KRBLNSEQ1 FY24August 11, 2023

KRBL Limited

7,616words
97turns
8analyst exchanges
4executives
Management on call
Anil Kumar Mittal
CHAIRMAN AND
Anoop Kumar Gupta
JOINT MANAGING
Ayush Gupta
HEAD OF DOMESTIC DIVISION – KRBL LIMITED
Ashish Jain
CHIEF FINANCIAL OFFICER – KRBL LIMITED
Key numbers — 40 extracted
512.5 million
estors. The world Rice production in marketing year 2022-23 is expected to be marginally lower at 512.5 million tons, lower by 0.2% over preceding marketing year. The shortage is mainly due to lower production
0.2%
tion in marketing year 2022-23 is expected to be marginally lower at 512.5 million tons, lower by 0.2% over preceding marketing year. The shortage is mainly due to lower production in China and Pakist
520.8 million
. In Marketing Year 2023-24, despite of El Nino conditions, world rice production is estimated at 520.8 million tons, which is higher by 1.6% against previous year. India is expected to grow record rice prod
1.6%
El Nino conditions, world rice production is estimated at 520.8 million tons, which is higher by 1.6% against previous year. India is expected to grow record rice production at 135.5 million metric t
135.5 million
ch is higher by 1.6% against previous year. India is expected to grow record rice production at 135.5 million metric tons in marketing year 2022-23, which includes 2022 Kharif crop and 2023 Rabi crop. Further
7%
Rabi crop. Further, the Indian government in its effort to support farmers' income has announced a 7% higher MSP for rice in the upcoming Kharif season at Rs. 2183 per quintal and Rs. 2203 per quintal
Rs. 2183
to support farmers' income has announced a 7% higher MSP for rice in the upcoming Kharif season at Rs. 2183 per quintal and Rs. 2203 per quintal for common grade and Grade A paddy respectively. We do not see
Rs. 2203
e has announced a 7% higher MSP for rice in the upcoming Kharif season at Rs. 2183 per quintal and Rs. 2203 per quintal for common grade and Grade A paddy respectively. We do not see any impact of the MSP on
9.5 million
h higher level as compared to the MSP The Basmati production for marketing year 2022-23 is around 9.5 million metric tons, about 12% higher than last year. Despite the overall increase in rice production in I
12%
e MSP The Basmati production for marketing year 2022-23 is around 9.5 million metric tons, about 12% higher than last year. Despite the overall increase in rice production in India in both Basmati an
16%
ing demand for both Basmati rice and non-Basmati rice from India. India's Basmati export has grown 16% in volume terms and 46% in value terms in FY23 over FY22. Volume growth mainly came from Saudi Ara
46%
ati rice and non-Basmati rice from India. India's Basmati export has grown 16% in volume terms and 46% in value terms in FY23 over FY22. Volume growth mainly came from Saudi Arabia, UAE, Yemen, Oman, Q
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Guidance — 20 items
Anil Kumar Mittal
opening
“As per latest information available, the sowing of Basmati paddy has increased in Punjab and Haryana, including western Uttar Pradesh, with a forecast of increase in production by 12% over last year.”
Ayush Gupta
opening
“Our regional rice business is progressing in line with our expectations, on track to achieve a 5% share of the overall domestic revenue by end of the financial year.”
Ayush Gupta
opening
“These regulations aim to restore consumer trust and ensure the true essence of basmati rice.”
Ayush Gupta
opening
“Key parameters that consumers will now rightfully expect for the price they pay are exclusively outlined in these regulations.”
Ayush Gupta
opening
“With this concerted effort, we anticipate a positive transformation within the industry, fostering an environment of trust and quality.”
Ashish Jain
qa
“This is going to be spread between FY'23 to FY'25.”
Soumen Choudhury
qa
“And what would be the outlook going forward, like for this quarter and next quarter?”
Anil Kumar Mittal
qa
“We expect the crop size to also increase by 12% to 15%, but to give you any guess work at the moment on that will be wrong on our part.”
Jayant Mamania
qa
“So what kind of growth we expect and these FSSAI norms have come into place?”
Mahesh Attal
qa
“Okay, and one more thing sir, so with this distributor, are we very sure that we will be reaching our earlier levels like in 2018-19, I mean whatever we used to do earlier in the Saudi market like that was around 1000 plus crores, are we still expecting it in this particular financial year, for the part of the year?”
Risks & concerns — 6 flagged
We do not see any impact of the MSP on the Basmati prices as Basmati paddy prices have been trading at a much higher level as compared to the MSP The Basmati production for marketing year 2022-23 is around 9.5 million metric tons, about 12% higher than last year.
— Anil Kumar Mittal
Addressing our Q1 FY 2024 performance, the 9.3% decline, compared to Q4 FY 2023 is a result of seasonal category dynamics.
— Ayush Gupta
Bulk pack sales peaked from October to March due to festivals and weddings, followed by a natural decline.
— Ayush Gupta
Yeah, and the other question is what would be the impact of FSSAI the new law on your COGS, cost of goods sold, is there will be any hit on the GP going forward?
— Saurabh Jain
I think your challenge was that you have a difference in quality between earlier and now.
— Ashish Jain
So it will be difficult for us to comment on that.
— Ashish Jain
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Q&A — 8 exchanges
Q
My first question was on export side. We are hearing that the rice export ban is making global rice importers worried and people want early shipments. Are we seeing price rise in better terms of trade because of what has happened in the domestic market? And secondly, what percentage of our business in exports would be short-term business or single consignment or rupee consignment type of business? Can you elaborate on these two aspects?
Anil Kumar Mittal
There is no doubt there is panic abroad, because of the ban on non-basmati rice exports. But as far as non-basmati is concerned, it is a small business for KRBL, as we are primarily exporting basmati rice. And since we are into branded business, there is no roller coaster behaviour because the orders are with the distributors, and they have been ordering at a consistent level. So if there is a demand abroad, it would be in private label, not in our segment of branded business. Hence our business is going on as usual. Exports have been going normally in their own way. However, during Ramadan, t
Q
Yes. So on capex, our maintenance capex is around INR 50 crores a year. In terms of the expansion that we are doing, the aggregate spend on that should be between INR 200 crores to INR 250 crores, all funded by internal accruals. This is going to be spread between FY'23 to FY'25. In terms of the requirement from working capital point of view, our principal working capital component, as you know, is inventory. On an average, we maintain about 230 days of inventory. And therefore, as sales grow, that number will increase. That is primarily funded through internal accruals, and we borrow short te
Ashish Jain
Yes. So on the new plants, we see about INR 400 crores to INR 450 crores of additional revenue. So the inventory with that should be around INR 200 crores to INR 300 crores additional over the current level. I think in terms of the distributor refresh -- yes, so one was done some time back. However, that has been revisited, but that should be completed by Q2.
Q
Mr. Jain mentioned about the domestic volume and realization being 68,500. And I think in the last call, you had mentioned that the domestic realization was 74,000. So is there a drop of 7%- 8% over the previous quarter. And if you could give a similar breakup for exports also in terms of volumes and realization, it would be quite helpful.
Ashish Jain
No, there's no drop per se, Soumen. There's a slight change in the product mix, but otherwise, overall realizations are in trend vis-a-vis last quarter. In fact, when we look at realizations, they've being fairly stable for the last 3 quarters. On the export number, the total basmati realization in Q1, FY24 was around 98,000 per MT for basmati. Okay. 98,000 tons? this is a realization? That's right, yes. Yes. And what would be the volume? Yes. So volume, I don't have right now, I can share with you separately. Okay. And what would be the outlook going forward, like for this quarter and next qu
Q
Yeah, good afternoon. Sir, can you elaborate on the export of INR540 crores on geographic basis at least top three territories?
Ashish Jain
Jayant, we don't typically give market-wise details because that's sensitive from a competition point of view. Okay, okay. The second question is India's total Basmati exports Middle East consist of 78%. So can you tell us the top three players after KRBL? You mean who are the largest exporters? Yeah, to Middle East from India. Exporters from India. There are 2 - 3 companies exporting large volumes from India to Saudi Arabia, viz. Supple Tek & DD International. There are others too. I can't say that these two are the only other big players but normally all are private label players, and not in
Q
Thank you for taking my question. You have just informed us that you have changed the distributor in Saudi. So, is this new distributor going to take care of the HoReCa segment also which we were actually looking for and I think in the last quarter it was told that we are looking for that maybe in the next couple of quarters you will see something. So, is this distributor going to take care of that thing also? And my second question would be, like I'm just trying to get on that inventory valuation. Mr. Ashish has just told that the inventory levels of rice, last year quantity wise was 3,67,000
Anil Kumar Mittal
Yes, I updated you on the Saudi front. We have already finalized with a very big and good distributor in Saudi. Already the agreement has been sent to them. We are expecting to get back the agreement duly signed by Mid of August. And simultaneously the shipment will start. This time we have made a common distributor for both retail, HoReCa and modern stores. And regarding your query on inventory, I will ask Ashish to reply. Sorry, I didn't get your question on inventory. Can you repeat? Yeah, Mr. Ashish, if you can just see the rice levels, I mean, quantity-wise, you have just told us it is 3,
Q
What is the allocation between domestic and export volumes in Basmati and non-basmati rice?
Ashish Jain
Yeah, so in my speech I had given out the volume sales of both businesses. We can give you the data after the call unless you have some other question. Yeah, and the other question is what would be the impact of FSSAI the new law on your COGS, cost of goods sold, is there will be any hit on the GP going forward? See as far as branded business for KRBL goes, we have been always compliant to FSSAI in terms of purity of Basmati. So, as a brand we have always sold 100% pure Basmati rice in our packets. So, this rule does not have any impact as such on the cost for KRBL for compliance. However, we
Q
Yeah, hi, good afternoon. Thanks for the opportunity and thanks for the buyback. Two questions, one is, can you talk on the performance of Unity brand where we were trying to move from the smaller or the unorganized Basmati to a relatively low price Basmati, so how's the brand doing and with this FSSAI regulation, if you have to consider the cost of the price differential which adulterated people were able to sell a Basmati rice versus now on a normalized, what kind of a price differential will it bring us to? So if it was INR100, what is our brand, how much of that reduction will happen now?
Ayush Gupta
See, our non-basmati mixture in basmati rice varies from grains from INR40 a kg up to INR60, INR65 a kg. And blending varies from anywhere between 10%, 15% to almost up to 50%, 60%. So it's quite a wide range of blending that happens across markets. If I have to talk about the numbers, it can vary from INR5 a kg up to INR25, INR30 a kg in terms of blending variance. So across markets, the effect will be different across market, the effect will be different for this relation to come in place. However, we see a positive outlook for our brands across. Unity, obviously being a pure basmati rice an
Q
So firstly, sir, in the opening remarks, you mentioned that there has been a remarkable growth in the non-basmati rice. So can you please quantify the contribution of non-basmati rice to our total sales? And how should one see this going forward if you can look to that as well?
Ayush Gupta
So yes, I mentioned those numbers. Non-basmati currently contributes to INR 30 crores over our INR 845 crores domestic revenue. And that's roughly about just sub of 5%. Our target also for this year for the financial year is for the non-basmati to be salient at about 5% to the overall revenue for the year. Okay. And secondly, can you also let us know the contribution of bulk or non-branded rice to total revenue? Bulk or non-branded? Yes. Bulk right. Yes, the non-branded product that I wanted to know. Yes. So I think useful to look at that number for the last financial year. So the total bulk w
Speaking time
Ashish Jain
23
Moderator
10
Ayush Gupta
10
Anil Kumar Mittal
9
Jayant Mamania
8
Saurabh Jain
8
Soumen Choudhury
6
Mahesh Attal
6
Nikhil Upadhyay
4
Himanshu Upadhyay
3
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Opening remarks
Ashish Jain
Thank you for joining us. Welcome to the Q1 FY24 Earnings Conference Call for Analysts and Investors of KRBL Limited. Today we have several key speakers on the call, Mr. Anil Kumar Mittal, Chairman and Managing Director, Mr. Anoop Kumar Gupta, Joint Managing Director and Mr. Ayush Gupta, Head of the Domestic Division. To kick off the call, Mr. Mittal will provide updates on the business, industry and our overall strategy. Following that, Ayush will delve into the perspectives of our domestic business. Finally, I will present the financial overview of the company for the first quarter of current financial year. Once the management has concluded their opening remarks, we will open the floor for an interactive Q&A session. Please note that some of the statements made during the call may contain forward-looking information and actual results may differ from these statements. For more details, you can refer to KRBL's investor presentation, which is available on the Stock Exchange website an
Anil Kumar Mittal
Good afternoon, investors. The world Rice production in marketing year 2022-23 is expected to be marginally lower at 512.5 million tons, lower by 0.2% over preceding marketing year. The shortage is mainly due to lower production in China and Pakistan. In Marketing Year 2023-24, despite of El Nino conditions, world rice production is estimated at 520.8 million tons, which is higher by 1.6% against previous year. India is expected to grow record rice production at 135.5 million metric tons in marketing year 2022-23, which includes 2022 Kharif crop and 2023 Rabi crop. Further, the Indian government in its effort to support farmers' income has announced a 7% higher MSP for rice in the upcoming Kharif season at Rs. 2183 per quintal and Rs. 2203 per quintal for common grade and Grade A paddy respectively. We do not see any impact of the MSP on the Basmati prices as Basmati paddy prices have been trading at a much higher level as compared to the MSP The Basmati production for marketing year 2
Ayush Gupta
This success is a testament to our relentless dedication to delivering quality products and meeting the evolving needs of our consumers. Our branded Basmati segment, a cornerstone of our success, has demonstrated strong momentum. The volume sales of both consumer pack and bulk pack has surged by 6% and 14% respectively, contributing to a 9% increase in overall branded Basmati volume over Q1 FY 2023. We are thrilled to report that KRBL has continued to consolidate its leadership position in the domestic market with a 90 basis points gain in volume market share reaching to 32.4% in general trade and an impressive 510 basis points gain to reach 41.9% in modern trade. Underpinning our achievements are the three strategic pillars that drive our domestic business. The growth in branded basmati household penetration, outpacing the unbranded segment is a noteworthy feat. Our flagship brand, India Gate, has shown exemplary progress by growing penetration faster than the category itself. Moreove
Ashish Jain
Thanks, Ayush. I will now take you through the performance for the quarter ended 30 June 2023, all figures mentioned by me would refer to the consolidated financials of KRBL Limited. Total income for the quarter was at INR1,441 crores, marking a growth of 16% over the corresponding quarter last year. The revenue from operations grew by 15% while other income in the quarter increased by 144% on account of interest and income tax refund, gain on forex and mark-to- market investments gains. Domestic revenue, excluding power, increased by 19% over the corresponding quarter of last year to INR845 crores. Year-on-year, basmati sales increased by 20%, driven by 14% growth in volume which was at 107,000 MT and 5% growth in basmati realization, which was at 68,500 per ton. On the export side, revenue increased by 11% over the corresponding quarter to INR540 crores. Out of the INR 441 crores unrecognized export revenue as of the end of Q4 FY23, INR 423 crores revenue was recognized in Q1 FY24. O
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