Mahesh,Ice cream revenue for Hatsun is not even 10% of their total revenues(around 6-7%).So,betting big on Ice cream may not yield anything big in the near future.
Hatsun’s revenue from ice creams (and this includes both Arun and Ibaco) is a small percentage of it’s revenue as you rightly point out. However, they are starting Ibaco parlors quite aggressively. They started Ibaco parlours some time in early 2012. By September 2013, they had around 90 Ibaco stores (many of them were Arun parlours re-branded as Ibaco). Currently they have 132 Ibaco stores and 245 Arun ice cream parlours.
The price at which ice creams are sold in Ibaco are higher than in Arun parlours or in Amul/Kwality Walls for that matter. So obviously the margins here will be far higher than in their regular business. So the markets may be pricing Hatsun to what may become a national chain of premium ice creams. But the question still is, will it click?
Just to point out the risks with Hatsun’s move from a pure dairy player, their initial targets of setting Ibaco parlours were far more aggressive and they seem to have fallen far short of it.
(This article was published on February 21, 2012)
The company plans to set up a chain of 250 Ibaco outlets including 70 in Tamil Nadu. As of now, there are 45 Arun Ice Creams Unlimited exclusive ice cream parlours which will be rebranded, and in the next one month 25 Ibaco outlets will be added.
Mr R. G. Chandramogan, Managing Director, Hatsun Agro, says the company plans to establish a strong presence across South India and in stages will enter the markets in the North over the next one year, when 180 Ibaco outlets will be added to gain a national presence.
The company announced to the BSE that it has resolved to sell a new range of ice creams under the Ibaco brand and open 70 outlets in Tamil Nadu and 250 across South India, including select outlets in North India by March 2013.
It’s been a long wait and I probably am going to wait for some more time. I would feel horrible to see it shoot up when I sell it after waiting all this time patiently. As I said earlier, I have a history!