Rupee's sharp fall against dollar not a worry for edible oil manufacturers

Edible oil manufacturers are unfazed by the rupee’s sharp fall against the dollar because the higher decline in crude palm oil prices has compensated for that.

However, edible oil players are in wait-and-watch mode and will see how the market evolves. That includes watching the movement of the rupee and crude palm oil prices. The price of Malaysian crude palm oil has dropped 52.8 per cent from its 52-week high and declined 43.8 per cent in the past three months.

The rupee on July 21 hit a low of 80.06 per dollar in intraday trade but it bounced back to close at 79.99. 

Adani Wilmar, which sells edible oil under the brand name “Fortune”, has cut the price by Rs 30 but the company will watch the movement of the rupee, edible oil prices, and consumer demand over the next fortnight.

“There won’t be much pressure (due to rupee depreciation) owing to a sharp correction in Malaysian crude palm oil prices,” said Angshu Mallick, chief executive officer.

Mallick, however, said the company would not cut prices further and wait for 15 days to review the situation.

“We have to watch how demand plays out in the next one month as the festive season kicks in and also how the monsoon and sowing progress across the country,” Mallick said.

Gemini Edibles and Fats India expects little impact due to rupee depreciation.

“We need to keep watch at what levels the rupee stabilises,” said Chandra Shekhar Reddy, vice-president (sales and marketing).

The brand has cut prices of its edible oil consumer packs and will continue to do so. It has reduced the price of its one-litre sunflower oil from Rs 190-195 to Rs 170-175.

“We are sitting with high-priced inventories, and will initiate further cuts as and when we buy low-priced ones. We will also see how competition reacts,” Reddy said.

However, the company intends to cut the prices of its consumer packs and take them to pre-Covid levels if the prices of the commodity also correct to the same extent. Before the pandemic, Gemini Oils sold its one-litre consumer pack at Rs 140-145 per litre. 

An executive of a fast-moving consumer goods player that procures refined palm oil was of the same opinion about the relationship between rupee depreciation and the drop in the commodity price. However, he expects pressure on sunflower oil prices to stay.