KRBL Q3FY23 NOTES:
• Higher total inventory (Rs 4,436 as on 31st Dec’22 vs Rs 3,168 Cr as on 31st Dec’21) to meet expected demand. We procured 47% higher quantity because we have good orders in hand, both for domestic and exports.
• DOMESTIC MARKET SHARE: Traditional trade: 32.4%, Modern trade: 39.8% (up 90bps, 810bps respectively qoq)
• QOQ REDUCTION IN EXPORT SALES: There is a reduction in export revenue in the current quarter due to ban on 100% broken nonbasmati rice. In previous two quarters, we had exported good quantity of 100% broken and nonbasmati rice to China.
• Our Saudi business is going as per expectation, and our new distributor is performing well, but we are still unable to finalize a new distributor for the HoReCa segment.
See, as far as the current distributor is concerned, it took us almost nine months to one year to look at this distributor. The biggest problem in Saudi is that everybody wants credit. There is no culture in KRBL to provide credit. So, till the time we get a distributor that agree to our terms and condition, it might take another 3-4 months, that is not important, but terms are more important, and I hope it will take another 2-3 months. After Ramadan, I’m quite sure that we will be able to finalize. We have already shortlisted 2-3 and we are going to finalize one of them in a very short period.
• DOMESTIC BUSINESS: Q3 FY23 Domestic HORECA sales augmented by GST rationalization on bulk packs, besides continuing strong retail demand.
The Consumer Pack segment grew by roughly 9% in volume terms year-over-year, with both the traditional trade and modern trade channels growing well.
Increasing distribution & penetration: KRBL has expanded outlet penetration by 15% year-over-year to reach a numeric distribution of 39.2%. In the current financial year, we have expanded our distributor count by 40% to take the number to an upward of 700-plus dealers and distributors. Annual household penetration of India Gate brand as of September 2022 stood at around 10 million households, including 1.4 million new households in this past year.
Unity today, stands as an INR 600 crores brand in the KRBL portfolio.
HORECA Segment: This segment has grown by 20% year-over-year and 88% sequentially in volume terms. It contributes roughly 40% of the domestic business revenue. KRBL plays very strategically in the segment, focusing only on top of the pyramid, which means customers who value quality and are willing to pay the price for it. With the revision in GST norms, which puts all sellers on a level playing field, the opportunity size for KRBL has significantly expanded. We are now targeting 20%-25% of this segment as against around 10% earlier and are looking at doubling our revenues in this segment in the next two years.
Regional rice: Here, all three regional rice – Sona Masoori, Gobindobhog and Kolam rice – are now launched in the market
• NEW PESTICIDE FREE VARIETIES: Those all the three, four varieties are super excellent. It has been accepted by the trade. We had made trial shipments also, trial milling also, everything went very well. And this year, so I can’t say because FY23 crop will also have a very limited quantity, but FY24 crops will have sufficient of those varieties, which is known as pesticide-free resistance-free commodity. That will help us to capture the European market and American market, where the pesticide issue has been come in a big way. And normally, in every speech, we say, that it is nothing but a nontariff barrier for which we accepted the challenges, and we are ready for that, but it will be in FY24.
• We are into branded sales, we don’t make a single export in a private label
• Now any order, which is to be shipped in the month of October or November, It cannot be from the new crops. It is all to be from the old crop and all that – that is why the reflection of the prices, quantity, everything because of Ramadan, you will see in the fourth quarter. Soumen Choudhury: So, realization should be better in this quarter than what we have seen in the third quarter? Anil Kumar Mittal: Definitely
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