Adani Group parting ways with its first JV partner

Gautam Adani, who built a $30 billion-plus business empire across 22 sectors, is parting ways with his first joint venture partner--Wilmar International. It was after joining hands with Wilmar 27 years ago, that he developed his now famous business theory of 'entering into new business adjacencies,' which eventually created a huge diverse business empire.

Adani started as a commodities trader and listed his first business Adani Enterprises in 1994. "Within two years, we realised the issue. People started saying Adani does not purchase assets. We were seen as a finance or trading company with individual expertise and no assets," Gautam Adani told Fortune India in May 2022, in his first detailed interview with any media after a long time and at that time one among the top five billionaires in the world.

"Then (27 years ago), we were the largest importers of edible oil. Wilmar approached us when we were developing the Mundra port. They had the vision of port-based agri-refineries," Adani explained, detailing the genesis and growth of the group into core businesses that extended from agri-commodities to coal to thermal power plants to power distribution, gas, SEZs and logistics and then into new business areas like end-to-end renewable energy forms, airports, defence, cement and data centres.

The deal comes at a time when Adani Wilmar, which owns the popular edible oil brand Fortune and rice brand Kohinoor, is stabilising from business backlashes in FY24. In H1FY25, the company’s revenue grew by 18% YoY to ₹14,460 crore and highest ever half-yearly profit after tax (PAT) at ₹624 crore. That was on the back of higher edible oil sales, food and FMCG sales. But in FY24, its EBITDA was down by 29%. The profitability of the company struggled due to market factors and problems in Bangladesh, where it is the largest edible oil company.

Wilmar International Limited, founded in 1991 and headquartered in Singapore, is today Asia’s leading agri-business group. Wilmar is ranked amongst the largest listed companies by market capitalisation on the Singapore Exchange. AWL is India’s largest and leading edible oils and food FMCG company, with operations comprising 24 factories in 15 cities and a strong distribution network of more than 10,000 distributors and 0.72 million retail outlets across India. With 100% urban coverage and a presence in over 30,600 rural towns, AWL exports to over 30 countries globally. AWL also exports products such as rice, castor oil and oleo chemicals to over 30 countries.

Wilmar International says the Group will recognise a gain on deemed disposal of an associated company of approximately $1.48 billion and a goodwill on consolidation which results in a reduction in net tangible assets of approximately $1.12 billion (based on the unaudited financial statements of AWL as at 30 September 2024). AWL will become a subsidiary of Wilmar and will be funded from internal sources as well as bank borrowings. "Wilmar will explore opportunities to bring in strategic investors to participate in AWL's growth story," Wilmar said in a press release. It also said "The parties have agreed to cooperate to undertake necessary actions for a change in the name of AWL before or upon consummation of the transaction."

Adani says that over $2 billion from the deal will be pumped in to fund the growth of its incubating businesses and renewable businesses.