Heritage Foods Q3FY17 Concall Summary

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Financial Highlights

Heritage foods Q3FY17 financials
  • Total Turnover has grown by 14.50 % to Rs 6671 m
  • Dairy turnover grew by 6.79 % growth to Rs 4596 mn
  • Milk volume Sales Grew by 5.89% to 8.63 LLPD
  • 18.22 % growth achieved in Branded Value Added Products Sale
  • 19.43 % growth in Packaged Curd sales (accounts for approx. 80% of Branded Value Added Products Sales)
  • 12.16 % de-growth in Milk Procurement to 10.55 LLPD (Lakh Liters Per Day)
  • Dairy EBITDA is at Rs 369 mn.
  • Retail EBITDA is at Rs 11 mn as against Rs (21) mn in Q3 previous year. 
  • Agri EBITDA is at Rs (1.10) mn as against Rs (1.30) mn in Q3 previous yea
  • Vet Ca EBITDA is at Rs 4.50 mn as against Rs 3.50 mn in Q3 previous year. 
  • Bakery EBITDA is at Rs 2 mn as against Rs 1.40 mn in Q3 previous year.
  • Total debt stands as Rs 124 crore, long term- 67 crore, short term-67 crore

Business Highlights

  • Procurement price is Rs 32.60 per liter right now
  • Milk prices going up both from procurement side to sale side
  • Different increase in prices in different market
  • On average, 2 RS per liter increase both in the procurement price and sale price is expected
  • Company will increase the milk prices by around rs2 per liter
  • Curd prices will be increased by RS 4 per liter
  • During this quarter there was no revision in milk prices. However, realizations increased due to favorable product mix (buffalo vs cow milk, full cream vs toned)
  • Fat content in milk
fat content in milk
  • Accumulated loss in retail is Rs 300 crore
  • 20% of the total sales comes from their own parlour
  • Working capital cycle for dairy - inventory period is 19 days, trade receivables are 2 days and trade payables are 13 days, the networking capital cycle is 7 d                                                                                                                                                       

Dairy Vertical

Heritage foods dairy vertical key metrics Q3FY17.png

Retail Vertical

Heritage Foods Key Metrics Retail Vertical Q3FY17

Procurement volumes

  • Procurement volume went down by 12.2% y-o-y
  • Company claimed that this was because previous year, the company leased a plant in Haryana which converted milk into milk powder and such conversions did not take place this time.
  • Current procurement is 10.5 lakh liters per day

On Retail demerger

  • They have got the no objection from the SEBI Stock Exchanges.
  • Applications have been filed in the NCLT and the competition commission
  • Approvals are expected by March end or April beginning and integration with Future retail should begin by May
  • The demerger will enable the retail stores to join a larger group, which is scaling up the stores faster and it is already profitable business
  • Also, the company expects that retail business will able to earn higher margins by joining with a larger group which is important as currently the division is incurring losses at the PAT level.
  • It will also help the company to sell its products through the larger group of future retail
  • Lock-in period is for 3 years after which they can exit their position

Acquisition of Retail dairy

  • It will help in building scale and making operations viable in Delhi
  • Reliance also offered their shelf space they have around 550, 600 food and grocery stores where the company can supply its products


  • Capex is expected to be around 70-75 crore per year for the next 12-18 months

Tax rate

  • Tax rate was 29% this year, compared to 34% previous year
  • Company said the tax rate is expected to go down as their efforts to bring renewable energy will bring in tax benefits due to accelerated depreciation

Future Plans

  • Initial plan to reach 6000 crore revenue mark by 2020 will have to redrafted since they are planning to demerge the retail, agri, bakery verticals
  • For the dairy vertical they are still aiming the 4150 crore revenue mark
  • To achieve increment growth, they are increasing their capex to increase capacity
  • Value added products are expected to have 40% of the total revenue share by 2020 compared to 21% right now