#KRBL's CFO Ashish Jain and #LTFoods' MD & CEO Ashwani Arora share their insight on government's impose on export duty and how this will impact their companies and sector going forward. #BQLive
Category
🗞
NewsTranscript
00:00 Hello and welcome to BQ Prama. Very good morning to all the viewers. I am Heeral Dadia. Rice
00:06 companies are in focus as well. And this is on the back of the center, who has gone ahead
00:10 and imposed a 20% export duty on parboiled rice. As well as it is said that there is
00:18 an expectation that they would be notifying a minimum export price for basmati rice, which
00:23 would be pegged at $1200 a ton. Now what would this actually mean for the industry, taking
00:30 the way prices are moving currently? Joining us on the show to discuss more is Ashwini
00:35 Arora, MD and CEO at LTFOODS, as well as Ashish Jain, CFO at KRBL. Good morning and welcome
00:42 to the show, gentlemen. Thank you. Thank you. Ashwini, let me come to you first. First,
00:48 let's discuss, what's the reason why the center is looking at imposing the export duty, as
00:56 well as the MEP that could be expected? Because everyone's talking about the increase in rice
01:02 prices in the domestic market and a scare of lower supplies. What's your read? So, setting
01:12 up this MEP, what we have understood that the government don't want to curb any basmati
01:20 export. They wanted to control that under this umbrella, non-basmati should not go.
01:29 So our understanding is that's how the government has imposed MEP on basmati. So as far as LTFOODS
01:38 is concerned, we are not impacted because most of our export goes in our famous brands,
01:50 which is Dawat and Royal and that's aged rice, that's above them, this MEP. Right. So, if
01:58 you could, okay, Ashwini, I'll take your first comments as well. First, what do you make
02:02 of this entire arrangement, basis what the center is indicating on parboiled as well
02:07 as the MEP? So parboiled as LTFOODS is not a non-basmati business, but the idea is simple,
02:17 that's food security. They wanted to make sure that, you know, as we have a sufficient
02:25 stock to feed our own people, as next year, you know, there is a forecast, there's a 5%
02:32 deficit they're expecting in non-basmati sourcing. So they wanted to be, you know, ensure that,
02:40 you know, India has sufficient rice to feed in. Right. Ashish, coming to you on the same,
02:46 how are you looking at it and how does it impact KRBL? Yeah, so I agree with what Ashwini
02:54 ji mentioned. I think this is coming on a background of avoiding any possible, you know,
03:00 food shortage in the country. And, you know, if you look at basmati, KRBL is, you know,
03:07 similar impact. So more than 90-95% of our basmati export is anywhere above the MEP that
03:13 has been set. So the overall impact on KRBL is going to be very limited. Number two, for
03:20 the industry as a whole, of course, you know, if you look at EPIDA data, the average realization
03:25 per ton of basmati was around $1,100 in the month of June. So sure, so the average is
03:32 below the 1200 mark, but then we are ready towards the end of the season. So basmati,
03:37 as you know, is harvested between October and December. So the stocks peak in December
03:41 and then their stocks start depleting. So this is the part of the year when more or
03:46 less the majority of the exports have already happened. So from a timing point of view,
03:52 minimal impact, but yes, the average currently for the industry is lower, but for KRBL, very,
03:59 very limited impact.
04:00 Right. So currently, what's the retail rice price and how has it moved in the last one
04:05 year, according to you, Ashish?
04:09 Yeah, so rice price, as you know, varies because there are a lot of varieties. But for rice
04:15 trend in general, prices on a year-on-year basis have been up and for various reasons.
04:22 I think Ashwiniji mentioned about the global production and that is our view as well. That,
04:29 you know, if you look at the bodies that track global rice production, there have been some
04:33 forecasts there that have been a cause of worry. If you look at the recent news flow,
04:39 especially around other large exporters of rice other than India. So let's say if you
04:44 look at Thailand or Vietnam, there have been news of El Nino impact on their crops. So
04:49 that and because of a variety of reasons, the rice price have been up on a year-on-year
04:53 basis.
04:54 Right. And with regards to MEP, Ashwini, if you could help me understand, is it already
05:00 notified or is that something which will be notified once a review is done in October?
05:06 Already notified. Already, already. The APTA has started taking action on that.
05:12 Okay. So what happens to contracts or rice, which is already sitting on the port, where
05:18 the pricing would be below $1,200, if orders that have been, you know, booked at below
05:25 $1,200 per tonne, what happens to that, Ashwini?
05:29 So this has been declared, you know, recently over the weekend. But the understanding we
05:35 have been given that, you know, under the, that they have formed the committee, you know,
05:42 under the leadership of Chairman APTA, and they will review that. But we have not had
05:50 that case. So this is the understanding we have.
05:55 Right. Ashish, at your end, any orders that have already been booked at below $1,200 per
06:02 tonne for exports and any actions that you're seeing, because what we are hearing is that
06:08 all of the orders that have been booked at $1,200 or below, have been asked to take a,
06:15 you know, halt and make revisions there.
06:19 Yeah, so this announcement only came in yesterday. We are building clarity on it. So not able
06:27 to give you full clarity in terms of how such cases will be handled. That's what we know
06:32 at this point.
06:33 Right. And from a market share perspective, Ashwini, do you see any impact coming in from
06:39 an export perspective?
06:40 Can you clarify your question, please?
06:45 My question is, from an export market share perspective, do you see any impact coming
06:50 in?
06:51 For the premium prices, I don't see there will be an impact. So on the Argoille to Iran,
07:02 we have to see how the government will look into the policy on the representation of the
07:09 association.
07:10 Right. And from a pricing perspective, Ashish, if I have to come to you, how do you see the
07:18 price trends from here on, on the back of the additional, because usually the trends
07:24 that we've seen is that the moment exports are opened up, we try to match prices of the
07:30 global markets and the domestic markets as well. And there is a tendency to prices, for
07:34 prices to go up. In this move, do you see correction happening in terms of rice prices?
07:43 By correction, you mean downward?
07:44 Yes, downward correction.
07:46 Well, difficult to say, you know, the way we would look at it is that government has
07:52 set a minimum export price. So to me, that will kind of set the tone for what is the
07:57 minimum at which that product will sell. But yes, I mean, there will be a demand supply
08:02 aspect there. So overall, difficult to say right now.
08:05 Right. And all this while, what was the minimum export price on an average, or an average
08:12 export price that rice was getting exported at? Just to understand the gap between the
08:18 $1,200 versus the prevailing prices, Ashish.
08:22 Yeah. So if you look at EPIDA data, you know, which tracks Basmati exports, and we look
08:28 at the average, so for the month of June, the average realization per ton of Basmati
08:32 exported by India was around $1,100, which after this announcement, gets reset to a minimum
08:39 of $1,200. So the average was $1,100. Now, after this, the minimum itself will be set
08:46 upwards to $1,200.
08:48 Okay. So another question based on this data, what comes to my mind, Ashwini, is, does this
08:54 mean that the margins probably will be better?
08:58 You know, it's too early to say anything. But as you know, we said that LTE is already
09:09 the average price is more than MEP. So, yeah. So the new crop is coming, we will see how
09:19 the prices are opening up. And we need more clarity in this week, the new of the government
09:26 policy, only then we will be able to comment on that.
09:30 I think a lot more details are actually awaited as well. Thank you, Ashish. Thank you, Ashwini,
09:35 for joining us on the show. But clearly MEP of $1,200, as the industry is saying, is already
09:42 notified. Now, major implications and clarifications are yet awaited. And that's something which
09:49 one should be watching out for as well. So that's the management of KRPL as well as LTE
09:53 Foods talking to us with regards to the 20% export duty that has been imposed in power
09:58 boiled rice, as well as the MEP that has been fixed at $1,200 per ton. And that's going
10:05 to be interesting to watch out for because this measure is to ensure that rice prices
10:09 remain under control, taking into consideration the overall inflation. And this will slow
10:15 down shipments as well. And the fear of lower supplies in the domestic market will be, you
10:24 know, dismissed as well. So that's all that we have in this session. Thanks for watching
10:30 and lots more lined up on the other side. Please stay tuned to BQ Pride.
10:34 [MUSIC]