KRBL Limited is better known by their flagship brand, India Gate Basmati Rice.

Being a rice milling

company, KRBL derives over 90% of the revenues from sale of basmati rice out of which 51% is
derived from the domestic market (India) and 49% from international markets. In domestic markets,
India Gate Basmati Rice captures the majority share, followed by Unity, which is developed with the
objective of replacing the market for unpackaged basmati rice. KRBL exports to over 80 countries
across the world with a special emphasis on Middle East countries where their ‘Nur Jahan’ Basmati
Rice is the market leader.

KRBL currently has 2 milling plants located in Punjab (Sangur) and Uttar Pradesh (Gautam Budh
Nagar) with a 195 MT/hour paddy milling capacity and 6 million sq. ft. of warehousing space. Being a
family run business, majority of the company is held by the promoters which reflects confidence in
the company operations. Reliance Commodities DMCC also has a 9.73% stake in the company.

To capitalize on the rising digitization, KRBL has started expanding its product portfolio and
developing SKUs that sell better on online platforms. A healthy food product line comprising of flax
seeds, quinoa etc. is primarily limited to exports for now.

Financials - Looking at the financial side, the company has been consistent in performance, where
last year was an aberration as revenues declined because of enforced disruption of distribution
networks due to COVID related lockdowns, but the gross profit margins remained consistent
(around 30%) reflecting reliability in the procurement channels. The company is almost debt free with
Net Debt/ Equity Ratio at 0.1% in 2021. A fall in debt has not restricted the CAPEX flow as the
CAPEX/Sales % has increased from 0.5% to 1% in 2021 from 2019. This highlights Fiscal Stability.
KRBL has consistently been improving the bargaining power in the market as an improved cash
conversion cycle is observed through falling Days of Sales Outstanding and rising Days Payables
Outstanding.

Gross Profit Margin Net Debt/Equity Ratio

33% 0.5%
31%
30%
29% 30%
28% 0.2%
0.1%

2017 2018 2019 2020 2021 2019 2020 2021

Risks - There are certain risks which affect the operations of the company. Currently, the market in
which KRBL operates is supported by the government through subsidies and export incentives, which
if withdrawn would affect the margins KRBL currently enjoys. Exporting to over 80 countries, KRBL
also faces heavy regulatory risks which leads to high legal and R&D costs to keep up with the
changing norms. This also exposes KRBL to significant foreign currency risk. Agriculture in India is
totally dependent on monsoons, hence restricting to India for procurement of raw materials poses a
raw-material risk and geographical risk to the operations of the company. A competition risk also
exists for KRBL due to the large unpackaged basmati rice industry and rising competition with entry of
Adani.

Road Ahead - KRBL seems keen on expanding the non-basmati product portfolio using the India
Gate Brand. The healthy foods portfolio would put KRBL right on the forefront of the market and with
strong procurement, branding and healthy margins, KRBL could capture a significant portion of the
market. The fiscal stability is promising, yet the risks the company faces are real. KRBL should
streamline the distribution channels to selected countries and expand procurement to other countries.
Submitted by

Chirayu – PGP/25/077

Varun – PGP/25/122