Kohinoor Foods sees domestic sales, rice export order swelling in FY17

Deepanshu BhandariHiral Desai | Updated on January 20, 2018 Published on May 31, 2016

Kohinoor Foods Joint Managing Director Satnam Arora

Kohinoor Foods has turned profitable in the January-March quarter. During FY16, the company booked cash profit of ₹41 crore as against a loss of ₹72 crore, as basmati business grew 11 per cent and non-basmati sales rose 21 per cent.

Speaking to Bloomberg TV India, Kohinoor Foods Joint Managing Director Satnam Arora says domestic sales have gone up by 32 per cent while export orders book has swelled.

Kohinoor’s Q4 earnings have been impressive with a jump in profits even though income has been stable. What’s led to the jump in profits?

Last fiscal, our turnover was ₹1,130 crore. Our basmati business has grown by 11 per cent, and non-basmati by 21 per cent. Even the domestic sales have been gone up by 32 per cent. We have increased sales everywhere. In FY15, our losses were about ₹72 crore whereas in FY16 we have a cash profit of ₹41 crore. And the good thing is that we have been able to market Kohinoor worldwide. The US, the UK, Canada and the UAE have been our main sources for branding and it increased our margins and profitability. We are only concentrating on the Kohinoor brand.

As far as prices are concerned, what has been the average price per kilogram during Q4? What’s the outlook on prices going ahead in FY17?

Prices keep on changing in the commodity market. But in case of brands, we can still book good margin. As far as the market outlook is concerned, we do not see any drop in prices because we still feel that the prices are low. And in brand, we definitely get a good margin because of the brand value and customers’ recall value for the brand.

We expect rice inventories in the top-three exporting countries to fall the most since 2003. How are rice inventories panning out for you?

Since sales are strong and everybody wants Basmati brand, especially minimum 12-month-old rice, we have no choice but to keep inventories. The customer requirement is: you charge a margin but we need one-and-half-year old rice. So we keep all these inventories. And the good thing is that if we have inventories, we can also sell large quantities as we have stock in hand. At present, we have very good orders of about 60,000 tonnes. And we are exporting this. And even in this quarter, results will be very positive.

There are reports that suggest that India and Indonesia may strike a deal on rice and this is an opportunity to export close to 1 million tonnes of non-basmati rice. Do you expect any gain out of this deal? What kind of gains are you looking at?

Our sales of non-basmati rice have increased by 21 per cent and this year our target is to increase them by 100 per cent. We are growing very fast in the basmati rice segment also. We are also growing very fast in the FMCG segment as well as the Kohinoor Food business. We have a new food factory too. We expect our food sales to jump by 40-45 per cent.

There are some near-term headwinds for rice producers. Iran is likely to ban rice imports from July 23. What impact will that have on your company?

In case of Iran, we are exporting quite a good quantity. They are sending orders and we are shipping them before June 30. But we really don’t know what the Iran government thinks about it. They told us to ship everything before June 30. There is nothing new in it because their rice crop comes after that. To justify their farmers, they close imports for 2-3 months. But as soon as our new crop comes in October, they reopen imports. This way they help their farmers and our market is also not disturbed.

Published on May 31, 2016
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