KRBL Limited (KRBL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to KRBL Limited Q1 FY'24 Earnings Conference Call. [Operator Instructions] Please note that this conference 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, sir.

Thank you for joining us. Welcome to the Q1 FY'24 earnings conference call for analysts and investors of KRBL Limited. Today, we have several key speakers on the call: Mr. Anil Kumar Mittal, Chairman and Managing Director; Mr. Anoop Kumar Gupta, Joint Managing Director; and Mr. Ayush Gupta, Head of the domestic division. To kick off the call, Mr. Mittal will provide updates on the business industry and our overall strategy. Following that, Ayush will delve into the perspectives of our domestic business. Finally, I will present the financial overview of the company for the first quarter of current financial year. 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 website and our company's website. Now I would like to invite Anil ji to share his views. The floor is yours.

Good afternoon, investors. The world rice production in marketing year, '22-'23, is expected to be marginally lower at 512.5 million tonnes lower by 0.2% over preceding marketing year. The shortage is mainly due to lower production in China and Pakistan. In marketing year '23, '24 despite of el nino condition, worldwide production is estimated at 520.8 million tonnes, which is higher by 1.6% against previous year. India is expected to grow record rice production at 135.5 million metric tonnes in marketing year '22, '23, which includes [ 2002, 22 ] crops and 2023 Rabi crop. Further, the Indian governance in its effort to support farmers income has announced a 7% higher MSP for rice in the upcoming kharif season at INR 21,083 -- INR 2,183 per tonne and INR 22.03 per [indiscernible] tonne for common grade, respectively. We do not see any impact of the MSP on the basmati prices, as basmati prices have been trading at a much higher level as compared to the MSP. The basmati production for marketing year '22, '23 is around 9.5 million metric tonnes, about 12% higher than last year. Despite the overall increase in rice production in India, in both basmati and non-basmati segments, we have seen a general price increase this year during the crop cycle, which indicates growing demand for both basmati rice and non-basmati rice from India. India basmati export has grown 16% in volume terms and 46% in revenue terms in FY'23 over FY'22. Volume growth mainly came from Saudi Arabia, UAE, Yemen, Oman, Qatar, U.S.A., U.K. and Jordan, whereas India's total rice export grew by 6% to record volume of 22.34 million metric tonnes and 24% in revenue terms to INR 89,689 crores accounting for nearly 42% of the global rice trade. The area under basmati expected to be higher in the new crop 2023 due to good prices realized by the farmer last year. As per latest information available, the sowing of basmati has increased in Punjab and Haryana, including [indiscernible] Uttar Pradesh, with a forecast of increase in production by 12% over last year. This does not include non-GI area such as MP and Rajasthan. It is too early to comment on the price structure of the new crop since it will depend upon final outcome of the crop and the government decision on whether they will continue with the export ban of non-basmati rice. On the non-basmati side, despite imposition on export duty of non-basmati white rice of 20% during September -- from September 2022, India has exported a higher quantity of non-basmati, at 4.2 million tonnes during the period September '22 to March '23, as against 3.37 million tonnes in the same period of previous year. Therefore, the government decided to ban the export of the grade in order to control the prices in the domestic market. This decision has severely impacted the global rice prices as stock in other exporting countries such as Thailand, Vietnam and Pakistan are also not abundant to take care of the shortfall created by the ban. KRBL impact due to the rice export ban is very minimum. Our exports of specially premium grade of non-basmati variant is affected, but we have represented our case to the government through the trade association and various chambers of commerce to carve out a proposal to allow export of premium variance of this do not have any effect on the food inflation and food security concern of government of India. As you have seen financial result for the quarter, our export revenue is INR 540 crores in Q1 in FY'24, against INR 485 crores in Q1 FY'23. With respect to the export business [indiscernible] been a little slow, this is on account of two reason which preponement of some sales to Q4 FY 2023 going to early Ramadan, and some distribution related changes in some key markets. We are hoping to complete the distribution [indiscernible]. With that, the second half of this year should be set up in performance vis-a-vis Q1. Any details regarding the export performance for any particular market can be discussed during question and answer section. In regards to our expansion program, we would like to apprise you that Gujrat market is fully functional and production is live. Presently we are keeping our cargo in rented warehouses till the time we concept, another warehouse of about 1 lakh square feet for which government approval is awaited. In Karnataka, all formalities pertaining to the land acquisitions are completed, government permissions are in place, and civil construction started in the month of June 2023. In MP, already the land has been purchased government formalities to start to [indiscernible] apply for. It will take time to get government clearances. Regarding buybacks, I think so I will hand over to Ashish. He will give you the complete details of that buyback, including dividend amounts and for the final dividend for financial year '22, '23. Thank you.

Ayush maybe you can cover your speech and then I'll...

Good afternoon, ladies and gentlemen. I'm Ayush Gupta. I'll be covering the domestic business remarks for today. I'm thrilled to be here today to discuss KRBL's remarkable performance and strategic efforts in the domestic markets during the first quarter of financial year 2024. Our commitment to growth and innovation has led us to achieve outstanding accomplishments across various dimensions of our business. In terms of our domestic sales performance, I'm excited to share that our quarter 1 domestic sales, excluding Power, reached an impressive INR 845 crores, reflecting a remarkable growth of 19% compared to the same period last year. This success is a testament to our relative dedication to delivering quality products and meeting the evolving needs of our consumers. Our branded basmati segment, a cornerstone of our success has demonstrated strong momentum. The volume sales of both consumer pack and bulk packs have surged by 6% and 14%, respectively. Contributing to a noteworthy 9% increase in overall branded basmati volume over quarter 1 financial year 2023. We are thrilled to report that KRBL continues to consolidate its leadership position in the domestic market with a 90 basis point gain in volume market share, reaching to 32.4% in general trade and an impressive 510 basis points gain to reach 41.9% in modern trade. Underpinning our achievements are the three strategic pillars that drive our domestic business. The growth in branded basmati household penetration outpacing the unbranded segment is a noteworthy feat. Our flagship brand India Gate has showed exemplary progress by growing penetration faster than the category in such. Moreover, I'm elated to announce that KRBL has crossed the marvelous milestone of 1 crores consuming households, reflecting the trust and loyalty of brand [indiscernible] amongst consumers. Distribution has a key focus area -- has been a key focus area for us, and I'm delighted to share that our efforts are paying off. We have meticulously evaluated our distribution potential across geographies and make substantial improvements to our distribution infrastructure, regarding a notable increase of 230 basis points in our numeric distribution over the previous quarter. This enhancement in power [ of 2 ] better serve our diverse consumables. Our commitment to innovation is evident in our category expansion agenda. We have embarked on a regional approach with India Gate South India marketing campaign. This campaign is aimed at expanding basmati consumption beyond the confines of biryani unlocking new avenues for growth and reaching untapped markets. In addition to our branded basmati success, we have witnessed a remarkable growth in our non-basmati sales. which surged by an impressive 60% to INR 30 crores in quarter 1 financial year 2024 compared to the same period last year. Our regionalized business is progressing in line with our expectations, on track to achieve a 5% share of the overall domestic revenue for the full financial year. Addressing our quarter 1 financial year 2024 performance, the 9.3% decline compared to quarter 4 financial 2023 is a result of seasonal category dynamics. bulk pack sales peaked from October to March due to festivals and weddings, followed by a natural decline. Hence, this is not a sales drop, but a pattern deflecting market behavior. In our quarter 1 financial year 2021 performance update, amidst our achievements of promising development has taken place. recent years have witnessed the rampant commercialization of basmati rice, raising concerns about authenticity due to reports of blending other grains, artificial fragrances and colors. However, a new area of hope emerges as stringent regulations come to effect this August. These regulations aim to restore consumer trust and ensure the true essence of basmati rice. The regulation imposed from 1 August 2023 are poised to bring about a significant shift in the basmati rice landscape. Key parameters that consumers will now rightfully expect for the price they pay are exclusively outlined in these regulations. One notable change expected with the implementation of these regulations is the probable preference shift among consumers from loose basmati to packaged ones. The new found assurance of authenticity offered by package varieties, it's likely to resonate well with consumers seeking the genuine basmati experience. Looking ahead, these regulations are poised to have a favorable impact on domestic trade. The presence of very defined standards will elevate the quality benchmark of basmati rice across markets. Moreover, the regulations will promote trade literacy and empower consumers with better education. This could signal the end of businesses that thrived on other under-graded basmati, ultimately, purifying the market for benefit of all consumers. As we continue to uphold our commitment to excellence and authenticity, India Gate basmati rice proudly joined hands with Eat Right India under the esteemed [indiscernible] of FSSAI to embark on a nationwide basmati rice no compromise campaign. This momentous collaboration underscores our dedication to promoting healthier eating habits, advocating balanced nutrition and enhancing food safety awareness among consumers across India. By spearheading this initiative, India Gate basmati rice assumes a pioneering role and raising widespread awareness about recently introduced FSSAI regulation on identity standards for basmati rice. With this concerted effort, we anticipate a positive transformation within the industry, fostering an environment of trust and quality. With this, I come to an end of my remarks. Thank you for your unwavering support. And I assure you that KRBL remains committed to its growth trajectory, innovation and delivering value to our stakeholders. I will now hand it over to our CFO, Ashish Jain, for further updates.

Thanks, Ayush. I will now take you through the performance for the quarter ended 30 June '23, all figures mentioned by me would refer to the consolidated financials of KRBL Limited. Total income for the quarter was at INR 1,441 crores, marking a growth of 16% over the corresponding quarter last year. The revenue from operations grew by 15% while other income in the quarter increased by 144% on account of interest and income tax refund, gain on ForEx and mark-to-market investments. Gains. Domestic revenue, excluding power, increased by 19% over the corresponding quarter of last year to INR 845 crores. Year-on-year, basmati sales increased by 20%, driven by 14% growth in volume which was at 107,000 MT 5% growth in basmati realization, which was at 68,500 per tonne. On the export side, revenue increased by 11% over the corresponding quarter to INR 540 crores. Out of the INR 441 crores unrecognized export revenue as of the end of quarter 4 '23, INR 423 crores revenues recognized in Q1 '24. Outlook for this segment has already been covered and comments are final. Gross margin in the quarter was at 28.8% and was affected by higher basmati unit cost on a Y-on-Y basis. EBITDA margin for the quarter was at 19.3% as against 19.6% in the corresponding quarter. EBITDA trend is affected by a lower gross margin but benefited from higher other income and lower proportionate other expenses, primarily freight and advertisement. Finance cost for the quarter was at INR 1.5 crores as against INR 2 crores on account of lower [ motional ] interest on liabilities. PAT for quarter was at INR 195 crores or 13.3% as against INR 164 crores or 13% in the corresponding quarter. PAT margin improved on account of lower proportionate finance costs and lower effective tax rate. I will now share an analysis of Q1 '24 versus Q4 '23. Revenue from operations in Q4, like I mentioned, was at INR 1,414 crores, as against INR 1,280 crores in the preceding quarter. Domestic sales, as Ayush mentioned, were lower by INR 87 crores, while export sale at INR 540 crores was higher by INR 209 crores. Domestic basmati volume was lower by around 10,000 MT due to seasonal factors, as Ayush explain, while Basmati volume was higher by around 35,000 MT, largely because of bulk basmati export recognized during the quarter. Quarter 1 gross margin is higher due to higher sale of high-margin basmati rice and 2% lower average basmati COGS. EBITDA Margin was -- has improved by 518 points due to improved gross margin coupled with lower proportionate freight and advertisement expenses. Moving on to balance sheet highlights. Total inventory as of June 30 '23, was up INR 3,278 crores, comprising INR 849 crores of paddy as against INR 396 crores in June '22 and INR 2,264 crores of rice as against INR 1,908 crores in June '22. In volume terms, paddy stocks were at approximately 211,000 tonnes and rice at approximately 371,000 tonnes. These numbers were 116,000 tonnes and 367,000 tonnes, respectively, last year. Inventory is higher primarily to meet higher expected demand. Total cash and cash balance, including all investments, but excluding debt and equity shares as of June 30 '23, was INR 930 crores against INR 936 crores as of June '22. With respect to distribution of surplus to shareholders, as you would have noted, the Board has recommended 100% dividend, which would come to INR 1 per share and approved buyback of INR 325 crores, as also mentioned by our Chairman. With this, the total distribution to shareholders, including the tax payable on buyback would be around INR 400 crores and around INR 24 crores of dividend, leading to a total outflow of about INR 424 crores. With that, I come to an end of my prepared remarks. I would now like to hand over to the moderator for opening the Q&A session. I just want to mention that as the ED matter [indiscernible] subdued, we will not be in a position to respond to queries from this matter. So over to the moderator now.

[Operator Instructions] First question is from the line of Himanshu Upadhyay from [indiscernible].

My first question was on export side. We are hearing that the rice export ban is making global rice importers worried and people want early shipments. Are we seeing price rise in better terms of trade because of what has happened in the domestic market? And secondly, what percentage of our business in exports would be short-term business or single consignment or rupee consignment type of business? Can you elaborate on these two aspects?

There is no doubt there is [indiscernible] because of the ban of non-basmati rice. But as far as non-basmati is concerned, it is a financial business of KRBL, we are primarily exporting basmati rice. And since we are into branding business, there is not a very much roller coaster type of behavior because the orders are with the distributors, and they have been ordering at a consistent level. So if there is a demand abroad, it would be in private label, not in our segment of branded business. So we are doing our normal business. Exports have been going normally in their own way. But only the difference is that during Ramadan, there were some early shipments. So that effect was there in Q3 -- Q1. But in Q2, we are very much expected to make it with our normal export with no problem.

Okay. And any update on Saudi market, especially on retail side and -- wholesale and retail, how the new distributor and what is the progress there?

See, as far as distributor related, there have been some changes, which have also affected the sales, which we are going to complete by another one week or 10 days by 15 of August. So you will find really the upgradation in export -- appeasement in export from middle of quarter 2 and quarter 3 and 4 will show a remarkable results.

Okay. And one last question, then I'll join back the queue. See, this year, we have paid both dividend and buyback and congrats or thanks for it. And it's a significant proportion of last year's profit. But in future, as our balance sheet is now net cash, is there a thought that we'll be paying this percentage of profits as, let's say, dividend or buyback or whatever it is and -- or in a range would you like to keep it? So any thoughts on that?

I think so Ashish should reply to this.

Yes. So thanks for the question. See, just in terms of policy terms, there is no change in our dividend policy, that continues as is. The way we looked at it this time was that we had surpluses beyond our requirement not for all the time to come, but at least for some time right now. And therefore, we decided to continue with the dividend, but then add buyback to it because we find that that's a very good tool in terms of returning value to the shareholders. Long term, there is no decision yet on what the mix of dividend and buyback would be, but we'll just evaluate it as and when surplus funds are available.

Next question is from the line of Karan Premchand Gupta from [ Sun ] Capital.

Two questions from my side. One, can you discuss the CapEx and working capital requirements for the company for the next 2 to 3 years? And then secondly, on the International business, if I remember correctly, last quarter, there were some shipments that were supposed to be -- that got delayed and were supposed to be booked in Q1. So excluding the effect of that, can you tell us what the revenues were in the current quarter for the export business? And my sense is there's been a significant drop. So if you could also just elaborate on that. And also, if I may squeeze in one more. Mr. Jain just discussed the dividend policy for the country that stayed average, if you could just elaborate on what the current policy is that you expect to continue into the future for the time being?

Yes. So on CapEx, our maintenance CapEx is around INR 50 crores a year. in terms of the expansion that we are doing, the aggregate spend on that should be between INR 200 crores to INR 250 crores, all funded by internal accruals. This is going to be spread between FY'23 to FY'25. In terms of the requirement from [indiscernible]Capital point of view, our principal working capital component, as you know, is inventory. On an average, we maintain about 230 days of inventory. And therefore, as sales grow, that number will increase. That is primarily funded through internal accruals, and we borrow short term primarily during the paddy bank season. In terms of the investment part and dividend policy, so it is there on our website. But just to summarize, it is -- the effort there is to distribute around 15, 1 5% of PAT. And I think your other question was on export performance. So out of -- when we ended the last quarter, which is the quarter ended March 31, '23, we had mentioned that around INR 441 crores was shipments that were dispatched, but the revenue was pending recognition. Out of that INR 441 crores, INR 423 crores have been recognized. And so if you look at the export for the quarter, the total number is INR 540 crores. So excluding that revenue, this results in about INR 115 crores to INR 120 crores of export. Now that number on a year-on-year basis is lower. But as Anil ji explained, there are 2 reasons for that. One is around INR 20 crores to INR 25 crores of revenue. Export revenue got preponed in quarter 4 because Ramadan, this year, which is the principal festival in Middle East, got preponed and that's an occasion where a lot of consumption happens. So we have shipped orders to that effect in the earlier quarter. And second, there is an on frame distribution change there, which we are hoping to conclude by quarter -- sometime in quarter 2. So you should see a step-up on the quarter 1 export performance in the second half of this year.

Okay. So this change in the distributor in the Middle East, this was something that we had undergone recently, right? So we are changing that distributor again and moving on to somebody else. And then on the inventory requirements for the new plants, what would the inventory -- Yes, if you could just elaborate on what are the expected sales from the new plants that are being set up so that we can get a sense of the working capital requirements for those?

Yes. So on the new plants, we are seeing -- our estimate is that initially, we see about INR 400 crores to INR 450 crores of additional revenue. So the inventory with that should be around INR 200 crores to INR 300 crores additional over the current level. I think on -- in terms of the distributor refresh -- yes, so there was one done some time back. However, that has been revisited, but that should be completed by quarter 2.

Next question is from the line of Soumen Choudhury from Jet Age Securities Private Limited.

Mr. Jain mentioned about the domestic volume and realization being 68,500. And I think in the last call, you had mentioned that the domestic realization was 74,000. So is there a drop of 7%, 8% over the previous quarter. And if you could give a similar breakup for exports also in terms of volumes and realization, it would be quite helpful.

No, there's no drop per se, Soumen. There's a slight change in the product mix, but otherwise, overall realizations are in trend vis-a-vis last quarter. In fact, when we look at realizations, they've being fairly stable for the last 3 quarters. On the export number, the total basmati realization in quarter 1, '24 was around 98,000 per MT for basmati.

Okay. 98,000 tonnes? Yes -- no -- okay, yes, this is a realization?

That's right, yes.

Yes. And what would be the volume?

Yes. So volume, I don't have right now, I can share with you separately.

Okay. And what would be the outlook going forward, like for this quarter and next quarter? Are we again seeing stable kind of realizations?

Yes. So I think -- Anil ji do you want to touch on the price trend?

Realization are going to increase. You see the market as on date is on fire. So definitely, the second quarter, you will see definitely the sort of 5% to 7% jump on the realization.

Okay. Okay. And 1 more issue on the domestic crop as you are saying that the sown area is better than last year. So are we expecting a better crop and then a price drop in October, November when the new crop comes in?

See, that is why it is still too early because sowing is still continuing because in certain areas where they were flood effected areas, the sowing is still continuing, and it will take another 1 week for the sowing to be completed. But this year, the sowing is on a larger area of about 15% over last year, 12% to 15%. We expect the crop size to also increase by 12% to 15%. But at the moment to give you any guess work on that will be wrong on our part.

Next question is from the line of Jayant Mamania from Care Portfolio Managers Private Limited.

Sir, can you elaborate on the export of INR 540 crores on a geographic basis? At least top 3 territories.

Jayant, we don't typically give market-wise detail because that's sensitive from a competition point of view.

Okay, okay. The second question is India total basmati export, Middle East consist of 78%. So can you tell us the top 3 players after KRBL?

You mean, who are the largest exporters?

Yes to Middle East from India?

We have 3 top is, one is Saudi Arabia...

Exporter.

So there are three more companies. One is Supple Tek another is DD International and the fourth one is -- who is the fourth one? There are many -- 1, 2, 3, 4 in numbers, I can't say these are [indiscernible] big players, but Supple Tek and other is D.D. International. But all of them are normally private players. They are also not into [indiscernible] they are all into private label, exports into private label.

So just to add to that, I think what Anil ji was saying was that the number of names that he mentioned, these are all bulk exporters. So they tend to do very large volumes. However, as you know, from a packaged branded point of view, KRBL is the largest exporter.

Okay, okay. So can you tell us to what extent we could recover our lost market due to that change of agent?

Yes. So it's already been explained that I think that is a temporary go-to-market change. You should see a step up from the current levels of performance in the second half of this year.

Okay. So in case of domestic market, ourselves is stabilized around INR 900 crores. So what kind of growth we expect and this [indiscernible] have come into place?

Yes. So we've been growing quarter-over-quarter at about 9% to 10%. And we will be expecting to close the financial year in healthy double digits. So I would say between 10% to 15%. Some tailwinds we got last year was the GST. And I believe FSSAI norms, which have recently kicked in is also a very positive tailwind that should help consumers choose packaged over loose. So the market size will definitely expand and player -- our brand being the dominant brand and the category should stand to gain from this regulation.

Is post-rice -- white rice brand, the parboiled rice are in great demand. So do we deal in parboiled rice?

parboiled, non-basmati rice you mean?

Yes. Yes.

No, our exposure in that space is very minimal. So we're not quite dealing into that category.

Next question is from the line of Mahesh Atal from Atal & Associates.

Just wanted this year just informed us that we have changed the distributed in Saudi. So is this new distributor going to take care of the HoReCa segment also, which we were actually looking sir and I think in the last quarter, it was told that we are looking for that maybe in the next couple of quarters, we will see something. So is this distributor going to take care of that thing also? And my second question would be, look, I'm just trying to get on that inventory valuation through NIC -- I mean, Mr. Ashish has just told that the inventory levels of rice last year quantity-wise was 367,000. And this year it is 371,000. But the value-wise, it is going, I'm not unable to understand. And please elaborate on this piece. These are my two queries.

Yes. So I'll question you on the Saudi front. We have already finalized the well and good distributor in Saudi already the agreement has been sent to them. We are expecting to get back the agreement duly signed by 15, 16 of August [indiscernible] this time we have made a common distributor for both retail, HoReCa and modern stores. And regarding our inventory, I will ask Ashish to reply you.

Sorry, I didn't get your question on inventory. Can you repeat?

Yes. Ashish, just if you can just see the rice level. I mean quantity wise you just told that it was 371,000 compared to 367,000 vis-a-vis. But valuation wise, there is gap. So I'm not able to understand like what -- how we are valuing this particular difference?

Yes. So the value of rice inventory as of June '22 was at INR 1,908 crores. That same number now is INR 2,264 crores. So if we look at the per tonne value, it was around 52,000 as of June '22, and number now is 61,000.

Okay. Okay. And one more thing sir. So are we with distributor -- are we very sure that we'll be reaching our earlier like in 2018, '19 levels, I mean, whatever we used to do earlier in the Saudi market like that was around I think INR 1,000-plus crores, are we still expecting it in this particular financial year for the part of the year?

We appoint a distributor after evaluating all the minus and plus points he has. This time, we think that we took -- it took us about another 6 months as we took last time, and we are quite confident that within next 1 year will reach to our old numbers which we used to have in '18, '19, '20. No problem in that.

And sir, what's the conservative way -- I mean what's the idea behind adding so much cash in books sir? I mean, I'm just able to understand the maximum requirement is something around INR 500 crores including the maintenance and CapEx that we are going to do. So just wanted to know that why there is an additional cash of INR 300 crores to INR 500 crores. Will it somehow reduce the [indiscernible] right?

Yes. I think you will have to consider our inventory requirement. So we stock up paddy, which is our basic raw material in October to December, and that is when the fund requirement take there. So you have to consider that along with the CapEx, when you look at our overall funding.

So also, I mean, will this buyback and giving back to shareholders thing will be a regular normal thing. Can we expect another buyback? Or what's the plan on the -- let's say, if you are having additional cash and there's no inventory that you want to pile up for the next season. Maybe you may take a decision for that in the next season. But still, it on the [indiscernible] and this will be regulating or it is onetime thing which you are in the 5-year period?

No, no. We find this buyback to be a tax friendly in the hands of the shareholders and the investors. And we can think of it to be not a regular, but a very frequent feature.

[Operator Instructions] Next question is from the line of [ Saurav Jain ] from [indiscernible].

Question will be on the other volume for domestic [indiscernible]

Sorry to interrupt Mr. Jain, your voice is not audible.

You are not properly audible.

Is it audible now?

Yes, a little better. There is some background noise.

I'm saying what is the allocation between domestic and export volumes in basmati in India?

Yes. So in my speech, I had given out the volume sales of both businesses. Can we sort of -- I can give you the data after the call, unless you have some other questions.

Yes. And the other question is, what would be the impact of FSSAI, the new law or you thoughts on cost of goods sold? If there will be any hit on the GPs going forward?

As far as branded business for KRBL goes, we've been always compliant to FSSAI in terms of parity of basmati. So as a brand, we've always sold 100% pure basmati rice in our packets. So this rule does not have any impact as such on the cost for KRBL for compliance. However, we -- however, we see competition prices going up because a lot of loose as well as branded players had a significant amount of lending in their tax. So we see a much more fairer competition in the market in regard to this regulation.

And with regards to MBR, there is the INR 30 crores sold, okay, in terms of business. So what would be the output volume in that? Domestic and international.

Yes. So the volume is about 5,300 crores -- tonnes.

Okay. And I think domestic basmati you have done -- you have already told us. So 107,000, is that correct? [indiscernible] [indiscernible] So what are the plans on the like MBR space? So what would be the realization in terms of MBR? Okay. I got IT, INR 30 crores on 5,300 would be the realization right -- and future plans on MBR, because you said INR 400 crores is the revenue you would be getting in the new plants. So it will be from the MBR or a mix of MBR and basmati?

No, it's a mix of the MBR and basmati.

And so what would -- and 450 million in next year or couple of years? 400, 450 or reduction for INR 400 crores realized revenue No, it's.

When the plants come online. It's not for next 1 year. So it's not for the next 1 year, it once all the plants are fully operational.

Maybe by FY '25 or '26. So what would be the allocation in MBR and Basmati including that [indiscernible].

So we -- the plants are still under construction. So I think it is just too early for that question. But broadly, it will be a mix of the 2, of course.

Okay. Mix of the 2. Okay. Okay. So in terms of exports, what would be the overall tonnage, if you can...

Sorry I mean that is a very granular question, not -- don't see the relevance right now, but we can touch off-line, if you like.

Next question is from the line of Nikhil Upadhyay from Securities Investment Managers Private Limited.

Two questions. one is, can you talk on the performance of Unity brand where we were trying to move from the smaller or the unorganized basmati to relatively low-priced basmati. So how is the brand doing? And with this FSSAI regulation, if you have to consider the cost of the price differential, which adulterated people were able to sell a basmati rice versus now on a normalized, what kind of a price differential will it bring us to? So if it was INR 100, what is our brand, how much of that reduction will happen now?

See, our non-basmati admixture in basmati rice varies from grains from INR 40 a kg up to INR 60, INR 65 a kg. So -- and blending varies from anywhere between 10%, 15% to almost up to 50%, 60%. So it's quite a wide range of blending that happens across markets. If I have to talk about the numbers, it can vary from INR 5 a kg up to INR 25, INR 30 a kg in terms of blending variance. So across markets, the FX will be different -- across market, the effect will be different for this relation to come in place. However, we see a positive outlook for our brands across. Unity, obviously being a pure basmati rice and more affordable basmati rice being the seam range compared to India Gate will definitely get better acceptance because the overall pricing in the market for our other basmati will increase. So Unity should get more competitive in terms of that. And we see a positive outlook for that brand.

Okay. And what would the price differential of Unity versus currently adulterated basmati rice?

As I told you, the current adulterated basmati rice [indiscernible] but the Unity would be at least a 10% to 15% premium compared to current adulterated basmati rice.

Okay. And another on the Saudi distributor. Now if we go back to 2021, we took almost 1.5, 2 years to appoint new distributor. And I think he started operating last year around Q1 itself. And within 1 year, we are again looking at a new distributor. So -- just trying to understand what are the factors on which we appoint the distributors? And what were the key things where you believe the lapses are happening that you wanted to reappoint a new distributor. So just want if you can spend some time here.

Yes, I'll try to explain you. Q1 '22 and Q2, they did a phenomenal job and we were getting orders worth about -- we got in 2 months orders worth about more than 22,000, 23,000 tonnes and we thought that within 1 year, we'll reach to our goal number of more than 100,000 tonnes a year. All of a sudden, after 2 monthly, I don't know what happened. He started asking for more discounts. He started asking for credits. There were so many type of problems he tried to create. And as a principle, when a contract is signed, it is for a 1-year -- minimum 1 year, and we could not either give you both the things either the more discounts and our credit, credit is definitely KRBL. It's not -- we don't entertain credits normally. So that's one of the reason and we finally told him whether you want to work or not, in both the claims cannot be entertained. And that is why we had to go to the new one. And this time, we were quite sure and we agreed for that, that credit does not require and at least for minimum 1 year, I will -- he and I will work on the discounts, which have been agreed upon. You ask me for discounts, whatever you say, really, about the discount of margins. So I feel that this time, minimum 1 year when he will get the real taste of India Gate. Now that old distributor is trying to come back to us, we are not interested to work with him. So as a brand, it's a strong brand, but I don't know he you wanted to exploit in between the agreement. So we have selected the new one.

Okay. And just one last question, sir. When these agreements we have with the distributor, is there a volume clause which we put in this year as much kind of a volume we have to get so to get a higher incentive? Or how the incentive and the discount structure worked around with the distributor?

See, first of all, there is no distribution contract with our distribution contract for more than 50, 60 countries, but quantity or definition of commitment of quantity is no contract. No distributor will guarantee you the contract for the quantity. Incentives are there, if you will sell above that, then we'll give to 1% or 1.5% more, but normally, those incentives -- there are very few distributor across those incentives. And they're all old distributor, like in Australia. There are a few in America. They are doing well. And even in Middle East, Doha, Qatar, Dubai, they are doing very well. Only we are disturbed in 1 or 2 distributed channels. One is in Kuwait, and other is in Saudi Arabia. Otherwise, everywhere is still okay.

[Operator Instructions] Next question is from the line of Navid Virani from Bastion Research.

I hope I'm audible. So firstly, sir, in the opening remarks, you mentioned that there has been a remarkable growth in the non-basmati rice. So can you please quantify the contribution of non-basmati rice to our total sales? And how should one see this going forward if you can look to that as well?

So yes, I mentioned those numbers. Non-basmati currently contributes to INR 30 crores over our INR 845 crores domestic revenue. And that's roughly about just sub of 5%. Our target also for this year for the financial year is for the non-basmati to be salient at about 5% to the overall revenue for the year.

Okay. Okay. And secondly, can you also let us know the contribution of bulk or non-branded rice to total revenue?

Bulk or non-branded?

Yes. Bulk right. Yes, the non-branded product that I wanted to know.

Yes. So I think useful to look at that number for the last financial year. So the total bulk was at around 15% of our total revenue in the last financial year.

Next question is from the line of [indiscernible] Investments and Financial Services Private Limited.

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[Foreign Language] It will be difficult for us to comment on that.

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[Foreign Language] We can still check. Any other [Foreign Language]

We will take that as a last question. Thank you very much, members of management team. Ladies and gentlemen, on behalf of KRBL Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.