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00:00 We have the whole Adani packet, most of them are reported numbers, Adani Wilma being one of them.
00:05 Anshu Malik, MD and CEO of Adani Wilma and Srikanth Kanhare, CFO of Adani Wilma,
00:09 join us to talk to us about how it's been for the company in the quarter.
00:13 Morning, gentlemen. Thanks a ton for joining us.
00:16 It's been a good quarter on the face of it for Adani Wilma.
00:19 You've managed to surpass at 1 million ton on FMCG sales, edible oil expansion.
00:24 So, lots of good things as well that have happened in the quarter.
00:27 You want to throw some color on how it's been and what's the guidance going into F525?
00:32 Our business in the fourth quarter has been good, particularly both in food and edible oil.
00:41 In industry essentials, particularly the oil meal, the volumes were a little less.
00:46 But otherwise, it has been a good quarter.
00:49 The first half was not as good, but the second half surely has seen much better results,
00:55 both in top line and bottom line.
00:58 Going forward, we see a greater scope of growing, both in terms of volume and improving on the bottom line.
01:08 One, because of the stability expected in the prices of commodities as we go ahead.
01:14 Second is the distribution reach that we have created over the last 25 years.
01:19 And now we reach almost 730,000 outlets directly and indirectly almost 1.8, 1.9 million retail outlets.
01:28 Food and FMCG both to put together is increasing at 30% domestic business growing at quarter on quarter.
01:36 So, that is a good thing to happen and we have touched 1 million.
01:40 So, going ahead, I see great opportunity for AWL.
01:44 Malik, that's amazing. It looks like it's a promising year ahead for the company.
01:49 But let's break that down, right?
01:51 I want to talk to you about what rural demand is looking like as we go into FY25.
01:55 Are you expecting an uptick on that?
01:57 Give me a sense of guidance of what we can expect on top line and exports as well.
02:01 Any plans to revive that piece of the business?
02:04 On rural, you see, last year hasn't been good from agri production point of view.
02:11 Growth of agriculture has been much lower than expected.
02:14 Normally, it is 4%, but it is almost 0.7%.
02:18 That is because of the erratic monsoon in the first half of the year.
02:22 The ravi crop was good.
02:23 Wheat and mustard was a good crop this year and that has given some solace to the farmers.
02:31 We are looking at the kharif crop and the monsoon.
02:36 And you know how important monsoon is for the rural economy.
02:40 What is predicted to be a normal and better monsoon, if this happens, I think the kharif crop will be wonderful.
02:49 With ravi good and the kharif crop coming to be good, I think by September, October, we will see revival of the rural demand.
02:58 That is one side, but from Adani Vilmar, we have been in staples business.
03:03 And staples are all essential commodities, whether we talk of wheat, flour, rice or edible oils.
03:09 And all these things are required by even the rural consumers.
03:12 We have in fact seen 1% growth over the urban.
03:17 So our share of rural has gone up from 30% to 31%.
03:21 So to that extent, we have seen rural demand better for us, principally because edible oil prices have been lower than last year.
03:31 And wheat and rice prices have been stable at least at that level.
03:36 Srikanth, if you can actually come in on the pricing environment right now, we are seeing an improvement in your margins in the third quarter.
03:43 And of course, pricing, I believe, has been dynamic because you guys have been making a lot of decisions based on market conditions, which are also very volatile.
03:54 Firstly, how has pricing impacted margins in this quarter?
04:00 And what's the way forward?
04:01 If you could also give us some sort of an idea about your expectations of margins range as we move into FY25.
04:10 Yes, so if you firstly look at this quarter, we have of course outperformed as compared to the same quarter last year.
04:20 But having said that, of course, in our business, there is always an overlapping between one quarter to another quarter on the inventory gains and the contract gains,
04:31 which are sitting, which sometimes gets delivered either in the quarter one or quarter two.
04:36 So with these, I think the numbers are quite good.
04:40 Coming back to your question on the pricing and how does pricing play in our overall scheme of the thing,
04:46 see, we have been saying this for quite some time that our revenues are basically impacted due to inflationary pressure.
04:56 So in most of the time, given that we have a very strong brand, number one brand in the country,
05:02 we have been able to pass it on any inflationary pressure to the consumer.
05:06 And therefore, our entire focus is always on how do we improve the margins per turn.
05:13 And that is something we have been able to deliver in this quarter.
05:16 Whatever we faced in Q1 and Q2 was very unprecedented because of the high price inventory and the disalignment of the hedges.
05:25 I think that problem is now behind us.
05:29 We have been going back to our normal numbers, which we used to deliver in FY22 and FY23.
05:36 And therefore, having said that, Q1 margins, if you really ask me, should be in line with what we were delivering earlier.
05:45 And of course, it should be better than what we have delivered in this quarter.
05:49 Would it be fair for us to assume that there will be upside, upside risk, if I can call it that, on margins going ahead into FY25?
06:00 I really don't see there is any risk on our margins, given the two factors.
06:06 One is all that commodity volatility that we saw in Q1 and Q2 is behind us.
06:14 I think markets have stabilized, prices are stable.
06:17 And whenever the prices are stable and in a range bound, I think companies like us, who have got a good brand in place, makes better margins.
06:28 And therefore, I don't see any risk as such on a business model.
06:33 The second thing, of course, is the food segment or a food portfolio in the company's overall basket is improving.
06:41 So this quarter, we have been able to clock 17% of volume came from the food.
06:47 We have been able to clock 1 million tons of food volume, which is quite a remarkable feat for any company to achieve.
06:54 So that gives you a better margin. And therefore, when you move ahead, I mean, the next year when the food proportion also increases, edible oil prices remain stable.
07:04 I think we don't see any risk on the margins as we see today.
07:10 So there could be a good possibility of improvement in margins in FY25.
07:15 Mr. Malik or Mr. Kanhari, either of you can come in on this one.
07:19 Talk to us about branded products, because your market share has been improving consistently over the last 10 quarters.
07:27 As we go ahead, what sort of margin, what sort of guidance can you give us in terms of the branded products?
07:34 See, Staples business is all about good supply chain management and very good distribution.
07:41 If that is there, then the market shares can improve.
07:46 So we have been working on that segment since last three or four years, very clearly with the focus after COVID that distribution is the key to success.
07:58 So we have gone in road from 16,000 rural towns. Last year we did around 33,000.
08:05 Now we will do 50,000 target we have taken.
08:09 Rural sits on a bigger population of almost 70, 75 percent, but the share is 30, 31 percent for us.
08:19 So we have enormous scope to grow. Second, the challenge in distribution in rural markets are on supply chain and your logistic cost.
08:28 Now that our volumes are big enough, we did around six million tons total as a company and edible oils volume,
08:35 our exact volume were 2.7 million tons and food one million tons put together gives us enormous strength to move goods at a lower cost
08:45 and thereby give value for money to the consumers. We are confident of getting higher market share as we go ahead.
08:54 All right. You know, if I can also touch upon industrial essentials at the moment.
09:00 Now, the second volumes have seen a little bit of weakness coming in, at least on a year on year basis for this particular quarter.
09:08 And I reckon that this can be attributed to the weakness in oil mill.
09:14 Can you take us through what's really happening with the segment?
09:17 I believe that experts have also taken a hit here. What's your reading about the way forward?
09:23 On industry essentials, oleo chemical is a big business of ours and has been growing at around 15, 20 percent per annum.
09:33 And we are expanding that. We have an export portfolio also, but oleo has done very well.
09:39 Castor, we are world's largest castor oil player and we export.
09:44 We are the largest exporter also. Now in castor, plants are running at almost 95 percent capacity.
09:50 So not much of growth by percent, but we are expanding there also.
09:55 What comes is the oil mill export. Oil mill is a matter of, you know, consumption at the destination and how price effective we are.
10:04 And in so having the South America mill is cheaper.
10:09 So that gives us a disadvantage. Our advantage is only that we are non GMO mill.
10:14 So we are exporting to Korea, Japan. What happens is that you need a little time to develop these markets,
10:20 because there is a lot of back and forth in terms of quality control and specs and all that.
10:25 But surely we have cracked that and we will see better oil mill exports.
10:32 Other than oil mill, rest of the two business, castor and castor oil and oleo has been surely have done better.
10:40 Well, thank you very much, Mr. Malik and Mr. Kanhar. It's been a good quarter.
10:45 Wishing you all the luck and congratulations again on having it good this time around and good luck for FY25 and we'll see you soon.
10:51 Thank you.
10:53 Transcription by ESO; translation by —