FMCG major Adani Wilmar on Wednesday posted a loss of Rs 78.92 crore during the first quarter of financial year 2023-24 as against a profit of Rs 193.59 crore during the corresponding quarter of FY23. It posted revenue from operations at Rs 12,928.08 crore, down 12.2 per cent as against Rs 14,724.09 crore during the first quarter FY23. Adani Wilmar said that the Q1 profitability was impacted by decline in edible oil prices that continued in Q1 as well, leading to high-cost inventory, dis-alignment on hedges, TRQ disparity, and finance cost. Adani Wilmar further added, “The wholly owned subsidiary in Bangladesh made losses of ~Rs 21 crore in Q1, due to price caps by the Government on edible oils, local currency-related issues, and unavailability of counterparty for forex hedging. This has resulted in lower consolidated PAT, compared to the standalone PAT.” The company EBITDA stood at Rs 130 crore, down 71 per cent on-year.
The prices of edible oils have been declining since Q1 of the last fiscal year. This trend continued during Q1FY24 with the price of edible oils experiencing further decline, in the range of 5 per cent to 20 per cent (Q1FY24 vs Q4FY23), before recovering as the quarter came to a close. This reduction has been attributed to a combination of factors, including the decline in consumer demand in developed economies, easing of supply at the Black Sea region and robust production of oilseeds globally. “Our margins during the quarter got impacted by high-cost inventory in a falling edible oil price environment and dis-aligned hedges compared to spot prices of physical commodity,” said Angshu Mallick, MD & CEO, Adani Wilmar Limited.
Adani Wilmar posted total income during the quarter at Rs 12,994.18 crore, down 12.1 per cent in comparison to Rs 14,776.39 crore during the same period last year. However, the total expenses during the quarter were at Rs 13,061.86 crore, down 10 per cent as against Rs 14,516.13 crore during the year ago quarter.
Adani Wilmar’s Q1 performance across business verticals
Adani Wilmar’s edible oil business posted a revenue of Rs 9,845.04 crore during the quarter, its food & FMCG segment recorded a revenue at Rs 1,097.14 crore, and its industry essentials business revenue was at Rs 1,985.90 crore during Q1FY24.
“We have regained the momentum in our edible oil business with the decline in the edible oil prices. The soft prices of edible oil are expected to augur well for the industry. The company is gaining good share from regional brands in the under-indexed customer segments with marketing and sales focus on specific geographies and oil categories,” said Angshu Mallick.
In the Food & FMCG segment, this was the eighth consecutive quarter with 20%+ volume growth and 30%+ revenue growth, on YoY basis for the standalone company. “Recognizing the pressing need of Indian households for genuine and consistent quality of whole wheat, the company launched four premium grades (including Sharbati) of whole wheat under the Fortune brand in select markets. We developed a multi-purpose cleaner as a forward integration of our oleo-chemical products and launched this product under the ‘Ozel’ band for HoReCa segment,” he said.
In terms of regions, Adani Wilmar said that both the urban and rural areas have witnessed strong demand. “The oil and foods continued to grow at a rapid pace in the alternate channels (e-com, MT, eB2B, etc.) and recorded around 50 per cent YoY volume growth for the quarter. The Company kept its focus on expanding the distribution of both oil and food products in the general trade channel. The sale of branded products to HoReCa clients continued to grow strongly with expansion of its distribution network in more cities and acquisition of new client accounts,” it said.
Way forward
Adani Wilmar said that going forward, distribution expansion, gaining share in under-indexed markets and margin improvement will be the key priorities in the consumer pack segment in both edible oil and food segments. “The Company sees large opportunities in the HoReCa, institutional segment and exports as well and is working on plans to exploit these opportunities,” it concluded.