Heritage Foods

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Company Overview

The Heritage Group was founded in 1992 by Shri Nara Chandrababu Naidu (current Chief Minister of Andhra Pradesh). It is one of the largest private sector dairy enterprises in Southern India. The company is also a leading food and grocery retailer under the brand Heritage Fresh. Currently operates with six-business divisions viz., Dairy, Retail, Agri, Bakery, Renewable Energy and Vetca under its flagship Company Heritage Foods Limited. The annual turnover of Heritage Foods crossed Rs.2380.58 crores in the financial year 2015-16. Currently, Heritage's milk and milk products have a market presence in Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha, NCR Delhi, Haryana, Rajasthan, Madhya Pradesh, Punjab, Uttar Pradesh, Gujarat and Uttarakhand. and its retail stores across Bangalore, Chennai and Hyderabad. Integrated Agri operations are in Chittoor and Medak Districts.

Shareholding Pattern

Heritage food shareholding pattern

Key Milestones


Business overview

Heritage majorly operates in five segments, namely, Dairy, Retail, Agri, Bakery and Renewable Energy. Dairy is the most important segment for Heritage as it contributes to around 72% of the total revenue.

Heritage foods org structure

Segmental Overview

Heritage Foods Sales breakup

Dairy Vertical

Heritage Foods Dairy Segment

With around 72% of the total revenue, Dairy is its largest segment. It is one of the largest dairy companies in India with a Chilling Capacity of 1.68 million liters per day, Processing Capacity of 1.53 million liters per day and Packaging Capacity of 1.06 million liters per day. The range of products in this segments include fresh milk, curd, butter milk, lassi, ice-cream, paneer, table butter, milk powder, flavored milk, UHT milk and dairy whitener.

The largest market for the company is Telangana which contributes to around 34% to overall revenue followed by 24% share in Andhra Pradesh. Karnataka and Tamil Nadu contributed around 17% and 15%. New markets which are Maharashtra, Delhi, Orissa and Kerala collectively contribute around 10% to overall revenue

Heritage Foods Geographical Distribution Sales
Heritage foods Procurement

Heritage procures 100% of its milk requirement through the direct mode, whereby farmers sell milk directly to the company via Village Collection Centers (VLCC). Around 56.5% of the total procurement comes from Andhra Pradesh, followed by Telangana and Tamil Nadu who contribute around 13% each to the overall procurement pie.

Heritage Foods Value added products share

The company is shifting its focus from fresh milk to the branded value added products (BVAP) which comprise of curd, ice cream, paneer, flavoured milk. The major reason for this is that these products command a much higher margin than fresh milk. Curd comprises of 75% of the total revenue of BVAP. BVAP have seen a consistent growth year-on-year and their share in the total dairy revenue has also been growing.


The retail chain is under the brand name “Heritage Fresh”. They use the Farm-To-Fork model under which they source fruits & vegetables directly from the farmers and then make it available at the Retail Stores within a few hours.

Heritage retail has two formats of stores:

  • Flagship store – Spread over 2500 square feet with a merchandise mix which fulfills all the essential home needs of an Indian household. This includes fresh fruits and vegetables, grocery, processed food, cleaning aids, general merchandise, bakery products, dairy, beverages, and frozen food.
  • Daily format store – Spread over 1000 square feet, this is essentially a food store with wide daily fresh needs and the immediate top up needs of a consumer
Heritage Foods retail vertical


Heritage Foods uses a franchisee-based model to open Heritage parlours. They provide whole range of Heritage products, that includes Heritage milk, milk products, ice cream, bread and other bakery products, eggs, private label products, fruits & vegetables.

Heritage Foods has a network of over 1000 Parlours in Hyderabad, Vishkapatanam, Rajahmundry, Vijayawada, Tirupati, Chennai and Bangalore.
Manufacturing facilities

There processing plants are located in Andhra Pradesh (7), Telangana (3), Maharastra(1), Karnataka (2), Tamilnadu (1), Haryana (1). Their Chilling centres are located in Andhra Pradesh (11), Telangana(1), Tamil Nadu (1)

Agri Vertical

Heritage Agri aims to provide fresh farm products to consumers by sourcing fruits and vegetables directly from the farmers. It acts as a supply chain arm for Heritage fresh stores, other MRF stores and wholesalers. Recently, it has also entered into the export of Fresh & Processed Fruits and Cereals.

Bakery Vertical

The bakery vertical supplies high quality bakery products to leading multinational chains like KFC, Pizza Hut, Hard Rock Café, and top star hotels, apart from it's own Heritage Fresh outlets.
The product range includes breads, cakes, pastries, desserts, savories and cookies.

Heritage Foods bakery vertical

Renewable Energy Vertical

Renewable Energy Vertical is an attempt by the company to reduce its carbon foot print while also developing green energy which can be used for its manufacturing plants. Under this vertical, On 27th March 2016 they Commissioned 1st Wind Power Plant of 2.1 MW Capacity at Chinahothur Village, Vajrakarur Mandal, Ananthapur District, Andhra Pradesh which is expected to generate 5 Million units per annum. After that, they commissioned another wind power plant in the same area and six solar plants with total Capacity of 1.66KW. In recognition of their efforts the Ministry of Energy, Government. of India, has awarded them the First Prize for "Conservation of Energy in Dairy Sector" for the years 2008, 2010, 2012, 2014 and 2015.

Veterinary Care feed vertical (Vetca)

Vetca deals with Animal Nutrition. It is one of the leading Cattle Feed players in South and Western India covering over 3 lakh farmers spread across five states viz., Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Maharastra.

Indian Dairy Industry

Indian dairy industry is one the fastest-growing dairy markets in the world. The market size of the Indian Dairy industry is estimated at around Rs 4 Lakh crore and the sector is estimated to see investments worth Rs 9,000-10,000 crore over the next five years. Milk production is growing at 4.3% while consumption is growing at 5% leaving a gap between demand and supply. To reduce this gap, Union Government has started a central scheme National Dairy Plan - Phase 1, for the period from 2011-12 to 2016-17 with the aim to help rural milk producers with greater access to the organized milk -processing sector. The Government of India in the budget for the year 2016-17 has allocate around 850 crore to help the dairy sector in India

Indian Dairy Industry

It is still majorly dominated by the unorganized sector but the organized sector is expected to take some share of the unorganized market in the future. Both Milk cooperatives and the private players procure about 10% each of the total production. The installed processing capacity of the cooperative sector 43.3 million litres /day while they actually process an average 33.5 million litres/day while the registered capacity of private sector milk processors in India is 73.3 million litres/day. Value added products are also expected to witness strong growth due to factors such as changing lifestyle, better health awareness and increasing urbanization.

Growth Factors

Revenue Diversification: the revenue stream of the company is highly diversified as it is operating in six verticals. Even though the dairy vertical comprises of 70% of the total revenue, there are a lot of different products within the segment such as curd, paneer, flavored milk. Also, the percentage contribution of these products to the total dairy revenue is increasing.

Huge potential in the dairy market: India is among the fastest-growing dairy markets and has become the largest global producer of milk, since 1998. Domestic milk production recorded about 4.3 % CAGR, reaching about 147 million tonnes in 2015-16, from 116 million tonnes in 2009-10. Growth in milk production in India outpaced that in other large milk producing nations such as the United States of America, which recorded about 2-3% CAGR during the past five years. Furtehrmore, a large portion of the dairy market in India is still unorganized which is gradually shifting toward the organized sector.

Growth in Value added products: Revenue from value added products such as curd, paneer etc have been increasing at the rate of 30% CAGR for the past 3 years. This is a very positive sign for the company as these products command a higher than the fresh milk and will improve the overall margin profile of the company

Competitive Advantage of Heritage Foods

Direct Procurement- Heritage is the only private dairy company in India which has procures its entire milk requirement through the direct procurement route. This helps the company in reducing its cost of procurement which helps in margin expansion.

Strong Presence in South India- Heritage has a significant presence in South India. This is a huge advantage for Heritage because compared to north India, the competition in the private dairy space is far less in south India

B2C Focus- Heritage is majorly a B2C company. This is also a great positive for the company as the margins in the B2C segments are higher compared to the B2B segment.

Key Financials

Balance Sheet

Heritage foods Balance sheet

Income Statement

Heritage foods Income Statement

Cash Flow Statement

Heritage Foods Cash Flow Statement

Ratio Analysis

Heritage foods ratio analysis

Heritage foods in six charts

Heritage foods Chart