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Adani Wilmar and Ruchi Soya join hands for marketing, sale of products
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Friday, 27 May, 2016, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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fiogf49gjkf0d Adani Wilmar Ltd, a joint venture between Adani Enterprises Ltd and Wilmar International Ltd, and Ruchi Soya Industries Ltd, have agreed to combine their respective procurement, marketing, distribution and sales businesses, for few of the two companies’ products.
It is contemplated that a new joint venture company will be formed which will own and manage all procurement, sales and marketing of few of the businesses of respective parties, and each party will also contribute its portfolio of brands in relation to the products. The manufacturing requirements of the joint venture company are proposed to be fulfilled by both the companies. It is proposed that Adani and Wilmar will, through Adani Wilmar, jointly hold an equity stake of 66.66% in the joint venture company, and Ruchi Soya will hold 33.34%. A non-binding term-sheet has been signed in this regard.
This proposed new integrated platform is expected to have significant value for both the Indian farmer, in terms of efficient handling of produce and sales realisation, as well as for the Indian consumer, who will stand to gain from an increased range of quality finished products through distribution networks that will be optimised to provide the highest standards of quality and handling, at the lowest cost possible.
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.
Proposed business of the joint venture company
The joint venture company will have the exclusive right to originate, market and distribute finished products from the following manufacturing businesses of Adani Wilmar and Ruchi Soya in India: 1. Oil seeds and vegetable oils, oil seeds crushing/extractions/refining,derivatives and byproducts; 2. Soya foods, byproducts and all other food products; 3. Oleochemicals; 4. Biodiesel; 5. Grains; 6. Castor oil and derivatives.
Gautam Adani, chairman, 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.”
“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,” said Kuok Khoon Hong, chairman and CEO, Wilmar.
Benefits from the joint venture company
The joint venture 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.
Dinesh Shahra, MD, Ruchi Soya, said, “Our company is truly honoured to be able to partner with such reputable conglomerates, and together we feel we will be able to leverage on each other’s strengths to truly make a difference to the agricultural backdrop of the country. 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.”
The planned integration of activities will help both companies realise savings in terms of origination efficiencies across distribution, handling and sales. Lastly, the proposed integration of Adani Wilmar’s and Ruchi Soya’s downstream businesses will serve as a catalyst for the further expansion of both parties’ product portfolios and allow the joint venture to reach and address the consumer tastes, preferences and aspirations of India’s ~1.3 billion consumers.
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