Fiscal 2019-20 proved to be a watershed year as it truly tested the robustness of ourbusiness model and the resilience of our organisation to withstand disruptive headwinds.Given the current macro-economic scenario and the sentiment in the rice industry it wasKRBLs enriching industry experience a deep understanding of customers' needs andsentiments and focus on high standards of quality which helped us stay ahead ofcompetition.
Despite the challenges KRBL Ltd. has exhibited sustainable growth in FY20 acrossdifferent business parameters. This performance has been supported by our relentless focuson building our capabilities disciplined approach towards procurement diversifying inselected profitable segments foraying into newer geographies adopting best-in-classtechnologies and creating an emotional connect with our consumers.
India's agro-allied activities showcased a 2.8% growth owing to the record productionof food grains. As of January 2020 India's agricultural exports stood at US$ 28.93billion. Further government-initiated strategic schemes to support our farming communitylike the Pradhan Mantri Kisan Samman Nidhi Yojana (PMKisan) rural credit and cropinsurance proved to be highly beneficial for the sector. Modernising farming activitiesand infrastructure promoting efficient water usage and facilitating seamless trade isexpected to propel India in the global scene as one of the key players in theagri-products industry.
Favourable spells of the monsoon rains in major growing states resulted in an estimatedrecord production in MY 2019-20. Basmati rice underwent a boom in the market owing to animproved year-on- year (y-o-y) driven by sustained export demand. This in turn hassignificantly supported farmer returns. Basmati's aroma and distinctive taste as opposedto other kinds of rice will catalyse its growth which is projected at a CAGR of 6% by2025.
FY20 in retrospect
At no time in our recent past the effectiveness of our long-term approach was morevisible than in FY20 and our growth numbers in each measurable parameter were immenselygratifying. Amidst a challenging economic environment we continued to reinforce ourreputation as an outperformer as KRBL reported 9% growth in revenues and 11% growth in PATon a y-o-y basis. Further we continued to generate sustained cash flow which enabled usto limit our external borrowings. As of 31 March 2020 our borrowings stand at Rs 496crores compared to Rs 1428 crores as of 31 March in the previous year.
Inventory costs have reduced significantly in FY20 owing to the currently reducedprices of the highest- quality paddy. Moreover systemic efficiencies have helped usenhance procurement and achieve stability in our inventories. We have enjoyed consistentprofitability throughout the year despite the fluctuating costs of procurement.
Owing to the excellent results the Board of Directors of the Company had declared anInterim Dividend @ 280% i.e. Rs 2.80/- per equity share of face value of Rs 1/- each forthe financial year 2019-20 absorbing the total dividend outgo of Rs 80 crores (includingthe dividend distribution tax).
The story beyond numbers
Going beyond the numbers I would like to bring to your notice the progress we made onthe non-financial parameters that helped us sustain the growth momentum. With a vast rangeof products we continue to serve a range of demand for a diverse set of consumers coupledwith unmatched quality and seamless availability.
Our flagship brand India Gate along with several other brands continued to command akey presence in both local and global markets. Further our fully integrated operatingmodel ensured end-to-end supervision from procurement to packaging. Thereby helped usboost quality standards. Our highly automated equipment backed by latest technologieshelped us successfully produce healthier plant varieties.
It gives me great pride to claim that KRBL is fully prepared to witness how theinevitable trend of automation will leverage healthier production in a post- COVID-19scenario.
Over the past decade our strategy to focus on selected products and markets with soundbasis for long-term growth and profitability has paid off well and our financial andoperational metrics have improved. Our focus to maintain a disciplined researched approachfor producing the best-quality seeds enables us to sustain long-term profitable workinstead of chasing revenue growth.
A longstanding collaboration with local farmers and our experienced in-house expertswill assist us in executing this vision of cultivating the best seasonal yields. This willbe followed by a unique rice ageing process that ensures KRBLs superior market value.
Another milestone in our success story is our philosophy - directly procure paddy. Theurgency for organic and pesticide-free resources drives our company to create awarenessamong farmers so that they incorporate these methods of farming by maintaining fullcompliance. However this must be a gradual process focusing on the intended outcome ofobtaining a sustainably higher produce each season.
Our inventories are steadily evolving to meet our brands' healthy growth in demand. Wefinance our inventory at reasonable costs which considerably reduces our dependence onexternal finances. This has enabled us to grow in progressive leaps in the context of asustained turnover. Our company operates via environmentally conscious means: we use powerfrom captive sources hence remaining fully self-sufficient in our energy requirements.Such continuous efforts ensure that we reap the optimal values for every component ofpaddy and its allied products.
We utilize an extensive distribution network that encompasses both traditional andmodern e-commerce channels in order to connect with our customers. Our popular brandsespecially India Gate have managed to hugely appeal to the people's taste thanks to ourdedicated promotional efforts and social media connect. We have extended solidarity towardsocial issues by initiating campaigns like Every Sacrifice Matters and Woman's Day EveryDay. Our vision of efficient production legitimately driving social change based ongoodwill helps us develop a loyal customer base.
Ingraining a healthy future
We are laying a strong foundation by spearheading initiatives to achieve a prosperousfuture inspired by the wisdom of our forefathers. Our produce is an immaculate synthesisof healthy food and diverse premium varieties of rice. Public outreach and consumerengagement are priorities that we achieve through targeted campaigns in order to gain adeeper emotional connect with the customers and understand their needs. The emphasis ofall our efforts is primarily on facilitating sustainability.
Response to COVID-19
Over the last few months the COVID-19 pandemic has engaged various industries in Indiaand across the globe in combating its effects. KRBL also got impacted. However we tookthe concomitant challenges in our stride and overcame the hardships.
With automated manufacturing sorting and packaging facilities combined with adedicated team we were able to weather the storm successfully.
In these times highly efficient operations will be necessary to enhance our momentum.Making our products available in online platforms is helping us evolve in the post-COVIDera. We focused on enhancing our on-line presence keeping in mind the evolving supplychain mechanism which is evolving from the traditional distributor-retailer model to D2C(direct to consumer) model via online platforms.
Further we have continuously supported the communities at large and we will continueto do so considering the present circumstances.
Our company continues to strongly focus on the growth of basmati rice business. Agrowing demand for exports in key geographies led by sustained industry leadership hasestablished us as a strong contender that can shape the industry's future. Furthermorebroader accessibility with an omni-channel approach (which include impeccable brandinginitiatives) will help us serve our customers in the best possible way.
Our acute focus on customers' needs ensure the constant elevation of our performancestandards. Complementary product lines of health and wellness are currently in theplanning stage. In addition a record procurement of the best-quality paddy last seasonhas invariably projected a turnover of Rs 8000 crores in the next 4-5 years. Globallycustomers are currently favouring branded staples. This puts us in a profitable positionowing to our stronghold in the key basmati markets. Our focus on stabilizing supply chainsand increasing production will ensure continuous demand in export and domestic sales inFY21. We will also maintain a robust balance sheet that will define our ambitions for thepresent as well as the future.
Heeding the call of our Hon'ble PM KRBL Ltd. is taking gigantic strides to steer theAtmanirbharta mission forward. Our dedicated involvement with farmers in harvesting andprocurement along with indigenous seed development and their in-house processing willherald holistic growth for our company and our nation at large.
I would like to thank all valued stakeholders our customer community our vendors ourbankers and our investors/shareholders for dedicatedly extending support and putting faithin our goals. I along with the entire management team and patrons wish to expressgratitude towards our employees for their valuable contribution towards taking thisorganization forward.
Here's wishing you the best of health and prosperity for the year ahead.
Anil Kumar Mittal
Chairman and Managing Director