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In the report on Thursday (February 09, 2023), Crisil Ratings said that next fiscal, however, sales will decline 5-7 percent as basmati rice realization is expected to soften with the anticipated increase in paddy acreage.
The volume demand is expected to remain stable at 6.8 million tonnes, it added.
"Basmati sector sales will likely rise 30 percent this fiscal, with volume growing 10 percent and realization increasing 20 percent.
"Growth in export volume is driven by two factors -- increased food grain demand amid geo-political issues, and India benefiting from lower basmati exports from flood-affected Pakistan, a key basmati exporter. Next fiscal, sector sales will reduce by 5-7 percent solely due to moderating prices," Crisil Ratings Director Nitin Kansal said.
Basmati rice exports, comprising 64 percent of sales by volume, are estimated to log a healthy growth of 11 percent on-year this fiscal to 4.4 million tonnes following strong demand from key markets like the Middle East and the US, as per the report.
India has already exported 3.19 million tonnes (a growth of 16 percent year-on-year) of basmati rice in the first nine months of this fiscal.
The report said the improved operating profitability will, in turn, result in higher cash accrual, which will improve the financial risk profiles of basmati players.
"Though the absence of capex will limit basmati players' requirement of external long-term funds, their working capital borrowings will rise as paddy procurement will increase this fiscal to meet increased demand.
"However, increased cash flows from business will control the overall leverage of the players, keeping credit profiles stable," Crisil Ratings Team Leader Rachna Anand said.
Source:
Online/GFMM
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