KRBL Limited (KRBL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the KRBL's conference call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.

Thank you. Welcome to today's call hosted by KRBL to discuss some measures taken by the company to address the COVID-19 situation. We had canceled the previous conference call on this subject, so before we commence today, apologies for that. Today, we are joined by senior members of the management team, including Mr. Anil Kumar Mittal, Chairman and Managing Director; Mr. Anoop Kumar Gupta, Joint Managing Director; and Mr. Rakesh Mehrotra, Chief Financial Officer. They propose to commence with an update with Mr. Anoop Kumar Gupta, JMD; and he will be followed by Mr. Anil Kumar Mittal, CMD, who will share his perspectives with you. After the opening remarks from the management, the forum will be opened for an interactive question-and-answer session. The company is yet to declare its financial results for quarter 4 and FY '20. Therefore, all analysts and investors are requested to kindly not ask questions pertaining to quarter 4 and FY '20 periods as the same will be unpublished price-sensitive information. As a cautionary note, certain statements that may be made on today's call could be forward looking in nature and actual statements could vary from these forward-looking statements. I would now like to invite Mr. Anoop Kumar Gupta to share his initial remarks. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for being with us on the call. I wish to take the opportunity today to present my thoughts on the impact of COVID-19 on the basmati sector, our business and also share some thoughts, insights on the way ahead. You would appreciate that as an essential food company, we have witnessed a sudden increase in requirement from the retail channel. This was on the back of consumer advancing their purchasing in the light of the lockdown nationwide. We have seen a quantum rise in volume dispatch, especially in the online channels to the extent of 2x than the usual. The modern retail formats have increased their volumes by almost 75% since post-lockdown, and this trend has continued to be. However, [indiscernible] toughness. This is a segment that services to the [ hotel ], restaurant and catering industry. And naturally, it is a reflection of the momentum in the business. So we believe that this segment will take a bit longer to turn around, but we remain confident that it will because there is really no alternative to the kind of basmati on the menus that branded companies like us can provide. We have seen similar good trends in our overseas business and Anilji, our CMD, will be sharing his views on the same in detail. We have sufficient quantities of both basmati rice and paddy as we have one of the largest processing and storage facilities in the world. During the recent procurement season, we have been able to buy highest-ever paddy as there has -- as there was a decline in prices. Even with the present trends in demand, we will be in a position to meet the requirement of the markets. During the first few days of the lockdown, we did experience some constraints in transportation and labor, but we have tirelessly worked with the local administration to streamline the process. The government remains very supportive of the essential foods industry, and thus, we expect the situation to progressively improve. To give you some perspective into how we have responded as a corporate to this pandemic at the outset, we implemented our business continuity program to ensure a seamless transition to work remotely away from our offices. The IT system are secure and have been tested for robustness. Except for the very essential staff that is required at the plant level, we do not see a need for not working remotely. Our teams are monitoring the situation on a real-time basis and adhere to meet any challenges. Although it is too soon to call out a definite trend in terms of consumption behavior, I have a few observations to share. Customers are broadly recognizing the health, hygiene and safety aspects of branded products domestically. Export markets will remain strong and diversification across geographies and key export markets will be a strength. The importance of multi-channel sales approach cannot be emphasized enough. A strong business model, combined with the robust balance sheet, gives flexibility required to adapt to any situation. I'm confident that when a nation, we would -- when as a nation we would move towards normalization, we will be able to stand out as a trusted brand which is the essential food and emerge even stronger as a company. The impact of our financial performance for the prospective quarters cannot be immediately quantified, but I can share that we are placed on a safe bucket. And in a few weeks' time when we do share our annual performance, we shall give a broader insight into the outlook of the next fiscal year. With that, I would like to draw my remarks to a close and request Anilji, our CMD, to share his thoughts with you on our exports to the broader industry and overall business. Thank you.

Yes. Good afternoon to everybody. I thank you all for being on this call. This conference is being organized primarily to understand KRBL's working scenario during this current COVID pandemic and its impact on our operations. Though Anoopji has already briefed you a little bit, which I'll not like to repeat the things, but I'd like to add my thoughts into it. We had to stop our milling plants in Punjab and Dadri just for 3, 4 days. Rice being an essential commodity, we got government permission to run the plants thereafter. However, there were other challenges such as availability of labor, logistics issues, lack of courier services and transportation restrictions. However, we managed to overcome the obstacle with meticulous coordination with the local bodies and the government departments despite of odds. As of -- our Dhuri, Punjab milling plant is running at 60% capacity, whereas our packing unit is running at around 80% capacity. The major challenge we faced in Dhuri is the availability of packing material, whether plastic bag or a carton or a jute bag because they are connected with jute industry, paper industry and poly industry. Similarly, our Ghaziabad milling plant is running at around 65% capacity, which I think since yesterday has come on 95% capacity, and the packaging unit has been run at 75%. Things are improving, and I'm confident that within next 1 week, all obstacles will be resolved and both our plants will be running at their full capacity. But it all depends upon what would be the future reaction of the government on pandemic. However, I must say that these 30 days were very hard on us, but the worst is behind us, and I'm sure that we are certainly going to get better and stronger with each new day. In spite of the global lockdown, the demand of rice is picking up. We have sufficient export orders in hand, and the execution of the same did look so difficult on 22nd of March, but it now seems that we will be able to fulfill our obligations without any problem. And we are also in a position to meet the increasing demand for rice, both globally and within the country. Apart from COVID, Indian rice exports are facing hurdles in market such as Iran and Europe. As we all know, Iran has been seriously affected by the pandemic, besides, they're also facing U.S. sanctions. On top of everything, the bigger problem with Iran is the availability of funds. A year ago, India was having an amount of around INR 16,000 crores to INR 20,000 crores lying in their escrow account against crude supply. And the same has now been come down to about INR 2,000 crore to INR 3,000 crore, which is, too, lying with IDBI Bank. The money lying with the UCO Bank has almost finished. Because of this, the country has severely cut back on subsidies on rice imports. This is important for you to understand that there was a subsidized currency in Iran provided to the importers by the government for the import of rice, that is 4,200 toman for $1 and about 15,000 toman to 16,000 toman for $1 for the open market, which is known as Nima, N-i-m-a. Now the government has announced that there will be no subsidized rate for the currency for rice imports except for USD 200 million allocated to GTC Iran for importation of rights from any part of the world, including India. It's my personal opinion, GTC Iran will buy only from India against this subsidy. Therefore, it will cost 4x the current prices for the private importers in Iran as compared to government purchases. We at KRBL have been doing business only with GTC Iran and, hence, we are in an advantageous position. I would like to also mention over here that recently the notification had come whereby Iran had allocated around USD 4 billion at subsidized rate. And the items for those subsidized rates are around 6 million tonne of feed, 2.4 million tonne of soya, 1.5 million tonne of soya meal, 1.1 million tonne of oil, 1 million tonne of feed barley and this is total for $4 billion, out of which $200 million for rice, that's only for the government departments. So this is the position of Iran, as I mentioned. Any particular more question you want, that will be in question and answer. As regards to Europe, this was the market for about 400,000 metric tonne annually for India, which came down to around 200,000 metric ton last year. And this year, up to February 2020, India has exported around 180,000 tonne. This could be a mistake by 5,000, 10,000 tonnes. Out of which, 90,000 metric tonne has gone to the U.K. alone. Indian basmati exports to Europe are taking a beat due to their restrictions of pesticide residue levels in the rice. The issue is serious and collective efforts are made by the farmers, exporters and the government to reduce pesticide usage at farm level. Following Europe, there were other nations like U.S.A. and few countries in the Middle East also which have imposed norms for pesticide residues level, but their norms were quite lenient. That was one of the reason that the exports to other parts of the Middle East, including U.S.A., has been taking place without any hurdle. However, major rice importing nations in the Middle East are Saudi, UAE, Kuwait, Oman, Qatar, Bahrain, which includes Iraq as well, and there are no pesticide issues. It should be noted that these nations together account for about 45% of India's total basmati exports. Hence, though the issue of pesticide residue norms is a matter of concern, India's overall basmati export look out to be quite strong as always it has been. And KRBL continues to reign in this arena as it has so far been. As far as orders are concerned, we have full of orders. There has been a sudden spurt in the demand because of the corona lockout, and the consumers are rushing to the store to buy good quantities of rice in the respective countries. That is one of the thing, and we are able to cater the demand whatever is coming in spite of so many odds due to corona. I have given you a brief glimpse of overall basmati export situation and KRBL's position. If there is any question, we'll -- let us discuss forward. Thank you.

[Operator Instructions] The first question is from the line of Shailesh Kumar from Sunidhi Securities.

I have a few questions. The corona endemic situation in Pakistan, which is competing with India for basmati export, is equally bad. So because of this event, what is -- how their export has been impacted? And how it is impacting us as a country and KRBL as a company? That is the first thing. Second thing, because of the disruption in global logistics and demand, how has prices of basmati rice been impacted in last, say, a month and 45 days?

Yes. Let -- as far as -- your first question was on?

Pakistan's export and the...

Yes. Let me tell you, first, you have to understand that India produces around 6.5 million tonne -- around 7 million tonne, out of which 4.4 million tonne were for exports and around 2.2 million tonne is for the domestic market, whereas Pakistan total production is around 700,000 tonnes. Out of 700,000 tonnes, they have 150,000 tonnes of domestic consumption and 550,000 tonne they export. So as far as the quantums are concerned, there is no match [ between ] India and Pakistan. What opportunity Pakistan got was from the Europe. Europe was our market of 400,000 tonne and Pakistan was just 30,000 to 40,000 tonnes. Pakistan this year has exported 200,000 tonne alone to Europe, and they have eaten up our market of 200,000 tonnes. That is the -- that is one major setback which Pakistan was able to give us. Because in Pakistan, nobody uses the pesticides because of poor farmers. And hence, their pesticide residues match with the European demand, number one. Second, Pakistan has already, in few markets like Indonesia, Malaysia which are known to be favored -- under the category of favored nation, thus, they have a border of Afghanistan, they have a border of Iran, they have a border of Kazakhstan and many other borders. And they have been using those borders for smuggling basmati rice, not in 10,000, 20,000 tonne but hundreds of thousand tonnes. And that hundreds of thousand tonnes was never our market, so it has not affected us. If something has really affected us, India won the European market. That is something was a matter of concern to us. What was your second question?

Pricing behavior in last 45 days due to price and disruption?

As far as pricing is concerned, this year, we had a good crop. Initially, it was brought to the notice of the trade, and those mapping reports were not correct, that I have been speaking to in each and every forum. Though we spent a big money and that mapping is done through Government of India, that is APEDA. But the numbers which came out in the mapping were not correct. And the crop this year was more or less same, or as you can say even 2%, 3%, 4% more than the last year. So there was no shortage of crop. That's number one. Markets have been depressed since beginning. If you compare to last year, the paddy prices compared to last year were around 20% lower than this year -- 20% last year were higher than this year. Therefore, from the very beginning, there was a pressure that export market will not show the same aggressiveness what they showed last year, and the major reason were Iran and Saudi. But let me tell you here -- over here that this year, Iraq, Saudi and many other Middle East countries have shown a good response towards India. And I believe that at least 30% to 40% shortage, which -- 30% shortage, which we got from Europe and Iran, it will cover up these Middle East countries. Prices are really depressed, no doubt. And after the new notification of Iran has come about the subsidized currency, there has been a further downtrend in basmati rice because that market is about 35% for India. And looking to the Nima prices, Nima currency rates, I think so Iran will import very less quantity this year compared to last year. So that is one fear in the mind of everybody. So those people, like KRBL, who are tied to only government of Iran, will be benefited. Otherwise, those who are dealing with the private trade, they will definitely get a setback. That's number one. Number two, one thing worrying for the trade was -- for which the prices have come down that last year, in FY '19, there were some exports worth INR 2,000 crore which took place in February and March and even April. That payment came to the exporters in the month of October because the payments were not released by the Iranians. And whatever we exported as KRBL, each and every payment came within 15 to 20 days in time. After getting such a big beating from Iran -- again I understand that from December up to February, people have again exported goods worth about INR 1,500 crores, and payment are held up because they were thinking that government will allow them subsidized rate. But now the notification has come and that INR 1,400 crore, INR 1,500 crore stacked up. Because of the financial issue, the prices at present in the market have come down by another 4%, 5%.

Okay. If you permit, can I have a couple of more questions, please?

Yes. Go ahead.

Yes. Sir, in case you had any thoughts for FY '21, the loss of business from HoReCa segment, will it be -- will we be able to compensate that from our retail sales, enhanced retail sales? Or you think HoReCa loss is going to hurt us?

This is our Anoop's question.

If you had invested, yes, there is a loss of HoReCa. Our -- we had around 20% share of -- which contributes to HoReCa. And practically due to COVID, HoReCa is practically 0. But I'm quite confident that due to COVID, hygiene, preference of package basmati rice to the consumer and our accelerated sales in modern and online channels, I'm quite hopeful that 20% loss will be covered. And during March '20, there was no loss at all. The loss was only in April. And maybe another for 2, 3 months, but that will be covered by modern channel and retail channel.

Yes. Just one thing, sir. Looking at our very strong balance sheet, and I believe because of favorable judgment on income tax thing, I believe our upward rating is due. And there is weakness in the interest rate scenario. So we believe our interest cost for FY '21 will go down as well. So -- and our stock price is also very depressed. So won't it be prudent to boost -- I mean, allocate some resource and buyback, so as to give further confidence to the market?

Yes. We can think of buyback, company can think of buyback. But let the COVID situation ease and we sit as a Board, then we can decide on the issue.

The next question is from the line of Sarvesh Gupta from Maximal Capital.

Sir, first question is, I have to look for the full year in which we are in. Middle East appears to be almost like 40% of our sales or something like that. Now in the Middle East the problem is also oil prices and the consequent loss of jobs and all the turmoil which is going on. Given that we are in basmati rice, which is sort of a premium offering, there can be a situation of down-trading by the consumers or reduction in the demand because they may be substituting it for a cheaper rice or not using -- or using cheaper brands. And given this oil prices turmoil, I mean, it is a major impact on the -- I mean, the income levels of our most important countries for export. So how do you read that for FY '21 and beyond? How do you read the situation, the oil price collapse?

Yes. It's a good question. We have been talking for last 1 month with so many customers, distributors, even competitors. And what was your worry or what you think about was the same, we wanted to know what would be the future in such circumstances. And there was a very logic answer to me. Let us say where the economies or the budgets are in trillions of dollars, Saudi Arabia is a big -- a very big economy. You know what is the total rise import? It's just around $2.2 billion, $2.3 billion. Out of which, 90% or 85% is basmati and 15% rices are from America, Guatemala or different this -- or glutinous rice from -- Japanoica varieties from different countries. You have to basically understand that people, those consume a particular type of a food, it is very, very difficult to change the food habit till the time there is a tremendous change and the things are not available and there is the chaos in the market. You have to basically understand that 70% of our market, which includes the Middle East, Iraq and the Persian Gulf, they consume 75% of Indian basmati rice or the total world's production of basmati rice, which is produced in Pakistan and India. Now these people, let me give you an example, if you go back about 10 years back in 2008 or '09, the total consumption of Iran of rice was around 6 lakh tonnes. Out of which, 1 lakh [ tonne ] is from India, maybe 1.5 lakh tonne from Pakistan, and balance was rice from Thailand, Vietnam, American rice, long grain rice like this. In last [ 10 years, ] they have changed their habit and they do not want any rice other than 1121 Sella rice in Iran. You talk the rich man or a poor man, they all want to consume 1121. That's point number one. And it is known as to be a middle segment food, 1121. The rich man food there is, they have a local rice, basmati called Domsiah, which is -- which has been sold to the consumer at around $4,000 per tonne or $4,500 per tonne, still the top segment of the society in Iran consumed that rice of $4,500 or whatever is the price. What I want to convey to everybody is whether it is Dubai, whether it is Kuwait, whether it is Saudi or any Middle Eastern country, they cannot consume or they have not -- they will not like any other rice other than basmati. So first of all, basmati consumption will continue. It is not a thing that it is just -- today it is there and tomorrow it is not there because they have to eat food, whatever maybe. They may not buy a car, they may not buy clothes, they may not buy other luxury items, but food is such a thing they are going to continue buying, and we don't have any intention as far as consumption is concerned, number one. Yes, I do agree. It will be too premature to say anything. We still do not know that what will be the final impact of corona, which path corona will take this world to be and what will be the impact on the pocket money and everything, this is too premature. But along that, let me give you one more example. About 15 days back, Saudi Arabia came out with a proposal to give about $1 billion or $1.5 billion to their importers, telling that you must build up the strategic reserves. Out of which, 60% said, "No, we don't want money. We have plenty of stock. We do not want government money." There are 15, 20 people who have opted for $200 million, $300 million. So what I'm saying in such circumstances where oil prices have crashed, even all the government, whether it is Iraq government or Abu Dhabi government or Saudi government, they are ready to fund the importers to have a strategic reserves of basmati rice.

Understood, sir. And the other one is Iran, so what percentage of our revenues comes from Iran? And I think GTC, you said $200 million is allowed and all of that is going to come to us mostly. So will that cover the existing revenues that we were getting from Iran?

See, let me tell you, I am expecting that 70% that business will come to India, and 30% it will go to other nations. So when I say $200 million, 70% is $140 million, which is equal to about INR 1,000 crores, which is about INR 1,000 crores. Now when I say you, at a concessional duty, it's a very big difference, 15,000 versus 4,200. I do not know this money will be given to them in piecemeal or at onetime because GTC imports about 300,000 tonnes of rice every year, basmati rice from India. And out of that 300,000 tonnes -- 300,000 is approximately today about -- 300,000 tonnage today about INR 2,000 crores. INR 2,000 crore or 300,000 in INR 70 a kilo, which is about...

INR 2,100.

INR 2,000.

INR 2,100 crores. So whatever it is, that amount will be given to GTC, but they will import only 300,000 tonnes. But there is one only question mark, since private import is worried and there will be no private import, I have a guesswork that GTC Iran might import instead of 300,000 tonne, 500,000 tonne. That is my apprehension.

You said GTC has a budget of INR 1,000 crores for India, and you are saying that they used to earlier buy 2,100 crores...

INR 1,500 crores. The $200 million into INR 75, it's INR 1,500 crores.

Yes. So that business will come down by 33%. Is that a right assumption?

No, no. Which business will come down by 35%?

If you were doing...

I said that GTC imports every year around 350,000 tonnes. If they have money up to 350,000 tonnes, they will import 350,000. If they have a shortage of money, they might go to the government, again, because I believe that the private import should come down by 25% to 30% because to them the currency will be allotted at the rate of 15,000 per $1 -- tomans per dollar, whereas GTC will be getting around 4,200 tomans per $1. This I'm telling you.

And how much are we getting from Iran, sir, total or what is the percentage contribution to revenues?

That I have not calculated, I didn't do. Let -- Mehrotraji, you take his question and tell him exactly how much is the percentage.

Yes, you can -- I'll reply. Sir, please send your mail to GTC, we will reply to you.

Sure. And sir, final question on the retail in India, what is the pricing trend because from the e-commerce side and modern retail, almost we have [ the same ], but you are saying that, that is getting compensated through other retail. So what is the pricing trend in India as such? Exports, I understand that prices are depressed because of variety of reasons that you...

[indiscernible] It's Anoop's question, I believe. Pricing trend, he's asking.

In the domestic market, sir.

Hello?

I'm asking pricing trend in domestic market, sir.

Pricing trend in domestic market is after the COVID and before COVID, there is no change. We are selling at the same price what we were selling at pre-COVID. So as of today, there's no change in the pricing trend. The prices we were selling in November, December, January, February, the price is the same. It is unimpacted.

Okay. So unlike exports where initially, you have mentioned, sir, mentioned that prices are a bit depressed and they fell further by 4%, 5% after Iran implication. In the Indian market, there is...

No, there is no change or there is no impact on basmati rice prices in the domestic market.

The next question is from the line of [ Saugandh Gupta ] from HDFC Mutual Fund.

My question is related to the previous question and to [ Sarvesh ]. You mentioned that the current paddy prices which you are procuring is down, but what you will be selling in export market would be something which you had procured maybe 1 year or 2 years back. So how does this pricing works out?

See, let me tell you, many a times we have told you and to our investors, and in many forums, that our strategy and our position is entirely different than rest of the trade. There are certain SKUs which we sell 2 years aged and there are certain SKUs, which is 1, 1.5 years aged. When we say aging, we do not sell steamed rice. There -- in rice, there are 2 qualities: one is white raw rice, one is steamed rice. The taste between the raw white rice and the steamed rice is hell of a big difference. And we get premiums out of that. There is a premium. And I give you an example. Today, my position is that about 15 days back, we, all member of the management, were sitting and we required -- we found the way the export orders are coming to us. We could never judge that -- we could never estimate that the export order due to pandemic will come in such an enormous quantum. So we feel that we will be short by 200,000 to 300,000 tonnes of India Gate classic. So we thought let us buy from the market. Let us see how it happens. You will be surprised to know there is not a single kilo rice 2 years old available in the market, which we are selling in India Gate classic. I'm just giving you these examples. Similarly, if you look at the prices today in Saudi Arabia, many things are to be discussed, which our competitors are -- I don't want to discuss on this. We have got a huge premium. You cannot even understand the premium at which our brands are being sold into the Middle East. And they're higher by 15% over the competitors.

So basically, it's fair to assume that our -- so our position will actually get more strengthened because of the current issues, even in export market?

See, it has already strengthened. We are worried of one thing only, let us be very frank. But as you rightly said, that today, there is a hue and cry in the market. People think what will happen after 2 months, whether exports will be banned, imports will be banned, what will happen, what is the position of India, what is we -- that is just a horror in the mind and people are taking the goods. We do not know the further impact of corona after 2 months. And if it continues and continues, lockdown and everything, definitely then the businesses are bound to get impacted. We will not be the only person who are not impacted and the whole of the world will be impacted. If such thing arises after 2 months, 1 month and it continues and continues, definitely, then our market will also be impacted.

The next question is from the line of Rajeev Agrawal from DoorDarshi Advisors.

My first question is you mentioned that you have too many orders that at some point, you were worried that you won't be able to service them. Given that, is it reasonable to expect that the volume, the total volumes that we will see in financial '21 will be similar to what we have seen in financial '20?

Financial year FY '21 is too far. Corona's effect started coming in the month of March, and we are just on 27th of April. The full 1 year is there for FY '21. As I told it to -- previously also, we do not know. It is difficult for us to anticipate that whether after 3rd of May or maximum end of May, it will finish, it will clear and things will come to normal way of working or will it continue. And not only in India, will it continue in other parts of the world, it totally depends upon that how this pandemic -- current pandemic is going to behave.

And assuming that the pandemic sort of continues, which is the first case scenario for any business, what levers do we have to reduce cost on our side? Like could you talk about some of the things that we could do [ or thought ] to sort of address and keep the business [ going on our side ]?

Anoop give the answer -- I'll let Anoop give the answer.

You see, it is a food item. To go to any...

Excuse me, this is the operator. I'm sorry to interrupt. Sir, your voice is breaking. [Technical Difficulty]

There is a problem in audio. There is a problem. That is why I put this question to Anoop. I'm not able to -- there is a breaking in the audio system.

Do you want me to ask the question again?

Now yes, it's clear. You kindly ask it again.

Okay. Sure. Firstly, I was asking if the corona impact were to continue, what is -- what are sort of the contingency measures the company has thought about that would help us alleviate that out.

Yes. I'll let Anoop answer it.

[indiscernible] especially, it is a food item.

Excuse me, this is the operator. Mr. Gupta, your voice is breaking. [Technical Difficulty]

Yes. Based on COVID-19, whatever -- there may be a lot of problems, but food, we are dealing in food and food is such an item, basmati rice, this people -- there is only one of [ part ], which I said previously also, this loss will be -- I think 90% of this loss will be consumer behavior...

Excuse, this is the operator. Sir, your voice is not clear, sir. [Technical Difficulty]

Maybe should I just move on to the next question I think as this is hard?

Yes. You can send it to us, we'll reply through mail.

Sure. No problem. My next question is, in Q3, we were selling paddy at a price of INR 28.4 a kg and rice at INR 48.7 a kg. And I see we have taken some write-down on the inventory given the market price. Do we expect another write-down for Q4, given how the prices have moved?

No, we have not seen write-down. Today, also the market price is more than the stock price. If say, the paddy is INR 28, today the paddy price is more than INR 30. Rice at INR 48, the rice price is more than INR 55.

Okay. So we don't expect for Q4 any write-down because from Q2 to Q3, we did take some write-down in the inventory.

No, no, no.

Okay. So that's very heartening to hear. And then you talked about Iran, and I think there was this question about what percentage of our business comes from Iran. So if that response, Rakeshji, I will send you the mail as well.

You send the mail, we will reply to you.

The next question is from the line of [ Jaspreet Singh from VA Capital. ]

Anilji, the goods which are going to Iran, I believe that they are not of the same value to the company as it is going to Saudi and Kuwait and other places. Is it correct that the margins on that goods in Iran is not listed?

See, it has been known to everybody there are 2 types of businesses with KRBL. One is the branding business, which comes under FMCG, which is our majority business. And one is this tender business which we do with Government of Iran. There are businesses of -- in private sector also in Iran, but we don't want to touch because of the payment problem. And as far as my knowledge goes, people are into big, big trouble, not trouble but they are into big trouble. And how they are managing, that I do not know. Yes, definitely, the business, what has been done and what has been quoted, it is with a fair good margin. It's with a fair good margin, which reflects in our top line and bottom line both. If you look at our bottom line, if it is too low, then bottom line still is -- we are showing a quite attractive bottom line. But I'll not like to react on that because first week of May, our results are coming, but we are doing fairly good and we are happy with that business, and we will continue doing that business.

Okay. Anilji, because of this pandemic, I believe you were exporting much larger volumes than you were initially exporting. So are you are gaining some new customers, new territories, which are sustainably kind of business, which you're building up?

Let me tell you, as far as rice is concerned, the biggest problem is, if you'll let us sell 70% of the trade, they are giving credits. They are doing businesses where payment is at a very high risk. We at KRBL ensure before doing any business that -- what is the position of the payment. And that is one of the credit which KRBL should take in, that in last 30, 40 years, whatever years we have been doing exports, we have never had a bad debt, as far as exports or domestic is concerned. So you have to ensure one thing in business, that payment is of prime importance to us. Otherwise, today, if KRBL was the way that other trade is doing, I can definitely sell at least 150,000 tonne more with the lower margins. So first is the margin of profit, which we ensure that we will not work less than this, whether we get the business or not. And second is the payment. Now when you talk of the new market or new buyers, see, why a new buyer -- if I come to the new buyer, it means there is something hanky-panky with the old one or there is something. This is not the time at this pending time that I go and sell for a new buyer or this and that. First, it is more important to let the market settle down because nobody knows what is going to happen after 3 months.

Okay, okay. And are you buying the crop from the market, paddy or rice, which is reducing as of last October, November, December -- October, November, December 2019?

Let Anoop answer this.

We are buying -- we bought the paddy till January last. And I think we have got around more than 700,000 tonnes of paddy, and we were buying rice also. From -- but from last 20, 25 days, 1 month, we are not buying much.

Okay. And maybe [indiscernible] [ long-term horizontal ] [indiscernible]...

[indiscernible].

Total debt as of date is around INR 300 crores, long-term contribution to the [indiscernible].

And during COVID also, we paid [ 100 CR ] to the banks.

Wonderful. And Anilji, a [ bigger ] crop [indiscernible] sowing only because harvesting is also delayed and harvesting is not being properly sold out in the markets in the Maldives. And labor is also not there in [ Ludhiana ] fields. So do you think any problem in the new sowing season coming up for rice?

Basically, basmati harvesting, I think it's June, July -- hopefully, June, July [indiscernible] problem only in Maldives [indiscernible] [ problem method for that area, but yes ], so basmati [indiscernible]. And the basmati harvesting [indiscernible] basmati [indiscernible]. I don't...

Let me add over here. If you look at the paper news and ministry of food and ministry of agriculture, this year, 25% have -- sowing as being done more in Eastern parts of India, especially up to Bihar, Bengal and Orissa for paddy. So everybody is thinking that, anyhow, by that time, when the sowing time comes, there should not be any problem. Farmer, by any way, is not going to sit idle and let his farm be empty. Whatever he does, he is going to grow something.

Okay. I think still we've got 1.5 months of that, so let's hope and [indiscernible]. And Anoopji, are you finding that unorganized markets will get converted to packaged market for sure going forward? [indiscernible].

See, I can -- I tell you, frankly, this COVID, there are advantages also -- advantage. So one should not say because it is not good for the human race. But that as far as business is concerned, people are preferring packaged rice. And instead of new consumers, I think in the secondary market what I heard from distributors, Delhi, new consumer basket is coming. If you talk of Delhi, in last 20 days, I've sold about 100 tonne, which is a record sale in Delhi. If it wasn't Delhi, you go to any shelf, India Gate is available in those shelves where never India Gate was sold. And one more information I should give you. Last year, ACNielsen, we have received the data. In modern trade, we had a 41% market share and we were #1. For modern trade and e-commerce, there is a 50% increase in modern trade orders post corona and 100% increase in e-commerce orders post corona. And I tell [indiscernible] if I compare April '19 sales to April '20 sales, until date, in domestic only, I have covered 60% of last year's April '19 sales. So looking at such a disastrous situation, I think we have done a good job. We and the KRBL team have done a very good job.

Okay. And Anilji, how is your volume and sales divided across traditional, modern, e-commerce and HoReCa?

No, it's really good. It's excellent. I'll tell you I couldn't imagine there was fear 2 months back that what will happen to the export orders and what will -- how they will be executed and whether orders will come or not. But Priyanka has done a lovely job. She really booked -- I couldn't imagine the orders she booked in last 2 months. It has been phenomenal orders. Phenomenal orders. And there also all -- there is a lockout, there is a curfew or whatever you say, so sales are taking place through e-commerce only.

Okay. And how are your other -- that [ Bemisal ] rice and that Kolam rice? How are they doing?

[ What ]?

Your other rices and paddy which you initiated last year, are they doing okay?

I don't follow. Last year?

[indiscernible] rice and Kolam rice and...

Yes, yes, yes. Those rices are okay, not very, very good, but I'm okay. And the stocks, I'm selling regularly. Because I am selling at a premium in 1 kg rice only. So there is no question of great volumes, but I am able to do the shelves with India Gate Jeera rice with 1 kg rice. I am not doing bulk sales.

The next question is from the line of Amitabh Sonthalia from SKS Capital.

Yes. [indiscernible] because I joined the call late, so maybe it's already been discussed. You mentioned several times that -- how KRBL catches a premium [ in the ] markets. Of course, we -- basmati is a food product and -- but at the same time, it's not an essential item. It is, as you know, sort of a higher-end food product. It's not -- how -- what is your view? Is it -- do you consider it as a staple? Or do you consider it as a premium, perhaps a premium product which in times of distress and low incomes or where income levels globally are hit, whether people will downgrade to, a, cheaper basmati rices in the market; and b, to even long-grain rice, maybe non-basmati since basmati is at a premium, too. What is your past experience of recessions and global crises? And how has that happened?

See, as far as global market is concerned, as I told you, 75% of the total exports of basmati rice from India is to Middle East, which includes Iraq and Persian Gulf. So it's -- majority is Middle East. And all these places which I have named to you, including Middle East, Iraq, Iran or Kuwait, Saudi, whichever country, there are 7 or 8 countries, it is a staple food over there. It's not a luxury food. So whatever may happen, they are going to continue buying basmati rice. The other non-basmati rice or long grain, which either grows from Thailand or other places, they are primarily sold for the [ expat tiers ] who are working as a labor class in different projects. So it has been more or less consumed not into the household or not into the other markets or local markets. Locals never eat non-basmati rice. 99% locals, they eat only basmati rice. So one thing should be clear, that it is a staple food over there, as far as globe is concerned. In India, yes, in India, I think Anoop will be to tell you much...

Yes. As far as India is concerned, speaking of the price range of rice, from INR 40 a kg to INR 200 a kg. And during COVID also, I think the majority sales were in the range of INR 70, INR 75. If you talk of India, the -- if I sell around 100,000, 150,000 tonnes, out of -- its average selling price of 350,000 tonnes is around INR 60, INR 62. So INR 200 a kg rice. It's quite less than INR 70, INR 80 a kg of rice. It is always like [ presumed ] where in the top, only the premium segment is there. And the bottom is the -- low price segment is there. So average is around INR 60 to INR 70. So you can't say that INR 80, INR 60, INR 70 rice is a luxury item. Even today's [ written basmati-related or both non-basmati related ] is not more than INR 70 a kg.

Okay. So -- and I mean you may have shared some volume data in the -- how much volumes globally and in India impacted so far during COVID?

How much volume?

What has been sales volume impact in the last 1, 2 months of COVID? Let's say...

You see, however, last April, I don't -- I can tell you, last April, April 2019, we sold 23,000 tonnes. And till date in April '20, we have sold 16,000 tonnes. So I don't foresee much loss. And I've seen -- whatever the loss will be in domestic market would be taken up by the export because export is doing better than pre-COVID.

Okay.

And let me add over here to all the participants in the conference that, today, KRBL is in a position to sell either one of the premium brands, which we are selling at a very good price even at $3,000, provided these other exporters they sell the prices which are 30% cheaper or 25% cheaper. The competition and pricing is such a price war, which should not be there in basmati rice. But people do not have the -- have that per region. But how to keep price of basmati rice, it's really surprising. It's really surprising. We can, I can take -- I do not know people, all my distributor, and many people say rice is not a problem, provided that we get offers daily at 30%, 40% cheaper than what you are selling in the premium segment. When people are selling at 30% cheaper -- actually, I see clearly, it's a commodity. No, the real problem within an FMCG company or a FMCG product -- but ultimately too it's a commodity.

Right. So then what is our response? We have mentioned that we are not -- we will not sell below our certain margin. Or of course -- and so which means that we are willing to take a short-term volume rate in this price war scenario.

Let me tell you that, [ the ] KRBL in export market, we come down with very heavy discounts or sale and this and that than whatever we have today. We will not remain -- it's not a question of only profit. We sell our rice because people, consumer feel it's a premium rice. There is no other rice in the market available. What is there in India Gate brand abroad, that is the concept. And if you go to any of the stores in Dubai or Kuwait, you will find people going to -- only to the shelf of KRBL that is India Gate brand in that segment, in that segment.

All right. And sir, my second question was you were looking -- in March, you -- there was a lot of [ accreting ] acquisition happening. And then suddenly, of course, has stopped the company from buying in -- I think, in the new financial year before you declare results. Is that -- can you just throw some light on the current regulation? And what is the promoter intent to increase their stake in the current financial year?

At present, the window is closed. At these prices, we would wanted to buy, but now the window is closed.

Right. So the windows will open...

[indiscernible] I'll tell you -- once it's open. And I'll tell you a very true example. What is happening in the share market today? Are you [indiscernible] back selling a price [ for full leg ] [indiscernible]. This is what's happening with KRBL's case, nothing else.

Right. So my question is are you [indiscernible] with this period? I mean the silent period end after the declaration of your April -- March quarter results.

It is after the declaration of the audit. After the declaration of the financial year.

Okay. So after that, you are allowed to...

There's discussion in the Board regarding the buyback as the company, not as the promoter. We are discussing in the Board regarding the buyback of shares in the company.

Right. Right. So far, there is no proposal for any buyback, right, are approved?

No. Until the financial results are announced, nothing proposed.

The next question is from the line of Anshul Saigal from World of PMS.

My question is on a carryforward from the previous question, not the immediately previous question but a few question earlier where a participant asked that will the company become stronger after this. And in many of your comments you have said that there are a lot of companies in the market who have significant debt on their balance sheets. You are selling at a 15% premium to the market. Even in these times, you are at 60% of volumes of April '19. And in the export market, you have in fact grown volumes. All of this gives us an impression that not immediately but definitely in the long term, KRBL will come out much stronger than what they were earlier in terms of competitive intensity. How would you react to that? What is your view on this? And there are things which are not in your control, which is how long coronavirus lasts, et cetera. Let that be aside. If we look at the long term, say 2, 3 years, how do you perceive KRBL to come out as a company in context of competition?

It's a financial question. Let Anoop answer it. Or I'll answer it, no problem. Let Anoop answer this question.

I thought you [ answered it ].

Yes. [indiscernible]

Anoopji, if you can please answer this.

[ Pardon us ]...

Anoopji, can you answer this?

Yes. I've [indiscernible]. It's what is the position today. Definitely, I've been telling you constantly that we are looking at rice and our market share, whether in export market or domestic market, is going to increase. Your question is the money will come and where we have growth risk. Definitely, today our Dhuri plant is running at 50%, 55%. We want to run it at 90%, 95%. Today, we are buying 700,000 tonnes of paddy. Then we will buy around 1.2 million, 1.4 million tonnes of paddy and you need finances for that. And whatever profit, 500 crores, 600 crore, [ 700 crores ] [indiscernible] basmati paddy only. And it depends -- and yes, it depends if [ any committee ] comes for takeover or anything, we can look at that, that time within a period of 2 year, 3 years. But definitely, our industry and our brands are doing extremely well, and we are going to show good results in the next 2, 3 years?

Okay, great. And there was another question earlier about full year volumes, that given as things are today, where do we see, in comparison to last year, this year's volumes? Will we be somewhere in the same region of last year's volumes, or do you see some impact on volumes this year? Of course, as we see things today, of course, they can change going forward, but what is your assessment today?

No, when you are comparing, it is [indiscernible] 2021, or it is '19 versus '20?

I mean FY '20 versus FY '21, sir.

Okay, okay.

If I -- I mean the point being that because of coronavirus, everybody estimates that some demand to get lower. But this being a staple food item, will the demand impact be marginal? Or it will be substantial? Can we, for instance, see price [ freeze ]?

This is -- I don't know. What I feel it will be higher. It will be higher by minimum 15% to 20% this year. The reason being consumer choice for packaged foods, consumer choice for [ brands ], consumer choice and even for export, we did good last year. So I think it will be better than -- better by 10% to 15% than last year.

So FY '21 volumes can be up by 10% to 15%, as compared to FY '20.

Yes.

The next question is from the line of Varun Goenka from Nippon India Funds.

Yes. To begin with, let me first appreciate. I think all of us were pushing for a buyback last year, but I think the management took a very wise decision of first repaying the debt than going for a buyback. I think in hindsight we all agree that, that has worked very well. Just 2 more questions. I think most of the questions have been very comprehensively answered. Is non-basmati or branded rice now also will become a focus for us because of India being in surplus who would export, demand very high? Or any thoughts around that? Because India Gate brand can be used today to extend beyond basmati.

Yes, definitely we were in the process. And due to COVID, I tell you sales can happen. Everything can happen, but the acquisition and logistics problem in the different states cannot happen. So we were in the process of acquiring or building some packaging plants in West Bengal and Karnataka. That program has become definitely slow. Within 2, 3 months, [ will we already be addressing on that ].

Absolutely. Perfect. Second question is the rice e-commerce and modern trade. Today, it might be very good for volumes, but eventually what happens is the pricing or the working capital goes in their favor. So how are we planning to balance that or control that?

You see, in the modern trade and even in the e-commerce we have a strict memo in the market standing with every one of them. They have to fix the [ PTC]. Price to the consumer has to be [ in that knowledge ] [indiscernible] and it cannot be [ worse than ] at certain point. That is very, very important if [indiscernible] supplies are [ immediately stopped ].

Okay. But I just want to -- I want to understand this. So e-commerce, are margins the same as company level? Because I've been myself buying classic or other India Gate brands from Amazon or bigbasket for last 10 years, but the prices seem much lower versus MRP. So is that the dealers that are just [ responding to ]?

It looks [indiscernible] [ out of any past subsidiaries ]. 80% of the shops are selling to that level MRP. It is a strategy of the industry. It is not a question of they have -- they will provide 30% less, 20% less, 25% less. So it is -- we are just adding 55% on our [ ex mill ] prices, which include the [ POC ] margin, the dealer margin, the [indiscernible] margin. We ship is 25% to the retailer, but retailers [indiscernible] [ at 5% ].

Right, right. I get it. Thirdly are receivables on the power side -- so how are that doing on our power business?

Why don't we start where it's very simple, you give a letter to a printer, [ say where the payments count ]. We have completed that. Maharashtra government gave us a -- I think there was a letter. They have cleared our 6-month debt. We said we will not demand an interest on it, they have cleared our 6-month debt.

Okay. So today, do we have any receivables, sir, pending March [ 29 ]?

[indiscernible] could -- I don't know the result. But [indiscernible] explained, we should assume paying short term of [ 40-odd crores, I think ].

Okay. So just my humble suggestion. As I mentioned earlier that today we are all talking about a buyback or something. That part, we should not -- maybe this power business can be demerged? Can it...

Yes, we are working on that [indiscernible] working on and businesses [indiscernible]. [indiscernible] only.

Right. Because today -- for example, today, on media, Shapoorji Pallonji had sold to KKR at [ 4.9 crores per megawatts ]. So this -- so 500 crores can give us additional liquidity to invest in our core business or to buy back KRBL.

Yes.

Yes. And just final request, if maybe once a year or 6-monthly even, Pri Mittal, you can come on call, help us on the brand. We can hear your thoughts on the brand, what we are doing on the maybe different segments of the brand creation, pushing the brand on the -- Anoopji, your thoughts on the institutional segment also will help. See, even though the trade is low today and might take a while, are we helping in any way that side of the business today to get loyalty with us?

The -- so institutional segment [indiscernible]. Once again [indiscernible] is not happening, nothing is working. Because [indiscernible] from their institution. It's all been [indiscernible]. But then for us to medicate due to COVID [indiscernible].

Well, fair enough. We'll come back as and when it's [ gain ].

The next question is from the line of Amit Doshi from Care PMS.

Sir, on the -- last year, we started -- I mean we announced that vision of reaching to approximately 8,000 crores in the next 4 to 5 years. So considering this -- and if you see our history, till 2012, our export component has been always on a larger side compared to the domestic, whereas after 2012, domestic became a major side of our sales or a major contributor. In '19, '20, if we see last 3 quarters and as you are, again, giving a bit of an idea about that exports, orders are robust and they're going very strong. So going forward, what do you think that -- out of that 8,000 crores plan that we have, how that share is going to be, considering that this COVID situation and otherwise? Any comments on that will be useful.

This 8,000 crores we have given last year in the next 5 years. [ The tail amounts ] [indiscernible] but the ratio would be [ 50-50 ].

Okay. [ Ration would be 50-50 ]. Okay. On the second question, that -- first of all, congratulations on winning that income tax pending appeal. But one small question on that, sir, that there is some spending or a demand of 180 crore matter, which is still pending and which you have taken at the higher appellate authorities. So what is that? Because I presume that the payments, cash payments to the farmers is not the only issue. So if the 2,200 crores, the entire amount, was bad debt, how is that a part amount is allowed and part ground is rejected? And...

[indiscernible] [Technical Difficulty]

Sorry, sir. Your voice is cracking, sir.

Audio is really bad.

Yes. Total [indiscernible] was 2,200 crores, out of which around 1,900 crores were due to farmer purchase. And about 180 crores were some certain parties, where they found that these purchases are not up to the mark or they're fictitious purchases. There have already been [ 7 million, about ] [indiscernible] crores [indiscernible]. So out of the [indiscernible] around 1,980 crores. So about 220 crores [indiscernible] we have to go to the tribunal. And for this, I tell you we have deposited 200 crore tax, of which 100 crore we'll get the refund. We have already applied for the refund of 100 crores. And 100 crores, we will get the refund after we win the tribunal order.

Okay, okay, okay. And just last question, sir. While our export market, and there is a bit of a pricing pressure on that side, as Anilji mentioned earlier, do you see any -- your earlier guided margins of that approximately 18% is what you had indicated, seem to continue. I mean I know it could be a bit of a premature question at this level but just broad thoughts on that front.

It is PSI, so we can't guide on that. This is price-sensitive information. We'll -- but we will be on target. That's the only thing we can say.

No, we'll try to maintain the EBIDTA outlook, what we have communicated [indiscernible] maintain that EBIDTA. EBIDTA, we'll try to [indiscernible] to maintain it.

The next question is from the line of [ Dhruv Agarwal ] from [indiscernible].

Yes. Sir, my question is regarding the volume numbers for FY '19, if you can give it to me as I don't have the split...

You can e-mail to us. We will reply. We cannot give it right now.

The next question is from the line of Ayush Mittal from Mittal Analytics Private Limited.

Sir, most of my questions have been answered. One question that I have is when we look at the international articles about the price increase in rice. This is about the general rice that the price increase has been happening, which has increased [ at more than 15%, 20% ]. Or in basmati also, are we seeing such a similar change in pricing when it comes to export orders?

No, no. It is for non-basmati rice. The one reason that India was not able to offer much of the rice because India was second largest in non-basmati rice, after Thailand, to export to Far East and to African continent. So because of that, the prices of non-basmati was jumped up, and I think so it will now be equalized. And after corona effect, a lot of non-basmati will [ start well ].

[ So this is the last thing ] after COVID [indiscernible] that's non-basmati even.

We'll start going after May. After May, people -- again, the importers have come back to India to import rice from India. They had all shifted it to Vietnam, Thailand and, well, Pakistan and all because the prices were not meeting. Prices went a little higher. Now India has been -- come to the parity after the prices came higher. So I think -- so from May, June -- from May onward, the non-export -- non-basmati export will start taking place.

Okay. Okay. And sir, how much has been the change in basmati prices -- price in the spot market as of now versus [ 3 months back ]?

Prices are more or less same. There is no change. There's no change, it's same. As far as KRBL is concerned, absolutely there is no change.

The next question is from the line of [ Ekta Mehta from Japtum Advisers ].

I had a few questions. Sir, firstly, about the Middle East, we support -- so initial like -- in 2014, our levels of export were quite high. And then we suffered because of distribution challenges. So now post corona, will -- do we have the potential to come back to those levels?

See, as far as the current orders and the current behavior of the market shows, that it is on its peak and everybody is happy. Orders are coming. They are being implemented. And in spite of so many impediments, logistics, labor and all, still the government has really held up the exporting community and shipments are taking place. That is number one. Looking to the current order, which we saw in March and which we saw in April, it seems that exports is going to do exceptionally well, but we do not know what will happen after May, June. At least first quarter of FY '21 will show a good, remarkable growth, but we do not know thereafter. So it will be impossible to guess or at least guide that -- our investor or anybody that, "No, we are going to do excellently well." We do not know. It's a very big question mark about corona and pandemic has taken place. That will shape. It will take place in next -- after 2 months or 1 month or 3 months.

Okay. Sir, but specifically on the distribution challenges that we were facing earlier, like have we taken any steps to like ease out those distribution challenges?

Oh, definitely, definitely. This is one good part in KRBL if any distributor is misbehaving or he is not up to the mark. So our agreements and our contracts are such that we change. We change them. And recently, we have changed our distributor in Dubai. After we changed, we are getting -- we are really getting a boost in our sales.

Okay, okay. My next question is on e-commerce. So like you said, that the e-commerce sales have increased by 100%. What period were you referring to?

I'm referring from 15 March [ lift ].

That is the previous March.

No, no, this March. During COVID period, I've said that sales have increased by 100%.

Okay. And so sir, have you tied up specifically with any platform?

Yes. We have tied up with Zomato. Zomato is active in 31 states -- cities across 11 states. We have tied up with Swiggy, which is active in Bangalore, Mumbai, Delhi, Gurgaon. And we are in discussion with Dominos also. So we are working all right to every possible channels.

Okay. So sir, are we -- is our next approach going to be on a communication of how hygienically your rice is processed and everything? Because now that has become a very big concern. So would that be a way to...

Within 1 week, you will receive a video.

Okay, okay. And also, sir, what steps -- so now people -- like in the rural areas the demand has not been affected as much as urban, so how are we trying to educate those customers on hygiene and from shifting to unpackaged to packaged? Like is that a possibility? Like are you seeing that happening already in rural areas...

[ Honestly ], I can advertise these things only on social media. I can't afford to tell them hygiene on national media, but I'll be active on social media definitely.

Okay. So sir, but are you seeing a shift in -- like in Tier 3 or in rural also from unpackaged to packaged rice?

I'll be -- I'm always active on social media [indiscernible].

Okay, okay. So all -- my like last question is on quinoa. Are we focusing more on quinoa right now on social media also?

Quinoa, in the end, sales are not [indiscernible]. So quinoa, the sales was hardly [ 150 tonnes ] domestically, but in exports we are doing well. Mr. Mittal will tell you in exports we are doing well in quinoa.

Let me tell you, quinoa, we were at a very initial stage because a very vital role has been played by the quality. The quality produced in South America is much better over India up to 2 years back, 1.5 years back. But 1.5 years back, we improvised the quality to an extent that there is hardly any difference between the imported quinoa and the Indian quinoa. And since then, we are getting very good orders in exports. Now there is one big problem in exports with India is that is pesticide residue. Now in America alone, I can tell, [ where in the ] quantities on the India Gate brand, we are so strong. Same way in Europe. I can sell big quantities of quinoa, but there the issue comes of pesticide residues. And we have tried against our contract farming or our contractors which are supposed to grow quinoa on our behalf. They say, "Sir, it is difficult for the farmers," that they will not grow without spraying the medicines and pesticides. So that is one issue which is coming on our way. I think it might take another 1 year or 2 years, and we are working with various scientists how to grow [ in direct peat ] organic quinoa. The day India produces organic quinoa our sales will become 3x.

The next question is from the line of Rohith Potti from Marshmallow Capital.

So my first question is if you could repeat what you were talking about your initiative. You're doing some acquisition in West Bengal and Karnataka, you said. Could you explain that a little more?

The acquisitions [indiscernible] packaging plant where we can track [ when taking within western ] India Gate brands, buy rice from different business, taking them in our warehouse, and [ adjusting it ] and distributing it. So we were thinking of growing the same in West Bengal and Karnataka. West Bengal for [ gobindobhog rice ] and in Karnataka [indiscernible]. We have [indiscernible] but we have annual production ready [indiscernible].

Sorry. Sir, your voice is breaking. So from what I understand, you're planning to procure [ gobindobhog ] rice and sona masoori rice from local millers and pack it in our packing plant within respective states and sell it. Was that what you're saying?

And [indiscernible] also. It is there where they pack it and then distribute it. But now we are doing the same thing here in North India, but there is a little bit of -- there is much of logistic costs, so we thought why not we package and distribute from there only. So we may be doing it after 3, 4 months after this COVID becomes normal.

Understood. That was helpful. Next question, sir, if you could explain. I mean I can see it is quite clear that KRBL is strengthening assets quite well in this downturn, but how is the competition doing? Do you have -- do you -- can you give us any insight into how the rest of the competition in the basmati rice industry is doing? Are they able to function to the extent that you are able to function, both unorganized and organized? And do you think there could be more players who will shut shop because of this issue?

Yes. And you see, even then, players like Daawat, Fortune, Kohinoor, they are also [ doing in ] because this is essential commodity and everyone is allowed to do it. But the small players, with hundreds of small players, they are [indiscernible]. So due to that, sale of the packaged food is only growing. And due to hygiene also, sale of packaged food is enormous in last 40, 45 days.

Understood. That was helpful. And I mean again this is an unprecedented time and you don't -- we don't know how this will evolve. But given our balance sheet strength and the fact that we understand branding and FMCG in the company, I was curious to know if over the next 1, 2 years -- a good brand comes for sale in the food industry, maybe in the basmati industry or some other related food industry. Will the management be open to acquiring a company or a brand like that?

Yes, yes. Management is open. And we will discuss the matter. If we think it's profitable and will benefit for the company, we will definitely go for it.

The next question is from the line of [ Shayl Peta ], an individual investor.

My question is the ultra-premium category which you are currently working on, the India Gate super category. I'd like to just know, what is your percentage on the top line on an overall basis comparing domestic and international markets?

[indiscernible] I won't be able to give you the percentage. Maybe Mr. Mehrotra will tell. Maybe later he can write a mail or something.

[indiscernible] Yes, send a mail to us. We will see if we can reply.

Okay. That's one thing. And second question is what is the projected growth you're looking for this category of the business, the premium, ultra-premium category over the next, say, 2, 3 years? Year-on-year, what is the projected growth here expected?

Anil, do you want to...

Let me tell you, as far as premium category is concerned, definitely we are going to improvise much, much more what we are today. But it's a normal phenomenon that people of the middle class have a better -- the sales could be much more over the premium class. So if we compare the 2 classes: our sale of super or bab al hind -- we call in Middle East bab al hind, somewhere we call it a super, it will be definitely much more over the most premium brand which we are selling above $2,000 a tonne.

Okay. So what will be the -- and what will it be in terms of volumes and not in terms of price. The volume, what do you think in terms of growth will be in next, say, 2, 3 years?

See, on premium quality we are expecting growth should come about 8% to 10% every year, 8% -- 7% to 8% every year, it should come.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Mr. Rangnekar?

Yes. Thank you very much for participating in the conference. We will see or meet you soon after the annual results are announced. That is early in [indiscernible]. Thank you once again.

Thank you very much, sir.

Thanks. Thanks.

Ladies and gentlemen, on behalf of KRBL Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.