Realizations for basmati rice have quadrupled.
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Third quarter of strong results and last two have been superb! All time high sales and profits. FY20 balance sheet improved too.
Last two years have been tough for the existing investors as the stock went through considerable derating and earning degrowth. Good news is that the co has come back strongly and the business model throws very attractive return ratios.
If only the management can adopt some good practices and improve its communication, there can be sustained value creation.
Ayush
Disc: invested in family and client acs
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The company has posted a net profit of Rs. 25 Crore in June '20 Quarter as compared to Rs. 21 Crore in March '20. This profit might not look phenomenal on the face of it but it is phenomenal if you have a close look at the balance sheet of the company. It is so because they had only Rs. 2 crore inventory of rice in the March '20 quarter which has increased to Rs. 50 crore inventory of rice because they have hoarded it. If you remove the expenses of inventory from total inventory then the net profit comes out at whopping Rs. 75 crore.
Please correct me if I am wrong because I am new in the market.
Disclosure: My views might be biased because I am invested.Chaman Lal Setia.pdf (3.1 MB)
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This is a wrong assessment. Change in inventory can’t be added to profit.
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The entire industry works that way, they store rice during the season and sell them later. Older the inventory, better the realisation.
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This is not how you calculate profit. Purchase of inventory is purely a Balance Sheet adjustment, and it does not impact the profit.
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What implications will the new political tussle between MP and Punjab over the GI tag have on the Basmati segment?
Against any sales made, you need to see the raw material consumption. Inventory changes along with total raw material purchases provides the actual raw material consumption against the sales made. So inventory changes don’t affect profit.
Can the more experienced investors guide how to view the high interest rates paid to promoter loans. Is it not a serious red flag on intention of promoters?
Article provides the growth of rice exports in the last 2 months, though it is in comparison to last year which was low base. Still augurs well for all rice companies as well as Chaman lal setia and its being reflected in the Q1 results.
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Was in Africa for 4 years - i did notice all Indian shops, restaurants preferred Maharani rice over KRBL.
Major household Indian would use India Gate Sona Masoori or Maharani. Given that demand vs situation co can do well
Am not invested in Chaman lal - invested in KRBL not a investment or a bias statement but i gave comments due to its popularity and usage in hotels, restaurants, households,
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Anybody having transcript of recent concall may please share, thanks
GIven the return ratios and conservative debt of the company, what should be the valuations commanded by the company. Also there is slight governance issues like high interest on promoter loans. Currently as per screener, PE is 8.
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Hope this will help them to procure competitively from these 2 states
From KRBL’s Q4 transcript:
Anoop Kumar Gupta, KRBL Limited - Joint MD & Executive Director [147]
APMC act and now no Mandi fees and all those arrangements which was related to market fees has been abolished. So from the new kharif season from 1st of October, we will have all the crop, all the products without indices. So that’s a big bonanza which government have given to the agriculture rice. Not a loan to the rice, paid for the total agriculture.
Manan Patel, Equirus Portfolio Management Services - Analyst [148]
So sir, would it help increase our margins as well as like a margin for the farmers themselves?
Anoop Kumar Gupta, KRBL Limited - Joint MD & Executive Director [149]
Yes. You see, definitely, it will add around INR 20 crores to INR 25 crores to our bottom line.
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I track paddy rate in Haryana: Major buying of paddy this season happened around 2500-2700. The rate has now gone up to 2900, inventory buying side this season is great.
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And another news coming in - https://news.rediff.com/commentary/2020/dec/02/china-imports-rice-from-india-after-30-years/08502cd591bec41ae4e7a2ccacc79131
I am just assuming it is in CLSE’s favor.
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What could be the effect of farmer’s agitation & Farm bills on Chaman Lal Setia Business. I think CLSE is an intermediary between farmers and consumers, but he is a facilitator for exports. Hence, the passing of farm bills could be positive for him as per my understanding.
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