KRBL Limited (NSE: KRBL) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Ashish Jain — Chief Financial Officer
Anil Kumar Mittal — Chairman and Managing Director
Ayush Gupta — Head of Domestic Division
Analysts:
Amit Agarwal — Analyst
Himanshu Upadhyay — Analyst
Yash Dantewadia — Analyst
Rishab Bothra — Analyst
Naitik Mutha — Analyst
Anuj Sharma — Analyst
Mohammed Patel — Analyst
Rohan Patel — Analyst
Aditya Yadav — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the KRBL Limited Q2 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference call is being recorded.
I now hand the conference over to Mr. Ashish Jain, Chief Financial Officer of KRBL Limited. Thank you, and over to you, Mr Ashish.
Ashish Jain — Chief Financial Officer
Thank you. And thank you to all the participants for joining us. Welcome to the quarter two FY ’25 earnings conference call for analysts and investors of KRBL Limited. Today, we have Mr. Anil Kumar Mittal, Chairman and Managing Director; Mr. Anoop Kumar Gupta, Joint Managing Director; and Mr. Ayush Gupta, Head of Domestic Division as key speakers on the call. To kick off the call, Mr. Mittal will provide updates on the industry, our overall strategy and the exports business. Following that, Ayush will delve into the domestic business. Finally, I will present the financial overview of the company for the second quarter and half year ended September 30, 2024. Once the management has concluded their opening remarks, we will open the floor for an interactive Q&A session.
Please note that some of the statements made during the call may contain forward-looking information and actual results may differ from these statements. For more details, you can refer to KRBL’s investor presentation, which is available on the stock exchange websites and our company’s websites.
Now, I would like to invite Anil to share his views.
Anil Kumar Mittal — Chairman and Managing Director
Good afternoon, everyone. Wish all everyone a belated happy and prosperous Deepawali. Thank you for joining us today for KRBL Limited’s Q2 quarterly investor call. I’m pleased to provide an overview of our recent performance and share insights into our future outlook.
Let’s begin with the review of the global rise market landscape. The USDA’s latest forecast for the ’24-’25 marketing year projects global rice production at 530 million metric tonnes, making an increase from last year. Global rice consumption is also expected to rise to 528 million metric tonnes. This year, global rice production will exceed consumption, reversing the deficit observed in 2022 and ’22-’23. Turning to India’s outlook, production for ’24-’25 marketing year is estimated to reach a record 142 million metric tonne, up from 138 million metric tonne last year. Basmati rice production is also anticipated to hit an all-time high with 16 million tonnes of paddy harvested across the GI region across all varieties, reflecting an estimated 10% increase over the previous year. The above production estimates are reflected on the prices.
We are witnessing the paddy prices to be lower by 15% over last year. Almost 15% of the crop has already arrived. If we take the total basket of basmati rice out of which the arrival alone of 1509 variety is estimated to be around 85%. The crop is healthy and the arrivals are going to remain up to December-end. KRBL is already there in the market and we are buying at a good pace as we decided during the beginning of the season. To be more precise, the price of 1509 remained at INR28,000 to INR29,000, whereas 1121 is between INR40,000 to INR42,000. 1718 is between INR37,000 to INR38,000 and 1401 is between INR33,000 to INR34,000. Normally, there are six varieties popular in basmati family vis-a-vis traditional 1121, 1718, 1509, 1401 and Pusa Basmati Number One. We are witnessing arrivals of pest resistance varieties such as Pusa 1885, alternate of 1121, 1847, alternate of 1509, 1886, alternate of 1401 and 1637, alternate of Pusa-1. The crop size of these pest resistance varieties is expected to be in a good quantity, but exact numbers will be established after the season is over.
Now focusing on India’s rice export. India is expected to retain its position as world largest rice exporter in 2025 with export projected between 18 million to 20 million tonnes including basmati rice. This growth is supported by a robust harvest, ample stock and the government open policy stand for all non-basmati rice exports except for 100% broken rice which remain restricted. India’s basmati rice export in the first half of ’25 reached 2.7 million metric tonnes, an 18% increase from 2.3 million metric tonne in the same period last year, despite a high comparative base from the record 5.2 million metric tonne exported in FY ’24. In September, the government removed the minimum export price of $950 per metric tonne on basmati export, which is expected to further drive export volumes. Given current paddy prices, we anticipate basmati prices in export market to be highly competitive, further enhancing export potential.
Now, moving to KRBL performance in Export segment. Our export revenue reached to INR252 crore in Q2 2025 compared to INR235 crore in Q2 2024, a growth of 7%, whereas the total revenue of KRBL stood at INR1,270 crores with domestic revenue at INR1,018 crores, witnessing a growth of 5% in Q2 FY 2025. The company reported an EBITDA of INR150 crores and a PAT of INR101 crores. The above export turnover is subdued due to the lower export through Europe of brown rice. Pakistan was more competitive and they had no problem whatsoever on pesticide residues. This year, we expect good business from Europe and which will start from December onwards. We have already made some bulk shipments via Dubai for which the revenue will be reflected in Q3-Q4.
In case of Iran, the imports were banned from 20th July up to 20th November. The license to import rice will be available in the month of December. As far as Saudi is concerned, I had gone myself to Dammam and Riyadh to evaluate the opening of our own office. It is a little bit time consuming, but we expect that by March-end we should be able to complete all formalities. Since India Gate is still a very strong brand name in Saudi, we have appointed two wholesale distributors to ensure that the visibility of the brand is maintained and shipments have already started commencing. Looking ahead of FY 2025, we remain confident in our ability to accelerate a growth in our export business, while sustaining our positive momentum in the domestic market.
If any one has any further questions, I would be happy to answer them during the QA session. I here now pass it on to Ayush for domestic update. Thank you once again.
Ayush Gupta — Head of Domestic Division
Thank you. Ladies and gentlemen, I’m honored to address you today and share the outstanding achievements of KRBL Limited in the India market for the second quarter of the fiscal year ’24-’25.
Our continued success in India reflects our unwavering commitment to a long-term growth strategy, focused on sustainable expansion and excellence in execution. In quarter two financial year ’25, our India market recorded revenue of INR984 crores, a growth of approximately 5% compared to quarter two financial year ’24. And our H1 financial year ’25 revenue stands at INR1,909 crores, reflecting a strong 7% growth over H1 financial year ’24. In a generally slowing FMCG market with urban growth volumes of around 2.5% in H1, we delivered an impressive 10% volume growth in the Branded Basmati segment, supported by solid performance across both Consumer and Bulk Pack segments. This success is further evidenced by a growing market share across multiple channels.
Our flagship brand, India Gate now reaches over 1.1 crore households, reaffirming our market leadership. In general trade, we’ve secured a 38% market share, marking an increase of 435 basis points over last year, thanks to our strategic focus on expanding distribution and deepening brand loyalty. In modern trade, despite a slowdown due to the rise of quick commerce, we hold a strong position with a 36.2% market share, an increase of 428 basis points year-over-year. Our e-commerce investments, the fastest growing channel, have also yielded exceptional results with our market share rising to 40%, a gain of 133 basis points compared to last year. This growth validates our digital strategy and commitment to meeting evolving consumer expectations.
Looking ahead, we are confident that our strategic initiatives will continue driving sustainable growth and reinforcing our leadership in the India market. To propel our India business to new heights, I’m pleased to introduce our four pillar growth strategy, designed to build on the foundations laid by an earlier three-pronged approach. The first pillar, democratizing our distribution network. Addresses the rapid changes in India’s channel dynamics. We see three emerging trends. First, basmati growth will accelerate in Tier 1 and Tier 2 towns where we aim to enhance our distribution quality. Second, in metros, where we already have an approximately 85% weighted distribution, we will focus on increasing range availability and strengthening market execution to boost share amongst existing handlers. Third, with the advent of quick commerce transforming shopping habits, convenience has become paramount. We are committed to increasing our visibility and fostering strong brand preference in this channel.
The second pillar, remodeling our supply chain is a response to these shifting channel landscapes. We are moving closer to the market to improve service levels and efficiency. In general trade, this involves expanding our distribution network with CNS and super stockists to reach account of 1,000 plus dealers and distributors, a target that will make supply-chain capabilities essential. Additionally, transitioning to an FOR model will enhance governance of our go-to-market strategy. In organized trade, these steps will improve not only service quality, but also cost-efficiency, enabling us to reinvest in brand preference and visibility. Our third growth pillar is investing in the brand. Celebrating 25 years in India, India Gate has become the world’s number one basmati brand with industry-leading brand equity and top of mind recall. We remain deeply committed to investing in India Gate, strengthening the brand’s identity and consistently maintaining our category defining share of rice at 67% plus.
Finally, our fourth pillar, foraying into new products and categories. Reflects our ambition to diversify and enhance our offering for Indian consumers. We are already exploring adjacent categories and the successful launch of India Gate Classic biryani masala in modern trade and e-commerce has shown the potential for expansion. Encouraged by the positive response, we will now introduce this product in general trade in top metros. As we advance, these four pillars will guide our efforts to reach more consumers, expand our presence and remain agile and responsive to India’s dynamic market. Each initiative reflects our commitment to delivering the highest-quality products, deepening our consumer relationships and ensuring that KRBL remains synonymous with trust, quality and innovation.
In closing, I would like to express my gratitude to our entire KRBL team whose dedication and hard work make these achievements possible and to our consumers, partners and shareholders for their continued trust and support. Together, we are shaping a bright future for KRBL in India and I’m excited for the journey ahead. Thank you.
I will now hand it over to Ashish Jain for further remarks.
Ashish Jain — Chief Financial Officer
Yeah. Thank you, Ayush. I’ll walk you through the performance highlights for the quarter and first half ended September 30, 2024. Unless otherwise stated, all figures are consolidated for KRBL Limited.
For the quarter, total income for the quarter was at INR1,306 crores, a 5% increase over the same quarter last year. Excluding power, rose 5% year-on-year to INR984 crores, driven by a 10% growth in branded basmati volume and stable realizations. In exports, revenue increased by 7% to INR252 crores with growth fueled both by volume and pricing gains. The outlook for exports has been covered in Anil’s earlier comments.
Coming to the margins, our gross margin for the quarter was at 23.7%, impacted by a 7% year-on-year increase in basmati unit costs as paddy prices were higher in the last season, while average sales realization in the period rose by 3%. The comparative base in Q2 FY ’24, which is the corresponding quarter last year, also benefited from a one-time provision reversal. EBITDA margin for the quarter stood at 12.1% compared to 18.2% corresponding quarter last year, primarily reflecting the impact on gross margin as well as higher employee costs, a provision for doubtful debt and other expenses.
Increase in employee cost is primarily driven by additions to our team that are a part of a long-term plan to strengthen our capabilities to deliver on growth initiatives. Finance costs remained stable at INR0.83 crores and PAT was at INR103 crore or 7.9% of total income compared to INR153 crores or 12.3% in the corresponding quarter last year and this reflects the trend basis factors outlined above. Coming to the half year performance, total income for first half of FY ’25 was INR2,527 crores, reflecting a 6% decline from H1 ’24. Domestic revenue saw 7% growth in H1 ’25, while exports declined by 36%, primarily due to a reduction in bulk sales. Bulk sales in the current H1 are at INR104 crores, while in the corresponding period last year, they were at INR450 crores. Notably, however, branded export in H1 increased by 43% as compared to the same period last year.
Gross profit margin stood at 23% with EBITDA and PAT margin at 12% and 7.5%, respectively, reflecting the impact of higher input costs I had mentioned earlier, proportionate employee costs, slight increase in trade on sales and provision adjustments that I have already mentioned. Coming to balance sheet, as of September 30, 2024, total inventory stood at INR3,013 crores comprising INR215 crores of paddy and INR2,647 crores of rice. This reflects a strategic inventory position to meet anticipated demand. In terms of volume, we carried inventory around 60,000 tonnes of paddy and 376,000 tonnes of rice compared to 114,000 tonnes of paddy and 332,000 tonnes of rice last year. Our cash and bank balance, including all investments, but excluding equity shares was at INR1,283 crores compared to INR1,268 crores a year earlier.
With this, I conclude my remarks and will now hand over to the moderator for the Q&A session. Please note that as the ED matter is sub-judice, we won’t be able to address queries on that issue, though we share an update on these matters in our notes to results every quarter.
Over to the moderator.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Agarwal from Leeway Investments. Please go ahead.
Amit Agarwal
Good morning, sir. My first question regarding Saudi Arabia market. Sir, you mentioned that two wholesale distributors have been appointed. Can you throw some more light on that? How soon we can think of shipping our first shipment? And is this regarding retail market or are these distributors related to HoReCa segment?
Anil Kumar Mittal
It is related to retail and HoReCa, but in general trade when I say retail, it is retail, not modern retail, but it is to the general trade.
Amit Agarwal
And how soon we should expect our first shipment to Saudi Arabia?
Anil Kumar Mittal
The first shipment went to — it has gone. Shipments started in the close quarter two also.
Amit Agarwal
Okay. So now, I think the worst is over for the Saudi Arabian market? Is it okay to assume that?
Anil Kumar Mittal
No, let us see. The actual momentum will come when we open our own office because it will take time because we have to take government position in India, then we have to apply to the Saudi government. I think so it will take another three, four months’ time till the time we are ready to open the office.
Amit Agarwal
But at least we have started shipping to Saudi Arabia, at least — last two quarter there was no export to Saudi Arabia, if I’m not wrong, right?
Ayush Gupta
Yeah, you’re right. So, you’re right. So the shipments to Saudi Arabia have commenced, but this is as Anil mentioned through the wholesaler route, but they have commenced.
Amit Agarwal
But that’s a private-label that means or is it our own brand?
Ayush Gupta
No, it is not private-label. I’ll explain. See, we are shipping India Gate, which is our own brand. But as a channel, I think these shipments are currently being routed through wholesalers based in Saudi, right? So that’s the route. Now the other channels that we’ve traditionally used are distributors for retail and HoReCa. Now that is work-in progress, but through the wholesale channel, the shipments have started.
Amit Agarwal
And my next question is regarding energy sector. Sir, for last two years, this energy sector turnover as well as the results are stagnant. But we initially were thinking that this is, the energy sector gives us 18% return on our capital employed. So, they should increase every year. Am I wrong to assume? There is something wrong in my reading? Because earlier results were INR48 crore for September half yearly, two years back, now it’s INR38 crores. It has reduced by INR10 crore.
Ashish Jain
Yeah. So, I’ll explain. See, we have about 147 megawatt of bulk of [Technical Issues]. Bulk of this is in power. So, where the overall unit generation is depended upon wind patterns. So, what has happened in the current quarter — also in the first quarter is that wind patterns have not been what they were last year because of which we’ve seen lower generation.
Amit Agarwal
And what about the price increase every year or is this price stagnant or how does it…
Ashish Jain
So, we operate by selling power to state electricity boards from long-term contracts where the contract is — where the price is fixed. So, there is no provision of year-on-year increase in power tariffs.
Amit Agarwal
So that means in the long-run, the results would be static, similar to what is being shown in last two years, right?
Ashish Jain
Yeah. Yeah, I would say stable, not static. So, they should continue to be stable.
Amit Agarwal
And my last question is regarding edible oil. Sir, is that the launch of the edible oil in progress or has been delayed? What is the expected month of launch in the domestic market?
Ashish Jain
Yeah. We are almost ready with all our things with the launch and we’ll be launching the product at the end of quarter three or first week of quarter four.
Amit Agarwal
And how much turnover should we expect in first year — first two years or something like this? Is it a small launch or is it — how big is the market we are expecting to capture?
Ashish Jain
We are looking at a market share of about 3% to 5% in the first year, leading up to about 15% by year three and we are expecting a turnover starting with INR70 crores, INR75 crores in year one and reaching up to INR300 crores by year three.
Amit Agarwal
That’s fantastic. Thank you. Thank you for all my questions. Good luck to you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Himanshu Upadhyay from BugleRock PMS. Please go ahead.
Himanshu Upadhyay
Yeah. Hi, good afternoon. My question was on inventories and what is our thought process now? Means we are seeing the price of basmati paddy is lower by 15% as you stated. So, would we like to increase our inventory materially from what we bought last year or we think as inventory remains higher than last year, so we like to buy less or what is your thought process on that? Can you give some of your thoughts?
Ayush Gupta
Yeah. Looking at the market, we are thinking of increasing the quantity. We are buying, we are buying, the pace is quite high and we are buying. But depends upon the market. If the market remains the same, we think will go little higher than last year.
Himanshu Upadhyay
Okay. And second thing, Ayush, we also had started focusing on other rice like Sona Masoori and others, okay. What is the progress there? Is it a really scalable business or you think it will — it again is a niche business only for us in future?
Ayush Gupta
Yeah, yeah, it is scalable. We are increasing by 10% to 15% every quarter. And you see, we are doing only specialty rice and that to wherein the value addition is there and the rice has to be aged minimum one year and 1.5 year. So, we have now put up a small processing plant in Andhra Pradesh also. We are putting up a plant in Gangavati also. We have already put up a plant at Kandla Port also. So, from all the three plants, we are doing processing of these material after keeping it for aging for one year. So, we are expecting this pace to be continued.
Himanshu Upadhyay
What would be the size of business besides basmati let’s say in Q2?
Ashish Jain
So, last year we did a INR200 crore revenue in the regional rice business and we are expecting it to be close to about INR275 crores and INR300 crores in this financial year.
Himanshu Upadhyay
Okay. And we seem very optimistic on the European business. So, have we decided to have a distributor or we’ll be doing it on our own or what is the thought process in that market?
Anil Kumar Mittal
See, as far as Europe is concerned, one thing is definitely in favor of India this time is that we have plenty of stocks which are compliant. Last year, we had a major problem and hence Pakistan took away our market. This year, there is another challenge is that Pakistan prices are — our prices are much lower over Pakistan and we are expecting a phenomenal business from Europe and the Europeans will come into the market around 15th of December to conclude the businesses.
Himanshu Upadhyay
Okay. And when you decided about Saudi Arabia, it will have our own office, how many people would it be required and the marketing and everything will be done by ourselves and even tying up with various retail channel and everything?
Anil Kumar Mittal
No, no, we will be operating it professionally and it will be fully controlled by us and staff and everything we are going to hire them after opening the office. We have already — I have gone and seen even the HR people who are number one HR people to get good people. And I think so those will not — see, initial challenges will always be there, but I don’t find it will be — we will overcome all those challenges because we have a 35 years experience of that market.
Himanshu Upadhyay
Okay. Thank you, sir, from my side.
Operator
Thank you. The next question is from the line of Yash Dantewadia from Dante Equity. Please go ahead.
Yash Dantewadia
Yeah, hi. So I just wanted to understand — am I audible first?
Ashish Jain
Yes, we can hear you.
Yash Dantewadia
Yeah. So, I just wanted to understand something on the inventory side and the margin side, right? From what I’ve understood is that we carried over high cost inventories from last year because the prices of basmati were much higher, last financial year, right? So, hence our margins are down. But as we move into the next financial year, maybe post two to three quarters, right, where the high-cost inventory is sort of sold out, can we look at the margins going back to sort of the 14%, 15% levels? And whatever I said, does it make sense to you? Does it work that way? Because I don’t know that you do increase distributor discounts when the prices sort of become very competitive as they are now.
Ayush Gupta
You see we are carrying high cost inventories, so margins will be under pressure for another two quarters. That is maximum. Another two quarters, we will be operating under 15% only. But first quarter of next financial, we should come to the same growth rate of 15% plus.
Yash Dantewadia
Yeah. So I’m talking about the domestic business. I’ll leave the export business aside for now. Can you tell me what will the margins look like in the — and also the MRP does not change, right, regardless of the pricing of basmati rice in the sort of wholesale and distributor level or the process level where you’re buying it and processing it, do the MRP change regard vis-a-vis the pricing or the MRPs remain the same? Like versus last year and this year that the prices of basmati were much higher last year, did the MRP change?
Ashish Jain
Yeah, Varun to answer your question, see what has happened in the last financial year, we have seen consistent decline in pricing of commodity over the six months, starting from quarter four end up to September-end we saw a consistent decline in prices of the commodity. So, what we did in quarter three starting, we revised our MRPs and we started our pricing fresh in terms of rebalancing because we are giving a lot of schemes in the market. So, MRPs have now been revised. And given the commodity position, now we only see an upward trend going forward. So, MRPs again and pricing will keep on rising month-over month, quarter-over-quarter as we feel comfortable. Margins, we are working on very healthy margins now, quarter three onwards and we see ourselves resuming back to the 15% plus EBITDA margins by quarter one end.
Yash Dantewadia
Yeah. So that we are talking about the domestic business, right? Can you clarify that?
Ashish Jain
Steadily rise back up as markets will allow.
Yash Dantewadia
Understood. But the 15% number that you just shared, is it for the domestic business? Because I’m asking purely on the basis of domestic business right now.
Ashish Jain
We don’t have a — we don’t really do a segmentation of a domestic versus an export in terms of EBITDA. But at a joint level, we are certain that a 15% plus EBITDA will be delivered in quarter one.
Yash Dantewadia
So that 15% EBITDA level that we just said, is it keeping in mind that the export and the domestic scale mix stays at the same level is my question?
Ashish Jain
I would say if export remains at this level that is currently going on, we will achieve 15% plus EBITDA. If exports increase, we will be in a much higher and a better position, 18% plus…
Yash Dantewadia
Exactly. That was the answer I was looking for. Also one more question on the land bank side, are we going to see any sort of land bank monetization going forward to strengthen the balance sheet or any anything on that front because I do know that we have a lot of land bank?
Anil Kumar Mittal
No, we have a lot of land bank, but we don’t want to sell anything. It is all in use. So, we use all the land in storing our paddy and all in — we have got about 5 million square foot of warehouses and the open land is used for storage of paddy and we are buying more land rather selling. There is no question of…
Yash Dantewadia
Okay. Also on the whole sort of…
Operator
Sir, I’m sorry to interrupt. Could you return to the question queue?
Yash Dantewadia
Yeah, I’ll do that.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rishab Bothra from Anand Rathi Shares. Please go ahead.
Rishab Bothra
Hello, sir. Good afternoon. Am I audible?
Ashish Jain
Yeah. Good afternoon, please go on. Yeah.
Rishab Bothra
Sir, just two, three things. Can you split our revenue in terms of retail network, online and the quick commerce and institutional?
Ashish Jain
Can you please repeat that question again?
Rishab Bothra
I wanted to understand the revenue mix with respect to our retail network, institutional clients like HoReCa, quick commerce and online?
Ayush Gupta
E-commerce online actually they are very involved there’s very different categories. What we can you kind of give you is that our consumer pack business, almost 30% saliency comes from the monetary e-commerce business and 70% comes from the general trade business, the consumer pack business. The bulk pack business is mainly from general trade.
Rishab Bothra
Okay. Got it. And sir, I understand we are almost 100 plus old entity, Khushi Ram Beharilal is what I understand. I covered the top 2006 to 2010 and has started looking at again. What would be the basmati rice market in India and non-basmati rice market in India? Plus, I guess we are the top player in the listed space. What is our ranking in unlisted space in basmati? So, two questions. One is our ranking in listed and unlisted space and another is what is the market size of basmati rice and non-basmati rice in India?
Anil Kumar Mittal
You see Basmati rice, according to our estimate is about 2.8 million tonne. This includes the sale of broken rice also. And out of 2.8 million tonnes, the branded segment is only about 0.75 million tonnes. Out of 0.75 million tonnes, 40% share is held by KRBL Limited. If you talk of the loose rice, which is about 2 million tonnes, there is no data who is the king and it is that is a very open and loose market. You don’t know who is the king. And non-basmati, non-basmati is a ocean. It’s just 80 million tonne market. You don’t know. And I am in a market of which I am competing because I am in a specialty rice, aged rice, which is above INR70, INR80 a kilo, which is about 5 million tonnes. So, I am in a ocean of 5 million tonnes instead of 100 million.
Rishab Bothra
See, because what I sense is the market, everyone wallets — I mean pocket sizes are increasing. They can spend, migrate from non-basmati to basmati. But when I look at companies, there are handful of companies in the listed space and the growth rate is not that encouraging which it should have been. I mean, why can’t we grow at a faster pace? I understand that aging of rice is required, but lot of people are investing in lot of companies and I don’t think there could be any shortage of fund for us to avail either from the debt market or from the equity market. So that is what I wanted to understand. I mean in terms of growth path, how can we scale up the growth?
Ayush Gupta
I just confirm what you’re asking. I think your question is that there is with rising incomes, people would generally want to upgrade to basmati or switch to Basmati. If that is the case, why isn’t the growth higher? Is that your question?
Rishab Bothra
Correct, sir. Correct.
Ayush Gupta
See, actually, what we have, Rishab, what we have seen in the India market, regional rice is a preference, is a food preference. It’s not easy to convert a regional rice consumer to a basmati rice consumer. Down south, basmati rice means biryani. Only when they want to consume biryani, they use basmati rice. For the everyday rice requirement, they use their Sona Massori, Wada Kolam, and other varieties that are grown there. And as such, India has more than 8,000 to 10,000 varieties of rice and every region would love to consume the rice that has grown in that region. Basmati, yes, the crown jewel in terms of the overall rice fraternity, but it holds a very special position in terms of special dishes.
North and West basmati is used for everyday consumption, but North and West, the consumption is of broken basmati rice, not of full grain. South and East, basmati is consumed mostly in the full grain, but again, it is used for special dishes and festive occasions, right? So, rice in India is, I would say staple and regional rice holds its own position. So, it’s really not a question of income and affordability, it’s a preference of taste. People who prefer regional rice continue to eat regional rice. However, as a brand, India Gate, we are leading from the front. We are communicating with our consumers and we are persuading them to switch to basmati rice in certain markets.
Our South campaign, regional campaign is actually a step in that direction, where we are telling consumers to cook lemon rice, tamarind rice, eat samber rice with basmati, which could elevate their dishes. But that’s a long term effort, something that ITC would have also done in the past five, seven, 10 years with atta in South market. So, we are now coming up with those efforts where we feel saturation has come with our high market shares, especially in the South market.
Rishab Bothra
Thank you, sir. Thank you for your detailed explanation. But what I understand, I mean, I am always trying to look at companies where they can multiply their growth. I mean, they have companies which have gone first in the right space. There are new entrants who are on the unlisted space. I mean Adani, Wilmar, I think all major retailers are packing products. My only sense is in last 10 years, our revenues have doubled, whereas Rei Agro has gone burst. So who has taken the market share of Rei Agro. LT Foods have grown at a faster pace than us.
So, my only worry is why we aren’t able to grow? In commodity, it happens that every two, three years, people start building up capacities. Our capacity at Dhuri has remained at 150 tonnes or lower near about that range. So, I wanted to get a sense, what are we doing directionally that we are not reaching that scale? Also, is there a strategic in distribution pushing the dealers or distributors in a different manner wherein growth can come at a faster pace? I mean, explanation was complete bang on in terms of different geographies, but if you could just highlight.
Anil Kumar Mittal
Actually, we are evolving on this question time and again for last three, four quarters. First of all, let me clarify that we have the largest manufacturing capacity. The number of players in last five years have just doubled. If there were, let us say, 40 players, about 20 years back, there are more than 150 players or 200 players at the moment playing in basmati rice. Bulk business have definitely increased. As far as blended business is concerned, we are concentrating on that business because the margins are better, EBITDA is better.
We don’t want to go on to the business which have 4%, 3%, 2%, there is still plenty of business which is being concluded under private label at 3%, 4% or maximum you can say 5% and that’s also not a very good business. We call it a dirty business. We don’t want to enter that type of businesses where mixings are there, blends are there. So, we are into neat and clean business. So, as far as basmati is concerned, definitely we have to take acceleration on export, I do agree. But as far as domestic is concerned, it is a phenomenal growth. I don’t think so the growth what KRBL is doing anybody can even dream for that.
Rishab Bothra
Thank you, sir. Thank you.
Ashish Jain
I would say we would have almost doubled our turnover in the India market. Our market share positions have increased from 32% up to 38%, 39% in the last month actually. So, I think there’s some bit of misunderstanding in how we are doing in the India market. There is a weak competition in the category.
Rishab Bothra
Thank you. Thank you, sir. Thank you. We’ll study more on the coming.
Operator
Thank you. [Operator Instructions] The next question is from the line of Naitik from NV Alpha Fund. Please go ahead.
Naitik Mutha
Hi, sir. Can you please give us the realizations in both export and domestic markets?
Ashish Jain
Yeah. In the domestic market, the branded basmati realization was around INR77,000 per tonne, while in export it was around INR1,45,000.
Naitik Mutha
Okay. My second question, sir is on the — what kind of investments would be required in the Saudi Arabia office that you are going to set up and envisage?
Anil Kumar Mittal
It is too early, is that first the permission come. We are working. It is very recently, about a month back only I went there. We are working on that each and every aspect of it. Investment will not be that bigger problem to us. But let us — the most important is the permission.
Naitik Mutha
Right, sir. Got it. And on the realization front, sir, what was the realization same quarter last year, I want to see the movement in realizations, domestic and export both in last quarter same — last year same quarter?
Ashish Jain
Yeah, in domestic, it is flattish over last year, right? And on the export side, we’ve seen an increase of about 10% over the same quarter last year.
Naitik Mutha
But sir, we’ve seen volume growth of 10%, but domestic volumes are only — the domestic total revenues increased by only 5%, we are saying the realizations are flat, so it’s not adding up.
Ashish Jain
Yeah. I think the — see, when we report domestic revenue, it comprises branded as well as the unbranded side. So, on the unbranded side, this time we’ve seen smaller revenue, which is why the aggregate is at 5%.
Naitik Mutha
Sir, my one more question. Right, sir. Sir, my next question is the kind of gross margin decline that we have seen is higher than some of our listed peers. So, I just wanted to understand that a little better. What is leading to the higher decline in gross margin?
Ashish Jain
Yeah, I’ll explain that. So see, if you look at H1 of last year, our gross margin was at 29%. This included around 1.7% benefit of a one-off reversal that we had done. So that will get you to about 27.3%. From 27.3%, we have reported 24%, so which is about 3.3%. Now this is largely because of the fact that I had mentioned, which is we’ve seen a 7% increase in paddy cost, while the realization in the period — actually in H1, we’ve seen an 8% increase in paddy cost, while the realization is only 2%. So, these are the two main reasons.
Naitik Mutha
All right. And sir, my last question, you also mentioned that the amount of provisions taken has increased. So, if you could give that amount, how much it has increased and why is that increased?
Ashish Jain
Yeah. The provision has increased. I mean, just out of prudence we provided for some receivables, that’s the only increase. So, the total provision that we created on that account in H1 is about INR17 crores.
Naitik Mutha
Sorry, I didn’t get the number.
Ashish Jain
INR17 crores as against INR11 crores in H1 last year.
Naitik Mutha
Got it, sir. That’s it from my side. Thank you.
Ashish Jain
Okay.
Operator
Thank you. The next question is from the line of Anuj from M3 Investment. Please go ahead.
Anuj Sharma
Yeah. Thank you for this. Sir, based on SEC [Phonetic] inventory on Q2 FY ’25, both paddy and rice, it is very similar to last year, just maybe a 10 million tonne difference. Based on current prices, what is the sensitivity to how much inventory we can build given the lower prices? Any range or any — how do you basically determine inventory level?
Ashish Jain
So, you’re saying that our current inventory level is very similar to that last year. Based on what’s going on in the market, how much more can we build?
Ayush Gupta
No, we will be buying — last year we had a very heavy inventory, but we’ll be buying something plus there last year.
Anuj Sharma
Okay. All right. See, in exports, are we now certain that we will have to go through our own setup or is it still contingent if we get some distributors in the next three, six months?
Anil Kumar Mittal
No, we are trying both because many times we have been received by distributor, but we are trying both because I have been to Saudi and I find a good potential. So, I’m not going to leave that option with KRBL. We will definitely have that option of opening an office, but simultaneously, we are watching for good distributors as well because we have time of three to four months.
Anuj Sharma
Okay. Okay. And this applies to HoReCa as well? We will go through our own setup in HoReCa or HoReCa is clearly marked for distributors?
Ayush Gupta
No, no, definitely, HoReCa. Let me tell you, the Saudi market is 45% is general trade, 25% is HoReCa and 25% is modern trade. This is the segment is like this.
Anuj Sharma
Okay. But we will if we set up our own, if we have our own setup in Saudi, let’s suppose if that is what it is, HoReCa we will keep searching for distributors or we will pass it through our own channel also.
Ayush Gupta
See, it all depends upon the results. We are going to — we cannot enter everything in one go. We are going to wait and watch. We will see how much capability or how much resources we have to get the market slowly, slowly. It will not be overnight that we are going to capture the whole market. We we will start with modern trade and little bit of general trade and slowly, slowly as the results will be in our favor, we are going to take control of the total business.
Anuj Sharma
Okay, got it. And again, one more point on this. So you said it is a matter of approvals. So, these are procedural in nature or there is more to it in terms of permission for Saudi setup. I mean everyone has to go through it and it is just matter of time or it could be that some get and some don’t get.
Ashish Jain
Anuj authorities who review it thoroughly, so it is not just a matter of procedure. They review thoroughly and then approve or otherwise.
Anuj Sharma
All right. And these would be the Saudi authorities?
Ashish Jain
I mean more in India, less in Saudi, but both authorities review it
Anuj Sharma
Okay. And my last question again on export, you talked about some professionalization. So, are we expecting some strengthening of management bandwidth in India as well for the export market or it will be just that particular setup which you will see professionalization?
Anil Kumar Mittal
So, professionalization we are discussing in Saudi Arabia here, so whatever setup we have, I think so it is more than sufficient move to regulate that business. We are going to control from here and rather now we travel once in about six months or five months, then we will be traveling every month to look into the whole process and the results.
Anuj Sharma
All right. Yeah, thank you so much for the answers.
Operator
Thank you. [Operator Instructions] The next question is from the line of Mohammed Patel from Care Portfolio Managers. Please go ahead.
Mohammed Patel
Yeah. I have one question. So, how is the trend of exports for the month of October and November?
Anil Kumar Mittal
That number we don’t have at the moment, but we are doing good. We are doing good, but numbers are not with us.
Mohammed Patel
Much better than the first half?
Anil Kumar Mittal
Yeah, much better than the previous quarter. Yeah, definitely, much better then and you will now find every quarter having better numbers.
Mohammed Patel
Okay. Thank you.
Operator
Thank you. The next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.
Rohan Patel
Hello, thanks for the opportunity. My question is regarding that, as you mentioned that we have brought two wholesalers in Saudi Arabia market for retail. So, considering that this distribution will take some time as you are also setting up your office. So, with the current two wholesalers, like how much business we can generate till the time you appoint a distributor for say, general trade and modern trade, if you can help us understand.
Anil Kumar Mittal
Quickly, let me tell you, Ramadan is coming in March and January, February, March is going to be a lead season. It is difficult to predict that how much quantities they are going to lift or they are going to order because we are into branded business. It is not a private label, it is all India Gate brand basmati rice but I expect good orders will come. We expect good orders will come.
Rohan Patel
Okay.
Anil Kumar Mittal
See, I don’t want to give numbers, see in sometime in February for the third quarter and you say, the numbers are not as per the expectations. So see, giving numbers at this stage will not be appropriate for me.
Rohan Patel
Okay. I get that point. Considering that our tone was a little bit pessimistic in previous quarters when it something like topic came regarding Saudi Arabia. So, now the actions that you are taking, so now can we say the worst is behind and now things are progressing and it will carry on from over here into much more positive and better territory for us?
Anil Kumar Mittal
Yeah, yeah. If we have our own office, I believe everything being cleared by the government of India and Saudi government. I expect in my five days visit this time, we see that it should not be any problem in getting our glory back what we used to have seven, eight years back, six years back.
Rohan Patel
Okay. And the other thing in regarding Europe, like you have said you made some bulk exports to Europe via Dubai that to — so as per annual report, like you mentioned that like Europe is somewhere around 11% of exports, which somewhere comes to INR145 crores, INR150 crores. Now considering that pesticide residue issue is behind us, so how much can you scale up? Like I’m not asking for a specific number, but I’m asking that going here on, how are you — like what are your plans? How bigger you want to take it to, like if you can provide any qualitative insight for us?
Anil Kumar Mittal
Yeah, let me tell you, I don’t know if I have done some mistake. The business rooted through Dubai is for Iran, it’s not for Europe, number one. And Europe will start from 15th December and we are expecting — see, it is not a branded market for us as far as brown bulk export to Europe is concerned, but we have very good close contact with the rice millers in various parts of Europe and we expect we should do minimum of about 50,000 to 100,000 tonnes — 50,000 tonnes business minimum. I should not accelerate 50,000 tonnes of bulk business other than we do little bit of — we are doing a good business in our own brand white rice business, which is also growing, but the numbers are not big. That’s why I never discuss with you. But brown basmati business is definitely a big number and we expect this year to conclude around 50,000 tonnes.
Rohan Patel
Okay. And just you made a correction that bulk export was to Iran. So, considering that Iran was more of an on and off market for us due to political issues, so how is the Iran and Iraq market right now? Like are the — the bulk export that you make and can it be more stable? And can we expect that to be a more of quarterly event for us now?
Anil Kumar Mittal
No, it could be like this. One quarter is zero, but other quarter is just double than the previous quarter. It is not a consistent business that every month we have been exporting. But even then let me tell you, rather saying zero exports to Iran via Dubai, it will be a good number this year.
Rohan Patel
Okay. Yeah. Thank you for answering my question. That was from my side and best of luck for future.
Operator
Thank you. The next question is from the line of Aditya Yadav from Transient Capital. Please go ahead.
Aditya Yadav
Hi, thanks for the opportunity. Am I audible?
Operator
Yes, sir.
Anil Kumar Mittal
You are audible.
Aditya Yadav
Sir, till two years back also, we used to be around INR1,500 crore, INR1,600 crore kind of turnover used to have in the export markets. And so definitely, we have discussed in detail how Saudi has been a troublesome area for us regarding the distributors and everything and we’ve had troubles nailing a distributor, proper distributor for past seven, eight quarters. But the entire delta, if we had to get back to the original levels of, let’s say, INR1,600 crore, kind of, INR1,700 crores of sales, so the entire delta will come from Saudi or how does that work? And let’s suppose — I mean Saudi situation normalizes in, say, a year from now, can we expect further growth like how the domestic sales have been growing well?
Anil Kumar Mittal
See, as far as consistence in business is concerned, Saudi is definitely a very good market and it is — and it can give us a very good revenue as we used to get about seven, eight years back, no doubt about it. But this year alone, when I say this year, it means not the financial year alone, it could be starting from the second quarter up to the second quarter of ’26, we are expecting a good turnover from Saudi Arabia. Expecting definitely good turnover.
But let me you tell, whether Saudi Arabia, Iran is also a good market. Europe is also a good market. These two markets, that’s very good market. So, all the markets together reaching to a INR1,500 crore or INR2,000 crore is not a — INR1,500 crore, we would like exceed. INR1,500 crores should not be difficult, but we are quite positive this year. Let me tell you, looking to the prices in India, looking to the quality and compliant material available in India, we are confident that KRBL will be able to do good business in export as well.
Aditya Yadav
Sir, my next question is a two part question. So, as we’ve struggled in the export market, so our competitors, our number one competitor also has done very well and other people have also done well. So — and it’s been a long while, it’s been a long while. So, I remember the remarks you’ve made previously that you feel very confident that in Saudi also India Gate is a very strong brand and you should be able to recoup the sales once you have the supply chain part figured out. But don’t you feel that it’s been too long now and then it will definitely have — definitely you’ll have some struggles where just to gain back the market share, it may take a bit longer or the branding sizes and everything. It might be a bit of struggle. It might not be easy walk to just regain the loss load because it’s been a very, very long while. That’s like my question.
Anil Kumar Mittal
See, in my opening remarks, I’ve already mentioned why we had made two wholesale distributors just to confirm that our brand is not out of the shelf. The presence of the brand in the shelves. And that is one of the reasons we made these two wholesalers. See, one thing was good that the wholesaler was also amazed when they imported the stock. It never took much time for them to liquidate the stocks. And we have got now fresh orders more than 3,000 tonnes from Saudi, which we have to export by end of December.
Aditya Yadav
Okay. Nice. If I could squeeze in one question more.
Ashish Jain
Yeah, go ahead.
Aditya Yadav
Sir, I mean the company overall is in a strong financial footing and so basmati definitely has its own cycles where the raw material price and your paddy procurement price and everything, it varies according to the season and the supply and everything. But overall, what we saw in the last five, seven years, the management of the company over the cycles has been very nice. So, the margin compression even when we were carrying high priced inventory was not so much, whereas this year, it’s been a little bit on the higher side. So, any comments on that? Whereas like previously, we’ve managed very well through the cycles of, maintaining our quantities and everything and maintaining the margins through the cycles.
Ayush Gupta
Yeah, you see, we are carrying high value stocks. Yeah, we were not never under pressure. This year there was little bit of pressure because of little bit of export pressure. The whole stocks were there because we could not liquidate because of exports. The delay in liquidation took place, that’s all. But this delay will go up to 31st March of this year, March of this — I mean, the financial year. Next financial year, the stocks will get liquidated and everything will be right. And we think we should buy more this year. And next year, we are expecting the crop because basmati is a cycle. If one year the prices are less, the next year prices are more. This actually, last 20 years we are seeing. So this year, our stock inventory should be higher than last year. So, our inventory position in next September ’25 should be the highest ever. I’ll give one thing.
Aditya Yadav
Yeah, sure, sir.
Anil Kumar Mittal
No, you have to say if you look into our communications, everywhere we mentioned that we have a two year aged rice. Now when you have to have a two-year aging rice, it means you have to keep rice for two seasons. It means we are still having rice, which is ’23 — part ’22 and part ’23 also. And if you go in the market and you say, I want to pay INR200 a kilo, give me two-year old rice, there is nobody who can offer you except KRBL. So, we are having such brands which get us a very good premium. That’s number-one. And number two, as I rightly said, because of our estimation of wrong export quantum, little bit quantities have been left over, but we had to keep those quantities for the aging purpose. If, let us say, tomorrow an demand comes of 5,000 to 10,000 tonnes of one year-old rice, then it is difficult for us to supply or make shipment accordingly. So, that risk we have always taken and that risk has always paid us also.
Aditya Yadav
All right, sir. Thank you. And that’s all from my side. If there’s anything further, I’ll get in touch offline. Thank you.
Operator
[Operator Closing Remarks]