I extend my warm greetings to each one of you as we come together to reflect upon the
year gone by and what it has entailed for KRBL Limited. It gives me immense pleasure to
present to you the significant developments in the growth trajectory of your Company, over
the last fiscal year.
Navigating the Tides: The Dynamic Shifts in Global and Indian Economies
The global food market has seen some fluctuations in recent times, but the overall
impact on our business has been minimal. The Black Sea Grain Initiative - The Ukrainian
ports' initiative focused on ensuring secure transportation of grain and food products -
played a significant role in stabilising global markets and maintaining their openness.
While there were some disruptions, the last few months of FY23 saw a partial alleviation
of high international food prices. The Indian economy is primarily driven by domestic
demand, wherein consumption and investments account for 70% of the economic activity. With
pent-up demand being unleashed and widespread vaccination coverage, the contact-intensive
services sector played a pivotal role in driving development in FY23. The rise in
employment, increasing private consumption and positive consumer sentiment contributed to
GDP growth in the fiscal year under consideration.
The Big Picture: An Expanse of Opportunities in the Industry
Long-term patterns of consumer expenditure in numerous international markets have
revealed a shift in spending habits. Consumers are spending less on essential items like
wheat and more on higher-value food products such as meat, dairy, fruits and vegetables.
This trend has been particularly noticeable in India, given the 15% increase in per capita
income in FY23. Multinational retailers have expanded their operations in developing
nations, leading to significant transformations in the global consumer food industry.
Manufacturers and retailers are striving to meet the growing demands of consumers, who are
increasingly seeking a broader range of high-quality products.
India, a major player in the global rice market, implemented certain measures and
export tariffs in September 2022, to ensure domestic supplies. Despite these measures,
India saw a remarkable increase of over 15% in rice exports, reaching a record-breaking
value of $11.1 Billion in FY23, with a volume of 22 Million tonnes (MT). This growth was
driven by a variety of factors, including the increased demand for high-quality rice
products in markets such as the Middle East.
Through the Kaleidoscope: Perspectives, Challenges and Triumphs
Against this backdrop, I am delighted to share that our flagship brand has been
recognised as the World's No. 1 Basmati Rice Brand. This recognition reflects the trust
and loyalty of our consumers, making it a moment of immense pride for all of us. In FY23,
KRBL attained a consolidated revenue from operations of Rs5,363 Crore, achieving a
remarkable growth of 27% over FY22 and crossing the Rs5,000 Crore mark. Our domestic sales
surpassed the Rs3,000 Crore mark for the first time, reaching Rs3,335 Crore with a growth
rate of 26%. In the domestic branded basmati rice segment, your Company continues to lead
the market with a market share of 32% in general trade and 42% in modern trade. The
post-GST rationalisation on bulk packs has driven a substantial increase in our domestic
bulk pack sales.
Export Sales witnessed a robust growth of 33% to reach Rs1,931 Crore, fuelled by the
revival of sales in key markets such as Saudi Arabia, among other factors. Despite the
Government's export restrictions on broken rice and the imposition of export duty on some
non-basmati rice varieties, our revenue remained resilient. Our consolidated Profit After
Tax (PAT) witnessed an impressive growth of 53% to reach a record high of Rs701 Crore.
This outstanding performance can be attributed to better realisation in both domestic and
export markets, further bolstering our profitability.
During the Kharif season of 2022-23, paddy prices witnessed a notable rise of 15% to
20% compared to the previous year, primarily attributed to the unpredictable monsoon
patterns in India and flooding in Pakistan. Consequently, both domestic and export markets
experienced a substantial increase in basmati rice prices. In response to the strong
demand for basmati rice, KRBL procured significant quantities of paddy and rice to meet
the robust market requirements.
I am pleased to share that we have achieved an all-time high Earnings per Share (EPS)
of Rs29.78 per share, a testament to our strong financial performance and growth
trajectory. Our net worth has also reached an all-time high, reflecting our commitment to
enhancing shareholder value and capitalising on opportunities for long-term success.
Expanding the Frontiers: Pioneering Success through Strategic Projects
The year also saw our expansion plans taking shape. The commencement of commercial
production at our plant in Anjar, Gujarat in June 2023, marks a significant milestone.
This strategically located facility, near the leading Kandla Port, lowers our farm-to-port
time for exports and reduces logistics costs per tonne of rice processed at the Gujarat
facility. Additionally, it enables us to procure and process rice grown in Western states
more efficiently, thereby comprehensively catering to consumers in Western India. These
would include Madhya Pradesh, Maharashtra, Rajasthan and Gujarat.
Our other two plants in Gangavathi, Karnataka and Madhya Pradesh are under
construction. Upon completion, these facilities will enhance our capacity and enable us to
delve deeper into the non-basmati space. This expansion plan and our foray into
non-basmati speciality aged rice will substantially increase our overall addressable
market and strengthen our dealer and distributor network. We are also focused on launching
new products to further broaden our product portfolio.
Thriving in Transformation: A Dynamic Outlook for FY24
As we look ahead to the fiscal year 2024, we anticipate a few key developments that may
impact our industry and business. The El Nino phenomenon may adversely affect rice
production in India and other South Asian rice-growing countries, leading to a potential
decrease in paddy planting and yield. This may result in increased global rice prices and
food security concerns in countries reliant on rice imports. Furthermore, the introduction
of new varieties of basmati rice in India, resistant to bacterial blight and blast
diseases, may boost basmati rice exports to European countries with stringent pesticide
norms. This development, coupled with the specified identity standards for basmati rice
set by Food Safety and Standards Authority of India (FSSAI), effective from 01 August
2023, will ensure fair trade of basmati rice and protect consumer interests. As a branded
player, KRBL stands to benefit from these developments as our customers can trust the
quality of our products.
We anticipate a growth in rural demand in the upcoming financial year, while urban
demand is expected to remain steady. This upswing in demand is likely to boost the revenue
of the FMCG sector. Additionally, the increase in the common paddy Minimum Support Price
(MSP) for the upcoming Kharif crop marketing season will provide remunerative pricing to
paddy farmers, potentially leading to indirect impacts on basmati paddy prices. Based on
the positive realisations from the previous year, we anticipate an increase in basmati
acreage.
Creating Impact: Initiatives for a Sustainable Future
At KRBL, we have always been steadfast in our commitment to serve society and protect
the environment for sustainable growth. Our fully integrated plants generate power for
captive consumption and produce value-added products from waste, showcasing our dedication
to resource optimisation. We operate wind and solar power generation units across the
country, generating green and renewable energy.
To address the challenge of affordable diagnostic tests, we are in the process of
establishing a medium to a high-end diagnostic centre in New Delhi. With an estimated
budget of around Rs27 Crore, this centre will offer various tests at negligible or minimal
charges, ensuring accessibility to the economically disadvantaged.
I would like to extend my heartfelt gratitude to our valued customers for their trust
in our products. We are committed to consistently delivering the highest quality and
maintaining our position as a brand of choice. Our dedicated employees have been the
driving force behind our achievements. Their commitment, expertise and relentless pursuit
of excellence have played a pivotal role in our success. I also extend my gratitude to the
farmers who have been instrumental in providing us with the finest basmati rice. Your hard
work and dedication are invaluable in ensuring the quality and authenticity of our
products. I would also like to acknowledge the support and cooperation extended to us by
the government and other stakeholders. With our pursuit of excellence, innovation and
sustainable growth, we are committed to delivering value to our shareholders, customers,
employees and society, at large and promise to keep doing so.
Yours sincerely,
AnRsl Kumar MiRs l
Chairman & Managing Director, KRBL Limited