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Business News/ Politics / News/  India’s basmati rice satiates China’s appetite
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India’s basmati rice satiates China’s appetite

India's basmati rice satiates China's appetite

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Reuters

New Delhi: Kohinoor Foods Ltd has shipped some 200 tonnes of basmati rice to China, the first time India has shipped this variety to the world’s largest rice consumer.

Rising disposable incomes in China are triggering demand for higher quality rice, the firm’s financial controller Rajiv Mangla said, “The initial sales are small but it’s going to grow fast."

China’s interest could further fuel prices of basmati rice, which have risen 30% over the past year on overseas demand. Basmati rice, which commands a premium over other varieties, costs Rs42 a kg.

India produces about 4 million tonnes of the aromatic grain annually, while the country’s total rice output is about 90 million tonnes. India accounts for 70% of global basmati rice exports, while Pakistan provides 30%.

“We are also seeing emerging demand from new markets such as Australia," Mangla said. “Demand from the Middle Eastern market is stagnant but European demand is growing sharply," he said. Mangla added that exports of basmati rice from India in this year would be around the previous year’s level of 1.1 million tonnes or slightly lower. But exports could grow more than 10% in the current marketing year ending March 2008.

As per Mangla, the firm was planning to shift its focus entirely to exports of branded basmati rice and stop sales of the grain in bulk. Currently, about 20% of the company’s basmati rice exports are in bulk.

“This will help us to improve our margins. If we export in bulk, our margins are just 4%. But if we export branded rice, our margins are close to 13%. The shift to branded exports would help us boost profits and revenues," he added.

Mangla wouldn’t give a revenue forecast, but the latest available results, for October-December 2006 quarter, show net profit rose 46% on the year on higher sales of branded products including ready-to-eat foods.

The company, formerly called Satnam Overseas, aims to boost its rice processing capacity to about 42,000 tonnes per hour this year from 32,000 tonnes.

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Published: 18 Apr 2007, 12:30 PM IST
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