1. Global Economic Overview
According to the International Monetary Funds World Economic Outlook report1, the global economy is undergoing a phase of recovery despite the challenges faced in the past three years, including the COVID-19 pandemic and the conflict in Ukraine. The United Nations Department of Economic and Social Affairs Economic Analysis (UNDESA)2 highlights that efforts are underway to address the impact of the conflict on the food and energy sectors, with a focus on improving food security and nutrition in developing countries. The World Food Programme (WFP)3 has been actively working to mitigate the consequences of the conflict, ensuring access to essential food items in affected regions.
Amidst these circumstances, the global economic growth has shown resilience, with a projected growth rate of 1.9% in 20232, building upon the positive momentum of the 3% growth rate observed in 2022 (Figure 1). Furthermore, there is an optimistic outlook for global growth, with a moderate increase expected to reach 2.7% in 2024. This growth trajectory extends to both developed and developing countries, as efforts to overcome challenges continue to yield positive results. Despite some lingering impacts, the easing of COVID-19 restrictions in most countries during 2022 has paved the way for a gradual recovery of domestic demand. Additionally, measures are being taken to address supply chain disruptions and stimulate trade growth, fostering economic resilience and stability. In FY23, there was a positive development in terms of container availability and freight rates in the global market. Container availability eased, for businesses involved in international trade. Additionally, freight rates gradually normalised, providing a more stable and predictable cost structure for businesses involved in logistics and supply chain operations. This positive trend in container availability and freight rates contributed to a smoother flow of
The economic outlook for FY24 is subject to various factors and may experience uncertainties. These factors include the potential impact of rising inflation on future monetary policy tightening, the ongoing conflict in Ukraine and geopolitical tensions between countries like the U.S.A. and China. It is important to consider the possibility of disruptions in supply chains. In South Asia, economic conditions have faced challenges due to high food and energy prices, monetary tightening and fiscal vulnerabilities. However, despite these challenges, India has maintained a strong growth rate of 6.5%4 in 2023, outperforming other economies in the region. The average projected GDP growth rate for South Asia declined from 5.6% in 2022 to 4.8% in 20234. It is worth noting that countries like Bangladesh, Pakistan and Sri Lanka sought financial assistance from the International Monetary Fund (IMF) in 20225. Despite these headwinds, efforts are being made to navigate through the challenging economic landscape.
2. Indian Economic Overview
Indias economy has shown significant signs of recovery, showing a complete recovery in FY23 before many other countries. It is now positioned to return to its pre-pandemic growth trajectory in FY246. Final growth numbers indicate that India grew at 7.2% in FY237 and despite global headwinds, the countrys economy remains resilient. The government and RBI have also worked to address inflation, which was exacerbated by European strife, among other factors.
However, while the challenge of the depreciating rupee persists and the possibility of further increases in policy rates by the US Fed may exacerbate this issue, recent trends seem to strongly suggest that the RBIs monetary policies have been consistent and proactive. Indian economys growth momentum is largely down to private consumption and capital formation in FY23, generating employment and declining the urban unemployment rate. Private consumption growth for FY23 stood at 7.5%7, which is 61% per cent of GDP and a 16-year high. This was also higher than the pre-pandemic five-year average of 6.9%, a further reflection of Indias economic rise.
Urban consumption ended FY23 on an over-three-year high8 and became a significant factor in economic growth along with CAPEX. Additionally, as per the report by QuantEco Research, rural consumption in India nearly caught up to urban consumption in the second half of 2022, driven by festival-related demand. Overall, despite multiple global headwinds during the year including economic and geopolitical uncertainties, Indias economy grew driven by strong domestic macroeconomic fundamentals and private consumption. This was especially reflected in sectors such as agriculture, mining, manufacturing, electricity and constructure. This was further supported by high gross tax collections.
Despite major global challenges, India emerged as the fastest-growing major economy at 7.2% in FY23. These optimistic growth forecasts stem in part from the resilience of the Indian economy seen in the rebound of private consumption seamlessly replacing the export stimuli as the leading driver of growth. The uptick in private consumption has also given a boost to production activity resulting in an increase in capacity utilisation across sectors. The rebound in consumption was engineered by the near-universal vaccination coverage overseen by the government that brought people back to the streets to spend on contact-based services, such as restaurants, hotels, shopping malls and cinemas, among others. Potential downside risks to certain sectors such as agriculture and FMCG would be the impact of the phenomenon known as El Nino which may change monsoon patterns and average rainfall for the year.
3. Indian Agriculture Industry Overview
The Indian agricultural sector has seen an average annual growth rate of 4.6%9 over the last 6 years. However, there was a slight decline in growth from 3.3% in FY21 to 3.0% in FY229 (Figure 2). On the other hand, India has recently become a significant net exporter of agricultural goods. During FY21, there was an 18% increase in exports9 of agriculture and related products compared to the previous year. Agricultural exports reached a record high of $50.2 Billion in FY229. Further, in FY23, agricultural exports are expected to reach a commendable $56 Billion10 which will include several high-value items such as wheat and rice. The governments efforts to support farmer-producer organisations, crop diversification and agriculture productivity through the Agriculture Infrastructure Fund have contributed to this impressive growth. The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) has also provided income support to farmers while promoting alternative income sources, thus increasing their resilience to weather shocks.
The Governments efforts include improving crop and livestock productivity, shifting towards high-value crops, resource efficiency, increased cropping intensity, higher prices for farmers, MSP increase and transitioning from farm to non-farm occupations. Despite performing well, the Indian agricultural sector still faces challenges, such as the adverse effects of climate change, fragmented landholdings, suboptimal farm mechanisation, low productivity, disguised unemployment and rising input costs.
FY24 is expected to bring significant improvements to the agriculture sector with the potential to generate more than $800 Billion in revenue by 2031 with an investment of $271 Billion, according to Deloitte India11. The industry anticipates schemes and policies related to technology upgrades, warehousing, food processing and farmer welfare, as well as initiatives to increase crop realisations and non-farm incomes such as livestock farming and horticulture. Currently, the Ministry of
Agriculture has a budget allocation of Rs1,25,036 Crore in FY2412 which is 5% greater than the revised estimates for FY23 and accounts for 2.8% of the total Union Budget. The rise in expenditure is due to a slight increase in the allocation for schemes like the Modified Interest Subvention Scheme (5%) and the Pradhan Mantri Fasal Bima Yojana (10%). A significant part of Indias agriculture sector depends on a timely and normal monsoon season and this can be critical in ensuring adequate produce. Indias central pool stock for food grains was pegged at 57.9 Million tonnes with rice stocks at 26.7 Million tonnes, as per Ministry of Consumer Affairs, Food & Public Distributions press release dated 1 June 202313. Meanwhile, the fertiliser sectors overall subsidy requirements are expected to increase from Rs1.6 Lakh Crore in FY22 to approximately Rs2.5 Lakh Crore in FY23. Furthermore, the Government has announced higher minimum support price (MSP)14 for Kharif season 2023-24 at Rs2,183 per quintal for Paddy-Common and Rs2,203 per quintal for Paddy-Grade A with around 7% increase over last years MSP ensuring fair remuneration for the farmers.
4. Global Rice Industry
The projection for global rice production in FY23 has been reduced by 1.4 Million tonnes to 512.5 Million tonnes (milled basis)15, marking the first decrease since FY16. This reduction is mainly due to the lower production in China due to drought and in Pakistan due to floods. In FY23, higher Rabi Rice production in India resulted in record Indias Rice Production of around 136 Million tonnes which trimmed the global rice production shortfall to a large extent. With a larger global carry-in offsetting production revisions, the total global supply for FY23 has increased to 694.9 Million tonnes16. Global Rice Consumption and residual for FY 23 is estimated at 521.4 Million tonnes resulting in Global Rice ending stocks at 173.5 Million tonnes15.
In the latest forecast, China, the worlds largest rice producer, recorded an annual production of 145.9 Million tonnes, a decrease of 3.0 Million tonnes16 from FY22. Pakistans total FY23 production declined by 3.8 Million tonnes to 5.5 Million tonnes17.
The global rice trade is expected to increase to 55.8 Million tonnes in FY24, up by less than 0.1 Million tonnes18. India, Thailand and Vietnams upward export revisions in 2023 will offset the export reductions for Australia, Brazil, the European Union and the U.S.A.
In terms of imports, China and Philippines are projected to remain the largest importers in 2024. Further, increased purchases are expected by Bangladesh, Ghana, Nigeria, Senegal and Vietnam which may be offset by Indonesias reduction in imports. Indias exports are expected to be around 22.5 Million tonnes18, a record for the country. Conversely, Thailands rice export in 2024 is expected to reduce by 6%. Further U.S.A. exports for FY24 are forecast to rise 21% and face lower competition from South American countries.
5. Indian Rice Industry
India, which is the second-largest rice-producing country globally, is expected to account for one-fourth of the projected global production, with record production in agricultural year 2022-23 to 136 Million tonnes19. In agricultural year 2022-23 kharif crop was impacted due to delayed and uneven monsoon in 2022 but the increased rabi and summer crop off-set the kharif shortfall. In September 2022, India, which is the largest rice exporter globally accounting for more than 40% of global rice export, implemented an export ban on broken rice and imposed a 20% export tax20 on some non-basmati rice varieties due to reduced expected production caused by erratic monsoons. Despite this, Indias rice exports for 2022 increased by 3.5% to reach 22.26 Million tonnes, surpassing the combined exports of the next four largest exporters - Thailand, Vietnam, Pakistan and the U.S.A.
Indias rice segment is set to see steady growth in the coming years. As per USDA estimates, despite possible El Nino in 2023, India Rice production in 2023-24 is estimated at 134 million tonnes21, 2 Million lower than previous year while domestic consumption and residual is estimated at 114 Million tonnes vs 112.5 Million tonnes. Despite 20% export duty on some non-basmati rice, Indian Rice prices are lower than its competitor in the global market which ensures continuous growth in export revenue. India has enough surplus rice production to meet export demand Overall, these forecasts indicate a positive outlook for Indias rice industry, with steady growth anticipated in the years to come.
6. Indian Basmati Rice Industry Overview
In 2022-23, India produced around 9.5 million tonnes of basmati rice. Out of that, India exported around 4.6 Million tonnes basmati rice in FY23. The Indian basmati rice export value saw a 46% increase from the previous financial year in FY23. Basmati rice exports reached $5 Billion in value terms in this period20 out of a total of $11.14 Billion in rice exports (basmati and non-basmati).
The rise in demand for long-grain speciality rice variants, known for their quality, aroma and flavour, is driving the growth of Indias basmati rice market21. Additionally, the market is benefiting from the increasing preference for brown basmati rice, which has a low-fat content and high nutritional value. In the domestic market currently, around 40% of urban households in India consume basmati rice out of which only 19% consume packaged basmati rice. This gives a huge headroom for growth of the packaged basmati rice in Domestic Market, as per the Kantar Household Panel report. Moreover, the markets future outlook is positive, considering the mounting export demand for basmati rice in various regions worldwide, particularly the Middle East and North Africa region.
The production for basmati rice is expected to remain stable at 10 Million tonnes for marketing year 2023-2024. Exports sees robust demand from significant markets such as the Middle East and the U.S.A.
Owing to good realisation from basmati paddy in FY23, Punjab government is planning to increase basmati sowing area by 20% in FY2422. This will ensure enough basmati to fulfil the basmati demand in domestic and export markets.
Further, Indian Agricultural Research Institute has developed new improved varieties which has resistance to bacterial blight and and blast disease. This will result in better yield with lesser use of pesticides. These new varieties boost Indian Basmati exports in the countries with stringent pesticide norms.
In the dynamic landscape of the global market, KRBL Limited recognises the significance of identifying and navigating the opportunities and threats that shape its industry. By analysing emerging opportunities and potential challenges, KRBL Limited remains proactive in adapting its strategies and capitalising on favourable trends. With a keen focus on continuous improvement and agile decision-making, the Company stands ready to leverage opportunities and mitigate threats, ensuring sustained growth and resilience in an ever-evolving business environment.
The shift from loose to packaged rice in both basmati and non-basmati segments in the domestic market presents a significant opportunity. This transition, driven by consumer preferences for convenience and quality assurance, is further accelerated by the ongoing urbanisation of the Indian population.
The Food Safety and Standards Authority of India (FSSAI)23 has recently specified the identity standards for Basmati Rice to come into effect on 1 August, 2023. This will make it significantly easier for consumers and customers to evaluate the quality of basmati.
New Varieties for Export
On the R&D front, the Indian Agricultural Research Institute has distributed a substantial quantity of basmati paddy seeds for seed multiplication and substitution. For instance, the 1121 variety is now replaced by 1885, 1718 by 1849, 1509 by 1418, 4714 and 1401 basmati rice by 1886 and Pusa basmati rice by 1677. We, as KRBL, are confident that this development will bring about a significant revolution in the production of chemical residue-free basmati rice. These new seeds exhibit resistance to diseases and pests, while also yielding better results compared to the old varieties. Consequently, our rice will better meet the requirements for export to various countries, including Europe, the U.S.A. and numerous Middle Eastern nations. These regions have imposed non-tariRs barriers by imposing import restrictions based on pesticide residue levels. Its important to note that these residue levels do not pose any harmful effects on human health.
The demand for rice, domestically and internationally, is growing. With an expected CAGR of 3% from 2023 – 202824, this growth in the global rice market is being driven by several factors including population growth, rising incomes and changing consumer preferences.
The Indian government provides several subsidies and other forms of support to the rice industry. These subsidies help reduce the cost of production and make it more profitable for farmers to grow rice. The government also provides technical assistance to farmers and helps improve the quality of rice production.
India enjoys a geographical advantage for basmati production and export. Compared to other exporters such as Thailand and Vietnam, Indias non-basmati rice prices are lower, even without the 20% export duty imposed on white rice. Indias competitive pricing in the non-basmati rice segment sets it apart from other countries.
8. Risks and Concerns
KRBL Limited places a strong emphasis on implementing a comprehensive system for managing risks, aiming to achieve its objectives while ensuring the sustainability of the organisation. The Company management actively identifies, analyses, assesses, manages and controls risks that may impact operations. KRBL Limiteds risk management approach aligns with its strategy and contributes to its successful implementation.
Exposure to Trade Policies and Government Regulations
Changes in the trade policies of key importing countries or government regulations, such as export bans or alterations in export duties, can impact the Companys export revenues.
KRBL s revenue is diversified into different geographies, domestically and in the export market (90+ countries) thereby reducing risk by not depending on any single customer or country.
Approximately 85% of world basmati exports are from India and therefore, countries looking to purchase basmati rice have limited alternatives.
Basmati rice is a premium product and so, less likely to be affected by food security concern-oriented policy developments.
The Company primarily deals in surplus basmati rice production in India and exports are expected to continue in the near term.
Vulnerability to Foreign Exchange and Agro-Climatic Risks
As a significant portion of its turnover comes from exports, the Company is exposed to foreign currency fluctuations. Additionally, being in the agricultural industry, KRBL faces agro-climatic risks that affect the availability and quality of raw materials, consequently impacting basmati rice prices.
Foreign e xchange risk is mitigated through hedging policy implementation.
Agro-climatic risk is mitigated by maintaining a sufficient inventory. During the basmati harvesting season from October to December, KRBL procures an adequate amount of paddy to meet the expected demand.
In case of price increases, KRBL can leverage its strong brand position and pass on the costs to the customers.
Intense Industry Competition Risk
The basmati rice industry is highly fragmented, with numerous players competing for market share. This intense competition limits pricing flexibility for industry participants, including KRBL. Risk Mitigation
S trong brand presence in both domestic and export markets serve as a mitigation strategy.
Availability of KRBL products across all channels, including General Trade, E-Commerce and Modern Trade, ensures broader market reach and reduces reliance on a single distribution channel.
KRBL faces certain ESG (Environmental, Social and Governance) risks, which are as follows:
Environmental Considerations: The Company is significantly exposed to climate-change risks, as the supply of paddy, its key input, relies on the monsoon. Paddy cultivation is water-intensive, posing sustainability challenges for this critical natural resource. While these environmental factors create supply-side risks.
KRBL is actively involved in green energy initiatives by operating Wind, Solar and Bio Mass plants to produce power.
The Companys power requirements are largely met through self-sufficiency measures, utilising rice husk as a renewable source for power generation.
By-products such as rice bran are effectively utilised for producing Rice Bran Oil, Furfural Oil, Furfural Alcohol, Cattle feed and other valuable by-products.
Demand for rice as staple food mitigates some supply side risks.
Social considerations: The Company relies on a large number of farmers for paddy procurement. KRBL supports farmers by providing them with superior quality seeds and offering training on agricultural techniques to maximise yields and optimise pesticide and fertiliser usage.
A high dependency on any single country can lead to a decline in profitability.
KRBL has a product presence in over 90 countries across the world. This diversified presence across multiple countries is expected to mitigate risks associated with geopolitical instability in certain regions.
KRBL holds a significant market share in two major rice markets within the Middle East region.
KRBL holds the position of market leader in the branded basmati segment of the domestic market.
Human Capital Risk
The Companys growth could be adversely affected if it is unable to attract and retain talented individuals.
KRBL Limited invests in recruiting talent that aligns with the organisations values, as well as in talent development and employee engagement. This approach helps create fulfilling career opportunities at KRBL Limited.
The Company strengthened its robust talent value proposition as one of the key focus areas to drive sustainable growth.
9. Internal Control Systems and Adequacy
The Company puts the highest priority on transparency, ethics and good corporate governance and has established strong internal controls which have been integral to its growth process. It maintains proper accounting control and monitoring of operational efficiency; its policies ensure strict compliance with laws and it works towards maintaining reliable financial and operational information. KRBL Limiteds Audit Committee is consistent in its periodic review of all audit reports, audit plans, audit findings of note, adequacy of internal controls and compliance with Indian Accounting Standards (Ind AS). Over and above this, the Audit Committee proposes improvements when necessary.
Overall Key Strengths:
KRBL is a leading player in the Indian Basmati rice industry, known for its strong brand presence.
The Company enjoys revenue diversification, across multiple sources, which contributes to its financial stability.
KRBLs facilities are strategically located, providing advantageous positions for operations and logistics.
The Company maintains a comfortable capital structure and demonstrates strong debt protection metrics, ensuring financial strength and stability.
With a strong demand in the domestic market, KRBL is well-positioned for growth and holds a market-leading position across various distribution channels, including general trade, modern trade and e-commerce.
Growth prospects are further enhanced by the transition from loose to packaged rice, expanding distribution reach, the introduction of new products and the exploration of selected non-basmati rice varieties.
KRBL maintains a strong presence in key export markets, solidifying its position as a leading player in the global rice trade.
The Company is actively pursuing efforts to stimulate growth in new markets, diversifying its export footprint and expanding its customer base.
By establishing new plants at strategic locations, KRBL is poised to meet growing demand and make inroads into the non-basmati rice segment, expanding its product portfolio and market reach. KRBL has successfully commenced commercial production at its new plant at Anjar, Gujarat. Another new plant in Karnatakas Gangavathi region is under construction. KRBL is also in process to establish a plant in Madhya Pradesh for which land has been identified and further due diligence and construction is in progress.
KRBL prioritises maintaining healthy margins and has ample capital availability, positioning the Company favourably for future growth. Furthermore, KRBL takes pride in being a zero-debt company, ensuring financial security and flexibility.
11. Companys Power Generation Overview
Installed Power Generation Capacity
|(in units MW)
|Total wind power project capacity
|Total wind power generated
|Total solar power project capacity
|Total solar power generated
|Total biomass capacity
12. Financial Performance
The Company recorded a total income of Rs5,45,601 Lakh, higher by 28% as compared to the previous year. Revenue from operations increased by 27% while Other Income increased by 117%. EBIDTA of the Company stood at Rs1,03,157 Lakh in FY23 as compared to Rs70,475 Lakh in FY22.
12.1 Summary of Consolidated Income Statement Rs Lakh
|Revenue from Operations
Material Cost / Total Income (%)
Gross Profit Margin (%)
|Employee Benefit Expenses
|Depreciation & Amortisation Expense
Total Expenses / Total Income (%)
EBITDA Margin (%)
Profit Before Tax
PBT Margin (%)
Net Profit after Tax
|Other Comprehensive Income/(Expenses)
Total Comprehensive Income
Comprehensive Net Profit / Total Income (%)
12.2 Segment-wise Performance
The Company recorded the highest-ever Revenue from Operations at Rs5,36,323 Lakh in FY23. The Company recorded the highest-ever domestic revenue in FY23 at Rs3,33,539 Lakh. Export business also witnessed strong growth of 33% in FY23 over last financial year.
|• Export Sales
|• Domestic Sales
|Note: All financial numbers are as per consolidated financials
12.3 Key Financial Ratios
|Operating Profit Margin (%)1
|Net Profit Margin (%)1
|Return on Net Worth (%)1
|Return on Capital Employed (%)1
|Inventory2 (Rs Lakh)
|Trade Receivable (Rs Lakh)
|Trade Payable (Rs Lakh)
|Inventory Turnover Ratio2
|Debtor Turnover Ratio
|Debt Equity Ratio3
|Interest Coverage Ratio4
Reason for change in ratio:
1 Gross margin in FY 23 has improved against previous year mainly due to better realisations. As a result, Operating Profit margin, Net Profit margin, Return on Net Worth and Return on Capital Employed followed the trend in Gross Margin and these ratios improved against previous year.
2 As basmati paddy crop season is from October to December, closing Inventory as on 30th September has been considered for calculating Inventory turnover ratio. Inventory turnover ratio improved on account of higher sales in current year
3 T otal borrowings of KRBL as of 31 March 2023 stood at Rs 20,136 lakh as compared to Rs 8,939 lakh as on 31 March 2022. Higher working capital borrowings is on account of higher inventory as on march end. Therefore, Debt Equity ratio is also marginally higher in current year.
4 Interest coverage ratio has improved in current year as Profit before Interest, Taxes and exceptional items were higher in current year with respect to previous year.
Formula used for calculation of the ratios
Operating profit margin (%)
Profit before interest, taxes and exceptional items/Revenue from operations
|Net profit margin (%)
|Profit after tax/Revenue from operations
|Return on net worth (%)
|Profit after tax/Average Equity
|Return on capital employed (%)
Profit before interest, taxes and exceptional items/ (Total Equity + Borrowings + Lease liability +
|Deferred tax liability)
|Inventory turnover ratio
|Net sales/Average of opening and closing inventories
|Debtors turnover ratio
|Net sales/Average of opening and closing trade receivables
|Debt equity ratio
|Debt (Borrowing and lease liability)/Equity
|Current assets/Current liabilities
|Interest coverage ratio
|Profit before interest, taxes/Finance costs
13. Human Resources
At KRBL Limited, a core part of the business strategy is to provide an environment where all employees feel enabled, empowered and committed. The Companys HR practices are aligned with industry best practices and have created a talent base, which helps it reinforce leadership across countries. These practices enable it to seamlessly integrate professionals from different socio-economic backgrounds, countries and cultures and invest in their formal and informal training. The Company is focusing on diversity hiring and on-boarding new talent from top FMCG organisations. During the reporting year, KRBL Limited strived to strengthen its employee engagement across levels by providing an enriching work environment, undertook HR transformation projects at various levels and maintained an ongoing dialogue with its people.
KRBL Limited believes that its people are fundamental to great products, service and reputation. Therefore it is a constant endeavour to build strong teams of passionate, dedicated and highly skilled workforce, both at corporate and plant level. The Company constantly introduces better systems and processes to enhance employee productivity.
KRBL Limited has been working towards developing, grooming and training its employees for next-level roles. It is inducting high-calibre talent to ensure that the Company has the right people, teams and skills to grow its business. Its HR approach is to ensure the overall growth of an employee. The Company strives to ensure that its employees are well-rounded, feel safe in the working environment and are motivated and productive in their personal and professional lives.
The Companys total employee strength as of 31 March, 2023 stood at 2,514.
14. Information technology
Information technology (IT) has been an integral part of the process of the Company and has been one of the key driving forces behind the growth achieved by KRBL. Effective management of the Companys vast network of distribution channels is facilitated by its use of top-of-the-line technology. We are thus consistently scaling up our IT investments to upgrade our technological processes and evolve an infrastructure & IT security capable of maximising the potential of the countless growth opportunities in the digital universe.
15. Cautionary Statement
Readers are advised to kindly note that the above discussion contains statements about risks, concerns, opportunities, among others, which are valid only at the time of making the statements. A variety of factors known or unknown, expected or otherwise, may influence the financial results. These statements are not expected to be updated or revised to take care of any changes in the underlying presumptions. Readers may therefore appreciate the context in which these statements are made before making use of the same.