Ruchi Soya and Adani Wilmar to form joint venture in India
May 30, 2016
India’s Ruchi Soya and Adani Wilmar announced on 25 May that they plan to set up a joint venture to tap into the country’s rising food demand and purchasing power.
According to World-Grain.com, the joint venture 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:
- Oilseeds and vegetable oils, oil seeds crushing/extractions/refining, derivatives and by-products
- Soya foods, by-products and all other food products
- Castor oil and derivatives.
Adani Wilmar will own 66.66% of the joint venture and Ruchi Soya the remaining 33.34%.
Adani Wilmar is a joint venture between Indian multinational, the Adani Group, and Asian agribusiness giant Wilmar International, the world’s largest palm oil processor.
Currently Adani Wilmar owns refineries in 17 locations across India, has eight crushing units and 18 toll packing units, amounting to a refining capacity of over 10,400 tonnes/day, seed crushing capacity of 7,400 tonnes/day and packaging capacity of 9,000 tonnes/day, according to World-Grain.com
The company also said it had the largest distribution network among all branded edible oil players in India, with more than 93 stock points, 3,500 distributors and 10% retail penetration spanning one million outlets over India.
Ruchi Soya is India’s largest manufacturer of edible oils, vanaspati, bakery fats and soya foods (see company profile, OFI January 2015). According to the company, it has over 6,000 distributors covering 600,000 retail outlets. It has 4.02M tonnes of oilseed extraction capacity in 11 locations; 2.99M tonnes of edible oil refining capacity in 14 locations; 0.52M tonnes of palm fruit processing capacity in two locations, 0.52M tonnes of vanaspati and bakery fats manufacturing capacity in seven locations; and 3.29M tonnes of soya meal production capacity in 11 locations.
Adani Wilmar and Ruchi said the joint venture was conceived looking at India’s complex agricultural environment, where declining farm productivity was occurring in the face of rising consumption patterns.
This mismatch could be partially eased by optimising and improving the supply chain networks of both groups, they said. The planned integration of activities would help realise savings in terms of origination and efficiencies across distribution, handling and sales.
“We are very bullish on Indian demand for high quality food products due to population and economic growth,” said Kuok Khoon Hong, chairman and CEO of Wilmar. “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.”
The joint venture would also serve as a catalyst for the further expansion of both parties’ product portfolios.
It is subject to due diligence and regulatory approvals.