KRBL (NSE:KRBL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to KRBL Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Shen, Chief Financial Officer of KRBL Limited. Thank you, and over to you, sir. Thank you, and thank you for joining us. Welcome to the Q2 FY 'twenty seven Earnings Conference Call for Analysts and Investors of KRBL Limited. Today, we have Mr. Anil Kumar Mittal, Chairman and Managing Director Mr. Anup Kumar Gupta, Joint Managing Director Mr. Ayush Gupta, Head of the India Business and Mr. Akshay Gupta, Head, Bulk Exports as key speakers on the call.

0:58 To begin the call, Mr. Anil Kumar Mittal will share updates on the business, industry and our overall strategy. Following that, Mr. Ayush Gupta will provide insights into the performance and outlook of our domestic business. Finally, I will present the financial overview of the company for the second quarter and half year ended 09/30/2026. Once the management has concluded their opening remarks, we will open the floor for an interactive question and answer 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. You can refer to KRBL's investor presentation available on the stock exchange websites and our company websites. Now I would like to invite Anilji to share his views. Good afternoon, everyone.

1:48 Thank you for joining us for KRBL's Q2 FY twenty twenty seven earnings call. I will briefly cover the global and Indian right of risk, the new basmati crop and paddy prices, the export environment and the company's performance. Let me begin with global picture, which is broadly unchanged since our last call. As per USDA's October estimate, the worldwide production in twenty twenty six-twenty twenty seven is expected to fall to about five thirty three million tonnes from a record of four forty six million tonnes last year, with India accounting for most of the decline.

2:37 Consumption, meanwhile, is expected to rise to a record of about five thirty nine million tons. Global stocks are therefore expected to draw down. India continues to hold close to 40% of worldwide trade and USDA expects Indian exports of about 24,000,000 tonnes in 2627 higher than the previous year. For India, USDA now estimates for 2627 production at about 147,000,000 metric tonnes against a record of 154,000,000 tonnes last year, reflecting a weaker monsoon. India will remain alongside China, one of the two largest size producers in the world, and domestic consumption is expected to rise by about 4,000,000 tonnes.

3:35 The 2026 monsoon ended about 13% below normal nationally, The weakest since 2015 under a strong Al Nino, last quarter, I flagged the risk disposed to the Cosmati Belt. I am glad to say that risk largely did not materialize. Northwest India finished about 6% below normal, irrigation carried the crop through and trade estimates currently put the year's Basmati crop modestly about last year's. The unseasonal rain in part of Punjab in the mid October wet some harvested body in the Mandis and flattened stating crop in places.

4:31 The damage appears localized and will have a clear picture as arrivals progress. Despite a larger crop, basmati paddy prices have risen sharply. Major varieties are trading at around INR 4,500 to INR 5,200 per Kunjan, well above last year's price. There are three reasons. First, the industry has entered this season with almost no carryover stock. Second, the export realization have stayed high. And third, buyer across The Middle East need to rebuild depleted inventories and the trade is pricing that demand in.

5:17 Our procurement approach reflects this. We will not chase the market. We are buying in a staggered manner across the season with a firm focus on quality, low moisture, high recovery, our inventory position gives us the flexibility to be patient whenever prices run ahead of fundamentals. On exports, between April and August, India shipped about 2,500,000 tonnes of basmati against 2,700,000 tonnes in the same period last year. The entire decline was in The Middle East. Shipments to the rest of the world were unchanged.

6:03 Realizations were about 21% higher in rupee terms. So the rupee value of India's basmati export actually rose by around 12%. And in August, volumes were back over last year's level. As I said last quarter, this remains a logistics problem and not a demand problem. The situation in The Gulf remains unsettled. Transit through the state of Hormuz has been intermittent and freight and war risk premiums remain elevated and sensitive to every development. Marine cover continues to be available price shipment by shipment and buyers have largely absorbed the higher cost because food security leave them little alternative.

7:05 Trade has adapted around the disruptions. Badmati shipment to Jordan largely for onward movement to Iraq are up almost sixfold this year, more than offsetting the fall in direct shipments to Iraq. Iran is the exception payment and banking channels have become considerably more difficult since U. S. Sanctions were tightened in August and that market will take longer to normalize. Our view of recovery is unchanged. Inventories in the region are low and when the route becomes dependable, destocking will be significant.

7:51 But we expect that normalization to be gradual rather than sudden. Now coming to KRBL's performance. KRBL recorded its highest ever quarterly revenue of INR $17.27 crore, up 14% on the same quarter last year, driven by 33% growth in domestic revenue. Export revenue for the first half was by 41 crores, lower by 41%. The decline was almost entirely in bulk export to The Middle East, where three factor weighted on the business. Payment channel in parts of the region became more difficult, movement through the state of Harmus became more restricted and the weighing risk against reward.

8:45 We choose to take on few opportunities there. We would rather protect the quality to our business than chase volume. At the same time, there are clear signs of strength in second quarter export revenue rose 22% over the first quarter to INR $2.97 crores, although it remains 31% below last year. And exports to market outside The Middle East grew 14% in the first half. These markets are doing well and showing good growth, which reflects that diversification of our export business and a strong recall our brands enjoy.

9:35 This is encouraging. Looking ahead, we expect exports to recover progressively through the second half, subject to condition in The Gulf. In Saudi Arabia, our largest export market demand remains steady, and we continue to survey through the wholesale route. Our priorities are unchanged, disciplined procurement, continued premiumization of the India Gate portfolio, deepening our relationship with large global buyers and prudent capital allocation. I would like to thank our shareholders, customers, partners and employees for their continued trust and support.

10:21 I will now hand over to Ayush for the domestic business update. Thank you once again. You. Thank you. And good afternoon, everyone. Our India business delivered its highest ever quarterly revenue in quarter two. Domestic revenue excluding Power stood at INR1390 crores, up 33% year on year. This took first half domestic revenue to INR2612 crores, up 24%. Let me start with what drove the quarter. Domestic branded rice sales grew 23% year on year from INR921 crores to INR1134 crores.

11:09 Unbranded rice sales increased from INR53 crores to INR166 crores, owing to a selective additional rice sale of INR102 crores. Within branded rice, consumer pack volume growth accelerated from 7% year on year in quarter one to 18% in quarter two. Modern trade and e commerce together grew consumer pack volumes by 31%. General trade also returned to growth after a decline of around 5% year on year in quarter one. Consumer pack volumes in general trade grew 10% in quarter two. That recovery accounted for most of the improvement between the first and the second quarters. In branded bulk packs, we had explained on our last call that some traders trade buyers had deferred purchases while waiting for prices to settle.

12:01 Buying picked up in quarter two with volumes growing 11% year on year. First half volumes were still below last year, but October was another strong month for bulk packs signaling strong recovery and sustained part two growth. Regional rice also performed well with quarter two volumes growing 42% year on year. The H1 growth in regional rice now stands at 32% from last year. Turning to our market position. India Gate continues to lead as the packaged Bhaskaranthi category across our key channels. For the twelve months ended September, our volume share was around 36% in general trade, nearly twice that of the next year. In modern trade, our share over the same period was 39.6%, a lead of more than six percentage points.

12:52 In e commerce, our internal estimates put our September exit share at 41.1% compared with approximately 33% for the next play. On pricing, we held prices through quarter two. As we had indicated on our last call, domestic rice realizations averaged around Rs. 80 per kg in both quarter one and quarter two. Compared with quarter two last year, realizations were around 12% higher. With the arrival of the new crop, bashmuthi padding prices have risen sharply. In late October, millers and exporters reported prices of around INR 4,500 per pintle for fifteen oh nine paddy and INR 5,200 for eleven twenty one in key Punjab and Haryana Mandis.

13:39 Both were at least 1,000 per quintile higher than a year earlier. We have taken price increases across our portfolio in quarter three. From here, we will manage pricing by gradient and channel, balancing our objective of gaining market share with the need to protect gross margins. Regional rice prices in the South also matter to that assessment. In parts of Karnataka, weak rainfall and limited water for irrigation reduced paddy soil. In early October, wholesale Sonamosi prices were reported at INR 75 to 80 per kg, up from around INR 50. In Telangana, retail prices for fine rice rose from INR 70 to 80 two-eighty 2 per kg, while Vaasmati moved from INR 113 to 122.

14:29 For a household comparing the two in that market, the rupee premium for Vaasmati stayed broadly similar. In our view, firmer prices for regional fine rice provide some support for domestic basmati pricing. So far, we have seen no noticeable shift from branded basmati to loose rice. Prices have risen across the category. Some households may choose a more affordable variant or a smaller pack to manage how much they spend on each purchase. We would want to see at least three months of purchasing data after the price increase before drawing a conclusion on either behavior. Let me turn to the investments we are making in distribution and in the India Gate brand. India Gate is present in around 3.3 lakh outlets and reaches approximately INR 1.2 crore urban households.

15:18 We are working to improve availability in towns where our distributor is still limited our distribution is still limited. Through our order to cash program, we are also connecting order placement, stock allocation, collections and claims. For a distributor, the practical benefit should be greater clarity on when an order will be fulfilled and when a claim will be settled. Beyond making India Gate available in more homes, we are also investing in what the brand means to the families who choose it. Consumers know India Gate for the quality of its rice and the confidence that a meal will turn out well. We want that trust to extend to something families care about more deeply, the nourishment of their children. That is the thinking behind Grains of Hope now in its third year.

16:06 This year, through the nutrition prayer, we took a familiar moment in a child's school day, the morning prayer, and used it to start a conversation about nutrition. The campaign reached more than 70 lakh children. For us, the longer term purpose is to build an association between India Gate, the care that goes into feeding a family and a responsibility as a food company to help address the child hunger. That is an association we intend to earn through sustained work overtime. In our newer categories, we are building on both that trust and our existing retail relationships. On our last call, I spoke about the launch of India Gate Light and Fluffy Poha. By mid September, Poha had reached approximately 44% of our existing rice outlet base in the launch towns.

16:57 Of the retailers who had stocked it, around 30 had already placed a repeat order. That is an encouraging early sign. Our focus now is to reach more outlets in those towns and track how consistently retailers reorder. In masalas, first half sales increased to approximately INR 4.5 crore from INR 3.1 crore a year earlier. Rice brings India Gate into the households and masalas give families more occasions to cook with us. Building on our Biryani Masala, we are developing ready to cook blends for regional dishes where consumers want authentic flavor and a simpler way to prepare their recipes at home. Our ambition remains to exit financial year twenty twenty seven at an annualized masala revenue run rate of approximately INR25 crores.

17:43 To get there, our priorities in the second half are to make our biryani masalas available in more outlets and build repeat purchases across the ready to cook range. In edible oils, our Applied Heart Balance pack addresses another everyday need by giving consumers greater control over how much oil they pour. Looking ahead, we continue to see approximately 10% growth in overall domestic rice volumes as achievable for financial year twenty twenty seven. Consumer pack growth has accelerated, bulk pack buying has remained strong in October and regional rise continues to grow. Our focus in the second half is to sustain that volume growth and gain market share while protecting gross margins as higher battery costs work their way through the business.

18:32 Thank you. I'll now hand it over to Ashish. Thank you, Ayush. I will now take you through the performance for the quarter ended 09/30/2026. All figures mentioned by me would refer to the consolidated financials of KRBL Limited. In terms of the quarter, total income for the quarter stood at INR1768 crores, higher by 15% over the corresponding quarter last year. Domestic revenue grew by 33%, driven by strong volume and realization growth in the branded business and a selective bulk rice sale of INR102 crores. Export sales were lower owing to lower bulk rice exports to The Middle East. Branded exports continued to be stable. Gross margin for the quarter stood at 34.5% compared to 29.2% in quarter two FY twenty twenty six, increased due to higher realization, better product mix and higher other income.

19:30 EBITDA margin for the quarter was at 21.1% versus 16.6% in the same period last year due to higher gross margin, partially impacted by higher proportionate freight and advertisement costs. PAT for the quarter was at INR159 crores or 14.6% in margin terms as against INR172 crores or 11.2% in the corresponding quarter. Let me now share a comparative analysis of Q2 versus Q1 of this year. Revenue from operations for quarter two FY twenty twenty seven is at INR1727 crores, higher by 15% quarter on quarter, driven by 22 higher export revenue and 14% higher domestic revenue. Other income is lower mainly due to lower gain on sale or revaluation on treasury investments and lower ForEx gain.

20:22 Gross profit is lower due to lower other income. EBITDA followed the trend in gross profit, partially impacted by higher proportionate and other expenses. Coming to the first half of this year, total income for the period stood at INR3329 crores, higher by 6% as against H1 FY 'twenty six. Domestic revenue grew by 24%, while export revenue declined by 41% due to lower bulk exports to The Middle East. Branded exports in the same period grew by 18%. Other income is higher due to higher yield on treasury investments and higher ForEx gain. Gross profit of the company stood at 35.3%, while EBITDA and PAT stood at twenty two point four percent and fifteen point six percent. Margin improved mainly due to better realization, better product mix and higher other income.

21:14 Moving to the balance sheet highlights, our total inventory as of 09/30/2026 was at INR20203 crores. This includes INR 146 crores in paddy inventory as against INR 123 crores at the same point last year and INR 1,900 crores in rice inventory as against INR $19.95 crores in September 25. On a volume basis, as of 09/30/2026, Paddy and Rice inventory stood at 31,000 tonnes and 278,000 tonnes respectively, compared to 33,000 tonnes of Paddy and 304,000 tonnes of Rice as on 09/30/2025. Slightly lower inventory is due to lower inventory quantity. Cash and bank balance including treasury investments was at INR2895 crores as of 09/30/2026, higher from INR 2,157 crores at the same point last year.

22:11 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 and A session. I will just like to mention that as the ED matter is subdued, we will not be able to respond queries on this matter. So over to the moderator now. Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We request you to kindly restrict the number of questions to maximum two of two questions at a time. In case if you have any further questions, please join the queue again.

22:56 Ladies and gentlemen, we will wait for a moment while the question queue is assembled. First question is from the line of Yash Dantivadhya from Dantivadhya. Congratulations on a great set of numbers. Just wanted to understand what sort of volume growth and export growth are we going to see from here? Because I think in the last two months, exports from India have a top, I think, a year high, right, rice exports.

23:41 And domestic business, obviously, your volume growth, I want some guidance on that. That's my first question. Export growth is primarily dependent on the situation in The Middle East. The day the situation is settled and there is agreement between U. S. And Iran, I think so we expect to increase the sale by more than double because in this half yearly results, our bulk sale is almost zero, which we expect it could grow in a very large quantity, maybe up to 30,000, 40,000 ton or maybe even higher.

24:33 So it all depends upon the situation and state of harmus and the entry of vessels in that area. Right. So basically, you basically said that exports will double if there is agreement between Iran and U. S. Is that what I should understand from what you said? Yes, yes, definitely. Definitely. Definitely. And on domestic volume growth, you didn't... Domestic volume growth, we've been saying that we are committed to a 10% volume growth year over year. Right. And my second question is basically regarding our low cost inventory.

25:18 Right? According to the numbers that we did, basically, we believe that you have another quarter or one one and a half quarter of basically low cost inventory still left in. So what kind of margins should we expect in this particular quarter? Because in Q3, because I think the prices have gone up further than Q2. So can you acknowledge this and also respond to this? Yes. But you see, Q3 would be a mixture of some part of new crop as well as old crop. Yes, old crop, definitely the margins will be higher. But in the new crops and the paddy is quite high, the margins would be comparatively lower. So I think about EBITDA anywhere between 16% to 20% can be the EBITDA for the third quarter.

26:12 No. But I think if I saw your inventory in Q3 and I sort of did the numbers based on the sort of inventory that you have, that sort of suggests that you have another quarter of low inventory left, Q3 inventory left of last year. Our inventory is not for the quarter. Our inventory for another one point five years. It will go on selling. There are certain products, certain SKUs, which are two years old, which are one point five years old. So it is not only the quarter based inventory. The profit will come, definitely it will come. You see on a rise branded commodity, 16% to 20% EBITDA is very good in EBITDA as per industry. No, but what I no, it's 100% to see you've performed in terms of margins. I'm not arguing against that. My only question is 16% to 20 is a pretty wide range, right? I was hoping for a narrower range since we're already halfway through.

27:12 It's difficult to comment, but we'll be nearing 2020 only, definitely. Exactly. Exactly. So that's what I wanted to hear because generally, I feel like we've tried to be a little conservative in terms of commentary, which I completely understand. But to me, when I look at the inventory and the numbers, it really seems like 20 is possible in q three. I just wanted to hear that from your... From the horse's mouth in in in that case. Thank you so much. I'll come back in queue. Thank you. Next question is from the line of Hoshan Hinduja from Elias Financial Services. Please go ahead. Yes. Thank you. So I have a couple of questions. So, mainly, as I... So the first question is on the line, like, you know, you had mentioned.

28:01 And even in the... Like, if you look at the environment Sorry to interrupt you, mister, we are unable to hear you, sir. Your voice is sounding little muffled. Can you hear me now? Hello? Is it better? A little better. Please go ahead. Yeah. So my question was with regards to, like, you know, the current macro environment with regards to the exports. You know, there has been, you know, especially in the new developments that are coming with regards to bulk, you know, cargo agreements between either various carriers or for countries, especially, I think there was one for Iran or Iraq. I think Iraq, which was announced where there was, like, an 80% cut in freight costs. So just wanted to know, do you expect any such bulk, you know, carrier agreements to come or something which could, you know, perhaps reduce the freight cost and maybe alleviate the export volumes or reversal coming back anytime soon?

28:59 That's my first question. Yes. That as far as Iraq was concerned, there were two, three consignment, which was joined by various exporters to ship a bulk cargo to Iraq. And in that case, they definitely saved the freight and the time of the cargo to reach at the destination. But when it comes to Iran or to other Middle East countries like Saudi Arabia, Kuwait, Bahrain and all other countries, this arrangement is not possible. And therefore, it was only for Iraq because there are two things. Iraq imports larger quantity of 20,000 ton, 25,000 ton in a single cargo, whereas Saudi Arabia, which is the second largest cargo of a thing, they import 20 containers, 30 containers, 40 containers, which is which is little difficult to send that cargo in a bulk...

30:03 Through bulk vessels. Okay. Understood. So my second question is with regards to basically the environment on the, like, you know, basmati rice as a whole. Right? I mean, since, you know, basmati rice is not, you know, even as per my understanding, yeah, when when it comes to non basmati rice, the government still has some control with regards to price and they keep a strategic reserve. Right? You know? Or if the price goes up, they can oversupply the market and perhaps, you know, drop the price onto a reasonable level. But with regards to pass material, that is not the case. There is no strategic reserves. So do you see this further going up in the longer term? And would this be, like, a more longer term price movement that will happen with regards to rice, or is it just, like, maybe for some time only based on your understanding?

30:55 And with regards to rice production, would... Do you think, like, you know, like, this year, there was the... And, you know, because of which the rice production fell. There are three, four questions involved in Basmati rice. First, let me tell you about the crop. This year, as per our estimation and the mapping done through the APITA, we were given to understand that the crop is around 5% higher over last year. But because of late rains in October and up till now also sometimes there is a cloudy weather, we are unable to assess whether that 5% increase which was anticipated about twenty days or a month earlier is still 5% higher or has become 2%, 4% lower.

32:00 That is question number one. So the total estimation rose around five percent. It could be 5% higher or it could be 5% lower. Now commodity is such a thing that it has got a sentimental reaction with each and every commodity. If you look at the world commodity prices, whether it is pulses, whether it is sugar, whether it is oil, oilseeds, all are going quite high. The prices are jumping skyrocket high. So the and moreover that non basmati rice prices itself in India have increased by 30%. In South India, the rice which was sold at INR 60 or INR 55, INR 60 is sold at INR 90, INR 95 because the crop in South India is totally failed.

32:56 So the prices of non basmati are quite high. Looking all the scenario of the worldwide, basmati prices are not going to remain low. They are going to be maintained at a higher price. Now there are three reasons also behind it. First, there is no carryover stock. Number two, the stocks or the inventories abroad are also depleting and they are waiting for the war to come down or to some settlement to take place, so that they start building their inventory into the Middle East. If that is the situation, then the exports from India may be higher by 500,000 tonnes instead of 6,500,000 it could be 7,000,000 tonnes, because there is a very big gap.

33:45 So at present, we don't find the prices going down, but we even feel that it is already too high, it might remain at the same level or may go higher by another 4%, 5%. That is all. Higher side is 5%, less chances of going down and prices will remain firm. Understood. Just one last question, sir. So with regards to now that, you know, you you mentioned that, you know, Middle East, especially exports would be, you know, kind of restricted or in terms of, you know, may not be feasible. So in... As... You know, from your perspective, what do you think, like, may... Are you planning to perhaps export to other countries? Or, you know, what what do you think is the outlook, you know, from your perspective on, you know, increasing the exports? Because if I'm not on export yield, technically, better margins than domestic.

34:41 Correct? So is there, like, are you planning to export to other countries where maybe travel is not that much of an issue? Or how how are you going about that? As far as exports and substantial increment is concerned, primarily it is Middle East and second country is the Europe, where they also buy about 400,000 tonnes of brown bags. Now it all depends upon the European nations and European countries that how they react on this price hike because we have a competition with Pakistan. Now Pakistan at the moment is a little lower than us, which is about $50 lower than us. So all the European countries are going to Pakistan to procure certain quantities.

35:32 But looking to the quality and looking to their internal market in Europe, they have to buy from India also. So it's a matter of another fifteen, twenty days because certain crops have started arriving, which are required for the European countries, Pusa Basmati rice. So we have to wait for fifteen minutes to take that reaction whether how much quantity Europe will buy from India. These are the two markets, The Middle East, including Persian Gulf, which can really improve the exports and in quantum wise, the second is Europe. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we request you to please limit your question to two per participant.

36:26 If you have a follow-up question, you may rejoin the queue. Next question is from the line of Amit Agarwal from D. V. Investments. Please go ahead. Congratulations for a good set of numbers. Hello? Hello. Can you hear me? Yes, we can hear you. My first question is regarding exports. Sir, we had export number INR300 crore. Can you divide the exports region wise, how much is to China and how much is to Europe and how much is to Middle East? See, I'm afraid we can't give a breakup in terms of countries, but I can confirm that there is... I'm just I just want to know how much is affected by the Middle East in this how much is Middle East covered in this INR300 crore export? What about China? China has been pretty slow. Otherwise, China was supposed to be a very good market for us.

37:23 See, China, there is no exports for the last more than six months now. And as far as KRBL is concerned, our majority of exports is to Middle East. So this number is basically for Middle East or for Europe and America mix also? That's normal. Whatever it has been going, we are still exporting to Europe and America. But our majority of the export, 75% is to Middle East and Persian Gulf. Okay. And my second question is regarding up life. So I have noticed for last two, three months up life is very difficult, highly available online marketplaces like Blinket and Swiggy and all. Any particular reason, are with supply constraint or this e commerce websites are stocking at less?

38:20 Appliance, I'm talking about. Are you talking about Appliance specifically or you're talking about our... Yes, yes, Oil. No, I'm talking about oil already. No, actually our Applied Oil primarily goes to modern retail platforms and e commerce platforms. Some of the e commerce platforms, rate of sale has been a little slow and investment requirements have been high. So we are still negotiating with our e commerce players on how to run this business sustainably. But on modern trade, we continue to perform well in edible oils. And how much turnover achieved from oil in this particular quarter?

39:08 I think close to about INR 6 crores is what we did in this quarter. What about the reason for Mr. Agarwal, may we request you to please rejoin the queue, sir? We have participants for this call. Thank you. Participants are requested to please limit their question to two per participant. Next question is from the line of from KRBL Please go ahead. Congratulations on a good set of numbers. So my first question is related to that what is the volume growth and realization growth on a Q on Q basis? And there is a bit of a decline in our gross margin. So could you just tell us that why there is a decline and what kind of gross margins we are expecting in Q3 and Q4?

40:02 She's talking quarter one to quarter. Yes. So I think your first question is on Q on Q volume growth, right? If we look at rice as a whole, the volume growth on between Q2 and Q1 of this year was at 18%, right? And what was the second question, sorry? Second question, there is a bit of dip in our gross margin from Q on Q basis, like it has been decreased from 33.5% to 32.9%. So why there is a decrease and what is the sustainable gross profit margin for Q3 and Q4, if you can guide us with that? Yes. So the decline is primarily because of other income. So quarter one included MTM gains as well as a higher gain from ForEx, while those numbers are lower than Q2. So that's primarily the reason for dip in gross margins.

41:01 I think in terms of what margins we expect that question was answered earlier. I think in terms of EBITDA for the year as a whole, we are looking at somewhere between 17% to 19%. Okay. But I was calculating gross margins excluding the other income only. So can you, I guess, a reason for that? Yes. So that slight drop is because of higher other expenses, which I like I said in my speech, there are two costs that have gone up within that. One is higher freight cost. That has gone up because of higher volumes, primarily in the domestic business. On the export side, freight rates have gone up, so that's the other reason freight cost has gone up. Second, in quarter two, there were higher investments in advertising.

41:46 So these primarily freight cost and advertising. Okay. And so what is your Q on Q domestic volume growth, just if you can give me a number? Yes. So domestic volume growth is at 18% Q on Q. So 18% is domestic volume growth. Okay. Correct. And the second question is related to that we have a cash rich balance sheet. So does it help us in a procurement, like we can do the bulk procurement as if we can see that supplies went uncertain and the prices are also elevated. So does it help us in our procurement? And can we expect much higher dividend payout this year as we have a surplus cash on our balance sheet?

42:36 Definitely, we are we are famous. We pay to the farmer within twenty four hours. So definitely, have a hedge on buying. There's no doubt about it. As far as dividend is concerned, we have a policy of 15% profit, but we'll look beyond that also. We'll look above 15% also. We'll discuss that. We'll be giving good dividend. Next question is from the line of Premal Shah from PH Investments. My first question is, what was your realization for the domestic sales for this Q2?

43:21 Average realization for total rise, whatever, whichever bhashmati or regional rise together? Combined realization for domestic business was INR 80 per kg. Okay. And for exports? Yes. Exports was around INR 132,000 per tonne, so INR 132 per kg. Okay. And what were the volumes in absolute numbers, not in growth for domestic market? What were the kind of volumes like how many tonnes --? That's something that we've not disclosed. Think in the earlier question, we'd answered the growth in volumes. But absolute volumes, we are not disclosing right now. Okay. All right. Fine. And what are your current domestic Q3 current going on market rates realizations just now in the domestic market?

44:15 Current realizations of Q3, we don't have. But as I mentioned that we have taken significant increases in our pricing. So by close to 15% to 18%. No, no, I think we'll close around 7% to 8% higher in quarter three. Okay. All right, sir. Thank you. You. Next question is from the line of Chirag Singhal from First Water Fund. Please go ahead. Yes. Can you hear me? Yeah, Chirag, we can hear you. Go ahead, please. Yeah. Congrats on a very good quarter. Second strong quarter in a row. Thank you. First question is on exports.

45:02 So you mentioned to one of the earlier participants that if the war ends, you're expecting the exports to double. So is that on H1 base or last year base? This is our anticipation. As we tell you, there are certain countries which have in last six months, not a single grain has gone, that is the Persian Gulf, Iran. Other than Iran, what is happening, the goods going to Kuwait, goods going to Saudi Arabia. There, we send them to Salalah Port. From Salalah Port, they go via truck to Kuwait and all these countries. The freight to the customer is costing them around $11,000 per container.

45:49 So I what we feel that once the there is a settlement and disruption in that area is normalized. We are going to do definitely double digit figure in Iran. Iran, we used to do 100,000 ton a year, which we should do now 50,000 tonne in next six months. And other than that, also there could be a rise of 15,000, 20,000 tonnes in the whole year for the other Middle East countries. So these are the two places where we expect we can do much better volumes. Okay. So I mean, in absolute terms, last year, we did close to 1,500 odd crores of exports.

46:36 The first half, we have done almost $545.50 crores of exports. So in in in the, you know, higher prices versus last year and whatever volume pickup that you are seeing in the current scenario, I mean, not when the war ends, do you still see the matching last year's exports of 1,500 odd crores for the full year or it will be lower? No. No. It will not be lower. It will be either the same or it will be better by about five to 10%. Okay. Got it. Coming to the India business, so what was the volume growth on a year on year basis in quarter two?

47:24 1818%. Year on year. So, sequence... Sequentially also 18 and year on year also 18. Is that correct? Oh, sorry. Year on year on quarter two is 19. Okay. So I... Do you see this kind of volume growth sustaining in the second half as well? Or, like, what's your outlook on the India business? I'm not asking what the realization. I'm just asking you on the volume front. What's your outlook for H2 volume growth versus last year? See, as I mentioned that Consumer Pack business has shown good trajectory in the last two quarters, and we are hopeful that the Consumer Packaging business continues to grow in quarter three and quarter four because there have been some structural changes in the way we conduct Consumer Packaging. Bulk pack has shown good recovery in quarter two.

48:15 And October also, we did good bulk pack volume compared to last year. So bulk pack, again, has been promising, and we will we are hopeful that business will also continue. Regional, as I told you, we did 42% growth on a quarter on quarter basis or year on year basis in the quarter. And even at the H1 level, we are at 32% growth. So all these numbers, they give us a promising number to deliver 10% growth for the year. We also mentioned that there was an unbranded sale that happened in domestic, which might not happen in the H2. Hence, the 19% number is not what we are promising. We are saying that 10% growth is something that we'll be able to deliver.

49:01 That is for H2, 10% volume growth for H2 will be there as well. Is that Yes. Yes. Okay. Okay. Just one last question on the overall guidance for the full year. So given whatever commentary you gave on exports and the India business, the revenues should and obviously, the prices, which are higher versus last year, the revenues can be in the range of INR 7,500 odd crores a 16%, 17% VAT margin. Is that a number that we can work with for the full year? Chirag, so... As I said, prices are 15%.

49:52 So Chirag, I'll break this up in two words, right? So if you look at half year, we've done around INR 3,200 crores. Like has been mentioned on the call, we expect the prices to sustain at the current level. I think the big thing to watch out for is the export performance in H2. Like Anilji had mentioned, we are hopeful that it will pick up and get to at least the previous year's level, which was about INR $15.50 odd crores of export. So I think the export performance fall in place, the number you mentioned looks feasible. INR 7,500 odd crores of top line with a 16%, 175%. That's right, yes. If we are able to do last year exports. Correct. Okay.

50:38 So that would be it from my end. Congrats again, and wish you the best. Thanks. Thank you. Next question is from the line of Anuj Sharma from State Food Investment Managers. Please go ahead. Yeah. Thank you. Thank you for this opportunity, and many congratulations for the strong performance in the domestic market. One question on domestic. What is the contribution of quick commerce in our revenues, and what is our market share in QuickCommerce? So QuickCommerce to our overall India business contributes about eight to 9%. And what was the question? Our market share is 41.1% in Quick Commerce, which is the leading market share.

51:34 Excellent. Excellent. Thank you. My second question is on exports. So sorry to harp on it, but beyond Iran, Saudi Arabia and Iraq, how are the other markets evolving? Because what we hear is these smaller markets are also contributing to business and growing. So except this year, how do you what is their share estimate over the next three, five years, the non three large markets in Middle East? See, as far as UAE is concerned, Doha is concerned, we are the market leaders there. But the only challenge presently we are facing is of shipment and the freight rates.

52:20 These are the two major challenges. Once these challenges are over, then definitely as far as our equity, Basmati India Gate is concerned, today if I send 50 container at a time they can be sold in a small market like Doha. So that type of equity and that type of brand reputation, we maintain over there. So at present, there are two challenges. Challenges is the shipment and the freight rates. If these two are settled in next one, one point five months, two months, definitely we will come we will be doing good shipments to all these small countries like Kuwait, Doha, Bahrain, all these countries. Okay.

53:07 Just a lot of things contingent on things normalizing and rationally, it should. But let's assume this uncertainty continues. Most of these markets will have to restock, right? As you are also alluding that the stockings have also gone down, the shipments have also gone down. Assuming this continues, how do you see the scenario then panning out? See, if it continues, it will economically not only rise every commodity will be into trouble because crude is directly connected, freights are directly connected, then buying power is affecting everybody over there and in India also.

53:52 So let us pray God that it should settle, it cannot continue. You can't say it will never be settled, it has to be settled because rice may be a small part, but there are billions and billions of businesses which are affected due to this war. Fair point. And last question is beyond Middle East, I just want to understand what is our strategy, what is our distribution arrangement we are setting up for for the next five, ten years. So, you know, how are we planning to go beyond Middle East? Some thoughts into regional offices, distribution arrangement, supply chain, that will be helpful. There are definitely two alternative, either you go through a distributor route or you go through your own office.

54:46 We had planned to open an office initially about one and a half year back in Saudi Arabia. Then we concluded that it is not a very interesting it's not interesting and rightful step to open your own office because then it would be distributing millions and millions of dollars on credit. So it is better that we appoint a distributor, that was the difference. And everywhere, we are of the opinion that will go through the distributors only. Okay. Okay. And non Middle East, how are we thinking about expanding our geographies beyond Middle East? Ascending the geography in Middle East already, also Middle East Beyond that, we are trying to develop more on Africa.

55:42 This year, we have done a very good business in South Africa, and that is how we are increasing other markets also in African Continent. But as far as Europe is concerned, I think so they are already importing around 400,000 tonne. It could be four twenty five, 10% higher maximum, but it's a good quantity, 100,000 tonnes of brown rice in Europe. Okay. Any targets you have that five years out or ten years out, what proportion you want non Middle East, which is the rest of world versus Middle East. Any targets you have kept internally of exports beyond Middle East? Beyond Middle East, can be a jump of 2%, 3%, 5%, not more than that. If we want a major jump, it will be Middle East including Persian Gulf. It cannot be other than Middle East including Persian Gulf. But let me tell you, there are certain market, for example, I give you and that is I will not talk beyond that.

56:45 Egypt is a market which imports about 20,000 ton of basmati rice. That basmati rice, when you go and look at in the Egyptian countries, Egyptian continent, they fill 80% of non basmati and 20% of basmati. That type of business, we don't want to do. Sorry to interrupt. May we request Mr. Sharma to please rejoin the queue. Thank you. Participants are requested to please limit your question to two per participant. Next question is from the line of Karan Gupta from Kabi Capital. Please go ahead. Yes. Thank you. Appreciate the opportunity, and congratulations on a very strong domestic market. I just wanted to follow-up from an earlier question regarding your domestic procurement strategy. Now given the cash on our balance sheet and the price trends where they are, how do you see the year panning out? Like how many tonnes of paddy do you expect to procure? And how much of this cash will be run down on the book?

57:53 This year, paddy prices are up by 20%, and we are planning around 750,000 tonnes of paddy this year. So as far as cash position is concerned, we are very comfortable. There's no problem at all. Right. So basically, you know, I'm looking at our return on capital and return on equity. Like, earlier, company used to use debt and that... You know, using that leverage, the returns looked better than what they are currently. So is there any thought of returning some of this capital to shareholders in terms of maybe a passing a dividend or do a buyback or something along those lines? Yeah.

58:42 We can think of that. We'll discuss within ourselves, then we'll let you know. It's difficult to tell on the moment what is. Alright. It would be good if you would consider and get back to us. Congratulations again, and happy holidays. Thank you. Thank you. We take that as the last question. Thank you, members of the management team. Ladies and gentlemen, on behalf of KRBL Limited, that concludes this conference call. Thank you all for joining us today, and you may now disconnect your lines. Thank you.