AWL Piles Up Edible Oil Stocks Amid Global Supply Chain Disruptions

India's largest edible oil manufacturer, AWL Agri Business, has increased its inventory of imported edible oils to guard against supply chain disruptions caused by the Middle East and Ukraine wars. The company, which produces Fortune cooking oil, now holds a 40-45 day stockpile, up from its usual 30-35 days.

AWL's CEO, Shrikant Kanhere, said that the move is a precautionary measure to mitigate the risks of supply chain volatility in a 'dynamic world' where disruptions are becoming increasingly common. He added that the company will maintain this strategy until it is confident that logistics disruptions are unlikely to recur.

India is the world's largest edible oil importer, meeting nearly two-thirds of its demand through imports from countries such as Indonesia, Malaysia, Brazil, Argentina, Russia, and Ukraine. The country's edible oil sector has been affected by lower imports in recent months, but refiners are rebuilding inventories to meet demand during the upcoming festive season.

Deven Choksey, managing director of DRChoksey FinServ, noted that AWL's move could help larger brands gain share from smaller rivals as refiners with stronger balance sheets can afford to hold larger inventories and avoid stock-outs. He also pointed out that Patanjali Foods is holding more stocks, calling it 'a material policy pivot'.

Kanhere said that the impact on margins has been minimal due to higher inventories tying up more cash. However, he noted that cooking oil prices have tracked commodity movements, while packaged foods face a lower risk of price increases due to domestic sourcing.