Leading private dairy major Hatsun Agro Product Ltd (HAP) is likely to end the current fiscal with a turnover of close to ₹10,000 crore, though the management remains cautious about achieving the milestone.
“We are on track to reach that, but there could be a marginal variation of plus or minus 1%,” Chairman R. G. Chandramogan said during an interview to a private TV channel, indicating that the company may either slightly miss or meet the target.
Input cost pressures mount
According to him, milk prices have increased by about 6% recently due to a shift in exports towards fat instead of skim milk powder, driven by higher global prices. This has resulted in a shortage of fat in the domestic market and a rise in fat prices.
Looking ahead, HAP expects good growth in the next fiscal, but flagged concerns over supply disruptions and rising input costs amid ongoing geopolitical tensions. Availability of packaging materials, particularly plastic raw materials, remains a challenge, with prices already rising by 30–40%, he noted.
He also cited difficulties in procuring gas used in the production of wafer cones, though the company remains relatively insulated in polythene requirements due to its in-house manufacturing capabilities.
“We can manage for about one-and-a-half months, but supply conditions need to improve. The cost pressures will lead to some inflation in product prices,” he said.
Strong margins, improving balance sheet
Despite the challenges, HAP continues to report superior margins, supported by its unique business model and strong brand portfolio, including Arun Ice Cream, Arokya Milk, Ibaco and Hatsun.
The company operates a direct distribution network of around 4,500 outlets, avoiding dependence on wholesale distributors. This model has helped it maintain margins significantly higher than listed peers.
Further, the company’s balance sheet has strengthened, with the debt-equity ratio improving to below 1:1 from earlier levels.
On its acquisition of Milk Mantra, he said operations have stabilised, with volumes improving as integration progresses.