Adani Wilmar, Ruchi Soya join hands to create FMCG company2 min read . Updated: 26 May 2016, 10:26 AM IST
Adani Wilmar, Ruchi Soya to contribute their procurement, marketing, sales and distribution businesses together towards the proposed joint venture company
Ahmedabad: Adani Wilmar Ltd, a joint venture between billionaire Gautam Adani controlled Adani Enterprises Ltd (AEL) and Wilmar International Ltd, has proposed to join hands with Ruchi Soya to create one of India’s leading consumer goods companies, AEL said in a stock exchange filing on Wednesday.
While the company did not give the time frame to accomplish this feat, it said the new joint venture company is proposed to be formed with both Adani Wilmar and Ruchi Soya contributing their procurement, marketing, sales and distribution businesses together for products such as grains, oil seeds, soya foods, oleochemicals, biodiesel and castor oil.
It is proposed that Adani and Wilmar will, through Adani Wilmar, jointly hold an equity stake of 66.66% in the new joint venture company while Ruchi Soya will hold 33.34%, AEL said in its statement. A non-binding term sheet has been signed in this regard, it said.
Gautam Adani, chairman of Adani Group, said, “The proposed partnership between Adani Wilmar and Ruchi will have a positive impact on the overall agricultural landscape of India. Our current partnership with Wilmar has been successful due to a solid combination of Wilmar’s strategic outlook and experience in the international food business, coupled with our domestic operational expertise. We look forward to take the next leap forward with the Ruchi family through this new joint venture."
When contacted a senior official of Adani Wilmar declined to comment on future investment plans or revenue targets. An e-mail sent to Ruchi Soya remained unanswered till press time.
The AEL statement said the new integrated platform is expected to raise efficient handling of produce and sales realisation. It is also expected to increase the range of high quality finished products as distribution networks will be optimized to provide the highest standards of quality and handling, at the lowest cost possible.
The new JV will hold the exclusive right to originate, market and distribute certain finished products from the manufacturing businesses of Adani Wilmar and Ruchi Soya in India.
“We are very bullish on Indian demand for high quality food products due to population and economic growth. The joint venture will be well-positioned to leverage on its strong base in edible oils and capture a good share of this demand to become one of India’s leading FMCG companies," according to Kuok Khoon Hong, chairman and CEO of Wilmar.
Singapore-based Wilmar International is the world’s largest palm oil processor and has over 500 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries.
AEL said the JV was conceived looking at India’s complex agricultural environment, where declining farm productivity has come in the face of rising consumption patterns amongst India’s growing population. This mismatch can be partially eased by optimising and improving the supply chain networks of Adani Wilmar and Ruchi Soya, it said.
The proposed transaction is subject to due diligence, definitive binding documentation, applicable regulatory and other approvals and certain other terms and conditions. Further announcements will be made at an appropriate stage, AEL said.
“This joint venture will not only enable us to continue with our core manufacturing operations via toll processing arrangements, but also to capture the synergistic value by working closely together and learning from each other’s experience to make things more lean and efficient," Dinesh Shahra, managing director of Ruchi Soya, was cited as saying in the AEL statement.