Rajesh Gandhi, CMD, Vadilal Industries is targeting a 15-16 percent growth in revenues to Rs 550 crore this fiscal.
Speaking to CNBC-TV18, Gandhi says the company has launched three new brands, catering to kids, youth and adults, each on the basis of their look and feel.
Vadilal is also looking to heavily advertise and has increased its spending by 2-3 percent for the same, he says.
The company is setting up a plant in Kolkata and this will increase its capacity to 4 lakh litres. Gandhi says the company may raise equity capital to fund the new plant.
Below is the edited transcript of Rajesh Gandhi’s interview with Latha Venkatesh and Sumaira Abidi on CNBC-TV18.
Latha: As we have been explaining the ice-cream market, as an industry itself are you seeing the sales numbers increasing, staying flat, what has been the trend?
A: The ice-cream market is vibrant according to us and we have seen a growth of around 15-18 percent consistently year-on-year (YoY)in the last 5-7 years. We, as an ice-cream manufacturer, believe that there is a good growth in the coming 5-10 years also.
Latha: Can you tell what is your distinguishing, how is it that you are trying to expand your market share, what is it standing at now and what was it a year ago?
A: In the last two or three years, we have launched few new brands, ‘Bada Bite’, ‘Flingo’, ‘Gourmet’ and ‘Ice Trooper’. So, we have started categorising each segment into a different ice-cream market.
Let us talk about kids, we have Ice Trooper which is targeted [to them], the product look and feel, the shape, the flavor matches the needs of the kids. Then we have a youth category whereby Flingo and Bada Bite which is trying to feed their requirement of the youth. The fourth category is Gourmet which is super premium category which we are trying to cap for the premium consumers of the ice-cream, those who know the real ice-cream, and would like to cherish the ice-cream. So, for them the Gourmet is a separate range by itself.
So, we have started categorising into different needs of the consumer and then very heavily advertising into this market. In the current year we have increased our advertising spending by around 2-3 percent to increase the market share and which we are seeing that people [have] started perceiving us as a innovator of the new product, new brands; new types of things and that is what has been accepted by the consumer.
Sumaira: Currently your capacity stands at about 3.2 lakh liters a day and your network has about 750 distributors. Are you looking at expanding this given the kind of plan that you are saying you have over the next 5-10 years and will it require that you take on additional debt?
A: We are now looking little bit differently, we are trying to expand our reach into the eastern sector. Now we are serious on that subject and hopefully by December 2016 our plant should be running. So, that is one thing which will be adding up capacity.
We currently have a 3.5 lakh liter capacity per day. We will be adding up another 50,000 liter by eastern plant so it will be total 4 lakh liters of a day. That is a capacity that we are going to build up in another 1.5 year time.
Coming to the issue of debt, we have been able to reduce the debt in last one year to the tune of Rs 50 crore. We are still hopeful that in another six months or a year we should be able to reduce the debt.
Simultaneously we will be looking at diluting the equity to a very small extent which will help us boasting up the requirement of the Kolkata plant.
So, we are not looking at debt anymore. We are trying to consolidate the situation and contain our debt to the current level.
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