Marico, Patanjali Foods, AWL Agri Business, Godrej Agro: FMCG shares decline following THIS government order

In the afternoon trade, Marico shares were trading 1% lower at ₹693 apiece on the NSE, while AWL Agri Business stock was trading over 2% lower at ₹270.45. Patanjali Foods was down 0.16% at ₹1,672.10. Godrej Agrovet shares were trading 0.75% lower at ₹786.35 apiece.

Marico's flagship edible oil brand is Saffola, while AWL Agri Business (formerly Adani Wilmar) offers a wide range of edible oil brands. Their flagship brand is "Fortune".

Patanjali Foods offers a variety of edible oils under different brand names, including Nutrela, Mahakosh, Sunrich, and Ruchi Gold.

Godrej Agrovet markets a range of edible oil brands, including refined sunflower oil, refined groundnut oil, Cooklite sunflower oil, among others.

The decision came after a detailed review of the sharp rise in edible oil prices following last year's duty hike. The increase led to significant inflationary pressure on consumers, with retail edible oil prices soaring and contributing to rising food inflation, according to a report by PTI.

The Centre has reduced the basic customs duty (BCD) on crude edible oils – crude sunflower, soybean, and palm oils – from 20% to 10%, resulting in the import duty differential between crude and refined edible oils increasing from 8.75% to 19.25%.

The PTI report said that a meeting with leading edible oil industry associations and industry stakeholders was held under the chairmanship of the Secretary, Department of Food and Public Distribution, where an advisory was issued directing them to pass on the benefits from the duty reduction to consumers.

Industry stakeholders are expected to adjust their Price to Distributors (PTD) and Maximum Retail Price (MRP) in accordance with lower landed costs with immediate effect, the department said in a statement.

Associations have been requested to advise their members to implement immediate price reductions and share updated brand-wise MRP sheets with the department on a weekly basis.

The ministry shared a format with the edible oil industry for reporting reduced MRP and PTD data, emphasising that "timely transmission of benefits through the supply chain is imperative to ensure consumers experience corresponding decreases in retail prices".

Why has the government cut the customs duty?

The report said that this adjustment aims to address the escalating edible oil prices resulting from the September 2024 duty hike and concurrent increases in international market prices.

The 19.25% duty differential between crude and refined oils will help encourage domestic refining capacity utilisation and reduce imports of refined oils, officials said.

Import duty on edible oils is one of the important factors that impacts the landed cost of edible oils and thereby domestic prices. By lowering the import duty on crude oils, the government aims to reduce the landed cost and retail prices, the report added.