adani wilmar ltd Management discussions

Industry context Global economy

The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

Indian economy

Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth was 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation.

(Source: IMF, World Bank)

Growth of the Indian economy
	FY 20	FY 21	FY 22	FY 23
Real GDP growth(%)	3.7	-6.6	8.7	7.2
Growth of the Indian economy quarter by quarter, FY 2022-23
	Q1FY 23	Q2FY 23	Q3FY 23	Q4FY 23
Real GDP growth (%)	13.1	6.3	4.4	6.1

(Source: Budget FY 2023-24; Economy Projections, RBI projections)

According to the India Meteorological Department, the year 2022 delivered 8% higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat harvest was expected to fall to around 102 Mn Metric Tonnes (MMT) in FY 2022-23 from 107 MMT in the preceding year. Rice production at 132 Mn Metric Tonnes (MMT) was almost at par with the previous year. Pulses acreage grew to 31 Mn hectares from 28 Mn hectares. Due to a renewed focus, oilseeds area increased 7.31% from 102.36 Lakh hectares in FY 2021-22 to 109.84 Lakh hectares in FY 2022-23. The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the overall price of goods before retail) eased to 1.3% during the period. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined below 5%, its lowest in months.

Per capita income almost doubled in nine years to H172,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was US$ 2,320 (March 2023), close to the magic figure of US$ 2500 when consumption spikes across countries. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3% in FY 2022-23.

Indian packaged food market overview

The Indian packaged food retail market, estimated at ~H6,00,000 Crore in FY 2019-20 contributes only 15% to the total food and grocery retail market estimated at H39,45,000 Crore in FY 2019-20. While the Indian food retail remains dominated by unbranded products such as fresh fruits and vegetables, loose staples, fresh unpackaged dairy and meat, the packaged food market is growing at almost double the pace of the overall category and is expected to gain a market share of 17% by FY 2024-25 from a share of 14% in FY 2014-15. Health concerns and limitation in movement due to COVID -19 have accelerated the growth of packaged food products which offer consistent and assured quality along with convenience. However, the penetration of packaged food is limited in the Indian households. Annual per capita spend on all categories of packaged food in India is estimated to be ~H4,650, much lesser as compared to China at ~H16,000 and the USA at more than H1,12,500.

(Source: Technopak)

Indian edible oils industry

The branded edible oil market is estimated to be around H1,56,000 cr and is expected to grow faster than the overall category gaining a lions share of close to 90% of the total market in terms of value in the coming five years. It is estimated that close to 75% of the total edible oil available in terms of volume is retailed as a branded product.

The edible oil industry in India is fragmented wherein 13% of oil is sold as loose/unbranded and the consumers are shifting to branded oils, which bodes well for the organised players.

The four key edible oils, palm, soya, mustard and sunflower constitute 85-88% of the total consumption in India in terms of volume. Palm oil is primarily used by the large-scale food processing enterprises. It is also used in blended oils for domestic consumption. Palm and soybean are also being used by the HoReCa segment. India imports most of its palm oil consumption. Soybean oil, mustard oil and sunflower oil is largely used for domestic consumption. The other oils include sesame oil, coconut oil, groundnut oil, rice bran oil amongst others.

A gradual shift is being witnessed in favour of soft oils such as soyabean oil, sunflower oil, mustard oil.

Consumption in rural India constitutes almost 50% of the total consumption in this category by volume..

Under-penetrated market: Indias per capita consumption of edible oil is relatively low at 19-19.80 kg per year, compared to the global average of 24 kg per year. However, with a growing population and increasing per capita consumption, demand for edible oils is expected to increase.

(Source: Technopak).

Specialty fats and oil market in India

Specialty fats and oils are products with distinct characteristics and functional properties as compared to traditional fats and oils. The category includes margarine and bakery shortenings, lauric fats, interesterified fats, high stability frying oils and CBE (Cocoa Butter Equivalents). The customised properties of specialty oils and fats make them ideal for application in bakeries, biscuit, confectionary and other snacks. In FY 2019-20, the Indian specialty fats and oil industry size was estimated at 9 Lakh MT and growing at a CAGR of ~8%. Indian specialty fats and oil market is divided into popular fats, premium bakery fats, frying oils and confectionary fats.

Indian soya chunk retail market

The size of the soya chunks retail market in India is estimated to be at H2000 Crore comprising branded and unbranded segments with almost equal share in terms of value. The total market for branded soya chunks is H1,000 Crore nationally with West Bengal having a market share of more than one third of total size.

The growth in branded market is expected to outpace the growth of the overall category. With a CAGR of 14%, the market estimated to be H1000 Crore in FY 2019-20 is expected to almost double in 5 years.

The growth in soya chunks is led by the eastern and northern regions of India which contribute 80% sales to the total market of soya chunks (branded and unbranded) as recipes such as soya chunks, dry soya granules bhurji, soya chaps, soya pulao and many others have been a part of regular diet in these regions since the 1990s. Soya chunks provide an alternative to cottage cheese in the north and to meat in the eastern region.

Indian wheat flour retail market

Before the late-90s, wheat flour (aata) was mainly milled through local chakki mills in India. Even now, the wheat flour market is largely dominated by local chakki mills in India. However the branded packaged wheat flour has emerged rapidly in the country in the past fifteen years capitalizing on hygiene and convenience factors.

Wheat is the staple food for most

Indians in the wheat growing areas (North and West India) and is consumed in the form of chapattis or rotis (unleavened flat bread).

Wheat grain milled to flour form at home chakkis or small chakkis is referred to as unbranded form of wheat flour. This unpackaged and unbranded form of wheat flour dominates the consumption in rural and semi-urban areas. Wheat flour retail market in India was estimated to grow at a CAGR of 5.5% from H96,000 Crore in FY20 to H1,27,000 Crore in FY25. The branded wheat flour is estimated to be at H14,500 Crore, growing at a CAGR of 15%, projected to double itself in the coming 5 years. The growth opportunities in Indian packaged wheat flour market are attributed to overall mindset shift in favour of packaged products, growing urbanization and associated convenience factors..

Rice market

The rice retail market in India was estimated to grow at a CAGR of 3% from H1,30,000 Crore in FY20 to H1,53,700 Crore in FY25. India packaged rice market is estimated to be H15,000 Crore in FY 2019-20 and is projected to grow at a CAGR of ~7.5% to reach H21,500 Crore in FY 2024-25 on the back of growing urban population and rising demand for fine quality products. Moreover, growing per capita income is further contributing to the growing demand for packaged rice.

Indian pulses market

Pulses Retail Market in India was estimated to grow at a CAGR of 3% from H1,50,000 Crore in FY20 to H1,77,000 Crore in FY25.

The share of branded products in pulses stands lower as compared to other that of other staples such as wheat flour, rice and oils.

Branded Pulse Retail Market in India was estimated to grow at a CAGR of 7% from H8,500 Crore in FY20 to H12,000 Crore in FY25.

Overview of Packaged Besan (Bengal Gram Flour) in India Besan (Bengal gram flour) is a milled product obtained out of Bengal gram. It is widely used in Indian cooking and is an important ingredient for the HoReCa segment and savoury snack manufacturers (namkeens). With a monthly consumption of 500-750 grams per household, it is estimated to be around H27,000 Crore in FY 2019-20. Expected to grow at a rate of 6%, it is poised to register H36,000 Crore market by FY 2024-25. Out of 10 Mn MT Bengal gram produced in India, almost 40-50% is milled into the flour form. While it remained largely unbranded until a few years ago, the transition of this unbranded market to branded play is now outpacing the growth of the overall category. Growth of modern retail and preferences changing in favour of packaged food has been driving growth in this category.

Branded Bengal Gram Flour Market in India is estimated to grow a CAGR of 12% from H4,750 Crore in FY20 to H8,250 Crore in FY 2024-25.

Ready to cook & ready to eat segments in India

The market for both the segments put together is estimated to be approximately H4,200 Crore in FY 2019-20 and is expected to grow at a high CAGR of 16% doubling itself by FY 2024-25.

Market for castor oil and derivatives

Castor oil is a multi-purpose vegetable oil obtained from castor found mainly in tropical Africa and Asia. India is the single largest producer of castor seeds and accounts for 85% of the total global castor oil seeds production, followed by China and Brazil. The production of castor oilseed in FY 2020-21 was at 1.9 Mn Tonnes. Castor seed is primarily used for oil extraction. In FY 2019-20, Indian players extracted an estimated 0.83 Mn MT of castor oil. The castor oil production in India is estimated to grow at a CAGR of 7% in the next few years.

India is the largest manufacturer and exporter of castor oil in the world and is responsible for 88% of total global exports. The major trading partners in this sector are China, Europe, Thailand, Japan and USA. China has been one of the biggest importers for castor oil due to its demand for sebacic acid (a basic industrial chemical compound) which is developed from castor oil.

Manufacturers of castor oil derivatives based in India consume 20% of the total castor oil produced in the country and convert it into derivatives like 12 Hydroxy stearic Acid (12HSA), Ricinoleic Acid (RA) and Sabacic Acid to fulfil the demand of the global market.

Castor seed and its derivatives in India are mainly consumed in the cosmetic, pharmaceutical, plastics manufacturing, lubricants, paint and printing ink sectors. Castor meal/cake, the byproduct of oil extraction is mainly used as a fertiliser.

Indian oleochemical market

The oleochemical market in India is primarily driven by rising consumerism, favorable government regulations, growth in the personal care sector, and an increasing demand for ecofriendly chemicals. Oleochemicals are widely used in the production of FDA-approved food packaging and surface sanitisers in the food industry. Triple pressed stearic acid derived from oleochemicals is also used as a mold-release agent in the food and beverage industry. The expanding utilization of oleochemicals in the food industry, as well as the growth of the food industry in developing countries, is expected to create opportunities for the oleochemical market in India.

(Source: Allied Market Research)

Business performance Edible oil

The first year half of the witnessed price volatility in the edible oil market, leading to decreased demand for edible oil and impacting our volume growth. However, in the second half, we successfully revived our business volumes. This was attributed to a decline in edible oil prices, increased out-of-home consumption during festivals and weddings, and improved direct coverage in both urban and rural areas.

The inflationary trend in edible oil prices resulted in consumers downtrading from premium products, affecting our margins. Nevertheless, we focused on expanding the distribution reach of our Kings brand of oils, capturing the demand at more affordable price points.

Our communication for Kings emphasises the benefits offered at a lower cost. To cater to the mass segment of consumers in the Rice Bran Oil category, we introduced Kings Rice bran Oil during the year.

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. This trend benefitted AWL and Mustard oil emerged as a major growth driver for us this year, experiencing a significant increase in volumes. In the fragmented mustard oil market, we hold an undisputed market leadership position with a market share of 12.9%. Being the only organised player with a nationwide presence in this category, our brand communication revolves around purity, differentiating ourselves from the unorganised players selling adulterated mustard oil. Through our integrated sales and marketing initiatives, we focused on expanding distribution in rural areas and creating consumer demand among urban consumers by leveraging the strong brand equity of Fortune.

To foster business growth, we focused on several key areas:

Marketing communication to maintain top-of-mind recall among consumers

Improved direct rural coverage: During the year, we doubled our direct reach of retail outlets in rural towns.

Leveraged technology to enhance the efficiency of our sales force.

Enhanced sales in the fast-growing channels of modern trade and e-commerce Moving forward, our plan includes the continuation of aggressive expansion initiatives in both urban and rural areas to improve availability and reach of our products to end consumers. Additionally, we have designed an ambitious brand campaign across traditional, digital, and outdoor media platforms for all major products, with a particular focus on enhancing brand recall in rural regions of India. These initiatives aim to establish a stronger brand presence, drive consumer pull, and increase market share. To enhance offerings in the Health & Convenience portfolio, the Company launched Fortune Xpert Total Balance, a new product featuring three blended oils.

Food and FMCG

In July 2022, a significant development occurred in the form of the Goods and Services Tax (GST) Councils decision to eliminate GST exemption on packaged food items sold under unregistered brands. As a result, these items are now subject to a 5% tax rate, the same as branded food products. This change has leveled the playing field for branded players and contributed to the industrys progress towards greater organization and increased penetration of branded food that adheres to food safety standards. The 5% GST is now applicable to all branded or unbranded SKUs weighing up to 25 Kg.

We continued our growth trajectory through the acquisition of the renowned domestic brand, Kohinoor, from McCormick Switzerland GMBH. This acquisition has positioned us as a dominant player in three distinct market segments: Kohinoor for premium Basmati rice, Charminar for affordable rice, and Trophy for the HoReCa segment.

In the Wheat branded consumer pack sales, our market share has increased to 5.0% in MAT Mar23 versus 4.7% in MAT Mar22. (MAT is Moving average Twelve months). In Rice, branded consumer pack sales has increased to 7.9% (incl. Kohinoor) in MAT Mar23 versus 6.5% in MAT Mar22.

Expanding our presence in the West Bengal market, Adani Wilmar introduced its premium regional rice, leveraging our state-of-the-art facility in Burdwan. Operating at full capacity, this facility caters to the demand for regional rice throughout the entire eastern zone. The launch of Miniket and Banskanthi variants has established Adani Wilmar as one of the key national brand offering regional rice variants.

To expand our Health & Convenience product portfolio, Kohinoor Hyderabadi Biryani Kit was launched in ready-to-cook category. The initial response has been good. This product will increase the household penetration of ‘Kohinoor brand.

We introduced two new variants of Khichdi. Additionally, we launched two variants of Poha, namely Indori Poha and Thick Poha

Industry essentials

Oleochemicals

We have added oleo-derivatives with application in Polymer additives, Lubricants, Home and Personal care, Agrochemicals and Food additives. The business intends to grow deeper into value added products creating synergistic products for the same customer segments.

Manufacturing

Adani Wilmar has successfully commissioned a state-of-the-art wheat flour manufacturing unit in Bundi. Additionally, a 1.3 MW at Hazira and 0.9 MW at Kadi solar power plant with advanced robotics cleaning arrangements has been commissioned at

Hazira, expanding our installed capacity to 4.3 MW. Continual improvements of plant efficiency is a key focus at Adani Wilmar. For instance, in FY 2022-23, we identified and addressed an untapped energy source by installing micro turbines at our Hazira plant, utilizing high-pressure steam energy to generate power. Through our lean Six Sigma project, we enhanced power factor by 4% at the 66-kW substation in the Mundra refinery by replacing degraded components.

During the year under review, we made investments of H673 Crore in capacity addition and technological advancements.

Some major additions are highlighted below:

We commissioned a state-of-the-art wheat milling plant at Bundi, Rajasthan. This consists of 350 Tonnes per day (TPD) refined flour mill to produce maida, suji, rawa, and a 150 TPD chakki/ stone mill to produce chakki atta to meet the growing consumer and institutional demand with matching packing lines. It also consists of 15,000 MT wheat storage facility.

The Company augmented the refining capacity of rice bran oil at Mantralayam from 70 TPD to 100 TPD to meet the growing market demand. It has also expanded the refining capacity of sunflower oil at Kakinada from 300 TPD to 450 TPD.

At the oleochemical plant in Mundra, a Multipurpose Reactor of 8 KL capacity was installed to produce various oleo chemical derivatives. It also expanded the hydrogenation capacity by adding a new 300 TPD continuous hydrogenation plant.

At Bundi, the soya silos were not fully utilised. To optimise the asset utilization, we converted two of them to store wheat and mustard by adding the desired conveying equipment. This has helped to meet the wheat flour mill and oil mill raw material storge demand.

At the castor plant located at Pragapar, Mundra, we installed a bulk container loading system to load the castor meal. This system consists of one Electrical y products. Overhead Travelling Crane (EOT) crane which picks up the container from truck and puts it in a platform and this platform tilts it vertically and dumps the material from the top. This has reduced manual effort and increased efficiency.

We invested in automating its pouch filling line at its refineries in Alwar and Hazira by installing robotic arms and carton erector. to automate the secondary filling. This will enable automation of the secondary filling and reduce dependency on labour.

Safety and the environment are paramount to the Company. We upgraded our existing firefighting system at Mundra Oleo plant by putting a foam-based fire suppression system which is more effective and environment friendly.

During the financial year, we commissioned Process

Information Management System (PIMS) in nine of our plants. The PIMS dashboard shows the real time Overall

Equipment Effectiveness (OEE) and Key Performance Indicators (KPIs) such as per MT steam, water, power and chemical consumption, control loops, etc.

In continuation of its efforts to improve operational efficiency, integrity, and reliability, we have installed tech systems to show real-time inventories of crude oil, refined oil and

As an organization, we are committed to reducing our carbon footprint. To achieve this, this year we commissioned one 1.3 MW solar power plant at Hazira and another 0.2 MW solar plant at Kadi.

We also installed a zero liquid discharge (ZLD) plant at our refinery in Saoner, Nagpur.

The recovered water shall be used in plant operations and consequently help in reducing the overall water consumption.

IPO projects

As part of our journey towards building best-in-class integrated plants, we identified multiple projects (capital expenditure / IPO projects) aggregating H2,220 Crore for expansion. These projects will primarily focus on augmenting our food capacities and reducing dependence on third-party leased units. H1,900 Crore will be utilised from the earmarked funds for capex in IPO (out of H3,600 Crore raised in the IPO), whereas the balance will be funded from the Companys internal accruals.

The work across all locations has commenced. As on 31^st March, 2023, we spent ~H320

Crore towards these and have committed about 35% of the overall budget. We expect most of the projects to commence operations in FY 2024-25.

Sales channels

Following the impact of the Covid-19 pandemic, we experienced substantial growth in the Modern Retail and E-commerce sectors. In FY 23, we observed remarkable volume growth in these alternative channels, leading to an increased contribution to the overall category sales and recorded H2,700 Crore of sales in packaged oil & foods for the year

Sales and distribution

The Company has been making strategic go-to-market interventions and expanding in both urban and rural markets to realise the full potential of its products. Our decision-making process is driven by data. We closely monitor market coverage through secondary sales and improvements.

In addition, we successfully implemented sales force automation and expanded our network to over 13,000 rural towns. Each outlet has been geotagged and is serviced by a dedicated rural sales force. This strategic approach has facilitated the growth of our rural markets and enabled us to establish direct connections with rural dealers.

By bypassing wholesalers who promote multiple brands, we now have better control over distribution of our products to ensure the stocking of our products by rural dealers. As the productivity of these new outlets continues to improve, we anticipate sustained growth in the coming years.

Fulfillment centers

The Company undertook detailed cost-effective and optimised secondary distribution system by engaging in a viability analysis of each fulfillment center.

During the year under review, the Company implemented Warehouse Management System that facilitate superior storage and retrieval. It upgraded the fulfilment centre infrastructure with modern stock handling tools and equipment that enhanced labour productivity.

Branding and marketing

Our branding and marketing efforts remained steadfast as we aimed to enhance brand awareness and strengthen consumer recall. To establish a strong association of our brand with superior culinary experiences, we partnered MasterChef India. We executed digital marketing campaigns during Holi and Diwali and regional festivities such as Durga Puja, establishing a regional connect with consumers and expand our presence in households where regional players have a strong foothold.

Furthermore, we successfully launched two impactful television commercials featuring renowned personalities. One showcased

Akshay Kumar endorsing Fortune soybean oil, while the other featured Samantha endorsing Fortune Sunlite sunflower oil.

Major promotional campaigns, FY 2022-23

Pet Pujo campaign

Durga Puja is the most celebrated festival in West Bengal. The market enjoys a strong Fortune KGMO (Kacchi Ghani Mustard Oil) loyalty. The Companys campaign was the sixth instalment in the Pet Pujo series. In 2022, Fortune Foods focused on inspiring the Bengali community across the world who had missed festivities during the pandemic to reminisce about the Pujo festivities.

The brand showcased

Durga Pujo through the lens of three friends reminiscing about the past while highlighting celebratory nuances with respect to the preparation, cuisine and reverence.

Sounds of the Kitchen (Diwali campaign)

Diwali is about celebrating together - with loved ones and food. While diyas, rangolis, and are visible motifs of the festival, food inevitably takes center stage. Fortune Foods leaned into this narrative and brought out the joy of home cooking during Diwali. The brand inspired Indians to celebrate Diwali with the sounds of cooking - reimagining the sound of fireworks with sounds from kitchens of families across regions. The campaigns multi-pronged approach leveraged a user-generated content contest, an influencer campaign and brand film.

Fortune Ek, Rang Anek (Holi campaign)

Holi is synonymous with togetherness, emotions and fun tied together by two elements: colors and food. Since

Holi enjoys a cultural significance from North to South India, every region comprises stories and food related to celebration. The foods eaten across the country during Holi change from region to region, is highlighted in this campaign. The promotional highlighted the message of Fortune Ek, Rang Anek! The Company collaborated with 29 pan-India influencers to introduce the campaign, urging their followers to participate in the

#FortuneEkRangAnek contest by submitting a video of their favorite Holi recipe.

Pickle season

Summer, particularly May, is peak for the preparation of pickles. The Company launched a television commercial that evoked a nostalgia for pickles through our Mustard Oil. The commercial highlighted the importance of good pungent oil for making a pickle special. The commercial was aired in Bihar and Uttar Pradesh

- a mix of free-to-air and local Bhojpuri channels - where mustard consumption and pickle preparation are key.

Association with cooking show

Fortune associated with the iconic MasterChef India show (which inspired a television revolution in cooking).

The association highlighted the benefits of Fortune brand; it showcased the range of products from oils to the foods portfolio. The Company extended the partnership to the OTT format. The Company promoted Soyabean Oil to the mass audience on television and Rice Bran

Oil on OTT.

Kohinoor spreading Khushboo Kuchh Khaas

Kohinoor, Indias leading basmati rice brand, was reintroduced by Adani Wilmar. The Company created an identity in the market and social media using the ‘Khushboo Kuchh Khaas tagline. The brand made a social media impact through persuasive storytelling and impactful features (authenticity and aroma). Influencers helped market the

Biryani Kit on social media through recommendations, creative product showcasing, offering products review cum testimonials, offering giveaways and promotions, creating educational content and participating in affiliate marketing programs.

Kings Oil campaign

Through relatable storytelling, Kings Oil showcased how its makes food delicious and healthy. The brand engaged with the audience through a campaign on the Moj application, providing it with the opportunity to showcase its dancing skill in line with the peppy Kings Oil tune. The range of delicacies using Kings Oil was showcased during the Republic Day contest and Eid campaign called Swaad-e-Ramadan.

Alife soaps campaign

Alife soaps represent lasting beauty and freshness. Utilising social media platforms, communication was built to make consumers realise that Alife soaps are what they need. Through a social media campaign for Womens Day, #KhoobsuratiKaSaathi, a message was delivered that Alife soaps support women empowerment.

ANNUAL REPORT 20

New television commercial for Fortune Soyabean Oil

In September 2022, the Company launched a television commercial for Fortune Soyabean Oil endorsed by the cricket icon Saurav Ganguly. The aim was to build a local connect in the West Bengal market. We also extended beyond the stereotypes of a woman being associated with a cooking oil.

Influencer marketing

Fortune Foods executed influencer-led regional campaigns during key festive occasions (Janmashtami, Diwali, Holi, and Mothers Day), and by engaging with MasterChef contests. These campaigns involved collaborating with more than 50 influencers. The initiative enhanced audience engagement, brand awareness, three-fold increase in views and a ten-fold expansion in reach.

Awards

Fortune Foods received the Silver award at the Sammies Awards for the Best Use Of Video Content for Hilsa 2021 television commercial. The Sounds of the Kitchen Diwali campaign was adjudged runner-up for the Best Use of Influencers on Social Media category by Mad Over Marketing.

D2C engagement

In fiscal year 2022-23, the Company was present in 25 cities and recorded 5.5 Lac+ app downloads, improving its social media visibility and enhancing the user experience. The Fortune Mart initiative has been successful, with 35 stores spread across 29 cities. These stores, featuring live bakeries, are thriving and contributing to the Companys growth.

Information technology

During the previous fiscal year, Adani Wilmar made significant investments in various areas. The focus was primarily on infrastructure consolidation, migrating to the Public Cloud, enhancing digital presence across key functions, and establishing the Analytics Center of Excellence (CoE).

During the last financial year, we modernised our infrastructure to ensure better scalability and availability. We took initial steps in setting up an Analytics CoE; we identified and implemented Robotic Process Automation (RPA) processes to improve productivity. We expanded our utilization of cloud-based technologies to enhance collaboration, data sharing, and remote working capabilities. We emphasised data security and privacy, with robust cybersecurity measures being implemented to safeguard against data breaches and cyber threats.

Our key capabilities were strengthened through the integration of technology in various areas:

Manufacturing:

Increasing implementation of the Internet of Things (IoT) in manufacturing, enabling real-time monitoring of production processes and equipment performance.

Sales enablement:

Leveraging IT tools and applications to enhance productivity and reduce operating costs in the sales function. This includes the implementation of solutions such as the B2B app for bulk pack distributors to place orders and view balances, improving transparency. Moreover, the Company implemented analytical tools to improve sales - Distributor Ranking, Auto Replenishment Model, Beat Optimization, and Inventory Optimization at the distributor level. These tools enable the Company to make data-driven sales decisions.

Supply chain process optimization:

Significant investments have been made in technologies to optimise supply chain management processes including logistics optimization, demand forecasting, inventory management, to optimise operations and reduce costs. Looking ahead, Adani Wilmar will continue to focus on consolidating applications, modernizing legacy systems, and adopting cloud-based solutions to streamline IT infrastructure and reduce complexity. There will be a greater emphasis on leveraging advanced analytics across all business functions to enhance decision-making. The aim is to use data to identify trends, optimise processes, and improve customer experiences. The Company remains committed to adapting and innovating in response to changing market dynamics and evolving customer needs.

Food safety and quality

In terms of food safety and quality, Adani Wilmar implemented measures, including the identification of peanut allergens in soy products, the use of QR codes on labels for clean labeling in compliance with regulations, and the implementation of laser coding on wheat flour and associated products to prevent misuse of expired goods in the value chain.

In FY23, the Companys plants received certifications from CII for excellence in production, manufacturing, quality, and food safety. In FY23, most plants were certified by CII for Production, Manufacturing, Quality and Food safety.

Food Safety Award recognition

CII (Confederation of Indian Industry) Awards

Hazira plant	Received Award Trophy for Outstanding Performance in Food Safety in the Category of ‘Large Manufacturing Food Businesses, Rising Star - Fats and oils, for the year 2022.
Kadi unit	Received the award for Winner of Commendation for significant Safety - Large manufacturing food business oil and fat.
Nimrani	Received award for winner of Commendation Food Safety to Adani Wilmar Ltd. Nimrani in the Category of ‘Large Manufacturing Food
	Businesses, Rising Star - Cereals and cereal products, for the year 2022.
Alwar	Received award for Winner of Commendation for Significant - Small and Medium Food Manufacturing Business: General Manufacturing.
Ferozpur plant	Received CII Food safety award in 2022
Other awards
Bundi Plant	Silver medal in the National Awards for Manufacturing Competitiveness (NAMC 2022)
Alwar plant	Silver medal in the National Awards for Manufacturing Competitiveness (NAMC 2022).
Hazira plant	OHSSAI Award for safety
Kakinada plant	OHSSAI 7th Annual HSE Excellence & Sustainability Awards 2022: OH&S Award
	OHSSAI 7th Annual HSE Excellence & Sustainability Awards 2022: Leadership Award
	OHSSAI 7th Annual HSE Excellence & Sustainability Awards 2022: HSE&S Mentor of the Year

Awards and recognition

The Fortune brand continued to achieve remarkable recognition and accolades, solidifying its position as a leader in the industry. It was honored with the esteemed ‘Brand of the Year Award 2022 by Team Marksmen, based on comprehensive industry research and insights.

Additionally, Fortune achieved a notable milestone by ranking among the top 40 in the esteemed Fortune 500 list. The brands flagship Corporate Social Responsibility (CSR) initiative, Fortune SuPoshan, received the prestigious CSR Project of the Year Award at the 8th CSR Impact Awards 2022.

Fortune was recognised and appreciated for its excellence in best practices in managing plastics and packaging waste under Extended Producer Responsibility (EPR) at the 7^th International Conference on Waste-to-Worth, jointly organised by the Confederation of Indian Industry (CII) and the Office of the Principal Scientific Adviser (PSA) of the Government of India.

ESG

We are dedicated to pursuing our social and environmental agenda with increased determination.

One of our flagship programs, Fortune SuPoshan, launched in 2016 by the Adani Foundation, aims to combat malnutrition in India. To date, the project has reached a population of 1.5 Mn across 3,51,985 households, spanning 1,081 villages and 177 slums, with the assistance of 535 SuPoshan Sanginis.

In addition to our nutrition intervention program, we have actively undertaken various initiatives to contribute to plastic waste management, water conservation, recyclable packaging, and the utilization of renewable energy sources. Complying with the guidelines set by the Central Pollution Control Board (CPCB) under the Plastic

Waste Management Rules 2016, Adani Wilmar has consistently increased the amount of plastic collected as part of our Extended Producer Responsibility (EPR) target. We have seen rise from 60% of the Companys plastic waste collection in FY 2021-22 to 70% in FY 2022-23. Moreover, as one of the largest edible oil sellers in the country, we have achieved a remarkable milestone by ensuring that 98% of our packaging is recyclable, setting an industry benchmark. We take pride in zero liquid discharge (ZLD) systems across eight effluent treatment plants (ETPs). We implemented rainwater harvesting facilities at four plants. With a collective capacity of 2,800 Kl per day (KLD), our focus has been on economically and efficiently reducing wastewater while generating reusable clean water. We mitigated carbon emissions by harnessing solar energy across six processing units, which currently has a generation capacity of 3,040 kilowatts peak (KWp).

Summarised Profit & Loss Statement

	March - 23	March - 22	YoY (%)
Revenue from Operations	58,185	54,155	7
Cost of goods sold	52,183	48,771	7
Gross Profit	6,002	5,383	11
Employee Benefits Expense	394	392	0
Other Expenses	3,947	3,255	21
EBITDA	1,661	1,736	-4
Depreciation and amortisation	358	309	16
Other Income	261	172	52
Finance cost	775	541	43
PBT	789	1,059	-25
Tax	235	284	-17
PAT (before joint venture)	554	774	-29
Share of joint venture Profit	28	29	-3
PAT	582	804	-28
EPS	4.48	6.89	-35

 

Key Ratios
Rs in Crore	FY 23	FY 22
Fixed Asset Turnover (x Times)	11.8x	11.0x
Gearing (TOL / TNW)	1.6x	1.8x
Interest Coverage	2.1x	3.2x
Return on Equity (ROE) %	7%	15%

Sales

The Companys volume and value growth were robust, led by a strong growth in the Food & FMCG and industry essentials. The Company achieved a 7% growth in revenue from operations, amounting to H58,185 Crore in FY23, driven by a strong volume growth of 14%. Volume sales has also crossed the milestone of 5 Mn Metric Tonnes, reaching 5.5 Mn Metric Tonnes. Adani Wilmar is among few FMCG companies to have clocked revenues more than H50,000 Crore.

Sales growth was attributed to an increase in product reach by expanding distribution in terms of towns, distributors, and retail outlets. The productivity of existing outlets also improved. The Company focused on enhancing direct distribution coverage in rural towns, resulting in better growth rates in rural areas. The Company added new client accounts for institutional and export sales during the year. New products and variants were introduced during the year, contributing to additional growth prospects in the future..

Profits

Profitability faced several challenges during the year, impacting the Companys EBITDA and PAT. EBITDA, including other income of H261 Crore, amounted to H1,922 Crore, reflecting a 1% increase compared to the previous year. Operating EBITDA stood at H1,661 Crore, declining by 4% YoY. The 5-year compound annual growth rates (CAGR) of operating EBITDA until FY 2022-23 was 10%.

Factors impacting profits

The Company faced an unfavorable Tariff Rate Quota that was implemented in June 2022 for the duty-free imports of crude soyabean oil and crude sunflower oil by importers. The Company was allocated only 10% quota of the total duty-free imports allowed in both soyabean oil and sunflower oil. This was against our actual imports of around 30% and 15% of total imports of soyabean and sunflower oils respectively in India. This led to higher import duties for the Company relative to the rest of the industry.

Declining edible oil prices throughout the year, particularly after Q1FY 2022-23, resulted in high-cost inventory impacts on the profit and loss statement. The Companys robust risk management processes mitigated the impact to a significant extent.

Inflationary pressures on packaging costs at the gross profit level, as well as inflation in logistics, chemicals, and power & fuel costs at the EBITDA level, affected profitability.

Finance costs increased due to rising benchmark interest rates following a hike in Fed interest rates.

The Companys wholly step-down in Bangladesh incurred a loss of H63 Crore in FY23, attributed to government-imposed price caps on edible oils, currency-related issues, and the unavailability of counterparties for forex hedging. This resulted in lower consolidated PAT compared to standalone PAT.

Profit after tax (PAT) amounted to H582 Crore, declining 28% compared to the previous year, resulting in an earnings per share (EPS) of H4.48, as opposed to H6.89 in the previous year.

Segment-wise revenue

Segment	Volumes (in MMT)		Revenues		YOY Growth %		Mix % FY 23
	(Rs in Crore)
	FY23	FY22	FY23	FY22	Volume	Value	Volume	Value
Edible Oil	3.4	3.3	46,104	45,342	3%	2%	61%	79%
Food & FMCG	0.9	0.6	4,053	2,621	39%	55%	16%	7%
Industry essentials	1.2	0.9	8,028	6,192	34%	30%	23%	14%
Total	5.5	4.8	58,185	54,155	14%	7%	100%	100%

Edible oil

The largest segment, edible oil, grew by 2% driven by 3% volume growth. Branded sales grew by 8% YoY volume growth in FY 23. However, overall oil sales volume was dragged down due to lower demand from the bakery and frying industry.

Food & FMCG

Food & FMCG grew by 55% YoY, driven by 39% volume growth. Strong volume & value growth across all our products. Both Wheat flour and Rice businesses crossed H1,000 cr. in revenue in FY23

Industrial Essential

Industry essentials grew by 30%, driven by 34% volume growth. Strong growth in Oleochemicals, Castor oil & derivatives and De-oiled cakes. Oleochemicals business has been growing well on the back of new capacity that got commissioned in Q3 FY 2020-21, along with the stable demand

Outlook and future plans Edible oils, foods and FMCG

We will continue to stay focused on our core business and extend our leadership position in edible oil. We have built a momentum in the Food business, where we will drive significant penetration in the coming years. We will leverage our capabilities to enter more Food & FMCG categories to widen our offerings, primarily with forward integration linkages. Post Covid-19, with rising edible oil prices, consumers shifted to cheaper brands that led to the growth of local players with operational presence limited to select geographies. With improving affordability driven by reduced vegetable oil prices, we are expecting organised players to gain market share because of improving premiumization and health consciousness. With a reduction in edible oil prices, we are expecting demand to increase for our premium brand Fortune which could lead to an improvement in margins.

Our addressable market is large, thanks to the product categories that we have chosen. With our large portfolio of products, presence across India and export markets and catering to all kind of customers and addressing many customer segments, we have multiple opportunities available to grow our sales, along with opportunity to continuously improve below

Strong execution

We will continue investments in brand building to strengthen our brand equity to command brand-premium and gain share of un-organised and regional players. Regional focus to cater to the varying consumption patterns. In channels, we will continue to develop the high-growth alternate channels. In general trade, we will expand our distribution networks and enhance our sales productivity. Besides, the Company will grow the manufacturing network to increase capacity and increase proximity to customers to ensure product freshness.

Gain new customers

We will gain share with a new level-playing field created by the introduction of GST on unregistered labels. We will continue to drive the conversion of consumers from loose, while ensuring value-for-money for them. We will gain market share from regional players, through better quality and brand trust. We will break into under-indexed markets with localised capacities, better distribution, and strategic promotions. We will cross-sell products with high-velocity products in the branded consumer segment. We will cross-sell products that have a low penetration to existing institutional customers. We will build our network of institutional, HoReCa and export clients. We will cater to the Indian diaspora in export markets.

Rice specific growth levers

We will continue scaling the Kohinoor brand. We will increase our share in rice exports from India. In Middle East, we will place products in major retail chains and build our distribution for the retail and HoReCa channels. We will develop Europe, Australia and other export markets using Wilmars network.

New product launches

We will launch more products and variants through R&D and leverage our Fortune brand to introduce them to the market. We will continue to launch high margin value-added products and will support those launches with up-front marketing investments. We will develop the portfolio of higher margin health-focused edible oils. To cater to institutional customer needs, we will build application-based products.

Enhance margins

We have multiple opportunities to enhance margins. We will enhance margins in products where customers are less sensitive to price increases. We will enhance the mix of premium brands. We will grow margin-accretive value-added products. We will enhance R&D capabilities for blending & cost optimization. We will set up integrated manufacturing units to drive revenue synergies and reduce cost.

Sales & distribution

General Trade

In urban areas, we will significantly increase our direct reach and increase sales productivity.

In rural areas, we will double the coverage of towns and cover most towns above a 5,000 population.

HoReCa

We will increase our direct coverage in all large towns. We will build direct relationships with more buyers for direct purchase from AWL.

We expect our packaged oil & food business to continue growing with the expansion of the economy, increasing incomes, increasing education, higher consciousness for health & hygiene and urbanization. With market-leading food brands, an extensive distribution network, state-of-the-art manufacturing facilities and superior sourcing capabilities, AWL is positioned to tap the huge opportunity in India.

Industry essentials

Castor

We will set up castor derivatives plant as a stepping stone for value-addition and widen the product portfolio

Increase the share of value-added products like high-value oil and derivatives in total oil sales

Get near consumers by setting ex-tank operations beyond Europe

Oleochemicals

Expand capacities periodically in basic oleochemicals to maintain market share.

Focus on basic surfactants.

Enter new chemistries and new products.

Internal control systems and their adequacy

The Company possesses robust internal control systems and top-tier processes that align with its size and operational scope. These include:

The Company has well-crafted policies and procedures that cover all significant and their effectiveness is tested, including financial closure, automated controls, and entity level controls. Adherence to these policies and procedures is a vital component of the management review process. These protocols promote effective business operations within a framework of governance.

The Company has a clearly defined delegation of authority, with limits on the power to approve revenue and expenditures that are regularly reviewed and adjusted as needed. This facilitates seamless decision-making in both day-to-day operations and in the development of long- and short-term business strategies.

The Company formulates comprehensive business plans for each segment, with year-on-year evaluations, annual financial and monthly monitoring being integral components of its established procedures across all functions.

The Company utilises a cutting-edge SAP4 HANA system to capture data for accounting, consolidation, and management information purposes, and for efficient exchange of information across multiple locations.

To minimise deviations and exceptions, the Company strives to integrate automated controls into its processes whenever feasible. Furthermore, the Company remains committed to aligning all of its processes and controls with global best practices.

The Company has a firmly established online compliance management system that features seamless integration of technology and laws. The system offers comprehensive coverage of all laws that apply to the business and provides compliance updates for each of the operating units through a management dashboard.

The Company has a well-established multidisciplinary Management Audit & Assurance Services (MA&AS) team comprising professionally qualified accountants and SAP-experienced executives. This team conducts comprehensive audits throughout the year across all functional areas and provides reports to the Audit Committee on internal control compliance, operational efficiency and effectiveness, and key process risks.

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

The Internal Audit team conducts audits in accordance with standard auditing practices to review the effectiveness of the Companys internal control systems and procedures for managing risks, monitoring control operations, and complying with relevant policies. They then recommend improvements to processes and procedures to ensure compliance and efficiency.

The Audit Committee conducts regular evaluations of the execution of the audit plan, the sufficiency and efficiency of internal audit systems, and oversees the implementation plans, and of internal audit suggestions, including those related to enhancing the Companys risk management policies and systems.

The Company has established several Board Committees that are mainly composed of Independent Directors to oversee and govern the effectiveness of internal controls, as part of its corporate governance framework. The Corporate Governance Report, which is included in this Annual Report, provides further information about these

Committees.

Human resources

The Company recognises that the competence of its workforce is crucial to achieving success and is dedicated to providing them with the skills necessary to keep up with continuous technological advancements. Throughout the year, the Company hosted training initiatives in various domains, including technical skills, interpersonal skills, operational excellence, general and advanced management, leadership qualities, customer focus, safety, values, and ethical standards. The number of employees working for the Company as of 31st March, 2023, was 2,600 Employees. The Companys workforce has been enriched through a culture based on enthusiasm, exposure to various market conditions, emotional involvement, and empowerment over the years.

Talent acquisition: In the last financial year, AWL hired 552 employees, a 70% growth in hiring over the previous financial year. Attrition in FY 23 was 15%, well below the industry average of

21%. Employer branding initiatives increased LinkedIn page visitors. Induction programs for freshers and laterals ensured that new hires were seamlessly integrated in the AWL culture.

Digitization: The Companys HR technology platform was transformed through automation and digitization, covering the employee lifecycle from manpower requisition to separation.

Cautionary statement

The Management Discussion and Analysis sections contains the Companys objectives, projections, estimates and expectation 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.

Risk management Commodity Price Risk
Risk description: -
Agri-commodities are our raw material, and their prices are volatile. Sudden increases in commodity price can impact our profitability Raw-material supply Risk	Risk mitigation: We use hedging instruments to hedge the price risks. Our sales contracts with our customers act as a natural hedge to the commodity risk.
Risk description:
In our edible oil business, majority of raw material comes from imports. Geo-political events can cause supply disruptions, exporting countries government can put restrictions on exports. Weather conditions can result in reduction of crop production.	Risk mitigation: In edible oil business, our long- term partnerships with the key suppliers allow us to source supplies. 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.
Regulatory Risk
Risk description:
There can be increase in taxes on import of crude edible oil. There can be restriction on the quantity that any Company can import. This can put a large Company like us at a disadvantage compared to our competitors.	Risk mitigation: The Company has flexibility in procurement. It will increase procurement from domestic sources. Increase in taxes leads to increase in prices of raw material for all companies.
Inflation Risk
Risk description:
A high inflation environment can increase our operating expenses, reducing our profitability. High inflation also generally results in increase in interest rates.	Risk mitigation: The Company can quickly change or increase its product prices to compensate for the higher cost to serve. A strong brand equity of our flagship brand ‘Fortune allow us to take up our prices.
Human safety Risk
Risk description:
The Companys employee and contractors are exposed to some risk in factories due to moving machinery parts, risk of fire, accidents at time of loading/ unloading boxes in storage or trucks.	Risk mitigation: Factories are designed to segregate the walking area from risky areas. Regular safety training is imparted, continuous monitoring of risk zones, through installed cameras, at local premise and central tower, regular review of safety incidents by top management, incorporate learnings from risk incidents, availability of fire-hydration systems.
Food-safety Risk
Risk description:
Food in raw material form or finished good form can deteriorate causing wastage of material. Regulatory agencies can take an action against us if samples of our products dont pass their safety norms. In case, an unsafe food gets delivered to our customers, it can damage our brand reputation Low Return on Investment in acquisitions	Risk mitigation: 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.
Risk description:
An acquired company may perform below our expectations on sales or profits, resulting in lower Return on Investment.	Risk mitigation: An extensive analysis and due diligence is undertaken to evaluate every opportunity. The opportunity is thoroughly debated internally and with the Board. The Company generally pursue opportunities where we have good understanding of the business and have upside potential of revenue synergy with our business.
Delay in capacity expansion
Risk description:
Capacity expansion by greenfield or brownfield projects have long lead times. Unavailability of capacity can restrict our ability to fulfill customer demand. It can also delay our entry in new products or markets for business expansion.	Risk mitigation: All business leaders prepare long-range plans to anticipate the capacity requirements. The Company has strong project team for planning and execution of expansion projects. Third-party units are also available for an exclusive leases to augment our own capacities.
Higher competitive intensity
Risk description:
Competition can be aggressive on prices or trade promotions. Competition can invest more in advertising to gain consumer mindshare. Competition can launch superior products. More players can enter in the market.	Risk mitigation: Our products have good price- value 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.