Transcript of Investor Meetings / Quarterly Calls

Transcript of the Interview given by Mr. R G Chandramogan, Chairman of the Company to CNBC TV on 28th April, 2022, a day after the Meeting of the Board of Directors held on

27th April, 2022

DURATION CNBC Mr. R G Chandramogan

Let’s invite the management of Hatsun

Agro. They have reported a muted In FY22 we were maintaining a quarter while there was revenue growth good growth till the first half of the of 4% on a year-on-year basis. Margins year. Second half there has been a came under pressure, driving a 55% cut torrential rain for two months it has in the company’s profitability. Even for disturbed the complete dairy the full year revenue growth was at 15% industry the whole in the entire for FY22 but its lower than what the country. This has left us with lesser company had guided to us earlier in their milk for the last six months. interactions when they had spoken about Recovery has been seen only by

Slot-1 a 20% type of growth. RG April this month, and the last six

Chandramogan, the Chairman of Hatsun months the milk growth has been

Agro Product now joins us on the show less. So this has resulted in a lesser now. Sir good morning and thanks so sales and also led to inflation. The much for joining in first. If you could last six months we have seen characterize the demand environment for inflation, but actually the prices us it’s just a 4% revenue growth in Q4. have been corrected. Now the

What’s the reason for it to be so low and inflation is not going to affect us and the number in terms of a growth number the milk arrivals have started for FY23? What is it that you are looking coming. This is the scenario. at?

Okay. All right. Sir you know then let’s focus on the margins if you are saying Actually see the milk procurement now inflation is not going to affect you as prices have gone up by say January much from now on I’m just looking at / February but the price increases your margin trajectory you know a few have been effected only about one quarters ago it was added on 15% it’s month later. So this has been the

Slot-2 come down to around 12% in the past strain of the last year and this has quarter it went down to around 9% improved but there are different approximately. If you could tell us you unknown factors like the power cut know the procurement of milk prices and other things. Right now I’m not continue to remain elevated. So what is able to indicate; but definitely will the margin outlook from year on from be 12% plus. this 9% mark go ahead?

12% plus. So margins will improve from around this 9% on a steady state basis it

Slot-3 That’s it. should be around 12%. Right? did we get that correct

Actually first half probably we were able to get that 20%. But probably

What about the volume growth you were the second half we suffered and the indicating that FY22 started of on a very situation is improving I’m not in a very strong note. I think at the start of the position to indicate right now year you were talking about a volume because the milk arrivals have

Slot-4 growth of close to around 18 to around started improving in the month of

20%. But I think you ended with close to April. So we have to just wait and

15% for FY22. For FY23 what’s the see. We are at confident that target? probably we’ll be able to maintain anywhere between 15 to 20% growth.

Okay. 15 to 20% growth. Sir thank you Actually for ice cream, the main very much for joining us. This is Pavitra. season is April, May, June. Last two

Could you now could you tell us what the years, covid has really affected us. demand is looking like now. You said This year it’s definitely better. As of that it was hit in the second half of last today things are getting better and year. So can you tell us what the demand we have to run through May June.

Slot-5 is looking like now? We are also getting Hopefully probably will be able to into the summer season. What is the make a good leap in ice cream as demand looking like now and especially well as curd business. Milk is more on the ice cream front? Also how much or less the same. It doesn’t make of your revenue comes from the ice much of a difference irrespective of cream space? whether it is covid or not.

So you can tell us how much of a growth you expect and also what is the market share of your ice cream thing and how

Ice cream normally contributes much does it contribute to your revenues.

Slot-6 about 12% of our revenue. 12% to

If you are saying that you see this

13% of our revenue. segment doing very well we just want to know how much does this contribute to your revenues.

And you expect curd to pick up. Right?

Slot-7 No not yoghurt. Curd. Simple curd.

You expect curd business yoghurt.

Curd is contributing about 14 to

15% now of the top line. There is a possibility that milk has been the major contributor. Now curd and

Simple Curd. Okay. How much does ice cream is growing. So hopefully

Slot-8 curd contribute currently and how much probably the level playing ground can it go up by? will come. I think the ice cream and the milk business may be about 50% of the overall total business in the future.

It has not been 70%. It has already

Ok. From 70% / 75%, it will come down come down to about 56%. So with

Slot-9 to 50%? growth of this business, it will be

50:50 something like that.

I’m not in a position to specifically say something on this. So probably

What’s the margins that you make on

Slot-10 this is a part of a dairy business and curd business? we don’t want to just get into these type of figures.

Current capacity levels at this particular time different products have got different capacities. We

Ok. All right. What’s your current can say that we are having about capacity utilization lever sir? If you

Slot-11 85% capacity run right now. And could tell us what is it at and do you have one more plant is coming in plans to add capacity?

Rajahmundry this year and that is the only addition right now what we are planning.

Rajahmundry capacity will be for

Slot-12 It will increase capacity by how much? about 2.5 to 3 Lakhs Litres of Milk and curd.

Capacity. Right now the capacity can be said as 47. So this will become 50. This will be 6% addition. But our new additions

So on that base of how much I mean I have already taken place this year. It want to know in percentage terms is 2.5 has to be really benefiting us in the

Slot-13 to 3 Lakhs will add how much in coming year. We already expanded percentage terms of your capacity? our capacity in different places of milk, curd and ice cream. So all these capacity expansions whatever we have done in 22 will help us in

23.

New capacities we have added in different products different capacities. Say for example, ice cream we have almost added 100%

Ok. How much of rise do you see on capacity increase. In Milk and Curd,

Slot-14 account of these new capacities that you we have added about the 12% have added? capacity increase. So different products have got different capacity.

Cattle feed we have added about

20% capacity of last year itself.

You can say ice cream is 12 and curd is about 15 / 16 and cattle feed is

Very quickly sir your revenue mix if you there. Rest of the cattle feed, we

Slot-15 could just detail it yet again between ice also sell ghee and milk products. So cream, curd, ghee as of now what is it? all these composition will be about

50%. 50% will be milk.

Growth prospect is good. Actually in Maharashtra we have put up factory in Sholapur. We have also

On just one more word. You were entered with milk marketing in looking to expand outside of south India.

Bombay and initially we struggled

What is the contribution that you

Slot-16 but probably right now we have set currently get from the non-south business a base. Now hereafter probably the and what is the growth prospects over growth can be attained in Bombay there? and other markets. We already started gaining good share of market in Bombay.

Okay all right. Good speaking to you sir.

Thanks so much for stopping by filling us with all those details of couple of big

Slot-17 numbers that you have given us margins to stabilize at around 12% the volume growth that you are looking at 15 to around 20% there upon.