Another good set of results from Chamanlal, with sales growing by 15% and EPS by 68%. They talked a lot about innovation which was really nice to listen to. I was also surprised to see gross margins drop to 18% (vs 30% last year). Management said last year shipping costs were very high and they bill on CIF basis resulting in very high sales, which has come down this year due to lower shipping costs. But profitability has been maintained. Concall notes below.
FY23Q4 concall notes
R&D:
- Brown rice which cooks in 15 minutes with new packaging.
- Working on Vit-D enriched rice but is currently not commercially viable
- Working on 2-minute rice cooking and are filing patent
- Created a mechanical device with Ravi Saroj from IIT Kharagpur (AGFE dept) where the device which contains an absorbent is installed on the emission line and absorbs exhaust gas (carbon dioxide, sulphur dioxide, nitrogen dioxide) thereby reducing gas emission and reducing surrounding temperature. The carbon absorbed can then be reused as a fuel. They showed it on 12 ton boiler
- Developing an organic material as a substitute for pesticides
Others
- Out of 49% sales growth, 28% was volume
- Diabetic rice is 7-8% of exports
- Lower volume this quarter (YOY basis) was because of ban on broken rice export. In last year, company had sold large quantities of broken rice to China
- Last year when ban on broken rice exports was announced, they had very little inventory at the port and they didn’t face inventory liquidation issues
- Gross margin is much lower this quarter at 18% (vs 30% last year and 26% last quarter) because last year shipping costs were very high and they sell on CIF basis
- Participating in multiple trade fairs to increase customer base. Focus remains on small buyers
- Investment in plant and machinery in the rice industry this year is tremendous. Many rice mills are coming into this business
- Japan is not a big potential market as they prefer sticky rice
Disclosure: Invested (position size here, no transactions in last-30 days)