IPO Alert: AWL files papers to raise ₹4,500 cr

The size of the Indian packaged food retail market was about ₹6 trillion in fiscal 2020, which contributed about 15% to the entire food and grocery segment. It is estimated that the edible oil retail market was around ₹1.79 trillion in FY 2020 and is expected to grow at a CAGR of 6% in the coming 5 years.

Adani Wilmar Ltd (AWL), the equal joint venture between Adani Enterprises Ltd and Wilmar International Ltd and the owner of the Fortune brand of edible oils, recently filed the draft red herring prospectus for its proposed initial public offering.

The IPO will consist of an issue of new equity shares by AWL for an amount of up to ₹45 billion. There won’t be any secondary offering.

The company plans to utilize the net proceeds for capital spending, prepayment of borrowings, funding strategic acquisitions and investments, and general corporate purposes.

Company Overview

Adani Wilmar is an FMCG company that offers most of the essential kitchen commodities for  Indian consumers, including edible oil, wheat flour, rice, pulses, and sugar. It accounts for approximately 66% of the total spend on essential kitchen commodities in the country.

The Gujarat-based company incorporated a joint venture with Adani group in 1999, and later diversified into the transport & logistics, and energy & utility sectors. The company owns more than 40 units that cumulatively translate into a refining capacity of over 16,800 tonnes per day, a seed-crushing capacity of 6,000 tonnes a day, and a packaging capacity of 12,900 tonnes per day.

Key Numbers

For the year ended 31 March 2021, AWL reported a total income of ₹372 million, compared to ₹298 million in the previous year. The total expenses for the year were at ₹364 million, compared to ₹291 billion in the previous year.

AWL’s core business is the production of commodities, and their prices are prone to high volatility. For instance, commodity prices are at an all-time high now, which had a positive impact on the company’s top-line – revenues grew about 25% — but affected EBITDA margin negatively.