Q4FY23 Concall notes:
• Key export destinations: UAE – 532 crores (includes 375 crores unbranded), Saudi Arabia – 414 crores, China – 242 crores, Australia – 117 crores.
• Strong domestic business momentum:
o India full year revenue grew at 26% in value to close at INR 3,335 crores. – The year marked a new high for KRBL with our portfolio crossing a household penetration of 1 crores households landmark with an 11.5% increase against the package basmati penetration growth rate of only 2.5%
o Volume Market share: 32.5% in traditional trade, while Modern Trade registered a highest ever market share of 58% in the quarter.
o Unity brand stands at INR 750 crores+ in the KRBL portfolio with a 50% growth over last year.
o HoReCa business with a healthy 28% volume growth in the full year (GST rationalization measure implemented from mid of the financial year has given the strong tailwind)
o This year, company has expanded its distribution network quite aggressively, growing at 40%, to reach a 750-plus dealers and distributors. And on the outlet front, the current penetration of package basmati in India is about 7 lakh outlets. And as a brand, KRBL is available in about 3.3 lakh outlets.
• Regional rice: Anchored under our master brand India Gate – Sona Masoori, Govind Bhog and Kolam rice have been launched in the market and are garnering good response. We have already crossed the milestone mark of INR 100 crores sales in the financial year 2023 in the regional rice category.
Our total addressable market has increased from INR 15,000 crores to INR 35,000 crores with our foray into regional rices.
• Loose basmati rice which contributes close to 65% of the total consumption of basmati in India. This presents a huge headroom for growth for KRBL in the domestic business.
• Basmati Standards by FSSAI: One other important tailwind expected to come for our business is the introduction of the new basmati standards by FSSAI with effect from 1st August 2023. Over the years, due to mass commercialization, there is a significant amount of adulterated basmati available in trade, making the prime objective of this regulation to safeguard the integrity of the grain and maintain an authenticity of flavour and taste. This resolution will have a number of positive impacts within domestic business scenario. First, increased literacy within the trade and subsequently consumer on basmati quality. Second, eradication of players indulging in unfair business as basmati adulteration practices, leading to consolidation of market share amongst top branded players. And third, an accelerated shift from loose and unregulated basmati to packaged and regulated basmati. We see this as a watershed moment for the industry and expect this to be a significant growth driver in the coming years.
• Lower export sales: Total value of goods dispatched during the year, but their revenue yet to be recognized pending receipt of payment at the end of the quarter was at 441 crores. This is the number as of March 31, 2023 as against 216 crores as of March 2022. A significant portion of this is expected to be recognized as revenue in Q1 FY 2024. We recognize revenue only once the payments are received.
Bulk export sales resulting in lumpy sales nos: Part of our exports also include bulk exports. That tends to be lumpy. So you may have quarters in which there is significant bulk exports and then you may have a quarter like Q4, where it doesn’t happen. So first, on a quarter-on-quarter basis, that’s primarily the reason why you will see export revenue moving. On an annual basis, we do about INR800 -INR900 crores of bulk exports.
• Saudi Market: HoReCa Distributor is still not done, but we are expecting that it will be done in the next 1 or 2 quarters. – Better sales expected this FY – FY24 expecting to get back to 1000cr sales.
• Modern Trade vs General Trade: Our Modern Trade and e-commerce channel actually for us is more profitable if I compare the overall P&L account because expenses are quite less compared to general trade. So in general trade, we will have a lot of manpower and other expenses to cater to that wide spectrum of retailers, when Modern Trade because of the consolidation of supply chain and other effects, our cost tends to be lower. Also, Modern Trade and e-commerce, this category of staples is I would say crowd-pullers or footfall drivers really. So these channels also invest heavily on these particular categories. So the cost of doing business to sum it up is lower compared to general trade.
• Aged rice vs new crop effect on margins: So between our Q3 and Q4, there is a part of sales that is what we call it aged rice or aged rice sale. So obviously, that inventory is what we carried from the year previous to that. And our inventory cost would be quite stagnant on that. But there’s a big portion of sales that happened in Q3 and Q4, which is new crop, which is the parboiled rice and the steam rice. For those – because it’s new crop and as you know, the crop season this year, the prices were quite high. So our input costs on the raw material was quite high. So that would be an effect between Q3 and Q4 that you see would be an impact on margins.
• Ebitda Margins: One of these factors that causes variance is the quantum of bulk sales, especially export sales, where we have limited predictability in terms of when that revenue will get recognized. However, overall, what we aim for is that during the year, we maintain the margin in the 17% to 18% trajectory. So the EBITDA margin range that we look at is a minimum of 17% to 18%. So that’s what we are looking to achieve through the year.
• Split of business between basmati and non-basmati in volume terms: Domestic branded basmati – 370,000 tons. Domestic Non-basmati branded – 21,000 tons. Exports basmati branded – 88,000 tons, Exports non-basmati – 5,000 tons.
| Subscribe To Our Free Newsletter |
