New Delhi: Adani Wilmar, a company that makes cooking oils and flour, plans to increase the price of its cooking oil by at least 20% this quarter. This comes after the Indian government decided to raise import taxes on refined oils.
On September 14, India raised the basic import tax on both crude and refined edible oils.
The import tax on crude oils like soybean, palm, and sunflower oils was increased from 0% to 20%. This change makes the total duty rate on crude oils 27.5%. Import taxes like this help protect local businesses by making imported products more expensive.
For refined oils like palm, sunflower, and soybean, the basic import tax went from 12.5% to 32.5%, leading to a total duty rate of 35.75%.
Adani Wilmar sells various edible oils including soya, sunflower, mustard, rice bran, groundnut, and cottonseed oil. It also sells kitchen staples like basmati rice and wheat flour.
Price Increase Expected
Angshu Mallick, the MD and CEO of Adani Wilmar Ltd, said that if international oil prices stay steady, consumers can expect a 22% price hike. He shared this during a virtual interview with Mint on Wednesday.
The company released its earnings for the September quarter on Thursday. Revenue from its edible oil segment increased by 21% compared to last year, reaching ₹10,977 crore, with a 17% rise in volume.
Demand for edible oil was stable in the September quarter, and the company is working to expand its reach in smaller towns and cities.
However, the price increase will not happen all at once. It will be passed on to consumers gradually during the December quarter. Mallick explained that after the duty hike in September, prices began rising, but the company prefers to raise prices in small steps. He said the real impact of the price increase will be seen in the third quarter.
This may reduce sales in the current quarter, Mallick added.
Mallick also disagreed with reports from companies like Hindustan Unilever and Nestle India that said urban demand for kitchen staples was weak. He said that for Adani Wilmar, urban demand has not been as challenging, while rural demand remains strong due to good monsoon rains.
The company is also monitoring wheat prices.
“Wheat prices have been steadily rising, but we expect them to peak by November or December, and then begin to fall. The government may introduce a plan to release more wheat into the market. We believe wheat prices will remain steady because the next wheat crop looks promising. The water and soil conditions are excellent, which should result in a strong harvest,” Mallick said.
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