On Episode 947 of The Core Report, financial journalist Govindraj Ethiraj talks to K. Ramakrishnan, Managing Director-South Asia at Worldpanel by Numerator (formerly Kantar Worldpanel) as well as Deven Choksey, market expert and Managing Director at DRChoksey FinServ.

SHOW NOTES

(00:00) Stories of the Day

(01:38) Oil Prices Fall On Demand Concerns, After A While, Markets Steady

(04:36) South Korean Markets Are Now In Bull Territory

(08:14) Finding The Balance Between Long Term Investments And Shareholder Return

(21:01) An Ease Of Doing Business Lesson From The USA Which Is Processing Tariff Refunds

(22:45) Rajkot Snacks Company Balaji Breaks Into Top 10 Most Chosen In-Home FMCG Brand

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Friday the 14th of August and this is Govindraj Ethiraj broadcasting and streaming weekdays usually from Mumbai, India's financial capital, but in transit right now.

Our top stories and themes…

Oil prices fall on demand concerns which have surfaced after a while even as markets are steady.

Finding the balance between long-term investments and shareholder returns, the Tata Group appears to have managed that. Will other businesses follow and what holds them back?

South Korean markets are now in bull territory having recovered 20% as the wild swings continue.

Rajkot snacks company Balaji breaks into the top 10 most chosen in-home FMCG brands very close to Parle and Britannia.

An ease of doing business lesson from the United States which is processing tariff refunds in billions of dollars and boosting balance sheets.

Markets, Oil, Metals and the Rupee

Okay, so before we jump in a quick plug on our newsletter that's the Core Daily newsletter which goes out to now 90,000 subscribers across the world. So today's featured article is by Katya Naidu and it's called India's borrowing boom is weakening the household safety net and covers how rising household debt and falling savings are putting financial pressure on families as consumption borrowing outpaces wage growth. So the link is in the description, do subscribe and stay tuned with our newsletter as well.

A day has passed since the shock announcement by Tata Sons chairman N Chandrasekaran that he would not be offering himself reappointment on the board of Tata Sons at the end of his tenure in February 2027, effectively tendering his resignation ahead. The markets are still reeling from the effects of this. Listed Tata Group companies, some 26 in all, have lost nearly 44,000 crore rupees in market capitalisation over the past two trading days following Chandrasekaran's decision on Wednesday not to seek reappointment as chairman.

According to a Business Standard report, of this, Tata Consultancy Services has been the top market cap loser in those two trading days and accounted for 81 percent, or 35,000 crores, of the market cap erosion. Chandrasekaran was previously CEO of TCS and a technocrat to boot—one reason why the group has gone after several high-tech investments in recent years, and more on that shortly.

Oil prices fell on Thursday as investors have, after a while, started weighing the impact of weaker global demand this year and higher U.S. crude stocks, even as there is a clear lack of progress in talks over the blockaded Strait of Hormuz. Brent futures were at about $87.30 or under $88 a barrel on Thursday morning, having trimmed gains over the prior six sessions, according to Reuters.

With oil prices down, the benchmark Sensex snapped a two-day falling streak, though the Nifty 50 extended losses thanks to weakness in metal and bank shares. The Sensex was up 113 points to 78,079, while the Nifty 50 was down 40 points to 24,395. In the broader markets, both the Nifty Midcap and Smallcap were up 0.15 and 0.2 percent each.

The rupee was down on Thursday thanks to dollar outflows linked to derivatives maturities and overseas debt repayments, according to Reuters, adding that it closed down 0.1 percent to 95 rupees 44 paise, with its one-month implied volatility—a gauge of future expectations—easing to 4.2 percent, the lowest since early March.

Meanwhile, CareEdge Ratings have said that they were revising upward their projections of FCNR—that's NRI deposit flows—to about 80 billion dollars along with external commercial borrowing and other inflows. The policy measures in June are likely to generate 90 to 95 billion dollars of capital flows in 26/27, according to CareEdge. It also says that India's balance of payments is expected to improve to a surplus of about 64 billion dollars this year, compared to deficits in the last two years. It also argues that the rupee's response has been relatively muted to all of this because—or likely because—the Reserve Bank is using some of those inflows to reduce its forward book.

On the metal side, gold prices meanwhile fell about one percent on Thursday as investors booked profits after softer-than-expected U.S. inflation figures, which reduced expectations of a Federal Reserve rate hike around the corner and sent gold prices—or rather had sent gold prices—to a more than two-month high. Spot gold fell about 0.7 percent to $4,373 per ounce on Thursday morning.

South Korea’s KOSPI’s Dramatic Reversal

Asian markets have once again surprised dramatically, this time on the upside, with South Korea's Kospi staging a dramatic reversal, returning to bull market territory as investors go back into the country's semiconductor giants that dominate the index. According to a CNBC report, the benchmark has now jumped more than 20 percent from its July low, and that 20 percent is the commonly used threshold for a bull market. Earlier, a big fall, also thanks to leveraged positions and forced selling, pushed the Kospi into bear market territory, but the speed of the turnaround underscores the massive volatility in tech stocks, which we've been discussing on The Core Report for a while. Also in this case, it asks—or rather poses the question—how long could this South Korean rally last?

The CNBC report says that for bulls, the answer rests largely on whether the fundamentals behind Korea's semiconductor giants can keep pace with increasingly optimistic expectations. Strong U.S. technology earnings and continued commitments to AI infrastructure spending have helped revive confidence. The demand for memory chips, much of which comes from South Korea, will remain robust. An analyst told CNBC that the AI rally and continued strong earnings have been a constant during the sell-off, so it is fundamentals returning the market back to normalcy rather than the other way around.

Back home, aggregate revenues of a sample set of 838 listed companies grew 22 percent in the June quarter, higher than the 13 percent year-on-year for the March quarter, reflecting earnings resilience of India Inc. offsetting weaknesses in the oil sector, according to rating agency ICRA. They also added that aggregate operating profit margin contracted by about 200 basis points in the first quarter of 26/27, and net profits were flattish, mainly because of the refining sector, where elevated crude prices and under-recoveries on LPG and petroleum products weighed on profitability. Excluding oil and gas, OPM (operating profit margins) were stable at 19 percent, and net profits grew over 20 percent, according to ICRA.

In that report in Business Standard, ICRA says that their review of the results announced so far suggests that India Inc. has begun 26/27 on a better footing than anticipated. This was driven by commodity and bullion price-led value inflation, the enduring demand lift from the GST rate cuts last year that continued to spur the automobile sector, and resilient overall consumption volumes despite the West Asia tensions and worries on El Niño and the monsoons.

India's merchandise trade deficit widened more than expected to a six-month high of about 32 billion dollars in July, thanks to the war in West Asia driving up India's oil import bill as well as global freight rates, according to Reuters, which adds that the data underscores the growing pressure on India's external balance as the wider trade gap weighs on the rupee and capital inflows. The trade deficit for July was wider than the forecast of 30.2 billion dollars, according to a Reuters poll, compared with a deficit of 30.4 billion dollars in the previous month.

Tata Sons chairman N Chandrasekaran says he will not seek reappointment

What is the significance of Tata Sons chairman N Chandrasekaran saying he will not seek reappointment in a role he would have been in for a decade when he steps down as indicated in February next year? At one level, it reflects a fissure that's emerged between the largest individual shareholder, Noel Tata, and his—or rather shareholder concerns over—some of the Tata Group investments which have not done well, going by reports. But at a more conceptual level, it's also about balancing shareholder value creation with nation-building investments, according to veteran investor Deven Choksey.

Before I come to him, Tata Trusts on Thursday said it would set up a selection committee to recommend the next chairman of Tata Sons after Chandrasekaran decided not to seek reappointment. The decision follows his communication to the Tata Sons board that he would not offer himself for another term. The trusts said they respect his decision not to offer himself for reappointment and appreciated his contribution to Tata Sons and Tata Group. They also placed on record their deepest appreciation for his contribution and stewardship of Tata Sons and the Tata Group in the last decade. They also said that they supported Tata Sons in ensuring a smooth, timely, and orderly transition of leadership in line with the values and long-term interests of Tata Sons and Tata Group.

Tata Trusts have a roughly 66 percent share of Tata Sons, just to recap. Chandrasekaran's decision came after the Tata Sons board did not reach a resolution on his proposed continuation at a February 24 board meeting. That's 24th proposal for his next term did not receive unanimous support, after which he deferred the decision. He also said in his letter to the Tata Sons board that it's been six months since that board meeting and no resolution has been reached. He said Tata Sons had several strategic projects at critical stages of execution, and clarity on leadership was important for everyone—that's employees, investors, partners, and other stakeholders.

So to come back to the theme of growth and investment, I began by asking Deven Choksey how he was seeing this transition in the context of the group's major investments in the past decade.

INTERVIEW TRANSCRIPT

Deven Choksey: So, in I think the number of observations and quick ones, I feel that I think when you are a family-owned organisation but run professionally—here in this case, I think it's a conglomerate, I think owned by the trust and then professionally managed, run, managed, etc. So that equation, I think, fairly got established. I think that is what I would like to say in this case also, because Chandra's tenure in Tata Group has been of 9 years as a chairman and of course, I think, for more than 40 years almost, I think, for the group as a whole in which he has worked in various positions.

So from that perspective, if you look at it, I think he has got a good run, and he has actually created a good value for Tata Group and other shareholders as well, with a 3 times increase in what you call the profits since he took over. That's commendable, because I think that is where probably—or 5 times increase in the profit and 3 times increase in the market value—is commendable, because that's what I think the shareholders would love to see, and particularly for a group like Tata's.

Now, say today at this juncture, about 1,70,000 crore worth of net profit at the group level the group is enjoying, which is significant. And today, I think if you want to create the next era of Tata Group, then probably I think this becomes your foundation. From here, I think you would probably, I think, take the next call. If you are close to a 2 lakh crore worth of net profit-making company, and suppose I think if you are visualising the next 10 years or so, I think you become anywhere in the vicinity of around between 5 to 7 lakh crore net profit-making company—or group, rather, for that matter—I think you will have to take a certain amount of decisions, which I believe that I think as a group they are taking.

However, I think in between there has been a situation wherein on this profit, suppose if you are making a certain amount of losses today—which is a case in this point, and India along with the digital put together is contributing around 26, 27,000 crore worth of losses as against 1,70,000 plus crore worth of profit—so yes, I think there is a situation of close to around 20% of your money which is going into loss-making propagation. And that's where I guess I think the challenge has come from the board of the group, which is where I guess I think this victimisation—if I, matter, it may be a little stronger word actually, but unfortunately, I think it has happened in this situation.

Govindraj Ethiraj: So you pointed to the fact that they have made these long-term investments, and not many companies or groups would have done it either ways, whether they had the profits or not. So how are you seeing this play out, particularly in the longer term?

Deven Choksey: So, good point here is that most of the businesses in the last 8-10 years have actually turned around. Take a case of Tata Motors, take a case of Tata Steel, take a case of Indian Hotels, I guess I think each of Tata Consumers for that matter—each of these businesses have had a systematic turnaround. And that's where, probably, I think you like the professional management, remain very assertive at the operating level and give a good amount of run for activity wherein probably you are asking the managers to turn around the assets which you have given to them for management or running, whatever you call it as.

I guess I think, see, this is where the foundation is. TCS, of course, has been a very strong company all along, but of late, I think one has experienced that even in TCS, I think one has seen the dip in the what you call the profit generation for a reason that they have followed, I think, the old method of continuing the IT services vis-à-vis, I think, the newer ways in which I think you are building the assets and then serve the customers.

So from that perspective, TCS is slightly lagging behind, but I would think that I think this is the time when probably I think they are acting also equally fast in adapting to the new situation. So they have turned around the group and group companies, and to me, I think that's fundamental. It is going to be the next stepping stone for any new manager who is going to take over this particular leadership.

For them, I think this particular turnaround companies are likely to see a better amount of, I think, performance going forward. The new investment which we are talking about, in the particularly semiconductor business and AI businesses, I guess I think that business will be requiring to be seen very closely from the point of view of generating their positive cash flow, because these businesses are extremely tough businesses when it comes to delivering the positive cash flow in a shorter period of time. But otherwise, I guess I think they have done a good job in my view, and that should continue going forward for the new position who takes over this particular position.

Govindraj Ethiraj: So I guess this is also a larger question you're also arguing in your piece, from as I could understand—maybe I was reading between the lines—that companies or groups need to make these investments because the country needs it. But these are also investments which will pay off or could potentially pay off for investors, but these are longer-term for which most companies do not have the appetite or CEOs don't have the appetite.

Deven Choksey: Yes, absolutely. Frankly speaking, I think today's CEOs, with due respect to them, I think they are becoming more and more administrators. They are not taking the entrepreneurship risk that is required to be taken, and one of the reasons could be that the entrepreneurs themselves do not have the confidence in those CEOs. So that is an unfortunate part.

I think India will have to learn some of these newer ways of handling the businesses, because let's accept the fact that when we started this entire journey of growing the industrialisation in the country and corporate started emerging, at that time the families became the managers. You know, they started earning as managers and they could probably, I think, take this because of they knew that where the risk was. Today, that delegation has happened in the hands of professionals, and that authority along with the thing—a measured amount of authority, I would say—has to be provided to people to run the show properly.

If you don't make investment, I think the death is inevitable. Frankly speaking, I think no corporate could ever survive without making the investment. No corporate could ever survive if they don't adapt to the newer ways of working, and today the world is telling us that I think the ways to work would be the newer ways of working.

Look at how the promoters or the founders in Google ended up giving the position to the professional managers. Look at how Microsoft ended up giving position to professional managers. You have no choice but to, I think, give this particular thing. Even Steve Jobs, for that matter, I think, handed over the position in the hands of professionals.

So in my viewpoint, I think the bigger companies are showing the ways of, I think, succession planning, if you want to call it as—showing the ways to handle the succession planning in the hands of professional managers. And we need to do that as an owner, as a shareholder, as a founder—whatever you want to call it as. You need to invest in the professional people who can basically get take the next decision, which is an entrepreneur decision. Then only, I think, the groups will emerge stronger. Otherwise, then these groups will go down under in a very quick time. I think they will not be able to see the next decade if they don't invest enough in the future of the group.

Govindraj Ethiraj: And are you sort of extending this message to other business houses and business families in India as well at this point, that they should be accelerating this rather than trying to sort of only pass on to their next generation? They should be accelerating and really learn from the Tata example. Ratan Tata may have not had a choice, but others might have a choice and therefore they should be looking at professionals more sincerely.

Deven Choksey: Indeed. In fact, I think if you take a leaf out of the Mukesh Ambani speech, I think in the AGM he categorically stated that okay, the family scions are the next-generation leaders, but at the same time, they are not alone. They are supported by an army of about 500 people who are basically supporting them. That means they are having the second line, third line of managers getting ready in the process, and that is a classic transition.

Managers don't come from trees, you know. You can't be picking them up from a tree as a fruit and, I think, just start installing them in the companies. You have to groom them, train them to take over this group and the businesses for the next 20, 30, 100 years. But from that perspective, I think Reliance has set up a very classic way of working.

Even larger groups like Adani's also, I think, are doing the similar kind of a thing. They are putting in a significantly large battery of professional managers who could probably succeed into the newer position going forward. You need to actually groom them for 20, 30, 40 years. Then, probably, I think these groups will emerge stronger in my viewpoint, and I think that's a message going to each and every single group country today.

Right, just to come back to the issue of big bets in general: India Inc. or corporate India has not been taking many bets, leave alone big bets, in the last decade or so and for various reasons. And of course, the contrast is the Tata group where they have taken some bets, and there are one or two others as well. What can make India Inc. or India's leading companies snap out of this phase and go into a more aggressive investment mode—including, of course, everything that you've talked about so far, bringing in the sort of more risk-prone entrepreneurs and so on, or entrepreneur professionals, and so on?

Well, I think as I always say that Google would not have happened in India, Tesla would not have happened in India, SpaceX would not have happened in India, because those companies which actually emerge stronger, they have spent some good 10, 20 years in building their base. They have never looked at, I think, making profits in the initial years.

Indian entrepreneur mindset is definitely trained to bring the profit into the balance sheet, and nothing wrong with that—that's a very disciplined approach, and I love this particular approach. I think that is keeping you on the tenterhooks, so that is a fundamental approach.

However, at the same time, I think we observe, when we study corporate reports, people are not willing to put an enough amount of money behind the experiments, behind the R&Ds. They are not—many of the companies, out of the total turnover pie, I think they are not even in a higher single digit. Forget about, I think, the higher single digit, they are not even 1-2% of their turnover who basically gets invested into some of the experiments called the new generation of business or R&D part of the activity.

So that is one thing which I think is a little sad part of the story. Maybe one can always say that we are always a capital-starved economy, capital-starved country, capital-starved the corporates, and that's the reason for which, I think, we are not getting enough conviction to do experiments.

But somewhere we'll have to start with schools. Allow them to experiment in schools to begin with, because that's a low-cost investment that you do. If you start making investment into them, allow them to make some amount of experiments in schools. Suppose if those experiments materialise, it can become corporations at some point of time.

So this is how, I think, we'll have to travel this journey. We all are learning, but I think I believe that I think a larger responsibility in our hands today in this generation is to build those schools where they are given the freedom, where they are given the training to carry out such kind of experiments and make the R&D happen over there itself, and produce the next Chandrasekharans.

Govindraj Ethiraj: Deven, thank you so much for joining me.

Deven Choksey: Pleasure interacting with you.

An Ease of Doing Business Lesson from Trump Tariffs

Here is an ease-of-doing-business lesson to take away: tariff refunds have begun rolling into big U.S. companies, in some cases providing a solid boost to earnings. The Wall Street Journal is reporting, contrary to warnings that the refund process could prove slow and messy, many companies appear to have received the money with remarkable speed, with some 40 S&P 500 companies having received about 9.6 billion dollars in refunds in the past quarter or so, including at least 2.1 billion dollars in cash already received.

Amongst the big refunds, Apple is 2.2 billion, Nike at 986 million, FedEx about 800 million dollars, Amazon 640 million, and General Motors 500 million dollars. If you recall, all of this is because tariffs were raised by the government and then those tariffs were declared unlawful by the U.S. Supreme Court, following which U.S. Customs and Border Protection has received something like 252,000 refund applications as of July 31st. According to the Wall Street Journal report, the customs agency accepted about 128 billion dollars in refunds for processing.

The Wall Street Journal quoted Nike saying it had received 302 million dollars in refunds in the last quarter of its fiscal year ended May 31st and the remaining 684 million by July 15th when it issued its annual report to shareholders. The report also points out that reported refunds don't always reflect money in the bank, and companies are handling the sums in different ways on their statements. Some record them only as cash arrives, while others are also reflecting likely payments in their financials. Either way, refunds have contributed handily, as the report says, to quarterly results. Apple said its tariff refunds contributed 11 cents to per-share earnings in the most recent quarter, about five percent of the quarter's total.

Insights from the 14th Annual Brand Footprint Report

Parle Products, known for its biscuit brand, has retained its position as India's most chosen in-home FMCG brand for a 14th consecutive year, while Britannia has once again topped the out-of-home rankings. The rankings are part of the Worldpanel by Numerator 14th edition of its annual Brand Footprint India report. These rank the country's most chosen FMCG brands by Consumer Reach Points (or CRP)—a measure which combines how many consumers buy a brand and how often they do so over a calendar year.

So there are many interesting stories behind some of these brands and their shifts in the pecking order, mostly due to changes in positioning or the product itself. So Parle was number one, followed by Britannia, Amul, Clinic Plus, and Surf Excel, which has been the same top five from last year. But the Rajkot, Gujarat-headquartered Balaji, a snacking company known for its chips and wafers, has broken into the top 10 for the first time, moving up from the 11th rank in 2025.

Dairy brands, the report says, have low penetration; however, higher purchase occasions are leading to more Consumer Reach Points. Vim has returned to the top 25 after two years, apparently thanks to product modernisation and a sharpened focus on liquids. Campa, owned by Reliance Group and Reliance Retail as of March '23, posted one of the steepest jumps in penetration this year and continues to grow. Dettol rose seven places to rank 36, and the story here is about the repositioning from germ protection to broader family protection alongside more localised communication in established markets, according to the report.

On the out-of-home arena, Britannia retained its leadership, followed by Balaji, Haldiram's, Cadbury's, and Amul. I reached out to K. Ramakrishnan, Managing Director - South Asia, Worldpanel by Numerator (earlier known as Kantar), and I asked him what he was seeing beneath or behind these numbers and the shifts that were taking place, and how he was seeing the demand side of the economy given the strains in the last couple of years.

INTERVIEW TRANSCRIPT

K Ramakrishnan: As you know, Govind, the brand footprint report is based on a metric called consumer reach points, and consumer reach points is a function of three things, the population, the penetration of the brand, and the frequency aperture is bought in a year. So all of these factors drive change in CRPs. So if you see, Parley has been the number one brand for 14 years in a row because of the fact that multiplicity of packs, multiplicity of purchase occasions, because each purchase of each unit is a CRP, which means if I buy one pack of biscuits is a CRP, if I buy five, it's five CRPs, and if five people like me buy it is 25 CRPs, that's how the metric goes, right?

So therefore, Parley has been leading and Britannia has come a close second, it's inched closer and closer in this year that you can see, and Amul has made it to the top five, that is a change that one is able to see in this year, as far as in-house in-home branding is concerned. And also another entry into the top 10 if you see is Balaji, which is a big, big achievement if you ask me for a brand like Balaji to make it to the top 10 in terms of brand footprint across the country. So it's a sign of wonderful things.

It's a sign of great news for smaller regional brands for their ambitious plans, etc. So that is one change that is there. Second, in the top 25, we find that RIN has made its way into the top 25.

And that's fundamentally because of their modernisation, introduction of new formats like liquids, etc, that have driven the change as far as RIN is concerned. There are other brands which have moved up as well. For example, XO is a brand which has moved up significantly.

It's not in the top 25, but it has made a significant move upwards. Similarly, you know, Sunrise Spices from ITC, that has seen a sharp change in terms of its numbers. So each of them has a different story.

Some of them are on account of geographical expansion or product expansion. Some of them on account of simply making offerings much wider and making the SKU game. So all of these put together end up in creating that CRP growth.

And that's what you're seeing in the report now.

Govindraj Ethiraj: Right. Between in-home and out-of-home, there seems to be a degree of overlap. Why is that?

K Ramakrishnan: Yeah, so the largest category, whether it's in-home or out-of-home is biscuits, in terms of its frequency of purchase in terms of CRPs. So that is why you see that overlap, whether it's in-home or out-of-home. But the thing is, the thing about out-of-home is that it is focused only on food and beverages.

Whereas in the case of in-home, we take into account food and beverages, home care, personal care, all of these put together. Out-of-home, there's not much of out-of-home purchase for the other category. So it's only for food and beverages.

And that's the difference. But biscuits being the largest category in both of these, there seems to be that kind of an overlap, which you're able to see. But the overlap is not in terms of the order of magnitude.

I mean, if you see the number one brand in in-home is Parle, but the number one brand in out-of-home is Britannia. But what I need to point out here is that the out-of-home is only metro, or rather million plus towns, whereas the in-home is both rural and urban put together. It's a summation.

And you find home care, personal care brands like Clinique Plus and Surf Excel in the top five, which you do not. Whereas in the out-of-home, it will be very different.

Govindraj Ethiraj: Right. You mentioned that Parle has been there now for 14 years. What does that tell us about the way Indian consumers are consuming?

I mean, for example, could, let's say other countries, including developed ones, have a similar hierarchy of products? I mean, obviously, their brands are different. Let's say, you said biscuits are so prominent in the Indian basket.

Could that be similar in other countries? Or what would it be in other countries? Yeah.

K Ramakrishnan: So globally, if you see, Coke has been the dominant player for many, many years in the brand footprint for the same reason, which is that the frequency of purchase is high and a large percentage of people. And that's what has been driving it. So it is similar in that sense.

There are dominant players like that, but there are others who make their way up and down in the whole scheme of things.

Govindraj Ethiraj: Right. And to come back to the regional play, and you mentioned Balaji and how Balaji has sort of risen up the ranks and quite rapidly at that. What else are you seeing around in terms of, let's say, potential entrants in future and what could be driving their moves?

K Ramakrishnan: See, every few years, this toss up between national brands versus regional brands keeps changing. Couple of years, there'll be a heavy growth of regional brands and then the national brands make a comeback, etc. Currently, it is the regional brands which are showing us sharp growth.

And they are growing on the basis of two or three things. One is geographical expansion, much like Balaji. Having been in one market, they're expanding to a few other markets, and that's giving them significant growth.

Second is category expansion. If they have a strong brand equity, then they expand that equity into other categories. Similarly, like Balaji from chips to noodles and things like that, or Gold Star from biscuits to noodles, etc.

So that's the second part that they're doing. And third is they're able to match innovation, advertising, packaging, and brand ambassadors to the same extent as national brands are. So the parity, the gap is not very, very significant.

The other benefit that the regional players benefit, or you can call it a disadvantage or an advantage. If you take a price pack, price packs are big, right, 10 rupees, 20 rupees, etc. When it comes to a constant price pack, the preference will always be for the more familiar, national, longer kind of thing.

So therefore, their play is not significant. But the larger packs is that they're able to show their superiority in terms of pricing. So that makes a big difference to them.

So that's what these are the stories in the regional versus national play.

Govindraj Ethiraj: Right. If you were to look around the market right now, I know Q1 results have been stronger, but consumer product companies in general have been under some strain for some time. Now, how are you seeing it from your vantage point?

And, again, specifically in the context of what some of the kind of pressures that consumer product companies are facing presently?

K Ramakrishnan: I think there is strain in the market for sure. I mean, there's no getting away from that. This is despite the fact that the first quarter results that you're talking about are like that, I mean, there is definitely strain and those are only what some listed players, etc.

The market comprises listed, unlisted and unbranded. If you look at it the whole, there is some amount of strain. I mean, the growth rates currently are in between four and a half, five percent, which have been the same for the last, let's say, one and a half.

Growth is there, but the growth is coming at a strain. And if you talk to consumers, consumers clearly are feeling the strain in terms of saying a whole lot of other expenses have gone up. Right.

In the sense that fuel that drives a whole lot of other expenses that has gone up. Education costs have gone up. Health costs have gone up.

Given all this, there is a significant strain on the wallet. So therefore, they're having to play around with what they have. Either they do downgrading or move to unbranded and come back to branded.

Those kinds of things are happening to a significant extent. Add to this the fact that there are two strong headwinds which are ahead of us, which is one is the war, second is the monsoon. The war is anybody's guess.

Nobody knows how long it's going to take. Nobody knows it will end, whether it will end, and if so, when and what would it have cost by then. So that has a significant impact on urban India, because fuel consumption, salaries, global companies, all of those put together, urban India gets influenced more by that.

The second is the monsoon. I think almost unilaterally it's been called out, it's going to be 90% of a normal monsoon, which means there's a 10% deficit of monsoon. And monsoon is one of the strongest factors that drives rural consumption.

And rural consumption is what is driving growth and accelerated growth for a lot of organisations. So if that comes under strain, what is remains to be seen, what it would cost is a big factor for us to see. So overall, if you combine both these headwinds into picture, even if the war, for example, hypothetically ends today and there's not an impact, the monsoon is reality.

So therefore, we do expect some stress from rural for sure. And we do expect that whatever is there currently will perhaps with great difficulty hold on or even drop a little in terms of growth rate in this year.

Govindraj Ethiraj: Thank you so much for joining me.

K Ramakrishnan: My pleasure.