Q1 23/24

Aug 11, 2023

Summary

Q1 FY24 income rose 16% YoY and PAT reached ₹195 crore, with domestic growth offset by export timing and distributor changes. Management expects domestic growth of 10%–15% for FY24 and export improvement in H2.

Ladies and gentlemen, good day and welcome to KRBL Limited Q1 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Jain, Chief Financial Officer of KRBL Limited. Thank you, and over to you, sir. Thank you for joining us. Welcome to the Q1 FY 2024 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 the 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 and our company website. Now, I would like to invite Anuj to share his views. The floor is yours. Good afternoon, investors. The worldwide production in marketing year 2022/2023 is expected to be marginally lower at 512.5 million tonnes, lower by 0.2% over the preceding marketing year. The shortage is mainly due to lower production in China and Pakistan. In marketing year 2023/2024, despite El Niño conditions, worldwide production is estimated at 520.8 million tonnes, which is higher by 1.6% against the previous year. India is expected to grow the record rice production at 135.5 million metric tonnes in marketing year 2022/2023, which includes 2022 kharif crop and 2023 rabi crop. Further, the Government of India, in its effort to support farmers' income, has announced a 7% higher MSP for rice in the upcoming kharif season at INR 2,183 per quintal and INR 22.03 per quintal for common grain, respectively. We do not see any impact of the MSP on the basmati prices, as basmati paddy prices are being trading at a much higher level as compared to the MSP. The basmati production for marketing year 2022/2023 is around 9.5 million metric MT, about 12% higher than last year. Despite the overall increase in rice production in India in both basmati and non-basmati segments, we have seen a general price increase this year during the crop cycle, which indicates growing demand for both basmati rice and non-basmati rice from India. India's basmati exports have grown 16% in volume terms and 46% in value terms in FY 2023 over FY 2022. Volume growth mainly came from Saudi Arabia, UAE, Yemen, Oman, Qatar, U.S., U.K., and Jordan. India's total rice export grew by 6% to a record volume of 22.34 million metric MT and 34% in value terms to INR 89,639 crore, accounting for nearly 32% of the global rice trade. The area under basmati paddy is expected to be higher in the new crop 2023 due to good prices realized by the farmers last year. 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. This does not include non-GI area such as MP and Rajasthan. It is too early to comment on the price structure of the new crop since it will depend upon the final outcome of the crop and the government decision on whether they will continue with the export ban of non-basmati rice. On the non-basmati side, despite imposition on export duty of non-basmati white rice of 20% from September 2022, India has exported a higher quantity of non-basmati rice at 4.2 million tonnes during the period September 2022 to March 2023, as against 3.37 million tonnes in the same period of the previous year. Therefore, the government decided to ban the export of this grain in order to control the prices in the domestic market. This decision has severely impacted the global rice prices as stock in other exporting countries such as Thailand, Vietnam, and Pakistan are also not abundant to take care of the shortfall created by the ban. KRBL impact due to the rice export ban is very minimal. Our exports of especially premium grade of non-basmati grain is affected, but we have represented our case to the government through the trade association and various chambers of commerce to carve out a proposal to allow export of premium variants of these do not have any effect on the food inflation and food security concerns of Government of India. As you have seen, financial results for the quarter, our export revenue is INR 530 crore in Q1 FY 2024 against INR 485 crore in Q1 FY 2023. With respect to the export business, Q1 has been a little slow. This is on account of two reasons, with postponement of some sales to Q4 FY 2023 owing to early Ramadan and some distribution-related changes in some key markets. We are hoping to complete the distribution refresh soon. With that, the second half of this year should be better in performance vis-à-vis Q1. Any details regarding the export performance on any particular market can be discussed during question and answer session. In regard to our expansion program, we would like to apprise you that Gujarat plant is fully functional and production is live. Presently, we are keeping our cargo in rented warehouses till the time we construct another warehouse of about 1 lakh sq ft, for which government approval is awaited. In Karnataka, all formalities pertaining to the land acquisition are completed, government permissions are in place, and civil construction started in the month of June 2023. In MP, already the land has been purchased. Government formalities to start construction is applied for. It will take time to get government clearances. Regarding buyback, I think I will hand over to Ashish. He will give you the detailed details of the buyback, including dividend amounts and for the final dividend for financial year 2022-2023. Thank you. Ayush, maybe you can cover. Yeah. Good afternoon, ladies and gentlemen. I'm Ayush Gupta, and I'll be covering the domestic business remarks for today. I'm thrilled to be here today to discuss KRBL's remarkable performance and strategic efforts in the domestic market during the first quarter of financial year 2024. Our commitment to growth and innovation has led us to achieve outstanding accomplishments across various dimensions of our business. In terms of our domestic sales performance, I'm excited to share that our Quarter 1 domestic sales, excluding power, reached an impressive INR 845 crores, reflecting a remarkable growth of 19% compared to the same period last year. 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 have surged by 6% and 14% respectively, contributing to a noteworthy 9% increase in overall branded basmati volume over Quarter One Financial Year 2023. We are thrilled to report that KRBL Limited continues to consolidate its leadership position in the domestic market with a 90 basis points gain in volume market share, reaching 32.4% in general trade and an impressive 510 basis points gain to reach 41.9% in volume. 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. Moreover, I am elated to announce that KRBL Limited has crossed the marvelous milestone of one crore consuming households, reflecting the trust and loyalty our brand enjoys amongst consumers. Distribution has been a key focus area for us, and I am delighted to share that our efforts are paying off. We have meticulously evaluated our distribution potential across geographies and made substantial improvements to our distribution infrastructure, resulting in a notable increase of 230 basis points in our numeric distribution over the previous quarter. This enhancement empowers us to better serve our diverse consumer base. Our commitment to innovation is evident in our category expansion agenda. We have embarked on a regional approach with India Gate South India marketing campaign. This campaign is aimed at expanding basmati consumption beyond the confines of biryani, unlocking new avenues for growth, and reaching untapped markets. In addition to our branded basmati success, we have witnessed remarkable growth in our non-basmati sales, which surged by an impressive 60% to INR 30 crore in Quarter One Financial Year 2024, compared to the same period last year. Our regional rice business is progressing in line with our expectations, on track to achieve a 5% share of the overall domestic revenue for the full financial year. Addressing our Quarter One Financial Year 2024 performance, the 9.3% decline compared to Quarter Four Financial Year 2023 is a result of seasonal category dynamics. Bulk pack sales peak from October to March due to festivals and weddings, followed by a natural decline. Hence, this is not a single drop, but a pattern reflecting market behavior. In our Quarter One Financial Year 2024 performance update, amidst our achievements, a promising development has taken place. Recent years have witnessed the rampant commercialization of basmati rice, raising concerns about authenticity due to reports of blending other grains, artificial fragrances, and colors. However, a new ray of hope emerges as stringent regulations come into effect this August. These regulations aim to restore consumer trust and ensure the true essence of basmati rice. The FSSAI regulation on identity standards for basmati rice in force from 1st August 2023 are poised to bring about a significant shift in the basmati rice landscape. Key quality parameters that consumers will now rightfully expect for the price they pay are explicitly outlined in these regulations. One notable change expected with the implementation of these regulations is the probable preference shift among consumers from loose basmati rice to packaged ones. The newfound assurance of authenticity offered by packaged varieties is likely to resonate well with consumers seeking the genuine basmati experience. Looking ahead, these regulations are poised to have a favorable impact on domestic trade. The presence of well-defined standards will elevate the quality benchmark of basmati rice across markets. Moreover, the regulations will promote trade literacy and empower consumers with better education. This could signal the end of businesses that thrived on adulterated basmati, ultimately purifying the market for benefit of all consumers. As we continue to uphold our commitment to excellence and authenticity, India Gate Basmati Rice proudly joined hands with Eat Right India under the esteemed aegis of FSSAI to embark on a nationwide Basmati Rice No Compromise campaign. This momentous collaboration underscores our dedication to promoting healthier eating habits, advocating balanced nutrition, and enhancing food safety awareness among consumers across India. By spearheading this initiative, India Gate Basmati Rice assumes a pioneering role in creating widespread awareness about the recently introduced FSSAI regulation on identity standards for basmati rice. With this concerted effort, we anticipate a positive transformation within the industry, fostering an environment of trust and quality. With this, I come to an end of my remarks. Thank you for your unwavering support, and I assure you that KRBL remains committed to its growth trajectory, innovation, and delivering value to our stakeholders. I will now hand it over to our CFO, Ashish Jain, for further updates. Thanks, Ayush. I will now take you through the performance for the quarter ended 30th June 2023. All figures mentioned by me would refer to the consolidated finances of KRBL Limited. Total income for the quarter was at INR 1,441 crore, marking growth of 16% over the corresponding quarter last year. Revenue from operations grew by 15%, while other income in the quarter increased by 144% on account of interest from income tax refund, gain on Forex and mark-to-market investment gains. Domestic revenue, excluding power, increased by 19% over the corresponding quarter last year to INR 845 crore. 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 INR 68,500 per ton. On the export side, revenue increased by 11% over the corresponding quarter to INR 540 crore. Out of the INR 441 crore unrecognized export revenue as of the end of Quarter 4 2023, INR 423 crore revenue is recognized in Q1 2024. Outlook for this segment has already been covered in comments of management. Gross margin in the quarter was at 28.8% and was affected by higher basmati unit cost on a run-by basis. EBITDA margin for the quarter was at 19.3% as against 19.6% in the corresponding quarter. EBITDA trend is affected by lower gross margin, but benefited from higher other income and lower proportionate other expenses, primarily freight and advertisement. Finance cost for the quarter was at INR 1.5 crore as against INR 2 crore on account of lower notional interest on liabilities. PAT for quarter was at INR 195 crore or 13.3% as against INR 164 crore or 13% in the corresponding quarter. PAT margin improved on account of lower proportionate finance cost and lower effective tax rate. I will now share an analysis of Q1 2024 versus Q4 2023. Revenue from operations in Q4, like I mentioned, was at INR 1,414 crore as against INR 1,280 crore in the preceding quarter. Domestic sales, as Ayush Gupta mentioned, were lower by INR 87 crore, while export sale at INR 540 crore was higher than INR 209 crore. Domestic basmati volume was lower by around 10,000 MT due to seasonal factors, as Ayush Gupta explained, while basmati volume was higher by around 35,000 MT, largely because of bulk basmati export recognized during the quarter. Quarter one gross margin is higher due to higher sale of high-margin basmati rice and 2% lower average basmati costs. EBITDA margin has improved by 518 basis points due to improved gross margin coupled with lower proportionate freight and advertisement expenses. Moving on to balance sheet highlights. Total inventory as of June 30, 2023 was at INR 3,278 crore, comprising INR 849 crore of paddy as against INR 396 crore in June 2022, and INR 2,264 crore of rice as against INR 1,908 crore in June 2022. In volume terms, paddy stocks were at approximately 211,000 tons and rice at approximately 371,000 tons. These numbers were 116,000 tons and 367,000 tons, respectively, last year. Inventory is higher primarily to meet higher expected demand. Total cash and cash balance, including all investments but excluding that in equity shares as of June 30, 2023, was at ₹930 crore as against ₹936 crore as of 2022. With respect to distribution of surplus to shareholders, as you would have noted, the board has recommended 100% dividend, which would come to rupees one per share, and approved buyback of ₹325 crore, as also mentioned by our Chairman. With this, the total distribution to shareholders, including the tax payable on buyback, would be around ₹400 crore and around ₹24 crore of dividend, leading to a total outflow of about ₹424 crore. With that, I come to an end of my prepared remarks. I would now like to hand over to the moderator for opening the Q&A session. Just want to mention that as the ED matter is sub judice, we will not be in a position to respond to queries on this matter. Over to the moderator now. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Himanshu Patia from O3 PMS. Please go ahead. Yeah. Hi. Am I audible? Yes, you are. Please go ahead. Yeah. My first question was on export side. We are hearing that rice export ban is making global rice importers worried, and people want early shipments. Are we seeing price rice in better terms of trade because of what has happened in the domestic market? Secondly, what percentage of our business in exports would be short-term business or single consignment or few consignment type of business? Can you elaborate on these two aspects? See, there is no doubt there is a panic abroad because of the ban of non-basmati rice. But as far as non-basmati is concerned, it is a miniscule business of KRBL Limited. We are primarily exporting basmati rice. Since we are into branding business, there is not a very much roller coaster type of behavior because the orders are with the distributor, and they have been ordering at a consistent level. So if there is any demand abroad, it would be private label, not in our segment of branding business. We are doing our normal business. The exports have been going normally in their own way. Only the difference is that during Ramadan, there were some early shipments. So that effect was there in Q3 and Q1. But in Q2, we are very much expected to make it our normal export. There is no problem. Yeah. Any update on Saudi market, especially on retail side and wholesale and retail, how is the new distributor and what is the progress there? See, as far as distributor related, there have been some changes, which has also affected the sales, which we are going to complete by another 1 week or 10 days or 15th of August. So you will find really the upgradation in export, upliftment in export from middle of quarter 2 and quarter 3 and 4 will show a remarkable results. Okay. One last question, then I'll join back the queue. See, this year we have paid both dividend and buyback, and congrats or thanks for it. It's a significant proportion of last year's profit. But in future, as our balance sheet is now net cash, is there a thought that we'll be paying this percentage of profits as, let's say, dividend or buyback or whatever it is? Or in a range would you like to keep it? Any thoughts on that? I think Mr. Ashish Jain should reply to this. Yeah, so thanks for the question. See, just in terms of policy terms, there is no change in our dividend policy. That continues as is. The way we looked at it this time was that we had surpluses beyond our requirement, not for all the time to come, but at least for some time right now. Therefore, we decided to continue with the dividend, but then add buyback to it, because we find that that is a very good tool in terms of returning wealth to the shareholders. Long term, there is no decision yet on what the mix of dividend and buyback would be. But we just evaluated as and when surplus funds are available. Okay. Thank you so much, sir. Thank you. Next question is from the line of Karan Premchand Gupta from Savvy Capital. Please go ahead. Yes. Thank you. Two questions from my side. One, can you discuss the CapEx and working capital requirements for the company for the next 2-3 years? Secondly, on the international business, if I remember correctly, last quarter, there were some shipments that got delayed and were supposed to be booked in Q1. Excluding the effect of that, can you tell us what the revenues were in the current quarter for the export business? My sense is there has been a significant drop. If you could also just elaborate on that. Also, if I may squeeze in one more. Mr. Jain just discussed the dividend policy for the company that stays as is. If you could just elaborate on what the current policy is that you expect to continue into the future for the time being. Thanks. Yeah. On CapEx, our maintenance CapEx is around INR 50 crore a year. In terms of the expansion that we are doing, the aggregate spend on that should be between INR 200 crore-INR 250 crore, all funded by internal accruals. This is going to be spread between FY 2023 to FY 2025. 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 220-230 days of inventory. Therefore, as sales grow, that number will increase. That is primarily funded through internal accruals, and we borrow short-term primarily during the paddy buying season. In terms of the investment and dividend policy, it is there on our website, but just to summarize, the effort there is to distribute around 15% of PAT. I think your other question was on export performance. When we ended the last quarter, which is the quarter ended March 31, 2023, we had mentioned that around INR 441 crore was shipments that were dispatched, but the revenue was pending recognition. Out of that INR 441 crore, INR 423 crore have been recognized. If you look at the export for the quarter, the total number is INR 540 crore. Excluding that revenue, this results in about INR 115 crore-INR 120 crore of export. That number on a year-on-year basis is lower, but as Anilji explained, there are two reasons for that. One is around INR 20 crore-INR 25 crore of export revenue got preponed in quarter four because Ramadan this year, which is the principal festival in Middle East, got preponed, and that is an occasion where a lot of consumption happens. We had shipped orders to that effect in the earlier quarter. Second, there is an ongoing distribution change there, which we are hoping to conclude sometime in quarter two. You should see a step-up on the quarter one export performance in the second half of this year. Okay. So this change in the distributor in the Middle East, this was something that we had undergone recently, right? So we are changing that distributor again and moving on to somebody else. Then on the inventory requirement for the new plants, if you could just elaborate on what are the expected sales from the new plants that are being set up so that we can get a sense of the working capital requirements for those. That is from my side. Thank you. Yeah. So on the new plants, our estimate is that initially we see about INR 400 crore to INR 450 crore of additional revenue. So the inventory with that should be around INR 200 crore to INR 300 crore additional over the current level. I think in terms of the distributor refresh, yes, so there was one done some time back. However, that is being revisited, but that should be completed by quarter 2. All right. Thank you. Thank you. Next question is from the line of Soumen Chowdhury from Jetedge Securities Private Limited. Please go ahead. Good afternoon, sir, and thank you for the opportunity. Mr. Jain mentioned about the domestic volume and realization being 68,500. I think in the last call you had mentioned that the domestic realization was 74,000. Is there a drop of 78% over the previous quarter? If you could give a similar breakup for exports also in terms of volumes and realization, it would be quite helpful. No, there is no drop per se, Soumen. There is a slight change in the product mix, but otherwise overall realizations are in trend vis-à-vis last quarter. In fact, when we look at realizations, they have been fairly stable for the last three quarters. On the export number, the total basmati realization in quarter one 2024 was around INR 98,000 per MT for basmati. Okay. 98,000 tons. Okay, yeah. This is the realization. That's right. Yes. Yeah. What would be the volume? Yeah. Volume I do not have right now. I can share with you separately. Okay. What would be the outlook going forward, like for this quarter and next quarter? Are we again seeing stable kind of realizations? Yeah. I think, Anilji, do you want to touch on the price trend? Realization are going to increase. You see the market as on date is on fire. Definitely the second quarter you will see definitely 5%-7% jump on the realization. Okay. One more issue on the domestic crop, as you were saying that the sown area is better than last year. Are we expecting a better crop and then a price drop in October, November when the new crop comes in? See, that is why it is still too early because sowing is still continuing. Because in certain areas, they were flood-affected areas, sowing is still continuing, and it will take another one week for the sowing to be completed. But this year the sowing is on a larger area of about 15% over last year, 12%-15%. We expect the crop size to also increase by 12%-15%. But at the moment, to give you any guesswork on that will be wrong on our part. Okay. Fine. That's it from my side. Thank you so much. Thank you. Next question is from the line of Jayant Mamania from Care Portfolio Managers Private Limited. Please go ahead. Yeah, good afternoon. Sir, can you elaborate on the export of INR 540 crore on a geographic basis? At least top three territories. Jayant, we don't typically give market-wise details because that's sensitive from a competition point of view. Okay. The second question is, India's total basmati exports, Middle East consists of 78%. Can you tell us the top three players after KRBL? You mean, who are the largest exporters? Yeah, to Middle East. From India. See, we have three top. One is Saudi Arabia. Exporters. Exporters. From India. India. About 12 Hello. There are three more companies. One is Sapoltech, another is DD International, and the fourth one is Who is the fourth one? There are many. There are one, two, three, four in numbers. I can't say. These are the two other big players. One is Sapoltech, another is DD International. But all others are normally private players. They are also not into branding. They are all into private label. They're forced into private label. Okay. Yeah. Just to add to that, I think what Anilji was saying was that none of the names that he mentioned, these are all bulk exporters. Correct. They tend to do very large volumes. However, as you know from a packaged branded point of view, KRBL Limited is the largest exporter. Okay. Can you tell us to what extent we could recover our lost market due to that change of agent? Yeah. It has already been explained that I think that is a temporary go-to-market change. You should see a step up from the current levels of performance in the second half of this year. Okay. In case of domestic market, our sales stabilize around INR 900 crore. What kind of growth we expect and these FSSAI norms have come into place? Yeah. We have been growing quarter-over-quarter at about 9%-10%, and we will be expecting to close the financial year in healthy double digits. I would say between 10%-15%. Some tailwinds we got last year was the GST, and I believe FSSAI norms, which have recently kicked in, is also a very positive tailwind that should help consumers choose packaged over loose. The market size would definitely expand and our brand being the dominant brand in the category, should stand to gain from this regulation. Okay. This post white rice ban, the parboiled rice are in great demand. Do we deal in parboiled rice? Parboiled, non-basmati rice, you mean? Yeah. Our exposure in that space is very minimal, so we are not quite dealing into that. Okay. Thank you a lot. All the best. Thank you. Next question is from the line of Mahesh Atal, from Atal & Associates. Please go ahead. Sir, thank you for taking my question. Just wondering, you have just informed us that you have changed the distributor in Saudi. Is this new distributor going to take care of the HoReCa segment also, which we were actually looking for? I think in the last quarter, you just told that maybe you are looking for that and maybe in the next couple of quarters you will see something. Is this distributor going to take care of that thing also? My second question would be, I am just trying to get on that inventory valuation. When I see, when Mr. Ashish Jain has just told that the inventory levels of rice in last year, quantity-wise was 367,000, and this year it is 371,000. But the value-wise, it is going, I am not able to understand. Can you please elaborate on this, please? These are my two queries. Yeah. I will question you on the Saudi front. We have already finalized with 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 15th, 16th of August, and simultaneously the shipment will start. This time we have made a common distributor for both retail, HoReCa, and modern stores. Regarding your inventory, I will ask Ashish to reply you. Sorry, I didn't get your question on inventory. Can you repeat? Yeah. Ashish, if you can just give the rice levels. Quantity wise, you have just told that it is 371,000 compared to 367,000 visibility. But valuation wise, there is big gap. I am not able to understand how we are valuing this particular thing. Yeah. The value of rice inventory as of June 2022 was at INR 1,908 crore. That same number now is INR 2,264 crore. If we look at the per ton value, it was around INR 52,000 as of June 2022, and the number now is INR 61,000. Okay. And one more thing, sir. With this distributor, are we very sure that we will be reaching our earlier level in 2018, 2019 levels? Whatever we used to do earlier in the Saudi market, that was around, I think, INR 1,000 plus crore. Are we still expecting it in this particular financial year for the part of the year? We appoint a distributor after evaluating all the minus and plus points he has. This time we think that it took us about another six months as we took last time, and we are quite confident that within next one year we will reach to our old numbers which we used to have in 2018, 2019, 2020. No problem in that. And sir, what is the idea behind having so much cash in books, sir? I mean, I just even promised that the maximum requirement is something around INR 500 crore, including the maintenance and the CapEx that we are going to do. Just wanted to know that why there is an additional cash of INR 300 crore to INR 500 crore, whether this is somehow related with the ROCE, right? Yeah. I think you have to consider our inventory requirement. We stock up paddy, which is our basic raw material in October to December, and that is when the fund requirement is there. So you have to consider that along with the CapEx when you look at our overall funding requirement. Will this buyback and giving back to shareholder thing be a regular normal thing? Can we expect another buyback? What is the plan on the, let us say, if you are having additional cash and there is no inventory that you want to pile up for the next season, maybe you may take a decision for that in the next season. Still, is this on the card and will this be a regular thing or is it a one-time thing which you have done in the five-year period? No, we find this buyback to be tax-friendly in the hands of the shareholder and the investor, and we can think of it to be not a regular but a very frequent feature. All right, sir. Thank you, sir, and all the best. Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Next question is from the line of Saurabh Jain from Ventus. Please go ahead. Hello. My first question will be the overall total volume for domestic NBR and Basmati. Sorry, Mr. Jain, your voice is not audible. We are not properly audible actually. Yeah. Is it audible now? Yes, a little better. There is some background noise. Yeah, I am saying, what is the allocation between domestic and export volumes in Basmati and NBR? Yeah. So, in my speech, I had given out the volume sales of both businesses. Saurabh Jain, I can give you the data after the call unless you have some other question. Yeah. The other question is, what will be the impact of FSSAI new law on your cost of goods sold? If 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 see competition prices going up because a lot of loose as well as branded players had a significant amount of blending in their packs. So we see a much more fairer competition in the market in regard to this regulation. Yeah. With regards to NBR, there is 30 kilos is sold, built into business. What would be the output volume in the domestic NBR? Yeah. The volume is about 5,300 tons. Okay. I think domestic Basmati you have already told us. 107,000, is it correct? 107,000 metric ton. That's right. 600, 500. What are the plan on the NBR space? What will be the realization in terms of NBR? Okay, I got it. 30 kilo on 5,000 three NBR. That will be the realization, right. Future plans on NBR, because you said INR 400 crore is the revenue you would be getting in the new plants. It will be from the NBR only or a mix of NBR and Basmati? No, it is a mix of NBR and Basmati. 450 will be next year or a couple of years? 400, 450 is for one year or two years. Sorry, which one? INR 400 crore revenue. No, when the plants come online, it is not for next one year. It is not for the next one year. Once all the plants are fully operational. Yeah, maybe by FY 2025 or 2026. What would be your allocation in NBR and Basmati in INR 400 crore? The plants are still under construction, so I think it is a little too early for that question. But broadly, it will be a mix of the two, of course. Okay. Mix of the two. Yeah. Okay. In terms of export, what will be the overall percentage, if you can Sorry. That is a very granular question. Do not see the relevance right now, but we can touch offline if you like. Okay, fine. Thank you, and congratulations. Thank you. Thank you. Next question is from the line of Nikhil Upadhyaya from Securities Investment Managers Private Limited. Please go ahead. Yeah. Hi, good afternoon. Thanks for the opportunity and thanks for the invite. Two questions. One is, can you talk on the performance of Unity brand, where you are trying to move from the smaller or the unorganized Basmati to a relatively low price Basmati. So how is 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 that to? So if it was 100 versus our brand, how much of a reduction will happen now? See, our non-Basmati and mixture in Basmati rice varies from grains from INR 40 a kg up to INR 60, INR 65 a kg. Blending varies from anywhere between 10%, 15% to almost up to 50%, 60%. It is quite a wide range of blending that happens across markets. If I have to talk about in numbers, it can vary from INR 5 a kg up to INR 25, INR 30 a kg in terms of blending variance. Across markets, the effects will be different. Across markets, the effects will be different for this regulation to come in place. However, we see a positive outlook for our brands across. Unity, obviously being a pure Basmati rice and a more affordable Basmati rice being the steamed range compared to Jade, will definitely get better acceptance because the overall pricing in the market for our other Basmatis will increase. Unity should get more competitive in terms of that, and we see a positive outlook for that brand specifically. Okay. What would be the price differential of Unity versus currently adulterated Basmati rice? As I told you, the current adulterated Basmati- On an average, across markets would be. Unity would be at least a 10%-15% premium compared to current adulterated Basmati rice. Okay. On the Saudi distributor. If we go back to 2021, we took almost one and a half years to appoint this new distributor, and I think he started operating last year around Q1 itself. Within one year, we are again looking at a new distributor. Just trying to understand, what are the factors on which we appoint these distributors, and what was the key thing where you believe the lapses were happening that you wanted to reappoint a newer distributor? Just wondering if you can spend some time here. Yeah, I'll try to explain to you. Q1 2022 and Q2, they did a phenomenal job, and we were getting orders worth about. We got in two months orders worth about more than 20,000-23,000 tons, and we thought that within one year we'll reach to our old numbers of more than 100,000 tons a year. All of a sudden, after two months, I don't know what happened. He started asking for more discounts. He started asking for credits. There were so many type of problems he tried to create. As a principle, when a contract is signed, it is for a minimum one year. We could not either give him both the things, either the more discounts nor the credit. Credit is definitely in KRBL. We don't entertain credits normally. That was the reason, and we finally said, "Brother, you want to work or not? Both the things cannot be entertained." That is why we had to go to the new one. This time we were quite sure, and he agreed for that, the credit does not require, and at least for minimum one year, I will agree and I will work on the discounts which have been agreed upon. Okay. Margins or discounts, whatever you say, agreement on the discounts or margins. I feel that this time, minimum one year when we will get the real taste of India Gate. Now that old distributor is trying to come back to us, we are not interested to work with him. As a brand, it's a strong brand, but I don't know why he wanted to acquire it in between the agreement. We have selected a new one. Okay. Just one last question, sir. When these agreements we have with the distributor, is there a volume clause which we could say, in this year, this much kind of a volume he has to get so as to get a higher incentive? Or how the incentives and the discount structure work around with the distributor? See, first of all, there is no distribution contract with us. We have distribution contract for more than 50, 60 countries, but quantities or definition of commitment of quantity is in no contract. No distributor will guarantee you for the contract for the quantity. Incentives are there. If you will sell above that, then we give you 1% or 1.5% more. But normally, those incentives, there are very few distributors who cross those incentives, and they're all old distributors, like in Australia, there are few in America. They are doing well. Even in Middle East, Doha, Qatar, Dubai, they are doing very well. Only we are disturbed in one or two distributor channels. One is in Kuwait and another is in Saudi Arabia. Otherwise, everywhere it is okay. Okay. Fine, sir. Thanks a lot. I will come back to you. Thank you. Ladies and gentlemen, a reminder to the participants. Please limit your questions to two per participant. Next question is from the line of Navid Virani from Bastion Research. Please go ahead. Hi, sir. Thank you for the opportunity. I hope I am audible. Firstly, sir, in the opening remarks, you mentioned that there has been a remarkable growth in the non-basmati business. Can you please quantify the contribution of non-basmati rice to our total sales and how one should see this going forward, if you can put a better word? I mentioned those numbers. Non-basmati currently contributes to INR 30 crore over our INR 825 crore domestic revenue. That is roughly about just above 5%. Our target also for this year, for the financial year is for the non-basmati to be salient at about 5% of the overall revenue for the year. Okay. Secondly, can you also let us know the contribution of bulk or non-branded rice to the total revenue? Bulk or non-branded? Yeah, bulk rice. Non-branded part of the business, which I wanted to know. I think useful to look at that number for the last financial year. The total bulk was at around 15% of our total revenue in the last financial year. Okay. Thank you. Thank you for this clarification. All the best. Thank you. Next question is from the line of Syed Faiz Ahmed from MIF Investment and Financial Service Private Limited. Please go ahead. Hello? Yes, you are audible. Please go ahead. Good afternoon, sir. Sir, basically Hello? Sir, Sir, 2018 को यह block deal हुई है मगर 2023 चल रहे हैं। तो sir, यह investor को आप release कैसे कीजिए जिसमें आप buyback ₹500 तक कर रहे हैं। और as an investor मुझे नहीं लगता है कि यह buyback price standard price है, जिसमें आप export भी कर रहे हैं, domestic sale भी कर रहे हैं और market में boom भी आया हुआ है rice में। Sir, इसमें थोड़ा clarify कीजिए। हाँ जी, मैं आपके सवालों का जवाब देता हूँ। पहला, I think आपका यह challenge था कि आपको quality पहले और अपने में फर्क है, तो इसमें आप हमारे जो customer care number है, उस पर phone कर सकते हैं। I think वहाँ easier रहेगा आपको respond करने के लिए। बाकी Ayush Gupta यहाँ पर हैं, जो domestic business देखते हैं। आप उनको भी directly reach कर सकते हैं। That is my suggestion on the first point. जो दूसरा है, देखिए वह deal दो shareholders के बीच में हुई होगी। उसमें company का कोई role नहीं है। इसलिए it may be difficult for us to comment on that. Sir, दूसरा shareholder कौन है? जिसमें block deal तो हो रही है, यह right सी बात है। Company को तो information होती है ना कि block deal हो रही है। 3,20,000 purchase हो रहे हैं ₹594 price से। एक को आप Abdullah साहब release कर रहे हैं और एक investor include हो रहा है। Company ने थोड़ी बैठा है जी। इसको समझाओ। Company ने थोड़ी बैठा है ₹594 में। यह तो block deal आपस में दो shareholder broker deal है। क्या हो गई उसमें, company क्या कर सकती है? Market price market driven है, इसमें company क्या कर सकती है। Company को information नहीं होती है कि इसमें एक block deal हो रही है, यह price है, एक investor को release भी करना है। I mean, as far as I know हमारे पास information नहीं है, but we can still check. आपका और कोई सवाल है इसके अलावा? Okay, thank you. Thank you. Thank you very much. We will take that as last question. Thank you very much members of management team. Ladies and gentlemen, on behalf of KRBL Limited that concludes this conference. Thank you all for joining us and you may now disconnect your lines.