Detailed narrative
Q3 FY26 Performance Overview and Sales Strategy
Chamanlal Setia reported a strong turnaround in Q3 FY26, following 'not so good' preceding quarters. Management attributed this to proactive sales efforts, including extensive travel by the sales team, meeting customers, and participating in major exhibitions like Indusfood and Gulfood. This direct engagement and improved company image contributed to a significant increase in sales volumes, particularly in top export countries, which saw over 100% growth from 15,493 metric tons to 34,578 metric tons.
Pricing Trends and Procurement Strategy
During Q3 FY26 (October-December 2025), Basmati rice prices increased across various categories. For instance, 1509 Basmati saw a 15% rise from INR 6,400 to INR 7,300 per quintal, and 1401 variety increased by 21% from INR 6,600 to INR 8,000 per quintal. The company stated it 'timely procured' in anticipation of these price increases, contributing to improved profitability. Management also noted that paddy procurement prices were 'more or less same' as the previous year, despite a 15-20% reduction in crop size.
Impact of US Tariff Reduction and Export Markets
A significant positive development was the reduction of the US tariff on Basmati rice from 50% to 19%. While management stated it's 'just begun' and too early to quantify the full impact, they expect business to 'begin fast' in the US market. The company maintains a global presence, selling in 'all parts' of the world, but avoids risky markets like Iran, only engaging in 100% advance payment transactions due to past incidents and geopolitical instability.
Capital Allocation and Funding Strategy
The company's short-term bank borrowings are seasonal, with low utilization of available limits (INR 2 crore availed from INR 300 crore HDFC limit, and INR 50 crore availment from PNB at a lower interest rate of 6.60% compared to HDFC's 7.20%). The Director's unsecured loan, which previously stood at INR 50-60 crores, was reduced to zero in September, explained as part of a capital rotation strategy to leverage internal funds and bank limits for procurement. Future CapEx is modest, estimated at INR 5-10 crores, primarily for new automated packing machines and production unit upgrades.
New Product Development: Teasan
Chamanlal Setia announced a new product, 'Teasan', a rice-based tea infused with ingredients like cardamom, fennel, and cinnamon. This product has undergone government and rat testing with positive results, showing potential benefits for cholesterol, liver, and colon health. Human trials are currently underway, and the company plans for both international and domestic market launches. The product's name is being changed from 'Rice Tea' to 'Teasan' to comply with regulations.
Domestic Market Focus and Brand Strategy
Management expressed a strong intent to expand its presence in the Indian domestic market, citing geopolitical risks in international markets and the success of competitors in brand building. While Maharani contributes 8-9% of revenue, and other brands like Mithas and Begum contribute 10-15%, the focus is on protecting the Maharani brand internationally (registered in ~20 countries) and growing online sales in India. Plans for broader domestic distribution are targeted within the next 6 months to 2 years, contingent on stable prices and good distributors.