Adani Wilmar Ltd
NSE:AWL
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
292.35
398.7
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Adani Wilmar Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Adani Wilmar Q4 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Karan Bhuwania from ICICI Securities. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone. It's our pleasure at ICICI to host Q4 FY '24 result conference call of Adani Wilmar. From the management, we have Mr. Angshu Mallick, Chief Executive Officer and Managing Director; Mr. Shrikant Kanhere, Chief Financial Officer; and Mr. Saumin Sheth, Chief Operating Officer.
Now I hand over the call to Mr. Shrikant Kanhere for opening remarks, and then we can open for the Q&A. Thank you. Over to you, sir.
Yes. Thank you, Karan, and very good afternoon to everyone who have joined this call for the Q4 FY '24 of Adani Wilmar. We'll talk about performance in the quarter 4 for the company, and then we'll open the floor for question and answers.
So quick highlights for the FY '24. Company crossed a volume of 6 million metric ton mark in which Food & FMCG crossed 1 million metric tons, which is a remarkable feat, too, for any company to achieve. This 1 million tonne translates into a revenue close to INR 5,000 crores for FY '24, nearly double in 2 years of time. HoReCa segment, which, for a channel rather I would say, which we have started a year back is now INR 400 crore channel.
Kohinoor brand crossed INR 350 crores of business, which we acquired in May '22. Edible Oil branded sales grew at a faster clip at a 15% year-on-year in FY '24. This is something very exciting for us because Edible Oil branded segment in the industry, also growing in a single digit, and we have been also clocking single-digit growth for last couple of years. This time, it is 15% for us. Food & FMCG domestic volumes grew in the range of 40% plus for the financial year '24. We have been seeing a very good turnaround on the alternate channel, which contributed close to INR 2,700 crores of the business.
Branded Exports, which the company has got a huge focus, where we explore edible oil as well as the food products to more than 30 countries across the globe, grew by 72% in FY '24. Distribution remains a focus for us as we move forward. Overall efforts to improve the distribution is resulting into the numbers. Now we reach close to 7.2 lakh direct outlets, with close to 2.1 million overall reach. Overall the go-to-market strategy for rural market to also remain focused for the company. Now we are covering close to 30,000 towns. We do have a target of covering close to 50,000 towns by end of next year.
On supply chain side, we do understand the ESG commitment of the company, and therefore, trying to ship as much as cargo through alternate channels, which is multi-model dispatched through a rail. The 25% of our volumes got dispatched through rail without adding any carbon footprint in the environment. 7.6% cargo dispatched through CNG vehicles.
A quick snapshot on the results. For the quarter 4 FY '24, sales volume grew by 4%. This 4% is overall. However, when we look at segment-wise, the Edible Oil growing, whereas Food also grew by double digit. Industry Essentials [indiscernible] that's why we are seeing this 4% growth for FY '24. The gross profit grew by 10% on a stand-alone basis, and the PAT, of course, grew by 60% as compared to the same quarter last year. On consolidated numbers also, more or less numbers read same. The volumes grew by 3% and PAT grew by 67% versus same quarter last year.
When we look at a full year summary, overall sales volume grew at 11% and gross profit -- and the EBITDA is down by 29%. I think the reason for the same, we all know, it's underperformance that we saw in Q1 and Q2 because of the high price inventory, coupled with the market crash and disalignment of hedges that we saw in H1. And that has impacted, right, from the gross profit to the PAT. The PAT we grew by 54% against INR 607 crores to INR 278 crore on a stand-alone basis.
On a consolidated basis, the volumes grew by 10% and PAT degrew by 75% similar reasons. But in this consolidated, we also have one more reason to add, which is Bangladesh, where we had some struggle last year given the fact that Bangladesh as a country witnessed a couple of not-so-good economic events, including the currency crisis and the government trying to control the prices.
On a profit performance, quarterly, I think we are slowly moving back to the normalized profit which we used to deliver in FY '21, '22 and '23. Whatever we saw in Q1 and Q2 in terms of disalignment of hedges and commodity volatility is now behind us, and we are now delivering the EBITDA and gross profit, which is a standard run rate at which we were running.
Profitability recovered in H2, after the subdued profit in H1 '24. So gross profit for H2 at INR 3,122 crores against INR 3,039 crores of same H2 of last year. EBITDA in H2 '24 is close to INR 863 crores. So that run rate of INR 900 crores EBITDA in half is somewhere we are close to that, as compared to INR 962 crores of EBITDA in H2 of last year.
This time, we had a reclassification of derivative gains and losses, which is in accordance with the accounting practices and been suggested by our auditor. Earlier, these gains were forming part of the material consumed, and this time we have adopted a reclassification where the derivative gains and losses are being regrouped or reclassified as other income or other expenses, as the case may be.
So therefore, we have given this normalized gross profit and normalized EBITDA number, because at the end of the day, we must understand one thing that derivative gain or a mark-to-market gain and loss is a very integral part of our overall scheme of the things. And therefore, looking at it differently will not really give the right picture in terms of the profitability. And therefore, we have to look at a normalized EBITDA after giving the effect of this reclassification.
And therefore, if you look at this, for the quarter, the EBITDA at INR 357 crores against same quarter 4 of '23 of INR 359 crores, more of a flattish EBITDA. And similarly, when we look at a normalized EBITDA for the full year against INR 1,661 crores of last year, we delivered INR 1,135 crores for this year, of course, because of the fund not so good impacting the entire full year of the EBITDA. Similarly, when you look at the gross margin level also against INR 6,000 crores of gross margin which we delivered in FY '23, we delivered a gross margin of INR 5,632 crore.
On business update, highlights, of course, volume grew by 3% and the revenue for the quarter now at INR 13,238 crores, H2 EBITDA of INR 861 crores. Demand remained strong during the quarter, which we saw. And we are hopeful that this demand should remain strong as we enter into a new financial year. We have improved the brand mix, both in Edible Oil and the Food.
And we are also rationalizing high penetration -- rationalization in the high penetration markets, particularly the regional marketing campaigns, incorporating all the local nuances and cultural aspects. We are also launching a specific market-specific campaigns to win the customer in those markets, like we launched Kai Manam campaign in South, promoting an entire range of potent products, including the wheat flour.
In Edible Oil particularly, we recorded 11% year-on-year growth, in which -- with a revenue of INR 10,195 crores. We also saw a very strong growth in sunflower and mustard oil. Mustard being the domestic oil also gives us some kind of benefit in terms of volatility, because they're less volatile. We gained market share in mustard by 180 bps, and now we have 15% market share. The domestic branded sales volume at a faster clip at 13%, while overall, oil grew at 11%. But branded segment grew at 13%, leading to the market gain -- market share gain of 60 bps. Branded Product overall delivered a very strong contribution to the profits in FY '24.
When we look at our Food & FMCG, it grew by 23% year-on-year. For the financial year '24, export restriction has been a drag for the Food. In FY '24, the domestic volume grew in the range of 40%, and that's very encouraging for us because most of the branded products that are getting sold in domestic market for us. Wheat business has gained share in the South India, and we have a very specific focus for this market, which is a very remunerative market.
And we are continuing with various campaigns to see that we keep growing in this market with our distribution reach as well as the marketing campaign. We do understand the fact that leveraging Edible Oil distribution is something which is very important for the Food segment to grow, which we are continuously doing.
The key metrics on the Edible Oil. If you look at the full year, Edible Oil grew by 10%, whereas the branded segment grew at 15%. When we look at quarter, full year quarter, Edible Oil grew at 13%, where our branded segment grew at 12%. So branded growing at double digits against the industry growth of single digit, less than 7%. These are very encouraging story, and that reflecting also in our market share.
If you look at the market share going up from 18.4% to 19%, leaving us strong #1 player in country. Segment-wise EBITDA, Food contributed EBITDA of close to INR 1,146 crores against INR 1,393 of last year. the reasons we know why the EBITDA contribution from Edible Oil is lower than last year. On capacity utilization, we are quite replaced, 60% capacity utilization. So we still have a good amount of headroom available for any kind of growth that we may see in coming years.
Similarly for the Food & FMCG, overall business grew by 17%, whereas domestic business grew by 43%. And similarly, when we look at the quarter, overall business grew by 11%, whereas the domestic business grew by 33%. A very good story on the segment EBITDA. We are consistently improving the volumes also and improving the margin profile also of the Food, and that is what we are saying since beginning that Food once reach a respectable level should start contributing to the overall profitability of the company.
For the financial year '24 food contributed an EBITDA of INR 170 crores on a turnover of INR 5,000 crores, close to 3.5% of EBITDA, which is quite encouraging for us. Atta, which is one of the focus area for us, growing steadily with a market share going up from 5% to 5.6%. Basmati rice overall, including Kohinoor and Fortune, we are flattish as far as the market share is concerned. But we do have a plan to see that how this market share crosses double digit, and we become a strong #3 player in the country.
When we look at our distribution because this is a very important aspect of our business, because without distribution you can't have -- you can't enjoy a pan-India presence of your brand, and this is a very important parameter for our business to look at. Now we have close to 2.1 million outlet reach, in which 7 lakh 20,000 is a direct reach. This direct reach is actually 2.4x when we compare it with March '20 number.
Similarly, rural town coverage, as I said in the earlier slide, that it remains for a focus area for us. We are steadily growing on the rural town. Right now, we are counting close to 30,000 towns, but we do have plans to take this 50,000 tons. The rural saliency remains at 30%, 31%. For us, it is improving. In fact, until last year, it was 30%. This year, it is actually 31% in terms of our overall theme of the [indiscernible].
Alternate channel is something which we have realized that this is a channel which is growing much faster than the general trade, and this is also a most remunerative channel for any brand company. In our case, this channel has contributed now for revenue close to INR 2,700 crores plus of revenue. In this whole alternate channel piece, e-commerce is growing faster than the modern trade. The overall growth of alternate channel is 29%, whereas the e-commerce has grown by 42%.
Similarly, on HoReCa, which is a new channel which we have created close to a year back, now it is 3x, contributing good INR 400 crore of business. On a branded export, which is again a focus area, we have doubled -- more than doubled the sales, it is growing by 72% and now close to INR 200 crores of turnover contributed by this channel. 30-plus countries, where we are exporting all the products on the brand name, Fortune, whether its Edible Oil or whether it's Food products.
As I said in earlier slides, the alternate channel remains a focus area because this channel is growing very fast and also remunerative channel. We have seen our market share is very, very good in this channel. While for example, in Edible Oil, our market share -- overall market share is 19%. But when we look at soyabean and mustart, particularly on sunflower, on alternate channel, our share is anywhere between 15% to 80%.
So there are, for example, in soyabean oil, depending upon market to market, share might be in the range of anywhere between 40 to 80 for mustard, 30 to 70 for atta, and 10 to 20 is building up very fast and was a base on 20%. So this is something which we will keep growing as we move to the next financial year.
On marketing, I will quickly pass on this because these are more of a social media connects which companies -- the company understand the very importance of digital marketing, which is growing very fast nowadays, and it allows a company to connect with the customer directly and it has got a better penetration than any other channel. So company continue to do a lot of digital marketing campaigns on social media, just to see that we get a focus concentration on the customer.
Besides digital marketing, we also did above-the-line ATL activities for Fortune and our Kings brand. Fortune we recently launched DomanTVC to reinforce the premium of the Kohinoor brand and the authenticity of the base, which Kohinoor brings in.
On ESG, this is the last part of my presentation. On ESG, company is very much committed to ESG, and we understand the criticality of this. We are doing a lot of energy and water conservation efforts in various our plant, which is resulting into efficiency in steam, power and water. As I said earlier, 25% of our dispatches are on a multi-model, which is allowing us to run the rail green points. In FY '23, we had 22,000 green points. In '24, we earn close to 28,000 green point.
Solar or renewable energy or a green energy, whichever name you may call it, is also something which we are working very closely. As of the close of March '24, we have close to [ 8 9 ] megawatt of installed capacity of solar against our overall requirement of close to 70-megawatt at a company level. So we are a little more than 10% of electricity is now been on renewables. We are working that how can we take this 19% of renewable energy to 100%. This is something which we are working internally and we should -- we will be coming back on our plans.
Rainwater harvesting, we are continuing with many plans. Tree plantation remains -- on all the plant locations, we are trying to identify the places where we do tree plantation. And of course, sustainable procurement remains focus area, with 90% of the palm oil now is traceable until mill, and we are also extending this sustainable sourcing to our domestic sourcing as well.
On logistics, I'll not spend much time. I have already spoken about how the dispatches are happening, which are able to give us an ESG benefit. This is just a certificate from the railways that since first half FY '22, how much of rail green points which we have owned by dispatching our cargo through rail.
So this is all from my side. The presentation ends here. And now I would certainly ask operator to open the floor for question and answers, and we would be happy to take the questions.
[Operator Instructions] First question is from the line of Abneesh Roy from Nuvama Institutional Equities.
Sorry, the name was not audible. So am I audible?
Yes, yes, very much.
So 2, 3 questions. First is Food & FMCG, this quarter volume growth of 9% and value growth of 16%, are you happy with this? And if you could give more color on how rice has done because there you have done that acquisition, how has that scaled up? Because clearly, this is having much more potential. But 9% growth of volume is lower than your even Edible Oil volume growth, where you're already very strong. Number one.
Yes. Yes. See, 9% volume growth is our overall volume growth in Food & FMCG. But when you look at the domestic business, we have seen 39% growth. In exports, we got impacted because of the non-Basmati rice that is the white rice that we had exported Q4 last year. That was around 50,000 tonnes, which was practically nothing this quarter because it is banned, both brown and white rice. So there, we got impacted. Otherwise, the domestic business, where we have more concentration, we have done 39%.
Going forward, this impact will not come because the impact has already been paid this year. Next year onwards, the export volumes are standardized, so that should not be a problem. And going by your statement that Food & FMCG should grow faster than Oil, surely, we agree. Oil will grow at around 10%, but Food & FMCG quarter-on-quarter, we have been growing at 30%. On Kohinoor, when we bought this brand, the highest that McCormick had done earlier about 38,000 tonnes, and we have done 50,000 tonnes. We have crossed that in the second year itself. May '22, we took over, and we took 68 months to understand the structure and all that. And after that, '23, '24 this year, we have done more than that. So we have crossed what McCormick did at the highest level. And going forward, you are right, Kohinoor should do better. And we are confident about the brand strength.
1 or 2 follow-ups. So one, in Q1, the white rice and broken rice exports won't be an issue?
White rice, we are not going to do because we are not supposed to do. The G2G business has now started. So possibly some business is happening, where we are supposed to buy and sell to the cooperatives NCL or crypco, and they are exporting. So we have started getting some business on that. And this quarter, possibly we'll do some business. But that will not come as an export, because you are not exporter, we will only be domestic procurement and selling to the cryo or NCL.
Okay. So to understand correctly, even in Q1, Food & FMCG could get some impact because of the white rice, broken rice exports, right?
No, no, no. Because last year, only 1 quarter we might have Q1 because the ban came in August. So April, May, June, whatever little bit of rice that we had exported, that might get impacted. To mitigate that the G2G business, what we are doing we'll bring that volume. But instead of export, it will now become domestic.
Right. Now a related question on Kohinoor. You mentioned you have gone beyond the earlier owners' performance from 38,000 tonnes to 50,000 tonnes. I understand your own presence is also there in this segment. So on a combined basis, what's happening? Is there any kind of cannibalization because your own brand is also there? So combined market share, if you could comment where is it now and where do you see in 3 years?
See, combined market share has dropped by around 0.2%. It was 7.9%. It has come down to 7.7%. The major impact has come not in Kohinoor, but in Fortune. Now that was because 1 or 2 festive seasons we had pushed good quantity through the modern trade. That business did not happen. And hence, that quantity was not available during this year. But going forward, we have plans to enlarge our retail base. The retail base of rice today is around 65,000, 70,000, which we want to take to at least 1 lakh 25,000, and we are confident that retail base will give us a lot of benefit.
Second is that our Gohan unit, which is from the IPO investment we did will be ready. Hopefully, the rice part should be ready by November as the season starts. Once that starts, we will get a lot of advantage of having in-house capacity, better -- more efficient milling and better cost optimization. So all that will add value to us going forward in the next Basmati season.
Right. My second and last question is on the hedging losses, which has plagued a lot of your quarters in the last -- around 1 year. Q3 was a positive aberration. But Q4, again, there is hedging losses. So 2 questions here. One is, why it is again recurring? Because what I understand is now, last 6 months at least, the commodities have been in fairly range bound, it's been in a tight band. Given that scenario in some of your key raw material, why should there be hedging loss?
Second is FY '25, what can be different in terms of hedging loss? Because this has been really taking down your profitability in a significant manner.
So Abneesh,, while on a hedging losses, what I would like to comment is that I don't think we should look at hedging loss only as a stand-alone because the second leg of the hedging loss always sits in a gain in the side of either in inventory or the sales which we have in that. So we have to look at overall. Having said that, this quarter, we have not suffered any loss due to the commodity volatility. In fact, we do have some bit of gains sitting in the inventory and some bit of mark-to-market gains sitting in the contract, which will get settled only when these deliveries will happen in next quarter.
So those -- to that extent, in fact, the gains sitting in the inventory and contracts have been carried forward to the next quarter. And therefore, this quarter looks a little bit subdued. And therefore, I always say, when you look at our numbers, quarter may not be really right judge because what happens is sometimes one leg of your hedging gets delivered in 1 quarter, the other leg get delivered in the next quarter. And therefore, when you look at the elongated time period, maybe half or maybe at a full year, you get a better picture of other things.
And therefore, I can confirm this quarter has got no impact on hedging losses per se. I think -- and whatever happened was to us in terms of hedging losses, in terms of disalignment of hedges or inventory -- high price inventory happened only in Q1 and Q2.
So that's fine. But on a full year basis, what is your expectation on margins, both EBITDA margin and profit margins? I'm asking on both because I understand some reclassification has happened. Ultimately, on a full year basis, you need to target that margins, which were happening earlier before all this commodity sharp inflation and then sharp deflation. Now we are in normal times, I hope so. Taking a normal scenario kind of assumption, where do you see your EBITDA and PAT margins for FY '25 given it's a full year number?
Yes. So Abneesh, good question. I think Q2, Q3 and Q4 has shown that we have now gone back to our original run rate on EBITDA as well as the PAT which we were delivering in FY '22 and FY '23. One is this. Second, the prices have been stabilized and we don't see much of volatility coming up in the near future. And whenever prices are stabilized, the brand makes better money. Number three, Food & FMCG proportion in the overall scheme of the things is improving. Today, it is at 17% of volume. 2 years back, it was 12%, 13%. And next year, maybe we are hopeful that it should take 30% of our volume. And Food, as you saw in the presentation also have started giving good EBITDA.
So I would not quote a number per se, but I can certainly confirm that we are on track to deliver the kind of EBITDA and the kind of net margins, which we had shown in FY '22 and '23, which should happen in '25, in line with the volume growth.
[Operator Instructions] The next question is from Aniket Kulkarni from BM SPL Capital.
So my question is specific to mustard oil production. So can you tell me what are the current spreads and what are the demand supply factors that are currently opening the spread? And how do we see the spread improving from hereon?
See mustard oil production is estimated at -- this year, the crop is very good and the harvest is going on. We see a very good crop and the crop is estimated at 112 lakh tonnes, [indiscernible] with 120 lakh tonnes. That is almost around 8%, 10% higher than last year. That is one. Two is that the government also has a lot of, I would say, strategy of increasing their mustard oil production because it's part of the Atmanirbar oilseed mission that the BMO has driven to make countries self-sufficient. So mustard oil will be our focused oil for the government.
And we, as the largest player in mustard, we understand this how we can also increase our volumes and also the margins. Let me tell you, mustad oil gives us very good and stable margin, as Fortune Kathani mustard oil. Number one, we have overall 15% market share. And this market is very fragmented because there are so many brands and so many small manufacturers. So 2%, 3%, 4%, these are the type of things you have. And in that, we are 15%. Margins are very good, and we have started expanding in milling capacity. This year, amongst the IPO project, one 600-tonne crushing per day has been commissioned. So that is now ready for operation in this season.
In Gohana, we are coming up with another 600-tonne plant, which will be ready by, say, another 1 month or so, and at least we can do crushing there. So 1,200 tonnes of crushing should give you additional around 35% of Kachigani honey. So that is the type of oil that we will get pure Kachigani oil and -- which will add to our volume. Now mustard oil, we have been growing at around 19%, 20% per annum. And that is a very healthy growth rate. It is more than refined oil. So consumers are looking at mustard oil, and that has happened. After the COVID, we are seeing that consumers have remained more loyal with unrefined oil or what you call a cold press oil, because colo is a cold pressed oil. So looking forward, we have made good profits in mustard, and we'll continue to do that because of the brand strength.
Okay. So you're saying that production will be substantial this year. So will it have any effect on your pricing? Or does it matter in terms of pricing your products? I mean if the supply is low, do you charge higher prices? Or is it maintained and you take a hit on your numbers?
See, higher production is good. The markets are -- remain stable. And when it remains stable, the brands get a lot of strength because volatility in prices brings a lot of fluctuation in MRP. So for us, the lower prices gives us higher margins. And we would always like higher production because that is better for the country as well as for the brand.
Okay. Okay. And then just one last question is the current production, which has been sufficient for the demand. Or is it higher or lesser? Or I mean is the demand in line with the supply? Or how is that balance in them?
So it is, I think, very good production going on. Earlier, 3 years back, it was only 80 lakh tonnes. And from there, it has gone to 120 lakh tonnes. A lot of area where, in Rajasthan, we have seen people have shifted from -- farmers have shifted from wheat to oilseed because last year, they got good money in mustard oilseed. So that is good in one way. It is encouraging. Harian and Panjawa also started producing more mustard because it gives them good margin.
[Operator Instructions] The next question is from Harit Kapoor from Investec.
Just had 2 or 3 questions on the Food & FMCG business. The first one was on the export side. So how long more do we expect that there will be this impact? And when does the export restriction impact come into the base? Would that be from Q3 onwards?
See, first is that last year, August, the ban was there on white rice and 20% duty on brown rice was put in August. So until August, things were normal. So I think for us, Q3 onwards, our export of rice will show much better performance. That is one. But in spite of that, our Basmati rice exports will grow this year because we have built good inventory. And April to September, we look forward to a good business season for Basmati.
Other than that, our branded Basmati has increased from, say, we were doing roughly around 7,000 tonnes. This year, we expect to do at least 15,000 tonnes or 20,000 tonnes. So branded Basmati, particularly Fortune brand and Tubi brand, we are exporting to more than 30 countries. And there, we are getting consistent growth.
Got it. Got it. And the second thing was on the branded food side. You just mentioned about rice. You did mention in the presentation that you've seen 30% plus kind of Y-o-Y growth for the past 10 quarters. Just wanted to get your sense about what that number is, branded as a percentage of the overall Food & FMCG business today? And how do you see that kind of moving forward? I know you don't kind of track it that way, but just a sense of where that number is at the...
Our Food & FMCG, more than 80% is branded. It is that. Now when I say that, it can be 25-kilo bags also for 2 bags, which goes to our hotels, which also goes to our out-of-home consumption, plus in-home consumption. So these are all fast and branded. So more than 80%.
Got it. And the last thing was on the profitability. So if you look at profitability of the Food & FMCG segment, you've seen it continuously improve compared to last year to this year also. EBIT margin trends are moving up. I understand you had mentioned in the past that it's also a function of scale, it's a function of premiumization that you are going to fully drive new innovation, et cetera. But I just wanted to get your sense about where can you -- what is the trajectory? Is that a 2-, 3-year trajectory in mind in terms of where we are looking to see this scale up from an EBIT margin or an EBITDA margin perspective for the Food & FMCG business?
See, on Food business, of course, as we demonstrated that it is growing not only in the volume, but also in the terms of margins. For us, we do have a plan that it should start delivering very respectable EBITDA margins, which is -- which can be compared to the competition. And therefore, we have said this earlier also, that Food has got more prospects of delivering better gross margin and EBITDA margins as compared to the Edible Oil. Edible Oil, margins can range between 3.5% to 4%, but Food can give double than this.
And therefore, we are moving on this trajectory. And I think we have no reasons to believe that in the next 2 years of time, by the time when we will cross the volume of more than 1.5 million tonnes in Food, we should have that pricing power in hand which can give us a better margin than the Edible Oil.
[Operator Instructions] Next question is from Karan Bhuwania from ICICI Securities.
Firstly, I just wanted to ask your outlook on the Edible Oil segment. Now that no prices have stabilized, what kind of volume growth that you're expecting next year more in terms of the medium term, right? And I think last quarter, you had mentioned that there was some inventory buildup in terms of imports of Edible Oil, which could have some impact on you as well. So if you could provide some update on that end.
On the prices front, surely, the Edible Oil prices are much more stable and it has come off -- until February, we were seeing continuously coming down, but then after February, we saw a little uptrend. But still, nevertheless, it is still much better than what it was last year. Number one. Number two, as far as growth is concerned, we are banking more on the rural growth because we are looking at -- India per capital consumption is 17.5 kilos. But when you look at neighboring countries, they are all at 18, 19. China is at 27, 28-kilo per head.
So going forward, India -- average Indian should consume more edible oil. That will happen. And with prices coming down, we have seen this year, branded Edible Oil grew at 15%. Now next year, we hope to have at least a double-digit figure somewhere in the range of 9%, 10%. If that happens, that should be good because our volumes are quite large, we did around 2.7 million tonnes in that. So another 10% more growth should be a good growth. That is one.
Two, we are banking into rural market because in rural market, there are many states which still consume less than average in India, whether the Bihar, UP, Orissa, parts of [indiscernible], parts of Rajastan, parts of Manda Pradesh, where we have seen that consumption per capita consumption is much lower. And we see a good opportunity to improve our sales there. So that is why the rural focus will be more.
And our inventory unlike last year, we have learned certain things and we have done corrective measures. We have changed our [indiscernible] risk management policy to ensure that we remain tight on inventory, and we have ensured that we are just-in-time managing. And hence, we will not be settled with any great inventory. This a normal inventory that we need to run day-to-day operation.
Okay. Also, if you could just highlight that now that the branded segment is growing faster than the other segment within it Edible Oil, what kind of profit improvement we can see in that segment because of branded growing faster. And lastly, my question will be on -- if you could explain what has happened in the Industry Essentials segment, which led to such a steep decline in volumes. What specifically has happened?
Industry Essentials, I will say that there are 3 components. One is oleo chemicals, another is castor and third is the oil meal. Now oleo chemical business has been doing very well, and we have been growing over 20% year-on-year, which we hope to continue. So there is no problem there. Castor oil, we are world's largest exporter and processor, and plants are running at almost 95%. So we are up at the thing unless we add more capacity. But we are adding capacities in derivatives, which is value-added products and not the base making just castor oil, but we want to get into derivatives and specialty caster products. There, we are investing. So castor business, will grow at 5% also.
What we -- or impacted our volumes were the oil meal export oil meal, we are big exporters of oil meal that in the last quarter did not happen. Because mustard arrivals were delayed and there was rain. So the oil meal was not available on time for exports, and we missed on that. And the prices were not in -- I mean, prices also went up and, globally, consumers were not willing to buy at higher prices. So the oil meal export, particularly rapeseed oil meal was impacted. I hope in Q1 this year, we will recover substantially.
So on your first question, the oil mix between the overall oil basket, I think, yes, of course, the branded portion will be -- will go up more because the dose is not the priority for us. Of course, brand remains priority for us. And brand, if it keeps growing at 8%, 9%, as Mr. Mallick said, with in line with the industry growth. I think the overall -- in the overall scheme of the thing, branded should improve.
I just want to understand what kind of profitability, because you mentioned that branded has much better profitability than unbranded, right? So how what kind of profitability improvement can we expect will land and growing faster in terms of a gross profit per tonne or EBITDA per tonne?
See, on Edible Oil, so for us, the standard run rate of gross profit is anywhere between 11,500 to 12,000 per tonne, and EBITDA margins of close to 3,500 metric tons. So this is what we see that our brand should be able to deliver. Food, of course, is something which is growing and it is still yet to come to its full potential of giving the margins. But that's how the margin profile should move in next financial year given that other things have been settled, no volatility, no kind of the event we had in Q1, Q2 are going to be there. So we are quite hopeful that we will have a good FY '25.
Got it. Lastly, just one [indiscernible] question. Why is there a significant decline in depreciation for this quarter? Any one-offs there?
No, there is no one-off as such, basically, the management keep doing the exercise of revisiting the useful life of the assets. And what has happened is, given the technological advances and the better technology coming in the play as far as Edible Oil and the Food business is concerned, a lot of plants which we have commissioned in the last 5 years, we realized that they have got a better life than what we have estimated at the time of the commissioning. So we have revisited the useful life of such assets, which we had put in, in the last couple of years. And that has actually resulted into or depreciation gain. Otherwise, there is no one-off as such.
Got it, sir. Also, if you could speak about your Bangladesh joint venture, how is economic environment? And you expect some recovery going forward, yes, on that?
See, Bangladesh, of course, was one of the reason why our profitability got dragged in FY '24. We had 2 issues in Bangladesh. One was the acute crunch of foreign exchange availability in the country. In spite of spending money, we were not able to get the money. And given the fact that our business clearly depends on the dollarized borrowing because everything is imported in the country. So we had to face a lot of issues on this and we had to spend a lot of cost, which has impacted the profitability.
Second was even the crisis in the country, and post-COVID impact through which country was going through, the government in Bangladesh was actually trying to control the prices and were not allowing the operators or businesses to increase the prices in line with the international oil prices. So we got stuck on both the price. One prices -- international prices were high, but we have not been able to increase our price in Bangladesh. Second, we also got a bleeding on the FX. That in spite of this, we had to spend of money on getting expect.
So both this problem as we stand today, as we speak today are more or less got resolved. Bangladesh went into elections in January with new -- with a now fresh government coming in place. Most of the macros have been improving in Bangladesh. Availability of FX is now there. Prices have cooled down. Government has also allowed us some free hand on the pricing. And the business is now giving a good numbers in Bangladesh, at least which we saw in the month of March as well as month of April. So FY '25, we do not see any drag on the profitability due to the Bangladesh operations.
That the last question. I would now like to hand the conference back to the management team for closing comments.
Yes, I would like to extend our sincere thanks to everyone who had joined the meeting, taking out their time to listen our story, to listen to our numbers. Do keep tracking our company. In case of any issues, do keep in touch with our IR team and we would be happy to respond to your questions. Thank you very much.
Thank you from our side. And thank you for attending.
Thank you very much. On behalf of ICICI Securities, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.