Shrikant Kanhere, Deputy CEO and CFO at AWL Agri Business, said the company will focus on the food FMCG business, with rice and wheat flour, the two main food categories, seen as the key growth drivers next year.
He expects this business to keep growing at a double-digit rate in the coming years.
AWL Agri Business (formerly known as Adani Wilmar) reported ₹18,229 crore in revenue and ₹190 crore in profit for the January–March 2025 quarter (Q4FY25).
These are the verbatim excerpts of the interview.
Q: The volume growth has been pretty good, because in the fourth quarter, edible oil saw about a 7% volume growth, and that is obviously helped boost your revenue, the topline to 37% as well. Let us start with the edible oil business, what’s the outlook for the next couple of quarters or 2025-26 (FY26) if you can share that, both in terms of pricing on edible oil as well as volumes?
Mallick: The volume growth essentially has come from our aggressive distribution expansion that we have been doing for the last couple of years, particularly the rural markets. We now have touched more than 50,000 small towns, as we call it, where we have appointed direct distributors. Direct reach has also gone up by 19% so number of people on the street has improved, and we have increased the direct coverage, because in essential commodities, the most important part is your availability in the retail outlet, and that is why the volume has gone up.
On the edible oil front. I think the prices and all this are very stable now, and over the last couple of months, things have been stable. We expect this to continue with good monsoon coming, and that is what we are all hoping for, the Kharif crop will be very good, where soybean, ground nut will come, and because of the new crop that will come the prices will be stable.
Mustard Oil crop has been very good. Mustard seed productions around 108-120 lakh tonne in that range – that is what people are saying, very good crop, and the yield – oil content is also good. So overall, edible oil is very comfortable.
Q: You did 9% volume total full year, this was in the previous year, basically. What will you do this year in edible oils and also, what’s the margin going to be? Some sense of pricing, and therefore, what margin should we expect on this business?
Mallick: On growth front, we are considering a target anything between 7 to 10% depending on how the first two quarters go, because that is very important. On the margin front, stable prices will help the brand to give a stable margin and brands always like stability in prices and this year, the brand will give a better margin.
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Q: Since you mentioned that a bulk of this 7% growth is coming because you are boosting your distribution in rural and you really want to be where your customers are, and quick commerce has been growing very well for you as well over this year. Just want to understand whether quick commerce is basically replacing the demand that would have other otherwise come from Kirana, whether it’s adding to your volumes?
Mallick: Quick commerce, we have grown by more than 100% this year, and that is helping us, because good brands are picked up by the consumers, because we understand that these consumers are better educated and all that, so they like to buy brands which they are aware of that is one.
Two – it has slowed down the modern trade, to some extent, because the consumers who are going to modern trade, who are used to going to bigger shops or self-service stores, have now gone online. Tier-two and tier-one cities, we have seen that some of the big Kirana shops have got impacted because they had good clientele, and those were the people who shifted to online.
Q: So alternate channels, they generated closure on ₹3,600 crore in the last year. For this year, how much will it generate?
Mallick: It should grow at around 35-40% minimum.
Q: Also, if you could help us out with the South focus. In 2024-25 (FY25) the south region has grown by closer on 25% in branded edible oils as well as foods, roughly it contributes closer on 10% of the total branded sales right now. What kind of a contribution we’re looking at from there?
Mallick: We have not been very strong in South historically, and we have been focusing on it for the last three years. Now it contributes 10% to our overall volume. Both food and oil is growing there, and this tempo of 25% growth should continue for a couple of years.
Q: Also, if you could help us out with your market share, the palm oil market share, there was a bit of a decline by around 140 basis points. Could you tell us, category wise, how do you see your market share move and if you have a target, you could help us out with that as well?
Mallick: On palm you are aware of that the palm prices went up, and it was higher than sunflower oil prices. So obviously consumers who were buying palm oil shifted to the next available soybean and sunflower. The palm oil volumes dropped, and our share also dropped, that is one. And we are number two, second largest palm oil player in the country in terms of branded packs.
Our soybean oil volumes have gone up so market share has gone up by almost 10 basis point, sunflower by 20 basis point, mustard by around 30-40 basis points. So overall, all other oils have grown well, but palm has gone down. That has impacted our overall market share, which has come down by 30 basis point.
Q: I remember when this entire Russia-Ukraine war started, we used to discuss impact on edible oil prices, etc. impact on crop prices. If this were to get to a near term resolution, could you give us a sense of what the implication could be on prices?
Mallick: Over the last three years, the trade has managed to how to grow crop and process and export so all the roads, whether it is from road route or the sea route, everything has been explored. Today, by and large, supply chain is very, very comfortable, and we see no reason to be afraid of any eventuality in that area, things are much better. Supply chain is much better. Argentina and Brazil also supply us some amount of sunflower oil, so we are having from there. So overall edible oil is very well placed today.
Q: There is no premium which has been built in where prices, if this were to be resolved. I am talking about resolution here, not escalation. There is no, there’s no implication, it is kind of settled prices?
Mallick: Yes, because by and large, things are stable. So even if war comes to an end nothing much will happen.
Q: Let us talk about the fast-moving consumer goods (FMCG) business, what sort of growth are you expecting? In the previous quarter, I am looking at the numbers now, about 9.2% growth over here again. Overall for the year, what can we expect from your FMCG business? Which segment will drive it? How are margins looking, looking at commodity prices right now?
Kanhere: Food FMCG business certainly is a focus area for us as we go forward. This year, we have been able to showcase a good volume growth in FMCG. The two basic food sub segments we have, one is rice and wheat flour, which will drive the growth next year for us. Currently, this business, we are running at an earnings before interest, taxes, depreciation, and amortisation (EBITDA) neutral by design, as we are aggressively spending on distribution and infrastructure for the food to grow.
This basket is already now close to 1.2 million tonne of basket for us in our entire scheme of 6.5 million tonne. It’s already contributing close to 18-19% of overall schemes. Our expectation is that it should continue to grow in a double digit as we go forward.
On margin fronts, as I said, currently, it is by design EBITDA neutral should continue to be in EBITDA neutral for next couple of years, given that it is still in investment phase.
AWL Agri Business’ current market capitalisation is ₹35,474 crore. The stock is currently trading at ₹272.50 as of 9:49 am on the NSE and has declined more than 20% over the last year.
