Edible oil major Adani Wilmar, which on Monday reported a 66 per cent jump in consolidated net profit to Rs 211.41 crore for the December 2021 quarter, has guided towards a muted fourth quarter on price rise pressures but expects demand picking up from April on new mustard crop arrival.
Total income rose to Rs 14,405.82 crore in the third quarter from Rs 10,238.23 crore a year ago, up around 41 per cent, driven by food products, which it sees as the focus area going forward.
It has also set aside around Rs 500 crore, from the recent Rs 3,600-crore IPO, for acquisitions in the food space, the company’s Managing Director and Chief Executive Officer Angshu Mallick told PTI in a post-earnings call.
“Our overall volume grew 30 per cent while in value terms it has much higher 41 percent. Because of the strong brand connect that Fortune has, we could pass on the entire input cost increase of 40 percent to consumers,” he said.
Mallick added that while food volume grew around 30 per cent, edible oil growth was muted at 2.7 per cent, still higher than the 0.2 percentage point growth the industry has seen in the reporting quarter.
He sees the demand scenario remaining stable (muted) in the current quarter as cost pressure is still on, but the price and demand will improve from April when the new mustard seeds will reach the market.
The edible oil industry has been clocking 6-8 per cent growth in the past five years as there was good demand from the rural markets but this has been almost lost this year due to a massive price increase, Mallick said, adding that the urban middle class is still buying.
He said the country imports 13.5-14 million tonne edible oils annually led by palm, sunflower and soybean oils, which constitute almost 98 per cent of inward shipments.
India, the world’s leading vegetable oil buyer, imported 7,80,741 tonnes of palm oils in January 2021.
Total vegetable oil imports rose 16 per cent to 12.70 lakh tonnes in January, compared with 10.96 lakh tonnes a year-ago period, led by palm oils which is more than 60 per cent of total vegetable oil imports.
But, the import of soyabean oil increased sharply to 3.91 lakh tonnes in January from 88,667 tonnes in the same period of the previous year, and the import of sunflower oil rose to 3.07 lakh tonne from Rs 2.05 lakh tonne.
Mallick said that going forward, they will focus more on food items as the branded market is only 12 per cent of the market that too with many small local brands.
“We see a huge market opportunity for us in there, and have already been clipping at over 30 per cent and hope to continue at that level and have earmarked Rs 450-500 crore for faster market share growth through acquisitions or strategic investments,” he added.
Mallick said that of the total revenue, as much as 82 per cent come from the edible oil business, which contributes 65 per cent of the volume.
Currently, food contributes only six per cent of revenue and 13 per cent of volume, while 12 per cent of revenue come from essential oils for industrial purposes but nets 19 per cent of the volume and has grown by five per cent in the reporting quarter.
This is the first quarterly result announced by Adani Wilmar after it got listed late last month. Adani Wilmar is a joint venture between the Adani Group and the Wilmar Group of Singapore.
Adani Wilmar sells its cooking oils and some other food products under the Fortune brand. Apart from cooking oils, it also sells food products like rice, wheat flour and sugar and non-food products like soap, handwash and sanitisers. PTI BEN HRS hrs
