Market regulator Securities and Exchange Board of India (SEBI), in its latest observations on the recently filed initial public offering (IPO) papers by Adani Wilmar Ltd, has kept the Rs 4,500 crore issue in "abeyance". The SEBI website shows the Adani Wilmar IPO has been "kept in abeyance". Adani Wilmar, a 50:50 joint venture between the Adani Group and the Singapore-based Wilmar Group, had filed its draft red herring prospectus (DRHP) with SEBI on August 2.
The proposed IPO offer worth Rs 4,500 crore will comprise a fresh issue of equity shares by the fast-moving consumer goods (FMCG) major and there will not be any secondary offering. Though SEBI has not cited a reason behind the hold, media reports suggest the Adani Wilmar IPO was put on hold due to an ongoing investigation into the group's flagship company, Adani Enterprises. Gautam Adani-led Adani Enterprises holds 50 per cent stake in Adani Wilmar, which owns the popular edible oil brand ‘Fortune’.
As per the SEBI rules, if one of the departments of the regulator is investing in a company, its related entity may not receive the regulator's approval for 90 days, which can further extend by 45 days. Adani Wilmar's biggest business is edible oil, which is a high-volume but low-margin segment. The company's flagship Fortune brand is among the largest oil brands and the company enjoys a unique advantage with its own refineries located close to its port and hence it can import oil and process it at a lower cost.
Adani Wilmar is the market leader in the edible oil segment, and has 22 manufacturing units spread across 10 states and boasts of a distributor network comprising more than 5,500 entities. Aani Wilmar had reported a net profit of Rs 654.56 crore for the financial year ended March 31, 2021, which was significantly higher than the previous fiscal's Rs 394.60 crore.
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