**Edible Oil Demand Set to Surge Ahead of Festive Season**
As the festive season approaches, AWL Agri Business Ltd (AWL), a prominent player in the edible oils and food sector, anticipates a notable increase in demand. This expectation is fueled by a recent decline in edible oil prices and robust monsoon rains, which are vital for the rural economy. The price drop follows the government’s decision to reduce duties on crude edible oil imports.
In an interview, Angshu Mallick, the managing director and CEO of AWL Agri Business, stated that the company has fully passed on the price reductions to consumers and is optimistic about a demand uptick starting in July. Despite a 5% year-on-year decline in overall volumes during the April-June quarter, AWL reported a 21% increase in revenue, reaching ₹17,059 crore. The volume decrease was primarily linked to the edible oil and food segments.
Mallick noted that the entire industry faced a contraction in the edible oils category. He explained that the government’s duty cut on crude edible oils on May 31 led to a delay in purchases, as buyers awaited price stabilization, which negatively impacted overall consumption. “Due to the import duty cut on May 31, the entire trade was waiting to understand the impact of the duty cut and how prices would adjust. Consequently, purchases were delayed, affecting our sales,” he remarked.
Additionally, the out-of-home consumption and B2B segments, which involve purchases by other packaged food companies, remained sluggish, reflecting a broader slowdown in consumer demand for products like frying chips and snacks. The basic customs duty on crude soybean oil, crude palm oil, and crude sunflower oil was halved to 10% effective May 31, following over eight months of elevated import taxes. The total effective import duty on these oils now stands at 16.5%, down from 27.5%.
Mallick highlighted that edible oil prices have decreased by approximately 6 to 7% since April 1, with palm oil prices dropping by 14%. He expressed confidence that consumption would improve starting in July.
During the quarter, the food segment’s performance was notably affected by the consolidation of the non-basmati rice business, which led to a reduced geographical footprint and lower volumes in that category. AWL also markets pulses, besan (gram flour), soya nuggets, sugar, and poha (rice flakes). Revenue from the food and FMCG segment fell by 8% year-on-year during the quarter to ₹1,414 crore due to various challenges. However, excluding the G2G rice business, the overall outlook remains cautiously optimistic.
**FAQ**
**What factors are driving the expected increase in edible oil demand?**
The anticipated rise in edible oil demand is primarily driven by a recent decline in prices due to reduced import duties and favorable monsoon conditions, which are crucial for the rural economy.
