India-Singapore’s Adani Wilmar Diversifies Into Value-added Foods

Wednesday, August 3rd, 2016 | 857 Views

India-Singapore joint venture Adani Wilmar is planning to diversify into value-added foods and edible oils as it aims to reach a CAGR of 25 percent in the next five years.

The joint venture, a 50:50 collaboration between Indian conglomerate Adani Group and Singapore’s agricultural and business group Wilmar International makes the Fortune brand of edible oils. The company plans to tap into overseas markets, including China and Malaysia, with its value-added oil and food products.

Angshu Mallick, chief operating officer at Adani Wilmar, said in an interview that the company was hit by the slowdown in rural consumption but is expecting to increase its capacity utilisation levels to 90 percent from the current 70 percent levels, livemint reported.

Adani Wilmar’s diversification plans come at a time when prediction of a bountiful monsoon in 2016 is expected to fuel rural demand, but firm signs of a recovery have not surfaced yet. A decline in commodity prices—which too started rising in the last quarter—and urban consumption growth has offset the rural slowdown, but only partially.

The company launched India’s first diabetes care oil Fortune Vivo in February this year, which targets the health-conscious community in India. It is now looking to introduce other value-added and healthy food items such as fortified rice, wheat flour, and pulses that provide vitamins and proteins like vitamin D3, zinc, folic acid and iron.

Mr Mallick said the company is bringing in high-end technology to introduce these food products within the next six months into the market. He added that Adani Wilmar is readying a series of food products with low glycaemia index and has hired experts to advise the firm.

“Health consciousness is big in India led by edible oil companies like Marico Ltd which markets cholesterol management with its Saffola edible oil. As such, value added food with low glycaemia index (GI) and fortification is a niche subset of the health category. This market is still small and the biggest challenge is low awareness. Even in cases where companies have products they are not focusing on, the category has a long gestation period,” said Anil Talreja, partner at consultancy Deloitte Haskins and Sells.

The entry into these value-added products is expected to help the company increase its capacity utilisation levels, enhance branded product portfolio and tap into growing rural demand. Out of its revenue of Rs 18,000 crore (US$2.7 billion), around Rs. 11,500 crore comes from branded products and the remaining from the sale of edible oil in bulk to companies such as Parle Products and Britannia Industries.