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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.
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