Adani Wilmar Ltd Management Discussions

Economic overview Global economy1

The global economy demonstrated resilience in CY 2023, registering a growth rate of 3.2%. Over the past few years, the global economy has reeled under the impact of various challenges, such as the prolonged Russia-Ukraine war and conflicts in the Middle East. To address these headwinds, central banks of advanced economies and major emerging economies resorted to quantitative easing measures in order to offer modest relief to ordinary citizens and businesses.

Owing to these headwinds, most economies of the world faced runaway inflation, which warranted monetary tightening measures during the last financial year. The scenario was made worse by transient challenges, such as tensions in the Red Sea.

However, defying these odds, the performance of the US economy has been stronger-than-anticipated, while Emerging Markets and Developing Economies (EMDEs) have also maintained a steady growth momentum throughout CY2024. Further, Europe and Asia have witnessed greater domestic demand and are on track for a gradual economic recovery.

Outlook

A balanced outlook on global economic growth is anticipated, with certain regions projected to achieve stronger growth than initially estimated. Moreover, the likelihood of a severe economic downturn has receded. Consumer price indices are improving, with inflation moderately easing. This is also likely to bolster consumer confidence in the advanced economies.

With central banks implementing fiscal policies and undertaking structural reforms to promote sustainable growth, the global economic outlook remains optimistic. The likelihood of interest rate reductions is expected to encourage economic activity. With governments in major economies withdrawing fiscal policy support more slowly than necessary, higher-than-projected global growth is anticipated in the near term.

Indian economy

Throughout FY 2024, India has maintained its position as the fastest-growing major economy amid global headwinds. It has also emerged as an alternative to China and garnered the attention of foreign companies, who are seeking an alternative manufacturing hub outside China. The domestic economy is further being buoyed by a robust financial system that is supporting its growth dynamics.

Forecasts by the National Statistical Office reveal that India has clocked a real GDP growth of 7.6% during FY 2024.2 This rebound in economic growth can be attributed to Indias sound macroeconomic fundamentals, burgeoning domestic demand and prudent fiscal policies implemented by the RBI. Further, easing supply-side constraints, coupled with the governments consistent emphasis on capital expenditure have facilitated economic growth. A surge in investments in the public sector and a strong banking sector has also contributed to gradual economic expansion over the years. Throughout FY 2024, inflationary pressures within the nation witnessed substantial moderation, primarily due to proactive supply-side initiatives implemented by the government.

Outlook

Notwithstanding a volatile global macroeconomic environment, the outlook for the Indian economy remains optimistic. Strong fundamentals, such as sustained political stability, enhanced government focus on public capex, increasing private capex, growing credit demand, low debt levels and deleveraged balance sheets of most companies, are expected to substantially contribute to economic growth. The Reserve Bank of Indias prompt and decisive monetary policy measures, which include suitable policy rates and liquidity measures, are further fuelling Indias rapid expansion. India continues to be a massive consumption-driven economy and along with higher capacity utilisation across sectors, economic growth is likely to continue in the coming years.

Industry overview

Indian packaged food market

Major consumer goods companies are now focused on meeting the demand for ready-to-cook meals, snacks, edible oils, pulses and juices, especially with consumer preferences shifting from unbranded to branded products following COVID. This is leading to a greater demand in the packaged food market in India.

During the period from 2019 to 2023, the Indian retail industry witnessed substantial expansion; it registered a growth of 34%, reaching USD 1.2 trillion from USD 890 billion. This growth has established India as the fifth-largest retail market globally.4 Factors contributing to the growth of the packaged food market include the increasing popularity of quick-service casual restaurants, evolving lifestyles, urbanisation, changing consumer preferences, the expansion of e-commerce services in rural areas and mushrooming contemporary retail outlets.

Packaged convenience food industry in India5

Indian packaged convenience food industry (INR bn)

Indian edible oils industry

At present, India is the worlds largest importer of edible oil. Over the past six decades, the per capita consumption of edible oils in India has substantially increased.Itnowstandsatapproximately 19 KG kg per year. Factors such as rising disposable incomes, urbanisation, evolving dietary preferences and the expansion of the food processing sector have led to a heightened demand for edible oils in India.

To meet this burgeoning domestic demand, India imports approximately 16 million metric tonnes of edible oils every year. Indias imported 16.5 million MT, up by 16% YoY, of edible oil and amounted to INR 1.38 lakh crore during 2022-23 (November-October).6 The agricultural sectors expansion, coupled with various initiatives aimed at augmenting oilseed production nationwide is further driving the market for edible oils in India.

National Mission for Edible Oils - Oil Palm (NMEO-OP) 7

In August 2021, the Government of India initiated the National Mission on Edible Oils-Oil Palm (NMEO-OP) with the objective of bolstering oil palm cultivation and increasing Crude Palm Oil production to 11.20 lakh metric tonnes by FY 2025-26. It is currently operational in 15 states across the country and covers an area of 21.75 lakh hectares. To support farmers amid global price fluctuations in oil palm, the Government has also revised the viability price from INR 10,516 in October 2022 to INR 13,652 in November 2023.

The NMEO-OP underscores Indias commitment to achieving self-sufficiency in the edible oils sector. Additionally, the mission aims to encourage private investment in the North-Eastern Region (NER) for establishing post-harvest processing facilities, offering special assistance of INR 5 crore for oil palm processing mills in the NER.

Specialty fats and oil market in India

The domestic market for specialty fats and oils is poised for substantial growth in the near-term, driven by shifting consumer preferences, heightened health consciousness and expanding disposable incomes. The perceived health advantages associated with specialty fats such as omega-3 fatty acids, medium-chain triglycerides (MCTs) and plant-based oils have made them popular among consumers.

Growing demand for premium and healthier food products, including bakery items, confectionery and processed foods is underscoring the necessity of specialty fats and oils with specific functional properties.

Further, the flourishing cosmetics and personal care industry in India is also contributing to a higher demand for speciality fats and oils, which are key ingredients in these products.

Indian soya chunk retail market

Soya chunks have emerged as a popular plant-based protein source in India, often used as a substitute for meat in vegetarian dishes. The growth of soya chunks is particularly driven by the eastern and northern regions of India, which collectively account for over 80% of the sales in the soya chunks market (both branded and unbranded).

Indian wheat flour retail market

Rapid urbanisation and evolving lifestyles are driving up the demand for food products that offer greater convenience, which, in turn, is boding well for the packaged atta market. Moreover, concerns pertaining to adulteration and contamination in unbranded or unregulated products are leading to a greater preference for packaged atta among consumers. Wheat serves as the staple food for a majority of Indians, particularly in the wheat-growing regions of North and West India, where it is predominantly consumed in the form of chapattis or rotis.

Indias packaged rice market8

India has been able to offer rice at competitive prices globally due to high domestic stocks and low local prices in recent years. The growth of e-commerce and direct-to-consumer channels has further ushered in opportunities for packaged rice manufacturers. The packaged rice market has recorded significant growth driven by the widespread popularity of rice as a staple food across various cultures worldwide. The estimated value of the India Rice Market in FY 2024 was USD 52.82 billion. It is estimated to reach USD 59.46 billion by FY2029, at a CAGR of 2.40% during the forecast period (2024-2029).

Key market players are now placing a greater emphasis on expanding their distribution networks by partnering with retailers, online platforms and food service providers. This strategy enhances the accessibility of packaged rice products to a broader consumer base, thereby contributing to deeper market reach and expansion.

Indian packaged pulses market

The size of the pulses market in India reached 34.4 million metric tonnes in FY2023 and is projected to grow to 57.3 million metric tonnes by 2032, clocking a CAGR of 5.7% during the period from 2024 to 2032.11 To reduce reliance on imports and achieve self-sufficiency in the pulse sector, the government is actively focused on boosting the domestic production of pulses. This strategic effort aims to meet the escalating demand for pulses within Indias growing economy, facilitating sustainable growth and stability in the pulses market.

Indian packaged besan (Bengal Gram Flour) market

The Indian packaged besan market is being driven by changing consumer preferences and intense competition between national and regional branded players across distribution channels. Besan (Bengal gram flour) is a milled product obtained out of Bengal gram. It is widely used in Indian cooking and is an essential ingredient for the HoReCa segment and savoury snack manufacturers (namkeens).

The northern and western regions account for a major share of the packaged besan market due to the higher consumption of besan-based foods in these regions. However, the southern market is growing faster as companies increase focus on this region.

Ready-to-cook and Ready-to-eat food market in India

Those food products that require minimal preparation, such as heating or boiling before consumption, are categorised as Ready-To-Cook (RTC), whereas Ready-To-Eat (RTE) includes packaged food items that are ready for immediate consumption. In recent years these segments have witnessed substantial surge in demand due to factors, such as a burgeoning youth population, a growing preference for convenience foods, advancements in food packaging technologies and enhancements in cold chain logistics.

TIe India Ready-To-Eat (RTE) Food Market is also projected to record a robust CAGR of 16.4% during the forecast period from FY2024 to FY2031, reaching USD 2,933.31 million in FY2031 compared to USD 870.43 million in FY2023.12 Similarly, the India Ready-to-Cook (RTC) Food Market, valued at USD 490.85 million in 2023, is expected to exhibit strong growth at a CAGR of 16.2% through 2029.13 The changing lifestyles of people residing in urban regions, digital revolution and the proliferation of online grocery stores have all played a transformative role in shaping the RTC food market in India.

Market for castor oil and derivatives

India holds the distinction of being the worlds largest producer and exporter of castor oil and its derivatives, contributing to over 75% of global castor seed production. Castor oil is extracted through seed pressing followed by solvent extraction of the pressed cake. In FY 2024, Indias castor seed production was estimated at 20.54 lakh metric tonnes, which is a 9% increase from 18.81 lakh metric tonnes in FY 2023.14

The positive trend in castor oil prices in India is driven by strong global demand from various sectors including food, biodiesel, soaps, cosmetics and lubricants. India has also emerged as a major producer and exporter of castor oil derivatives such as 12-hydroxy stearic acid, castor wax, dehydrated castor oil and undecylenic acid, benefiting from the abundance of castor seeds.

Castor seed and its derivatives find application across multiple industries in India, including cosmetics, pharmaceuticals, plastics manufacturing, lubricants, paints and printing inks. The byproduct of castor oil extraction, known as castor meal or cake, is primarily used as a fertiliser. This diversified usage highlights the significance of castor oil and its derivatives in various industrial sectors within India and globally.

Indian oleochemical market

The Indian oleochemical market is poised to grow in the coming years. This expansion will be driven by increasing demand across various sectors including personal care, food and beverages, cleaning products and industrial applications.

This growth is primarily fuelled by heightened consumer awareness regarding eco-friendly products and government initiatives promoting the adoption of bio-based products. The ready availability of raw materials such as vegetable oils (palm, soybean, coconut) in India ensures a consistent supply for oleochemical production.

Additionally, the increasing utilisation of oleochemicals in the food industry, coupled with the overall growth of the food sector in developing countries, is anticipated to create favourable opportunities for the oleochemical market in India. The versatile applications of oleochemicals across diverse industries underscore their importance and potential for growth in the Indian market.

Business performance

The branded sales is less than 10 to 15% of overall staple food sales. However, the branded food category is growing at a fast pace led by the shift in consumer preferences towards hygienic and trustworthy products. AWL is uniquely placed in this industry with offerings in five out of six kitchen essentials.

The Company has a wide portfolio of kitchen essentials such as edible oils, wheat flours, rice, pulses, besan and sugar, which together represents a very large addressable market, which only few pan-India players are addressing and that too they have restricted themselves to one or two categories.

‘Fortune is already a well recognised and trusted brand across 11 crore households for the kitchen essentials. In five categories – edible oils, wheat flour, basmati rice, besan and soya nuggets, Company has gained a respectable market share at national level and is amongst top-3 player in India in key categories. In edible oils, we are numero uno player.

The Company has been meticulously expanding its processing capacities and increasing the distribution of its products. It is making steady investments behinds its key brands and building deeper connects with its consumers. The Company is executing well on its strategy and has been gaining market share across consumer products. The Company is also executing regional strategies such as differential pricing, offering regional product varieties and deepening market penetration in local regions.

Segment-wise revenue

	Volumes (in	MMT)	Revenues (J	in Crore)	YOY Growth %		Mix %	FY 24
Segment	FY 24	FY 23	FY 24	FY 23	Volume	Value	Volume	Value
Edible Oil	-3.67	-3.36	- 38,788	-46,104	-9%	-16%	-61%	-76%
Food & FMCG	1.03	0.89	4,994	4,053	16%	23%	17%	10%
Industry essentials	1.32	1.23	7,479	8,028	7%	-7%	22%	14%
Total	6.02	5.48	51,262	58,185	10%	-12%	100%	100%

Edible oil

The industry witnessed a 7.7% YoY growth in FY ‘24, with both urban and rural markets contributing to this growth. The easing of edible oil prices simulated the consumer demand during the year.

In the edible oil segment, the Company had a strong year, achieving a 9% year-over-year (YoY) increase in volumes in FY 2024, with branded domestic sales growing by 15% YoY. Affordable edible oil prices led to consumer shift to our premium ‘Fortune brand, resulting in the higher mix of premium brand in our portfolio.ByMarch2024,theCompanys market share in overall edible oils stood at 19% up by 60 bps YoY.

The strong growth was primarily driven by strong performance in sunflower oil and mustard oil, which have outperformed industry growth rates due to our focused drives, well supported by robust brand equity, increased direct reach and improvement in sales function. The strong growth rates of Mustard oil and Sunflower oil for the 2nd consecutive year well demonstrates the success of our strategy of focusing on under-indexed markets and gain our fair share from the regional players.

Mustard oil has been gaining significant traction among consumers post-Covid due to its health benefits, and its domestic production has increased as the Indian government policies prioritised reducing import dependency on edible oils. In the fragmented mustard oil market, we hold an undisputed market leadership position. In FY 24, AWLs market share in Mustard oil has increased by 180 bps to 15.0%. Sunflower industry growth was strong at 18% YoY in FY ‘24. AWL grew at much higher levels and gained market share by 90 bps in FY24. The capacity utilisation of our refineries is at 60%, providing ample room for future market expansion with limited capex requirement for edible oils. The branded products delivered strong contribution to profits in FY24, however it was offset due to the impact of high-price inventory and dis-alignment of the hedges in H1 24

Food and FMCG

The performance of the Food and FMCG segment, comprising products such as wheat flour, rice, pulses, besan, sugar, poha and soap, continued its strong pace of growth as per our expectations. The segment recorded revenue of INR 4,994 crores in FY24 and the revenue surged by 23% year-over-year (YoY), with an underlying volume growth of 16% YoY. Moreover, branded food products are experiencing rapid growth, with domestic branded sales growth of 41% YoY. On the contrary, export sales declined due to export restrictions. The Company is leveraging the distribution network of edible oils to increase the penetration of its Food products. The Company is observing an increasing interest for food products from distributors and retailers which augurs well for expanding reach. Wheat flours and Besan and Pulses continued to grow well during FY 24 too. Rice recorded increased sales in domestic markets supported by the Kohinoor brand. However, the overall growth of rice was moderate due to the export restrictions. Sugar and Poha also observed robust growth during the year. In the third quarter of the FY 2024, the Company introduced the Fortune Biryani Kit for export markets, which resulted in over 25% export contribution in Biryani Kit sales for the year. During the year, wheat business made multiple interventions in the southern states, a profitable market with an opportunity to expand reach. Moreover, we also leased additional wheat milling capacity in the South, enabling us to ensure freshness of product and distribution in smaller lots. This has significantly improved the volume offtake, increased the penetration in retail outlets and led to strong demand for our products from the retailers in the South. The success is reflected in the increase of market share in the Chennai market, increasing from a low single digit to a double digit. The increase in outlets for our ‘Chakki fresh atta is also expected to benefit the Sunflower oil business in South.

Industry essentials

The Company offers industrial products such as Oleo chemicals, Castor Oil derivatives and oil meals.

The Industry Essentials segment continued to exhibit robust volume growth, fuelled primarily by the oleochemicals and oil meals businesses, which have been growing at double digits year-on-year. Castor oils also registered a low-single digit growth. Oleochemicals and castor oil growth is driven by increasing industrial demand, particularly in sectors such as lubricants, cosmetics, pharmaceuticals and other industries.

With a strong market position, commanding a 34% market share in stearic acid, 18% in glycerine within India and 27.5% market share of castor oil exports from India, the Company is well positioned to capitalise on this increasing demand across various sectors.

Capital Expenditure

During the fiscal year FY24, Adani Wilmar Limited made significant strides in expanding its manufacturing capabilities, with several new projects commencing operations as part of its ongoing commitment to enhancing production capacities and improving operational efficiencies.

New Projects commenced during the year

1. M ustard Crushing in Bundi (Rajasthan):

A new Mustard Crushing Unit with a capacity of 600 Tonnes per day commenced operations at the existing mustard facility in Bundi. This expansion reinforces the Companys commitment to the domestic mustard oil production and strengthens the Companys position in the market.

Unit2. Soya Nugget Unit in

Nagpur (Maharashtra): At the existing Edible Oil crushing and refining unit in Nagpur, a new Soya Nugget unit with a capacity of 100 Tonnes per day commenced its operations. This addition enhances the product portfolio and meets the growing demand for soya-based products.

3. Solvent Extraction Plant (SEP) for Rice Bran Oil in Mantralayam (Andhra Pradesh): At the existing plant in Mantralayam, a state-of-the-art SEP plant for rice bran oil with a capacity of 250 Tonnes per day began its operations. This initiative reflects the Companys commitment to innovation and sustainability in the edible oil segment.

4. Fractionation and Neutralization Units in Haldia (West Bengal): At the existing refinery in Haldia, a new Fractionation unit with a capacity of 500 Tonnes per day and a Neutralization unit with a capacity of 400 Tonnes per day commenced operations. This expansion is integral to expand the Companys capabilities to deliver the increased demand of edible oils to consumers.

All these projects are part of the IPO projects identified during the time of listing. We are being funded by the fresh equity proceeds from IPO. The Company had identified capital expenditure to the tune of INR 2,220 Crores during the IPO, out of which INR 1,085 Crores have been utilized towards these projects. We are pleased to report that all projects are progressing well and are expected to become fully operational by March 2025.

IPO Projects: Strategic Focus on Capacity Expansion

As part of the IPO project, it is noteworthy to mention that the new project in Gohana (Haryana), stands out as a major greenfield project. The remaining projects are brownfield expansions aimed at augmenting the Companys food capacities, gradually replacing third-party operations for the Foods business. This strategic approach aligns with the Companys vision of establishing its own capacities to ensure greater control over quality and efficiency.

The Gohana Project is an integrated Food Complex, consolidating processing units of wheat flour, rice, mustard oil, rice bran oil, and cottonseed oil at a single location, with a designed annual capacity of 627,000 MT.. This integration enhances our production capabilities, optimizing manpower, supply chain, and distribution efficiencies. Looking ahead, the Company remains committed to evaluating opportunities for building more Integrated Food Complexes at strategically important locations to further strengthen our manufacturing footprint and better serve our customers.

New product launches

Several noteworthy product launches occurred during the fiscal year, which are mentioned below-

Introduced four premium grades of whole wheat, including Sharbati, under the Fortune brand in select markets in Q1 FY 2024.

Rolled out a multipurpose cleaning concentrate liquid under the Ozel brand tailored for HoReCa clients in Q1 FY 2024.

Introduced the super-premium Xpert Range of edible oils specifically for export markets in Q2 FY 2024.

Introduced brown rice under the premium Kohinoor brand in Q2 FY 2024 to enrich its health-focused product portfolio.

Launched the Fortune Biryani Kit for export markets such as the UAE, Singapore and Mauritius in Q3 FY 2024 to cater to the Indian diaspora.

Additionally, the Company extensively leveraged social media platforms to engage with customers and promote food products such as rice and nuggets. The Company also resorted to branding in metro trains in Delhi for three months as part of its multimedia campaigns, gaining enhanced brand visibility.

Sales and distribution

To drive growth in its edible oils and packaged foods business during FY 2024, the Company is actively expanding its distribution network across various channels including General Trade, Modern Trade, HoReCa (Hotel, Restaurant and Catering) and Export.

General Trade

The Company is strengthening its presence within the General Trade channel to seize opportunities in packaged staples. At close of FY24, the Companys direct reach has extended to approximately 7,20,000 retail outlets, marking a surge from

5,80,000 outlets compared to the previous year. This expansion covers over 30,600 rural towns.

10,000+

Distributors

Alternate Channels

The alternate channels, that includes modern format stores and e-commerce recorded revenue of 2,700 crores, with an underlying volume growth of 29% YoY for packaged oils & foods. The Quick Commerce (Q-commerce) segment has emerged as the fastest-growing sector within e-commerce sales for the Company.

Adani Wilmars is committed to expanding its market presence through diversified distribution strategies across multiple channels, both domestically and internationally.

HORECA and export Sales

The Company has established a dedicated HoReCa channel that is experiencing strong growth. The revenue for the HoReCa segment stood at over INR 400 crore; which is 3x of the revenue of previous year. The HoReCa team has expanded distribution to 41 cities in FY 24 and intends to extend coverage to all major towns in the future.

The Company has created a dedicated export team to develop distribution channels and markets for its branded products. Branded exports witnessed a 72% year-on-year growth in FY ‘24, reaching over 30 countries. Key export products include wheat flour, rice, pulses, besan, soya nuggets and other soya products.

Branding and marketing

In FY 2024, the Company made strategic investments in region-specific marketing campaigns, new product launches, branded export expansion, digital promotions to enhance brand visibility and penetration across markets.

The Company initiated the ‘Kai Manam (‘Magic of the Hands) campaign in southern markets to promote the entire Fortune product range and deepen its market presence. It also prioritised understanding regional consumer preferences and forged connections with them through localised marketing campaigns that incorporated cultural nuances.

Major promotional campaigns

The Company executed several impactful brand campaigns in FY 2024 to promote its range of edible oils and foods under the ‘Fortune brand, featuring popular actor Akshay Kumar. These campaigns conveyed the message of Ghar ka khana, ghar ka khana hota hai, implying that home-cooked food is the best and the healthiest.

One of the key campaigns undertaken during the past year was the launch of a new TV campaign titled ‘Roti ki Mehnat for ‘Fortune Chakki Fresh

Atta. This campaign highlighted the convenience of using easy-to-knead atta, catering to consumers with busy lifestyles who seek quality and convenience in their daily cooking routines.

Additionally, a new campaign was introduced for ‘Fortune Kachi Ghani Mustard Oil (KGMO) specifically targeting mustard oil consumers. This campaign aimed to showcase the deep-rooted connection of mustard oil with the culture and traditions of India. Adani Wilmar collaborated with Malini Awasthi, a renowned folk singer from Uttar Pradesh, to create music that resonates with the local population across the Hindi belt states.

These strategic campaigns underscore the Companys commitment to engaging consumers through compelling storytelling that resonates with consumers from varied cultural backgrounds. Further, endorsements by notable personalities, also help reinforce the brands message of delivering quality products and upholding traditions, all while enriching essence of home-cooked meals.

Manufacturing

The Company operates 23 plants in India, which are strategically located across 9 states. These plants comprise 10 crushing units, 19 refineries and multiple food processing units Notably, the Companys refinery in Mundra is the largest single-location edible oil refinery in India; with a designed capacity of 5,000 metric tonnes per day (MTPD).

The Company is also enhancing its manufacturing capabilities by establishing new capacities focused on integrated plants capable of processing multiple products within the same facility and efficiently utilising shared resources.

23

Own manufacturing plants across the country

Information Technology (IT) integration

AWLhasmadesignificantstridesinitsIT digitisation efforts by leveraging cloud-based solutions, focusing on key areas such as Analytics , IT Security, domestic procurement, Go-To-Market (GTM) channel automation, and SAP version upgrades. By staying at the forefront of technological advancements, the Company is committed to meeting the evolving needs of the business and delivering value to the stakeholders.

Analytics and Generative AI

AWL has transformed its data analytics capabilities with the introduction of cutting-edge technology. The Company launched an enterprise-wide Data Lake service, encompassing all business aspects, to enable real-time monitoring and facilitate faster and more informed business decisions. AWL also exploring the integration of Generative AI to enhance its analytics, providing deeper insights and more accurate predictions.

IT security

Maintaining a secure IT environment is a top priority at AWL. The Company have implemented a comprehensive IT Security Awareness programme that covers all users within the organisation. This initiative aims to strengthen the IT security posture by educating employees about the latest security threats and best practices. AWLs commitment to robust security measures ensures that its data and systems are well-protected against evolving cyber threats.

Domestic procurement and GTM channel automation

To streamline the procurement processes, AWL has adopted advanced technologies that enhance efficiency and reduce costs. The Companys focus on domestic procurement has enabled it to build stronger relationships with local suppliers, ensuring a reliable supply chain. Additionally, AWL has automated the GTM channels to improve sales enablement and customer engagement. These technologies allow the Company to reach its customers more effectively and respond to market demands with lower costs.

S/4HANA upgrade

AWL has successfully upgraded the SAP systems to the latest version as part of the Companys broader strategy to modernise legacy systems. This upgrade, along with the efforts to consolidate tools and applications and adopt cloud-based solutions, aims to streamline the companys IT infrastructure, reduce complexity, and enhance overall operational efficiency.

ESG

The Company is committed to drive inclusive growth and is thus implementing its environmental, social and governance initiatives with greater determination. One of the flagship programmes, Fortune SuPoshan, initiated in 2016 by the Adani Foundation, is focused on addressing malnutrition in India. To date, this programme has positively impacted 4.4 lakh households, encompassing 1,750 villages and 190 slums. Over 1.4 lakh children have transitioned from acute malnutrition to a healthier state as a result of this initiative.

The Company is encouraging the adoption of alternative energy sources and has successfully installed solar power at four new locations, taking the total to eleven units out of the 23 owned units. The Company is planning to continue to use solar power across all its plants in the coming years.

Adani Wilmar is leading sustainability efforts in the edible oils industry in India by being an early adopter of sustainable palm oil practices. Over 90% of the palm oil is traceable back to mills as of December 2023 and all the plants are RSPO (Roundtable on Sustainable Palm Oil) certified.

As part of its commitment to environmental sustainability, Adani Wilmar was the first edible oil Company to introduce recyclable packaging. At present, 98% of the packaging is recyclable, contributing to reducing plastic waste while fostering a circular economy

As a part of our ESG commitment, we are shifting a growing proportion of our cargo through multi-modal dispatch (railways) and it accounted for 25% of our volumes in FY24.

We have planted 133,781 trees till March 2024, and plan to add 50,000 more trees in FY25.

The Company has installed rainwater harvesting at its Kadi plant, with a capacity of 17,215 cubic meter / year. With this adding, the Company now has installed rainwater harvesting structures at 5 plant locations with a potential water collection capacity of 233,194 cubic meter / year. were dispatched through rail. Additionally, 7.6% of cargo was dispatched through CNG vehicles.

4.4 lakh

Households reached

1,750

Villages covered

In addition to the nutrition intervention efforts, the Company has actively undertaken various initiatives aimed at conserving water, promoting recyclable packaging and leveraging renewable energy sources. Some of these are-

Summarised Profit and Loss Statement

Segment	March- 24	March- 23
Revenue from Operations	51,262	58,185
Cost of goods sold	45,275	52,183
Gross Profit	5,632	6,002
Employee Benefits Expense	421	394
Other Expenses*	4,076	3,947
EBITDA	1,135	1,661
Depreciation and amortisation	364	358
Other Income	294	261
Finance cost	749	775
PBT**	316	789
PAT	148	582
EPS	1.14	4.48

*excluding derivatives impact ** PBT is before exceptional items

Key Ratios

J in Crore	FY 24	FY 23
Fixed Asset Turnover (x Times)	9.1x	11.8x
Gearing (TOL / TNW)	1.4x	1.6x
Interest Coverage	2.5x	2.1x
Return on Equity (ROE) %	2%	7%

Sales

The Companys continued with strong volume growth across all the three segments.

The Company recorded revenue of INR 51,262 Crore in FY24, driven by a strong underlying volume growth of 10%. During the year, edible oil, oleochemicals and castor oils had lower realisation due to the decline in underlying commodity costs. This is the reason for reported revernue being lower by 12% in FY24, compared to last year, despite the strong volume growth.

Volume sales has crossed the milestone of 6 Mn Metric Tonnes. Food & FMCG segment hit the sales mark of 1 mn Metric Tonnes.

Adani Wilmar is among few FMCG companies in India to record revenues of more than INR 50,000 Crores.

In general trade, sales growth was driven by higher offtake from existing outlets along with distribution expansion in terms of towns, distributors, and retail outlets. The alternate channels volume grew at faster rate of 29% YoY, contributing INR 2,700 crores of revenue.

The Company is focused on improving its penetration beyond urban areas to rural towns (below 100,000 population), which have 75% of Indian population. Rural towns witnessed better growth rates for packaged oils & foods, compared to overall oils & foods growth.

The faster growth in HORECA and export sales during the year, has been the additional levers of growth. In FY24, HORECA sales contributed INR 400 crores+ revenue, which is 3 times of previous year revenue. Branded exports crossed INR 200 crores of revenue growing at 72% YoY

Profits

In FY 24, the Company had subdued profitability compared to the previous year due to losses incurred in first half of the year due to high-cost inventory and hedges dis-alignment. Operating

EBITDA stood at INR 1,135 Crores, declining by 32% YoY compared to INR 1,661 crores in previous year. EBITDA, including other income of INR 294 Crores, amounted to INR 1,429 Crores.

In H124, we suffered losses caused by hedge dis-alignment, wherein physical prices didnt move in-line with the prices on exchanges where the company had taken hedges. Loss suffered on inventory was not compensated by corresponding gain in hedges. The Company has realigned its risk management framework, to take care of such kind of situations in the future. We had normal quarters in the second half of the year. In H2 24, we reported operating EBITDA of INR 861 crores, compared to INR 274 crores in H1 24 and INR 964 crores in H2 23 of previous year.

For the financial year, decline in input prices of edible oils led to lower inventory and corresponding trade credits. This has resulted in lower interest expense by INR 26 crores, despite the increase in interest rates compared to previous year. The Company recognized an extraordinary loss of INR 53.5 crores on account of settlement of entry tax dispute, in West Bengal, pertaining to the financial years from FY13 to FY18. The lower EBITDA for the year resulted in lower PAT at INR 148 crores, compared to INR 582 crores in previous year.

The Companys wholly-owned step-down subsidiary in Bangladesh incurred a loss of INR 111 Crores in FY24, attributed to government imposed price caps on edible oils, currency-related issues, and the unavailability of counterparties for forex hedging. Additionally, there was a loss of INR 23 crores from share of JV profits. This resulted in lower consolidated PAT of INR 148 crores, compared to standalone PAT of INR 278 crores in FY24.

Way forward:

The ambition is to double Adani Wilmars volume in packaged foods in the next three years and continue to grow packaged oils in double digits.

In Edible Oil, the Company expects to further solidify its position in the edible oil market. The Company will continue to expand its sales and distribution to increase its market penetration and thereby gain market share. The focus will remain on increase in the direct reach of outlets, covering more rural towns and improving distribution in South India. With increasing per capita income we expect a drastic surge in demand of packed oil in Rural areas of UP, Bihar, West Bengal, Odisha & Jharkhand. Company will continue to drive growth in Sunflower and Mustard oils by increasing the penetration of these oils in more markets. In the food and FMCG segment, we expect to increase its sales volume contribution to 25% of overall Companys sales by FY 2027.

The Company is making targeted efforts to rapidly expand the distribution network for General Trade to capitalise on the substantial opportunity within the packaged staple foods market. The Company is aiming to increase its rural footprint to 50,000 towns by FY25 and increase its direct reach of retail outlets to 1 million in the next 3 years. The Company is focused on further scaling its branded export business to cater to the Indian diaspora across more markets. The fast growing HORECA sales and exports sales will be additional drivers for the edible oil & food volume growth. The Company is already excelling in few areas of ESG, and going forward plans to improve its ESG performance across all material topics.

Risk management

Types of risks	Description	Mitigation measures
Competition risks	Our products have good pricevalue equation and has a long-term trust of our customers, enabling us to defend our market. Our sales team is close to the ground, quickly picking new developments in the market. We believe we are an agile organization to provide an appropriate response to competitive maneuvers. The market is also large enough that multiple players can have a profitable growth in the branded segment.	Our products have good pricevalue equation and has a long-term trust of our customers, enabling us to defend our market. Our sales team is close to the ground, quickly picking new developments in the market. We believe we are an agile organization to provide an appropriate response to competitive maneuvers. The market is also large enough that multiple players can have a profitable growth in the branded segment.
Commodity price volatility risks	In edible oils, we use hedging instruments to hedge the price risks. Additionally, our sales contracts with our customers act as a natural hedge to the commodity risk.	In edible oils, we use hedging instruments to hedge the price risks. Additionally, our sales contracts with our customers act as a natural hedge to the commodity risk.
Supply chain disruptions	In edible oil business, our long term partnerships with the key suppliers allow us to secure our supplies in disruptive situations. Our co-promoter, Wilmar International, can also help us in securing supplies. In Food business, we procure a good amount of requirement during the harvest season when the supply is abundant.	In edible oil business, our long term partnerships with the key suppliers allow us to secure our supplies in disruptive situations. Our co-promoter, Wilmar International, can also help us in securing supplies. In Food business, we procure a good amount of requirement during the harvest season when the supply is abundant.
Foreign exchange risks	We hedge almost all of our foreign exchange exposure.	We hedge almost all of our foreign exchange exposure.

 

Types of risks	Description	Mitigation measures
Geopolitical and economic risks	The Company has a diverse portfolio of edible oils. Supply side constraints in any edible oil, generally leads to higher demand of other type of edible oils, which we can serve due to our broad portfolio. We maintain strong balance sheet position to fund working capital requirements for a scenario that edible oil prices go up significantly.	The Company has a diverse portfolio of edible oils. Supply side constraints in any edible oil, generally leads to higher demand of other type of edible oils, which we can serve due to our broad portfolio. We maintain strong balance sheet position to fund working capital requirements for a scenario that edible oil prices go up significantly.
Product quality and food safety risks	We have extensive safety measures in place to regularly monitor the quality of our raw material and products at every stage of processing and delivery.	We have extensive safety measures in place to regularly monitor the quality of our raw material and products at every stage of processing and delivery.
Climate change and environmental risks	Company is taking steps to increase sustainability in our procurement, reduce our carbon emissions, improve water conservation and other sustainability practices for the environment.	Company is taking steps to increase sustainability in our procurement, reduce our carbon emissions, improve water conservation and other sustainability practices for the environment.
Technological disruptions	We work with multiple technology partners, including start ups to increase the application of technology in our operations.	We work with multiple technology partners, including start ups to increase the application of technology in our operations.
Human safety risks	Factories are well designed to segregate the risky areas. Regular safety training is imparted to all personnel, risk zones are continuously monitored through installed cameras, at local premise and central tower. Regular review of safety incidents is done by top management, incorporate learnings from risk incidents. Fire-hydration systems are installed in all our premises.	Factories are well designed to segregate the risky areas. Regular safety training is imparted to all personnel, risk zones are continuously monitored through installed cameras, at local premise and central tower. Regular review of safety incidents is done by top management, incorporate learnings from risk incidents. Fire- hydration systems are installed in all our premises.

Human resources

The Company acknowledges that the competence of its talent pool is essential to achieving success. In keeping with this, it equips them with the skills required to adapt to ongoing technological advancements. Throughout the year, the Company conducted comprehensive training initiatives covering various domains, including technical skills, interpersonal skills, operational excellence, general and advanced management, leadership qualities, customer focus, safety, values and ethical standards. As of March 31st, 2024, the Companys employee strength stood at 2,678.

Over the years, the Company has consistently nurtured its workforce through a culture that prioritises enthusiasm, exposure to diverse market conditions, emotional engagement and empowerment. In the last financial year, AWL hired 79 employees on net basis, marking a 3% increase in headcount as compared to the previous financial year.

The Company has also significantly enhanceditsHRtechnologyplatformby adopting automation and digitisation. This has streamlined its processes and enhanced efficiency across various HR functions. This will enable the

Company to leverage technology to optimise workforce management and enhance employee experience.

Internal control systems and their adequacy

The Company maintains robust internal control systems and high-level processes that are commensurate with its size and operational scale. Key aspects of these systems and processes include:

The Company has comprehensive policies and procedures covering significant activities, including financial closure, automated controls and entity-level controls. These policies are regularly tested for effectiveness and adherence as part of the management review process, ensuring effective business operations within a governance framework.

There is a clearly defined delegation of authority within the Company, with specified limits on the power to approve revenue and expenditures. These limits are regularly reviewed and adjusted as necessary, facilitating efficient decision-making in day-to-day operations and strategic planning.

The Company develops detailed business plans for each segment, including annual evaluations, financial and operating plans, and monthly monitoring. This structured approach is integral to the Companys operational procedures across all functions.

The Company leverages an advanced SAP4 HANA system for data capture, accounting, consolidation and management information purposes. Automated controls are integrated into processes to minimise deviations and exceptions, aligning with global best practices.

An established online compliance management system that integrates technology and laws, providing comprehensive coverage of applicable regulations and offering compliance updates for operating units through a management dashboard.

The Companys MA&AS team, comprising qualified accountants and SAP experienced executives, conducts regular audits across functional areas. Reports are provided to the Audit Committee, addressing internal control compliance, operational efficiency, effectiveness, and key process risks.

The MA&AS team follows a risk-based annual internal audit plan approved by the Audit Committee. Internal audit processes are web-enabled and managed through the Audit Management System (AMS), enhancing efficiency and transparency.

The Audit Committee evaluates the execution of the audit plan, internal audit systems sufficiency and efficiency and oversees the implementation of audit recommendations to enhance risk management policies and systems.

Several Board Committees, predominantly composed of

Independent Directors, oversee and govern the effectiveness of internal controls within the corporate governance framework. The Corporate Governance Report provides detailed information about these Committees.

These measures collectively demonstrate the Companys commitment to maintaining effective internal controls, promoting compliance with regulations, and continually enhancing operational efficiency and governance standards across all aspects of its operations.

Cautionary statement

The Management Discussion and AnalysissectionscontaintheCompanys objectives, projections, estimates and expectations may constitute certain statements, which are forward-looking within the meaning of applicable laws and regulations. The statements in this management discussion and analysis report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors.