'Rural consumption to do well going forward'

'Food inflation is important and if that is controlled, then consumption will go up.'

Adani Wilmar expects volume growth to be in the range of 8-10 per cent over the next three quarters.

After announcing the June-quarter (Q1FY25) results, the company's Managing Director and Chief Executive Officer Angshu Mallick, and Chief Financial Officer Shrikant Kanhere spoke to Sharleen D'Souza/Business Standard in an exclusive interview.

Do you expect the growth you saw in Q1 to continue for the rest of the year both in terms of volume and revenue?

Angshu Mallick: There are three parts of the volume, one is oil, next is FMCG and the third is industrial essentials.

Edible oil growth has been very good this quarter as we have seen 12 per cent volume growth.

However, going forward, I am not very sure about 12 per cent.

Because the country has not done so well, we have done so because of our infrastructure.

We will be in the range of 8-10 per cent for the next three quarters on the volume front.

On the value front, if all remains steady, then we could see it go up by 10 per cent.

Do you expect Ebitda (earnings before interest, tax, depreciation, and amortisation) to also witness strong growth going forward?

Shrikant Kanhere: It's one of our highest set of numbers... I think operational efficiencies, stability in edible oil prices and good demand, everything got reflected in better Ebitda numbers.

But as we have been saying for some quarters now that our run rate of Ebitda is over Rs 500 crore, I think we should continue with that.

I will not comment on if we would be able to give similar kinds of Ebitda numbers in the coming quarter.

But yes, closer to this range.

So far the monsoon has been good and also the government has taken steps to revive the rural economy in the Budget.
How do you think the rural economy will revive from these levels?

Mallick: For over a year now, rural demand has been weak. This year, the monsoon is expected to be good.

If everything goes well, then the farming community and allied industries will have a lot of advantages in terms of higher crop yield, higher processing, higher handling, etc.

All these things will bring in employment and money to the system, which will enhance rural consumption.

The staples business is normal anyway, but when there is more money in hand, then consumers buy good brands, they purchase a higher quantity of branded items, and that is why we expect the rural markets to do well going forward.

How is urban demand panning out?

Mallick: The consumption story has been steady in metro cities.

However, in Tier-2 and Tier-3 cities, earnings depend on how the ecosystem works.

Food inflation is important and if that is controlled, then consumption will go up.

I think towns with lower population (10 lakh-plus) will do better than others.

Will the move from unbranded to branded foods continue at the same pace from current levels?

Mallick: Unbranded to branded, loose to packed, average brands to good brands, regional brands to national brands, this will continue to happen, because this is what is the younger generation, or the educated Indian, has been doing.

We can see this across urban and rural.

People are looking at buying better brands, better quality food, and food is now becoming a little sensitive matter in terms of choice. This phenomenon will continue.

How do you expect the food segment to grow?

Mallick: In volume terms, we see at least 20-25 per cent growth over last year.

Volume-wise, we should do more than a million tonnes to 1.2 million tonnes.

Revenue will also keep growing, and we should most certainly close the financial year with revenues higher than Rs 6,000 crore in the food segment.

Feature Presentation: Aslam Hunani/Rediff.com