There has been a growth of 36% in B to C segment: Nawal Sharma, Kwality Dairy

In a chat with ET Now, Nawal Sharma, President and Head, Business Transformation, Kwality Dairy , talked about the positive growth numbers and said that there has been growth of 36 per cent in B and C segment of his business. Edited excerpt:

I was just flagging off it is a good set of results so congratulations for that your top line has finally been able to break above that 5% average growth that you have been clocking in so what led to that, we understand from analyst that milk prices have risen quite a bit so has that been a contributing factor?

Yes, let me just first touch upon the numbers and then maybe we will get into the strategic game plan as to what is reading to this positive results. So firstly as we talk about top line there has been a growth of around from Rs 1416 crore to Rs 1540 crore which is 8.8% growth but key thing to be noted is, the B to C component, the consumer part of the business, has really grown from Rs 446 crore to Rs 606 crore which is around 36% growth and in terms of percentage contribution this goes up from 30% to around 40%.



Now as we talk about the profitability there, so far as EBITDA part is concerned, this has grown from 86 crore to 103 crore which is around 20% increase which is 6.1% to 6.7%. Now as we talk about PBT layer, so this has grown from 49.5 crore to 63.5 crore which is 28% increase, that is 3.5% to 4.1% and lastly about the PAT layer, so here also we have given a very impressive growth from 37.5 crore to 42 crore which is around 12% and 2.6% to 2.7%.

Wanted to know how much have the value added segments like ghee, lassi etc. contributed to your top line and your margins?

So far as B to C part is concerned as I said there has been a growth of around 36% in B to C but we break this B to C into two buckets first is the fresh products and second is the value added products. Now we are in a process of rolling out of these products and so far as the value added piece is concerned, there the roll out will start from January onwards. So that is where we are as of today.

Wanted to know how much have the value added segments like ghee, lassi etc. contributed to your top line and your margins?

So far as B to C part is concerned as I said there has been a growth of around 36% in B to C but we break this B to C into two buckets first is the fresh products and second is the value added products. Now we are in a process of rolling out of these products and so far as the value added piece is concerned, there the roll out will start from January onwards. So that is where we are as of today.

What kind of a fall of revenues did you see in the first few days of November on account of demonetisation and are you seeing a recovery play out?

So far as demonetisation is concerned, now being into essential items, so there would not be any impact so far as the sales number is concerned. So that is one and also we are really gearing up very very hard to manage the fundamental logistical issues. Now I will talk about two dimensions – one is on the demand side where we are managing the things through credit leverage frameworks and so far as the supply side is concerned we have taken multipronged strategies to help our farmers.

First off all we have identified those farmers who have got their bank accounts so that direct transfer can be made to farmers account. Secondly, in each village we have got a village service provider who in turn is getting NEFT done to all the farmers and lastly whatever is left out is being manage through cash where we are helping our VSPs and liasioning with banks to ensure that farmers do not face any problems. So in a sense, in line with this grand vision which our honourable PM have, we are gearing up very very hard to ensure that there is no impact on the business and we support and go all out basically in making it a grand success.

Safe to say that you all have had minimal impact especially since you are in the consumer staples business that you have had minimal impact in November on the note ban?

Yes

You have said B to C business of course is growing but if you could tell me what is the contribution that it has currently to your total sales and going forward how much will the contribution increase?

Current contribution is around 40% and if you compare quarter on quarter same quarter last year it was 30% and this is going to go up only. If you see last year we closed at around 70-30 mix in favour of B to B but over the next three to four years time, we intent to reverse this mix in favour of B to C and that is what is going to have a very positive impact on our bottom line so that is the strategy on which we are working because there is a complete strategic shift as I shared with you last time also from B to B towards building a very strong position in the consumer space, and that is a direction in which we are moving with a series of products lined up in the categories of let us say tetra pack, UHD, flavoured milk, butter, cheese, yogurts and paneer and all these kinds.


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