Adani Wilmar's results for the fourth quarter of the financial year pointed to a recovery in domestic volumes and robust profitability. The company reported a 57 per cent year-on-year rise in profits from Rs 94 crore to Rs 157 crore in the same period last year. Volume growth fell to three per cent due to a strain in exports of oil meals.
In an interview with Outlook Business, Adani Wilmar’s managing director (MD) and chief executive officer (CEO) Angshu Mallick and its chief financial officer (CFO) Shrikant Kanhere talk about the company’s strategy with dealing with challenges in the Indian market, assuring good quality products and expanding the fast-moving consumer goods (FMCG) business.
How was financial year 2024 for Adani Wilmar and what were the key takeaways for the leadership?
Shrikant Kanhere: This year was quite different for us. Our first and second quarters were impacted due to high price inventory, commodity crash and the misalignment of hedges. We had not seen such a year in a few years.
But these problems are behind us, which is why we made a comeback in the third and fourth quarters. Performance in the second-half of the year is more aligned with the kind of performance delivered in previous years.
But apart from financial performance, there were some good takeaways.
First, the food business, which has been a focus area for us, clocked more than one million tonnes in volume. The turnover from the food business has doubled in the last two years, which is very encouraging for us.
Second, we have been able to consolidate our market share in several segments. Being a leader in the market, it is difficult to maintain market share but we have been able to consolidate it. Our market share in edible oils went up from 18.4 per cent to 19 per cent. In wheat flour, it went up from 5 per cent to 5.6 per cent. In rice, we have not been able to grow but the share remains stable.
Third, we were able to return to our normal run rate in financial performance in the third and fourth quarters. This is very important going forward. Overall, volume and market shares were good. Going forward, a good growth rate amid stable prices and robust demand will improve our financial performance.
What is the Adani Wilmar group’s outlook on export business?
Shrikant Kanhere: The export business suffered due to restrictions on rice exports. These restrictions were not there in the last financial year, so it is reflected in volume growth. But since this is the base now, growth in exports should improve in the current financial year.
Premiumisation has emerged as a dominant trend in the FMCG sector. Is Adani Wilmar also witnessing a similar trend in its product portfolio and is there any plan to expand premium brands?
Angshu Mallick: We have also seen a premiumisation trend. The rate of growth for our Fortune brand has been higher than for other mass brands. This is happening on a consistent basis after two to three years. The Basmati rice and wheat flour brands also did well despite prices being higher. Premium brands like Aashirvad have improved.
We have just launched ‘sharbati atta’ which is a premium brand which we sold via partnerships with Reliance Reliance and other e-commerce channels. There are discussions going on [about] introducing other variants of wheat flour, fortified rice, low GI [glycemic index] rice and good quality pulses.
With food brands facing scrutiny over quality of products — How is Adani Wilmar ensuring it is compliant with guidelines?
Angshu Mallick: This is a matter of concern for everybody in the food business. It is important to ensure compliance with food regulator FSSAI’s guidelines. But I believe we can do better.
Wilmar operates in 90 countries, and they have more than 1,000 factories across the world. We have a central audit system which ensures quality checks. Our plants follow the American Institute of Bakers standard which has over 280 points on which audit is done. All our plants are compliant with this.
All our specifications are better than FSSAI requirements. We are very possessive about delivering the best quality to people and we are not following global standards.
Another aspect is the inherent problem of using pesticide in Indian agriculture. We do not know [that] when we buy. We send samples to European labs for testing to ensure the best quality as our wheat flour is exported to several countries. We are spending roughly Rs 20–25 crore every year on these efforts.
Food and FMCG businesses are seeing good growth for Adani Wilmar. How big is this segment going to be for the company in its overall business?
Angshu Mallick: In volume terms, 17 per cent comes from food and FMCG. This segment is recording growth of 30 per cent. Over the next three to five years, we want to see 25 per cent of our volumes coming from this segment.
FMCG players across the country have reported competition from local and regional brands. Has Adani Wilmar seen competition intensify? What are the plans to stave off such a challenge?
Angshu Mallick: Regional and local brands have been there for a while. Some of them have a good reputation and they are efficient. Their limitation is that they cannot operate at scale across the country, so they are very strong in specific states. To compete with these kinds of brands in specific markets, we have a well thought-out strategy.
As pricing-wise Fortune is in the premium segment, the company does not want it to get into battles with local brands. I do not want my national leading brand Fortune to compete with local players. So, in different markets, the King’s brand will compete with local players. We use the same strategy for Aadhar—a sunflower oil brand. The fight with local players is mostly about pricing.
How much capital expenditure has the company earmarked to ensure strong manufacturing and distribution?
Shrikant Kanhere: We have several capex plans in the pipeline. One is, an investment of around Rs 2,200 crore as part of our IPO [initial public offering] project. We are spending this amount to build food facilities with a couple of expansions in the edible oil space. The majority of capex is in the food segment. We have a state-of-the art food facility coming up at Gohana in Haryana.
This Rs 2,200 crore capex will be delivered by the end of financial year 2025. The topline and bottomline of this capex will be visible in 2026. Since we are growing in all our segments, there is a plan to spend more to expand in the food segment. We are planning one more Oleo [manufacturing] complex down south in addition to the one we have in Mundra.
We were able to export just a standard product of Castor oil. We are now getting into a much more derivative segment of Castor oil, which is more lucrative in terms of creating value for better margins. These other capex plans are over Rs 1,000 crore. This will be spent through the financial years 2025 and 2026. Overall, the company has capex plans of over Rs 3,000 crore.
Climate change is increasingly affecting food supply chains. How is Adani Wilmar planning to insulate itself from the disruptive impact of climate change?
Angshu Mallick: It has become important for us to monitor the impact of climate change on supply chains across the world. As we get edible oil from different countries, such disruptions can have an impact on us.
As Wilmar operates around the world, we get information from them about climate change across the world. So, a lot of data is being analysed about water levels, rain etc. We have a desk which focuses on these studies. Agri-climatic events impact us heavily because we are in all staples.
