Adani Wilmar Ltd

NSE:AWL

Ladies and gentlemen, good day, and welcome to the Adani Wilmar Q3 FY '25 Results Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you, and over to you, sir.

Hi, everyone. It's wonderful. Good morning, good afternoon, good evening in the part of the world you are joining this call from. Representing ICICI Securities, it's our absolute pleasure once again to post the results conference call of the company. This time with it's Q3 FY '25. The company is represented today by Angshu Mallick, Chief Executive Officer and Managing Director; Mr. Shrikant Kanhere, Deputy CEO and CFO; Mr. Saumin Sheth, Chief Operating Officer; and the team.

Over to the management for the opening remarks, post which, we'll open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Manoj, and very warm welcome and good afternoon to everyone who joined this call. As a ritual, what we will do is we'll take you through a brief presentation on the performance of the company for the quarter 3. The presentation is separately uploaded on the exchange, so you can also take your copies separately and go through the presentation. For that company, we will take you through the presentation.

We saw one of the best quarter since inception of the company, posting consolidated revenue quarter at INR 16,859 crores, with an underlying volume growth of 5%, EBITDA of INR 792 crores and a PAT of INR 411 crores. This translates into 31% year-on-year growth in revenue, 57% EBITDA growth and more than 100% growth in PAT as compared to the same quarter last year.

On the 9 months ended 31st December '24, revenue at INR 45,488 crores, EBITDA of INR 2,033 crores and PAT of INR 1,035 crores grew by 20% and 161% in terms of revenue and EBITDA. Whereas on the PAT, it is complete,turnaround from a loss of INR 9 crores to the profit of INR 1,035 crores as compared to the same period last year.

We are also been able to demonstrate improvement in important metrics in the case of broad wins and EBITDA over the past quarters, primarily led by Edible Oil business, as the food business continues to remain in investment phase and more or less an EBITDA neutral given that it is still at a growth stage.

Stand-alone numbers are no different on consolidated ones, with revenue for the quarter at INR 16,491 crores, EBITDA at INR 782 crores and PAT at INR 409 crores remains the best performance for the company since inception. Similarly, for the 9 months ended 31st December '24, we delivered revenue of INR 44,235 crores, with an EBITDA of INR 2,022 crores, PAT of INR 1,059 crores, translating into growth similar to consolidated numbers.

For tonne metrics on gross margin and EBITDA remained similar to the trend we witnessed at the [ aggregated ] numbers. Normalized gross margins and EBITDA for the past 5 quarters are consistently improving. Q1 and Q2 of the last year, as we said earlier also, was an aberration due to hedge disalignment that edible industry witnessed last year. Barring these 2 quarters and, in particular, last 5 quarters margin structure has shown consistent improvement.

Quarterly trend on important metrics for the gross margins and EBITDA are more or less range bound, except Q1 and Q2 of last year. EBITDA margins have -- EBITDA margins about INR 3,500 level in any quarter are suggestive of a commodity cycle gain that company has been able to [indiscernible]. EBITDA per tonnes of INR 4,956 for this quarter is also suggestive of the same. This quarter, we saw gains on account of favorable positions and breakup inventory gains.

On segment basis, Edible Oil, Food & FMCG registered healthy volume growth, up 4% and 23% for the quarter, and 11% and 32% for the 9 months ended 31st December '24. Industry Essential segment degrew on volumes by 3% and 9% for the quarter and 9 months period, respectively. Degrowth in Industry Essential segment is primarily due to lower edible oils business, which is more of a parity driven business. We are a constituent of Industry Essential business, oleochemical, continues to grow volume in double digit and with a healthy margins.

On Mundra, Edible Oil registered segment profit of INR 571 crores and INR 1,342 crores per tonnes in the 9 months ended, which is one of the best for the segment. Industry Essentials delivered a profit of INR 82 crores and INR 165 crores for the quarter and 9 months, primarily driven by oloe and castor business. Food & FMCG delivered a segment loss of INR 46 crores and [ INR 20 crores ] for the quarter and 9 months ended 31st December '24. This is primarily on account of loss in the inventory due to downward correction in the market. Any positive correction in the market from here will improve this number.

Other than rice, all other food business, such as wheat flour, Besan, pulses, soya nuggets and sun business remained a bit positive. Overall Food & FMCG business more or less remained EBITDA neutral for the quarter and the 9 months ended December '24. The EBITDA performance on all business segments for last 4 years shows a consistent improvement. In Edible Oil has increased from INR 1,532 in FY '22 to INR 2,375 crores in [ FY '24 ] 12 months.

In our mature business of Edible Oil, we are generating a return on capital employed of close to 22% on the back of high turn of fixed assets. Food business, which comprises several product categories, is currently in an investment phase and we target 20% to 25% of [indiscernible] in this segment as well. Our soya nuggets and besan has already reached decent ROCE level. On overall basis, the company is delivering an ROCE of close to 13% on trailing 12-month basis.

This is how the ROCE and the capital employed figure as far as the last 3-year trend is concerned, Edible Oil with 22% and Industry Essentials at 10% giving last 12-month ROCE of 13%. We are consistently investing in Food business. The fixed asset investment in the Food has gone up from INR 482 crores in March '22 to INR 1,328 crores as far as December '24. And similarly, the net working capital in the Food business has also gone up from INR 393 crores in March 22 to INR 1,461 crores in December '24.

And this is also reflective of the fact that the Food business is close to INR 6,000 crores plus when we look at a trailing 12-month of date.

On a market context, overall market sentiments in Edible Oil are bullish during the quarter. Prices of all major 3 oils, soya, crude and palm remain elevated as compared to the last quarter. Industry met some downward correction in the prices in the later part of December, but still prices remained higher as compared to the past quarters, primarily due to duty imposed by the government in the month of September '24.

Throughout the quarter, palm remained [ higher ] than sun and soya, which is a complete departure from earlier trends. We have sun and soya always used to command a premium over palm oil. This is quite concerning as palm remains one of the highest consumer oil in India, and therefore, any such trend will have a risk of inflation and trajectory on the food items, including the demand for the edible oil.

In both edible oils and wheat flour industry has been showing stable growth in low single digit for last 5 quarters. In wheat flour, rural had been growing in strong double digits due to consumer shift in packaged wheat flour. Whereas in edible oil for the quarter 3, the industry grew by 5%, whereas rural grew by 8%. So overall, what we see is not a very encouraging demand from an industry perspective, whether in the case of edible oil as well as wheat flour.

The company has been able to register a handsome both on the revenue and margins for the quarter as well as the 9 months ended December '24. One of the highlight of course in this entire performance in the alternate channel comprising of MFS, e-comm and q-comm that is growing faster than the general trade attributes, a sizable business with a trailing 12 months revenue in excess of INR 3,000 crores. Similarly, HoReCa channel, which we started a couple of years back, continues to grow for us and is now contributing close to INR 600 crores of business basis 12 months.

In Edible Oil business, in spite of high prices, we could register a single-digit volume growth led by soya, sun and mustard oil. This volume growth would have been in single-digit had the palm -- in high single-digit had palm prices remained below the soya and sun. We witnessed cutting consumption by consumer due to high pricing. As a result, consumer PAT in the industry grew only by [ 5% ] [indiscernible] source as well as Nielsen. Our regionalization strategy in Edible Oil continues advanced region-specific SKUs to cater to the local demand.

In the Food & FMCG business, we delivered yet another quarter of a sizable volume growth of 23%. The growth came on the back of all the food products showing sizably. On margins, the segment support loss due to invention loss in rice. We continue to consolidate our market share in most of the food categories.

ESG continues to be integral part of our entire ecosystem. Flagship CSR program, Fortune SuPoshan, that aim curb malnutrition among the children, adults and girls, and women in reproductive age, has won prestigious Indian CSR Award 2024 in the category of Best Rural Children's Healthcare Initiative of the Year 2024. AWL's Mundra and Hazira plant received gold metal, silver medal, respectively, at the 10th Edition of India Green Manufacturing Challenge organized International Research Institute for Manufacturing. Our Vidisha factory, which manufactures soya nuggets and soya value-added products earned a safety award for -- at the Global Safety Summit 2024.

On Edible Oil, I think we have been steadily contributing to the volume growth quarter after quarter, which is reflective on the stand-alone EBITDA, which is we are delivering in this segment. The capacity utilization in this segment continues to need to be [indiscernible] welcoming reasonably, which is suggestive of the fact that any future growth can be accommodated easily.

On the market share, we had a flattish market share. We actually dropped basis point on overall market from 18.3% to 18.1%. But the encouraging part of this entire story on market share is that Fortune market share actually has gained. Similarly, we have gained market share in particularly in the case of soya bean and sunflower.

As far as the Food is concerned, again, we have enough capacities in place. The utilization of capacities at 53%. Whereas, market story for wheat looks good. We have gained market share gone up from 5.3% to 5.8% now. Basmati rice market share has come down from 7.4% to 6.1%. And clearly, there are work in progress, particularly in branded Basmati rice, which company is working on. And we have put in place a lot of interventions in this particular business. And as we go forward in all quarters, we should be able to see improvement in market share as far as the Basmati rice is concerned.

On distribution front, we continue to work on growing it and now have a direct coverage of more than 8 lakhs [indiscernible] and total reach of more than 2.1 million outlets. In terms of rural distribution expansion, we now reach more than 40,000 towns and have -- which have got a population of less than 100,000. And rural sales in our business remains at a close to 30% of our overall business.

Alternate channel continues to continues to be a good story for the company. This channel grew a healthy 16% during the quarter, in which e-com and q-comm grew by 41% and 81%, which is very encouraging for us. We are working closely with all the e-com players to see that this growth and market share is sustained in future. Because as we go forward, this is the channel which is going to cater to most of the demand coming in from the consumers who are demanding packaged staple food.

One of our IPO project at Gohana and bit is going to be one of the biggest integrated food facility for the company is more or less completed. This is an aerial of the facility, which shows how the big this facility is. We have commenced the production of rice to rise and mustard oil facility have achieved first commercial dispatch from this factory in January '25. This integrated facility is expected to be operational by end of first quarter of next financial year.

The integrated facility houses production lines of paddy to rice, rice to rice, wheat flour, refined wheat flour, ricebran oil, mustard oil and cottonseed oil. This will be built with kind of overall capital outlay of close to INR 1,300 crores, which is majorly funded through an IPO funding.

We continue to do a lot of marketing campaigns, whether it is on social media or retail activities or TV activities, and these are some of the glimpses of our engagement with the consumer on various mediums through which we connect to the consumers.

So the key takeaways -- finally, this is the final slide from my side. First quarter, of course, for the company since inception, we have been delivering consistent performance for last several quarters and have best-ever operating EBITDA of INR 2,390 crores trailing 12-month basis. Food & FMCG revenue of INR 6,000-plus in the last 12 months, and therefore, our target of reaching to INR 10,000 crores by end of FY '27 seems to be very much achievable.

We have big lever for growth by increasing our distribution, and we remain very bullish on emerging channels like e-commerce, branded exports and HoReCa to fuel the kind of growth that company is looking at for commerce. And on ESG, as I said, ESG remains integral part of our culture. We participate in CDP and DJSI ratings during the year and are fully committed for a continuous improvement in scores.

This concludes my presentation, and we can now open the floor for the Q&A. We would be happy to answer the questions. Over to you.

[Operator Instructions] The first question comes from the line of Abneesh Roy from Nuvama.

Congrats on the profits. My first question is on the Food business. So you have called down growth in soya nuggets apart from the other food segment. There, we have seen incremental competition from Marico Saffola, and they also claim to be doing well. Could you talk about the competitive intensity here, pricing pressure, et cetera? And if you could also talk about Satu because that clearly seems to be a focus area by customers in terms of more protein-specific products. So long term, how do you see the organized market share within satu because it's largely an currently?

On soya nuggets, let me tell you that after COVID, we have seen the higher sales of plant protein or wedge protein. Now so soya nugget have 52% protein and doctors have recommended that, particularly for the vegetarian people. Plus, I have seen that non-vegetarian people also, once in a week, they have accepted nuggets as integral part of the food.

Now we have we have understood this business. And in terms of technology, we went ahead with putting [indiscernible] technology. So all our plants are ringer plants from U.S. We are the world's best manufacturers of such products. And we have that in Vidisha and Hazira, and now we have started Napo. So we are possibly the only people to have 3 locations of nugget. And as you know, these are light products. So cost of freight is very, very important. And we had logistic advantage because we have soya been planting with Nakpur, Vidisha, and Holi also, we have our own packing station. So that helps us.

Logistically, we are better off. There is competition, but then that's okay. Everybody is trying to enlarge the market, and we see great opportunity. So feel very good to have healthy competition. No problem on that. Pricing trend, we are -- this is a very stable product and doesn't need too much of pricing except once in a while, you give some consumer scheme or trade promotion scheme. But by and large, it's a steady market. Sales 60%, 65% sale comes from March to October; and 30%, 35% come the winder. That is our very clearly lead in the market.

On Satu, let me tell you, Satu is not [indiscernible] which normally goes during -- in Eastern India and Eastern UP onwards, we are charged. So there, we have satu. We have our plant -- we supply from Delhi. But going forward, we can surely make in Haldia, we have a plant in Haldia. So satu is one product, which also is seasonal a bit. In the summer, it does very well. Winter, it reduces. So we are pushing it along the base products.

So from a competition perspective in soya from Saffola, you're not seeing anything disruptive?

See, first of all, they don't have their own manufacturing base. They are getting it produced at some other factories. We see advantage for us that we have our own setup. We have -- believe can expand if required, and that is what we have done. So we are the largest soya nugget producers now in India at 6,000 tonnes per month. So we have enough capacity to provide to the market.

Sure. That's very useful. My second question is on the branded rice weak performance. So you mentioned inventory losses there and supply chain issues. So if you could address here because -- for the acquisition of the #3 brand there, it has been a bit challenging post that. So here, could you have done something different to prevent the inventory losses? Or that's part of the business, nothing much could have been done?

But from a structural perspective, my question is, how do you start getting back the market share? Because general M&As in India FMCG, we have seen lot of them ultimately turned out to be very challenging. So if you could talk about Basmati market share, the journey in the next 2 to 3 years, how do you see that?

See, in Basmati rice, unlike big players, we did not have our own plant. We had only plant in [indiscernible] Punjab and in Haryana, which is the main area for Basmati. We used to work under that arrangement. Now these toll arrangements have a limitation to the processing capabilities as well as capacities.

Now we have been waiting for our Gohana plant. And because we were doing in the tolling, obviously, there was a lot of stocks we moved from one place to another to consolidate bases. But now that Gohana plant has just started operations. The most important part is that in Gohana we have almost 6 tonnes paddy per day and 500 tonnes of rice per day capacity, which is very big enough for us to use it. And we have very large storage capacities there. So it will be easy for us to have a consolidated production base as well as dispatch.

Once that happens on the logistic issues, the fill rate and the challenges of yield or what all that gets, to a large extent, [indiscernible] and then we can concentrate building the brand and distribution. And you will agree with me that e-commerce, modern trade alternate channel, is 50% of the branded Basmati rice consumption. So unless you are good in fill rate, unless you are good in supply chain for these products, the alternate channel doesn't do well. Now that with Gohana coming up, our supply chain will become much more stronger, and we are confident that we will get back the share. I'm sure 2 quarters or 3 quarters, you will find that our Basmati shares have gone.

Sure. Last quick question, that's my last question. On the palm oil, what will be your understanding in terms of pricing because it went up sharply by almost 30% and from top has corrected 10%, 15%. So what will be your understanding of pricing? No one can call it, I understand it's a commodity, but what will be your understanding? And on the 20% duty which [indiscernible], is there any expectation that in the near term, this could get corrected? Any discussions on that?

Saumin here. So on the pricing, it has become a very political product, both for Indonesia and Malaysia. [indiscernible] is important than the food demand. Yes, Angshu already mentioned this is actually were higher by 15% to 20% compared to the other soft oils. Now market is correcting, the spread is reducing and this [indiscernible] of Indonesia, whether it is be 40 or eventually, it will only remain to be 35 before the prices will also fluctuate in line with the policy.

On the duty, it's anybody's guess. Government, after a long way, increase the duty to support the Indian farmer. Unfortunately, today also beans are trading way below the MSP. So I mean, you can call it 50-50, whether they can reduce the duty or not. Their priority probably is farmers and the consumers.

The next question comes from the line of Harit Kapoor from Investec.

Just a few questions on...

Sorry to interrupt, sir. Please use your handset, your audio slightly muffled.

Yes, is this better?

Yes, sir.

Yes. So just a few questions on the numbers. I just wanted to -- if you could just quantify the employee cost impact on account of the ESOP for the quarter? And just a sense of how this works, is it a onetime in this quarter? Or -- and what is the future impact on the employee expense, if you could just talk on that?

Yes. So I can understand from where you're coming from because the employee costs have gone up quite substantially in this quarter. But this impact is not exactly on the ESOP, because ESOP we declared in the month of December, so the real India ESOP may start coming in from the next year, not from this year.

So right now, the in employee costs, which you see, which has gone up as compared to the year, and of course, that on the 9 months also, is basically because of the onetime incentive provision that we made, given the fact that only this year is going to be -- going to declare one of the best results. And therefore, our policy provides for an additional incentive, which have been provided on a proportionate basis for this 9 months. So that's reason why the employee cost has gone up. And this is, of course, only a onetime. And then for the modeling, I don't think you can consider it for the next year and next quarter.

Got it. Got it. And secondly, even on the other expenses bit, if you look at sequential numbers, they're quite [indiscernible]. I understand that this is INR 70-odd crores of MTM there on the derivative side. I mean adjusting for that, it looks slightly on the high. So I just wanted to get your sense, is it what to do with Gohana rationalization? Or what would explain that kind of sharp 30-plus percent growth?

No, it's not basically anything to do with the Gohana rationalization. Because Gohana, as I said, we just started on commercial go from the complex. I think the entire complex will get commissioned only in the next quarter -- sorry, first quarter of the next financial year. So this expense and hike is -- again, it's kind of onetime where the hike is due to -- one is, of course, derivative impact, [indiscernible] impact. And both these impacts actually somehow get recovered from the -- either from the [indiscernible] either sitting in the inventory gain. So there's a modifying impact of this spend, which you are seeing more.

But that -- there is a onetime some marketing provisions have been taken. So if you normalize those, these expenses have actually gone up in tandem with the BIM growth.

Okay. Understood. Understood. And how I look at -- what do I look at the inventory which sits out of your -- in your gross profit, either for the full -- for the 9 months or for the quarter? What do you think would a more normalized level? And the second point is with the prices having corrected a bit in Jan, do we expect some of these inventory led gains slightly to reverse -- not reverse, but be a little bit of a reduction there in quarter 4? How do I kind of read this and build out?

Yes, I would not call it an inventory gain, rather, I would say this quarter numbers do have onetime impact of the commodity cycle, rather, I would say. When I say commodity cycle, it includes both inventory as well as better positions which have turned positive for us. And therefore, numbers for this quarter are more or less consistent with what we have been declaring for last couple of quarters, one-off inventory -- one-off commodity cycle gain.

So our normalized EBITDA, as we are saying earlier also, is anywhere in the range of INR 3,500 crores to INR 3,600 crores. Anything above that is suggestive of the fact that we have witnessed a commodity cycle gain in that particular quarter or period, which may be 6 months or 9 months.

Very clear. Very clear. And just on the direct reach side, if you look at -- if I just look at a period of time or a quarter where you've seen the highest kind of move from quarter-to-quarter in direct reach, I think Q3 or December quarter is one of the -- the addition is almost 50,000, which is a pretty substantive number. Just wanted to get your thoughts on what is the kind of 3-year, 2-year, 3-year target here? We're already at 8.2 lakh outlets. How do we think about a 2-year, 3-year kind of target on direct reach expansion?

We have taken a target to exit FY '27 at 1 million direct coverage.

Got it. Got it.

So we have that much distance to travel. And some of the quarters, it is fast. Some of the quarters, it will be too slow. Say Q1, we will find it is a little slower out of the summer time and heat and all that. But then winter time can get -- work timings are much bigger and people travel more, people work more, so we get more legs on it.

Got it. Got it, sir. And no portfolio level on the Edible Oil side, if you could just give us what has done well, what has been weak? I mean mix between, say, palm, soya, the key oils for you, where have you seen strength in growth, where we've seen a little bit of weakness? Branded versus unbranded, a little bit more color on that in this quarter given that the price fluctuation has been quite material.

Okay. To sum up the edible business, you see in-home and out-of-home consumption. So if you look at in-home consumption, it is by and large driven by 2 main oils, that is sunflower oil and soyabean oil, and the domestic its mustard. These 3 oil forms actually the core of the household consumption. Every house will have one refined oil and one unrefined oil or [indiscernible] oil. So mustard is normally consumed in east and north part of Central India, and groundnut will be in a little bit of Western India and Southern India.

Now cottonseed oil is also a good oil. 1 million tonnes, 1.5 million tonnes, but consumer tax are in the 0.5 million tonnes, that is in the western part of India. That is Gujarat, a little bit of Maharashtra, and a little bit of Madhya Pradesh. These oils from the main core household consumption. Now when you go to out-of-home consumption, palm is a big out-of-home consumption, because normally, the restaurants and all that, they prefer palm. Baking industry, frying industry and snack food industries prefer palm because that gives them a better share life and nutrients.

So palm prices going up, obviously. They -- some of them shifted to ricegrain oil, some of it get to cottonseed oil, because these oils were as competitive as palm or more cheaper than palm. But then once the palm will be cheaper, they will always switch over to palm. Out-of-home consumption is 30%, 35%, and 65% is in-home consumption. So that is how it is actually divided.

Since we have a basket of oil, that is we have groundnut oil, we have cottonseed oil, so we have that advantage of seasonality, location advantage and price advantage. Anything that is cheaper, we are always there. So we are there in gran oil also. So that's our advantage. So that is how the business of Edible Oil is.

Okay. Okay. And on the last question, I come back, was on the Food & FMCG side. So say, if I had to strip out the losses from the inventory, what do you think would have been more a normalized number for Food & FMCG, if you should hazard a guess?

So the inventory loss right saying in this number, which is again this have taken given the fact that market has corrected downwards, is INR 250 crores. So if you normalize that, I think we have been consistently declaring the EBIT of Food positive. So we would have been in that range, more or less with what we have been showing in the past couple of quarters.

And last question was on rural. So it's a very interesting slide on industry growth trends, retail consumption, and rural volumes in the last 3 quarters in Edible Oil actually have accelerated. And even wheat flour, you've seen a sharp increase. As you mentioned, this is all conversion led. What's your view on what's happening in rural markets? Is it slightly better incomes over the last 3 quarters, which are driving this conversion to an organized category growth? Just your own kind of hypothesis of what's happening here.

Rural was almost stagnant between last, say, December to this year, June, July. Only after good monsoons here, we saw the route consumption pick up. And good consumption, good response we saw only after September. So September onwards until now also we are finding. Rural is to a large extended it back in action. Urban stress continues, and we can see that urban consumption is stretched.

And second, inflation is hitting somewhere both the rural and the urban. In rural, it has not been [indiscernible], but in urban we can see that very, very clearl? So if you ask me, rural has started coming back in terms of demand and all that. That food is doing well, and we see small pack demand is increasing 1 kilo, 2-kilo packs, 0.5 kilo besan. Nuggets also doing well in rural market. Sugar is doing well, 5 kilo, 1 kilo. So rural, overall, has started giving that indication coming back to action. More will depend on how government intensifies the rural.

The next question comes from the line of Latika Chopra with JPMorgan.

A couple of questions. Let me start with Edible Oil. You had a volume growth of 4%. You called out that the branded sales declined low single digits. And it seems the demand environment, as we explained, and the price differential, palm over to the other oils, sounded a bit cautious. Now with the palm oil price index kind of moderating, how should one think about overall volume growth for edible oils? And also, how do you go about the profitability volume growth sustaining at mid-high single-digit levels over the next couple of years, given your distribution initiatives?

See the edible oil demand. So the industry always used to grow in a range of 5%, 6%. And so while palm remains one of the highest used oil in India, and therefore, correction in palm oil downward, of course, will give some boost to the demand in quarters. Our expectation, to answer your question straight, the demand for the packaged edible oil should -- I mean, the industry should keep growing within the range of 6% to 7%. And our growth, of course, we feel that we should be able to grow at 8%, 9% kind of number. So that share keeps consolidating from here.

All right. And the second thing was on realizations. This quarter, there was a massive increase because of the increase in palm oil prices. Do you -- just trying to think in terms of the pace at which you change prices depending on your raw material sources. Do you anticipate these firm levels to stay, at least in the current quarter, probably coming in line with the market price in the next quarter? Just trying to think through what is the lag with which the pricing will follow in your numbers?

See the palm prices have moderated in the last week of September, but it is fluctuating. So like today, the complex was again because of some geopolitical factors, and then tomorrow, it may go down. But what our expectation is that the level which we have seen in the month of January will continue to play, at least for this quarter. Having said that, it's very difficult to comment how it will fare in first quarter of this year. But at least for this quarter, the prices should remain at what level which we are looking at. So from a [indiscernible] perspective, more or less, as what we have seen in January.

All right. And can I then check on profitability metrics? [indiscernible] metric ton, because considering the pricing fluctuates, and I'm sure you want to maintain a certain threshold of profitability on per unit basis. This quarter, it is coming to about 5,800-odd level for metric EBIT, I'm just talking about edible oils. And on a 9-month basis, this number is roughly 4,500. When you gave a number of 3,500 to 3,700, is this the number you were referencing to? I'm just a little confused so I thought I'll just clarify. Is that the more nominal range of profit per metric ton for edible oil?

No, no, no. So when I give you a range of 3,500, 3,600, this is blended at a company level, which includes all the business segments particularly. And therefore, Edible Oil, it could be certainly different than 3,500, 3,600.

And what would be the range be, sir, for Edible Oil? Because even in this quarter, you had about [ 3,760].

See, for Edible Oil, of course, it would be a little bit higher than because, as we said, Food remains EBITDA neutral for us and EBIT neutral for us. As well as the Industry Essentials, it's more of a downstream of edible oil only. So of course, the Edible Oil EBITDA is a little more than INR 3,500. It would be in the range of INR 3,750 to INR 3,800, because that's how, when you look at a blended level, you get an EBITDA of 3,000 -- normalized EBITDA of INR 3,500 levels at a company level.

So this is EBITDA you're talking about? I was going to EBIT.

Yes, it's on EBITDA.

Okay. EBITDA. Fair enough. The other question I had was on Food & FMCG. Any broad thoughts on -- with this new capacity coming up, how should we think about your volume growth aspiration? And also, any flavor on medium-term margin outlook for aspirations that you have?

See, we have said earlier that Food & FMCG, we wish to continue at an average growth rate of 20% plus. Now looking at that goal, we need to add capacities which are surely world-class and can give best products at the most efficient processing process. So we are investing and these are integrated plants where we have multiproduct. So that helps us in buying, processing and supply. That is one.

Two is that these capacities will surely add -- Gohana at it -- when it runs full, and even as we take 80%, 85% capacity, it should give us a volume around 6 lakhs 25,000 tonnes per annum, food and oil put together, where food will be made, oil will be around 200,000 tonnes. So we expect Gohana to add -- help us in enhancing volume, reduce our cost as efficiencies will -- or in the integrated operations.

Third is that because we will have integrated plant, our dispatch delivery, all the cost to our distributors, will become cheaper. And all those benefits will surely be seen in our performance.

Sure. And can I just take one thing. When you look at the pricing for your Food & FMCG products and you benchmark it against whoever the competitor is in each of the categories, and I'm sure there will be variations on a state-wise basis, city basis. Has differential reduced over time as you've built in more efficiency?

I would say, you take an example of nuggets, that is one of the earlier FMCG & Food product that we started, and we had only one national competitor which you are aware of. Now obviously, when you compare with that competition, you keep the prices lower and you start seeing your main competitor and then work around it. Slowly that happened. But as we progressed, our products were surely better in terms of technology, and we knew that we can give a better product with better distribution. We were slowly getting into higher pricing. And today, we are purely priced equal. Many places, we price it higher than the nearest competitor. So that happens.

Secondly, based on -- we don't have a national plan. So obviously, when you look at Delhi, you have a competitor, so you price it with that competitor. Or in Bengal, you as a competitor, you -- but rest of the place, where there is nobody to compete with, we fall out and we price better, And because we are a leader there. So whether it is the [indiscernible], all these markets, we are the leaders and we price it basis the brand premium.

Sure. And last one on this, Mr. Mallick, was when you look at Food & FMCG, how do you think about further additions to your portfolio? Would you want to do [indiscernible] at scale or not? Or you would like to focus on scaling up market shares and wheat, rice, and some of the other broader big categories that you're already in?

See, when do you talk of [indiscernible], we have we know that Chandar or China is almost 50% of India's consumption, almost 10 million tonnes is the normal domestic production. So we have put 3 new plants, 240 metric tons per day in Napo, Nimac and Karin, Ahmedabad, out of [indiscernible]. These are state-of-art nut processing plants. And with that, we will possibly be the largest [indiscernible] processors in the country. And we are matching based on with that 150 tonnes per day in each of the units.

So today, we have 4 such [indiscernible] in the country. So that becomes important for us because whatever there is coming out, almost 5,000 tonnes we have, we're selling per month. So we will have to sell [indiscernible] in brand or in consumer tax. So that way, we are progressing. Rice, we are putting up such a large unit. Obviously, we are thinking of improving and increasing our base, both domestic and exports. Atta, we are putting big plants. And next year would plan to have a bigger CapExes.

So wheat flour, we want to be reasonably large player in this category. So in each of the category that we are going, we want to be in the top early, and maybe 1 and 2 number position for each of these.

Understood. And I think I asked this earlier, but any margin aspirations in Food & FMCG, EBIT margin aspiration or anything you would like to share over the medium term?

No, I think this is what we have been saying for some time. I think Food will remain in the investment or a growth stage, rather, I would say, until FY '28. And therefore, the EBITDA margins for the Food, ideally should only start growing after FY '28. But having said that, it's not that we would certainly not want this to grow. But yes, until and unless we get to the level of market share and the volume share that we have envisaged, I think this will remain an EBITDA neutral.

But as we go forward, post FY '28, certainly we have market discovered benchmarks available for rice and wheat flour and besan. I think we would certainly want to go to those levels. For example, in rice, we have marketers who have been able to showcase our gross wins of close to 25%, EBITDA up 10%. Similarly, in wheat flour, since we are the biggest player in the country, as per our estimate, making an EBITDA margins of close to 6% to 7%. But for us, it is a story of next 3 to 4 years to reach to that level.

[Operator Instructions] The next question is from the line of Ashok Shah from Elaine Family Office.

Sir, do we have any thoughts to tie up with the farmers to Gumtree in India as the Wilmar a leader in gulf?

Yes, Mr. Sheth.

No, as of now, we do not have any palm plantation in India.

So we majorly procure palm from the -- our [indiscernible] or the international where we grow the palm tree?

We are procuring all the palm from Malaysia, Indonesia and other Southeast Asian countries, mainly from [indiscernible] and also from other [indiscernible] palm players.

And how much we consume palm oil to make nuggets and any other products?

Nuggets, see, these are different raw materials all together. Nuggets is actually non-GM soya beans and its derivative. And palm is mainly for the edible oil and the other value-added specialty products.

Ladies and gentlemen, that's the last question for today. I will now hand the conference over to the management for closing comments.

Yes. So thank you very much, everyone, for joining the call, taking out time and listening to us today. Keep connected with us. And thank you again. We wish everyone a very good evening, and thank you.

Thank you all for attending. Thank you.

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.