KRBL Q3 revenue hit by export challenges but domestic business growth strong
Ashish Jain, CFO of the company known for the India Gate brand of basmati rice, hopes to overcome export challenges soon, while also driving a three-pronged strategy to boost domestic sales.
KRBL, one of India's top branded rice exporters known for its India Gate brand of basmati rice, had a subdued third quarter (Q3FY24) with revenue declining 6% year-on-year (YoY) to ₹1,437 crore, margins contracting to 12.4% from 18.2%, and profits dipping 35% YoY to ₹134 crore.
Ashish Jain, Chief Financial Officer of the Noida-based company attributed the poor show to the distribution challenges in Saudi Arabia, which is a key market for the company's branded rice exports, and the absence of good deals in the bulk exports segment.
"It (Saudi Arabia) is a key market for us. Therefore, getting the right distribution partner there is even more important. We are progressing on that, but it's just taking more time than what was earlier estimated. That's why the branded export side has been affected. The other part of the export business is bulk exports, where we opportunistically export to a global market where we find commercial deals that work well, especially in terms of the payment plans, etc. Last year, the same quarter had about ₹220 crore of bulk export revenue while this year so far, we've not come across these that makes sense for us," he said.
KRBL's exports declined nearly 47% YoY to around ₹278 crore for the third quarter from ₹524 crore.
However, Jain highlighted the strong performance of the domestic business with sales crossing ₹1,000 crore for the first time, and a healthy 14% growth in basmati sales.
Jain expects the domestic business to continue growing at around 10% in the coming quarters. This will be driven by the company's three-pronged strategy which involves growing distribution, increasing the reach of packaged basmati through optimum pricing, and driving non-basmati revenues.
Jain said the government's recent reset of the minimum export price for bulk exports had no impact as the company's realisations were higher.
On October 26, 2023, the Central government announced a reduction in the minimum price for exporting white rice from $1,200 per tonne to $950 per tonne. This decision was made due to worries that higher prices were negatively impacting the volume of exports.
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The company's stock has declined more than 9% over the past year. The company currently has a market capitalisation of ₹7,710.16 crore.
For the entire interview, watch the accompanying video
(Edited by : Shweta Mungre)
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