EGoM decision will aid exports: Kohinoor Foods

3063 Investors following Kohinoor Foods. Share this News with them.

0

Like this story, share it with millions of investors on M3

EGoM decision will aid exports: Kohinoor Foods

Yesterday, an Empowered Group of Ministers (EGoM) allowed export of non-basmati rice up to four million tonnes. In an interview to CNBC-TV18, Gurnam Arora, joint managing director of Kohinoor Foods says, EGoM decision will aid exports.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Kohinoor Foods See previous management interviews See what other Experts & Brokerages are saying about Kohinoor Foods Kohinoor Foods BSE | NSE 29/05/12 Are Mutual Funds betting on Kohinoor Foods?

Yesterday, an Empowered Group of Ministers (EGoM) allowed export of non-basmati rice up to four million tonnes and reduction of minimum export price (MEP) of basmati rice to USD 700 a tonne from USD 900 a tonne

In an interview to CNBC-TV18, Gurnam Arora, joint managing director of Kohinoor Foods says, EGoM decision will aid exports. "Reduction in MEP for basmati rice will boost exports. We will be pleased if the government abolishes MEP for basmati rice," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: On both the decisions taken by the EGoM, increasing exports on non-basmati and bringing down the floor on basmati export prices, what is the impact for a company like yours?

A: I think the entire industry is overwhelmed with the decision of the EGoM. It will certainly improve the exports to a large extent. I think we have lost about more than 300,000-400,000 tonne, this is basmati. But anyhow I think we will try to cope up with that.

Non-basmati, adding two millions tonne more is a very good step. Atleast now we are again treated as a supplier, which we were not in the last couple of years. About two million tonne have already been exported. The rest two million tonne we are very comfortable. We should be doing it in the next two-three months.

Our request to the government is that they should make a firm long-term policy. It is changed so frequently that we are not treated as a serious supplier in the world market. That's very important because otherwise we don't get the price which Thailand, Vietnam get.

Q: The minimum export price has gone down by USD 200 per tonne. Is that good enough to make you comparative in the international market or is your request to the government to take the floor price away altogether?

A: I think our request was to remove the floor price. It doesn't make any sense. It was irrelevant to have a MEP on the basmati. If one decision had been taken earlier, we could have done a lot of exports which has shifted to Pakistan just because we could not do it in time.

If there is no regulation on that then I think this is the market forces which decide the prices. It is not the government or we do it. If the crop is good, the demand is good, obviously export will happen. But sometimes it becomes a bottleneck, if the MEP is there. But still I think USD 200 will do a good job.

Q: There have been reports about defaults on payments from Iranian customers. Are you directly exposed to Iran at all and do you see this as a legitimate or a genuine problem for the sector?

A: Iran has become very important in basmati exports because 30% of our export goes to Iran. Because of the sanctions by the US, they are always having problems in the payment terms and all. Right now, I am told that some banks have started opening letter of credit in Indian rupees. I think that will be a good step. Atleast we will be very comfortable that the payment is coming in, in time. That's the only problem with Iran. If it is sorted out, I think we will be able to do a very good job in Iran also.

Q: Assuming you can get something out of this increase in exports, how much do you think that will augment sales for this quarter by and any visible impact on blended margins? Does it pull it up considerably?

A: Prices of basmati are low. So, I think I our margins will not be too much affected because our procurement price is also cheaper. But, overall, realisation on the books will be lower than last year from the basmati.