Chaman Lal Setia Exports Limited (CLSEL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, on behalf of Captify Consulting Investor Relations team, I welcome you all to the Q1FI27 post-earnings conference call of Chamanlal Setia Exports Ltd. Today on the call, from the management team we have with us, Mr. Rajiv Setia, Joint Managing Director and CFO, and Mr. Ankit Setia, Whole Time Director. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risk and uncertainties. Also, a reminder that this call is being recorded. I would now request the management team to brief us about the business and performance highlights for the period ended June 2026, the growth plan and vision for the coming quarters or the year, post which we will open the flow for Q&A. Over to the management team.

So, I welcome all for joining us, and I would like to thank everybody for investing, having trust in our company. Yeh jo last quarter gya hai, this was a quarter which happened during the war of Iran and USA. So, iske different lara ke challenges thai, and... If I talk about the performance of my company, there was absolutely no effect. The sales went fine, there were no claims, there were no containers which got stuck anywhere. So it was a smooth quarter for us. And two, three days before, somebody very senior from MSC line, shipping line, was in our office. And he highly praised about the company's way of working. They said that the way Chamallal Sitya Exports Limited has diversified their export business, the way we are capturing multiple ports all over the world, like he said that this way there is no other company working.

So it gave us great confidence to listen to that.

So this is what I wanted to say. Chacha, if you'd like to add.

Yes, with the spread risk, we are working. This is what we are doing for years altogether. And this has really paid now when the war situation is going on. The movement to Middle East is low. So, of course, through Dead Sea, the countries like Egypt and this Aqaba Port, Jordan, and Lebanon is doing well. And this part is slow down now. But let's hope it goes well. Our 500-ton shipment to Jeddah is moving in a day or two. So, it's going, let's see, this part is not as good as it used to be, but the other part of the world, like US, Canada, New Zealand, Europe, Russia, African part, we are all over.

So, last quarter, we had zero shipments to Iran. That is why you can see there is no effect.

When we have shipped to Iran, never.

Yes. Let's move on to the Q&A.

Yeah. Sure. All those who wish to ask a question, we use the option of raise hand. In case you are unable to raise hand, you can drop a question in the Q&A box and we'll ask your question on your behalf. I request participants now to raise their hand.

No, sir. It's an afternoon.

We can respond to my fellow chapter.

Sir, we will take the first question from Manish Kela. Manish, you can go.

Hi. Thank you for the opportunity and congratulations. Once again, displaying a solid performance, both on top line as well as bottom line. So I have a couple of questions. So one is, in your commentary, you've talked about, again, elevated ocean freight costs. Again, I understand all of this is because of the geopolitical situation. So again, were we able to observe these costs? Like, were we able to pass it through the customer? So, that's the question. That's one. And my second question would be, we also talked about doing good purchase of low-cost inventory. So, this was highlighted on the previous call. So, are we still holding on to any low-cost inventory and affairs? What would be the quantum? And do we expect Q2 realizations to be strong as well, going by the current rates of Basmati rise?

Yes, your first question is about ocean freight. We are quoting only FOB these days and telling the buyers we will ship CIF, of course, because we have to secure our cargo also with the insurance and the ocean freight bill, the actual ocean freight as on that date will be added to the price to make it CIF. And we always tell them we give you the price whatever because you are yet to sell. We have sold you and you are yet to sell. You are in a better situation than us despite paying ocean freight. But everybody knows ocean freight has gone up at accordingly. They factor into their prices and sell. The demand is there. It's an essential product. Demand is too much. And other question, you know. We built up huge stock of low prices and starting from the commencement of season until mid January we bought a lot of rice. We still have a reasonable quantity with us at the lower price and whenever the prices. Went down in this period also because when there was good news for from the war side, the prices used to go up. And when any eventuality happened like the resume of war, whatever unfortunate we should say, the prices used to come down. We got opportunities to procure also. So, in all, we are in a very good situation too, sir.

Thank you. So, if I can squeeze in one final question. While sales increased, the volumes reduced. So, do we expect volumes to be soft in Q2 as well?

Q2, it's very little premature stage to come in because it's just beginning of the... As Water 2. Demand is there. Now it depends. Demand is there means buyer and seller are confident about the business. Now it depends upon the logistics. If the, I mean, this war is receding slow day by day. And let's hope good time comes. Ocean freights come down. The movement to all destinations is in order or going quick, the business can happen anything. And if the slowdown remains, then it can hit also. It's premature to stay. Still we have to pass.

And how are the current prices of Basmati ruling? Is it high? Thank you. Thank you.

They are high, of course, but not the peak level which was achieved by rice. They are less than that, but still high.

Thank you, sir. I'll join back the queue.

Thank you, Manish. We'll meet the next question from Rajesh.

Yeah, good afternoon, Rajiv and Ankit. Nice to talk to you one second. My question is, sir, the first thing that I have seen in the presentation, it is very fun to see the full integrated form-to-form operations. The tagline is very similar. And second point is the result which is very good. Simple thing is that the top-line growth is not happening in the past three years. If we see the top-line growth in the past three years, we will see 1 percent. So, what do we want to do with management?

Ankit, you will answer or should I answer? Yes, the good part is, we recently we have come across a company, Al-Muhadab, they are called, a Saudi company, and because they have been buying from multiple people, but they got hits here and there. So, they have selected our company for, of course, part of their purchases. And they are very big buyer. They are buying around two and a half lakh ton. So first shipment of 500 ton is moving. And if there's I mean it's not the question of their satisfaction because they examine everything in our factory in our plant. They go, they have, we have learned from them also the way they are procuring. And hope so this company remains with us. And if we live up to their expectation, why not they will be going here and there because they, after a lot of investigation or observation, they have come to us. And we have told them, our company doesn't work on break-evens or losses. We need, because I always say the true marker of any business is profitability, and it has to be there, low or high. And I am expecting increase of top line from these people. Apart from that, We are regularly discussing in our own company for domestic sales, because two days back I was talking to my distributor in Agra. He is my distributor since 1980, and Maharani is quite famous in Agra. So just one call of mine and talking to him, he placed order of 100 into factory.

Very nice.

Yeah, very nice, you know. And what we really need is we, maybe personally, me or Ankit or my son, because Vijay is involved in quality production in the factory. He's not free. We need to meet the people. We have to revive our old distributors. It will grow. And I have seen we have, as God brand is concerned, somebody has carried out some this survey. Next to Lalkila, we are coming. I'm happy. So, domestic sales is very important now, and particularly after this war and disturbance happens in any part of the world, you know, it was earlier in Ukraine, then we have seen Israel, Iran, war only. And now America entering into it. So which hit not only Iran and GCC countries also. Nobody ever knew, nobody ever dreamed this thing will happen. So it's like not putting all egg in one basket. We are doing separate business and domestic is our next target.

Rajiv ji, मैंने जो देख रहा था, अपना export turnover, domestic turnover का ratio अपन देखें, तो financial year 23 में ये 2.74% total export turnover था हमारा, and financial year 26 में ये 2.39% था, तो near about 97.5% turnover अपन domestic क्या कर रहे हैं, ठीक है?

Good morning, everyone, and welcome to the call. And it is essential for the management also to visit once.

Yes, yes, yes. I would like to correct something over here. Rajeshji. Yeah, please. In FY23, our export revenue as a percentage of sales was 73%. Okay, export revenue as a percentage of total revenue was 73%. Today in FY26, it was 91%.

No, please check me. Where I feel, FY23, your total revenue is $125 crore, which is your presentation. And FY26, $156 crore.

Let me just recheck and come back to you on this, but it has gone from 73% to 91%.

Rajiv sir, you can tell us more, why Rajiv sir, as I am telling you, is that 91% total sales of 91% is your export?

But I personally assume 90% export, 10% domestic, but figures you have to reconcile, you know.

It needs

recheck rather than to make any claim, it's better.

Correct, correct, correct. Second, sir, this slide 15 has given us that the average margin is I am a a a a a a a Uh-huh.

Hmm. Hmm-hmm. So, you can see it is going up. And future, maybe you can expect similar things to happen.

Very good. Very good. Very good. Second, Ankit Ji, more than 300 plus brand is trading. This is the most famous brand. This is the second largest brand in the domestic market.

Sir, Maharani, of course, is the flagship brand. Then, we have a Mithas brand, which is also very strong. Our brand is also very strong. And we have another brand, which is also very strong. So, we have a lot of brands that show strength.

My opinion is that our website is not a view on the other side of the site. Please, let us show that.

Thank you.

So, uh, you can

say special brand bhi kai sakti ho, humara khud ke bhi branj bhi hai, humara ek brand hai, diwan.

Royal India is doing great. Okay.

So we have a brand, Diwan, which has become very big in one of the countries. Maharani would be number one brand in Nigeria. So different countries. Thank you.

Last question. Thank you. Last question. Our site is maharani.in. Do you have any options for investors? I don't know.

I think investors have made a whole website. I will share it with you.

Okay. Okay.

Okay.

Thank you. And all the best for the near term.

Just to clarify on the export query. Yeah. If you go to slide number 31. Yeah. Can you go to slide number 31 of the presentation? Just given the export sales. Okay. Which is 1011, right? Against a turnover of 1387 in FI 23, which is 73% of revenues, okay? Against that, it is 1268 in FI 26, okay? Against a turnover of 1440, yeah? This is including other operating income. Other operating income, your turn number is 1399. If I take as a percentage of that, it comes to 91%

of revenue that's right. Thank you. Thank you.

Sir, we'll take the next question from Mrunal Kadam. Mrunal, you can go ahead.

Thank you. Congratulations on a strong set of numbers. And I believe this is one of your best quarters. We have seen average realization move up significantly. Can you help us understand how this moves in domestic and export? And what was the key drivers for this higher realizations? And is this looking sustainable?

Actually, you see, the prices in this particular year, they raised around 30% from January onward. They started rising and the peak level of was observed 30% which added to the profitability of course. And secondly, despite war, demand was too high because the people buy essential in such tough times. So the prices, the profitability was good. We were supplying timely and we have a very big spread of our business.

Vinay sir, I think our sales price is the highest in 90 per kg, please tell me a little.

Yeah, that's right. So in Q1 of FY27, our domestic selling price is 64 but our export selling price is 98. So, this is the highest level, I think, since, at least the data I have since Q1, FI23.

This is the highest we've done till now. And you'll get to see this only benefit in the future.

Okay. Thank you, sir. Will companies contributed the most to the growth in quarter one? And are these markets expected to remain strong through FI27?

Yes, absolutely. These conditions are the same in the future.

Okay, sir. Thank you.

Thank you, Murnal. Sir, we'll take the next question from Surbhi Mishra. Surbhi, you can go to it.

Hello, congratulations on good sites of number. I wanted to know in the current global rice trade environment, where does Shamanlal Setia sees the biggest opportunity to gain market share from competitors?

You see, the business comes, increases the kind of dealings we have with our customers. If we live up to the expectation of the customers, one, give them the good quality, good price, they remain attached to us, always. And it grows. So we don't see more to our peers. Let them do their own way. And we have a different way of business. We don't do in two, three, four countries business. We do with the multiple. And it's very tough one. Believe it, it is more than 300 brands of private label of the customers and backing them. And give up to their expectation is quite tough and we are doing tough job. It's hard to do. So we sometimes feel we have hardly much competition and we are going our way good.

Yes, sir.

I also wanted to know, are international customers increasingly looking for reliable long-term suppliers post recent supplier disruptions, and has the company won any strategic new customers in the upcoming year?

Yeah, yeah, always new people are coming. Right now, one guy from Saudi Arabia is sitting on the upper floor, and I was with him, and I just came at 12 o'clock. My share team is handling.

Maan, main add kardeta hoon. We have a team of new buyer development. There are more than 20 people working in it, 24-7. The process of getting the buyer is incentivized. So, they work very hard to get new customers. So, daily, there are 10-10 queries for customers. And they've been chasing these customers for a very long time. So, if we talk about countries, these are the sales coordinators. The countries, which are the buyers, because they don't change, they're the buyers. They're the buyers. They're the buyers. They're the buyers. They're the buyers. They're the buyers. They're the buyers. They're the buyers. They're the buyers. So, these new buyers look at the company.

Okay, thank you. All the best.

Thank you.

Thank you, Surbi. We'll take the next question from Lav Gupta. Lav, you can go ahead, please.

Thank you for the opportunity. So, sir, firstly, I wanted to understand why has our EBITDA remained flat around 150-160 crores over the past four years? And you know, what could be a sustainable EBITDA margin that we can expect to operate at going forward?

At this time, EBITDA has gone up, you know.

Now, the EBITDA basically oscillates between 8% to 12%, sometimes 14% also. So, this quarter, we've done 12.35%.

So, do we expect to sustain this for the full year?

Yes, we expected to sustain it because we are sitting on stocks. You can check the figures.

All right. And secondly, our export volumes have also been flat, you know, since the past two, three years. And, you know, as Mr. Vinay mentioned that 90% of our business is now from export. So, can we say that we have lost some share in the domestic market?

If you look at the domestic sales, it has been consistent. Nothing has gone down. Right. So, in the future, focus is going to come on domestic sales also.

And the volumes in the export market, them being flat, what is the reason for that?

See, if you look at the history I said before also, the revenue remains flat for a few years, and then it picks up. So, we are in the process.

I have already explained about the new buyer, which is one of the biggest. They buy more than 2 lakh tons, this Al-Mahadab group. They have joined us. First shipment of 500 tons is in, is going in any day, just booking has come.

So, like the example of Mohadeer joining, I mean, we've supplied them 500 tons. You know, we are chasing a lot of customers. You never know when, you know, the big customer starts to, you know, who's buying on our side, how do they do it? How do they do it, the sales will pick up.

Okay, understood.

So, it's a process. I would say it's a process. You can see the history also. If you can check the revenue of last eight, nine years, you will see it remains same for two, three years, and then it picks up. Okay, got it. So, we are in the process. Thank you.

We'll take one or two questions that have come from Chad from Gursidap Singh. The company had earlier projected or looking at 1,800 crore revenue. Is it likely to be achieved this year?

See, absolutely, and it will be achieved not even 1,800. We can go up to 2,000 also. It's a matter of some time now.

The second question is, has the overall demand from areas affected by Hormuz's situation improved from last quarter?

So, we are not dependent on the areas where state of Hormuz is affected. First of all, that is why you can see the revenue has not dropped. Neither the profitability has come down. You can check, there is no big credit given to any customer. And I don't think there is no major effect.

Sir, we'll take the next question from Ayushi Paritya. Ayushi, you can go.

Good afternoon, sir. Thank you for the opportunity. Sir, my first question is that gross margins have improved meaningfully in Q1. So, what specific factors have driven this improvement, like it is better procurement, aging gains, freight normalization, current movement, or a higher share of premium products?

So, there is a major procurement reason. If we talk about this quarter, that is the main reason for the margins. Procurement was done at lower price and we still have stocks. You will see in future also the benefit is going to come.

Sir. And one more question. What is the company's medium-term gross margin aspiration and what operational levers can sustain margins at the current or at levels above the current level?

You can expect same levels of margin in the future.

Thank you. All the best.

Thank you, Ayushi.

Thank you, Ayushi. Sir, we'll take the follow-up question from Manish Lira. Manish, you can go ahead, please. Thank you.

So, can you give an update on your current capacity utilization, especially across the units?

Which capacity utilization?

Client utilization.

Yeah. It's in full swing, all over, nothing idle.

But what should be the percentage, like 50, 60 percentage, or more than that?

Manish, I would say that... And sometimes, you know, we are focusing on domestic sales also because we have the rice. When we are making export rice, a lot of lower grade rice is also produced, right? That also needs machinery to be processed. So we are in that process also. That is why the machinery is working at their efficiency, at a good efficiency. But, you know, to get rid of the lower qualities, that process is going on as of now. We've sold a lot of lower quality rice in this quarter.

Understood. And Dusra, Ankit Bhai, so we started with not so favorable monsoon conditions, right? So do we see any kind of an impact or do you think the weather conditions are favorable as far as rice is concerned?

Up till now, I don't see any impact. It is more in the news. The early, I mean, one of the Basmati varieties, 1509, which comes early in the month of July, it is coming normal. So I don't see any effect as of now.

The effect of which one? I understood the question. What kind of effect do you know?

So, he was asking about the monsoon.

Monsoon, you see, initially there was, people were saying rainfall is limited. No, it's only rainfall all around. It's raining all over. Secondly, apart from that, farmer always uses canal water or tubal water. They go for their crop always. And this early crop which came, every year it comes early crop from UPA. And in this particular year, the early crop was very high price because the prices of rice were high. So consequently, the prices of early crop were very high. So farmer is likely to grow a lot. And if this weather situation, the way rain is happening, so I think we are hearing from the farmers crop is going to be good this year.

Yeah. And Rajiv sir, how are the margins going to be across this order? In line with what you've been doing normally?

Yeah. Your question is very good. And this was our own concern when we start dealing with these people. Because this kind of companies don't let anyone earn much. This this is their way of working. I've seen and they have been buying from multiple suppliers and they have been cheated also. Because they give low price, they don't give margin, people try to cheat them. That is the reason they have approached us. I have not approached that company. They have approached us. And we have told them, if you really want to get good rice, you have to pay for that. We don't say give us very large but reasonable profitability has to be given. We have to meet our expenses. We have to meet our direct costs. And unless you don't give us the good price, how can we work? Because profitability has to be there in every container. This is what we have said. So first we have tried 500 ton with them. And they are quite happy the way we cooperated with them and the way quality, they could not find any deviation in our quality. So, hope so. We also earn our sales rights also. It's the time.

If you are asking this particular deal of 500 tons, this was highly profitable. Because we had stocks.

And how big can we scale, especially this customer that we are referring to? So Rajiv, sir, highlighted that the customer was quite happy with the... See, the customer is one of... Right.

So customer is the biggest from Saudi Arabia. Let us see in the future how it unfolds. If the customer is valuing the kind of service we'll give them, if he values our quality, and he gives us margin, of course the business will become big. All right.

Thank you, Muni. Sir, we'll take the next question from Vedant Rane. Vedant, you can go ahead, please.

Thank you so much, sir, for the opportunity. I'm fairly new to this company, so please bear with me if I ask some basic questions. So, my first question would be follow-up on the last participant question. You mentioned that Saudi Arabia Group is sourcing 2.5 lakh tons from India. So, how much percentage of that... Should come to our company.

Yes, it depends. Where they get good price and good quality. That matters. And we are strict with our principles. We need profitability also. And we will live up to their expectations. But they have to pay us. He will not, as our father said, don't do that.

So, sir, my question was more on, like, how much percentage of volume would come to us, like, out of 2.5.

It's, I cannot comment right now.

It's no plan, sir, though.

Vedant, if you work on loss, then it will give you $2.5 million. What will it be? You have to think about this, right?

Correct, correct.

If you give a margin, then we will increase the work.

If you don't give a margin, then we will do it.

When they came to me, this was my first condition that we always earn in every single transaction, and we give the quality. And they're very happy with the quality, and I'm sure they will come to us.

Got it. My second question is, like, could you please explain me what could be the timeline for your inventory to move? Like, if we process, if we procure some inventory, let's say around Jan or Q3, when is the revenue recorded for us? Like, in which quarter will the revenue be recorded?

No, it's subjective. I mean, we have procured rice and patty in the beginning of season. Some of the rice are still with us, quality-wise. And we have been buying also, even today we are buying. Whenever somebody gives a good price to us, good quality, we pay second, they get 2% cash discount. And we have customers in different parts of the world, we make money and sell. So this is, I mean, you can't stick to one time and holding. When the prices are low, this year, we bought or not?

So, Vedant, since, you know, we buy a lot of rice, it's always just in time. I can get rice in the morning and by night time, it'll be getting packed after the fumigation process.

I mean, within 24 hours, I can pack it.

So, it is not a big time we take in, you know, procurement and then, you know, processing it. It is always just in time.

Got it. So second, my third question would be on similar lines. Like, is there a split that we maintain between paddy and semi-processed rice in our inventory? Like 80 would be semi-processed, 20 would be paddy, something like that.

I think it is mentioned in our balance sheet exactly what we are doing. Chacha, you tell me what exactly it is.

45 to 30% is paddy, rest is all rice. And if you ask for the capacity, capacity for milling is different. And buying rice and packing is altogether a different capacity. We have multiple units for packing machines.

Got it. Uh, so one more question, like with the current capacity we have, uh, packaging capacity, what's the peak potential revenue company can achieve with this capacity without additional capix?

No, I mean, A lot of business is happening, you know, machines are, I mean, as per demand, we can do, no problem.

Vedant, if there is a big packing, there will be more packing. If there is a small packing, there will be less packing. Average, we do about 500 tons of packing. We can go up to 800 tons per day of packing. So in terms of infrastructure, there is no problem. We are trying hard to get more customers, so that it will increase more sales, so that we will get more domestic.

So, on this side, what would be the ideal mix management would like to maintain between domestic and export as a percentage of total?

See, it is not the matter of mix, it's the matter of making profitability. I would like my profit to be, you know, EBITDA, 12%, 14%, 18% for you. Revenue cannot be the criteria, with less percentage of profit. So, if you get a profitable business, you will grow and grow.

Understood. So, thank you so much. This was my question. I would also like to touch base offline. I have a few more questions.

I'll try it without you.

Thank you Vedan. Since there are no further questions, would you like to give any closing comments? I want to talk.

Yeah, because we're...

Yeah, because...

Hello, Mikas.

Good afternoon, sir. Is the company only in Basmati Rise or Sona Masuri and all also, sir?

No, primarily we are in Basmati because we are in Basmati area, GI area of Haryana, Punjab, and UP. All the closed market and that is our main business. But yes, if any customer asks for Sona Masuri, UP also is giving this rise now. It is available from UP. We don't do South India because we don't have control on that area. And we do also.

So the majority of our business is Basmati. And of course, we do Sona Masuri also for our customers.

Sir, what will be the future guidance of growth for current year, sir?

Vikas, can you complete your question?

Yeah, the first thing for growth is the ethics of the company. How we deal with the customer? How we give service to the customer? Whether the customer is comfortable with us, our goodwill, our reputation, that matters, and which is one of the greatest in the world for our company. I would like to show you one video. I will call you Ashok Ji, for 5 minutes.

Sir, do not do this? Maybe.

Yes, I will do this video, which was shown to you.

We'll share it separately, sir, with them.

Okay, we'll share it separately. And after three o'clock, I have a meeting with the Japanese again. A team has come, and they want to sell and buy both. All the best for your future, sir. Thank you so very much.

Rajee sir, last question. You have the last tagline that you can buy and sell.

I'll see what happens.

Okay, all the best, all the very best. Thank you. Jamal Lal meeting at 10 times, it feels good.

Good bye. You are always welcome.

Thank you. Thank you. Thank you. Thank you.

Bye. Thank you, Rajeshji. Have a good day, sir.

Sir, since there are no further questions, would you like to give any closing comments?

My closing comments are that despite so many challenges in this quarter, I feel the revenue and the profitability remain all well. And you can expect the next quarter also to be the same. Everything will be stronger now.

Actually, what I personally feel, if principally we are doing well with our organization, within our organization, ethics, and with the customer, we are living up to their expectation, business will organically grow. Nothing to worry.

Thank you, sir. Thank you to the management team for your valuable time and thank you to all the participants for joining.

Can we expect any buyback?

Because we are ending the call now. I would request that you allow us to finish the call.

Sir, last question, sir. This year, can we expect any buyback?

I do take on record your suggestion. Thank you.

Thank you to the management team for your valuable time. This brings us to the end of today's conference while you may disconnect now.