Demand to take hit in Q3 due to rise in price of edible oils: Adani Wilmar

After announcing its July-Sept quarter results, Angshu Mallick, MD and CEO, and Shrikant Kanhere, CFO, spoke to Sharleen D'Souza in an exclusive interview

Adani Wilmar expects rising edible oil prices to affect demand in the October-December quarter. Adani Wilmar reported a net profit of Rs 311 crore compared to a loss of Rs 130.73 crore in the year ago quarter. Also, its revenue stood at Rs 14,460 crores , which is a growth of 18 per cent YoY with an underlying 12 per cent YoY volume growth. After announcing its July-September quarter results, ANGSHU MALLICK, managing director and chief executive officer, and SHRIKANT KANHERE, chief financial officer, spoke to Sharleen D’Souza in an exclusive interview. Edited excerpts:

 

Do you expect strong top-line growth to continue?

 

Angshu Mallick: We may not replicate this growth, but one thing is certain: all this is happening because of concerted efforts to create a better distribution infrastructure.

 

Edible oil prices have risen by 25-30 per cent, which will impact consumption. However, the good news is that we have a very strong wedding season starting November 15, expected to be one of the best in two to three years. I am confident that this wedding season will lead to robust consumption of essential commodities like our products. Also, rural markets will experience enhanced consumption. 

How do you expect edible oil prices to pan out from current levels?

 

Mallick: We all expected prices to come down after the duty hike, but that did not happen. This is an indication that international prices are not solely influenced by India’s demand. However, it must respond to India’s demand.

 

Starting this month, groundnut oil, soybean oil, cottonseed oil, and rice bran oil will enter the domestic market, which will exert some pressure on international prices. Edible oil prices are likely to remain at these levels. We will pass on any price increases if they occur. 

 

What is your total distribution reach?

 

Mallick: We reach 780,000 outlets directly through our distributors and salesforce. Indirectly, we reach 2.1 million outlets for edible oil. For food products, the number is different, but generally, we reach 200,000-250,000 outlets directly for food.

 

Other fast-moving consumer goods companies have witnessed a slowdown in urban demand. Have you seen this trend affecting you as well? 

Mallick: We are in the kitchen essentials segment. When it comes to consumer purchasing priorities, kitchen essentials are typically ranked higher. Consumers need our products; the key is ensuring availability. So, we believe that distribution is the key driver of sales. 

 

When will the shares of Adani Wilmar be transferred to Adani Enterprises shareholders?

 

Shrikant Kanhere: The demerger scheme requires several regulatory approvals, and we are actively working on it. It is in the process of being approved by various regulatory authorities, including the exchange. It’s a lengthy process, and if everything goes well, it should take another three to four months. 

 

How do you expect margins to pan out from these levels?

 

Mallick: If international prices rise and domestic prices do not match that increase, there could be a problem. We will have to monitor this situation carefully. Otherwise, margins for other products are stable.