Khushi Ram & Behari Lal (KRBL)

History

BASMATI The world’s most precious rice strain

Grown only once a year in the Indo-Gangetic Plain beneath the Himalayan sub ranges.

The fertile alluvial soil, fresh and cold air and the sweet water from the ranges contribute primarily to the uniquecharacteristics associated with the grain.

The Basmati is longer, lighter and fluffier than standard white rice, and does not stick together.

Basmati also is geographically indexed.

Basmati growing areas are Uttrakhand, Punjab, Haryana, Uttar Pradesh, adjoining areas of Jammu, Kashmir, HimachalPradesh and Delhi.

Quite like Wine & Scotch, it gets better with age. Under good conditions it keeps well for up to 10 years. Old rice cooks upfluffy, with separate grains and releases a pleasant aroma.

The consumption is typically based on recipe, eating habits, health needs and cultural geographical usage.

Businesses of The Company

It is core business of the Company

Agri Division

Diversified Business of the Company

Energy Division

01

02

With a 129 year heritage and an existence since 1889, KRBL Ltd. is India’s first integrated rice company with acomprehensive product chain.

Agri Business

Under this segment, the company is doing the business of basmati rice and value-added products.

KRBL still lead the industry ranking in terms of Basmati Rice production and trade, both within and outside thecountry.

Largest in the world

Agri Business

Agri Business

Consumer pack

segment

Bulk packaging segment

Super premium segment

Distribution Channels

Traditional ModernE-

Commerce

Consumer Pack Segment

The Company sub-segments its consumer pack segment into India Gate brand and other brands which include Bemisal, NurJahan and Doon.

Sales in 2016-17 increased by 28.66% in volume terms and by 25.55% in value terms.

This premium segment was created with the rationale of capturing market share from the huge unbranded Basmati Rice Market

Bulk Packaging Segment

The Company’s two key brands in the segment i.e, Unity and India Gate

Sales grew by 26.9% in volume terms and by 43% in value terms In 2016-17.

The segment caters to the requirements of institutional buyers such as hotels, restaurants and caterers.(institutional buyers include StarGroup of Hotels, The Leela and ITC Hotels.)

Super Premium Segment

This is a new segment created by the Company for building consumer perception. This category comprises KRBL’s most premium and health-oriented products.

Sales volume from this category grew by 19.36%, while in value terms it grew by 10.48%. (target to grow this segment by 35% in value term.)

Products newly launched or re-launched within this category include: India Gate Quinoa, Brown Basmati Rice, Brown Rice.

Agri Business Segment

Distribution Channels

Modern Trade

Modern trade distribution channel, the Company has enhanced its presence to 6,500 stores.

Initiatives undertaken by the Company towards retail activation and dominating shelf-space,has resulted in improved same-store sales and category share.

The Company’s strong business development team undertakes significant research and analysisto identify the right city, right catchment area and right store.

E-commerce

Viewing the huge scope of opportunity from the online distribution network, the Company hasfocussed on strengthening its e-commerce channel.

The Company tied-up with major players like Big Basket, Grofers, Amazon, Shopfilo, JBL, andFlipkart among others.

Quality

ControlResearch &

Development

Seed

Development

Contact

Farming

Procurement

Ageing

&

Storing

Milling

01

02

03

04

05

06

07

How Company Run The Business

Value-added Product

Cattle Feed

Burning Husk

Rice bran Oil

Paddy Husk

Other Products under Agri Segment

Organic Basmati Rice

The company's organic basmati rice farming had initiated in 2004 with 23 basmati ricegrowers in the fertile Ganges river belt.

Presently, the company's organic project is spread in an area of about 5000 Acres withdedicated 800 farmer families.

A team of more than 65 members in Agri division is dedicated to the task of providingproper extension services to the farmers.

The company anticipates expanding the organic basmati operations to the tune of10,000 acres within a period of 5 years.

Sesame Seed Pulses Seed

Product Portfolio

Market Share

Energy Division

This division has not only helped the Company in becoming self-sufficient for powerrequirements, but it has also opened up a new revenue stream.

KRBL strengthened its green energy portfolio to 129.35 MW in 2016-17 from 102.05 MW lastyear.

Long-term power purchase agreement for 13 & 20 Years with MSEB, AVVNL, TEB.

Plant Location

Management

Anil Kumar Mittal

The visionary behind the success of the company, Mr. Mittal is the Founder Chairman of KRBLLimited. He has been instrumental, in turning the company into a global brand and the leader inthe Indian Basmati industry.

He was the President of the All India Rice Exporters Association and the Vice President of theBasmati Rice Farmers & Exporters Development Forum.

He has been a Board Member of the Export Inspection Council as well as Basmati DevelopmentFund.

Arun Kumar Gupta

An expert on the Basmati paddy supply chain management and the paddy milling technology, Mr.Gupta has steered the company into a growth trajectory.

He holds various eminent positions in various reputed organizations, one of them being anExecutive Member of the Basmati Rice Farmers & Exporters Development Forum.

Management

Anup Kumar Gupta

The financial architect and the chief strategist of the company, Mr. Gupta hasadded immense value to the company’s financial stability.

He has been the Executive Committee Member of All India Rice ExportersAssociation.

He is currently, the Chief Mentor of Basmati Rice Farmers & ExportersDevelopment Forum.

Share Holding Pattern

Promoters58.81%

MF/DII/Banks, 0.12%

FII/FPI/FDI, 12.11%

Indian Public / Others, 28.95%

Farming around Industry The year 2016 turned out to be a record year for paddy production post two years of poor outcome which was marked

with El Niño weather anomaly.

India is the second largest producer and largest exporter of rice.

The key Basmati Rice producing states in India includes Jammu and Kashmir, Punjab, Haryana, Uttarakhand, andwestern Uttar Pradesh.

In 2016-17, the Basmati Rice production is likely to decline by over 18% from 9.8 MMT in 2015-16 to 8 MMT driven bya sharp decline in acreage.

Haryana and Punjab are likely to account for nearly 40-45% production followed by Uttar Pradesh at 10-15%.

Middle East is the world’s largest Basmati Rice Market.

Saudi Arabia imported the largest quantity of Basmati rice from India in FY17 followed by Iran, UAE & Iraq.

Basmati Rice is exported to 156 countries out of which KRBL exports to 75 countries and is the market leader in the importantBasmati consuming markets in the branded segment

Export of Basmati

The overall shipment of rice from the country increased by 3.94% from 10.41 MMT in 2015-16 to 10.82 MMT in 2016-17.

Value Realization

Industry Players

Risks

Rice, being an agricultural commodity, is prone to plant diseases that can damage the crop.

Low rainfall and improper climatic conditions can adversely impact rice plantations

Fluctuations in the market prices of paddy can lead to inventory losses

Declining economies of major importing countries and currency fluctuations adverselyimpacts international/export business

Economic Risk

Raw Material Risk

Premiumness and Quality Risk

Competition Risk

Foreign Exchange Risk Cost Risk

Regulatory Risk Product Concentration Risk

Opportunities

The Company’s strong in-house R&D capability facilitates it to consistently drive quality and operationalexcellence across its business segments.

Being the largest manufacturer of Basmati Rice seed, KRBL has the capacity to handle 20% of India’s totalBasmati production.

Integrated Value Chain & R&D Capabilities

Strong Farmer Relations & Dealer Network

Evolving Lifestyles and Consumer Preferences

Global Market Expansion and Increased Consumption

Changing Quality Consciousness and Consumer Perception

Financial

Profit & Loss Statement

Particulars 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 CAGR

Total

Sales1631.35 2080.38 2910.46 3159.68 3428.12 3149.03 14.06%

EBITDA 209.82 311.88 460.13 527.68 543.16 653.82 25.52%

EBIT 165.31 261.32 402.48 474.99 493.11 598.99 29.37%

PBT 95.30 184.21 326.46 394.11 429.70 537.58 41.34%

PAT 73.05 129.88 255.15 321.75 337.08 399.43 40.46%

Profit & Loss Statement Margin

Particulars 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

EBITDA 12.86 14.99 15.81 16.70 15.84 20.76

EBIT 10.13 12.56 13.83 15.03 14.38 19.02

PBT 5.84 8.85 11.22 12.47 12.53 17.07

PAT 4.48 6.24 8.77 10.18 9.83 12.68

In (%)

Particulars 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

P/E 6.63 4.05 4.59 12.18 15.61 23.57

ROE(%) 10.19 15.66 24.44 24.29 20.76 20.94

ROCE(%) 19.64 28.25 31.78 30.12 26.68 28.33

Current Ratio 1.34 1.40 1.44 1.54 1.78 1.79

Quick Ratio 0.28 0.24 0.28 0.29 0.30 0.25

D/E 1.22 1.01 1.26 0.97 0.67 0.55

Debtors Days 22.28 26.83 35.80 30.22 37.18 42.20

Inventory Days 221.13 198.37 202.58 184.98 219.11 273.70

Creditors Days 25.87 17.84 19.81 17.16 20.03 30.53

Other Financial Data

Peer Data

Company Price

Market

Cap (in

cr.)

P/E P/B D/E ROE ROCE

KRBL 443.35 10,441.95 23.25 4.65 0.57 23.46% 21.44%

LT Food 91.90 2963.26 20.98 3.88 2.46 19.69% 15.40%

Kohinoor

Basmati64.25 227.48 - 0.83 3.16 - -

Chamanlal

Setia152.45 781.18 18.80 4.38 0.30 30.06% 37.73%

Source : Screener(as on 27th April, 2018)

Investment Rationale

Huge entry barriers for new entrants

Investment Rationale (other than industry triggers)

Strong demand in the Middle East

Iran may resume purchases of Basmati rice

Opening up of Chinese markets for basmati

Rising disposable income leading to shift towards premiumisation

Strong market share in Middle East countries Higher realization than industry average Diversification in Renewable energy/ Captive power Integrated operations resulting in minimum wastage In house R&D facilities

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