Write down will help strengthen our business: Devendra Shah, Chairman, Parag Milk Foods

Published: 11th May 2022 09:04 AM  |   Last Updated: 06th July 2022 02:04 AM   |  A+A-

By Express News Service

The previous quarters saw strong growth for Parag Milk Foods. What helped you, and what are your expectations for this fiscal?

The economy's gradual opening up has resulted in a good year for demand growth. All of our categories have experienced decent growth in terms of both volumes and value. We expanded our beverage category with the launch of ‘Go Milkshake’ in five flavours and also entered the whey-based energy drink market ‘Rapid’ with an accessible price of Rs. 10/- for 125 ml pack throughout the year to improve our product range and capture the affordable customer segment. In order to produce goods in 125 ml packs, we added another beverage line to our infrastructure. Our business is moving well, and the upcoming festive seasons will further help that progress.

Milk inflation is expected to remain high in FY23, according to the industry and brokerages. Can we expect a price increase again?

For FY-22, our milk procurement prices have increased by 8.7%. In line with the commodity prices, we have also seen the prices of milk increasing continuously. We have passed on this increased raw material pricing by hiking the prices for our products and the same have been absorbed by the markets. This reflects the strength of our brands.

How will you explain the most recent financial developments in the company?

Despite the business being on strong footing, the reported financials have shown loss on account of write down which is one time phenomena. This development will not have any impact on the going business operations and financials ahead.

E-commerce has shown tremendous growth potential for Parag Milk. What are your future expectations from this channel?

Ans: Since the economy was gradually opened up after Covid waves, we have noticed a persistent uptick in demand. E-commerce has evolved as a very fast expanding segment that is now dominating the entire distribution. In the fiscal year, our e-commerce business tripled in size, and we have noticed a rapid increase in demand across all market sectors and product categories.

It is one of the fundamental cornerstones of our distribution strategy because it enables us to reach a wider audience with lower additional spending on advertising. The spending on this platform will expand in the upcoming years because it gives us greater visibility to win market share. As a company, we are using a variety of classic and modern media to spread brand recognition and reach people in tier1, tier 2, and urban areas.

What type of growth do you foresee from the HORECA division, and what are your key channel strategies for the future?

Ans: HORECA and out–of–home consumption have witnessed a good comeback post-pandemic. Our growth in this segment in FY-22 has crossed pre-Covid levels. Also, with economic activities on upswing and festive seasons coming ahead, we would continue to witness good traction for this segment.


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