Hatsun Agro Product Chairman Emphasizes Volume-Driven Growth Over Prize? | NDTV Profit - video Dailymotion

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00:00 [MUSIC PLAYING]

00:03 Hello, and welcome.

00:15 Thanks for tuning into the Small and Mid-Cap Show

00:17 here on NDTV Profit.

00:19 I'm Harsh Saita.

00:19 With me is Mahima Vachcharajani.

00:22 And I wish to welcome a very special management

00:26 because the numbers have been extremely strong.

00:28 The stock is up and away.

00:29 We have the management of Hudson Agro Products.

00:33 We have RG Chandramoghan, who is the chairman at Hudson Agro.

00:37 Thank you so much, sir.

00:38 Welcome to NDTV Profit.

00:39 It's a pleasure having you here.

00:42 Thank you.

00:43 So, sir, first off, I want to try and understand

00:46 the traction with regard to volumes for Q4.

00:50 Numbers are very solid, of course.

00:52 Volume led largely because there's

00:54 been no change in price per se?

00:58 Yes.

00:59 It's the volume growth and not the price inflation.

01:03 So what's driving the volume traction in your view for Q4?

01:09 And can it last in FY25 as well?

01:13 See, last three years, the COVID-19 was also hitting us.

01:18 And it created inflation last year.

01:21 And after that, it is settled and prices are corrected.

01:24 And those corrections took the first half of the year.

01:28 From the second half, we are comparatively well settled.

01:31 So things are improving.

01:33 And the market trend also is helping us.

01:36 And we are able to focus on business

01:37 other than attending to the COVID issues and all that.

01:41 Things are improving.

01:43 Understood.

01:44 Mr. Chandramoghan, Mahima this side.

01:45 Well, I want to understand from your entire portfolio,

01:49 what are the products that are actually adding the value?

01:52 I just want to understand the mix in terms of what

01:55 products are adding value.

01:56 And how much is ice cream different from your overall

01:59 milk products then?

02:02 We don't have the type of makeup.

02:04 We are actually-- of the opening,

02:06 there is no separate value-added product.

02:09 If it is branded and if it is having the market leadership,

02:13 that's a value-added product.

02:15 We don't believe in this product is value-added,

02:18 that product is value-added.

02:20 Or we are into 96% of the sales is only branded goods.

02:25 That is value-added.

02:28 Yes, sir, so I take your point.

02:29 I just want to try and understand

02:32 the mix a little better.

02:34 As you have evolved with regard to products within the--

02:42 if I can call it the value-added basket from a perspective

02:45 that you are moving more towards stuff like chocolate,

02:49 more towards stuff like ice cream.

02:51 And as you are moving into some of these spaces,

02:55 what's the kind of mix that you are

02:57 expecting to see in FY '25, '26 from some of these products?

03:02 How do you expect the mix to evolve?

03:05 If you leave milk, commodity, and feeds,

03:09 35% will be the normal things on ice cream, curd, and all that.

03:14 And so just with regard to the mix,

03:19 what is it currently in terms of what percentage of top line

03:24 is milk versus other products?

03:26 And where will that go in FY '25?

03:30 No, no, 32% is the present.

03:32 Means it will become 35% in the coming year.

03:36 Understood.

03:37 So, sir, I also wanted to understand

03:40 how have the raw material prices been like.

03:43 From what I've understood, the milk prices

03:45 have eased down for the last quarter.

03:48 How have they played well for you?

03:49 One thing, and going forward, how do you expect?

03:52 Because from what I've understood

03:54 is that your inventory levels have gone up.

03:56 So you've stored inventory because your raw material

03:58 prices have gone down.

04:00 So what does this play look like?

04:03 And how will this impact your top line going forward?

04:06 See, last year has been an abundant supply of milk

04:11 for all the people.

04:12 And this is the time to store and preserve.

04:15 And we have stored, and we have kept the reserve.

04:17 This year, we are expecting an acute summer,

04:19 according to the weather below.

04:21 If that is the case, the flesh may not

04:24 be as good as last year.

04:26 But we have got a war chest of commodities.

04:29 In any eventuality, the cost of inflation will not hit us.

04:34 And we are well prepared to meet any contingencies

04:37 without any difficulty.

04:39 And we will not be surprised by the price increase or anything.

04:44 And we will be able to manage with our own stock

04:46 in a much better and competent manner.

04:49 Understood, sir.

04:50 That's good to hear with regard to preparedness.

04:54 Just with regard to how the margins are therefore

05:00 evolving as a result of this, and therefore, you

05:04 might expect more stability in terms of margins in FY25,

05:09 is that a correct way to look at it?

05:10 Can margins sustain above 12%?

05:14 Definitely, margins will improve better than the last year.

05:18 Margins have to improve.

05:19 And also, we are expecting around 15% increase in top line,

05:24 and almost 1 to 1.5 basis point in margin.

05:28 Both are expected.

05:30 Right, point taken, Mr. Mogan.

05:32 Now, I want to understand in terms of debt.

05:35 From what I've understood is that for March FY23 ending,

05:40 your debt was around 1,500 crores,

05:42 both short term and long term, which has gone up

05:44 to around 2,200 odd crores.

05:46 So how does the debt trajectory look like?

05:50 Where do you think that-- from when do you start--

05:53 the debt-- think the debt will reduce?

05:56 See, this is almost--

05:59 half of it is term loan and working--

06:02 term loan and other things.

06:03 And most of it is stock.

06:05 But this stock will be very useful to us

06:08 in the next six months.

06:10 Gradually, it will get diluted.

06:12 And we will be still maintaining some stock.

06:15 But the debt levels will start falling.

06:19 Sure, sir.

06:19 And extent of that fall, how much

06:22 can we expect that to fall by?

06:24 We are not in a position to give any guarantee on that,

06:27 because probably it all depends on how far the lien will

06:30 be acute.

06:31 Based on that, the stock prices--

06:33 stock volume quantity will vary.

06:36 But this will give us price stability without inflation.

06:39 That's the only thing right now we are not going to say.

06:41 Sure, understood, sir.

06:42 And just with regard to capacity utilization,

06:45 how will it evolve, especially with regard

06:48 to your Solapur and Govindapur facilities?

06:51 What are the capacity utilizations

06:53 at these facilities currently?

06:55 And how do they evolve in FY25?

06:57 They are expected to get better, if I understand right.

07:01 See, in Ice Cream, we have three factories.

07:03 And Govindapur is the third largest factory.

07:07 Last year, we were able to do 50% only.

07:10 But 24-25, we will be able to do 75% utilization

07:15 for two reasons.

07:17 These two factories are already saturated last year itself.

07:20 So any growth will just go to Govindapur automatically.

07:24 So this year, we will be able to have better utilization

07:27 of property.

07:29 And also Solapur is likely to do much better,

07:32 because Maharashtra also, we are gaining momentum.

07:34 And we are also supplying to North Karnataka

07:38 and the North Telangana from the Solapur factory.

07:41 So both capacity utilization is likely to substantially go up.

07:46 Understood, sir.

07:47 So I also want to understand that what

07:49 do the margins look like when it comes

07:51 to your value-added products versus the milk

07:55 that you're selling?

07:57 Where does the value come from exactly in terms of margin

08:00 then?

08:01 I don't have any value-added product.

08:03 Every brand is a value-added product.

08:04 I explained to you categorically.

08:07 Even milk, a value-added product.

08:10 We are doing it well.

08:11 Our margins are safer.

08:13 So there is no safety for us, and we don't do it all.

08:16 Understood.

08:17 So any kind of bifurcation that you

08:18 can give us versus milk versus the milk products then?

08:23 This is internally the input and output.

08:25 It's not for externalization.

08:27 OK.

08:28 OK.

08:28 So then one more question to you.

08:31 You've given a revenue guidance of around 10,000 crores,

08:35 and right now your revenues are around 2,000-odd crores.

08:38 So by when do you think you'll reach the 10,000 mark

08:41 that you've guided?

08:43 We'll be close to it by this year itself, '24, '25 itself.

08:48 Once again, I'm talking about 15%.

08:50 From 8,000, it's about 9,200.

08:54 It may be 15, it may be 20 also.

08:56 It all depends on how the monsoon is going to turn out.

09:00 We are most likely to come closer to 10,000.

09:03 If not this year, next year we will cross it.

09:06 So, sir, and with regard to this revenue number,

09:09 you've guided for a 15% growth, which is quite healthy.

09:14 Pricing to remain stable, and therefore all of this

09:16 will be volume driven?

09:19 Volume driven.

09:20 There is no price increase we are anticipating.

09:22 It's all volume driven.

09:24 That's good to know, sir.

09:26 And just with regard to--

09:28 you mentioned that the heat wave may

09:30 have an impact with regard to milk production in the country.

09:35 Does that, therefore, give you an advantage

09:37 given the way you have showed up on your inventory

09:40 versus competitors?

09:43 Compared to other people, probably we

09:45 are well-equipped, I can say.

09:48 The reason being, in the fresh, we

09:50 were able to gather all the milk, whatever

09:52 that was supplied.

09:54 And the procurement has gone up by 20%

09:56 compared to the earlier year.

09:57 So we accommodated milk.

09:59 And today, that is just going to help us in the process,

10:05 in case there is an acute lean also.

10:08 We can manage comfortably.

10:09 If there is a moderate lean, we may

10:11 be able to sell some commodities at a good price

10:14 and get out of it.

10:15 OK, point taken.

10:17 My last question to you, sir, would

10:18 be that you've mentioned in your con call

10:21 that you continue to explore export of ice

10:24 cream to various countries.

10:26 So I just wanted to understand what kind of initiatives

10:29 you've taken in this regard.

10:31 We are already available in four or five countries,

10:33 and we are trying to explore a few more.

10:36 We are mainly looking for smaller countries, where

10:39 probably it is--

10:40 definitely, penetration is easier.

10:43 A country like Brunei, a country like Seychelles,

10:45 we start looking at these type of countries,

10:47 and we are already exploring it.

10:49 Well, OK.

10:54 Mr. Tandemogan, thank you so much for taking our time

10:56 and speaking with us at NDTV Profit.

10:59 We'll now slip into a short break, but stay tuned.

11:01 We have more on the other side.

11:02 [MUSIC PLAYING]

11:06 the next segment.

11:08 [MUSIC PLAYING]

11:11 [MUSIC PLAYING]

11:15 [MUSIC PLAYING]

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11:26 [Music]

Hatsun Agro Product Chairman Emphasizes Volume-Driven Growth Over Prize? | NDTV Profit

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