KRBL Limited (KRBL) Q1 FY23 Earnings Concall Transcript

KRBL Limited (NSE: KRBL) Q1 FY23 Earnings Concall dated Aug. 10, 2022

Corporate Participants:

Anil Kumar Mittal — Chairman and Managing Director

Ayush Gupta — Head, Domestic Division

Ashish Jain — Chief Financial Officer

Analysts:

Amit Doshi — Care PMS — Analyst

Nishid Solanki — CDR India — Analyst

Pritesh Chheda — Lucky Investment Managers — Analyst

Jayant Mamania — Care PMS — Analyst

Nisarg Vakharia — Revanta Funds — Analyst

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

Himanshu Upadhyay — O3 Capital — Analyst

Avadhoot Joshi — New Berry Capitals — Analyst

Jagpreet Singh — VA Capital — Analyst

Nikhil Upadhyay — SIMPL — Analyst

Aman Madrecha — Augmenta Research Private Limited — Analyst

Jayesh Gandhi — Harshad Gandhi Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to KRBL Limited Q1 FY ’23 Earnings Conference Call. As a reminder, all participants lines will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir.

Nishid Solanki — CDR India — Analyst

Welcome to KRBL Limited first quarter FY ’23 earnings conference call for analysts and investors. I’m pleased to introduce to you the 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 would then be followed by Mr. Ayush Gupta, who will take us through the perspectives on domestic business. Thereafter, we still have the financial overview presented by Mr. Ashish Jain. After the opening remarks from the management, the forum will be opened 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.

Anil Kumar Mittal — Chairman and Managing Director

[Technical Issues] everybody. Hello?

Nishid Solanki — CDR India — Analyst

Yes, sir. We can hear you.

Anil Kumar Mittal — Chairman and Managing Director

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 cost and rampant inflation.

Total rice planted area has declined by 13% so far this season[Phonetic], due to lack of rainfall in some areas, including West Bengal, Odisha, Chhattisgarh, and Uttar Pradesh, which accounts for the major area of India’s rice output. There is still hope if weather god showered 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 has increased the MSP to INR20,400 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 sowing is good, and according to the field survey, the production of basmati will increase by 25% in crop year ’22-’23. This is mainly due to high prices witnessed by the farmer last year. Recently, we witnessed that early crop, which comes in the month of July-August, that is 1509 basmati rice tired[Phonetic] the price of INR32,000 to INR3,000 per metric ton, giving the farmer a revenue of INR70,000 per acre, whereas non-basmati with the new MSP will price the farmer around INR62,000 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 be 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 business witnessed a growth of 25.54% in the first three months of the financial year ’22-’23. As this export increased from $922 million between April to June to U.S. Dollar — April to June to $115 million between April to June ’22. Whereas in volume terms, the growth was only 3.5%, thereby confirming that the price realization was very good.

During the last two years, we have really witnessed a panic situation on account of the poor availability of containers, labors, 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, labors, 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, were still are on the higher side. But it does not affect to the industry anymore till the freight charges are built up in the pricing.

The new mechanism introduced by RBI, which enables exporter to export in Indian rupees was a welcome move by the exporting community 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 had this kharif season distributed seeds to three — of three new varieties of basmati rice, which possesses infill resistance to bacterial blight and blast disease as I had mentioned you last year as well.

IARI have 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 to — into a commercial crop during the crop year ’23-’24. This will give a big leap to basmati exports practically in EU and USA, including few countries in the Arab world. Though the restriction of pesticide residue is nothing but a non-tariff barrier, the challenge which was accepted by the Indian exporters, and now we have come up with the new varieties to ensure 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 year was a loss of a 40-year-old distributor relationship in Saudi due to his financial crisis. We have now appointed a new distributor for the mainstream market and he is doing exceptionally well. The result of which are already seen in the first quarter and we’ll 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 a hard time in EU. I would like to add that UK has signed MoU for free trade with India whereby there will be a total exemption of duties on imports from India from 1st of October ’22.

The white rice will attracts — white rice presently attracts about EUR175[Phonetic] metric tonnes duty which will go away and the scope of exporting branded white rice is ample since UK is the largest importing country in Europe, but it has lot much implication in the economies of both the countries and it could be delayed for a few months.

I’m happy to share that India Gate is now recognized as the world’s Number 1 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 Ayush Gupta for the domestic scenario.

Ayush Gupta — Head, Domestic Division

Thank you. Good afternoon, ladies and gentlemen. I am pleased to share the results of quarter one financial year ’23 for India market. Revenue grew by 47% year on year. Unity brand has grown by more than 100% to clock INR150 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 market. First, densifying distribution reach. We’re 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 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 brands into three broad clusters: a cluster where there is an overwhelming need to drive basmati — 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.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Doshi from Care PMS. Please go ahead.

Amit Doshi — Care PMS — Analyst

Yeah. Thank you and congratulations for the great set of numbers. Sir, you did mention about jump in the exports, etc. But when we compare year on year, the numbers are not that kind of remarkable while sequentially there is a good growth. So, 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. So, what is the gap?

Anil Kumar Mittal — Chairman and Managing Director

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 quarters. 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. So it cannot be overnight the numbers cannot be turned, it requires some time to it. We have to give a gestation period to the new distributor as well.

Amit Doshi — Care PMS — Analyst

Got it, got it, got it. Sir, as far as the domestic business is concerned, of course, your numbers have been really appreciable and a great effort clearly. So this shift from unorganized to organized and that is probably driven by the Unity brand. So what is the price gap between the — our brand versus the unorganized segment? And what is driving the shift from there to Unity is just what I was trying to understand?

Anil Kumar Mittal — Chairman and Managing Director

Ayush, do you want to take that?

Ayush Gupta — Head, Domestic Division

Yeah. See, between branded products such as India Gate, which is a purely carrying the USP of an aged rice that is clearly selling at a premium of about 20% to 25% compared to the unbranded lose variants in the markets. With 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 come on at a premium of about 10% to 12% over the unbranded lose premiums. So that becomes a much attractive ladder for an unbranded consumer to climb on to get into the branded bandwagon. And that’s been a clear strategy for us where we have been trying to drive a more consumer penetration in our key markets and that’s working well for us.

Amit Doshi — Care PMS — Analyst

Okay. Okay. Okay. And in the presentation Slide 14, the share — market share is mentioned at 32% for traditional trade and modern trade is 37%. Could you give figures of what hit it had been prior to say probably one year back or some comparable number, just for the understanding purpose?

Anil Kumar Mittal — Chairman and Managing Director

Ayush?

Ayush Gupta — Head, Domestic Division

I don’t have. Ashish, would you have numbers from — I don’t have numbers from the last quarter. I don’t have the numbers.

Ashish Jain — Chief Financial Officer

I think he is asking for one year back. I don’t have the number, but probably share it separately.

Amit Doshi — Care PMS — Analyst

Sure, sure. Thank you. Thank you, and all the very best.

Anil Kumar Mittal — Chairman and Managing Director

The next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

I have three questions. One putting to Slide 4, I don’t understand these growth numbers where your quarter growth number is 21%. And you’ve mentioned some growth number for domestic business at 47% export business at 73%. So I don’t understand these numbers, if you could help us, clearly, on Y-o-Y, what is the situation? My second question is somewhere in the presentation, it is mentioned that there is 25% in basmati price realization, but I don’t see any impact on the gross margin side. So what is the reason?

And 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. And based on that we had mentioned that half of that business will be recouping FY ’23, which means about a plus 20% or 25% top line growth for the company for FY ’23. Where are we on that journey in terms of growth for FY ’23? So these are my three questions?

Ashish Jain — Chief Financial Officer

Yeah. This is Ashish, I’ll address the first one. So the overall growth in revenue is at 21%, okay. This comprises 47% quarter-on-quarter growth, which is against quarter — first quarter of last financial year. For domestic business was up 47%. For export, the same number was a de-growth of 4%. The 73% that we mentioned in the presentation is against the preceding quarter. And our idea there was to highlight the change in trend that is clearly observable in export revenue.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And is it possible to share in this 20%, what is the volume decline number or the growth number?

Ashish Jain — Chief Financial Officer

Sorry, we don’t give out that data separately, but we’ve shared separate growth numbers for the two segments in value terms.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Can you directionally at least mention that there is a volume decline or a growth?

Ashish Jain — Chief Financial Officer

Yeah. So overall — I mean, overall when we look at 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. Sorry, what was your second question?

Pritesh Chheda — Lucky Investment Managers — Analyst

For price increase in gross margin reflection is not there.

Ashish Jain — Chief Financial Officer

No, I am not — you would observe that the gross margin has gone up, vis-a-vis the last quarter.

Pritesh Chheda — Lucky Investment Managers — Analyst

That’s just about 100 basis point, right, versus the price increase of 13%?

Ashish Jain — Chief Financial Officer

Yes. 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 affect in gross margin.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. We must be following FIFO, right, first in, first out? So by that method you would have paddy prices over the last year as well, right?

Ashish Jain — Chief Financial Officer

No, we don’t follow FIFO. In our case, the fixed products are valued at on a net realization basis while the raw material is at cost.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And on that last quarter’s bifurcation and our expectation of growth of plus 20 — the calculation seems to suggest a plus 20% growth for FY ’23, where are we on that journey, sir?

Anil Kumar Mittal — Chairman and Managing Director

We are very much on the debt.

Ashish Jain — Chief Financial Officer

Yes. See, I will not comment on what we’ll 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, right. I think your question was that, where are we on that.

Pritesh Chheda — Lucky Investment Managers — Analyst

And Iran, two places.

Ashish Jain — Chief Financial Officer

Yes, so I’ll request the Chairman to address.

Anil Kumar Mittal — Chairman and Managing Director

Saudi, we are expecting with the current arrangement that our top line will increase by minimum INR300 crore to INR400 crore extra over the past performances. So, this INR400 crore definitely will be 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 INR300 crore. So we are expecting INR700 crore jump in the Saudi top line itself this year.

Pritesh Chheda — Lucky Investment Managers — Analyst

INR300 crore via the first distributor arrangement, another INR300 crore via the new arrangement, right?

Anil Kumar Mittal — Chairman and Managing Director

Maybe INR200 crore, INR300 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.

Pritesh Chheda — Lucky Investment Managers — Analyst

No problem. Has the quarter one already started showing Saudi numbers? And if you could just share the quarterly run rate in Saudi, now?

Anil Kumar Mittal — Chairman and Managing Director

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 INR70 crore, INR80 crore.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay, no problem. And sir…

Operator

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.

Ashish Jain — Chief Financial Officer

Yes, 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 INR1,239 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 earnings per share of INR164 crores and INR6.99 respectively during the quarter.

Revenue from operations grew by 21% led by domestic sales, which excluding energy sales grew by 47% to INR709 crores. Export sales at INR485 crores were lower by 4% vis-a-vis quarter one FY ’22, but marked substantial growth over the preceding quarter. Overall, rice sales realization increased by 13% while volume increased by 7% over quarter one FY ’22. 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 INR19.6 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 INR2 crores as against INR3.6 crores in corresponding quarter as a 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 one FY ’23, as against that in quarter one FY ’22.

I will now share some key numbers on the inventory. Total inventory as of June 30, 2022 was INR2,461 crores, comprising INR396 crores of paddy and INR1,908 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 INR938 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.

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Jayant Mamania from Care PMS. Please go ahead.

Jayant Mamania — Care PMS — Analyst

Yes, congragulations Anil-ji for a good set of numbers. Sir, we have succeeded in sustaining the domestic sales at around INR700 crores since last three quarters. So what is our internal target of growth for domestic sales?

Anil Kumar Mittal — Chairman and Managing Director

You see, we are expanding domestic market and we are of the opinion that it would be around 50% of the revenue, if my revenue goes INR5,000 crores. So we are targeting around INR2,500 crores to INR3,000 crores.

Jayant Mamania — Care PMS — Analyst

So at the INR700 crore run rate, it will be around INR2,800 crores already this year. So.

Anil Kumar Mittal — Chairman and Managing Director

Yes. Maybe it will cross INR3,000 crores.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Sir, what would be our EBITDA margin in case of domestic sales.

Anil Kumar Mittal — Chairman and Managing Director

We are on a up trend. I don’t know the figures, but we are on the uptrend.

Jayant Mamania — Care PMS — Analyst

Yes, yes, yes. Sir, what would the EBITDA margin in domestic sales?

Anil Kumar Mittal — Chairman and Managing Director

We don’t have EBITDA margin, but as a company policy, our EBITDA will always be in the range of 15% to 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 export EBITDA.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Sir, you said this season, the non-basmati rice prices are expected to remain strong because of the lower products than expected. So what would be our strategy to stock this season considering the higher price of basmati?

Anil Kumar Mittal — Chairman and Managing Director

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 every year, the prices will remain firm. That is number one. Secondly, MSP has increased to INR20,400. It means a farmer will have an income from the government minimum support price to about INR62,000. Whereas if the farmer gets, let us say, less than INR32 or INR32, even they 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 INR65,000 to INR70,000 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 the next quarter. The demand has definitely increased. And this year I expect that our — the figure of India should touch about 4.4 million, 4.5 million tonnes as compared to 3.9 million tonnes 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’ll be buying more. We will be buying more compared to last year — compared to last two years, we have been buying more.

Jayant Mamania — Care PMS — Analyst

Sir, we are not that good in U.S. market. And you said the — with new variety the residue level will be complied. So what would be our strategy for U.S. market?

Anil Kumar Mittal — Chairman and Managing Director

See, definitely not this year, but next year when commercial crop comes of compliant rise, definitely our share will increase not only in Americas, in many other markets where there is an obstacle of being noncompliant. So I’m quite sure that we will do much better in these countries when the compliant right is available in abundance.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Okay. Thanks a lot, and all the best.

Operator

The next question is from the line of Nisarg Vakharia from Revanta Funds. Please go ahead.

Nishid Solanki — CDR India — Analyst

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?

Ashish Jain — Chief Financial Officer

Yes, I think we just clarified that we’ll not be able to share segment-wise gross margins. The overall number is already with you.

Nisarg Vakharia — Revanta Funds — Analyst

Okay. Just asking this because Unity you said is not a very premium brand as compared to what we sell. So it was trying to get an indicative sense for you guys. Anyways, we’ve appointed a new distributor in Saudi Arabia. Does it mean and it’s 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?

Anil Kumar Mittal — Chairman and Managing Director

Yeah. You’re correct. You’re right.

Nisarg Vakharia — Revanta Funds — Analyst

Okay. That’s great, sir. And lastly, sir, you gave a clear road map 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 ’23 or in FY ’24?

Anil Kumar Mittal — Chairman and Managing Director

FY ’23, so definitive we will have a respective share in Iraq — 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. And we are quite confident that our share in the next three quarters will be quite impressive as far as Iran shipments are concerned.

Nisarg Vakharia — Revanta Funds — Analyst

Okay, sir. Thank you so much for answering my questions. All the best.

Operator

Thank you. The next question is from the line of Soumen Choudhury from Jet Age Securities Private Limited. Please go ahead.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

Good afternon sir. Thank you for the apportunity and congratulations on significant improvement in performance in this quarter. I’m referring to the presentation where you have talked about a 25% increase in realization in the current quarter, Y-o-Y. So what would be — would it be like quarter-on-quarter? Would it also be a similar trend like 20%, 25% increase over quarter four?

Anil Kumar Mittal — Chairman and Managing Director

Let me just give you the number. It is not 25% over the preceding quarter. In the India market, at least we are at about 10%. So I think that’s when we are.

Ashish Jain — Chief Financial Officer

Yes. I think a similar number overall.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

10% growth only.

Ashish Jain — Chief Financial Officer

Yes. I think you were asking about realization.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

Yes, yes. 10% increase in realization quarter-on-quarter.

Ashish Jain — Chief Financial Officer

Yes, that’s right.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

But in the export market, it should be better than that I think.

Ashish Jain — Chief Financial Officer

No, I think the — I mean, realizations tend to be higher in the export market as we’ve explained in earlier calls. But I think overall if we see the quarter-on-quarter increase in realization, I think it’s similar across both domestic and exports.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

My sense was quarter four realizations were impacted because of the Saudi distributor issue. And this quarter it seems a little bit better than that? Or it is still 10%.

Ashish Jain — Chief Financial Officer

Yes, I will just clarify. I think your question was that how does the realization compared to the preceding quarter.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

Yes, that’s right.

Ashish Jain — Chief Financial Officer

Yes. So 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.

Soumen Choudhury — Jet Age Securities Private Limited — Analyst

Okay. Okay, fine. That’s it for my side. Thank you.

Operator

Thank you. The next question is from the line of Himanshu Upadhyay from O3 Capital. Please go ahead.

Himanshu Upadhyay — O3 Capital — Analyst

Yes, hi. Good afternoon. My first question was despite this 25% increase in sowing for basmati, you expect the basmati prices to be high this season?

Anil Kumar Mittal — Chairman and Managing Director

The government of India has increased the MSP to INR20,400. That’s number one. So in comparison, it will impact the basmati pricing as well. That’s number one. Number two, the basmati buffer stock with the government is depleting because of this giving free ration to 80 crore people. And 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 increase. And let me clarify that if we take the crop of non-basmati around 120 million, less 13%, whatever it is, basmati rice production is just 7 million to 8 million, which is 6%, 7% of the total crop. So that 25% increase versus non-basmati rice has got no correlation, but the price impact will definitely come.

Himanshu Upadhyay — O3 Capital — Analyst

Okay. Okay. And you had spoken about going into regional varieties of rice also for the last 1.5 years. Would we start buying those also? And what is the progress on the capex we were to do for the regional basmati rice?

Anil Kumar Mittal — Chairman and Managing Director

Yes, 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 the process. The construction will start in the next 60 to 90 days. I think we will be able to catch FY ’24. FY ’24, the production will come. And naturally — but the regional rice we are buying and storing it and packing it in our brands, and we are marketing it. And Kandla is already under — I mean machines have started installing in the plants. So I think within six months, the Kandla-Gandhidham unit will be operational.

Himanshu Upadhyay — O3 Capital — Analyst

Okay. Okay. Yes, that’s all from my side.

Operator

Thank you. The next question is from the line of Avadhooot Joshi from New Berry Capitals. Please go ahead.

Avadhoot Joshi — New Berry Capitals — Analyst

Good afternoon. Thanks for opportunity. Sir, just one clarification. Last year we had sent some non-basmati rice to China. Is that correct?

Anil Kumar Mittal — Chairman and Managing Director

Yes, that is correct.

Avadhoot Joshi — New Berry Capitals — Analyst

Yes. So if the opportunity comes in now the Bangladesh is also starting to import from us. The three major — three or four major regions which produce rice, Dangalaest, China and Vietnam. Out of that, two are going to procuring from India. If such apportunity comes, that we will be exporting rights to China and Bangladesh in this year also, taking the advantage of prices?

Anil Kumar Mittal — Chairman and Managing Director

As far as Bangladesh is is concerned, the problem with KRBL is that we don’t entertain any business with a EBITDA of less than 10% or 11%. Otherwise, our bottom line goes heywhy. So 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 of 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%.

Avadhoot Joshi — New Berry Capitals — Analyst

Understood, sir. And on the global scenario for non-basmati, the production is also decreasing, right? In India also the product is decreasing, as we mentioned in the opening remarks. So that will help us for export and realization also. Is that correct understanding?

Anil Kumar Mittal — Chairman and Managing Director

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.

Avadhoot Joshi — New Berry Capitals — Analyst

Okay. Understood, sir. Thank you. That’s it from side. Thank you.

Operator

Thank you. The next question is from line of Jagpreet Singh from VA Capital. Please go ahead.

Jagpreet Singh — VA Capital — Analyst

Good afternoon, everybody.

Anil Kumar Mittal — Chairman and Managing Director

Yes, hi. Please go ahead.

Jagpreet Singh — VA Capital — Analyst

Anil ji, you mentioned that there was a spillover of some INR60 crores, INR70 crores from Saudi Arabia to the next quarter. Any other spillovers in this quarter?

Anil Kumar Mittal — Chairman and Managing Director

Yes, there is spillover of other countries, which I’ll not like to discuss, but there is a spillover. The total spillover maybe up to the tune of INR150 crores.

Jagpreet Singh — VA Capital — Analyst

All right. All right. Sir, the capex plans which you have, how much is the total capex for this year?

Anil Kumar Mittal — Chairman and Managing Director

Capex plan, how much? Yes, for this nonregional rice, we have a plan of about INR150 crores this year.

Jagpreet Singh — VA Capital — Analyst

So that will be the all capex, which would be required, right?

Anil Kumar Mittal — Chairman and Managing Director

Yes, total capex.

Jagpreet Singh — VA Capital — Analyst

Which means we would have around INR350 crores to INR400 crores of extra capital to invest in inventory of rice.

Anil Kumar Mittal — Chairman and Managing Director

Yes, Jagpreet, this year we will be very — we’ll be buying we need finances — even we are going to buy regional rice is even our share in basmati purchase would be higher this year. So I think all the money which is lying in the banks will be utilized.

Jagpreet Singh — VA Capital — Analyst

Okay. And sir, any color on the growth in the premium segment rice, like classic and super, is that segment growing as fast as, let’s say, Unity is presenting most of the additional numbers? Is your premium segment also growing?

Anil Kumar Mittal — Chairman and Managing Director

See, I you can ask — I can reply to you separately on this. These numbers of classic and super — browth is there. Growth is there, definitely. Otherwise, how could the realization should be so good. The realization has come about INR124 a kilo. The average realization is coming under INR24 a kilo, you can understand, therefore there is a growth in the premium segment.

Jagpreet Singh — VA Capital — Analyst

Okay, wow much would be the growth, 10%, 15%?

Anil Kumar Mittal — Chairman and Managing Director

Acturally for domestic market…

Jagpreet Singh — VA Capital — Analyst

Your are cutting, you please continue.

Anil Kumar Mittal — Chairman and Managing Director

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 recorded 60% volume growth in this particular segment.

Jagpreet Singh — VA Capital — Analyst

Beating our overall performance and Premium segment has outperformed the overall performance. wonderful. Right sir. Thank you very much.

Anil Kumar Mittal — Chairman and Managing Director

Jagpreet-ji, when the bottom line improves, it means our Premium segment sale is going up.

Jagpreet Singh — VA Capital — Analyst

Okay. Thank you very much.

Operator

Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead.

Nikhil Upadhyay — SIMPL — Analyst

Yes, 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 percentages we entail?

Anil Kumar Mittal — Chairman and Managing Director

Ayush, do you want to take that?

Ayush Gupta — Head, Domestic Division

Yes, 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. And quarter one, we are actually — I would say, if I don’t have my numbers correct, but I would take a guess at about 40% increase from pre-COVID levels in the HoReCa segment. And 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 the brand. However, we are aggressively promoting the consumer pack range of Unity through our expanded distribution network. And we are hopeful to see much better growth in the consumer segment as well.

Anil Kumar Mittal — Chairman and Managing Director

And I would like to add one thing due to the 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 choose not to pay. Now I’ve cleaned my packing from Unity 25 kg to 30 kg. So as per government notification, above 25 kg there is no tax for everybody, whether it’s a registered brand or a nonrestated. And I hope with this, our HoReCa sales will improve very much. Thank you.

Nikhil Upadhyay — SIMPL — Analyst

Okay. And 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. So on the secondary sales, are we seeing a similar kind of trend sequentially what we had seen in terms of the export demand? Or can we say there is some channel filling in the numbers and probably this numbers may sort of die in following quarters?

Anil Kumar Mittal — Chairman and Managing Director

The channel demand is very good. What’s your question? Repeat again.

Nikhil Upadhyay — SIMPL — Analyst

My question was, all — I think for last two quarters, we were not — we had issues with meeting the demand in the modern trade and all. So 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 onetime sales versus the normal sale which we would be doing.

Anil Kumar Mittal — Chairman and Managing Director

This is — this all sales which we have shown in quarter four — quarter one and in future quarter is only channel sales. And 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 the channel, all different channels. So channel sale is very, very strong in Saudi, and that is the strength of the brand.

Nikhil Upadhyay — SIMPL — Analyst

Sure. Thanks a lot. I’ll come back.

Operator

Thank you. the next question is from the line of Aman from Augmenta Research Private Limited. Please go ahad.

Aman Madrecha — Augmenta Research Private Limited — Analyst

Ye, hi, Sir, and thanks for the opportunity. Sir, can you just throw some light about how the paddy guys have moved compared to quarter-on-quarter and Y-o-Y? And also give some sense of understanding, like you’ve seen that the growing area is areas low, comparitively around 13%, 14% lower compared to last year. So can we expect that the paddy prices to remain high for the remaining year also?

Ashish Jain — Chief Financial Officer

I can give you the paddy numbers on how they have moved from quarter-to-quarter. If you look at our average cost of paddy purchase, right, that was for basmati, that was at about 34,000 per metered tonnes as of quarter one FY ’23, right? And this is about — as against about 28,000 in the last season. So if you compare it to buying price, it was 28,000 increase to about 34,000 in the last buying seasons.

Aman Madrecha — Augmenta Research Private Limited — Analyst

As buying season as during the quarter one of FY ’22?

Ashish Jain — Chief Financial Officer

December.

Aman Madrecha — Augmenta Research Private Limited — Analyst

Okay. Okay. Okay, sir. And like how are we — like can we expect the prices to continue at this level for the paddy because of lower sowing season and…

Ayush Gupta — Head, Domestic Division

Yes, paddy prices will be strong as Anil Ji has already told yo. Number one, there are a lot of reasons. Number one, the government has increased MSP, the area of non-basmati is less. So there will be a pressure on basmati and the demand in export is quite good, and there is no carryforward stocks with 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 28 and finished at 35, 36. This year, we hope the crop will start at 32, 33 compared to 28 So naturally, it is higher by 20% than last year.

Aman Madrecha — Augmenta Research Private Limited — Analyst

Okay. Thank you. Thank you.

Operator

Thank you. The next question is from the line of Jayesh Gandhi from Harshad Gandhi Securities. Please go ahead.

Jayesh Gandhi — Harshad Gandhi Securities — Analyst

In one of the earlier callers’ question you said that you don’t follow FIFO method. What method you follow, sir?

Anil Kumar Mittal — Chairman and Managing Director

Sir, it is, the — it it paddy prices are at cost. Whatever the cost is, that will go, that will be the cost. There is nothing — I mean it is the average, if the average of everything is; a, if it will be a.

Jayesh Gandhi — Harshad Gandhi Securities — Analyst

So you mean to say, for example, if you have a paddy stock of six months, higher price will be there? Or is the average of the six month price that we book.

Ashish Jain — Chief Financial Officer

Yes. So I’ll add to what Anil ji said. See, from a calculation perspective, we thought we use weighted average. So it’s not first in first out. And 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-process stock, it is at cost.

Jayesh Gandhi — Harshad Gandhi Securities — Analyst

Okay. Thank you very much, sir.

Operator

Thank you. This was the last question for today. I would now like to hand the conference over to management for closing comments.

Anil Kumar Mittal — Chairman and Managing Director

Once again, I’m thankful to the investors for attending this conference call and I’m 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, 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.

Operator

[Operator Closing Remarks]