CLSELNSEQ3 FY23February 06, 2023

Chaman Lal Setia Exports Limited

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142turns

11analyst exchanges

1executives

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Management on call

Sankesh Setia for the highlights. Over to you Sir. Sankesh Setia

Welcome and thank you everyone for joining us on our Q3FY23 & 9YMFY23 earnings

Key numbers — 40 extracted

15%

nth ended December 2022. This season the planted area for the paddy has increased by almost 10 to 15% compared to last season, despite it the paddy price is up by approximately =10 per kg this year.

62%

profitability. Coming to the key highlights of Q3FY23. For Q3FY23 our operating revenue was up by 62% year-on-year to $353.9 Cr. from %218.9 Cr. last year. The growth in the revenue is due to the mar

44%

exhibitions and many other travelling- based marketing. For the quarter, our exports sale grew by 44% year-on-year and export sales by value grew by 66% year-on-year at $312.4 Cr. Gross profit for th

66%

ing. For the quarter, our exports sale grew by 44% year-on-year and export sales by value grew by 66% year-on-year at $312.4 Cr. Gross profit for the quarter was at 791.1 Cr., up to 35% year-on-year.

35%

value grew by 66% year-on-year at $312.4 Cr. Gross profit for the quarter was at 791.1 Cr., up to 35% year-on-year. The gross margin increased' by 505 bps from 30.8% in Q3FY22 to 25.8% in Q3FY23, due

505 bps

profit for the quarter was at 791.1 Cr., up to 35% year-on-year. The gross margin increased' by 505 bps from 30.8% in Q3FY22 to 25.8% in Q3FY23, due to the increase in output? cost. However, the stro

30.8%

e quarter was at 791.1 Cr., up to 35% year-on-year. The gross margin increased' by 505 bps from 30.8% in Q3FY22 to 25.8% in Q3FY23, due to the increase in output? cost. However, the strong revenue

25.8%

791.1 Cr., up to 35% year-on-year. The gross margin increased' by 505 bps from 30.8% in Q3FY22 to 25.8% in Q3FY23, due to the increase in output? cost. However, the strong revenue growth along wi

130%

for the all the industries. Along with the focus on operational efficiencies the EBIDTA was up by 130% year-on-year at 751.4 Cr. from %22.4 crore in Q3FY22. The EBITDA margin improved by 430 bps yea

22.4 crore

h the focus on operational efficiencies the EBIDTA was up by 130% year-on-year at 751.4 Cr. from %22.4 crore in Q3FY22. The EBITDA margin improved by 430 bps year-on-year from 10.2% in Q3FY22 to 14.5% in Q3

430 bps

as up by 130% year-on-year at 751.4 Cr. from %22.4 crore in Q3FY22. The EBITDA margin improved by 430 bps year-on-year from 10.2% in Q3FY22 to 14.5% in Q3 FY23. Profit after tax was at 37.5 crore in Q3

10.2%

at 751.4 Cr. from %22.4 crore in Q3FY22. The EBITDA margin improved by 430 bps year-on-year from 10.2% in Q3FY22 to 14.5% in Q3 FY23. Profit after tax was at 37.5 crore in Q3FY23, a growth of 134% yea

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Guidance — 16 items

Sankesh Setia

opening

“We continue to focus on operational efficiency, expanding our distribution reach, and penetrating into new geographies, which we will continue to drive our growth journey going forward.”

Agastya

“Sir, | had a few questions, one was can you tell us going forward given that we are adding so many new markets, how will the quarterly seasonality play out?”

Agastya

“Also, the seasonality and the variations that we will see in the ASP going forward, because as you said, area 3215.4 (incorrectly called out as %15.5) Corporate Office: 472, Phase-3, Udyog Vihar, Gurugram, Haryana-122016 CIN No.: L51909PB1994PLC015083 Chaman Lal Setia Exports Limited Q3FY23 Eamings Call February 06, 2023 under cultivation is very high this time and yet prices have gone up.”

Rajeev Setia

“First of all, | feel little regret on my part, that | after one or two con- calls after long gap, | have resumed calling and it will be more frequent in the future.”

Sankesh Setia

“So, automatically we being very strong player and we being head-to-head and we being complete knowledge, information about the supplier, their buyers and we always have a target that yes, this company is getting weak, their performance is getting low, their deliveries are getting late.”

Sankesh Setia

“| will be very precise and quick, so we are exporting in 90 plus countries now, we have already touched 91 countries.”

Ankur

“Sir, my first question is if | look at your historical quarterly seasonality trends, the Q3 tends to be a bit weaker versus next two quarters which is Q4 and next year’s Q1 is very high.”

Ankur

“So, can we expect this kind of trend to continue in this year also?”

Ankur

“Sorry Sir, | am saying if | look at last few years trend, Q3 is not very high quarter if | look at Q4 as well as next year Q1.”

Ankur

“So, can we expect this Q3 performance to be improved in the coming quarters is what | am trying to ask you sir?”

Risks & concerns — 10 flagged

Any buyer, a new buyer | get, | online check, if the company is on adverse risk of ECGC, | don't ship.

— Rajeev Setia

If the party is available with the cover of risk | export.

— Rajeev Setia

Since 1982 we started exporting and this business my dad started in 1974 as sole proprietor first year and after that it was a partnership with me and my brother, family concern.

— Rajeev Setia

So, automatically we being very strong player and we being head-to-head and we being complete knowledge, information about the supplier, their buyers and we always have a target that yes, this company is getting weak, their performance is getting low, their deliveries are getting late.

— Sankesh Setia

So, they are looking for stable suppliers, good suppliers who can supply them good quality, timely quality, good pricing, so all these things matter a lot and when a supplier gets weak, of course a buyer also looks for a new supplier and we are always there for them.

— Sankesh Setia

He does not want to change, it’s a very big risk for anyone who is running a brand to change the supplier.

— Rajeev Setia

Private label can definitely go to the other person, but it is a very big risk for him and many customers say me, Rajeev give me the good price, don't care for the price, charge your price but | want the best quality, best than anyone.

— Rajeev Setia

The amount of inventory what we have is it all presold inventory only that we are keeping or we are keeping some excess inventory and is there any risk of price fall on that inventory at any point of time, just some thoughts on that?

— Himanshu Upadhyay

It will be leased by the company from the family concern.

— Rajeev Setia

See the other thing that has happened in past years is that our margins have been very volatile, and they keep increasing and then falling.

— Ayush

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Q&A — 11 exchanges

Thank you Neha Ji. Am | audible?

Management

Thank you very much sir and congratulations for great set of numbers. | am Agastya, from CAO capital. Sir, | had a few questions, one was can you tell us going forward given that we are adding so many new markets, how will the quarterly seasonality play out? Koun Sa quarter heavy rahega? Koun sa quarter light rahega? Kyoki thoda sa seasonal to rehta tha business, but given the organic growth and given the new markets how will that play out. So that is the first question. Also, the seasonality and the variations that we will see in the ASP going forward, because as you said, area 3215.4 (incorr

Rajeev Setia

| am Rajeev Setia. First of all, | feel little regret on my part, that | after one or two con- calls after long gap, | have resumed calling and it will be more frequent in the future. This is what | assure. Now coming back to your question, admittedly, rice is, basmati is one crop in a year, various variant they start coming from September onward and till October and the complete harvesting takes place and yes, the farmer brings the paddy to the mandis, and we all start our production process but we as a company, precise reply to your question is we don’t buy the entire material at the beginni

Hello Mr. Sanjeev, | am looking for you.

Sanjeev Damani

Namaste ji!, Sir for last about 2-3 years | have noted you to be a very conservative businessman and a very prudent businessman, and | really congratulate for the result that you have seen in this quarter. It is all because of your continuous perseverance and good strategies of the business that we are here today. So that is firstly, | want to really congratulate you and your entire team that is one. Now secondly sir, you know just now | have noted before | move to my other questions, | just noted that you have an inventory of 7439 Cr. as on 31st December, | am glad that this has been disclose

Hi sir good evening! | just wanted to ask you sir from our analysis we understand probably may be around 15 odd companies or more based out of Delhi NCR and Punjab region are involved in rice exports similar to yours. So, | just wanted to understand, and | am sure international standards are of certain level. So, what is that makes you know your company score over other companies in terms of all the parameters, especially when we have 15 odd companies competing for similar product in similar markets that is the first question.

Rajeev Setia

Admittedly, there are other competitors because that has to be in every industry. We are not out of that. You see we are one of the oldest rice exporters. Since 1982 we started exporting and this business my dad started in 1974 as sole proprietor first year and after that it was a partnership with me and my brother, family concern. So, we have seen all up and down and turbulences. It’s a huge experience, then it's a very spread market ours. It is very hard, it is very easy to say we put up a mill and we start competing others. Admittedly some competitions comes but it’s the strength you know,

Hi, good afternoon. See | have two questions. The first was what percentage if business would be through private labels and lets says brands or private label which have been with us for more than five years, established brands, something like that can you give?

Rajeev Setia

Yes. | have already explained in the last speaker. We have largely private table business and 8 to 9% around our own Maharani Basmati rice of branded rice. Customers in the private label there are long as 30 years old, 1990s, 1995 prior to that, very old customers. | have so many customers which | can count they are 25- year-old, 20-years, their sustainability is long. Can we see that more than 50% of revenue would be from private labels for us? My export is 7 to 8% in my own label, obviously my entire business around 90% little more is from private labels. Corporate Office: 472, Phase-3, Udyo

Hello sir, congrats for a very good set of numbers and thank you for taking my question. Sir, my first question is if | look at your historical quarterly seasonality trends, the Q3 tends to be a bit weaker versus next two quarters which is Q4 and next year’s Q1 is very high. So, can we expect this kind of trend to continue in this year also?

Rajeev Setia

Repeat your question, you are too quick. Sorry Sir, | am saying if | look at last few years trend, Q3 is not very high quarter if | look at Q4 as well as next year Q1. So, can we expect this Q3 performance to be improved in the coming quarters is what | am trying to ask you sir? You see it is something very, very subjective, you know this Ramadan is coming early, early every year. So, when the Ramadan requirements come suddenly sales goes up. It is a festival in the GCC. So, it matters you know sometime the customer expect for any reason the prices may come down, they stop, they hold themselve

Hello sir, how are you?

Rajeev Setia

Good. Your gross margins have fallen around 100 basis points quarter on quarter and 500 basis points year on year. So, | mean, as we go into the strongest quarter of the year, is there any gross margin guidance you can give? And how have basmati prices held up in this quarter, then Ramadan also in this quarter so demand increases, inventory also gets depleted, so can we expect gross margins to improve in this next quarter? | have to study your question because | am not prepared on this answer and if you can give your some contact, | will get it answered, maybe Iwill have to discuss with my acc

Just a couple of questions from my side. You know these are pretty outstanding results that you announced for this quarter. Is there anything that we should consider as exceptional in this quarter, anything out of the ordinary that has happened which you know has led to such strong profitability or is this just business as usual.

Rajeev Setia

Actually, for last after the COVID you must have noticed, the food has become priority in the world. Some countries are storing and this story of Pakistan many people will learn the lesson. | don't know what they will do. India has wheat, India has rice. We are a lucky country, so in the food, we feel it's quite a long time for us for favourable, | think the favourable result, favourable market and India has won 105 million tonne rice and all out of that basmati is just 6 million tonne and out of that around 4 million tonnes exported, just 2 is sold in India. So, it is a geographical indicatio

Hello.

Moderato

Yes Deeksha, we can hear you. Good evening, sir. Good evening. So congratulations for good set of numbers, so | have one question sir. Sir can you share the volume breakup on a quarterly basis of last 3 quarters, branded and traded both. Right now, that figure | don't have. | think the total volumes we have? Nahi nai if we have just the figures, but | can answer you, if you want we can send the figures. Okay Sir Yeah, okay we will revert to you. Okay. Coordinator, please take notes of this question. We will answer. One second it has already been given in this investor presentation this answer

Hello how are you Ayush, in Lucknow?

Ayush

Hello am | audible Sir. Yeah, yeah Ayush you are audible. Corporate Office: 472, Phase-3, Udyog Vihar, Gurugram, Haryana-122016 CIN No.: L51909PB1994PLC015083 Chaman Lal Setia Exports Limited Q3FY23 Eamings Call February 06, 2023 Good afternoon, sir so happy to see you again and congratulations to you and your team for a wonderful performance, having been a shareholder for so long, | can say ki matlab this was long overdue, the kind of growth that the company has delivered now, and it is a very proud and happy feeling, so few questions. One like if we look back into the company till 2-3 years

Thank you everybody for joining us, not a lot of number of people could speak to us but | believe we have answered all the questions which may have come to their mind, Corporate Office: 472, Phase-3, Udyog Vihar, Gurugram, Haryana-122016 CIN No.: L51909PB1994PLC015083 Chaman Lal Setia Exports Limited Q3FY23 Eamings Call February 06, 2023 those who could not talk to us or who had another question in all as a group it is completed. If you have any questions and query, please do contact us. No problem, we are always open to answer and available to our respected investors. That is all, thank you v

Sankesh Setia

Thank you very much. Have a good day. Thank you. (This document has been edited for readability purpose) Ms. Kanika Nevtia, Company Secretary Email: ir.chamanlalsetia@clsel.in Meerankot Road, P.O.Central Jail, Ajnala Road Amritsar, Punjab, India - 143001 CIN: L51909PB1994PLC015083www.clsel.in Corporate Office: 472, Phase-3, Udyog Vihar, Gurugram, Haryana-122016 CIN No.: L51909PB1994PLC015083

Speaking time

Rajeev Setia

Moderator

Sankesh Setia

Sanjeev Damani

Agastya

Ankur

Ayush

Deeksha

Somnath Paul

Himanshu Upadhyay

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Opening remarks

Sankesh Setia

Welcome and thank you everyone for joining us on our Q3FY23 & 9YMFY23 earnings call. | am delighted to announce that we have recorded a robust performance in the quarter and nine month ended December 2022. This season the planted area for the paddy has increased by almost 10 to 15% compared to last season, despite it the paddy price is up by approximately =10 per kg this year. The export demand scenario has been favourable in key markets. Our strength lies in strong customer relations as of today, which is further strengthened through consistent and timely supply of quality rice as per the presence and end consumer. We continue to focus on operational efficiency, expanding our distribution reach, and penetrating into new geographies, which we will continue to drive our growth journey going forward. While growth remains a key factor for us, we always believe in the sustainable performance, while maintaining our profitability. Coming to the key highlights of Q3FY23. For Q3FY23 our operat

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Chaman Lal Setia Exports Limited

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