How AWL Agri is trying to decouple itself from swings in crude oil prices as the West Asia crisis pushes up costs

AWL Agri Business Ltd isn’t exactly preening these days about its position as India’s top edible oil maker. Rather, it is seeking to sell more packaged foods and staples to cut its dependence on oils.

Reason: the maker of the Fortune brand of edible oil and Kohinoor rice is trying to find a shield against frequent price swings in its principal product line, cooking oils, and consumer demand.

Take the latest conflict in West Asia. Crude oil prices have gained 65% since the US and Israel started bombing Iran at the end of February. Prices of cooking oils such as palm, soybean and sunflower oil have risen in response by as much as 20%.

Vegetable oils are diverted for production of biodiesel, an eco-friendly alternative to petroleum diesel, during times of conflict. Supply chain disruptions and panic buying by households drive up costs.

To add to the discomfiture of edible oil makers like AWL Agri Business, Prime Minister Narendra Modi has called on households to reduce oil consumption by 10%, citing the good it would do their health and the nation’s foreign exchange reserves.  

“When crude oil prices rise, the demand for biodiesel goes up, and less edible oil is available for human consumption. It’s a dynamic situation,” says AWL Agri Managing Direcor and Chief Executive Officer Shrikant Kanhere. Angshu Mallick has been re-designated from Managing Director and CEO to Executive Deputy Chairman of the company in November.

With the situation in West Asia unlikely to improve any time soon, the company plans to divesify its revenue sources. AWL Agri, now controlled by Singapore-based Wilmar International, wants 30% sales volumes to come from food and fast moving consumer goods (FMCG) over the next two-three years, up from 18% now. The country’s cooking oil imports have risen sharply from 13 million tonnes in 2019-20 (November-October) to 16 million tonnes in 2024-25. The annual import cost has gone up to Rs 1.6 lakh crore in the 2024-25 oil year (November-October), roughly equal to the annual farm spending.

Analysts don’t hold out any hope of a quick improvement in the edible oil situation even if the West Asia war ends soon. “Prices are likely to depend on how long the war continues. It will take about two months after the war ends to get to the pre-war situation,” says B.V. Mehta, executive director of the Solvent Extractors’ Association of India. Prices are expected to remain firm as more vegetable oils is diverted to production of biodiesel, he adds, warning that a potential drought may hit production of oilseeds in India, worsening the situation.

Of India’s roughly 24 million tonnes edible oil consumption, 15-16 million tonnes is imported, leaving companies highly exposed to global price swings. India imports roughly 60% of its edible oil requirement. Of this, AWL Agri manages nearly 20%.

Less-vulnerable food basket

AWL Agri is doubling down on food and staples to future-proof itself. “Food is less volatile as it is not import-dependent. India is largely self-reliant in wheat, rice, pulses and sugar, so food is inherently less volatile. The more food we add to the basket, the more we reduce oil-related risk,” says Kanhere.

The move by AWL Agri to pivot its portfolio towards a 30% food share is a strategic necessity driven by low margins in edible oils, says Deven R Choksey, Chairman and Managing Director of DRChoksey Finserv, a wealth management and investment advisory firm.

“In the edible oil business, gross margins hover around 12-13%, with EBITDA margins often squeezed to 4-4.5%. By contrast, the branded food and FMCG segment (staples, pulses, rice, and sugar) has gross margins of up to 25% and EBITDA margins between 8% and 9%,” says Choksey.  

EBITDA stands for earnings before interest, tax, depreciation and amortisation, an indicator of a company’s operating profitability.

“Edible oil is highly volatile due to its dependence on global prices and import duties. The food basket provides a more stable, high-margin revenue stream,” says Choksey.

Of the company’s Rs 73,731 crore revenue in FY26, 81% of it came from edible oil; 8.8% from food and FMCG and 11.5% from industry essentials like oleochemicals. By 2027, AWL is seeking to earn Rs 10,000 crore revenue from the food and FMCG business, says Kanhere. Its profit plunged to Rs 148 crore in FY24 before bouncing back to Rs 1,266 crore in FY25. In FY26, the profit fell to Rs 1,045 crore.

 

Vast opportunity

AWL Agri’s food business still has a long way to go before it earns healthy margins. “Food will remain EBITDA-neutral as we are in an investment and growth phase. We are aggressive on pricing. However, the business has turned EBITDA-positive over the last few quarters,” says Kanhere.

The opportunity in food and FMCG is vast. While 60-65% of India’s edible oil market is now packaged or branded, 90% of staples are sold loose. The shift from loose to packaged form is a major growth opportunity, says Kanhere.

“The market that is generated each year in packed staples is big. For a company like AWL, which has brand distribution and manufacturing, it is easy to tap,” he adds.  

But taking on market leaders in categories such as rice may not be easy. India Gate basmati rice producer KRBL Ltd and Daawat rice maker LT Foods are No.1 and No. 2 in branded rice, respectively. The company is now targeting the export market. “The business model of rice is such that you have to have exports. Currently, about 30% of our rice business is export-driven, with a target of 50%,” says Kanhere.

To expand its staple foods portfolio, AWL acquired basmati rice brands Kohinoor and Charminar from US-based food company McCormick in 2022. “Kohinoor is a premium brand and does not directly compete with Fortune. Both operate in different markets. Kohinoor commands a bigger premium than Fortune and has its own market,” says Kanhere.

To expand the foods and FMCG business, AWL Agri is using cash flows from edible oil to support capital expenditure. Acquisitions are also accelerating the shift. “We are open to acquisitions, particularly in the food segment, focusing on high-margin opportunities,” says Kanhere.

 

Expansion strategy

The 2025 acquisition of GD Foods, the maker of Tops sauces and condiments, was part of its move to expand the high-margin business.

The company has been quick to ride the quick commerce bandwagon. “We are selling 5-6% of volumes via quick commerce,” says Kanhere. “Quick commerce and e-commerce together contribute about 10% to our volumes.” About 30% of its revenue comes from B2B.

AWL launched soaps under the Alife brand in 2019 as part of a forward integration strategy for oleochemicals. Today, Alife is a 100 crore brand. Getting into soaps is part of a strategy to extract everything possible from the value chain, says Kanhere. Wilmar’s India playbook 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 processing and consumer-pack cooking oil company. “Wilmar has got big plans for India. In India, they want to replicate what they have done in China. Wilmar is bullish on India. India is going to 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,” says Kanhere.  

AWL uses its wide edible oil distribution network to push food and FMCG products. “The company is utilising its massive oil distribution network (which reaches over 2.6 million outlets) to push food products like Kohinoor rice, Fortune besan, and soya nuggets with minimal incremental logistics costs,” says Choksey.

 

Stock under pressure

AWL Agri’s stock has been under pressure since the Adani Group decided to exit from its 50:50 joint venture with Wilmar in December 2024. “A major catalyst was the exit of the Adani Group in late 2024 and early 2025. Wilmar International became the sole promoter. This led to significant institutional rebalancing and block deals that put downward pressure on the stock,” says Choksey.

Margin compression has also weighed on the stock. “Despite growing revenue, profits have been erratic. High inventory costs and fluctuations in palm oil prices meant that even when volumes grew, the bottom line often shrank,” says Choksey.

The AWL Agri stock has declined 48% since its initial public listing in February 2022 and 25% over the past year. “Post-IPO, the stock was trading at very high P/E (price/earnings) multiples. As growth in the core oil business slowed, the market rerated the stock toward more realistic FMCG multiples,” says Choksey.  

Kranti Bathini, equity strategist at WealthMills Securities, says ups and downs in profitability in the last few years, too, have had an impact on the stock. The high freight rates, volatile edible oil prices and increasing packaging costs have also had an impact on AWL Agri, says Kanhere. “High inflation has led many rural consumers to downtrade or downgrade—switching from premium branded oil to smaller packs or cheaper unbranded alternatives,” Choksey adds.

While the core edible oil business will continue to provide scale and cash flows, 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 is becoming the hedge. The question is how quickly AWL can build it.

 

@karandhar11