Adani Wilmar Ltd (AWL) Q3 FY23 Earnings Concall Transcript

Adani Wilmar Ltd (NSE:AWL) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Shrikant Kanhere — Chief Financial Officer

Angshu Mallick — Managing Director & Chief Executive Officer

Saumin Sheth — Chief Operating Officer

Analysts:

Manoj Menon — ICICI Securities — Analyst

Latika Chopra — JP Morgan — Analyst

Smitesh Sheth — Raedan Securities Pvt Ltd — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Adani Wilmar, Q3 FY ’23 Results Conference Call hosted by ICICI Securities. [Operator Instructions]

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

Manoj Menon — ICICI Securities — Analyst

Hi, everyone. It’s a wonderful good morning, good afternoon, good evening, depending on the part of the world you’re joining this call from. Representing ICICI Securities, it’s our our pleasure to host the 3Q FY ’23 Results Conference Call of Adani Wilmar Limited.

The Management is represented today by Mr. Angshu Mallick, Chief Executive Officer and Managing Director; Mr. Shrikant Kanhere, Chief Financial Officer; and Mr. Saumin Sheth, Chief Operating Officer.

Without much ado, over to the Management for their opening remarks, post which we’ll open the floor for question and answers. Thank you.

Shrikant Kanhere — Chief Financial Officer

Yes, thank you, Manoj, for the introduction. This is Shrikant Kanhere, Chief Financial Officer for the company. A very good evening to all the participants joining from India, and good afternoon and good morning, depending upon the territories from where you — the investors are joining.

As a ritual, we will take you through a crisp, 15 minute presentation just to talk about the performance for Quarter 3. And post that presentation, we will open the floor for question and answers, and we would be happy to answer questions coming in from your side.

To start with, macro context. The edible oil prices soften, I mean, last time we spoke in November. That was the time when the edible oil prices started softening from July. And more or less, now they are stable for the entire quarter between November to this — between October to December. CPI food inflation is something which we keep always eye on, because that is something which has got some or other impact on the business parameters as Adani Wilmar is concerned. It has been softened 7% — as high as 7% in October to 4.7% and now 4.2% as far as December is concerned. So it’s a good story for us that on a macro economic level, the CPI food inflation is softening and coming down.

As far as the industry is concerned, the ROCPE industry for edible oil, it contracted by 1% between December ’21 and December ’22. Of course, this has got a multiple impact of COVID, multiple impact of lot of geopolitical issues and disruption of demand which came in the way. As far as the market for rice and wheat flour is concerned, on a MAT basis, December ’22 wheat flour grew by 4%, industry grew by 4% and rice grew by 6%.

This is a little bit snapshots and overview for all those who are joining the call first time and hearing out about the Adani Wilmar first time. We are one of the food FMCG company now in India with INR54,000 crore turnover recorded for last financial year, Number 1 player in Edible Oil, Number 2 and 3 player as far as the wheat flour and Basmati is concerned. With a good retail reach of 1.6 million outlets and 50-plus manufacturing location, one in every third household today, use the Adani Wilmar product.

For the nine months ended, 62% of volumes came from Edible Oil, 16% from Food & FMCG and 22% from Industry Essential. Our whole focus that is what we were speaking for last a couple of years, that whole focus is to grow the Food basket. And last year, it was 13%, now, it is good 16% of the volumes coming in from the Food. And that is what we would be growing as we go forward.. Edible oil is steady at 62%. The revenue mix though, keeps changing on the basis of the inflationary pressures or deflationary pressures on the price.

As far as the brands are concerned, today, Adani Wilmar holds portfolio of the brands including Fortune, which is our premium segment brand. Then we have lot of popular segment brand in Edible Oil, and of course we have premium brands in rice, which is — we are recently acquired Kohinoor.

So if you look at this slide 20 — so Fortune, today, is now INR20,000-plus crore brand, which is a quite a significantly big brands to talk about. King’s and Raag, which are our popular brands brands, fighter brands for — to support the Fortune in various markets is good INR4,000 crore-plus brands. Rupchanda, which is our Bangladesh subsidiary brand, it’s basically a brand in Bangladesh, which is again, a INR1,000 crore-plus brands. And all the other food brands, including Kohinoor, now, are INR100 crore-plus brands. So overall, the brand portfolio of Adani Wilmar has got good concentration as far as not only the markets are concerned, but in terms of the value is concerned. So brand portfolio, growing very steadily. And today, close to 73% of our revenue comes from the branded segment.

Little bit on the result highlights. So when we talk of the nine months, volume — consolidated volume grew by 13%. We were able to hold on the similar growth story as far as the gross profit is concerned, absolute gross profit grew by 16%. EBITDA, flattish, and of course, the PAT de-grew by 14%, and that is basically and that is basically an overhang of Quarter 2 numbers, which — we didn’t had a very good quarter given too much of volatility in the market. Similarly, on the standalone, more or less, similar numbers as we speak, for consolidated one. Volumes grew by 12% and PAT de-grew by 13%. Again, here also, overhang of Quarter 2 continues.

So when we talk about Quarter 3 numbers, a good story to talk about. We are quite satisfied with a reasonable performance which we have been able to showcase. Overall, consolidated volumes grew by 16%. Absolute gross profit grew by 23%, which is more than the volume growth. So we have been able to — this also shows that we have been able to consolidate the gross profit per ton basis, and that’s why the gross profit — absolute gross profit grew more by — more than by volume growth.

EBITDA, 20% growth and PAT 16% growth. Between EBITDA and PAT, of course we had to take a hit of interest cost, which is due to the rising rate of interest for last two quarters. On standalone, again, similar performance as far as — as compared to consolidated. Volume grew by 17% and PAT also grew by 15%, more or less in line with volume growth.

One a segment performance, for quarter and for the nine months, Edible Oils, grew by 9% on volumes, when it comes to the quarterly performance, and 4% as far as the nine months. Food & FMCG grew by 26% and on nine-month basis, it grew by more than 39%. Industry essential at 38% and 28%, steadily growing. So overall, when we look at so volume for the quarter, 16% growth and for the nine-month, 13% growth.

Similarly on the segment revenue per se, of course, the revenue is a result of price variable. So, on a y-on-y basis, again 16% volume growth. Our revenue grew by close to 8% and for the nine month, revenue grew by 13%.

On all the segments, we performed quite well in terms of quarterly as well as yearly performance. And yearly, of course, I want to add here is that it also has a lot of overhang of the Quarter 2 numbers, but when we look at a Quarter 3 number, Edible oil and Food segment, consolidated, their margins, Industry Essential basically got impacted because of the price volatility that we saw in the raw materials which we source for the Oleo and Castor oil.

This slide gives you a brief on how the realization per ton and gross profit per ton moved the — from — on a quarter basis and on the nine-month basis. I think the basic highlight of this slide is just to show that we have been improving on a gross profit per ton, whereas PBT per ton basis. And that’s very important for us whether the prices move up or down. If our margin profile per ton is growing, that’s how you are able to showcase an absolute margin growth in your performance. So, gross profit grew by close to 5% on year-on-year basis when you look at Quarter 3 numbers. Similarly, PBT per ton for the Quarter 3, grew by close to 2%, for the quarter.

Just to give little update on macro context for the Quarter 3. So we had a macro tailwinds in the form of strong demand on the back of festivities and weddings. Actually, there was more demand in terms of Edible Oil as well as the Food. The profitability and per ton margin on a standalone basis, the gross profit per ton improved by 5%, resulting into absolute gross profit growth of 25%, which is a combination of volume growth as well as margin improvement.

Our Bangladesh operation, which is our wholly owned subsidiary, suffered a loss of INR47 crore in Quarter 3. Bangladesh, as we know, right now the countries going through very crisis situation in terms of forex reserves, also in terms of the balance of payment conditions in the country. Currently, the government is — government has taken all the steps there to ensure that the coming festival — festive season of Ramadan goes well without any food inflation. And that’s adds to the worry to us because, while on the one hand, we are facing a problem on a currency crisis, because there also more than 70%, 80% of the raw material is imported. So, on one hand, you have a crisis on currency. On other hand, the government has putting a cap on the pricing, so you can’t raise the price. And that, actually combined effect, has resulted into our performance. But we are quite hopeful. And in fact, as we speak, today, the liquidity has already started improving in Bangladesh. So as we go forward, we are quite optimistic that this operation will turnaround and will start adding to our bottom line.

The good story is around the alternate channels. All the alternate channels, whether it is e-commerce or a modern trade, registered a very strong y-on-y growth of 32% and 26% in Q3 and nine months, respectively. And this is very encouraging for us because these are the channels where you are able to penetrate the Food products quite easily.

On the market share, AWL continues to gain the market share in Edible Oil and witness a satisfactory volume growth. Portfolio — on a portfolio part, the growth was enables by portfolio approach of having both the premium as well as popular brands. And that is what we always keep saying that, Adani Wilmar, per se, doesn’t have any risk in terms of downtrading, because we do have all kind of brands in our portfolio, whether it’s a premium and popular. So, whenever there is a downtrading thing happens, the customer usually falls in our net only because we do other popular brands to service the customer.

The mustard is a next growth story in Edible Oil. In fact, we have seen a tremendous growth in this segment. So, mustard volumes grew by 50% year-on-year in Quarter 3, and we are very, very bullish on this particular oil. Not only we but I think Government of India is also bullish, and they are putting in lot of incentives for farmers to grow mustard crop so that — and that is also one step in the direction of making India a self reliant as far as the edible oil is concerned. And therefore, we are also betting very big. We are Number 1 player in the mustard category, whereas the next largest player is being a distant Number 2. So, we do have a lot of plants for the mustard, and it is a very good oil in terms — not only in terms of volume, but also in terms of the margin.

So, our Food & FMCG business is now contributing, on a consolidated basis, 16%. And has delivered 26% volume growth for the Quarter 3. The key categories of course, of both our top product categories remains wheat flour and rice, in which we are growing very, very strong. On the wheat category, our next level focus, because we are now more or less stabilized on wheat flour, which is called Chakki Atta [Phonetic] in India. Our next focus is of course on the SRM, which is Suji, [Phonetic] Rawa [Phonetic] and Maida, [Phonetic] and of course, we would be betting big on Maida [Phonetic] in terms of the institutional. We want to become a big Maida [Phonetic] player as far as India is concerned. Going forward, the Company will keep leveraging its extensive oil distribution network to increase the penetration of its Food & FMCG products.

The Food & FMCG basket as such clocked close to INR2,900 crore of revenue, a very significant number to talk about for any company. And therefore, we expect that this basket when we close this year, FY ’23, would be a good close to INR4,000 crore of basket.

On Industry Essential, our Oleo Chemicals continues to grow on volume. While we had some hiccups as far as the pricing is concerned in this particular quarter, but Oleo Chemicals is a very, very premium business for us. We have now close to 800 tons per day of Oleo Chemicals activity, which makes us India’s largest Oleo Chemicals complex. We are also betting on various value added products in Oleo, which are using home and personal care category.

As far as the Castor is concerned, we remain leader in this category with 32% market share. 32% of Castor exports out of India is done by Adani Wilmar.

Quick business update, as far as the market share is concerned, we continue to consolidate our market share, Basmati rice market share now going up from 6.5% to 7.5% If I add Kohinoor into it, which we have just launched in August ’22, our market share is now close to 8.5%. Edible oil, our consolidated market share along with our JVs is now 19.5% Again, there is a gain of 10 basis points. Wheat flour continues to grow from 4.3% to 4.8%. And now wheat flour basket is a good close to 30,000 tons monthly basket for or us, which includes wheat flour, Maida [Phonetic], SRM and other products.

Some marketing activities, which you can see on the slide. Most of the multiple the marketing activities that we did in most of the e-com and model format stores, the strong on the ground execution — and so we keep doing such kind of marketing activities to promote our new products, particularly Khichdi [Phonetic] and our ready-to-cook products so that we get good traction in these market.

Enhanced — okay, next, ESG. On ESG, our mission, of course, we are quite conscious of Environment, Social & Governance dashboard. Our mission called SuPoshan, which is one of our premium project to eradicate malnutrition and anemia among the lactating mothers and children under age of 5. Now, we reach close to a good 1.6 million people, we have impacted lives of 1.6 million people. And this project continues and we want to — going into new areas where we can put this in place.

Next, on the Green Energy part, we have successfully, now, today, 7 out of 23 of our plants do have solar energy, and our plan is to continue put installations across all the plants over the year. We continue our efforts on water conservation through a zero liquid discharge which has been installed in 9 major plants. And we continue to work on this.

On sustainable plan — palm oil, responsible palm oil sourcing continues. So, more than 90% of our palm oil is today traceable till mill. And all our plants today RSPO certified. When it comes to recycling of the packaging material, more than 98% of our packaging material is recyclable. Of course, we do have a plan to take it to a 100% within next three years of time.

Just to harp upon what is the advantage of AWL, why do one in AWL. I think, without reading too much into this slides, the crux of this slide basically is that the business in which AWL is. which is Food & FMCG, huge amount of potential is available in India given the fact that today, still 90% of staple food business is unbranded. So there is a huge potential to grow for anyone who is into this business. And if you have a brand in place, manufacturing in place and the distribution in place, which we have, and with such kind of potential, you have — you can grow manifold in coming years. And that’s the message of this slide. And beyond that, if you have a support of two of the big promoters, the deep pocketed promoters, one side on Adani and other side on Wilmar, you have practically 0% risk of failing. And that’s, we are gunning for. And we are — we have been able to showcase such kind of performance for last couple of years and we are very much sure that as we go forward, we will become the largest Food & FMCG company of India.

So, this is it from my side. The next are more of annexures which are — talks about the result and talks about the financial numbers. I think, I am done with the presentation. And now I hand it over to Moderator to open the floor for question and answer. Mr. Mallick and Mr. Saumin Sheth is also with me, and we will try to answer the questions as they come. Thank you.

Manoj Menon — ICICI Securities — Analyst

Hello?

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Manoj Menon from ICICI Securities. Please go ahead. Manoj, please unmute your line from your end and proceed with your questions.

Manoj Menon — ICICI Securities — Analyst

Yeah, sorry. Sorry for that. Hi, team. Thanks for a pretty detailed presentation. I’ve got a bunch of, I would say, clarifications. One, on the market share in Edible Oil, if you could just give some — it’s a credible performance that 17-odd percent is 19-ish%, right? So two things there. One, your view of what’s driving these shares. Is it essentially the pricing volatility, you have better marketing mix, or is there also an element of increase in new recruits?

Angshu Mallick — Managing Director & Chief Executive Officer

Manoj, two, three things have happened. First is that for the first nine months of the calendar year, the market was not growing, and that is why you see as the industry MAT December figure is showing almost 1% drop in consumption. That is because of the high Edible Oil crisis. After October, we have seen, as the prices have cooled down, the consumption coming back and out-of-home consumption also going up.

As far as AWL is concerned, we have consistently built our rural distribution, because we always felt that the consumption potential in rural is higher because of the population. So we have — since last almost 12, 18 months, we have put a new team, we have extended the numerical distribution, we have made sub-distributors, and today, we have added at least, 7,000, 8,000 new towns — potential towns in the rural. And that is why our numerical distribution has increased.

In urban also, you will find that we have increased our direct reach, and that is why our market share has improved.

Manoj Menon — ICICI Securities — Analyst

Okay, understood. What I’m trying to understand is two things here. One, what is the further headroom based on the activities which we have already done, let’s say, for the next 12 to 24 months or maybe 36 months of sales driven revenue growth?

Secondly, I also want to bring in angle of South India being a market where your market share could potentially be much, much higher than where it is today, and what are the actions there on both marketing and sales side?

Angshu Mallick — Managing Director & Chief Executive Officer

Unlike other competitors in South, who always — who only has Edible Oil, and each of the state has one leader, we will play with our strength of Chakki [Phonetic] fresh, Atta [Phonetic] because in Atta [Phonetic] there is only one competitor across South who holds around 80% market share. And there is more than 5,50,000 retail outlets, which sell packed Atta [Phonetic]. We see a great opportunity in becoming the second largest brand of Atta [Phonetic] in entire South. And because of Atta’s [Phonetic] distribution, we can enlarge our Edible Oil distribution as well.

And both Edible Oil and our — and Atta [Phonetic] — and Food — rice, particularly Basmati rice put together will be a good combination to reach more number of outlets. So that is one strategy that we are going to take and which we have started working on in South.

Rest — in rest also, we see rural Maharashtra, rural Madhya Pradesh has great opportunity to increase, and our Hazira plant is going to play a very important role in catering to this part of the market.

Put together, we feel, going ahead, we will have enough scope to increase our market share, and you will see in the next four quarters, how things are changing slowly, because the edible oil prices have now come to a level where the brand Fortune is growing. So we see a good opportunity for AWL.

Manoj Menon — ICICI Securities — Analyst

Fair enough, sir. Just quickly moving on to the Food business, INR700-odd crores last year, INR2000 crores, again incredible growth year-on-year, but sequentially, largely INR1,000 crores — so it has some seasonality or should we not look at sequential at all?

Angshu Mallick — Managing Director & Chief Executive Officer

Presently, there is good opportunity for us to grow because everywhere, we see great opportunity, and we are pushing. This year, what has happened, I will tell you, in wheat flour, as the wheat prices have gone up, local players have lost the steam. And it is the big national players like us who have strength of inventory and strength of going ahead. We could get that market.

Second, the GST normalization of brand and registered brand and unregistered brands has helped us. So we have now much more fair — in terms of fair pricing. So we have that opportunity that is coming our way.

Seasonality is there in Food. Summer is bad for Atta [Phonetic] and good for rice, whereas winter is good for Atta [Phonetic], bad for rice. So that way if you see, we have both rice and wheat, so we are getting the advantage of all four seasons.

Apart from this, out-of-home consumption is giving us lot of advantage now, after October, as you see lot of weddings and lot of out-of-home consumption, people moving out, tourism is increasing. So, Basmati rice is doing well, Atta [Phonetic] is doing well, Maida [Phonetic] is doing well and Besan [Phonetic] is doing. All the four products, along with Edible Oil.

Manoj Menon — ICICI Securities — Analyst

Angshu, thanks for this. But actually, what I was trying to understand was, let’s say, December quarter, the 3Q FY ’23, Foods is around INR1,000 crores, September, the last quarter was also ballpark similar number. What I was trying to understand is given the — it will be reasonable in S&P of your Foods business. I mean, the sequential growth should have been higher or is it not the way to think about that?

Angshu Mallick — Managing Director & Chief Executive Officer

It should have been higher, but what has happened is the new tax — extra tax of 20% export duty on rice slowed down our rice export, otherwise our sequential growth would have been better. The order came on 8th of September. And all of a sudden, when 20% duty was imposed, the buyers who were reluctant to take on 20%, and we were trying to discuss it. So we lose, one, one and a half month on it. So that is why the rice exports slowed down in 25 days, at least up to 15th of November.

So you see, sequential, little less growth, but given the situation, every quarter, you will see q-on-q growth.

Manoj Menon — ICICI Securities — Analyst

Okay, one last question for the moment from my side. Honestly, we are also — actually, I am still learning the nuances of the Edible Oil as a category. So one philosophical question here is, as someone who has seen this for multi decades, would you prefer inflation or would you prefer deflation?

Angshu Mallick — Managing Director & Chief Executive Officer

Deflation.

Manoj Menon — ICICI Securities — Analyst

Okay, if I may ask why would you say so?

Angshu Mallick — Managing Director & Chief Executive Officer

Brands like Fortune would thrive more when the commodity prices are stable or lower. Consumers then buy more. And as you know, in rural India, people buy more on rupee value rather than quantity. So the buying becomes more. So we are the largest player get lot of advantage. And we have both, premium brand as well as the popular brand, and largest reach. So everywhere you go, you will get Fortune or King’s, either way. So we have lot of advantage. And I can tell you, the performance of the company will improve as the prices have come down and now it is much more reasonable.

Manoj Menon — ICICI Securities — Analyst

Understood. But as far as your P&L is concerned, it’s largely a profit per ton approach, right? So to that extent, it should not — except for the, let’s say, operating leverage you could have got during inflation, the profit per ton aspect doesn’t really change.

Shrikant Kanhere — Chief Financial Officer

No, so Manoj, just to answer — or just to add what Mr. Mallick said is that in case of the deflation or a bearish market or a falling market, whichever way you want to look at, generally what happens is you are sourcing cost goes down, whereas as far as the brand is concerned, you are able to maintain the kind of prices [Indecipherable] so you are not reducing your brand prices but you sourcing goes around. Therefore, the per ton margins improve and that’s the point where Mr. Malick is coming that deflation also always is good for us.

Manoj Menon — ICICI Securities — Analyst

Understood. So basically your volume of propensity to consume also gets better, as the penetration gets better, plus profits also. Very clear. Thank you, and all the best.

Angshu Mallick — Managing Director & Chief Executive Officer

Thank you, Manoj.

Operator

Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead.

Latika Chopra — JP Morgan — Analyst

Yeah, hi. Thanks for the opportunity. So couple of questions. The first one is on the Edible Oil sales. For the nine months, you’ve done a 4% volume growth, how you think about sustainable volume growth as you move into FY ’24? Will it come off of more normalized sales and hopefully in Edible, prices will stay stable? How should we — what kind of target you have in mind for Edible Oil volumes?

Angshu Mallick — Managing Director & Chief Executive Officer

See, Latika, the first nine months of this year have been bad in terms of the prices coming from the top, and slowly coming down. So, consumers were surely — wait and watch policy, so buying less, less inventory, consumption going down, out-of-home consumption also going down. Now, the industry was not growing. After two years, we have seen the first up-shoot in consumption from October onwards. October, November, December itself, the industry has seen almost 6% to 8% consumption growth. And we have seen double-digit growth.

Now, this is because, you have seen how many marriages are there, more than 3 million marriages, they are saying, between November and April. And then, out-of-home consumption, tourism has increased, and everything. So that is a big consumption for India. In-home consumption because of the prices going down, has also improved. So overall, overall, Edible Oil consumption is now growing for the first time after two years.

For the coming year, FY ’24, we see at least 6% to 8% volume growth at all-India level industry growth, but AWL should grow at double-digit.

Latika Chopra — JP Morgan — Analyst

Okay, and you just said that your consumption growth was double-digit growth, but for Q3, your volume growth is 8%, right? So, are you talking about retail volume growth instead of primary?

Angshu Mallick — Managing Director & Chief Executive Officer

See, what has happened is, when we give you the figures, these are all consolidated figures for our in-home consumption as well as out-of-home consumption, which includes our sales to the industry, particularly Baking industry and Frying industry. In Baking industry, mainly comes the the chip manufacturers, whether it is ITC, Britannia, Parles of the world, and then Frying industry can be Lay’s, Bikaji, Balajis of the world. Now, they’re also potential Edible Oil consumers and we are one of the largest suppliers to them. This industry did not do well in the Quarter 2, and that is why that consumption was less, but when you look at oil consumption in our general trade, modern trade and all that, it has been more than 15%.

Latika Chopra — JP Morgan — Analyst

Okay, so it’s more like B2C kind of a volume growth.

Angshu Mallick — Managing Director & Chief Executive Officer

Yes, yes, yes, B2C has done very well.

Latika Chopra — JP Morgan — Analyst

Okay, that’s helpful. And the second thing I wanted to check was realizations in Edible Oil. Are these stabilizing now or there is a little more connection that’s anticipated in the current quarter depending on your selling prices, et cetera?

Angshu Mallick — Managing Director & Chief Executive Officer

The prices, more or less, has corrected downwards, at say, INR95 colleen wholesale price per kilo, is one of the most affordable price, which used to be earlier INR120. So, at these prices, market is very stable and consumption is back in action. I feel consumers are — have accepted INR100 — between INR100 and INR120 a liter price is acceptable to the consumers. Mustard season is coming next month. So obviously, mustard will bring lot of pressure in the prices, and because mustard crop is a bumper crop this year, so it will cool down the prices, which will improve consumption, and B2C or tactile volume is surely going up, and AWL will stand to gain [Technical Issues] have been the leader in almost all the categories offered.

Latika Chopra — JP Morgan — Analyst

So average realizations could some off, which basically means the overall revenue growth could still be lower than the volume growth. Is that the right way to think about it?

Angshu Mallick — Managing Director & Chief Executive Officer

Yes, you are right.

Saumin Sheth — Chief Operating Officer

And how should we think about margins, and because this quarter for Edible Oils, you’ve reach 2%. Do we benefit, as you just said in the earlier question, you benefit more in a deflating environment. So should we anticipate these margins to move to close to 3% odd levels, which you were doing in — probably in FY ’21?

Shrikant Kanhere — Chief Financial Officer

Yeah, so Latika, Shrikant this side. I think, yes, you’re absolutely right. So if the prices are stable and/or may correct little downward, I think our margin profile should improve.

And in fact, there is another angle to it also, that all the downgrading that we witnessed in Quarter 2 and Quarter 1, and to some extent, Quarter 3, I think that downtrading should announced get corrected and customers who have dropped from, let us, Fortune network and have gone to the popular brands, they will again come back.

So to that extent also, the margin profile per ton in terms of gross margin or EBITDA per ton should improve.

Latika Chopra — JP Morgan — Analyst

Sure, and Industry Essentials, this year, did see benefits of adding of capacity, at least on volumes and top-line, but we did not really see much benefit in EBIT. So this is a little complex cohort for us to understand. I know there are lot of moving parts here, but could you help us with some kind of target that you have in mind for FY ’24? How should we think about revenue and EBIT margins for this segment?

Shrikant Kanhere — Chief Financial Officer

So this is a very steady state business. This is the first time this is — I mean, you can say, it is a one-off case where Industry Essential vertical has got a hit because of, of course, the price volatility and to some extent overhang of the Quarter 2. But it’s an extension of Edible Oil only, it’s an extension of Palm Oil refining. So overall, the complete value chain, it should be able to deliver the margins little better than the Edible Oil, because as we said, it’s more of an extension and forward integration, and it delivers the products which are basically utilized — used is a HPC category. So it does had some level of better margins as compared to the Palm refining or Edible Oil.

I think as we go forward, next year, we should not face such kind of margin drops, which we have witnessed in this year.

Latika Chopra — JP Morgan — Analyst

Alright. And the last thing I wanted to check was increase in interest expenses sequentially. What is the impact on account of, is there any one-off fatigue there? Thank you.

Shrikant Kanhere — Chief Financial Officer

No, it’s typically rate hikes which we have witnessed for last three quarters. So, I mean, last year same time, the LIBOR or [Indecipherable] was close to the 50 basis point, today it is 4.75%. So on a quarter-quarter basis, last year quarter versus this year quarter, the dollar is — interest costs have gone up by good 3.5%.

Similarly, on a nine-month basis the dollar cost — interest costs have gone up by close to 2%. And that is a very big chunk of interest increase for us. And that’s why the interest cost has gone up, which, I think should remain at this level, because what the commentary which we are hearing from the Fed, as well as most of the Central Bank, that while hiking cycle is peaked, but rate cuts are not going to happen sooner, at least for the next one, one and a half years. So these interest levels will more or less remain same.

So, the interest which you see for this quarter, I think, to some extent, it is a representative for — as we go for the next financial year.

Latika Chopra — JP Morgan — Analyst

Okay, and what could be your short-term borrowings, as of nine months ended, December?

Shrikant Kanhere — Chief Financial Officer

See, Latika, there is no — so, we don’t have a borrowings per se, because if you look at our definition of borrowing, we don’t have any cash-backed drawing or a cash — or fund-based drawing. At max, we have close to INR1,000 crore of borrowings sitting on our balance sheet.

Rest everything is the suppliers credit. So, to give that number — so if you want that number, it is close to $1 billon.

Latika Chopra — JP Morgan — Analyst

Alright. Thank you so much for the answers.

Operator

Thank you. The next question is from the line of Smitesh Sheth from Raedan Securities. Please go ahead.

Smitesh Sheth — Raedan Securities Pvt Ltd — Analyst

Sir, my — all my questions have been answered. Thank you very much. It was a detailed and an elaborate presentation.

Angshu Mallick — Managing Director & Chief Executive Officer

Good, very good. Thank you.

Operator

Thank you. [Operator Instructions] I will now hand the conference over to Management for closing comments.

Angshu Mallick — Managing Director & Chief Executive Officer

Good evening to all. So, first is that, thank you for attending the call. We could explain as you have asked for. Looking forward, we, as a company, always feel that we have — we are in a business, which is food, and we are in basic foods. Basic foods, as you know, are most required products, such as rice, wheat flour, Daal [Phonetic], Besan [Phonetic], sugar. And these products are always in demand. The branded part is hardly 15%, not even 15% in case of rice. So we have a big opportunity of going ahead. Edible Oil is a matured category, but other categories are coming up. It’s very exciting.

It has also taught us many things which we have now understood how to build infrastructure to handle such vast volumes. We do now more than 5 million ton, and we would like to grow fast on this volume. So, supply chain management and all this, we are working on. And I’m sure, in days to come, you will find Adani Wilmar as one of the most efficient FMCG and Food player in the country.

Thank you, everyone.

Operator

[Operator Closing Remarks]