KRBL is the world's largest & only integrated manufacturer and exporter of basmati rice. The company is certified by FSSC 22000 issued by Eurofins, a globally recognised certification. The certification confirms that the organisation's food safety management system is in conformance with the scheme requirements.
The company is also India's first, integrated rice company with an extensive supply chain presence and a rich, 130-year history. With processing capacities of 195 MT/per hour, its portfolio includes 14 brands in rice and a variety of healthy food products like quinoa, chia seeds, flax seeds, and brown rice. The company offers its rice under a varied range of brands namely India Gate, Unity, Nur Jahan and many more. Its flagship brand India Gate is appreciated worldwide for its premium quality.
Ayush Gupta, business head, India market, KRBL, talks about his company’s plans and more in an email interaction with Ashwani Maindola. Excerpts:
How would you describe India Gate’s journey towards becoming the World’s No. 1 basmati rice brand?
On the back of a rich industry experience spanning over a century, the company has successfully established itself as a world leader in the basmati rice industry. We have been a pioneer in the basmati rice industry, besides being the only integrated manufacturer and exporter of basmati rice.
We have two state-of-the-art manufacturing units and four technologically advanced packing units which are strategically located across India. Through our extensive network of 500+ distributors and 3 lakh+ retail outlets operating in more than 750 cities, we enjoy product presence throughout all of India.
We have the most advanced research and development laboratory in the industry. Notably, we have collaborated with Buhler, the world’s leading rice manufacturers for process and machine improvement. Furthermore, we have worked in close collaboration with Indian Agricultural Research Institute for development of newer varieties of crops.
With more and more stringent food safety rules prevalent across the international markets, we have consistently ensured that our products meet these safety standards across the value chain. We did this by consistently focusing on the quality and testing of the products.
Our flagship brand, India Gate, has garnered the trust of consumers across the world owing to its premium quality. India Gate has come a long way since its inception in 1998 to currently being recognised as the World’s No 1 basmati rice brand. A recent study by Mordor Intelligence also validated India Gate’s numero uno status in the basmati rice industry.
Over the years, India Gate has developed a successful global consumer franchise. This is evident from the fact that it is exported to over 90 countries and sells 8+ crore packs annually.
The speciality of India Gate basmati rice lies in its grains, which are aged to perfection, making them longer, fluffier, non-sticky, and full of beautiful aroma.
Ensuring top-notch quality is our foremost priority. As a brand under KRBL, India Gate’s focus is no different. With every packet of the India Gate basmati rice, consumers are guaranteed consistent taste and finesse.
Could you shed some light on broader industry scenario (India as well as global) vis-a-vis rice trade?
The Asia Pacific is the leading producer of rice, globally. The region accounts for almost 90% of the global production. China is the leading rice producer, followed by India.
With the bulk of top rice suppliers in Asia, the biggest exporter being India, activities across the continent are of utmost significance and are bound to affect the output and the affordability of the crop across the world.
In the context of basmati rice, India is the largest producer as well as exporter. Basmati rice is exported throughout the world, but it’s a staple for the Middle East and Persian Gulf. 75-76% of India’s total exports go to the Middle East and Persian Gulf only.
Only India and Pakistan grow basmati. But Pakistan’s quantity and quality (in terms of growing and exporting) is far inferior to what India can manage. India produces around 12 million tonne of Basmati paddy in a year.
What are your expansion and growth plans. Elaborate.
Our flagship brand India Gate has tasked itself to convert a largely unbranded loose market into a branded one. There is a well thought out strategy basis robust consumer and category insights that has been put in place to drive this which includes sharp consumer communication, aggressive retail footprint expansion from 3 lakh to 5 lakh outlets, distributor expansion in lower population class markets and scaling up digitisation to accelerate efforts in this direction.
Moreover, our company is expanding in terms of regional branded rice. The brand is setting up plants in Maharashtra, Gujarat, Karnataka. The company is also setting up a plant in MP (for both basmati and non-basmati rice). In terms of regional rice, the brand is looking at rice varieties like Govindobhog, Sona Masuri and Kolam.
KRBL also anticipates good growth for one of its brands called Unity. It is a brand which deals with biryani rice. In South India, especially in Andhra Pradesh, Kerala, Tamil Nadu and Karnataka, there is a lot of biryani culture and biryani is made out of Unity Basmati. Today, Unity is about a Rs 800 crore brand. In 2-3 years, it should go to approximately 1,300-1,400 crore, as per our KRBL’s estimates. While India Gate is aged, Unity is not aged and hence, much cheaper too. India Gate and Unity are the two main brands in the domestic market.
Lastly, in terms of expansion, the company is also looking at rice bran oil. Next year, we might add a refinery and it would be branded as India Gate Rice Bran Oil. Presently, we are selling to refineries and manufacturers around 50 tonne per day.
How do you see the blending of basmati and non-basmati rice, as the Government recently has fixed the portions for blending?
Rice has been a major source of calories for households across India and the world. Factors such as high quality, premium appearance and a distinct taste distinguish basmati from non-basmati rice. These factors also ensure that basmati witnesses a huge demand globally.
Also, India is a growing basmati rice market. From the standpoint of a large player in the basmati rice market, the company aims to see that around 55-60 per cent of the basmati rice which is sold loose gets converted into branded. As the company has a ratio of around 40 per cent in the branded basmati rice market, it will naturally emerge as a winner in such a scenario. If the category has to convert from largely loose to branded; standardisation of the quality would be of utmost importance.
As the world’s largest & only integrated manufacturer and exporter of basmati rice, our company is of the view that this move is consumer-centric in nature and would help not only KRBL but also the category to grow. The company feels capping of blending percentage would be a good move in the right direction.
Share some insight on how the Indian rice industry can further strengthen itself globally.
The Indian rice industry has been at the pinnacle and shown exemplary performance in the last 2-3 years. The total export of rice from India has crossed 21 million MT which makes it the largest exporter in the world. In approximate terms, India occupies a 40% share of the global rice market.
Nevertheless, there is always room for growth and improvement. India has more than 100 distinct varieties of rice which is seldom known to the global consumers of rice. Globally consumers are aware of 3-4 varieties of basmati and 3-4 varieties of non-basmati which are mainly traded across various countries. However, better marketing and showcase of other distinct varieties can create new opportunities for Indian rice, which would be specifically sourced from India having no other alternative from other origins. Such initiatives can give a great boost to the rice industry by giving good margin expansion opportunities and value addition against the bulk of the commoditised market that Indian exporters currently deal with.
In order to become the food basket of the world, Indian agriculture has to consider health regulations of various importing countries and employ strict measures and compliance metrics to ensure compatibility in their use of pesticides and fertilisers. Appropriate storage mechanisms need to be put in place to ensure longevity of the produce.
Do you think the rice trade should be left to markets instead of Government deciding the prices?
As far as basmati prices are concerned, we must note that it’s a completely freely traded commodity and there is no government involvement at any point in time. The prices are decided purely through demand and supply metrics.
However, non-basmati prices are somewhat controlled by the government’s public distribution scheme (PDS) which sets the minimum support price (MSP) every year for the paddy price for farmers. This dictates the prices of most of the non-basmati varieties.
We don’t see a scenario in the near future wherein the government would abolish the MSP regime as the government is the biggest buyer of the non-basmati paddy for fulfilment of their PDS scheme.
High value non-basmati variants of rice are also freely traded and there is no government restriction or control on their prices.
Could you share broad profit and loss guidance for the full fiscal FY-23?
As a policy, we don’t give financial guidance. However, I can share updates on our two market segments. The company is growing strongly in export market – our Q2FY2023 revenues increased by 106% on a y-o-y basis. We have made remarkable progress in Saudi Arabia – one of our key markets - with the new distributor. Sales pertaining to modern trade are also showing good progress in Saudi Arabia. We have nearly captured back our lost market share, and it seems that the customers were waiting for the India Gate products to come back in the market.
I'm also delighted to share that domestic business also recorded a strong quarterly performance, with domestic branded revenue growing by 18% year-over-year. We have delivered our best ever H1 performance, wherein domestic branded revenue increased by 36%. Growth has been equally contributed by the general trade and modern trade, e-com channels. So, overall, both segments have demonstrated strong growth. Overall, we expect higher revenue growth and profitability over the preceding year in FY2023.
What are the factors/challenges impacting global rice trade and how can those be mitigated?
The biggest challenge impacting global rice trade is climate change and erratic weather patterns which has a detrimental effect on global rice prices and global production. South-East Asian countries such as Thailand, Vietnam, Cambodia, Myanmar and China which used to be major exporters of rice to the global market have had to cut down their crop size due to drought situation for the last 3 consecutive years, impacting their export prices and hence, competitiveness in the global market.
Pakistan faced a severe flood this year which wiped out a good portion of their produce in the Sindh region.
Countries such as Egypt, Iran have had issues with less monsoons and lower ground water levels, thereby reducing their crop size and focusing more of importing from surplus countries such as India.
The only way to mitigate such challenges is through research and development in high yielding varieties which can give more output in the same acreage of land. This can be done by developing varieties which require less water for cultivation and developing drought-resistant varieties.