New crop at mandis priced 30% higher; basmati rice shortfall likely

He said, "The Sarbati crop will start arriving during first week of October and we expect that crop is also lesser by 10 to 15 percent. So, we expect its price will open 15 percent higher compared to last year." Last year the price for sale of Sarbati rice opened up at around Rs 21-22 per kilo, and this year we are expecting it to open at around Rs 26-27 per kilo.

In the overall basket of basmati rice, there is about 10 to 15 percent shortage this year -- it could be 5 percent or it could be 7 to 8 percent. But if you look variety-wise then there is a huge difference 1509 is lesser by about 35 to 40 percent, whereas 1718 is higher by 35 to 40 percent. So, it equates as far as the shortage is concerned. Similarly, 1121 is short by 20-25 percent and the Musa Basmati 1401 is higher by 20 percent.

When asked what all this meant for the company’s realisation in quarter two and would there be a sharp jump. Mittal said, “I will not say sharp jump but we are doing fairly well because in 15 days, we will be closing our second quarter. The reason KRBL is doing good is because of the stocks. In the industry, today, nobody has got stock of 300,000 tonne of rice that we have got because we are the only company raising the rice for two years. So we have a stock of 300,000 tonne, which is a quite a big quality and so we will get benefits.

Usually, the company sells basmati at around Rs 85 rupees a kilo, so when asked what the realisations are likely to be in the second and the third quarter this year. He said, “When you sell anything – say branded rice, if the prices come down then also realisations are super excellent and when the prices goes too high, then you cannot increase the price too much in the market. We have to keep a balance of the brand.”

However, the hike which we are expecting in next three-four months, during the new crop, we will get at least 30 to 40 percent benefit of that hike and not 100 percent benefit. The 100 percent benefit of this hike will come to us in March, said Mittal.

The promoters of the company bought from the open market between Rs 180 to 190 per share and were buying in March but not since then. Meanwhile, the stock price has shot up to Rs 266. So when asked, with the outlook looking strong, would they buy more from the open market and was a buyback on the cards? Mittal said, “We are looking for acquiring food companies and are in discussion with 2-3 of them. I cannot confirm but we are on a stage where we might acquire a food company within the next two or three months.

The current cash on the books for the company stood at Rs 850 crore other than the stocks, he said, okay.