"Flavor of India "- Kohinoor Foods

Kohinoor Foods has come out with its Q3FY07 numbers. Its Q3 net profit was at Rs 8 crore versus Rs 5.5 crore.

Rajiv Mangala,the CFO of Kohinoor Foods, says that the total turnover is up by 29%. Apart from that he states that the food turnover is up by 100%.

Mangala adds that Kohinoor Foods is in a tie-up with Reliance Retail and are supplying their products to all the outlets. The turnover they expect from that is around Rs 20-25 crore.

Excerpts of CNBC-TV18's exclusive interview with Rajiv Mangala:

Q: Can you walk us through the kind of growth that you have seen in each one of your divisions for this particular quarter because your net sales have gone by about 29% at Rs 181 crore and despite your net profit being on a small base, there has been a substantial ramp up in your margins?

A: Our total turnover has gone up by 29%. Out of that, our food turnover has gone up by 100% and our total branded turnover has gone up by 24%. On branded part of the exports, which is again our focus area, our turnover is up by 45% than last year because the EBITDA margin on branded basis is much better than the non-branded basis. So our profit before tax has gone up by 68% and profit after tax has also gone up by 46%.

Q: Do you hope to maintain you margins in Q4 at 10.5%?

A: Q4 also looks very exciting and very good. We believe the numbers will be on the same lines as on Q3.

Q: Another aspect is that you have a supplying agreement with Reliance Retail. Could you throw more light on whether this is an exclusive agreement and how do you stand to benefit on account of it?

A: Right now, we would like to inform that we are supplying our basmati products and food products to every retail outlet of Reliance. We have even supplied food products to Reliance outlets, which are supposed to be opened in the next one week's time in Delhi.

Q: So is it an exclusive tie up?

A: It is an exclusive tie up.

Q: How much of a revenue do you see coming in from the supply, and particularly from Reliance retail?

A: Going forward, we believe that we are looking at a turnover of close to Rs 20-25 crore from Reliance retail outlet.

Highlights of the quarter (Q3 FY07 v/s Q3 FY06)

• Revenues at Rs181.62 crore, an increase of 29.21% on Y-o-Y basis
• 99.84% increase in revenue from the foods division to Rs 10.14 crore from Rs 5.07 crore
• 19.58% increase in sales of branded basmati rice to Rs 94.71 crore from Rs 79.20 crore
• EBITDA at Rs 19.07 crore, an increase of 32% on Y-o-Y basis
• PBT at Rs 10.54 crore, up by 68.64% on Y-o-Y basis
• PAT at Rs 8.04 crore, up by 46.18% on Y-o-Y basis
• EPS (annualized) of Rs 12.13

Kohinoor Foods Ltd, today announced its results for the quarter ended December 31, 2006. The company recorded sales worth Rs 181.61 crore, an increase of 29.21% from Rs 140.43 crore in the corresponding quarter last fiscal. The net profit also recorded an increase of 46.18% to Rs 8.04 crore from Rs 5.50 crore.

The company showed excellent realizations from increased share of branded product sales and thrust on high margin Ready-to-eat segment. The company's exports have also shown tremendous growth.

Branded basmati sales (domestic and exports) increased to Rs 94.71 crore as against Rs 79.20 crore in the corresponding previous quarter reflecting a growth of 19.58%. This was particularly on account of 45.16% increase in exports of branded basmati rice to Rs 22.87 crore in Q3 FY07 as compared to Rs 15.76 crore in Q3 FY06. Ready-to-eat foods segment recorded a 100% growth with an increase in sales to Rs 10.14 crore from Rs 5.07 crore.

Kohinoor's thrust towards increasing branded sales and defocusing commodity business could be seen in the 24.42% increase in revenues from branded business and a 10.99% fall in revenue from private labeling business. This resulted in EBITDA growing up to Rs 19.07 crore in Q3 FY07 from Rs 14.46 crore in Q3 FY06.

Kohinoor Foods has been a strong player in the global market, both for its Branded Basmati rice and Ready-to-Eat food business. The company entered into frozen foods category after already establishing a strong foothold in the ambient foods. During the quarter, Kohinoor completed its shipment of frozen foods to UK, Australia and Switzerland and also added 10 new products in this category.

In the ambient foods business, Kohinoor Foods introduced its products in TESCO, Ireland and tied-up with leading stores of Cash n Carry, Palmer and Harvey in UK, thereby increasing its supplies in these countries. It also introduced a new range of ready-to-eat meals in Malaysia Airline and entered Norma, a leading German chain of stores for its product range of rice, RTE meals and spices.

Domestically, the company has got listed for rice and food supplies for the upcoming stores of Reliance in Jaipur, Delhi and Mumbai. This is besides presence in Reliance Store at Hyderabad.

Commenting on the results, Mr. Gurnam Arora, Jt. Managing Director, Kohinoor Foods Limited, said, "With Kohinoor's foray into frozen foods, our diversification into high margin foods business is complete. The company has been able to report exceedingly good numbers because of the strength of its branded basmati rice in India and abroad, as well as the success in the RTE food business across countries. This shows the recognition of our brand "Kohinoor" and reinforces the trust associated with it."

Kohinoor Foods is further planning to increase the capacity of its ambient foods from 50,000 meals per day to 1 lakh meals per day and that of basmati rice from 62 mt/hr to 70 mt/hour. The company also has plans to install steam turbine for power generation.

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