Adani Wilmar Ltd (AWL) Q4 FY23 Earnings Concall Transcript

Adani Wilmar Ltd (NSE:AWL) Q4 FY23 Earnings Concall dated May. 03, 2023.

Corporate Participants:

Shrikant Kanhere — Chief Financial Officer

Angshu Mallick — Chief Executive Officer and Managing Director

Analysts:

Manoj Menon — ICICI Securities — Analyst

Latika Chopra — J.P. Morgan — Analyst

Varun Singh — ICICI Securities — Analyst

Yogesh Tiwari — Arihant Capital Markets — Analyst

Akshay Krishnan — ICICI Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q4 FY’23 Earnings Conference Call of Adani Wilmar Limited, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.

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

Manoj Menon — ICICI Securities — Analyst

Hi, everyone. Representing ICICI Securities, it’s our absolute pleasure to welcome you to the conference call of Adani Wilmar Limited. Wonderful good morning, good afternoon, good evening to you depending on the part of the world you’re joining this call from. The company is represented today by Mr. Angshu Mallick, Chief Executive Officer, and Managing Director; and Mr. Shrikant Kanhere, Chief Financial Officer.

Over to you sir, for the presentation. And post that, we will open the floor for Q&A. Thank you.

Shrikant Kanhere — Chief Financial Officer

Yeah. Thanks, Manoj, and very good afternoon to everyone who has joined the call. Thank you very much for joining the call. As a ritual, we will take you through our presentation — a short presentation and then we will open the floor for question-and-answers.

To start with, we’ll talk about macro context. The edible oil prices cooled off during this quarter, while the slide still continue. Last full-year, it was a very eventful at year as far as the edible oil prices are concerned. The prices were as high as $2,000 a tonne when we started the year. Now it is even lower than $1,000, so that’s kind of price we have witnessed during this year. Wheat prices also started going up and down and finally after government intervention, the prices came down and has been stabilized. However, the El Nino of fear and the unseasonal rain which hit our Indian territory off late has created some concern around the stocks.

The paddy prices, of course, remained again up and down depending upon the season. Food inflation which is one of the most talked about number during last whole year cooled down from 8.6% in September ’22 to now below 5%. That is something which is a good news for the companies like us, where the inflation goes down, the demand picks up and that’s where we have an opportunity to pick up our business. Coming to the results highlights, it’s a mixed bag, rather I would say for the full-year as well as for the quarter. On volume front for the quarter, we grew by close to 15%, 16%, which is good. However, the revenue went down by 7%, is more of a price correction impact due to which revenue came down. When we look at yearly volumes, we grew by 14%, tis a double-digit growth, fueled by food segments today. And that’s something which is encouraging for us. Revenue went down by 8%, and again more of a price impact.

So when we look at our quarter number on a gross profit EBITDA and PBT, we have actually got impacted on the margins primarily because of the five basic reasons. The reason number one is that the TRQ disparity, which continued for us in this quarter has still. So while we actually had finished our TRQ quota, the competition was still having it and they were importing the oil without any duty. Where s for us, the oil import was with duty. However, we took a conscious call not to in increase the prices and keep selling at the market prices just to ensure that our market share is intact. That impacted our margins at a gross profit level.

Second, of course, in the quarter the commodity prices slide continued and therefore as we witnessed in quarter two last year — quarter two this year, a every level we had some high priced inventory which had to be sold in the market at a lower price, impacted us.

Third very important, which is something I think entire India Inc cooperation went through it is also about inflation. Inflation kept impacting our operating costs. Last and not the least is of course the finance cost. We all have seen the rate hiking cycle which was — last year unprecedented rate hikes at US, unprecedented rate hikes at most of the countries where the Central Bank raised the rates to contain the inflation. So that also costed us because the interest cost went up, which could not be fully passed on to the consumers because they rate hike was quite significant. And of course, our Bangladesh subsidiary, they didn’t do well this year. They incurred loss because of the situation in the country which is right now going on. It is still going on, in fact, as far as the currency situation concerned, nonavailability of counterparty to hedge the [Indecipherable] position. And, of course, too much of government intervention in controlling the prices. All these factors actually impacted very adversely on our quarter four bottom line.

But having said that, these kind of risks are not something which will be there quarter-after-quarter. I think these risks come and go. The only encouraging thing and for us good thing is that volumes are growing and therefore our coming quarters we are quite optimistic, given the fact that demand is also picking up.

Going to the FY’23 full year number, more or less similar. But however, when we look at the full year and as I said earlier, our quarter two and quarter four got impacted more due to commodity volatility rather than quarter one and three. And therefore when you look at the full year number, the impact on margin is not as high as we actually experienced in quarter two and quarter four. So overall PAT down by 28%, again similar reasons which I explained in the earlier slides. But as we go forward, I think the things look good.

On a business wise numbers, as I said, we grew by 15% on volume though the revenues went down by 7%. Food segment, which is one of the priority segment for the company, in the quarter four grew by 38% on volume and 3% on the value. So practically last two years we have doubled our food business. In fact, the industry essential grew by 55% on the volume. Edible oil remains flat because of the demand not picking up from the institutional and frying and bakery segment. While consumer pack and the packed oil kept growing at a high single digit.

For the full-year again, food story remains same, growing at 39% and 55% on volume and value. Edible oil remained at 3% and 2% on volume and value. On segment, we had most of our drop in our margins coming in from the edible oil, and of course, because the edible oil being a significant contributor to our topline as well as bottom line. And of course, the volatility was very high as far as the edible oil is concerned. This is the segment which got impacted very much whether it is quarter or whether it is full-year. But as I said earlier, since the prices have been now cooled off, stabilized, from here onwards we don’t see the volatility hitting our profitability number.

So these are the few key highlights. I will certainly not read into everything. I’ll just highlight a couple of them that are food business now is close to INR4,000 crore, which we were saying since last year since we went into the IPO. And I think as we said earlier, it is doubling every two years and therefore we are quite optimistic. Within the food, wheat flour and rice are individually now INR1,000 crore business. Our Oleo Chemical is growing by more than 20%. And — so these are couple of highlights which are there. I think I’ll not go through each and everyone. So can you go to the next slide. On the macro context, I think quarter four — so these are the basic reasons which I spelt out earlier. What are the reasons which impacted our margin.

One the business update, we are putting our leadership in edible oil continues. So, we are number one player in the soyabean, number two player in palm, number one player in mustard oil. So our leadership continues, while the market share in 1.5 times of our next competitor and we are going quite decently on our market share as far as the edible oil is concerned. Wheat flour and rice, again the story remains the same. We are consolidating our market share, going up from 4.7% to 5% in the case of wheat flour and 6.5% to 7.2% in the case of rice.

Now I will in fact stop here without dwelling much on the presentation which is already there, it’s uploaded on the NSE site also, which talks about sort of other things, which I don’t think needs to be explained at least on these calls because most of you who are attending this call has fair understanding about the company, fair understanding about the company’s business and the segment.

In fact, I would now request Manoj to open the floor for question-and-answers. Myself and Mr. Mallick are here. We will try to answer as much as possible. And let’s go ahead with the question-and-answer.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Manoj Menon from ICICI Securities. Please go ahead.

Manoj Menon — ICICI Securities — Analyst

Hi, Team. So just a couple of micros and then a couple of other questions as well. One sir, if you could tell us about, let’s say, your your view — your outlook on the different commodities because it could behave differently, the different edible oils rather than the bucket. So that’s question number one.

Angshu Mallick — Chief Executive Officer and Managing Director

Okay. Manoj, I will take one by one. Let’s go to our big business edible oil. Edible oil prices from the top has come down, presently is in the range of $950, which possibly is a very low numbers. Rice bran oil crude is at INR79, which is surely very cheap. Cottonseed oil is in the range of INR95. Mustard oil has come to around INR9,500, so which are at its slow. Two things are happening. One, between H1 and H2, let me tell you, our sales have grown by 28% in terms of packed oil, I am saying. That means in H2 consumers have consumed that much amount of more, one. And two, our brand share has gone up because the edible oil prices have come down.

Two, at these levels, India consumes only 16.5 kilo per head. Whereas if you see Bangladesh, a poor country, 17 kilo, Pakistan is 19 kilo, China 24 kilo. So obviously, India will consume more oil. And we are seeing that in the first four, five months of this oil year, that oil year starts in November, the imports are already 8% up. So consumption is also 8%, 10% up. So we see; one, India will consume more edible oil at these prices. Good for us because strong brands like Fortune will attract more consumer. Second, it is now more affordable, so consumers will put in more money on the brand. Third, what we are seeing, five liter jars, 15 liter, where we saw a drop in sales in the first half of the year, second half it started going up, but Jan-Feb, March the five liter sales really picked up. That’s an indication that consumers are buying full five liter at a time, so that is good for brands like us, that is one.

Now we go to other products like wheat. Wheat market went up INR28, INR29. Obviously, lot of local brands evaporated from the market. Fortune, obviously was there and we grew the market. We consolidated our position, and thanks to our inventory management. Generally we buy large quantity of wheat during the season and we’ll keep it so that we are able to supply consistently same quality to the consumer, and that is what is our USP, since we have enough funds to carry. And second, we know that wheat prices normally goes up as the season goes up. So we were able to supply and our volumes grew by around 25%, 30%.

Now come to rice. In the rice, basmati is only branded. Non-basmati is nonbranded. We have started non-basmati in a bigger way. So we have processing plants in UP, Bengal, South, and we are also packing in Gujarat and other places. So we now have almost a pan-India packing and distribution centers for non-basmati rice. And basmati, obviously, we are there with Kohinoor and Fortune. So this portfolio grew by around 40%, 45%.

Then come basin. Basin is a big business for us, almost nearly half. That means 50,000, 60,000 comes from the brand, 40,000 comes from the HoReCa segment. So almost 100,000 tonne business for us. We are the largest player there. So we saw out-of-home consumption going up, so that’s commodity pulses and percentage-wise. Sugar, we are in branded segments, so that did around 18%, 19% growth. So year-on-year it is growing so. So all the commodities if you see, the prices have becomes stable, affordable and country is consuming more.

One very interesting thing I would like to inform you and everyone is that there is very clear evidence of rural now consuming more. That is very-very clear. Quarter-on-quarter if I were to tell you. In edible oil our normal share is 30%, rural 70%. That was Q1 was 30%, Q2 was 29%, Q3 was 29%, Q4 was 31%. It went up. And in foods, it was 29% in Q1, then 30% — 30%, and Q4 was 34%. So both food and oil showed much better volume growth in rural markets. So that is good for us that brands are getting considered. So this is important, Manoj.

And the third part of all these commodities, who — how are you selling. So alternate channel has become very important. Ecommerce, let me tell you is becoming very-very important for grocery. Alternate channel in edible oil has grown from 10% to 12% in one year, but in case of food it has grown from 15% to 23%, and today food gives us 23% business from alternate channels, but this is at India level. But if you go at some towns like Gurgaon, Pune, Bangalore, all these places, it is almost 60% of the business coming from e-commerce and our brands, obviously does well these. This is what I wanted to say.

Manoj Menon — ICICI Securities — Analyst

Helpful. Thank you. Thank you, sir. And just a lot of for my follow ups also. And this just — for one aspect in terms of the volatility which you have seen, does it also create situation opportunities for you? Are you finding such opportunities in the market currently?

Angshu Mallick — Chief Executive Officer and Managing Director

See, when the market goes up, commodity goes up, brands — strong brands like us can grow the volume, but after a point we can’t increase the price when the commodity goes up very much, like what has happened. But when it comes down, we don’t reduce it at the same level and the consumers are comfortable. Say in today’s situation, consumers are comfortable buying our product although we have not corrected it downwards to that level. So, when commodity comes down, strong brands like us as will surely gain.

Manoj Menon — ICICI Securities — Analyst

No sir, my question was does this volatility also, I mean industry consolidation up and accelerated market share gains for you.

Angshu Mallick — Chief Executive Officer and Managing Director

There has been a situation where many of the brands were not available when the market went up to $2000 because they could not cover and they had no stocks. So then they returned back when the market becomes normal, But surely there is an opportunity to consolidate.

Manoj Menon — ICICI Securities — Analyst

Sure, sure. Thank you.

Operator

Thank you. [Operator Instructions] We have a question from the line of Latika Chopra from J.P. Morgan. Please go ahead.

Latika Chopra — J.P. Morgan — Analyst

Yeah, hi. Thanks for the opportunity. Couple of questions. First was on edible oils. You closed the year with 3.4 million tonnes of volumes. As you look look forward to FY’24 and you did mention some pressures on the B2B side of the business, how should one think about full-year volume growth, would it be in the mid-single-digit range, picking-up from 3% levels that you clocked for FY’23?

And the second part on edible oils is on realizations. Your Q4 average realizations were almost 10% below the full-year realizations. So does it mean that assuming prices kind of stay at Q4 levels and I know mix might keep changing. For FY 24, we are looking at a high-single-digit decline in realization year-to-year. How should one think about that? Thank you.

Angshu Mallick — Chief Executive Officer and Managing Director

I will answer your first one first, that on 3% growth. Overall, edible oil growth for AWL has been 3% on volume, but packed edible oil business it grew by 8%. Our B2B business was impacted mainly from the frying industry, namkeen industry. These industry has had difficult times because with raw material prices going up, their INR5, INR10 snacks did not do well because they did not have margin and many people were not able to sell. So we found that these small frying companies and of namkeen basically and potato wafers, they were impacted and they buy our oil. So that is one. But brand share, packed oil grew at 8%, which is surely more than what Nielsen has given. Going forward, we are confident that we will continue to grow at more than 8%, it looks like, because India is consuming more. And since India is consuming more, we are confident that it will grow more.

As far as B2B is concerned, B2B is now coming back. Out-of-home consumption has started. Frying industry, baking industry have started doing well. Rural market is doing well. It is very important for rural to do well for this type of industry because rural consumes big amount of biscuits and namkeen. And when the people go out-of-home, they buy more of these products. So it is very important. And we see a good opportunity. So I think overall, overall India will consume more edible oil for sure, and Adani Wilmar will also grow at more than India’s levels.

And as far as the realization is concerned, would you like to?

Shrikant Kanhere — Chief Financial Officer

Yah. I think, Latika, so. As we said, the prices have already cooled off and settled. We also don’t think that there would be now any bullishness that might come in the edible oil prices. However, having said that, you never know because the kind of world we are sitting today, you really don’t know what is coming up tomorrow. But assuming that there won’t be too much of price rise in edible oil prices, I think the realization should moderate by close to 15% as compared to the last year.

Latika Chopra — J.P. Morgan — Analyst

That’s helpful. Thank you. And when you think about — I don’t think margins are probably is the right way to look at it, but if you’re looking at EBIT per metric ton or EBIT per metric ton, how should one think about that? There will be — there is a price deflation, but volumes will go up, but it seems like even if volumes go up high-single-digit and there is a double-digit price deflation, are we saying that overall revenues for edible oils in FY’24 could look lower, but at the same time your EBIT for metric ton could improve, and I was just thinking about the other costs, operational costs etc., which you mentioned have been inflationary in nature. How are you thinking about that?

Shrikant Kanhere — Chief Financial Officer

Yeah. So the big thing which is very important in our industry is that if the edible oil prices are cooled off and therefore you have a reasonable price level, the brands like us should be able to pass on any inflationary pressure on the operational cost interest or anything else to the consumer. But however, you can’t handle both. On one hand you have a high edible oil target and on other hand you also have a inflationary pressure on your cost.

So what we are very optimistic about that as we go forward in next year since prices are stabilized at a level where we were actually pre-COVID, so we should be able to consolidate our margins on EBITDA level per ton as far as the edible oil is concerned.

Latika Chopra — J.P. Morgan — Analyst

Okay, so because of the huge volatility in Q3 — in FY’23 among quarters, right? Q2 and Q4 were quite low. So should we then take the reference more as where we have numbers on FY’22, FY’21, which were like INR3,000, INR3,500 rupees per metric ton kind of an EBIT on full-year. Can we reach those levels? Is there some confidence?

Shrikant Kanhere — Chief Financial Officer

So I can only tell you that we can certainly look at the levels which we were at in FY’22, given the fact that now edible prices have stabilized. So we should be able to achieve those levels which we actually demonstrated in in FY’22.

Latika Chopra — J.P. Morgan — Analyst

And the second question I had was on food business where you have done really well. So 38%, 40% kind of growth. Is that kind of momentum of 30% to 40% be still maintained over a base that you were able to clock in FY’23. Is there a reasonable confidence in terms of capacity buildup and revenue potential?

Angshu Mallick — Chief Executive Officer and Managing Director

I think the food business, we are very bullish because honestly only 12% branded in Atta. How much we can grow is something that I think we can surely push, why not. This 12% is very low because the country can surely consume 25% branded Atta and it is possible. So we have — our new capacities are coming up. We have put 500 tons per day. We are going ahead with another three such capacities in near future for 500 tons each, Atta, Maida. So we are taking some units on toll and all that. We are ramping-up our capacity. We are increasing distribution reach for Atta, Maida. That is one.

Two, rice business we see a great opportunity to grow. So we are pushing that. Al the food segments we are very bullish honestly, and we are investing also heavily. Our three new dal projects are coming up, which should be ready by year end, which are all 240 tons per day Channa dal. So I think we will be the largest Channa dal player in the country after one year. So entire dal that we will get we will sell that to the institutions, to the HoReCa and to consumers, thus make Basin out of it. So all this put together, we are putting lot of money on capex into the business.

Latika Chopra — J.P. Morgan — Analyst

I know you’ve always maintained that revenue growth is prioritized over margins in this segment, but you have done decent with overall year ending at almost 2.5% EBIT margins, which actually were better than edible oil for this business. So you should — would the mix and the scale leverage keep pushing up these margins for food business going forward? Or the level of investments that you’re making could be a little bit of a drag?

Shrikant Kanhere — Chief Financial Officer

So you’re absolutely right, Latika. So food this year was actually delivered better on topline as well as bottom-line. But as we said and we were maintaining this since beginning that we are driving food at a EBITDA zero level just to ensure that we reach to a respectable level of 25%, 30% of food coming in, in the overall schemes of things. But having said that, as we go-forward into next year, we will have some capacity additions coming in and therefore the depreciation costs and other cost will be adding it up. However, the performance on the bottom line I think we should be able to continue the way we have been able to deliver. We are ahead of, in fact, delivering on the food bottom-line than what we have said earlier. But I think next year going forward I think this performance should continue.

Latika Chopra — J.P. Morgan — Analyst

All right. And just one bit on industry essentials. You ended the — you had 1.2 kind of million metric tons of volumes, which is like a 34% volume growth because you added more capacity. What are the plans for FY’24? Do we see full impact of capacity addition still playing out in next few quarters?

Shrikant Kanhere — Chief Financial Officer

Yeah, so the capacity will be added Oleo is still not being fully utilized. So therefore you may see more volumes coming in industry essential. But let me also tell you that industry essential volumes are also also consist of couple of credit commodities such as [Indecipherable] feed mill and other mills. So if that gets added, it may continue to grow. But this 34% majorly came from the VOC rather than coming in some Oleo. So to answer your question, the Oleo capacity will play full when we go forward in next year.

Latika Chopra — J.P. Morgan — Analyst

And in terms of realizations, here again there is a fair bit of volatility, but is the average that you’ve seen over the last two-three quarters a fair way to look at average realization here? Like this, sorry, the Q4 levels that we have so that’s included?

Shrikant Kanhere — Chief Financial Officer

Yeah, absolutely right. So Q4 levels are kind of now levels which you can expect as we go forward.

Latika Chopra — J.P. Morgan — Analyst

So like for edible oil you said like almost 15% inflation for FY’24, this will be a lot lower, right?

Shrikant Kanhere — Chief Financial Officer

This should be more or less similar to what we are — because at the end-of-the day Oleo is an extension of what we do in our palm refining.

Latika Chopra — J.P. Morgan — Analyst

Okay, and my last question was on capex — planned capex for FY’24, and if you have any visibility in FY’25 also if you could share? Thank you.

Shrikant Kanhere — Chief Financial Officer

So all our capex which we had envisaged in IPO are running on time. The biggest complex which is at Gohana, we have already started working on that. So out of the total capex outlay of close to INR1,900 crores which we had kept in IPO proceeds, we have already spent close to INR400 crores and another INR400 crores of commitment has already been issued. So close to 50% of capex already committed. As per the plan, most of the capacities should get delivered by end of FY’24, except for the fact that the Gohana, which is the biggest one will get delivered only in FY’25

So basically all the capex which we are doing it now, the real impact on the bottom-line and the top-line both, we should start seeing from FY’25 and to FY’26.

Latika Chopra — J.P. Morgan — Analyst

Got it. Thank you so much.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Varun Singh from ICICI Securities. Please go ahead.

Varun Singh — ICICI Securities — Analyst

Yeah. Thanks for the opportunity, sir. Three questions from my side. First is on the high inventory cost days that you discussed in the results. So can we now fairly assume that the impact of all the high cost inventory is already taken and from here onwards we can expect improvement in margins, etc.?

Shrikant Kanhere — Chief Financial Officer

Yeah, I can only answer it in one question that now FY’24 we are starting with a clean slate. Okay, sir. Okay, great. And then my second question is, how do we see rising competition from private-label from other alternate channels? So, I mean, including modern trade, e-commerce, quick commerce, etc.

Angshu Mallick — Chief Executive Officer and Managing Director

See, product-wise the competition is different. Take edible oil, the first one, it’s a big volume business. General trade is 90% and 10% is organic channels. So, and in alternate channel private-label shares are much smaller, it is not more than 10%, 12%. So put together in edible oil, private labels have not played big and they have not been able to succeed because of the volatility and they’re not being able to manage that well.

When it comes to food, in rice I don’t think Basmati rice there is any private-label strong. There are top three brands in the country and Fortune and Kohinoor is also amongst them. So that is by these three brands handle it.

Atta, I have seen top two-three brands nationally are doing better, although there is some amount of private-label, but that is not so strong and not a very preferred choice of consumers. People do buy, but it’s not people always order online. And dal, yes, dal I would say private labels have done better because there is no national player which can command one premium and recall. So they have done well in dal. Basin, I think branded basins are doing better than private-label basin. [Indecipherable] has done better, because there is no national brand. We are there in the national, but we are still to grow big. So there are some products where private-label has done well because there is no national competition or even strong local competition. And that is only where they have done well. Otherwise, I still think the national brands are doing better.

Varun Singh — ICICI Securities — Analyst

Understood, sir. Understood. And, sir any commentary regarding private-label doing better on e-commerce compared to modern trade or, I mean, in both the places your commentary remains same?

Angshu Mallick — Chief Executive Officer and Managing Director

I think modern trade, private-label will do well because they have the ability to push it. They can keep a good brand behind and they can put their brands in the front of the shelf, they can promote their brand aggressively and they can put some gondolas or display. But e-comm what happens is that consumers generally go for brands that they trust.

Varun Singh — ICICI Securities — Analyst

Understood, sir. Understood. Yeah, that’s it from my side, sir. Thank you very much.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Yogesh Tiwari from Arihant Capital Markets. Please go ahead. Mr. Yogesh Tiwari, you like is unmuted. Please go ahead.

Yogesh Tiwari — Arihant Capital Markets — Analyst

Thank you, sir, for taking my question. My first question is on — if you can share the percentage for B2B and final consumer in terms of your edible oil and food business, both. What would be the percentage which goes to B2B, like baking and other industry and the final consumer?

Shrikant Kanhere — Chief Financial Officer

Yeah, I’ll give you a little slicing on edible oil. So 75% of our edible oil we sell in a pack format. Now that pack format can be a consumer pack and that pack format can be a bulk pack also, which is a 10 liter and 15 liter kind of packs. The rest of the 25% of edible oil we sell actually to the institutional or a bakery and frying industry which goes into noodles. So that’s the basic slicing of the edible oil.

Yogesh Tiwari — Arihant Capital Markets — Analyst

And the same in the food business, like if I get a percentage of B2B and final consumer?

Angshu Mallick — Chief Executive Officer and Managing Director

In food business, this ratio is little high. It would be around 85% in packed form and 15% in — see, there is nothing lose in food. 50 kilo is only large-size pack, that is Maida, mainly Maida for the baking institutes industry. So that we give in 50 kilo bags, rest everything is it 25 kilo bag and less, but mostly Atta is almost 95%, 90% is in consumer pack up to 10 kilo that we all take at home. Rice is also 1 kilo, 5 kilo, 25 kilo more is there for the institutions.

Yogesh Tiwari — Arihant Capital Markets — Analyst

And sir, are we seeing any recovery in the baking industry because that would be very important for volume growth. So from last quarter we are seeing this slowness. So any recovery in fourth quarter and going forward in the baking and confectionary industry?

Angshu Mallick — Chief Executive Officer and Managing Director

The biscuit industry has started doing well. Biscuit industry should grow at around 7%, 8%, that is our estimates are. So baking industry should do well because Maida prices have come down, edible oil prices have come down, only the sugar prices and sugar is also under control. So there are major products that they consume. All the three are under control and oil is surely controlled. Wheat flour which they were buying at a high price has now come to normal.

When it comes to frying industry, potato was a problem. Now potto availability has increased. Edible oil prices have come down and rural market and out-of-home consumption has begun. I personally feel the frying industry is also started doing well. So you will see that all the snack food industry is also doing that, because their major construction comes from out-of-home. And the more people are on the streets, they will buy.

Yogesh Tiwari — Arihant Capital Markets — Analyst

Yes, sir. And sir in terms of realization in edible oil. So like as you said, we are currently about $1,000 and we expect about 15% drop approximately in realization. So at $850, will that be a bottom, like after that the price can still not stabilize and go up?

Shrikant Kanhere — Chief Financial Officer

Sorry, so when I was answering to the question raised by Latika, when I said 15% moderation in sales realization, that is I am referring to the last full-year average of the realization versus the realization that we expect as we go forward into next year. I was not referring to the commodity prices correcting from to $1,000 to $850, is our realization which wheat clocked for FY’23 as we go forward since the prices have already cooled off, so the realization per ton as compared to last year maybe 15% lower than. That is what my comments is.

Yogesh Tiwari — Arihant Capital Markets — Analyst

Sure, sir. And sir, in terms of ruler conjunction, as you told that it is growing faster than urban. So any multi-pad we can use to understand that? So like what would — how much more is the rural growing more than urban in terms of edible oil?

Angshu Mallick — Chief Executive Officer and Managing Director

Normally when we say rural is doing well or not well, statistically it should be proved. I have — earlier also when somebody asked me I told them in generally that we could sense some improvement in rural demand. So as I said, usually quarter one was 30%, 29% Q2, Q3 29%, Q4 31%. That means 31% of our edible oil packs was sold in rural market. This has increased from 29% to 31%. That is overall if you see 2% increase in share, and that is not small. When you look at almost almost 25 lakh tons packed oil that we sell. So you can understand that 2% shift is a significant quantity that is shifting to rural and that is what will bring rural demand. But more heartening to see is you’re packed staples. Can you believe that 45% of our Basin, half kilo pack sale comes from rural market, UP, Bihar, Orissa. Jharkhand Maharashtra, these are the markets where our Basin is selling half kilo in Fortune basin in consumer pack. Now that is what is it. 25% sugar — branded sugar — Fortune sugar is selling in rural market. Almost 30% Atta is selling in rural market. So overall, overall food basket is 34%, which is I would say, very significant if you look at the packed branded Fortune Attas or sugar, all they are selling there. So that’s the indication of improvement in rural market.

Yogesh Tiwari — Arihant Capital Markets — Analyst

And sir, finally, like the growth which we are seeing in foods, that would be more driven by a branded, like what would be the contribution of branded and unbranded in the food business in terms of revenue?

Shrikant Kanhere — Chief Financial Officer

So in terms of revenue as I said earlier also, more than 72% of our revenue come from the branded segment and 28% is the institutional one. When we talk about the growth, I think growth is across, including the brand. So within the edible oil, as Mr. Mallick said earlier, we should be able to showcase a high-single-digit growth, whereas the food should continue to grow the way we are growing today because last year we clocked 39%, 40% and therefore the target is always to double the volumes in two years, which we have been able to showcase. On the institutional side, the Oleo and Castor keep growing at a double-digit. So most of the growth ideally should be coming in from the brand and not from the institutional.

Yogesh Tiwari — Arihant Capital Markets — Analyst

Thank you, sir. That’s all from my side. Thank you.

Operator

Thank you. We have our next question from the line of Akshay Krishnan from ICICI Securities. Please go ahead. One moment please. We have our next question from the line of Akshay Krishnan from ICICI Securities. Please go ahead. Mr. Krishnan, please go ahead. Mr. Akshay Krishnan, you’re unmuted. Please go ahead.

Akshay Krishnan — ICICI Securities — Analyst

So I just want to understand what is the incremental distribution gains on a year-on year basis on the edible oil segment and also on the food segment.

Angshu Mallick — Chief Executive Officer and Managing Director

Distribution. So Akshay, I’m just repeating your question for ease. What you have asked is what is the growth in the distribution as far as the edible oil is concerned, right?

Akshay Krishnan — ICICI Securities — Analyst

Yeah. And also in the food segment.

Angshu Mallick — Chief Executive Officer and Managing Director

And also…

Akshay Krishnan — ICICI Securities — Analyst

On the food segment.

Angshu Mallick — Chief Executive Officer and Managing Director

On the foods, okay, okay. Akshay, we have understood that distribution will be the key differentiating factor between Adani Wilmar and any other similar kind of product companies. So we have gone ahead with ramping-up our rural infrastructure. No, urban, let me tell you. There are 505 towns which are one lakh plus. We cover all of them directly. So our salesman goes shop by shop and picks up orders. We do almost 3.3 lakh retail outlets directly. And in rural we do around 2.6 lakh outlets directly through our distributor and our own sales force that we have.

In rural let me tell you there are almost 600 towns, which are 50,000 population and above. I’m talking of only 2011 census because that is what is the published census we have. So we are working on that only. So 600 odd towns, we cover 594 directly, rest is covered indirectly, but that also six-seven left, which we will do this year. After that, we have increased town coverage from 5,200 towns last year to 13,600 towns this year. That means any town which you will see 20,000 plus, we are trying to go and directly put a distributor and cover the retailer’s there. Like that, today direct coverage is at 5.9 lakh outlets, indirect coverage is around 1.65 million outlets. Still, this is only 40% of the universe. So we have a bigger universe to to cover.

So. go-to-market is one of the most important part and we would like to be directly reaching as many outlets as possible because these are all [Indecipherable] and consumers can’t wait if it is not available. So the game is if you are available and if you are visible, you can sell. That is what we believe and that is how we are working.

Akshay Krishnan — ICICI Securities — Analyst

A lot is already answered. Thanks.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

Angshu Mallick — Chief Executive Officer and Managing Director

Yeah, thanks. I again extend thanks to all the participants who participated in this call and asked the questions. We encourage you all to go through our presentation which has been uploaded on the site and please connect with us for any further questions. Thank you very much again for joining the call. Thanks.

Shrikant Kanhere — Chief Financial Officer

Thank you all for attending and I hope we have been able to answer most of your issues. Still, we are always available and we can answer to each of your questions if there are any. Overall, overall India is bullish, India is going to consume more and we are in the center of the plate. So I think, Adani Wilmar should do well.

Operator

[Operator Closing Remarks]