Rei Agro expects net profit at Rs 300cr in FY11

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Rei Agro expects net profit at Rs 300cr in FY11

Rei Agro has declared their third quarter FY11 results. The company has seen a jump in their revenues to Rs 960 crore versus Rs 651 crore. Their net profit stands at Rs 81.38 crore versus Rs 34.28 crore.

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Rei Agro has declared their third quarter FY11 results. The company has seen a jump in their revenues to Rs 960 crore versus Rs 651 crore. Their net profit stands at Rs 81.38 crore versus Rs 34.28 crore.

Sundip Jhunjhunwala the chairman, Rei Agro, in an interview on CNBC-TV18 says revenues have gone up due to higher incremental volume growth.

With floods affecting Pakistan's crop, India's Basmati production down by about half a million tonne and an increased demand for supplies over the last four years, he says to expect a 25-30% shortfall of rice available globally.

He adds that 20% revenue comes from the Gulf region. "We also expect PAT to touch Rs 215 crore in the first nine months of FY11."

He sees PAT doubling by the year end.

Below is a verbatim transcript of Sundip Jhunjhunwala's interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. For complete details watch the accompanying video.

Q: Your revenues have gone up quiet a bit to Rs 960 crore. Can you take us through how much was volume growth and how much was realisations on rice?

A: This growth, mainly, has been based on incremental volumes because we commissioned one of our units in this quarter. I would believe that by the end of this year, most of our projects that are going to get commissioned. By the end of this financial year, we will probably be at 1 million tonne of capacity

Q: We have also been hearing that because of weather situations etc, Basmati prices internationally have gone up. Are you expecting a boost in realisations in Q4, Q1?

A: Basmati production in India is down by about half a million tonne. The crop across Pakistan is probably affected because of floods and because of increased supplies over the last three-four years, the industry, both in the international market as well as domestically is growing at about 15% per annum. We tend to believe that there would be a shortage of about 25-30% of total rice available for the world.

Q: Where are prices trading at right now and what does that mean for realisations that you are seeing in the fourth quarter that is underway?

A: Our realisation is that the domestic market went up to Rs 77 per kilogram (kg) from Rs 70 per kg as of March. We were able to pass on the price increase to the domestic market. Internationally, also prices are pretty firm and demand is quite robust. We would believe that paddy being short in supply, there should be some more strengthening of prices from here.

Q: You also export a fair amount to the Gulf region. Are you enjoying higher realisations in that market?

A: Twenty percent of our revenues come from exports, mainly, to the Gulf. Most of the Basmati rice in the Gulf is branded rice. I don't think its going to be very long when these increased prices are going to be passed on to the consumers in Gulf also.

Q: You did Rs 157 crore in PAT in FY10. You must have crossed that number comfortably in the first nine months, if you can give me that number and how much you expect to clock by the end of FY11?

A: We have done Rs 215 crore in the first nine months of this year. I would tend to believe that we are on track the same way we have grown. We should be going the same way in this financial year as well.

Q: Rs 300 crore nearly of PAT?

A: It looks a possibility. We would endeavour to do that.