Adani Enterprises Weighs Exiting US$6bn Wilmar Venture: Report
Moneylife Digital Team 09 August 2023
Gautam Adani-led Adani Enterprises Ltd is exploring selling its stake in Adani Wilmar Ltd, its consumer-staple joint venture with Wilmar International Ltd, a report from Bloomberg News says, citing people familiar with the matter. Adani Wilmar shares fell nearly 5% in the morning trade following the news report.
According to the report, Adani group has been considering a potential sale of its 44% stake in Adani Wilmar for a few months. The India-based fast-moving consumer goods (FMCG) maker is currently valued at US$6.17bn (billion).
"Indian billionaire Gautam Adani and his family may retain a minority stake in a personal capacity following a sale, while Wilmar could decide to retain its stake in the business," the report says, adding that deliberations are at an early stage and Adani Enterprises may decide to keep its stake.
Hurt by a steep decline in edible oil prices, Adani Wilmar reported a loss of Rs79 crore in the June quarter of 2023, against a net profit of Rs194 crore a year ago. The company's revenues also fell 12% to Rs12,928 crore from Rs14,724 crore in June 2022 quarter.
In a regulatory filing, the company says, "Since the first quarter (Q1) of the last fiscal year, the price of edible oils has been declining. This trend continued during Q1 of fiscal year (FY)23-24, with the price of edible oils experiencing further decline, in the range of 5% to 20% (Q1FY23-24 vs Q4FY22-23), before recovering as the quarter came to a close."
In January, US-based Hindenburg Research with a focus on activist short-selling, claimed: "the seven key listed companies of Adani group are 85%+ overvalued even if you ignore our investigation and take the companies' financials at face value."
The Adani group responded to the Hindenburg report at length in an over 400-page response (the actual response is 54 pages, while the rest comprises annexures), raising questions against the ulterior motives and modus operandi of the US-based research firm. In response, Hindenburg says it believes that "fraud is a fraud, even when it is perpetrated by one of the wealthiest individuals in the world". (Read: Adani Replies With 413-Page Report; Hindenburg Says Fraud Cannot Be Camouflaged With Patriotism)
You can read Moneylife's coverage of the Adani issue here…
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