Strong oilseed crop to keep India edible oil prices stable: AWL Agri Business
New Delhi: Edible oil prices in India, which rose in response to the government's decision to raise import taxes on cooking oils in September last year, are likely to remain stable this year, buoyed by robust domestic oilseeds harvest and steady global supplies, AWL Agri Business Ltd (formerly Adani Wilmar Ltd) said.
The company has also been reducing packaged wheat flour prices in response to fresh crop arrivals and easing inflation, potentially boosting consumption.
'In FY26, the edible oil supply chain will remain stable globally as well as in India. India has done well in mustard seed, so mustard crop is very good. The upcoming monsoon season is going to be good. So, India will produce its average oilseeds. We don't see any price issue in oilseeds nor supply chain issue in oilseeds," Angshu Mallick, managing director and chief executive officer of the company, said in an interview with
Mint
.
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Edible oils account for around 64% of the company's annual revenue, followed by packaged foods and other fast-moving consumer goods. The edible oil segment saw a 7% year-on-year volume growth in the March quarter, with a 45% increase in revenues, reaching
₹
14,769 crore. The overall revenue of the company, known for its Fortune brand of edible oils, jumped 38% year-on-year to
₹
18,230 crore in the January-March period, with an 8% underlying volume growth.
Edible oil companies were forced to raise prices in the second half of FY25, following the government's move in September to increase the basic customs duty on various edible oils. This was done to shield local farmers from the impact of high global oilseeds production that could have made its way into the country, depressing prices. India relies heavily on imports to meet its domestic edible oil needs, with approximately 57% sourced internationally. According to government data released in August last year, India imported 16.5 million tonnes of edible oils in 2022-23, with domestic production fulfilling only 40-45% of the country's requirements.
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In the December quarter, the company raised prices of cooking oil by at least 20%, following the government's move to impose higher import duties on refined oils.
The government raised the basic customs duty on crude soybean oil, crude palm oil and crude sunflower oil to 20% from 0%, resulting in an effective duty rate of 27.5% on these oils. The basic custom duty on refined palm oil, refined sunflower oil and refined soybean oil was increased to 32.5% from 12.5%, leading to an effective duty rate of 35.75% on refined oils.
Basic customs duty is a tax levied on imported goods to protect domestic industries by increasing the cost of imports.
The company sells edible oils such as soya, sunflower, mustard, rice bran, groundnut and cottonseed. The company also sells basmati rice and wheat flour. 'The duty hikes came in September. So, that hiked the entire value chain," he said.
According to the company's full-year and March quarter results announced late Monday, palm oil volumes in the value-for-money segment experienced a negative impact during the second half of FY25 due to a significant price surge compared to other edible oils.
However, excluding palm oil, the company reported a 6% year-on-year growth in branded edible oil volumes for FY25.
Earlier this week,
Mint
reported a sharp decline of
₹
5-7 per kg in wheat flour (atta) prices over the past month, attributed to the arrival of wheat from key producing states like Punjab, Haryana, Madhya Pradesh, Uttar Pradesh Rajasthan and Gujarat.
Mallick said the company had responded to the dip in prices. Wheat prices have come down by 10-12% since early March, Mallick said.
The company has reduced the price of all packaged flour sold under its Fortune brand by almost
₹
4 per kilo.
'We have passed on the benefits to consumers in April and gradually, every week, we are reducing prices," he said. 'Rice prices are also low and whatever reduction was to be given, we passed it on in March itself. Dal and besan prices are down too, sugar is also stable. Overall, all the prices are under control," he added.
Mallick said consumption metrics looked broadly stable with food inflation trending downwards.
'Going forward, consumption should improve because income tax benefits will kick in which will mean more cash in the hand of consumers. Overall inflation as well as food inflation is coming down. Thirdly, our job market will be better because the government investments will go up. So, more cash in hand will give a better consumption story," he added.
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Government data released earlier this month revealed that India's retail inflation eased in March to its slowest pace in over six years, primarily due to lower food prices.
Food inflation in March rose by 2.69% year-on-year, a significant decrease from 3.75% in February and 8.52% the previous year.
Last year, Adani Enterprises Ltd announced its exit from the 26-year joint venture with Singapore's Wilmar group. Following the exit, the company transitioned to a new name—AWL Agri Business Limited. It also unveiled a new brand logo earlier this week.
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