Investor update

Sep 16, 2025

Summary

An independent review of the resigned director’s observations is due within 30 days. Management detailed the ₹58 crore export receivable write-off, CSR balances, and the enabling real estate proposal.

Ladies and gentlemen, good day, and welcome to the investor conference call of KRBL Limited. As a reminder, all participant lines will be in the listen-only mode. Should you need assistance during the conference call, please signal an operator by pressing * and then 0 on your touchtone phone. Please note that this conference is being recorded, and the duration of this call will be 30 minutes. 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, and good evening to each one of you. Thank you for joining the call at short notice. This call has been scheduled to apprise the investors and shareholders with respect to events post the resignation of Mr. Anil Kumar Chaudhary, independent director of the company. With me on the call are Mr. Anil Mittal, chairman and managing director, and Mr. Anoop Kumar Gupta, joint managing director. I will request Anilji for his comments. Good evening, all the stakeholders. I will just like to share my views. Mr. Chaudhary was appointed on board on August 20, 2024. However, he decided to step down with effect from September 8, 2025. The contents of the letter required internal board level deliberation. The letter submitted to stock exchanges within statutory timelines. Mr. Chaudhary has mentioned certain concerns in his resignation letter. Mr. Chaudhary has not highlighted any gaps in compliances relating to financial and legal matters, and his observations are focused on board processes. We would like to mention that there are no apparent lapses, and the company conforms to the standards as stipulated by the law governing bodies of India to the best of our understanding. The company has the confidence and support of all board members, including the other three independent directors who are of repute and are standing strong with the company. Mr. Dogra, an existing independent director, has stepped into the audit committee with effect from yesterday. Taking cognizance of the observations and as a matter of good corporate governance, separate meetings of independent directors and the boards were convened at a shorter notice yesterday, that is, on Monday, September 15, 2025. The observations were discussed at the said meetings. It was noted that the company has in place systems and processes commensurate with the size of the company's operation to ensure that any kind of financial impact or non-compliances are highlighted to the board and respective committees with full closure to the stock exchange in compliances with applicable laws as and when required. However, the board and independent directors have concurred of taking following actions. An independent reputed third-party firm be appointed to conduct a thorough review of the observation as soon as possible, but not later than 30 days, and present the report to the respective board committees. The respective board committees will deliberate on the report to their area of observations and submit recommendations to the board. I will now hand over to Mr. Ashish Jain to share some facts. Thank you, sir. I will just like to share some facts with respect to some of the observations. First, on the observation with respect to write-off. Coming to this transaction, as disclosed in financial year 2024-2025 annual report, the company has written off export receivables of approximately INR 58 crores relating to financial year 2023 shipments to a customer based in Africa. The customer is not a related party. Details of the transaction are as under. On February 7, 2023, KRBL executed a contract to sell around 23,000 metric tons of non-basmati rice for around INR 79 crores. This transaction was confirmed by the customer on February 8. The buyer paid approximately INR 17 crores in January 2023, and the balance INR 62 crores fell due by August 7, 2023. Apart from around INR 6 crores received across financial year 2024-2025, with last payment being received in April 2024, no further payments were made despite sustained follow-up and demand and legal notices sent by the company. KRBL recorded an expected credit loss provision under Ind AS 109, the value of which was around INR 18 crores in FY 2024, with the first provision being recorded in September 2023 and the remainder value in financial year 2025. This was supported by a legal opinion that the counterparty is untraceable and enforcement is unlikely. With our authorized dealer bank, authorization for self write-off under FEMA and RBI export directions, approximately INR 58 crores was written off in FY 2025, leaving nil outstanding as on March 31, 2025. Related provisions are disclosed in note 36 of financial year 2024 and 2025 annual reports. This matter, including the chronology, the provisioning, and the write-off rationale, were placed before the audit committee and the board and the statutory auditors. Separately from the accounting treatment that I just described, we are finalizing a recovery plan comprising commencing arbitration and appointing a collection firm. Recoveries, if any, will be recognized in the P&L when received. Moving on to the concerns that have been raised on CSR funds. Over the past three years, including the current year to date, the company has spent approximately INR 40 crores on CSR and as on date, there is an unspent balance, including current year's obligation of INR 37 crores. The company follows the due process in CSR, wherein an annual operating plan is presented and approved. It is ensured that CSR spendings are in line with applicable rules and regulations. Unspent amount is planned for utilization in a phased manner for ongoing projects to ensure that funds are only released based on careful evaluation of the agreed utilization. Proper due diligence is undertaken before appointing any implementing agency or initiating a project. Utilization certificates and impact assessments are obtained for all projects up to financial year 2025. This is in place. Appropriate disclosures are made in financial statements, and CSR committee not only approves all spends but also monitors the spends closely. Moving on to the subject of change in object clause or memorandum of association. This pertains to the land monetization and real estate projects proposal. As discussed in the board meeting dated August 7, 2025 and explained in the subsequent earnings call by the management. This is meant to be an enabling resolution for the company to engage in real estate business with a view to unlocking shareholder value and to utilize available funds more competently. As above is intended only as an enabling resolution, any project will be brought before the relevant committee and the board for approval as required before being taken up for execution. Similarly, a detailed plan along with business and financial details will be disclosed in due course. When this proposal was presented, one of the directors recorded dissent, which has been duly recorded in the minutes, and the resolution was approved by majority in audit committee and the board, and is now being put up for shareholder approval at the ensuing meeting as required. Coming to the fourth point. On the point of variable pay and annual increments to persons holding office or place of profit, I would like to inform that there are currently eight persons that hold office or place of profit. These include four executive directors, while the other four either head businesses or important verticals within the company. Their compensation is recommended by NRC and approved by the board. In their review, NRC considers the compensation policy, their performance, industry benchmarking, underlying reasons, and skills and responsibility. Board considers NRC recommendations and decides post-deliberation. We would further like to confirm that increments and variable pay are within the limits approved by the shareholders. With that, I come to an end of my prepared comments. We can now take up a few questions, but we need to close the call at 4:30 because of other commitments. Moderator, you can take a few questions now. Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and then One on their touch-tone phone. If you would like to remove yourself from the question queue, you may press Star and then Two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Hitesh Goel from Origin Capital. Please go ahead. Yeah, thanks for taking my question, sir. This is regarding the board composition, right? If you look at firms, basically they have more than 50% of their board comprising of independent members, independent directors, right? If I look at your board composition, actually there are three independent directors, right? And four relatives of promoter family. What are we doing regarding this to improve the board composition? We are already in a search out of the fourth in replacement of Mr. Anil Kumar Chaudhary, and since we have three months' time, but we will try to finish that gap as early as possible. We are going to have four independent directors and four members from the family, right? I mean, from management team. Right. Okay. And sir, the second question is regarding this export receivable. Like Ashish Jain has mentioned, there is no other outstanding as of now export receivable issue right now in the company except for this, which has been provisioned in FY 2025. We should not see this provision coming in FY 2026 as such. That is correct. Okay. Can we ask a business question, or is this related to this issue only? No, I think we should focus on the objective of this call for now. Okay. Then my questions are answered. Thank you. Thank you. Our next question comes from the line of Mohit Saini from Way2Wealth Securities. Please go ahead. Yes, sir. Thank you for the opportunity. I just had a small question. Mr. Anil Kumar Chaudhary has attended two meetings, as mentioned in the FY 2025 report. So how is it possible that he found out the governance issue and all within those two and there's dissent and everything going on? Can you just throw some light on that? I didn't get your question. Sir, in the annual report, it was seen that he has attended two meetings. Is that correct? Yes, that's fine. I think the annual report is correct, yeah. Yeah. Sir, my question was that then how did he find out, and he raised questions in the meetings about the governance and all, still there was no solution or any further meeting for that. Let me tell you, whenever there was a board meeting or committee meeting, he had never placed before the board or within the committee that he has some issues. But if a person has decided or he was cooking up some stories within himself, that cannot be answered. Now I also want that let this independent audit happen so that we become more stronger to enable us to ensure that we are within compliance for everything. Okay. All right, sir. We'll wait for the report now. Thank you very much. Thank you. Our next question comes from the line of Jatin Chawla from RTL Investments. Please go ahead. Yeah. Hi, good evening, and thanks for the opportunity. The first question is that, on this export receivable, is this the first time that we dealt with this party or have we dealt with this party before as well? No, we used to deal with this party way back in 1995 to 2005. After 2005, we stopped it. All of a sudden, he requested us that he wants one vessel of non-basmati rice for African continent, and it was on CAD basis. But ultimately, the man who is notorious or who has a wrong understanding, he has played with us. Let us be very frank. He played a dirty and a smart game with us. We could never imagine in our 30 years or 40 years of export business, I think this would be the only issue of bad debt. Got it. The second question, on the kind of audit, the independent audit expert that you are looking to appoint, what sort of organization are we looking to appoint? The stature of the organization. Yeah, we are looking for a reputable firm who has the necessary skills. Typically, it will either be a Big Four, or a firm of that stature or a reputed legal firm. Got it. Thanks. Those are my two questions. Thank you. We will take the last question from the line of Nitin S. Dharmavat from Aurum Capital. Please go ahead. Yeah, thank you for the opportunity. Am I audible? Yes. Yes, you are. Okay. My question is, the resignation happened on the 8th, and it was reported to exchanges on the 13th. It might be legally right and within the limits, but the company took so much time to report to shareholders. Why company took it so long? Don't you think that this is a case of legally right but ethically wrong? No, I tell you, when we received this letter, the whole board was under shock because we could not dream that he is going to react like this. One is that you are already prepared and you know, okay, somebody is going to play a dirty role or he's going to become hostile. This we knew. We didn't know about it. When we received the letter, you will not believe we could not imagine that such type of letter will come and that made a delay of 3, 4 days or 5 days, whatever it was. If you think that this is something, dirty work has been done. Are you contemplating any legal action against the independent director? For the kind of level of allegations which are there in the letter. See, my comment at this moment will not be appropriate. See, we are from the part of the board. Let that independent report come and then only we will be able to answer you in a more transparent manner. Till the report is not there, I will say my positive side, which is not good. Let the report come. I appreciate, sir. But I think we should have been more careful in reporting to the exchanges. Thank you. Thank you. Ladies and gentlemen, I now hand the conference over to Mr. Anoop Kumar Gupta for closing comments. In the end, I would just like to reiterate that we operate in accordance with applicable laws and regulations. The board has moved swiftly and taken cognisance and set a transparent review process. Where improvements, if any, are identified, we will implement them and inform the market. Meanwhile, the business remains focused on execution. We appreciate your continued trust. Thank you. Thank you. On behalf of KRBL Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.