AWL Agri Business Ltd these days is not keen on being subtle about its status as India’s largest edible oil manufacturer. Instead, it seeks to sell more packaged foods and staple foods to reduce its reliance on oils.
The reason: The manufacturer of the Fortune brand of edible oil and Kohinoor rice is trying to find a shield against frequent price fluctuations in its flagship product line of cooking oils and consumer demand.
Take, for example, the recent conflict in West Asia. Crude oil prices have risen by 65% since the United States and Israel began bombing Iran at the end of February. The prices of cooking oils such as palm, soybean and sunflower oil rose by up to 20%.
Vegetable oils are converted to produce biodiesel, an environmentally friendly alternative to petroleum diesel, during times of conflict. Supply chain disruptions and panic buying by households are driving up costs.
To further upset edible oil makers like AWL Agri Business, Prime Minister Narendra Modi called on households to reduce oil consumption by 10%, citing the benefits it would have on their health and the country’s foreign exchange reserves.
“When crude oil prices rise, demand for biodiesel rises, and less edible oil is available for human consumption. It is a dynamic situation,” says Shrikant Kanheer, Managing Director and CEO, AWL Agri. Angshu Mallick was reappointed from Managing Director and CEO to Executive Vice Chairman of the company in November.
With the situation in West Asia unlikely to improve any time soon, the company plans to diversify its revenue sources. AWL Agri, now controlled by Singapore-based Wilmar International, wants 30% of turnover to come from food and fast-moving consumer goods (FMCG) over the next two to three years, up from 18% now. The country’s imports of cooking oil rose sharply from 13 million tons in 2019-20 (November-October) to 16 million tons in 2024-25. The annual import cost has risen to Rs 1.6 lakh crore in the oil year 2024-25 (November-October), which is almost equivalent to the annual agricultural expenditure.
Analysts do not hold out any hope for a rapid improvement in the edible oil situation even if the West Asian war ends soon. “Prices are likely to depend on how long the war lasts,” says BV Mehta, executive director of the Solvent Extractors Association of India. “It will take about two months after the war ends to reach the pre-war situation.” Prices are expected to remain steady as more vegetable oils are converted to produce biodiesel, he adds, warning that a potential drought could impact oilseed production in India, worsening the situation.
Of India’s consumption of edible oil of about 24 million tonnes, 15 to 16 million tonnes are imported, making companies highly vulnerable to global price fluctuations. India imports about 60% of its edible oil needs. AWL Agri manages approximately 20% of this amount.
When crude oil prices rise, demand for biodiesel rises. As demand for biodiesel increases, the amount of edible oils available for human consumption decreases.
-Shrikant Kanheer,Managing Director and CEO of AWL AGRI
A food basket that is less at risk
AWL Agri is redoubling its efforts in providing food and essential items to future proof itself. “Food is less volatile because it is not dependent on imports,” says Kanher. “India is largely self-reliant for wheat, rice, pulses and sugar, so food is inherently less volatile. The more food we add to the basket, the more we reduce the risks associated with oil.”
AWL Agri’s move to shift its portfolio toward a 30% food share is a strategic necessity driven by lower margins in edible oils, says Devin R. Choksey, chairman and managing director of DRChoksey Finserv, a wealth management and investment advisory firm.
“In the edible oils segment, gross margins range between 12 and 13%, with EBITDA margins often narrowing to 4% to 4.5%,” says Choksi. “In contrast, the branded foods and fast-moving consumer goods (staples, pulses, rice, sugar) segment has gross margins of up to 25% and EBITDA margins between 8%. And 9%.
EBITDA stands for earnings before interest, taxes, depreciation and amortization, and is an indicator of a company’s operating profitability.
“Edible oil is very volatile due to its dependence on global prices and import duties. The food basket provides a more stable revenue stream with a high profit margin,” says Choksi.
Of the company’s revenue of Rs 73,731 crore in FY26, 81% came from edible oil; 8.8% from food and fast-moving consumer goods and 11.5% from industry basics such as oleochemicals. By 2027, AWL aims to achieve revenues worth Rs 10,000 crore from its food and FMCG business, says Kanheer. Its profit fell to Rs 148 crore in FY24 before bouncing back to Rs 1,266 crore in FY25. In FY26, profit fell to Rs 1,045 crore.
Wide opportunity
AWL Agri’s food business still has a long way to go before it achieves healthy profit margins. “Food will remain EBITDA neutral because we are in the investment and growth phase. We are very careful on pricing. However, the business has shifted to EBITDA over the last few quarters,” says Kanher.
The opportunity in food and consumer goods is extensive. While 60% to 65% of the edible oil market in India is now packaged or branded, 90% of the food staple is sold in bulk. The shift from bulk to packaged form represents a major growth opportunity, Kanher says.
“The market that is created every year for packaged staples is large. For a company like AWL, which has brand distribution and manufacturing, it is easy to tap into,” he adds.
The ups and downs in profitability in the past few years have had an impact on the stock. AWL Agri’s profits fell to Rs 148 crore in FY24 before bouncing back to Rs 1,266 crore in FY25.
-Kranthi Pathini,Equity Strategist, Wealthmills Securities
But beating market leaders in categories like rice may not be easy. Basmati rice producer India Gate KRBL Ltd and rice manufacturer Daawat LT Foods are ranked first and second in branded rice respectively. The company is now targeting the export market. “The rice business model is that you have to export,” says Kanher. “Right now, about 30% of our rice business is export-based, and we aim to reach 50%.”
To expand its staple foods portfolio, AWL acquired the basmati rice brands Kohinoor and Charminar from US-based food company McCormick in 2022. “Kohinoor is a premium brand and does not compete directly with Fortune. They both operate in different markets. Kohinoor commands a bigger premium than Fortune and has its own market,” says Kanheer.
To expand its food and FMCG business, AWL Agri is using cash flows from edible oil to support capital expenditure. Acquisitions are also accelerating this transformation. “We are open to acquisitions, especially in the food sector, with a focus on high-margin opportunities,” says Kanherr.
Expansion strategy
The 2025 acquisition of GD Foods, a maker of sauces and condiments, was part of its move to expand the high-margin business.
The company has jumped on the bandwagon of rapid commerce. “We sell 5% to 6% of the volume through express trade,” says Kanherr. “Together, express and e-commerce contribute about 10% to our volumes.” About 30% of its revenue comes from B2B.
AWL launched soap under the Alife brand in 2019 as part of its advanced oleochemicals integration strategy. Today, Alife is a Rs 100-crore brand. Kanher says entering the soap business is part of a strategy to extract everything possible from the value chain. Wilmar’s playbook in India is similar to what the Singapore-based group has achieved in China. Yihai Kerry Arawana Holdings Co, Ltd. (A subsidiary of Wilmar International) is China’s largest edible oil processor and consumer packaged cooking oil. “Wilmar has big plans for India,” says Kanher. “In India, they want to repeat what they did in China. Wilmar is bullish on India. India will be the next consumption story for staples and food. Wilmar has tasted success in China. Its strategy remains the same – to extract everything from the value chain.”
AWL uses its extensive edible oil distribution network to push food and fast-moving consumer goods products. “The company uses its huge oil distribution network (reaching over 2.6 million outlets) to push food products like Kohinoor Rice, Fortune Beans and Soya Nuggets with minimal additional logistics costs,” says Choksi.
Inventory is under pressure
AWL Agri shares have been under pressure since Adani Group decided to exit its 50:50 joint venture with Wilmar in December 2024. “The main catalyst was the exit of Adani Group in late 2024 and early 2025. Wilmar International became the sole promoter. This led to a major corporate rebalancing and large deals that put downward pressure on the stock,” says Choksi.
Margin pressure also affected the stock. “Despite growing revenues, profits have been erratic,” Choksi says. “High inventory costs and fluctuations in palm oil prices mean that even when volumes grow, the bottom line often shrinks.”
AWL Agri stock has fallen 48% since its initial public listing in February 2022 and 25% over the past year. “After the IPO, the stock traded at very high price/earnings multiples,” Choksi says. “As growth in the core oil business slowed, the market revalued the stock toward more realistic multiples for fast-moving consumer goods.”
The ups and downs in profitability in the past few years, too, have had an impact on stocks, says Kranti Bathini, equity strategist at Wealth Mills Securities. High freight rates, volatile edible oil prices and increased packaging costs have also had an impact on AWL Agri, says Kanher. “High inflation has prompted many rural consumers to down-trade or downgrade – shifting from premium branded oil to smaller packages or cheaper unbranded alternatives,” Choksi adds.
While the core edible oil business will continue to provide scale and cash flow, the future, as the company sees it, lies in building a more stable, higher margin and less volatile portfolio. The food business is no longer an experiment. It has become a hedge. The question is how quickly AWL can build it.
@karandhar11
