« Back to articlePrint this article

'Rural areas been stressed for many FMCG companies'

February 15, 2024 11:46 IST

'In staples, we have still managed in rural areas.'

Photograph: Kind courtesy Facebook

Adani Wilmar expects rural demand to improve from the first quarter of 2024-25.

The company anticipates revenue growth to return next financial year.

After announcing its December-quarter results, Angshu Mallick, managing director and chief executive officer, and Shrikant Kanhere, chief financial officer, spoke to Sharleen D'Souza/Business Standard in an exclusive video interview.


When do we see revenue growth?

Mallick: Over the last four quarters, you will find that the edible oil prices have come down but our volumes have gone up.

Prices of edible oils are now stable. In Q4 last year, prices of edible oils were higher than this year and that fall will still be visible.

But from Q1 FY25, you will find stability. In foods we are growing at 18-20 per cent both in volumes and value.

What affected volumes in the quarter?

Mallick: Q3 is normally a very big quarter in terms of festival and consumption.

Overall edible oil growth is flattish, but when you look at the packed segment, it has shown a growth rate of 4-5 per cent.

Our sales to namkeen and bakery units have come down as last quarter was not a strong one for them.

Packed oil has grown 16 per cent in the last nine months, which is healthy for a very mature category.

When you look at food, we have grown at 18-19 per cent overall.

If you look at the domestic business, we have grown at around an average rate of over 40 per cent.

The export of rice has come down because of restrictions.

How do you expect the contribution of Horeca (hotel, restaurant, and cafe/catering) and the export business to grow?

Mallick: For the Horeca business, we have a separate team and have started distribution in 53 towns with Horeca-specific distributors with integrated supply chains of food and edible oils.

Volumes have been growing steadily at 20-25 per cent.

The quarter which went by was good because it was the wedding season and I think this will continue in the next quarter.

When do you expect a revival in rural consumption?

Mallick: Rural may not grow as much in January-March but from April after the harvest of the wheat crop, because some money will come to farmers.

So the rural market generally does well from April onwards.

Rural areas have been stressed for many fast-moving consumer goods companies. In staples, we have still managed in rural areas.

With the Lok Sabha election coming in, a lot of money will flow to rural areas.

Normally during elections, consumption goes up due to gatherings, which pushes up the consumption of food items and that is why rural areas will consume more.

We expect the June quarter of FY25 should be a good one.

By how much do you plan to increase your distribution reach next financial year?

Mallick: Our overall reach has increased and now more than more than 2.1 million outlets sell our products directly and indirectly.

Normally, these retail outlets are growing in the range 6-8 per cent.

We will grow a little better than normal because we are pushing our rural reach.

I think our growth will be around 10 per cent and it will be 2.35-2.4 million outlets in FY25.

How do you expect the margins to play out?

Kanhere: We are back to normal margins, which we used to report in FY22 and FY23.

If you take out Q1 and Q2, which are a kind of aberration because of the high volatility that we saw in these two quarters, we are back in the game where Ebitda is close to Rs 550-600 crore and profit after tax Rs 200-250 crore.

As we move forward, volumes-led growth can be seen in Ebidta and PAT.

Have you stalled talks on stake sale in the company?

Mallick: We have no comments. It's the owners' prerogative to decide.

Feature Presentation: Aslam Hunani/

Sharleen D'Souza
Source: source image