Edible oil prices could fall by up to 15% in June, says Adani Wilmar CEO Edible oil prices, which have been soaring since February due to geopolitical tensions and the recent ban on exports by Indonesia, could decline by up to 15% by June. Speaking to FE, Angshu Mallick, chief executive officer and managing director at Adani Wilmar, said prices have peaked and should start to correct from next month onwards. Also, Indonesia should lift the ban on palm oil exports by May 10. “By the end of the June quarter, we should see a correction in edible oil prices. Prices should surely correct by 10-15%. We have seen the peak, and by June, we will see the market getting corrected,” he said. Adani Wilmar took an average price hike of 30-35% in the edible oil segment during the quarter ended March 31. The cost of raw material consumed in the three months to March 2022 was up 40% year-on-year to Rs 13,666 crore. For the full year ended March, raw material costs were up 49% y-o-y to Rs 48,214 crore. According to Mallick, as Indonesia is a palm oil surplus country, it cannot afford to hold the stock for long and is also short on storage. “They can wait for 7-10 or 15 days, but they have to export because they do not have enough storage to keep the oil. I feel that by May 10, it should start exporting and prices should start looking downwards because there is no other reason left for higher prices,” he said. India imports more than 55% of its edible oil consumption annually, either in crude or refined form. Out of India’s imports of 7.2 million tonne (MT) of palm oil annually from Indonesia and Malaysia in 2021-22, 5.4 MT was crude palm oil. For FY22, Adani Wilmar reported a Y-o-Y increase of 26% in its consolidated net profit to Rs 804 crore. Revenue from operations grew 46% to Rs 54,214 crore while EBITDA was up 34% to Rs 1,909 crore. In FY23, Adani Wilmar expects the edible oil to continue to grow at 6-8%, staples and food basked at more than 30% and industry essentials at 5-6% in terms of volumes, while the value growth will depend on the market. The company also expects to hold on to the margins with edible oil prices coming down. “Overall, margins should not go down, it should remain at these levels what we have done in Q4,” Mallick said.
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In its consultation paper, Sebi has suggested that trustees of mutual funds should focus on market abuse by AMC, its employees and mis-selling by the AMC to increase the asset base.
Also, trustees should be responsible for fairness of fees and expenses charged by the AMC, compare its performance with peers and ensure that AMC’s sponsor is not getting any undue advantage.
In addition to the core areas, the trustees should be responsible for periodically reviewing the steps taken by AMCs for the folios which do not contain all KYC attributes with bank details.
Further, Sebi has suggested that trustees and their resource persons should independently evaluate the extent of compliance by AMC and not merely rely on AMC’s assurances.
To facilitate trustees’ supervision, AMCs should provide them with analytical information.
Presently, the trustees primarily rely on the AMCs for ensuring compliance with the applicable rules.
Under the rules, trustees hold the property of the mutual fund in trust for the benefit of the unitholders. The trustees appoint an AMC to float schemes for the mutual fund and manage the funds mobilised under various schemes, in accordance with the investment objectives.
“In view of the increasing scale and reach of the mutual fund industry, trustees’ role in respect of unitholders’ protection assumes even greater significance,” Sebi said on Friday.
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Over the past decade there has been a five-fold increase in the size of the mutual fund industry. The assets under management (AUM) has surged from Rs 7.93 lakh crore in November 2012 to Rs 39.89 lakh crore in December 2022.
To ensure that trustees devote time and attention to their core responsibilities, Sebi has suggested that for fulfilling other responsibilities, trustees may rely on professional firms such as audit firms, legal firms, merchant bankers for carrying out due diligence on their behalf.
The Sebi also listed some duties trustees can delegate to AMCs. This include ensuring that all systems are in place prior to the launch of any scheme by the AMC, and calculating any income in the mutual fund due to the fund and any income received in the mutual fund for unitholders.
The regulator has proposed to provide a one year time to existing trustees with board of trustee structure to convert into a trustee company, from governance point of view.
Presently, two structures for trustees are permitted — corporate and board of trustees structure. Moreover, there are a few mutual funds which have the board of trustees structure while the trustees of all other mutual funds have adopted the structure of a trustee company.
Considering the enhanced role of trustees over the period of time, Sebi has suggested to increase the minimum number of trustees to adequately perform their functions. Presently, the minimum number of trustees prescribed is four.
Also, it has been proposed that the chairperson of the trustee company should be an independent director.
Sebi has suggested that apart from the meeting of the audit committee of AMCs and trustees (which mostly comprises of independent directors), the board of AMCs and the board of trustees may be mandated to meet at least once a year to discuss the issues concerning the mutual funds.
The regulator proposed that the existing MF Regulations on AMC and its obligations may be amended to include additional clauses with respect to the obligations of the board of AMC.
The proposed amendment may include a clause which casts an obligation on the board of AMC to ensure that all the activities of the asset management company are in accordance with the provisions of these regulations.
The Securities and Exchange Board of India (Sebi) has sought comments from public till February 24 on these proposals.