AWL AGRI'S NEW BET

THE COMPANY IS TRYING TO DECOUPLE ITSELF FROM SWINGS IN CRUDE OIL PRICES AS THE WEST ASIA CRISIS PUSHES UP COSTS

- BY KARAN DHAR

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.