KRBL Limited: Rice to Riches; Cultivating Value in the Global Rice Market

“One other important tailwind expected to come for our business is the introduction of the new basmati standards by FSSAI with effect from 1st August 2023. Over the years, due to mass commercialization, there is a significant amount of adulterated basmati available in trade, making the prime objective of this regulation to safeguard the integrity of the grain and maintain an authenticity of flavor and taste. This resolution will have a number of positive impacts within domestic business scenario. First, increased literacy within the trade and subsequently consumer on basmati quality. Second, eradication of players indulging in unfair business as basmati adulteration practices, leading to consolidation of market share amongst top branded players.”
-Ayush Gupta, Head, Domestic Business

Stock Data

Ticker	KRBL
Industry	FMCG
Exchange	NSE & BSE

Share Price

Last 1 Month	-13.6%
Last 6 Months	-1.7%
Last 12 Months	63.9%

Business Basics

KRBL Limited is a leading basmati rice company based in India. The company is primarily engaged in the business of cultivating, processing, and marketing of basmati rice. With a rich heritage spanning over 130 years, KRBL has established itself as a trusted name in the rice industry. One of KRBL’s key strengths is its backward integration, as it owns and operates rice mills and processing units. This enables the company to have control over the entire value chain, from seed selection and cultivation to processing and packaging. KRBL’s state-of-the-art facilities are equipped with modern technology and adhere to stringent quality standards to ensure the production of premium quality basmati rice.

The flagship brand of KRBL is “India Gate,” which is widely recognized and preferred by consumers both domestically and internationally. The brand represents the company’s commitment to delivering high-quality basmati rice that is known for its long grains, distinct aroma, and exquisite taste. India Gate has gained significant market share and enjoys a strong brand presence in over 90 countries worldwide. In addition to the India Gate brand, KRBL also offers other brands such as Nur Jahan, Doon, Unity, and Lotus. These brands cater to different consumer segments and provide a variety of basmati rice options to meet diverse preferences and culinary needs.

KRBL has a robust distribution network that spans across various channels, including retail, institutional, and exports. The company has established strong relationships with distributors, wholesalers, and retailers, ensuring wide market reach and availability of its products to consumers.

Q4 FY23 Financial Performance

KRBL Limited reported Total Income for Q4FY23 of ₹1,323 Crores up from ₹994 Crore year on year, a rise of 33%. Consolidated Net Profit of ₹118 Crores, up 8% from ₹109 Crores in the same quarter of the previous year. The Earnings per Share is ₹5.01 in this quarter.

Updates On Company’s Basmati Production & Export

On a year-over-year basis, the total volume of basmati sales fell by 14%, but a 19% increase in realization made up the difference. Domestic basmati volume was lower in Q4 compared to Q3, owing to the festive season in Q3. Due to a higher percentage of low-margin basmati sales in Q4, the gross margin was lower than in Q3. A higher percentage of non-basmati sales were made in the fourth quarter compared to the third, accounting for 11% of all rice sales in Q4 as opposed to 3% in Q3. According to the management, the trend in sales of branded basmati is still positive.

On the export front, lower bulk exports resulted in a 2% decrease in basmati sales volume in FY 2023. However, revenue increased to ₹331 crores, up 18% from the prior quarter. Due to no bulk basmati sales during the quarter, branded basmati sales increased by 11%, but overall basmati sales were flat in value terms. Nevertheless, realization was up 38%. The company’s overall basmati sales volume increased by 4% in FY 2023, while realization increased by 29%.

Global Rice Production & Export

The current estimate for the world’s rice production for the marketing year 2022–2023 is 512.6 million tonnes, 2.4% less than the record-breaking 525.1 million tonnes reached in 2021. The primary causes of the 12.5 million tonne production shortfall worldwide are decreased output in China, Pakistan, Sri Lanka, and Nigeria. Due to inclusive measures taken by nations like India, which has banned the export of 100% non-basmati broken rice and implemented an export duty of 20% on non-basmati white rice, the global rice trade, which peaked at 56 million tonnes in the years 2021–2022, has decreased to 53.6 million tonnes this year. These precautions have limited exposure to China and African nations, which are the main importers of broken rice from India. India is anticipated to produce 130.8 million metric tonnes of rice in the marketing year 2022–2023 (which includes the kharif crop of 2022 and the rabi crop of 2023).

Regarding the outlook for the rice industry in 2024, the most recent USDA estimate predicts that during the crop marketing year 2023–2024, global rice production will be close to 520 million metric tonnes. From 521 million metric tonnes in 2022–2023, 523 million metric tonnes of rice are anticipated to be consumed globally in 2023–2024. The most recent USDA estimates predict that India will produce 133 million metric tonnes of rice during the marketing year 2023–2024 and 10 million metric tonnes of basmati rice.