Fortune India Exclusive: Open to new partner, M&As in India, says Wilmar’s Kuok Khoon Hong

The Singapore-headquartered Wilmar International, one of Asia's leading agribusiness groups and the world's largest palm oil trader is seeking “good strategic partners” in India to help the company grow its agri and food businesses in the country, even as its 25-year-old association with the Adani group is set to end in 2025.

In an exclusive interview with Fortune India, Kuok Khoon Hong, 75, chairman and CEO, Wilmar International, confirmed the group's plans. “We think India will be a very big and important player in global agri commodities and food businesses, and its influence will extend to the whole Indian sub-continent, and not just India,” says Kuok, who cofounded Wilmar in 1991 and is counted among Singapore’s top 15 billionaires with a near $4 billion net worth.

Initially, Adani Wilmar (AWL), known for its Fortune edible oil brand, was engaged in the edible oil business but later diversified into other agri and food-related businesses encompassing rice, wheat flour, oilseed crushing, oleochemicals, speciality fats, home care products, pulses, besan, soya value-added products. The company clocked consolidated revenues of Rs 51,262 crore in FY24 with a profit of Rs 148 crore.

Given that India is the largest importer of edible oils and largest exporter of rice, it is very important as a source of demand, exports and market information for many commodities that Wilmar is involved in. “Because of its huge population and high economic growth, the Indian market is very important for many commodities, especially some of Wilmar’s key businesses such as edible oils, crushing, oleochemicals, rice, flour, speciality fats,” says Kuok.

With regard to Wilmar’s association with Adani, Kuok was profuse in his praise. “To succeed in any new market, especially one as big and complex as India, we need technical expertise, knowledge of the local market and ability to build a good local team. Adani’s contribution has been invaluable in helping find good local people for the JV, and advise on local strategies and government relationships,” says Kuok.

In fact, AWL is the only joint venture managed totally by local people and Wilmar never sent any permanent expatriates there since the inception of the joint venture 25 years ago. For many years, AWL operated independently with little direct control from both partners. “This is possible because it has a good management team,” says Hong.

While AWL is a leading player in edible oils, oleochemicals, castor, wheat flour and rice businesses, Wilmar plans to consolidate its market position in all its agri and allied food businesses, even through M&As. That is not surprising considering the potential to consolidate market share as 50% share is held by regional brands, especially in edible oils.

In fact, AWL had ramped up its presence in the FMCG industry essentials (oleochemicals) space through the acquisition of a 67% stake in speciality chemicals company, Omkar Chemicals, last year. The acquisition was a strategic step for Adani Wilmar to establish a strong production footprint in the speciality chemicals market, which includes home and personal care products, food additives, plastics and polymers, agrochemicals, lubricants and petrochemicals.

Prior to the Omkar deal, AWL had in 2022 acquired several brands, including the renowned ‘Kohinoor’ brand from McCormick Switzerland GMBH to strengthen its leadership in the food business. The acquisition has given AWL exclusive rights over the brand ‘Kohinoor’ basmati rice along with ‘Ready to Cook’, and ‘Ready to Eat’ curries and meals portfolio under the Kohinoor brand umbrella in India.

The company’s edible oil business in FY24 clocked a profit of ₹ 1146 crore, with food and FMCG chipping in with ₹ 172 crore.

As per Wilmar, excluding the cost of the buyout, the cost of Wilmar’s investment in AWL, currently valued at over ₹ 42,000 crore, is approximately $94 million and is currently valued at around $2 billion. As per the deal announced a couple of days ago, Wilmar will acquire Adani Enterprises' (AEL) 31.06% stake in the JV by March 2025, while AEL will offload the remainder 13% stake through an offer for sale. Adani plans to deploy the $2 billion fetched from the exit into the group’s core businesses such as energy, utilities, transport, logistics, and other industrial verticals.

Meanwhile, JPMorgan has reiterated its underweight rating on the Adani Wilmar stock, with a target price of ₹320, while Investec, a home-grown research and broking firm, has a hold rating with a target price of ₹397, highlighting single promoter ownership as a favourable factor. The stock is currently trading at ₹327 levels, down over 10% over the past year.