Q1 22/23

Aug 10, 2022

Summary

Q1 FY23 revenue from operations rose 21% and PAT reached a record INR 164 crore, supported by domestic growth and improved rice realizations. Management cited strong demand and Saudi distribution recovery, while higher paddy costs, weak rainfall, and EU pesticide rules remained key considerations.

Ladies and gentlemen, good day and welcome to KRBL Limited Q1 FY 2023 earnings conference call. As a reminder, all participant lines will be in listen-only mode. 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 and zero on your telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishith Solanki from CDR India. Thank you, and over to you, sir. Welcome to KRBL Limited's first quarter FY 2023 earnings conference call for analysts and investors. I am pleased to introduce to you senior members of the management team on today's call. We will have with us Mr. Anil Kumar Mittal, Chairman and Managing Director, Mr. Anoop Kumar Gupta, Joint Managing Director, Mr. Ayush Gupta, Head, Domestic Division, and Mr. Ashish Jain, Chief Financial Officer. We propose to begin with updates from Mr. Mittal with views on the industry, business, and broad strategy. He will then be followed by Mr. Ayush Gupta, who will take us through the perspectives on domestic business. Thereafter, we shall have the financial overview presented by Mr. Ashish Jain. After the opening remarks from the management, the forum will be open for an interactive question and answer session. A cautionary note: Certain statements made on today's call could be forward-looking in nature, and actual results could vary from these statements. A detailed statement in this regard is available in KRBL's investor presentation, which is available on the stock exchange website. I would now like to invite our Chairman, Mr. Mittal, to share his views. Thank you, and over to you, sir. Thank you. Everybody. Hello? Yes, sir, we can hear you. Good afternoon to everybody. When we talk about rice, we should keep in mind that there are two different commodities, that is basmati rice and non-basmati rice. There is no linkage whatsoever between the two as far as production, price, and markets are concerned. In regard to non-basmati rice, we see that non-basmati rice could emerge as the next challenge for global food supply as a shortage of rain in parts of India, which has caused planting area to shrink to the smallest in about three years. The threat to India's rice production comes to a time when countries are grappling with soaring food costs and rampant inflation. Total rice planted area has declined by 13% so far this season due to lack of rainfall in some areas, including West Bengal, Odisha, Chhattisgarh, and Uttar Pradesh, which account for a major area of India's rice output. There is still hope if weather gods shower their blessing in the next 25 days, then the above scenario can change. Let me add that the prices have already increased by 10% and the Government of India has increased the MSP to INR 20,400 per metric ton for the upcoming kharif crop. Moreover, there is still good demand from overseas markets since India is still the cheapest among all exporting nations. As regards basmati rice, the showing is good, and according to the field survey, the production of basmati will increase by 25% in crop year 2022/2023. This is mainly due to high prices witnessed by the farmer last year. Recently, we witnessed that the early crop, which comes in the month of July, August, that is 1509 basmati rice, fetch a price of INR 32,000 to INR 33,000 per metric ton, giving the farmer a revenue of INR 70,000 per acre. Whereas non-basmati with the new MSP will fetch the farmer around INR 62,000 per acre, which certifies that the price of basmati paddy, in spite of 25% hike in production, will still remain firm and the export prices will also fetch good prices. Moreover, the export demand is good and there is also an alternate channel established to export basmati rice to Iran. As we all know, Middle East is the largest consumer of Indian basmati rice. It doesn't have much stock in hand. Besides, the Ramadan season will start in March this year, which will put pressure on prices of basmati rice during the season. Basmati rice export witnessed a growth of 25.54% in the first three months of the financial year 2022/2023, as its export increased from US$922 million between April to June to US$1115 million between April to June 2022. Whereas in volume terms, the growth was only 3.5%, thereby confirming that the price realization was very good. During the last 2 years, we have really witnessed a panic situation on account of the poor availability of containers, labor, transportation, and warehousing had brought down the productivity by 50%. We are now starting to see the situation ease out with freight levels coming down and availability of containers, labor, transportation, and warehousing space are considerably improved. There is no impediment as far as logistics are concerned, except that freight rate, though they have come down, but still are on the higher side. But it does not affect the industry anymore, since the freight charges are built up in the pricing. The new mechanism introduced by RBI, which enables the exporter to export in Indian rupee, was a welcome move by the exporting Unity of India. Unfortunately, it does not help much to the basmati rice industry, since the major importing countries of basmati rice do not fall under rupee mechanism. This is to confirm that IARI has this kharif season distributed seeds of three new varieties of basmati rice, which possesses inbuilt resistance to bacterial blight and blast disease, as I have mentioned to you last year as well. IARI has supplied seeds to farmers of improved 1487, 1885, and 1886 rice varieties, in which two genes have been inserted, which could withstand the attack of bacterial blight and blast disease that adversely impact the crop yield. Three varieties would gradually replace the existing basmati rice varieties of 1121, 1509, and 1401, which are cultivated in more than 90% of about 2 million hectares of aromatic and long grain rice grown areas. The above program of IARI will multiply the seed this year, which will result into a commercial crop during the crop year 2023, 2024. This will give a big lead to basmati exports, practically in the EU and U.S.A., including few countries in the Arab world. Though the restriction of pesticide residue is nothing but a non-tariff barrier, the challenge of which was accepted by the Indian exporters, and now we have come up with the new varieties to ensure that Indian basmati rice is fully compliant. We have an excellent order book, and our first quarter results are already with you. Both domestic as well as export sales are showing remarkable progress, and this growth trajectory will continue in times to come. One of the biggest setbacks KRBL faced in the last couple of years was the loss of a 40-year-old distributor relationship in Saudi due to its financial crisis. We have now appointed a new distributor for the mainstream market and is doing exceptionally well, the result of which are already seen in the first quarter and will improvise in the subsequent period. We have yet to finalize another distributor for HoReCa and traditional trade, which we hope to finalize by September or October. KRBL is doing exceptionally well throughout the globe except EU region due to pesticide restriction. Let me add, it is not only KRBL, but the entire rice industry is facing hard times in EU. I would like to add that U.K. has signed a MOU for free trade with India, whereby there will be a total exemption of duties on imports from India from 1st of October 2022. The white rice presently attracts about EUR 175 metric ton duty, which will go away, hence the scope of exporting branded white rice is ample since U.K. is the largest importing country in Europe, but it has not much implication in the economies of both the countries, and it could be delayed for few months. I am happy to share that India Gate is now recognized as the world's number one basmati rice brand, which is the testimony to the quality and love for our brand. With this, I thank you, everybody, once again and pass on the speaker to Mr. Ayush Gupta for the domestic scenario. Thank you. Good afternoon, ladies and gentlemen. I am pleased to share results for quarter one FY 2023 for India market. Revenue grew by 47% year-on-year. Unity brand has grown by more than 100% to clock INR 150 crores in quarterly revenue. Consumer pack continues to grow in healthy double digits year-over-year in volume terms. I will now share updates on our three-pronged strategy to transform the India markets. First, densifying distribution reach. We are diligently expanding our direct distributor network to town class 1, town class 2, and rural markets of India. We are on track with our target to expand our distribution reach to 250 more towns by the end of this financial year. Next, we have increased our investments in brand penetration initiatives such as trade marketing to accelerate the ongoing shift in consumption from unbranded to branded rice. We continue to expand our direct coverage to retail outlets by deploying more feet on street. This is not only helping us expand the width and depth of distribution, but making us a more agile organization as we move closer to the market. With respect to the third lever of augmenting our product portfolio, we remain committed to deliver close to 10% revenue contribution from new products within the next two financial years. As we continue to evaluate the basmati landscape in India, we are constantly reminded of the immense headroom for growth. However, India is a vast country with diverse consumption habits across regions. KRBL is thus moving to a regional approach stemming from consumer insights. To this end, we have launched Project RICE, where RICE stands for Regional Insight and Cluster-focused Execution. Through this exercise, we aim to converge the diverse grant task into three broad clusters. Cluster, where there is an overwhelming need to drive branded basmati penetration. Second cluster, where penetration exists, but consumption needs to be increased. Just to mention, the average yearly basmati consumption per household in India currently stands at just 21 kgs. And cluster three, where KRBL market share needs to be increased. The three-pronged strategy mentioned earlier will now be executed more sharply under the above framework. With that, I come to the end of my remarks and hand the line back to the moderator. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we request you to please limit your questions to two per participant. Should you have further questions, you may join the queue back. We will wait for a moment while the question queue assembles. The first question is from the line of Amit Doshi from Care PMS. Please go ahead. Yeah. Thank you, and congratulations for the great set of numbers. Sir, you did mention about jump in the exports, et cetera. But when we compare year-on-year, the numbers are not that kind of remarkable. While sequentially there is a good growth. Can you just comment on that as to because last year also, I believe that Saudi distributor was not in place, the new Saudi distributor. What is the gap? As I mentioned, even in the last speech and in my today's speech also, that we had a very big setback as far as Saudi was concerned, and that's why the numbers were not very good in the past quarter. But since we have already appointed the Saudi new distributor, the results are before you, and by third quarter, you will see an enormous good results from Saudi Arabia. That was one part. It cannot be overnight, the numbers cannot be done. It requires some time to appear. We have to give a gestation period to the new distributor as well. Got it. Sir, as far as the domestic business is concerned, of course, the numbers have been really appreciable and a great effort, clearly. This shift from unorganized to organized, and that is probably driven by the Unity brand. What is the price gap between our brand versus the unorganized segment and what is driving the shift from there to Unity? I was just trying to understand. Ayush, do you want to take that? Yeah. See, between a branded product such as India Gate, which is clearly carrying a USP of an aged rice. That is clearly selling at a premium of about 20%-25% compared to the unbranded loose variants in the market. With our Unity brand, our objective was to provide the non-aged steam versions to the consumer, which do not command such premiums. So Unity brand generally command a premium of about 10%-12% over the unbranded loose variants. So that becomes a much attractive ladder for an unbranded consumer to climb on to get into the branded bandwagon. That's been a clear strategy for us, where we've been trying to drive more consumer penetration in our key markets, and that's working well for us. Okay. In the presentation, slide number 14, the market share is mentioned at 32% for traditional trade and modern trade as 37%. Could you give figures of what it had been prior to, say, probably one year back or some comparable number just for the understanding purpose. Ayush I don't have. Ashish, would you have numbers from- I don't have numbers. From last quarter? I don't have numbers. I think he is asking for one year back. I don't have the number, but probably share it separately. Sure. Thank you. And all the very best. Thank you. The next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead. I have three questions. One, pertaining to slide 4, I couldn't understand the growth numbers, where your quarter growth number is 21%, and you have mentioned some growth number for domestic business at 47%, export business at 73%. I couldn't understand these numbers. If you could help us clearly on why is the situation. My second question is, somewhere in the presentation it is mentioned that there is 25% increase in basmati price realization, but I don't see any impact on the gross margin side, so what is the reason? I have one more question. In the last quarter, we had given the bifurcation on the loss of business in Saudi and Iran, certain volume numbers, certain value numbers. Based on that, we had mentioned that half of off-site business will recoup in FY 2023, which means about a +20% or 25% offline growth for the company for FY 2023. Where are we on that journey in terms of growth for FY 2023? These are my three questions, sir. Yeah, this is Ashish. I'll address the first one. The overall growth in revenue is at 21%. Okay, this comprises 47% quarter-on-quarter growth, which is against first quarter of last financial year. For domestic business was at 47%. For export, the same number was a degrowth of 4%. The 73% that we mentioned in the presentation is against the preceding quarter, and the idea there was to highlight the change in trend that is clearly observable in export revenue. Okay. Is it possible to share in this 20% what is the volume decline number or the growth number? Sorry, we do not give out that data separately, but we have shared separate growth numbers for the two segments, in value terms. Okay. Can you directionally at least mention that there is a volume decline or a growth? Yeah, so overall, when we look at basmati rice business overall across the two segments, in the quarter, we saw 13% increase in realization over the corresponding quarter last year and 7% increase in volume. Okay. Sorry, what was your second question? Sir, price increase and gross margin reflection is not there. No. You would observe that the gross margin has gone up vis-à-vis the last quarter. That is just about 100 basis points, right? Yeah. Yeah, versus the price increase of 13%. Yeah, but you would also note that the paddy prices were higher in the season that we just closed, and because of that, there is also an increase in the input cost, which is why the entire realization does not reflect in gross margin. Okay. We must be following FIFO, right? First in, first out. By that method, you would have paddy prices of the last season as well, right? No, we don't follow FIFO. In our case, finished products are valued on a net realization basis, while the raw material is- At cost. At cost. But it is not. Okay. On that last quarter's bifurcation and our expectation of growth of +20%, the calculation seems to suggest a +20% growth for FY 2023. Where are we on that journey, sir? Yeah, so- Very much on the chart. I will not comment on what we will achieve during the year, but I think you had earlier mentioned that we had indicated last quarter that the growth which is expected on Saudi. I think your question was that where are we on that? Saudi and Iran, two places. Yeah. So I will request the Chairman to address. See, Saudi, we are expecting with the current arrangement that our top line will increase by minimum INR 300 crore to INR 400 crore extra over the past performances. This INR 400 crore definitely will be added in the top line. Besides, we have yet to decide for another distributor for HoReCa segment and general trade, which we believe we would be finalizing somewhere within September, October, and that will add another in this financial year to about INR 300 crore. So we are expecting INR 700 crore jump in the Saudi top line itself this year. INR 300 crore via the first distributor arrangement and another INR 300 crore via the new arrangement, right? Yeah. INR 300 crore the other one. It is okay. Maybe INR 200 crore, INR 300 crore. See, when we talk about the way we are looking at the numbers now with the present distributor, on the basis of that, I have discussed the numbers because we are exceptionally doing well with the new distributor. No problem, sir. Has the quarter 1 already started showing Saudi numbers? If you could just share the quarterly run rate in Saudi now. Yes. The Saudi numbers are there, but there were certain payments which could not come, so they are not reflecting. Otherwise, this number would have increased by another INR 70 crore-INR 80 crore. Okay, no problem. Lastly, Sorry to interrupt sir. I would request you to please come in. Okay. Thank you. Thank you. As we were not able to connect to Ashish Jain, CFO earlier, we have him now and I hand over to him for his remarks now. Yeah. Thank you. I'll just give an overview of the quarter in terms of financials. All figures mentioned by me would refer to the consolidated financials of KRBL. Total income for the quarter stood at INR 1,239 crore, marking a growth of 20% over the corresponding quarter last year. Gross profit of the company increased by 24%, and EBITDA and profit after tax by 17%. The company recorded highest ever quarterly profit after tax and earning per share of INR 164 crore and INR 6.99 respectively during the quarter. Revenue from operations grew by 21%, led by domestic sales, which excluding energy sales grew by 47% to INR 709 crore. Export sales at INR 485 crore were lower by 4% vis-à-vis quarter one FY 2022, but marked substantial growth over the preceding quarter. Overall rice sales realization increased by 13%, while volume increased by 7% over quarter one FY 2022. Higher realization was recorded across both domestic and export segments. Gross margin improved to 32.5%, an improvement of 100 basis points over the corresponding quarter. EBITDA margin for the quarter was at 19.6%, as against 20.2% on account of higher advertising costs, higher travel costs, mark-to-market loss on the equity portfolio, and some other expenses. Freight expenses increased by INR 19.6 crores during the quarter, though the latter is largely recovered from the customer and therefore tends to be EBITDA neutral. KRBL's finance cost declined to INR 2 crores as against INR 3.6 crores in corresponding quarter, as our reliance on borrowing continues to reduce. The company's PBT margin was comparable at 17.9% as against 18%. PAT margin was at 13.3% as against 13.7%. The gap is on account of proportionately higher taxable income in quarter 1 FY 2023 as against that in quarter 1 FY 2022. I will now share some key numbers on the inventory. Total inventory as of June 30, 2022, was INR 2,461 crores, comprising INR 396 crores of paddy and INR 1,908 crores of rice. In volume terms, paddy stocks were at 116,000 tons and rice at 367,000 tons. The inventory is lower as compared to last year, primarily due to lower paddy purchase in the last buying season. Total cash and cash equivalents and investments excluding equity investments were at INR 938 crores, up by 130% over the same quarter last year. The company's liquidity position remains strong and supports the company's ability to invest both in inventory as well as in expansion in the forthcoming year. With that, I come to an end of my prepared remarks, and we can resume the Q&A session. Back to the moderator. Thank you, sir. Before I take the next question, I would like to remind the participants to limit their questions to 2 per participant. The next question is from the line of Jayant Mamania from Care PMS. Please go ahead. Yeah. Congratulations, Anil ji, for a good set of numbers. Sir, we have succeeded in sustaining the domestic sales at around INR 700 crores in last 3 quarters. What is our internal target of growth for domestic sales? You see, we are expanding domestic market, and we are of the opinion that it would be around 50% of the revenue. My revenue goes INR 5,000 crores, so we are targeting around INR 2,500 crore to INR 3,000 crore this year. Sir, at the INR 700 or INR 100, it will be around INR 2,800 already this year. Yeah. Maybe it will cross INR 3,000 crores. Okay. Sir, what would be our EBITDA margin for domestic sales? We are on our trend. I don't know the figures, but we are on our trend. Yeah. Sir, what would be EBITDA margin domestic sales? We don't have EBITDA margin, but as a company policy, our EBITDA will always be in the range of 15%-20%. That is a big number I have given. It can be, but I can't comment on what is the domestic EBITDA and what is the export EBITDA. Okay. Sir, you said this season the non-basmati rice prices are expected to remain strong because of the lower production expected. So what would be our strategy to stock this season, considering the higher price of basmati? Let me tell you, when we talk about the higher price of basmati, it was in the mind that though the production is higher by 25%, even then, due to shortage of non-basmati rice everywhere, the prices will remain firm. That is number one. Secondly, MSP has increased to INR 20,400. It means a farmer will have an income from the government minimum support price paddy to about INR 62,000. Whereas if the farmer gets, let us say, less than INR 32 or INR 32, he will have no interest in growing basmati rice. Therefore, the prices of basmati rice, I said, will remain firm, because minimum we have to achieve anything between INR 65,000 to INR 70,000 for the farmer to have interest in growing basmati rice. That is why I have mentioned that the prices will remain firm this year in spite of 25% increase. Moreover, the demand. Let me tell you, the demand has increased, which you will witness in the next quarter. The demand has definitely increased, and this year I expect that the figure of India should touch about 4.4.5 million tons as compared to 3.9 million tons last year. So these are the two reasons where we feel that prices will remain firm. Your question was on buying. So definitely this year we will be buying more. We will be buying more compared to last year, compared to last two years. We will be buying more. Okay. Sir, we are not that good in U.S. market, and you said with new varieties, the pesticide residue level will be complied. So what would be our strategy for U.S. market? See, definitely not this year, but next year when commercial crop comes of compliant rice, definitely our share will increase not only in America, in many other markets where there is an obstacle of being non-compliant. I am quite sure that we will do much better in these countries when the compliant rice is available in abundance. Okay. Thanks a lot. Thanks, and all the best. Thank you. The next question is from the line of Mr. Guvakadia from Revanta Funds. Please go ahead. Yeah, good afternoon. Since you mentioned that Unity as a brand has started contributing in a big way in this quarter, can you give us a rough indication as to what are the approximate gross margins in the domestic portfolio versus the export portfolio? Yeah, I think we just clarified that we will not be able to share segment-wise gross margins. The overall number is already with you. Okay. Just asking this because Unity, you said, is not a very premium brand as compared to what we sell, so was trying to get an indicative sense from you guys. Anyways, we have appointed a new distributor in Saudi Arabia. Does it mean, and it is safe to say that, the last two quarters of performance is now behind us, and this is a more or less steady state run rate or base for us in terms of profitability? You are correct. You are right. Okay. That is great, sir. Lastly, sir, you gave a clear roadmap on the exports front. Can you also tell us how much can Iran contribute in terms of export revenue for us whenever that goes through, approximately, in FY 2023 or in FY 2024? FY 2023, so definitely we will have a respectable share in Iran because we are- Iran. Iran. Iran, so we will have a respectable share because a good channel has been emerged, and that channel is a legal channel to export to Iran. We are quite confident that our share in the next three quarters will be quite impressive as far as Iran shipments are Okay, sir. Thank you so much for answering my questions. All the best. Thank you. The next question is from the line of Soumen Choudhury from JPH Securities Private Limited. Please go ahead. Good afternoon, sir. Thank you for the opportunity, and congratulations on significant improvement in performance in this quarter. I am referring to the presentation where you have talked about a 25% increase in realization in the current quarter year-over-year. Would it be like quarter-on-quarter? Would it also be a similar trend like 20%, 25% increase over quarter 4? Let me just give you the number. It won't be 25. It is not 25% over the preceding quarter. Okay. Yeah. In the India market, at least we are at about 10%. I think that's going to be- Yeah, I think that's similar number overall. 10% growth only. Yeah. Not growth. I think you were asking about realization. Yeah. Yeah, 10% increase in realization quarter-on-quarter. Yeah, that is right. But in the export market, it should be better than that, I think. No, I think the realizations tend to be higher in the export market, as we have explained in earlier calls. I think overall, if you see the quarter-on-quarter increase in realization, I think it is similar across both domestic and exports. If you are asking My sense was quarter 4 realizations were impacted because of the Saudi distributor issue, and this quarter it seems a little bit better than that. It is still 10%. Yeah, I will just clarify. I think your question was that how does the realization compare to the preceding quarter? Yeah, that is right. Yes, sir. Yeah. I think what we responded was that first, the trend is similar in both domestic and exports, and the number across is about 10% improvement over the preceding quarter. Okay. Fine. That is it from my side. Thank you. Thank you. The next question is from the line of Himanshu Patnia from O3 Capital. Please go ahead. Yeah, hi. Good afternoon. My first question was, despite this 25% increase in sowing for basmati, do you expect the basmati prices to be high this season? Hello? The reason is that Government of India has increased the MSP to INR 20,400. That is number one. So in comparison, it will impact the basmati pricing as well. That is number one. Very forward. Number two, the basmati buffer stock with the government is depleting because of this giving free ration to 80 crore people. Moreover, this year, the crop is lesser by 13% overall because of the rain shortfall. These two things will also impact the basmati pricing, and that is why the basmati prices, in spite of 25% higher crop will increase. Let me clarify that if we take the crop of non-basmati as around 120 million, less 13%, whatever it is, basmati rice production is just 7 million-8 million, which is 6%-7% of the total crop. That 25% increase versus non-basmati rice has got no correlation, but the price impact will definitely come. Okay. We have spoken about going into regional varieties of rice also for the last one and a half years. Would we start buying those also, and what is the progress on the CapEx you were to do for the regional basmati rice? Yeah, we are actually buying rice, but we are in process of putting rice mills. In Karnataka, we have bought the land, and it is under process. The construction will start in the next 60-90 days. I think we will be able to catch FY 2024. Okay. FY 2024, the production will come. The regional rice, we are buying locally and storing it and packing it in our brands, and we are marketing it. Kandla is already under, I mean, machines have started installing in the plants. I think within six months, the Kandla Gandhidham unit will be operational. Okay. Yeah, that's all from my side. Thank you. The next question is from the line of Abdur Joshi from Newberry Capital. Please go ahead. Hi, good afternoon. Thanks for the opportunity. Just one clarification. Last year, we had sent some non-basmati rice to China. Is that correct? Yeah, correct. Yes, it is correct. Yeah. If the opportunity comes, and now Bangladesh is also starting to import from us. The three or four major regions which produce rice, Bangladesh, China, and Vietnam, out of that, two are procuring from India. If such opportunity comes, whether we will be exporting rice to China and Bangladesh in this year also, taking the advantage of prices? As far as Bangladesh is concerned, the problem with KRBL Limited is that we do not entertain any business with an EBITDA of less than 10% or 11%. Otherwise, our bottom line goes haywire. We do not know about Bangladesh, but definitely China, we get an opportunity because China gives a better profit or margin, so we will definitely do with China. It will be not correct for me to disclose. We are working with certain countries in non-basmati rice, where our profit or margins will be above 10%. And we are quite hopeful we will be able to conclude with those countries where the margins are 10%, above 10%. Understood, sir. And on the global scenario for non-basmati, the production is also decreasing, right? In India also, the production is decreasing, as you mentioned in the opening remarks. So that will help us for export and realization also. Is that correct I am understanding? India has an upper hand, and definitely the crops are less, no doubt, but not to that extent what is the situation in other countries. Okay, understood, sir. Thank you. That is it from my side. Thank you. Thank you. The next question is from the line of Jagreet Singh from VA Capital. Please go ahead. Good afternoon, Anup ji. Yes, hi. Please go ahead. Anup ji, you mentioned that there was a spillover of some INR 60 crores-INR 70 crores from Saudi Arabia to the next quarter. Any other spillovers in this quarter? Yeah, there is a spillover of other countries which I'll not like to discuss, but there is a spillover. The total spillover may be up to the tune of INR 150 crores. All right. Sir, the CapEx plans which you have, how much is the total CapEx for this year? CapEx plan, how much? For this non-basmati regional rice, we have a plan of about INR 150 crore this year. So that will be the all CapEx which will be required, right? Total CapEx. Which means we would have around INR 350 crore to INR 400 crore of extra capital to invest in inventory of rice. Yeah, this year we will be buying heavily, so we need finances. 100, 200. Even we are going to buy regional rice, even our share in basmati purchase would be higher this year. I think all the money which is lying in the banks will be utilized. Okay. And sir, any color on the growth in the premium segment rice like Classic and Super? Is that segment growing as fast as the Unity is suggesting most of the additional numbers? Is your premium segment also growing? See, I can reply to you separately on this. See these numbers of Classic and Super. No, Classic. Growth is there. Growth is there definitely, otherwise how could the realization should be so good? The realization has come about ₹124 a kilo. The average realization is coming ₹124 a kilo, you can understand. Therefore, there is a growth in the premium segment. Okay. How much would be the growth then? At least for domestic market. Yep, please continue. Yes. At least for domestic market, I had run some numbers and for India Gate Classic and Super, we have done exceptionally well in quarter one, and we have recorded 60% volume growth in this particular segment. It is actually beating our overall performance. The premium segment has outperformed the overall performance. Wonderful. Right. Thank you very much. The gross margin when bottom line improves, it means our premium segment sale is going up. Okay. Thank you very much. Thank you. The next question is from the line of Nikhil from SiMPL. Please go ahead. Yeah, hi. Good afternoon. Thanks for the opportunity and congrats on good set of numbers. Two questions. One is on the HoReCa segment in India. Are we back above to pre-COVID level in terms of volume, or what is the sense you are getting? And because for HoReCa, we used to sell under the Unity brand, so what percentage would be HoReCa and what percentage would be retail? Ayush, do you want to take that? Yeah, I'll take that. Thank you. On the HoReCa front, we were back to higher levels pre-COVID at least two quarters back, I believe. Quarter one, I would say, if I don't have my numbers right, but I would take a guess at about 40% increase from pre-COVID levels in the HoReCa segment. When it comes to Unity brand, Unity brand has historically been primarily a HoReCa brand. More than 85% of revenues still come from the HoReCa segment for that brand. However, we are aggressively promoting the consumer pack range of Unity through our expanded distribution network. We are hopeful to see much better growth in the consumer segment as well. I would like to add one thing due to this recent GST notification, where the taxability on the branded and unbranded has become equal, and we are now at a level playing field. We used to pay 5% tax while others used not to pay. Now I have changed my packing from Unity 25 kg to 30 kg. As for government notification, above 25 kg, there is no tax for everybody, whether it's a registered brand or a non-registered brand. I hope with this, our HoReCa sales will improve very much. Thank you. Okay. Secondly, sir, in Saudi, I think even in last quarter, you had mentioned that the demand for our brand was pretty strong, and this quarter we would have done a lot more channel filling. On the secondary sales, are we seeing a similar kind of trend sequentially, what we have seen in terms of the export demand? Can we say there is some channel filling in the numbers and probably this number may subside in following quarters? The channel demand is very good. What is your question? Repeat again. My question was, I think for last two quarters, we had issues with meeting the demand in the modern trade and all. This quarter, when we say the export demand was very strong sequentially, is there some element of channel filling also, and as a result, this number can go down in future quarters because there could be some one-time sales versus the normal sales which we would be doing. These all sales which we have shown in quarter one and in future quarter is only channel sales. The demand in channel sale is so much that none of the containers are going to the warehouses of the customer. They are going directly for supply to all different channels. Channel sale is very strong in Saudi, and that is the strength of the brand. Sure. Thanks a lot. I will come back to you. Thank you. The next question is from the line of Aman from Augment Research Private Limited. Please go ahead. Yeah. Hello, sir, and thanks for the opportunity. Sir, can you just throw some light about how the paddy prices have moved compared to quarter-on-quarter and year-on-year? And also give some sense of understanding, like as we are seeing that the sowing area is low, the comparison 13%-14% lower compared to last year. So can we expect that the paddy price is to remain high for the remaining year also? I can give you the paddy numbers on how they've moved from quarter to quarter. If you look at our average cost of paddy purchase, that was for basmati, that was at about INR 34,000 per metric tons as of quarter 1 FY 2023. Right. And this is about, as against about INR 28,000 in the last season. So if you compare the two buying price, it was INR 28,000 increased to about INR 34,000 in the last buying season. Does that answer your question? Last buying season as in during the quarter 1 of FY 2020. December quarter. Yeah. Okay. Can we expect the prices to continue at this level for the paddy thing because of lower sowing this season? Yeah, paddy prices will be strong, as Anil has already told you. There are a lot of reasons. Number one, the Government of India has increased MSP. The area of non-basmati is less. There will be a pressure on basmati, and the demand in export is quite good, and there are no carry forward stocks with the rice millers and exporters. So naturally, in the new buying season, everybody would be a buyer. So we are expecting price to be very good. You see, last year the crop started at INR 28 and finished at INR 35, INR 36. This year, we hope the crop will start at INR 32, INR 33, compared to INR 28. So naturally it is higher by 20% than last year. Okay, sir. Thank you. Thank you. The next question is from the line of Jayesh Gandhi from Harshad H Gandhi Securities Private Limited. Please go ahead. In one of the earlier caller's question, you said that you don't follow FIFO method. What method you follow, sir? Sir, it is paddy prices are at cost. Whatever the cost is, that will go. That will be the cost. There is nothing FIFO. I mean, it is the average. If the average of everything is A, so it will be A. You mean to say, for example, if you have a paddy stock of, say, six months, the six months prior price will be there, or is the average of the six months price that we book? Yeah. I will add to what Anup ji said. See, from a calculation perspective, we use weighted average, so it is not FIFO. In terms of how inventory is valued, like I mentioned, for finished products, it has NRV, which is net realizable value, and for cost and semi-processed stock, it is at cost. Okay. I understood. Thank you very much, sir. Okay. Nothing from my side. Thank you very much. Thank you. This was the last question for today. I would now like to hand the conference over to management for closing comments. Closing comments. Yeah. Once again, I am thankful to the investors for attending this conference call. I am quite confident that this quarter results must have encouraged you that KRBL is back to the trajectory of growth, and we are going to follow this much better in coming three quarters. Our order book is very strong, and we feel that the coming three quarters, we are going to show very good results, both with the top line as well as the bottom line. Thank you very much. Thank you very much. On behalf of KRBL Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.