Adani Wilmar eyes acquisitions in UP

Ahmedabad-based Adani Wilmar, an edible oil maker, is eyeing acquisitions in Uttar Pradesh to expand production capacity, indicated Anghsu Mallick, chief operating officer.

In the past two years, Adani has done 11 acquisitions of crushing and refining units in various oil-producing states such as Madhya Pradesh, Maharashtra, Rajasthan and Andhra Pradesh. This, with expansion of its six existing units, saw it spend Rs 1,100 crore on capacity building.

Mallick says the company, maker of edible oil brands Fortune, Fortune Plus, Raag Gold and King’s, is now in a phase of consolidation. However, there is a definite interest in getting an entry into UP, he said.

Adding: “We are open to acquisitions even in existing markets such as Maharashtra.”

The rush to acquire capacities is not difficult to explain. With a crushing capacity of close to 7,000 tonnes per day, Adani lags arch rival Ruchi Soya, the maker of brands such as Ruchi Gold, Sunrich and Mahakosh. In refining, however, the two are neck and neck, with a capacity of 10,000 tonnes per day.

Cargill, maker of Gemini and Nature Fresh edible oils, is a distant third, with no crushing capacity and a refining capacity below 5,000 tonnes per day.

Kolkata-based Emami, a newer entrant, maker of Healthy and Tasty edible oil, is upping refining capacity to 2,800 tonnes per day from the current 1,600 tonnes per day. Emami is also looking to set up a 1,200 tonne-per-day refining plant in Andhra Pradesh at an initial investment of Rs 200 crore, besides another 1,000 to 1,500 tonne-per-day plant in Gujarat at an investment of Rs 250 crore. The firm is also eyeing acquisitions in North India.

All of this will see Emami firm spend close to Rs 700 crore on capacity building alone. This with investments of Rs 1,000 crore that Adani has planned for capacity and brand-building, as well as backward integration, will see close to Rs 2,000 crore flowing into the edible oil industry in the next few years.

The reason for this flurry of activity is the potential for growth the industry sees in the next few years. Consumption of edible oils in India is about 15.5 million tonnes per annum, while yearly domestic production is just about 6.5 mt. Hence the investment in expanding domestic production.

And, the consumption of branded or packaged edible oil is growing rapidly. At 15 per cent per annum, it is three times the rate at which overall consumption of edible oil is growing, which is five per cent per annum.