Rice industry remains stable: CARE Ratings
CARE Ratings has come out with its report on "Rice Industry Outlook". The Indian government is unlikely to impose any export restrictions in the near future with the forecast of near-record production and "more-than-sufficient" government-held rice stocks, says the rating agency.
November 21, 2013 / 17:49 IST
Credit outlook for Rice industry remains stable: CARE Ratings
India’s production of rice hit an all-time high in 2011-12 crop year (period from July to June) and crossed the 100 million tonnes level. Also India has emerged as the world’s leading exporter of rice in 2011-12 marketing year (period from October to September). India is expected to retain its top rank as rice exporter in 2012-13 marketing year on bumper production and strong export demand for Indian rice, both basmati and non basmati.The business profile of CARE-rated rice millers are expected to improve in the medium term backed by increasing scale of operations. However, leveraged capital structure owing to the seasonal and highly working-capital-intensive nature of the business will continue to impact the financial risk profiles. Improvement in the overall credit profile of the players would depend on their ability to fund the incremental working capital requirements through a judicious mix of equity and debt.The outlook for the current year is stable on the expectation of a good harvest in 2013-14 crop year. According to the first advance estimates released by the agriculture ministry, India’s Kharif rice crop output is expected at 92.32 mt in 2013-14 crop season which is more or less in line with the Kharif rice output of 92.76 mt last year. The timely arrival of monsoon in major rice growing states supported by better rainfall from last year has augured well and improved the rice productivity. Also better price realization of fine and aromatic variety has induced farmers to grow paddy.Despite the increase in minimum support price (MSP) of non basmati rice for marketing year 2013-14 to Rs.1,310 per quintal for common grade and Rs 1,345 for ‘A’ Grade, as against Rs.1,250 and Rs.1,280 for common grade and ‘A’ Grade respectively in the immediately preceding year, the prices of rice are expected to remain stable on the expectation of a healthy production.Moreover, the demand outlook for the industry remains healthy with increasing domestic consumption and export demand of basmati rice given the India’s dominant position in the global basmati rice industry. The Indian government is unlikely to impose any export restrictions in the near future with the forecast of near-record production and "more-than-sufficient" government-held rice stocks.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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