Adani Enterprises to demerge food-FMCG biz, investment in Adani Commodities to Adani Wilmar

New Delhi: Adani Enterprises Ltd will demerge its food-FMCG division and also its strategic investments in Adani Commodities LLP to edible oil major Adani Wilmar Ltd as part of the strategy to give greater focus on this business and unlock value for shareholders.

Adani Wilmar is an equal joint venture between Adani Group and Singapore's Wilmar Group. Adani Commodities and Wilmar hold 43.94 per cent stake each in the company. The remaining 12 per cent stake is with the public.

Post this demerger, Adani Wilmar, which sells edible oils and other food products under Fortune brand, will cease to be the joint venture entity of Adani Enterprises Ltd. Promoters stake in Adani Wilmar Ltd will come down to 76.76 per cent from the current 87.87 per cent.

In a regulatory filing on Thursday, Adani Wilmar informed that the board has approved a 'Scheme of Arrangement' amongst Adani Enterprises Ltd (demerged company) and Adani Wilmar (resulting company) and their respective shareholders and creditors.

The proposed scheme provides for the transfer and vesting of the demerged undertaking (which primarily includes the entire business of demerged company pertaining to the Food FMCG business with all associated activities, assets, liabilities and Demerged company’s strategic investments in Adani Commodities LLP) from Adani Enterprises to Adani Wilmar on a going concern basis.

The scheme also proposes the issue of equity shares by Adani Wilmar to the equity shareholders of Adani Enterprises, in consideration thereof.

The shareholders (including promoter/promoter group shareholders) of Adani Enterprises will hold shares in Adani Wilmar directly.

Adani Wilmar will issue 251 equity shares of the company to shareholders of Adani Enterprises for every 500 equity shares of the latter.

On the rationale, the filing said that "each of the varied businesses being carried by the demerged company either by itself or through its subsidiaries or through associate companies including Food FMCG Business have significant potential for growth and profitability.

The nature of risk, competition, challenges, opportunities and business methods for Food FMCG Business is separate and distinct from other businesses being carried out by Adani Enterprises.

"The Food FMCG business and the other businesses of the demerged company are capable of attracting a different set of investors, strategic partners, lenders and other stakeholders. There are also differences in the manner in which the Food FMCG Business and other businesses of the demerged Company are required to be handled and managed.

"In order to lend greater/enhanced focus to the operation of the said businesses, it is proposed to reorganize and segregate the Food FMCG Business by way of demerger and transfer the same to the resulting company," it added.

On Monday, Adani Wilmar reported a consolidated net profit of Rs 313.20 crore for the first quarter of this fiscal against a net loss of Rs 78.92 crore in the year-ago period.

The total income rose to Rs 14,229.87 crore during the April-June period this fiscal from Rs 12,994.18 crore in the corresponding period of the previous year.

During the April-June quarter, Adani Wilmar's revenue from the edible oil business grew 8 per cent to Rs 10,649 crore in April-June of this fiscal from Rs 9,845 crore in the year-ago period.

Food and FMCG business revenue rose 40 per cent to Rs 1,533 crore from Rs 1,097 crore. The revenue of the industry essentials segment was flat at Rs 1,986 crore.