GST Cuts Pass Benefits to Consumers | FMCG & Dairy Volume to Grow | Dr. Jayen Mehta & Rishabh Jain - video Dailymotion

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00:00First race, let's keep the GST conversation going and let's talk to two of the biggest category benefits that are coming in.

00:06First up, let's talk about the GST cut from 12% to 5% on ready-made numkeens, pre-packaged bhuja, snacks.

00:14On the back of that, we have the management of BKG Limited joining us on the show.

00:18And also remember, the second biggest beneficiary in terms of the rate cuts that we're seeing also extends to the milk sector,

00:25wherein you have dairy products, ultra-high temperature milk, all of them have seen significant rate cuts coming in,

00:32for which we also have the management of Amul joining us.

00:35So let's first get into conversation with Rishabh Jain, CFO at BKG Food International.

00:39And Rishabh, hi, morning. Thanks for joining us.

00:43Help us understand this GST rate cut that we've seen from 12% to 5% on your categories like pre-packaged numkeen, bhuja, mixtures.

00:55Would it be via price cuts? Would it be via increase in grammage?

00:59Or perhaps a mix of both, depending on which category we're addressing in your portfolio?

01:04Yeah, so thank you very much.

01:06And the simplification in the structure overall, we're also helping doing ease of business in India across.

01:14And as a business, as a brand, we are committed to pass on completely.

01:18Like in Family Pack, we serve a two-pack, Family and Impulse Pack.

01:21So all the bigger packs will have reduced MRP from today.

01:25So we'll be passing on completely to the consumers.

01:29And in a 5-rupee, 10-rupee pack, we are giving more grammics to the consumers.

01:33That's what our strategy is.

01:37All right. So that's about BKG strategy.

01:40But along with that, Mr. Mehta, let me come to you.

01:42Because over the weekend, we did hear your announcement that how Amul is definitely,

01:47has already announced the price cut across so many categories.

01:51But if you can help us understand that what will it really mean for the growth going ahead?

01:57Which categories do you believe can really be the biggest beneficiaries of this GST rate that has been announced

02:06and which have definitely led to the price cuts as well?

02:09Thank you so much. Happy Navaratri to you.

02:13And the first Diwali has kicked in today.

02:16The GST cut will bring in really big benefit to all the consumers.

02:20And as you mentioned, the demand will lead to a better future for the milk producers of our country.

02:27The GST cuts have been fantastic, particularly in product categories like ice cream,

02:31which was always treated as a luxury product, so from 18% to 5%.

02:35And products like ghee, which is the second largest consumed dairy product in the country,

02:41brought down from 12% to 5%.

02:43It was a longstanding demand of the industry, which the government listened to it and actually implemented it.

02:49And along with that, the butter and the cheese category is also coming down from 12% to 5%.

02:54The per capita consumption of ice cream, butter, cheese in the country is still very low.

02:58And once the prices become affordable, the demand will grow up multifold.

03:03And this is what is the benefit we look at as marketeers, we look at as consumers,

03:08and we also look at as a producer-owned corporate team.

03:12Okay. So, Mr. Mehta, that's the take coming in on the GST cut.

03:16But also help us understand on the back of this GST cut,

03:19do you expect to see any acceleration in the shift from unbranded dairy to now branded dairy?

03:25Is that something that you are expecting to see?

03:30Yes, exactly. This is going to be one of the biggest catalysts for this particular change,

03:36as consumers want to shift from loose to package and branded,

03:39but it was the tax factor which was coming in as a deterrent.

03:42Paneel, again, a very large category, now brought into GRO's GST.

03:46So, we'll see a massive, massive shift, and that's how consumers will benefit

03:50by consuming branded products which are safer, better quality,

03:55and, of course, you are not at the risk of adulteration.

03:58Same applies to ghee also. Same applies to most of the dairy product categories also.

04:03So, milk now, both in package from beet carton or pouch, is now zero GST,

04:09and the same applies to low GST for butter, for cheese, for ghee, the ice creams,

04:15and, of course, the chocolates and other categories also benefit out of it.

04:18So, yes, we would see a major, major shift,

04:21and that's how the industry will develop, organized sector will develop,

04:26and it will benefit both the producers as well as the consumers.

04:29All right. But, Rishabh, let me come to you,

04:31because we understand that some of your raw materials are also getting taxed low,

04:36and specifically with respect to the refined sugar,

04:40which is now taxed at almost 5%.

04:42How will this affect the margin structure for you,

04:45if you can help us understand that?

04:48So, for us, it's tax neutral because all 12% categories are coming at 5%.

04:52Numkins, and from input perspective, sugar and dry food are very small.

04:57So, overall, from margin less, we don't see any major improvement due to GST cut,

05:02but, yeah, overall, we see good volume growth coming in after GST cut

05:05because, as rightly said, we see organized sector going more stronger in future,

05:11and that will help all the organized industry, and that will help Bikaji also.

05:15That's positive coming in for Bikaji,

05:17but let's talk about your raw material pricing, Rishabh.

05:20Now that the cuts on Numkins, of course, they affect your direct product offering,

05:25but what about the process of the products that you are making?

05:29So, you have dried fruits that have seen a cut coming in,

05:33you have cuts coming in on milk, ghee, butter, some major raw materials for you.

05:38On the back of that, how much are you expecting to see an overall cut

05:42in your cost of production as well?

05:46We are cutting costs of production.

05:48Largely, we are looking at complete output and input ratio of tax structure,

05:53trend will pass on completely. That's what we will be doing.

05:57All right, but Mr. Mehta, the other thing that I wanted to understand

06:01is in terms of the shift that people are making in terms of their eating

06:06and consuming habits, and specifically with respect to Amul,

06:10I see that you guys are focusing a lot more on getting a protein-rich diet.

06:15So many new offerings are being done, and overall,

06:19we are seeing that premiumization trend also growing.

06:23If you can help us understand what's your expectation with respect to

06:27the demand for such newer products, how do you see this transition happen

06:33with lower prices? Do you believe that more people will shift from,

06:37say, a normal milk to an A2 milk, from a normal paneer to a paneer

06:44which offers you more protein? How do you see this change in a transition

06:49happen? And along with that, can we say that these products are

06:53better margin products versus the ordinary ones?

06:59Consumers moving from loose to package itself is a very big shift.

07:03Milk by itself is a superfood. And of course, when you say superfood,

07:06you have good quality fat inside the milk, also the protein, also vitamins,

07:11calcium, and the sum of the parts game is actually much, much larger.

07:15Indian GDP has been growing very fast, and so is the availability of the money

07:20for our consumers to buy. And once you increase the consumption of these

07:24value-added products, obviously the focus on nutrition also goes up

07:27multifold. And that's why you just mentioned that we have shifted a lot

07:31towards bringing in high-protein products in our portfolio.

07:34Now, for us, the whey of the cheese is a by-product, and we found out a way to

07:40extract the best quality whey protein and launch this high-quality

07:43whey protein-based products in the market, be it high-protein paneer

07:48or whey protein concentrates or high-protein lassi, buttermilk, shakes, and so on.

07:54Now, this means better value addition for the milk, better quality for the customers,

07:59lower price for good quality protein for the customers, and more importantly,

08:02the trust of the Amul brand is also there. So we do expect a very, very significant shift

08:07towards the high-protein-based products, and also the consumption of milk-based

08:13dairy products under the Amul brand name, under the variety of products that we already

08:16have in the market, also grow multifold. So this is actually a win-win situation

08:21that you are adding value to the liter of milk which our producer gives.

08:26End of the day, pass on the highest price of the consumer's rupee to the producer,

08:30thanks to the lower taxation, and more importantly, consumers benefit by a trusted brand

08:36which brings in the best quality products at the most affordable prices.

08:40So value addition, while, is a very important step in this journey, but more importantly

08:45is the story of bringing the goodness of the superfood called milk to the largest number

08:50of consumers in our country, and the various initiatives that we do are in that direction.

08:55Okay, Mr. Mehta, sounding very optimistic over there. Rishabh, let me come to you for

09:00a last question. Just give us a sense of where you are seeing the festive period headed

09:04this time around. What expectations do you have this year? Because you have the festive

09:08boost coming in, Navaratri has just begun, Diwali around the corner, and you also have

09:13the GST cuts now that are going to be giving this a further fillip. Any year-on-year expectation

09:18compared to last year?

09:19So we are hopeful that this Diwali will be very good for brand, as well as for country

09:24first. And we are targeting good numbers from last compared to last year.

09:30If you can talk number with us, Rishabh, in terms of numbers, what sort of a volume growth

09:35are you anticipating, if at all?

09:37So, lastly, from this BHT benefit, we see that in next two quarters, we will at least

09:44have, so this year will be up to our first half and second half. And we see at least

09:48two to three percent more volume growth compared to first half and second half. That's what

09:51we are targeting.

09:52Okay. So, Rishabh and Mr. Mehta, thank you so much for taking the time out and joining

09:59us. Wishing both of you a very good festive season and hopeful to interact with you after

10:03the festive season as well to get a sense on what that period has been for you. Thanks

10:07once again for joining us.

10:09Okay. On that note, we'll skip into a very short break on this edition of First Rates.

10:13Lots of more interesting conversations lined up on the other side. So you stay tuned.

GST Cuts Pass Benefits to Consumers | FMCG & Dairy Volume to Grow | Dr. Jayen Mehta & Rishabh Jain

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