Chaman Lal Setia Exports Ltd (CHAMANSEQ) Q3 FY23 Earnings Concall Transcript

Chaman Lal Setia Exports Ltd (NSE:CHAMANSEQ) Q3 FY23 Earnings Concall dated Feb. 06, 2023.

Corporate Participants:

Sankesh Setia — Executive Director

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Analysts:

Caesar Augustus — CAO Capital — Analyst

Sandeev Damani — — Analyst

Somnath Pal — — Analyst

Himanshu Upadhyay — — Analyst

Ankur — — Analyst

Kaustubh — — Analyst

Namit Mehta — — Analyst

Diksha Patil — — Analyst

Ayush Mudgal — — Analyst

Presentation:

Operator

Good evening and warm welcome to Chaman Lal Setia Exports, Ltd. Q3 and Nine Month FY23 Earnings Call. [Operator Instructions]. Please note that this conference is being recorded. The results, press release, and investor presentation are available on the stock exchanges and the company website.

I would like to introduce the management team today on-call with us, Mr. Rajeev Setia, Joint Managing Director and Chief Financial Officer and Mr. Sankesh Setia, Executive Director.

A cautionary note before we begin, some some statements made on the call today could be forward-looking in nature and actual results could vary from these statements. A detail information in this regard is available in the investor presentation, which is available on the stock exchanges and company website.

I will now hand over the call to Mr. Sankesh Setia, Executive Director for the highlights. Over to you sir.

Sankesh Setia — Executive Director

Okay. Welcome and thank you everyone for joining us on our Q3 FY23 and nine-month FY23 earnings call. I’m delighted to announce that we have recorded a robust performance in the quarter and nine-months ended December 2022. This season, the planted area for the paddy has increased by almost 10% to 15% compared to last season. Despite, the paddy price is up by approximately INR10 per kg this year. The export demand scenario has been favorable in key markets. Our strength lies in strong customer relations as of today, which is further strengthened through consistent and timely supply of quality rice as per the presence and end consumer.

We continue to focus on operational efficiency, expanding our distribution reach and penetrating into new geographies, which we will continue to drive our growth journey going forward. While growth remains a key factor for us, we always believe in the sustainable performance while maintaining our profitability.

Coming to the key highlights of Q3 FY23. For Q3 FY23, our operating revenue was up by 62% year-on-year to INR353.9 crores from INR218.9 crores last year. The growth in the revenue is due to the market-share expansion in the current geographies because we have entered a lot of new countries recently and strengthening our distribution network through exhibitions and many other traveling-based marketing. For the quarter, our exports grew by 44% year-on-year and export sales by value grew by 66% year-on-year at INR312.4 crores.

Gross profit for the quarter was at INR91.1 crores, up 35% year-on-year. The gross margin increased by 505 bps from 30.8% in Q3 FY22 to 25.8% in Q3 FY2023. Due to the increase in output cost, however, the strong revenue growth along with our constant focus on operational efficiencies and moderate in freight expenses have resulted since the freight prices also went below this year, which is good for all the industries.

Along with the along with the focus on operational efficiencies, the EBITDA was up by 130% year-on-year at INR51.4 crores, INR22.4 crores in Q3 FY2022. The EBITDA margin improved by 430 bps year-on-year from 10.2% in Q3 FY22 to 14.5% in Q3 FY23. Profit after tax was INR37.5 crores in Q3 FY2023, a growth of 134% year-on-year compared to INR16 crores in Q3 FY22 to. EPS for the quarter stood at INR7.2.

Now taking you through the key highlights of nine-month FY 2023. So now we’ll be talking about the nine months before it was about the quarter. So for nine-month FY23, the company registered a record high revenue and profitability. Our operating revenue stood at INR1,030.2 crores in nine-month FY2023, up by 65% year-on-year from INR622.9 crore in nine-month FY 2022. So from INR622.9 crores to INR1,030.2 crores.

In the same period, our export sales volume grew by 58% year-on-year and export sales value grew by 67% year-on-year at INR904.1 crore. The company is growing in the export market and has made a remarkable progress in the countries like Germany, Israel, Egypt in nine-month FY2023. The company has also entered new countries in Central Asia like Turkmenistan, Kazakhstan and so on. The gross profit for the year nine-month FY23 increased by 43% year-on-year to INR264.6 crores. Gross margin was at 25.7% EBITDA for nine-month FY2023, increased by 81% year-on-year to INR110.4 crores and EBITDA margin increased by 94 bps year-on-year from 9.8% in nine-month FY22 to 10.7% in nine-month FY2023. In the same-period, PAT grew by — profit-after-tax grew by 88% year-on-year to INR79.9 crore. PAT margin increased by 94 bps to INR7.8% in nine-month FY2023 compared to 6.8% in nine-month FY2022.

The earnings per share was at INR15.5 per share and the total inventory as 31st December 2022 was at INR439 crores. Thank you so much for allowing me to speak and thank you so much for hearing me out. With this, I would like to open the floor for questions and answers and thank you very much. Have a good day. Thank you very much. Sankesh Setia, regards. Thank you.

Operator

Thank you sir. [Operator Instructions]. The first question is from the CAO Capital. Yeah, hi, thank you Neha Ji, am I audible? Yes, go ahead.

Caesar Augustus — CAO Capital — Analyst

Thank you very much, sir and congratulations for great set of numbers. I am Augustus from CAO Capital. Sir, I had a few questions. One was, can you tell us going forward given that we are adding so many new markets, how will the quarterly quality — sorry quarterly seasonality play out. [Foreign Speech], but given the organic growth and given the new markets, how will that play out. So that’s the first question. Also the seasonality and the variations that we will see in the ASP going forward because as you said, area under contribution is very high this time and yet prices have gone up. [Foreign Speech] for the year going ahead? That’s the first question, sir.

Sankesh Setia — Executive Director

Yeah. one second. Yeah, [Technical Issues] first of all, I feel little regret on my part that I, after one or two concalls — after a long gap, I have resumed calling and it will be more frequent in the future. This is what I assure. Like coming back to your question, admittedly, rice is Basmati is one crop in a year, which is variant that start coming from September onwards and in October end, the complete harvesting takes this. Yes, the farmer brings the paddy mandis and we all start our production processes. But we as a company, [Technical Issues] relate to your question is, we don’t buy that entire TDM at the beginning of season. We keep on buying frequently, Simultaneous, our sale process is going on because we buy paddy and we buy the rice also, which is complete rice. But, we still have to put into the process of air cleaning, strong cleaning, any kind of foreign material, we have to clean it up. We have to make it as per the international standards [Technical Issues] metal detection and after that, we pack. This in itself is a sophisticated and latest machinery it goes through. It is most essential for export. So that is also a kind of a capacity. And again so many supporting [Technical Issues] keep on buying all year, it is available. Rice is available full year. Paddy, that finishes almost by March every year. Then thereafter there is limited availability or actually it is sold out by the farmers. Farmers also, some [Technical Issues] also keep paddy, but yes, of course its a seasonal product. A period — at the end of year, a period comes when there is short of supplies, but instead of — hopefully [Technical Issues].

Caesar Augustus — CAO Capital — Analyst

And sir about ASP [Foregin Speech] given again [Foregin Speech]. So are you seeing this INR80 plus number sustaining for the next, let’s say, four quarters or will you see some correction?

Sankesh Setia — Executive Director

Repeat your question.

Caesar Augustus — CAO Capital — Analyst

Average realization, average realization, do you see INR80 plus sustaining throughout the year or will you see some correction?

Sankesh Setia — Executive Director

This is a very subjective question for us, it’s very simple. We bye on one side and sell on the other side like any business. So if we get — whatever is the cost of procurement, accordingly, the market price is open will and accordingly we sell. The advantage of the company is a very wide distribution around the world, very wide distribution. That is the catch up for the business, we built up in so many years of our sustained relationship with the customer and meeting them in the exhibitions or travel, which Sankesh told. So if the [Technical Issues] down, for example, if the [Technical Issues] it matters sometime the prices are vey high in the season. After two months, they come down. In the commodities, prices go up-and-down and we buy with some sales coverage. There is nothing blind in the business. We sell on one side, procure on other side and keep this balance maintained throughout the year.

Caesar Augustus — CAO Capital — Analyst

Sir, [Foreign Speech] as a percentage of total total sales.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

The branded sale is the 6% to 7%. Sankesh, you will answer or should I continue with answers. it is 6% to 7% as regard export is concerned, In Indian market, it is mainly our own brand, but international market is 6% to 7%. The beauty of this business is, though it is very small, but we are in 40 countries, 39 to 40 countries, Sankesh, I am, right?

Sankesh Setia — Executive Director

.Yes, you are correct.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Yeah, because what you handle this. We are in 39 to 40 countries you see whenever for any business, you find a good distributor. Distributor present the product, which is famous in the market. But the new product, it’s hard-working for them. Most of the very big distributor do not catch on your product. We always try to sell to someone may be smaller person or bigger person, our presence should be in the country. And I have seen it — realized it that in few countries — in one African countries, our supply was just four-five containers a year. But the brand separately, there was limited competition, the brand separate. And now more than 100 container in that particular country. I do not name publicly. Today, if something is selling in one country in limited area, gradually it will become famous. If my [Technical Issues] distributor works hard and enhances my sale, I’m very happy. And if he is unable to do, at least my presence in that country, I have ease in finding the next distributor and place. This is idea.

Caesar Augustus — CAO Capital — Analyst

So one final thing and then I’ll go back in the queue sir. I have other questions, but I’ll come back later. [Foreign Speech] again because of this Adani problem, corporate governance issues have come out in the open and you have seen where the market is reacted and I have always found your company to be trading at a substantial discount to do what the fair-value should be. And given the — especially the cash-in on the books generally [Foreign Speech] but you are a cash-rich company. So my request to you is you partially touched upon it that you will continue with the con-calls regularly now. So. I really appreciate it, sir. Also sir, any other corporate actions that you take, any of the end-use of the cash that you make. Sir, please be very-very careful. Market is getting very finicky about these things. So I really hope that now that we are making such good progress on the branded side and on adding new markets and our growth is also coming –organic growth is coming, this is probably the best kind of growth that the company can make. You’re doing so many things operationally. I just hope sir that we continue with our disclosures and we maintain the highest corporate governance standards so that the value of the firm goes up, so that everyone will win, sir. That is my only request, sir. [Technical Issues]. Please keep that in mind, sir because markets are very-very finicky now, very, very maybe about that corporate governance, it’s a humble request, sir. I have no complaints against you, but I just wanted to point it out. Thank you sir. I go back to the queque.

Sankesh Setia — Executive Director

Your suggestion is excellent, and I have taken it very serious and [Technical Issues] about what you said. Historically, we have very conservative and carefully run the company. In our industry, if you search, a lot of people have gone in bad shape [Technical Issues] period also. Yes, on the corporate governance also, we are implementing everything. Wherever we need, we are approaching professionals for that [Technical Issues]. Thank you so very much.

Questions and Answers:

Caesar Augustus — CAO Capital — Analyst

Thank you sir. I’ll go back in the queue. I have other questions. All the best for the future, sir. Neha Ji, I am done, but I will be back in the queque

Operator

Okay, thank you sir. The next question is from Sandeev Damani.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Hello. Sanjeev, I’m looking at you.

Sandeev Damani — — Analyst

Namaste Ji, sir, for last about two three years, I have noted you to be very conservative businessman and a very prudent businessman. and ideally congratulate which led for the result that you have seen in this quarter, It is all because of your continuous perseverance and good strategies of the business that we are here today. So that is the firstly I want to really congratulate you and your entire team. That is one.

Now secondly sir, just now I noted — before I move to my other questions, I just now noted that you have an inventory of INR439 crores of as of 31st December. I’m glad that this has been disclosed so we have come to know about it. Another question is that can you also disclose the outstanding that we have on either export front or the domestic market. Can we get a figure of net debtors as on 31st December if at all we can.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Today speaking, I have right now no figure [Technical Issues] always around INR100 crores, INR110 crores, INR95 crores.

Sandeev Damani — — Analyst

Okay, no problem sir.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

And let me add one thing. Entire export turnover is ensured ECGC under multiple [Technical Issues] policy.

Sandeev Damani — — Analyst

Very nice sir.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Any buyer, a new buyer I get, if he is — I online check. If it is — if that company is on adverse rate ECGC, I don’t ship if the party available with the cover of this export. So and I very rarely I sell on DA, I mean, on credit basis, which we have called in the common [Technical Issues]. That is very old buyers, They are known for 20,30 years. We are still continuing with them. But, it is against payment [Technical Issues]. Despite that, it is ensured if the buyer does not take [Technical Issues] in any country if I call back, the entire two and from expenses are also ensured with ECGC. Very nice sir. Very happy to know this. Very happy to know this. I mean, it is not blind risk because once in a while somebody will definitely default in every business.

Sandeev Damani — — Analyst

Right, right, right sir. So now I come to my next question is regarding, sir, domestic modern trade that you are now targeting through Amazon and all others. So what are the prospects there and how we can push it more if it has not reached a reasonable level of your satisfaction and one more question is regarding the fact that when we export, we always sell it in one 5 kg, 10 kg packages or it is in bulk that it goes from here. This is I want to understand for my understanding, say a 25 kg pack or a 50kg pack, is that the way it is exported or we export it on in our pre-printed flexible packaging, 1 kg, 4 kg pack in export market.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Most of that export is in small pack, 5 kg, 10 kg, and 20 kg, most of it and 1 kg too. This is how [Technical Issues]. Beyond 50 kg, we are not permitted because ILO, International Labor Organization, their maximum size is 50 kg packing. Beyond that, we cannot export. It is all branded, pouch packing, BOPP packing BOPP packing packing, all kind of backings we do. [Technical Issues], but very beautiful looking.

Sandeev Damani — — Analyst

Okay, sir. Now regarding modern rate, last question is regarding [Speech Overlap].

Rajeev Setia — Joint Managing Director and Chief Financial Officer

That truly speaking, we are very limited in that business so far. It’s gradually growing.

Sandeev Damani — — Analyst

, And regarding online, through our own website, if somebody clicks and give you order, then we do deliver that?

Rajeev Setia — Joint Managing Director and Chief Financial Officer

That is also available apart from that we are with Amazon, Flipkart, Jio Mart, and yesterday [Technical Issues] people were — two days back, they were in my office and they also plan to buy in a big way.

Sandeev Damani — — Analyst

Congratulations. Thank you very much. I am satisfied sir. Of course, my pending requirement is dividend from your company. I mean our company. Thank you sir.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

I have taken due note of your suggestion.

Operator

Thank you sir. The next question is from Somnath Pal.

Somnath Pal — — Analyst

Hi sir, good evening. I just wanted to ask you sir. From our analysis, we understand probably maybe around 15 odd companies are more based out of Delhi NCR and Punjab region are involved in price export similar to yours. So I just wanted to understand and I’m sure international standards are of certain level. So what is that makes your company score over other other companies in terms of all the parameters, especially when we have 15 odd companies competing for similar products in similar markets. That’s the first question. Thank you.

Sankesh Setia — Executive Director

Admittedly, there other competitors because tat has to be in every industry. We are not out of that. You can see one of the oldest rice exporters. Since 1982, we started exporting and this business my dad started in 1974 as a sole corporate first year and after that, it was a partnership with me and my brother, family consent. So we have seen all up and down [Technical Issues]. It’s a huge experience. Then, it’s a very separate market all over. It’s very hard, it’s very easy to say we put up in Midland, we start competing with others. Admittedly some competition comes, but it’s just [Technical Issues] financial strength. If I buy the rice, I did at 2% CD immediately and on the third day I make the payment. It’s not even a week. When you make payment timely, your vendor sleep comfortably after selling you. He sells cheaper also. We gets this kind of advantage I have with cash. We are cash-rich company. We do [Technical Issues] one for our pricing and we can better compete than others. So there are big companies, [Technical Issues]. They can be very good business. So it’s part of business. [Technical Issues].

Somnath Pal — — Analyst

Secondly, I think you mentioned to the previous speakers that you have seen the highs and the lows of the business and you have also seen lot of companies going through a bad phase or probably getting bankrupt. So probably you being cash-rich company, so have you come across situations or have you ever wanted to acquire companies in your business who have gone through bad shape either by their choice or by industry headwinds?

Sankesh Setia — Executive Director

Absolutely not, I will newer any company. From my own industry, I can expand on my own. I know how to put up the machinery. My bother Vijay Setia.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

I would also like to answer this question partially, Sankesh Setia, this side on Chaman Lal Setia Exports Ltd, full time director. I would like to inform one more thing like when there is a bankruptcy, so most of it goes in our favor. So, let’s say, there’s a company and they’re doing a turnover of INR500 crores and they go bankrupt overnight or in one year or 1.5 years, their business starts going down. So, out of INR500 crores of their exports, there are buyers who are buying, somebody is buying worth INR5 crores, somebody is buying INR10 crores of rice from them annually. Somebody is buying worth INR25 crores of rice from them annually. So automatically we being very strong player and we being head to head, we being complete knowledge information about the supplier, their buyers, we always have a target that, yes, this company is getting weak. The performance is getting low. Their deliveries are getting late. So we automatically penetrate those buyers and all that sale. I won’t say the whole INR500 crores sales comes to me, but a huge chunk of that always comes to us because even a supply — even a buyer is looking for stable supplier so that who can supply them rice on time, who can park their private label on time. There are lot of supermarkets around the world who get their private-label packed in India under their brand names, the Basmati brands. So, they are looking for stable suppliers, good suppliers who can supply the good-quality, timely quality. Good pricing. So all these things matter a lot and when a supplier gets weak, of course, the buyers also looks for a new supplier and we are always there for them.

So anybody bankrupt, automatically a huge chunk of business comes to us. So it goes in our favor. So, there is no — it makes no sense for us to acquire them. Automatically, the businesses anyhow coming. And we are very choosy at that time because a lot of times because our portal — out of our total field, only 2% to 3% of our business is on credit basis, means Udar open graded without LCs or without any bank guarantees. So, out of all our business, only 2% to 3% of the business is like that. So sometimes, let’s say, there is an exporter who was exporting INR500 crores of rice annually and out of which INR200 crores of supplies were on credit basis. So, I will not touch that business. I’m not looking for the buyers who buy on credit. I would always say that [Technical Issues] free people, okay, you can take this business. I don’t want this business. I’m more than happy to leave this business apart. So they can go and grab the business. So I grab the cash business, good buyers, who will give good margin, who will give good cash. Whose payments are good. So it goes in our favor only when somebody gets bankrupt.

Sankesh Setia — Executive Director

We don’t wish anybody goes bankrupt.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

And, honestly, yes, we don’t, we don’t. We never wish that.

Sankesh Setia — Executive Director

Everybody should flourish.

Somnath Pal — — Analyst

So the idea was more to do with sometimes acquiring assets or maybe, of course, the sales as you said, comes to your books or under your kitty, but it was about assets as well. Okay, sir. I think I’ll put a final question and I’ll come back in the queue if I have anything more. So, for the same Basmati rice, what would be your margin profiles say supposed to a developed country, maybe like Sweden and Australia versus an emerging, the smaller country. That is one. And secondly, as you mentioned, six to seven of your exports are branded sales. So, likewise, branded in exports and non-branded, how would be the margin profile different. Thank you.

Sankesh Setia — Executive Director

Yeah, this question has been many times answered. Our large business is private-label of the customer. So that is more important for you to first understand. You see what happens for example if somebody from New Zealand or Australia or Canada, India people, people of Indian region or Iran, Iraq, oriental part of the world original, they setup their store there or warehouse there, they have to have multiple products, from they are one country, of if they are from India, Indian and other products also. And they take rice. They fortunately or unfortunately in other industry, private label business is huge from many people. We have to do private label, if you want to sell in our brand bank since I wont like that. Okay fine. Now what happens then, he starts to private label in pouch of 1 kg, 2 kg, 5 kg, or [Technical Issues] good quality, we give the good quality, we give the reasonable price, and then starts the business, one consignment, two consignments, third, fourth. After a year six months when he’s happy and getting good rice, my brand is flourishing in the market, the brand becomes his baby. He loves his baby the most. And we get the price. He doesn’t want to change. It’s a very big risk for anyone who is running a brand who change the supplier. As a distributor, he will have to — somebody is bringing our brand, he will have to come to us. Private label can definitely go to the other person, but it is a very risk for him and he — many customers say me, Rajeev, give me the gold price, don’t care for the price. Charge your price, I want the best quality — best than anyone. This — so our profitability as regard our private label businesses concerned is very good. And as regard our own label is concerned, maybe in the beginning, sometimes we sell at breakeven also to enter into a country, but gradually, we start getting.

Somnath Pal — — Analyst

No sir, if you could quantify probably some rough range for the profitability.

Sankesh Setia — Executive Director

Profitability? You see it cannot It’s very subjective and cannot be correctly determine because it’s a commodity item. We get huge margins from the prior label also and our label also.

Somnath Pal — — Analyst

And sir I was asking also about just Basmati selling in Australia and New Zealand and Canada versus a small country, which is growing. So we have a margin for one difference there as well, some similarity sold in two different countries.

Sankesh Setia — Executive Director

No first thing, from the well part of the world, Europe, we get better prices, its premium market. Canada is premium market. USA is premium market because it is FDA approved, you have to give rice. And our unit is the certified by Plant [Technical Issues] Department for export to USA. It’s mandatory for exporting to USA and we guaranteed FDA clearance rice. So we have very huge business in USA too and with with a good margin. Yes, you are absolutely right, a country like Iran, we absolutely do not do business. It is simply a problem of business low margin. Something we lose money also. Yes, this Middle East market some people play group. Though it’s a very big market, we do business in this area also, large business, but we don’t choose the top-class buyer, first category buyers who buys says 100,000 ton rice, we search for 20,000, 10,000, 5,000 ton, smaller customer can pay that because there is no profitability in every business.

Somnath Pal — — Analyst

Okay, sir. I will join in the queue for follow-up questions. Thank you.

Operator

Thank you, sir. The next question is from Himanshu Upadhyay.

Himanshu Upadhyay — — Analyst

Yeah, hi, good afternoon. See I had two questions. The first was, what percentage of business would be through private labels and means, let’s say, brands or private-label, which have been with us for more than five years, established brands, something like that. Can you give?

Sankesh Setia — Executive Director

Yes. I have already explained In the last, we have largely private label business and 8% to 9% of maharani basmati rice are branded rice. Customer in the private label as long as 30 years old, 90s, 95, prior to that. Very old customers. I have so many customers which I can count, they are 25 years old, 20 years old, sustainable these long.

Himanshu Upadhyay — — Analyst

Can we say that more than 50% of revenue would be from a private labels for us.

Sankesh Setia — Executive Director

No, my export is 70% in my own label. Obviously my entire business around 90% or little more is from private label.

Himanshu Upadhyay — — Analyst

And when we do a private-label, is there means supplier also generally given that we are the manufacturers and sellers on the lets say the private-label bag what he is taking. Is it generally given? So let’s say half a kg bag somebody takes a package, okay or brand ok, private-label okay.

Sankesh Setia — Executive Director

We can do half also. We have infrastructure for packing half kg also but we avoid unless it is a very large good order, then we go. Otherwise 1kg, 2 kg, 5 kg 10 kg

Is the supply. So we make excellent [Technical Issues] packet, box it [Technical Issues] stepping in the container, we can [Technical Issues]. It’s done in [Technical Issues] factory only not local transportation sending that destroys. So I think [Technical Issues].

Himanshu Upadhyay — — Analyst

One last thing, how are we looking at inventory management okay. See we have seen prices of paddy and Basmati rice both have increased in last one year. And some of them are at all time high. The amount of inventory what we have, is it all pre-sold inventory only that we are keeping or we are keeping some excess inventory. And is there any risk of price fall on that inventory at any point of time. if there is some thoughts on that.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

This is the best question so-far [Technical Issues] because this is something which we are [Technical Issues] i’s something we have to be very-very cautious on that when they buy. We go with the satellite data prediction when paddy comes. We carryout our own surveys for the size of protection. We check how much is the last year crop is available in the market and prices and of course demand. Now, it’s question of demand and supply. Yes, we have to buy some material unfold also in the beginning. And thereafter, the sales starts. Customer also now for last 15 days, people are waiting for the Gulfood because companies participating in Gulfood 20th to 24th, five days in Dubai. It’s one of the biggest there. May of my existing and prospective customers will come. People wait. We will see the price there also.

So, one-side, we sell and one side we buy. We can match our prices. And because as I told we have established sales around the world, 90 countries, we are selling and we can likely can please also. So it’s hedged product. You know, we have sales. It is already hedged. This buyer will buy. Even if he buys 20% less, we make [Technical Issues]. We prepare everything [Technical Issues]. For example, my three months what our sales is INR350 crores, INR360 crores, three months. And my stock buildup as on December is INR439 crores. So I can comfortably sell in coming three months. If I compare with like preceding quarter, so this is how it is balanced. We sell and buy and we by and sell and this is a continued buses. I would like to answer one of the thing in this. Whatever the stock is, almost 80% to 85% is already sold out. It’s already –exhibit are done, everything is done. So, deliveries have to be made, some of them before Ramadan, which is on 22nd of March and some of them just after Ramadan. So most of it — most of the, chunk will be exported before Ramadan, almost you can say INR252 crores to INR275 crores, or maybe INR300 crores of rice would be already shipped before [Technical Issues]. Sankesh, you tell them your team of selling because export you are handling. I did a lot of exposure in my life. Now you are handling and Ankit is handling. Explain to everybody.

Sankesh Setia — Executive Director

Yeah, I’m answering on the inventory only. So, out of inventory, even if the prices go down, up, it doesn’t matter to us because 80% to 85% of the stock is already sold.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Sankesh, one movement. They have one question. You explain. You and Ankit have been doing exports. So you are roaming all around the world, How have decided the countries, how you are doing, what is your modus operandi of doing business exports. It should be apprise to all the listeners.

Sankesh Setia — Executive Director

I’ll be very precise and quick. So we are exporting in 90 plus countries. Now, we have already touched 91 countries. Recently, we started exporting to Turkmenistan and Kazakhstan, central Asia also. So at the moment, we have more than 200 plus supermarkets around the world, which work with us, which is a very direct business the other manufacturers. They are the buyers and there is a consumers. So there is only three people on the line. So me as a manufacturer, the buyer and direct consumers. So we have and working with the supermarkets is always a very stable business and they are always up to their commitments, because they are not wholesalers. But yes, we do have a lot of wholesalers with us.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Sankesh, narrow down because there are other people trying, it’s just 15, 20 minute left out, how much work you are doing, how much Ankit is doing. You have to explain for them. All the sales are handled by me and my brother Ankit. So, how much percentage of export you handle and we handle.

Sankesh Setia — Executive Director

So, Ankit is handling about 42 countries and balance of the countries are handled by me.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Some of the existing which I was handling.

Sankesh Setia — Executive Director

Yeah, about 22 countries were handled by you, which have been passed to me and Ankit and a lot of buyers have been passed onto me and Ankit from you. So, we have about 400 plus accounts, 400 plus buyers around the world, which has spread out in these 91, 92 countries. And we are also looking for new geographies and also in the same countries, we have a lot of potential. We have a lot of.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Organizer, please take the next speaker, you see, because of time is short.

Himanshu Upadhyay — — Analyst

Yeah, thanks from my side.

Operator

Thank you sir. The next question is from Ankur. Hello, sir. Congrats for a very good set of numbers and thank you for taking my question. Sir, my first question is, if I look at your historical quarterly seasonality trends, the Q3 tends to be a bit weaker versus next two quarters, which is Q4, and next year’s Q1 is very high. So can we expect this kind of trend to continue in this year also.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Repeat your question. You were too quick to follow.

Ankur — — Analyst

Sorry, sir, I am saying, if I look at last few years trend, Q3 is not very high quarter if.I look at Q4, as well as next year Q1. So can we expect this Q3 performance to be improved in the coming quarters is what I’m trying to ask, sir.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

You see it’s something very-very subjective. You know the Ramadan is coming earlier every year. So when the Ramadan requirements come, suddenly sales grows up. It’s a festival in the GCC. So, it matters, you know, sometimes the customer expect for any reason, the prices may come down, they stop. They hold themselves for few days and then they come up. This happens, you know. Overall we are concerned. It doesn’t like one quarter is down and one quarter.

Ankur — — Analyst

And sir, this quarter we did 15% margins also, Can you comment what is our sustainable margin trend?

Rajeev Setia — Joint Managing Director and Chief Financial Officer

We always expect it should continue. We work hard on the margin. We work hard on the sale prices. We work hard on the quality. Every part of the business will result this thing and we have to be performing being[Technical Issues].

Ankur — — Analyst

Sure sir, and we have added 25% of our business is now branded sales. So what is our trend basically, how do we want to go up in this branded sales part.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

No our branded sale is not 25%. Domestic, it is all branded, whatever is the sales, for the total entire sale, it’s branded. In sports. In exports, I have repeatedly said, it’s around 8%. And of course, it is 40 countries. We want to increase our sales in the country where we are already established and of course it is our endeavor to increase in every part of the world because always we try to sell our brand first. My first sale in 1982 was also in my Maharani brand. So we know, everybody sells his brands first [Technical Issues] when you don’t get back, you can’t — we can’t refuse the customer or don’t refuse the customer for the private label.

Ankur — — Analyst

So how is brand, Maharani brand doing right now?

Rajeev Setia — Joint Managing Director and Chief Financial Officer

It’s going good. In international, it is 40 countries. Its reasonably good. Yes, we are not strong in Indian market as compared to peers like KRBL and [Technical Issues] and one or two [Technical Issues] company. Yes, it is our endeavor. We are moving to this online business first. Let the name [Technical Issues], then we can find distributors. We have distributor. In India we know everybody. Every big distributor is known to us. Let the brand become little famous so that we can sell at a reasonably good profitable rate.

Ankur — — Analyst

Sure sir, last question would be, company has directors deposit of INR55 odd crores. Can you comment what is, what — why is this taken from director and what is the interest that is being paid on this?

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Interest is being paid, I don’t — i’s 9%. And banks are charging 7% to 8% with — but they charge monthly and we are annual. it’s more or less same. This cash is a big strength of the company. Cash is the big strength of the bulk, We are not dependent upon the banks. And this helps in the business.

Ankur — — Analyst

Sure, thank you, sir and all the best.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Yeah.

Operator

Thank you sir. The next question is from Kaustubh.

Kaustubh — — Analyst

Yeah, hello sir, how are you. So, gross margins [Technical Issues] 100 basis-points quarter-on-quarter and 500 basis-points year-on-year. So I mean, as we go into the strongest quarter of the year, is there any gross margin guidance you can give on how Basmati prices held up in this quarter and Ramadan also in this quarter, so demand increases, inventory also gets depleted. So can we expect gross margins to improve this next quarter.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

I will have to study your question because I’m not prepared on this, sir. I’ll if you can give some contact, I will get it out sir. May be I will have to discuss with my [Technical Issues].

Kaustubh — — Analyst

Okay, but in general, how this quarter probably looking right now in terms of demand.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

No, business wise, we are very confident, We have orders because I was not interested to disclose how much orders we had but anyways Sankesh did that because new generation, the are more aggressive. So it’s all covered business. And whatever is the shock and whatever is the bookings will come in the subsequent quarters, hopefully [Technical Issues].

Kaustubh — — Analyst

Great, thank you so much. I will stay in touch with you about this gross margin.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Yeah, yeah, that question, that question.

Operator

Thank you sir. The next question is from Namit Mehta.

Namit Mehta — — Analyst

Hi, Rajeev Ji, Hope you are doing well. Just couple of questions from my side. So what should — these are pretty outstanding results that you announced for this quarter. Is there anything that we should consider as exceptional in this quarter, anything out of the ordinary that has happened, which has led to such strong profitability or is this just business-as-usual.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Actually from last after the COID, you must have noticed noticed, the food has become priority in the world. Some countries are storing And the story of Pakistan, many people will learn the lesson, They will — I don’t know what they will do. India has, India has wheat, India has rice. We are a lucky country. So in the food, still it’s quite a long-time for us for favorable result, favorable marketing. India has 105 million ton rice in all. Out of that Basmati is just 6 million tons. Out of that around 4 million ton is exported. just 2 is sold in India. So it is a geographical indication product registered for seven states in India. And world is the market. Its a monopoly product jointly with Pakistan of dome monopoly and Pakistan has no [Technical Issues] rice. So they are no longer a competitor with us. So, lets see what happens in the future.

Namit Mehta — — Analyst

And were there any Ramadan orders in Q3, or will they all come in the next quarter?

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Yeah. There were in Q3 also Ramadan we supplied and they are continued. Some people are a little late in buying, some are quick.

Namit Mehta — — Analyst

And last, question so, I know you had some thoughts around selling some other products outside of basmati rice as well [Technical Issues] given that you have so many customers and any further progress on that with whether it’s dry fruits, biscuits or anything else. How are you thinking about that.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

A plant is coming up in Gujarat in Mundra area, we are putting up a plant. It will be leased by the company from the primary concern. So in Gujrat, we see there is [Technical Issues] there is this moong phully, ground nut, and haldi, turmeric, tese kind of products are available, Spices are available. However. 99% of our customer has not into one product rice, they are in multiple products. And many times they ask us, [Foreign Speech], but we will do with a specialization and complete research. So [Foreign Speech] Mundra, they have opportunity for this. I have already plans in my mind. But we will go for the commodity business, key product which is our special item because if I do rice, I can do wheat also, I can do other things also. And wherever I make money, I will go for that.

Namit Mehta — — Analyst

Understood. Thanks so much.

Operator

Thank you sir. The next question is from Diksha Patil. Yes, Diksha, we can hear you.

Diksha Patil — — Analyst

Good evening, sir. Yeah, so congratulations for good set of numbers. So. I have one question, sir. So can you share, can you share the volume breakup on a quarterly basis, of last three quarters, branded and traded both.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Right now, the figure, I do not have. Total [Technical Issues]. Coordinator please take note of this question. We will answer [Technical Issues]. One second, it already been given in this investor presentation, this answer is available. You look into that. If you still have any question, please do write to us.

Diksha Patil — — Analyst

Okay sir, no issue. Thank you sir.

Operator

Thank you. The next question is from Ayush Mudgal.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Hello. how are you Ayush in Lucknow. Hello, am I audible, sir? Yeah, you sure are audible. Yeah, yeah, you sure are audible.

Ayush Mudgal — — Analyst

Rajeev Sir, so happy to see you again and congratulations to you and your team for a wonderful performance. Having been a shareholder for so long, I can say, this was long overdue the kind of growth that the company has delivered now. It’s a very proud and happy feeling. So a few questions, one, like if we look back into our company till two-three years back, we were kind of stuck in a INR700 crores, INR800 crores range for three-four years. And then we started growing gradually. That was a single-digit rate and now that the whole industry is doing well since last two quarters, we are seeing that we have also started doing very well. One, if you can share what we have done in the last two-three years, what changes we have brought in the company that we have been able to grow now or what — and second, what kind of things are we doing that we can maintain on this growth rate for coming time. What initiatives are you taking.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

This is very-very good question. It is continued pursuit to grow for the growth in the business. And thank god, we have very good next-generation Sankesh and Ankit, both brother. They work so far. They travel. We are participating and not leaving any exhibition. Everywhere team is going, now, we are Gulfood, We are going on 20th onwards, Gulfood [Technical Issues]. Prior to that we did in Iraq. Prior to that, we did exhibition in Turkey. And, the one more exhibition I do not recollect, which country they did. Yeah, we were in [Technical Issues] also. Even in in the COVID, I went to [Technical Issues]. So we have — the meet, the more you market, the more your business can do. We have cash on hand. We can buy anything. We can meet any demand of the customer. Okay, earlier, we had acquired a factory which work next to us. Have we build up more capacity or we have done more expansion over there or. In that which used to — we call [Technical Issues], so we have put up big warehouses what [Technical Issues] and [Technical Issues] are coming in that factory. This is for storage mainly because plants are integrated with each other and they [Technical Issues].

Ayush Mudgal — — Analyst

See other thing that has happened in past is that our margins have been very volatile and they keep increasing and then falling. Any thoughts on that as we scale forward, any thoughts on protecting profitability because in past, we have seen that at times we have gone very low on profitability despite being able to maintain turnover or do you believe that is the nature of industry and that will keep happening.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Your last word correct. It is part and nature of this industry as regard bulk [Technical Issues] is concerned. But in the branding of [Technical Issues] branding and and our branding that sustains us for the brand. So the — If if that part of export selling and domestic continues well, then there’s is no fear, which is likely. Wholesale prices come down and go up, which is the shape. [Technical Issues].

Ayush Mudgal — — Analyst

Sir, last question, we are seeing that many of the rice companies are also going into food product like though you mentioned that you are trying to go into fruit or something but apart from that, natural extensions like going into other food products which are related to rice or maybe going into value addition, or increasing our range. Are we doing something on those lines that other companies are doing.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

And first, we have to always look at our own product, rice. We have come out with the brown rice. The brown rice takes 30, 40 minutes to kook. So, it was — though it is a more healthy, but it is not sold by us because of the longer cooking time. LT Foods has also brown which cooks quick, 15. 14 minutes and may be little less. I’m not sure about that. And we have also come out with brown rice, which books in the same period. We achieved [Technical Issues]. Yes, one competitor, friendly competitor. No problem. So, t hat what we have done. We are also trying to produce. Vijay is very hard-working on it with the roast and then processing. Roasting is nowhere in this industry except us. But it is not something unknown. It used to be — UP farmers were doing 50 years back, they were roasting [Technical Issues]. So that mechanical process Vijay has established and discontinued and now again we are going back. That kind of rice when I was selling in Dubai, the people were holding my arm [Foreign Speech] and telling Vijay that come out with quality, which is unique. [Technical Issues] and find good distributor. And yes, apart from the, value-added, we have not gone in the rice, different products [Technical Issues] ready-made or something like that our goal because that, you have to burn a lot of cash to market if it does not sell quickly. We prefer improving our product as I said earlier. I mean change exclusive in the rice. Yes, and I will go for other quality product and other as I said we are in Gujarat.

Ayush Mudgal — — Analyst

Okay, okay. Thank you, sir and all the best. Thank you. Thank you sir. As there is shortest time, this was the last question. I now hand over the call to the management for closing comments.

Rajeev Setia — Joint Managing Director and Chief Financial Officer

Thank you, everybody for joining us. Not a lot of number of people could speak to us. But I believe we have answered all of the questions, which may have come to their, those who could not talk to us or who had another question in all as a group, it is completed. If you have any question inquiry, please do contact us or problem, we are always open to ourselves and available to our respected investors. That’s all. Thank you very much. I will be definitely again talking or meeting up at the Annual results. Lets hope for the best. Thank you very much.

Sankesh Setia — Executive Director

Thank you very much, Have a good day.