'Indian cashew processors cashing in on demand, revenue to rise 15 pc'

NEW DELHI: Higher price realisation and rising domestic demand are expected to lift the revenue of the Indian cashew processing industry beyond Rs 30,000 crore next fiscal (2023-24) — the highest ever, said Crisil Ratings.

This forecast, according to the rating agency, is likely to be driven by 15 per cent yearly growth in revenue in the current financial year and the next.

Accordingly, operating margins for the processors are likely to improve by 200 basis points (2 percentage points) to an all-time high of 7 per cent this fiscal (2022-23) and will remain at a similar level next fiscal.

The record operating margins are set to be supported by an 8-10 per cent increase in the spreads between raw cashew nut and its kernel prices, the rating agency said. Spreads refer to the difference between two prices.

India remains the world’s largest consumer of cashews, processing almost half of the global cashew kernels and consuming about 40 per cent of the global output. The US is a distant second, accounting for 10-15 per cent of global consumption.

“In contrast, India exports only 10 per cent of its output, down from 35 per cent in pre-pandemic times. That’s because of an overwhelming rise in domestic demand, replacing the exports,” it said.

On the price side, cashew kernel prices are expected to be at Rs 615-625 per kg this fiscal, up almost 5 per cent on a year-on-year basis, led by increasing domestic demand, fuelled by the opening up of hotels, restaurants, and cafes after the pandemic.

“Cashew processors are currently operating at near-full capacity. With demand increasing, we anticipate they will increase capacity by a fifth over the medium term. But there will be low reliance on debt to fund this as well as the increased working capital requirement because cash flows are robust,” it said.