STRATEGIC EXIT

The Adani Group's decision to sell its holding in the FMCG food business is seen as a way to reduce high debt and allocate money smartly

- BY KRISHNA GOPALAN

IT IS A good time for companies to venture into the fast-moving consumer goods (FMCG) space. Increased spending reflects greater confidence in launching new brands or exploring low-penetration and untested product segments. A quick glance at FMCG valuations and the rising stock performance for some of the listed entities highlight this growing trend. Quite clearly, investors like the sector and brands with high market share in segments that are poised for growth are most sought after.

Against this backdrop, Gautam Adani-led Adani Group's decision to exit its stake in food FMCG major Adani Wilmar appears both surprising and intriguing. A significant portion of Adani Wimar's revenue of over ₹51,500 crore in FY24-comes from edible oils, a high-volume, lowmargin category (₹171 crore net profit in the same fiscal, reflecting a margin of just 0.33%). Beyond edible oils, the company's portfolio includes basmati rice, pulses, soya chunks, gram flour, sugar, and wheat flour.

As the market transitions into a more organised structure, most of these categories offer a tremendous opportunity-these are a part of the essential consumer basket and there is serious room for innovation. Companies getting it right can charge a premium and in the process, and can create serious entry barriers for competitors.