Transcript of video recording - Interview given by Chairman to BQ Prime

Transcript of the Interview given by Mr. R G Chandramogan, Chairman of the Company to BQ Prime on 18th April, 2023:

Duration BQ Prime Mr. R G Chandramogan

Slot 1 Thanks for tuning into this See there was a shortage but it is not conversation. I’m Niraj Shah. The going to be the case in future. See last term ‘Milkflation’ has caught on year we had different issues. After two atleast in Economist conversations years of demand destruction of covid, and a fear around what milk prices and demand started picking up wheat prices could do and milk internationally including domestic. But shortage and maybe wheat shortage the international fair prices went up could do to inflationary pressures in beyond a reasonable level and it went

India is now starting to come about in upto 583 Rupees Indian value or the realms of the conversations. We something like 7100 US Dollars. That thought it best to get in somebody way India started exporting before who’s been in an industry at least in stabilizing last year. So India exported the milk industry in a dairy industry over and above the normal quantity of for a very long period of time one of key branded. They exported 20000 tons the leaders of the Indian Dairy extra. That 20000 tons normally in a ecosystem Mr. R G Chandramogan. fresh period it is being built for the lean

He is Chairman of Hatsun Agro to protect. So we have exported with a

Products joins us to talk about his better price and after that there was a thoughts on whether he is worried shortage. Inflation started creeping in about the same or not. Mr. but one good thing about this particular

Chandramogan great having you inflation is the farmer was in shop for thank you for joining in. Does, does almost two years. So, this inflation is the I mean do you sense or do you stabilized thing and I don’t expect any believe that there could be a prospect further inflation based on this. This has of there being a shortage of milk in come to a peak.

India in calendar year 2023?

Slot 2 Which is good to know sir. I was No. See two things have happened. talking to a couple of economists and First crisis started on 20000 tons extra one of them actually both of them export of butter that has been the real referred to this but one of them problem. So they were talking about mentioned that there is there is a almost importing the same volume. demand supply mismatch that is going This was the situation in January to come up and there might be a case February. Going forward, Delhi had a of importing milk into India which has comparatively cooler climate for quite prompted me to write a request to you some time with some rain hitting Delhi. to talk to us is that a fear you think or So the flush of Delhi extended by a no. month. This is the good news. This is a blessing in disguise and our normal flush season in Tamil Nadu and South is supposed to start by May and it has started now. From almost April first week it has started. It is slowly gaining momentum. By the time Delhi is shutting off probably the South as well as Maharashtra will start coming up with milk. So the problem was acute in the month of January February not today and by June nobody will be talking about probably milk shortage or anything. The inflation may also moderate to an extent of Three to Four percent down by June, July. Not before

Slot 3 Okay. So so one is the inflationary I don’t think there is any need for it. pressures two is the imports you Okay it’s important it must have been reckon that importing milk is out of done by January February not now with the question. Uh South and flush coming into this. Flush coming

Maharashtra will compensate what into southern part of India and also

Delhi might vacate and that together Maharashtra. It is too late and it will be will ensure that we don’t reach a point only damaging the local Farm. wherein India has to import any kind of milk.

Slot 4 Got it um well but from a country No. I don’t expect any price increase perspective that’s great to know. Mr. hereafter. See companies went through

Chandramogan so thanks for giving us a turmoil last year because inflatory that insight. Um quick follow up pressures made them pay a higher price therefore and I know you can’t talk to the farmer and in the consumer price numbers but I’m just trying to they could adjust immediately. So that understand I heard you say that even if particular year of disturbance is over. milk prices don’t come off you see So we are basically under track of that the peak prices we’ve kind of recovery. We don’t expect any price reached the peak price levels. To your increase further and it can only estimates sir um do prices stabilize at moderate after June not before. the current level is before June July when we see the first signs of normalcy in demand supply or can we start seeing some bit of a pullback before that also because the markets may discount the future.

Slot 5 Ok. Would there be a sharp No. Actually there will be gradual moderation? I’m just trying to moderation but probably the old prices understand based on what the prices will never come back. So it may be a had increased by, would there be a from this present crisis it may be down sharp moderation in prices or will it be by Three to Four percent in my opinion. a gradual one sir?

Slot 6 Got it sir. So I don’t want to get into See. One major issue in our opinion is numbers Mr. Chandramogan but just skimmed milk powder is taxed at Five trying to understand what do what percent. Milk is separated into two does a price increase of such a such a parts. One is skimmed milk powder proportion in such a pace of increase another is milk fat. So during the due to business prospects for summer, we re-blend it to make milk to companies like yourself. compensate the missing volume say may be Eight percent to Ten percent.

On this particular note, our GST rates are Twelve percent for fat Five percent for SMP. This is getting added up on the reconstitution which is adding inflation and also pressures. Say for example, fat at Twelve percent and Five percent SMP is adding costs by almost

Eight percent to the full cream milk and we have requested the Government to consider reducing the tax of Twelve percent to Five percent for fat also.

Because in milk you can’t get the rebate back because there is no tax on milk but these commodities which are made out of milk is not allowed to get the compensation. Now a foreign farmer who is planting the edible oil grains and the edible oil is charged at Five percent, why we should charge a local farmer at

Twelve percent? that is our contention.

So the fat can also be at Five percent means. Government can moderate the inflation straight away by about Two to

Two and half percent straight away we cannot wait.

Slot 8 Got it sir. Well I hope somebody is Yes please listening into this on that as well but

I’ll just just one clarity that I need before we wrap up this interview

Slot 9 I’m trying to understand that when the No, actually in the long run this is good prices have gone up at a particular for the country as well as the companies pace that they have what does it do to also for two reasons. So after two years business prospects for your company of covid the farmer was under a shock sir? Don’t let’s not get into specific whether to focus back into milk or not. numbers but just trying to understand This particular inflation though it has the impact. damaged to some extent of the economic side, it has given a pepper for the farmer and hereafter you will be able to maintain the animals well and though the prices may go down by three to four percent still you will be in business and you will continue to supply. I expect probably the peak is already done and we are only on the moderation of gradually coming down but not to the whole levels but some moderation will definitely be there before June end.

Slot 10 Okay and and at these levels the Till March we couldn’t maintain the margins get compressed or you kind margin because probably we were in a of maintaining the margins because tremendous pressure. But in April we you also have to pay the farmers are back into the pavilion and I think accordingly. probably hereafter probably it will be a normal year subject to no other volatility coming in. Three years we have been used to volatilities after volatilities.

Slot 11 Well. Hopefully it becomes smoother Thank you thank you going ahead Mr. Chandramogan thank you for joining us allaying some fears around milkflation as the term has being become popular of sorts for the wrong reasons of course but much appreciate your time sir.

Slot 12 And viewers thanks for tuning into Bye this conversation.