Demand hit by increase in prices; eyeing acquisitions in food space: Adani Wilmar

In the wake of Russia’s invasion of Ukraine, several commodity prices have shot up including sunflower oil as the region catered to a major chunk of the global demand. Several raw material prices are now surging on the back of supply shortage. To understand the ground reality and also the coping strategy of companies, CNBC-TV18 spoke to Angshu Mallick, MD & CEO, Adani Wilmar.

Mallick confirmed that there has been a steep cost increase across all areas of the business. He added that so far, the company has been able to pass on the rise in raw material prices to its customers. However, demand has gotten hit due to a 15-20 percent hike in prices. Further, sunflower oil consumption has dropped over 50 percent due to higher prices, he mentioned.

He said, “The staple prices are normally passed on to the consumers without much loss of business and at Adani Wilmar, we have been able to pass it on so far and managing our bottomline as well, as there is a growth in topline in terms of volume growth also.”

On supply side constraints emerging out of Russia’s invasion of Ukraine, he said that the situation has been manageable. Elaborating on it, he mentioned that small lots of sunflower oil have been coming from Argentina and Russia so the situation isn’t as bleak.

“India consumes normally around 2.5 lakh metric tonne a month, but with the prices going up, there has been fall in demand and currently the country is consuming around 1 lakh metric tonne and if this volume is expected to be consumed then the country has, at least 2 months’ stock to continue. Some parcels from Argentina have started coming in and some parcels are afloat. There is some transaction from Russia and possibly small lots will come from Russia also very soon. So I feel the supply side situation will be manageable as demand has curtailed and supply chain is still trickling in,” Mallick said.

On inorganic growth, Mallick said that the company is looking at acquisitions in the food space. Detailing on acquisitions, he said the company has earmarked Rs 500 crore for acquisitions. He added that acquisition in the food space is on the horizon and will get completed by Q1 of FY23. The company is looking to expand and is looking at regional players, brands that could help in this endeavour, he shared.

For the entire interview, watch the accompanying video