Aiming for 20% revenue growth in FY17: Parag Milk

Despite higher international milk prices, Parag Milk will not see a big impact as only 5 percent of its sales come from exports, says Devendra Shah, Chairman of the company.

After the initial public offer (IPO) in May this year, the company has managed to off-load its debt by Rs 100 crore and the current debt stands at Rs 250 crore, Shah told CNBC-TV18.

He further expects margins to improve to around 9-9.5 percent and sees a revenue growth of 20 percent for FY17.Below is the verbatim transcript of Devendra Shah's interview to Nigel D'Souza on CNBC-TV18.Q: International prices had been moving higher, in all the recent auctions we have seen prices moving higher. For your company, how much of it comes in from exports, what kind of an impact can it have on your business as well and tell our viewers on exports do you enjoy a better margin or on domestic business do you enjoy a better margin?A: On domestic we have better margins but officially, international prices have gone up. The environment is very positive to increase the milk production on the basis of the productivity. It has helped in the domestic market also.Q: What kind of an impact can this international price increase have on your business? Is it minimal because hardly 5 percent of your sales is from exports?A: Yes. We have hardly 5 percent from exports. Major focus is on the domestic market in the consumer segment.Q: Your margins in the last quarter were 8.5 percent, it had come down from around 9.5 percent, why did that happen? Going ahead what kind of a guideline can you give us? Also tell us your finance cost had been coming lower, what is your debt? What is the outlook going ahead, how much can you reduce it?A: With the initial public offering (IPO) fund, we will reduce Rs 100 crore debt and Rs 150 crore -- we are using for all major debt repayments. We have around Rs 250 crore.Q: Currently the debt is Rs 250 crore?A: Yes.Q: What about your margins? You did around 8.6 percent last time, will it improve going ahead?A: It has improved to 9-9.5 percent.Q: What about your value added products currently how much is your value added products out of your total sales? Secondly, everyone says that value added products were getting better margins, how much better are the margins on value added products?A: 80 percent is our value added product. 20 percent we are in the fresh milk business but 80 percent of the revenues come from the consumer products.Q: Going ahead also you want to maintain that at 80 percent?A: In India, we are the largest dairy fast moving consumer goods (FMCG) product company.We have so many new innovative products, in the cheese segment, in the milk based beverages.Q: In Q1 you have done a topline growth of 2.5 percent. You were telling us, you will do more than 20 percent for the year, you are still maintaining that for the rest of the year?A: Yes, in this festival season that is going on, demand in the dairy products is also going on.