For Adani Wilmar, the tag of India's largest edible oil producer has a hollow ring to it. Sure, its Fortune oil brand is a staple in grocery stores and pantries across India, but the margins from edible oils are thinner than the papads that are fried in them. And to say Adani Wilmar is overly reliant on this category would be a gross understatement—80% of its business in the last fiscal year came from edible oils.
Adani Wilmar wants to change this. It said as much in its IPO filings. Indeed, its planned $610 million issue, which would see the company valued upwards of $5 billion, was meant to facilitate a transition from being a commodity player to an FMCG titan. With this would come higher margins, and in turn, more love from the public markets. A virtuous cycle.
Its IPO, however, is already in question, having been stalled by market regulator Sebi. This in itself is not particularly worrying—Sebi is known to do this, and companies often emerge unscathed even if their plans are delayed. Airline Go First and mutual fund house Aditya Birla Sun Life AMC both had their listings halted in June, before receiving Sebi's go-ahead in August.
Even if Sebi finally okay's Adani Wilmar's IPO, though, it would only represent the first of many hurdles standing between the company and its FMCG dreams. As Sheela from MMS writes in today's articles, many more challenges lie ahead. It will need to figure out branding and distribution, all while convincing investors that it can become a diversified FMCG player despite the Adani Group’s limited experience with consumer-facing businesses.. www.multimediastudio.net