Extended rains may hit rural consumption: AWL Agri Biz top executives

Extended rains could have an impact on rural consumption as this has dented farmers financially in many parts of the country, according to AWL Agri Business (formerly Adani Wilmar).

 

“Demand has been very subdued for six months of the year …very high rainfall in September, extended up to harvest time, has damaged crops or reduced output, or has hit farmers financially… we will have to study the rural market more closely. Consumption in rural areas may not be great,” Angshu Mallick, executive deputy chairman, told Business Standard.

 

While talking about crop damage, Mallick said that groundnut crop has gone bad. The same was witnessed with the paddy crop in Punjab and Madhya Pradesh.

 

However, he said that urban demand should improve as the wedding season and winter sets in and this typically pushes demand.

 

While talking about volumes, Mallick said that the company is hopeful to end FY26 with at least single-digit in edible oil and double-digit in food.

 

He expects food to see a volume growth of 15-25 per cent and edible oils to be in the range of 5-7 per cent.

 

Talking about margins, Shrikant Kanhere, managing director (MD) and chief executive officer (CEO) at AWL Agri Business, said, “We will keep having earnings before interest, tax, depreciation and amortisation (Ebitda) in the range of ₹3,500-3,600 per tonne. I think in both this quarter (Q1) and Q2 we have been able to deliver this. Margins as such, are not under pressure. They are according to the run rate that our business would like to have. Last year was an exceptional event, that's why, year-on-year (Y-o-Y), you see a drop in profit. But that doesn't essentially mean that margins are under pressure.”

 

In the July-September quarter, the company’s net profit was down 21.3 per cent to ₹245 crore and its net sales was up 21.8 per cent to ₹17,605 crore.

 

The company’s profit before interest, depreciation and taxes (PBIDT) was down 9.2 per cent to ₹609 crore.

 

On quick commerce, Mallick said the channel has expanded to 85 towns from being only in the top five-10 cities.

 

He said that in the top 10 metros, there is a tremendous shift in buying patterns, especially seen in the last one year.

 

“Mom and pop stores have not been able to grow. Their growth has been subdued or negative. Modern trade has seen 8-10 per cent growth while quick commerce has seen 50-80 per cent growth. Consumers are finding it easier to buy daily essentials or any other items like namkeen or cold drinks through quick commerce. The channel also offers a better range. They are able to compare the prices and select the brands they want,” Mallick said.

 

On the company’s distribution reach, Mallick said it now has a direct reach of 900,000 outlets and plans to take it to a million outlets by March 2027. He expects the food business to touch ₹10,000 crore.