Heritage Foods Limited · NSE:HERITGFOOD
Heritage Foods — Q3 FY2025 Earnings Presentation
48 slides from Heritage Foods's earnings presentation, Jan 22, 2025
Slide 1: Stock exchange cover letter for press release
Ref: SECT: STOC: 07-25 22nd January, 2025 To To The Manager The Manager, BSE Limited Listing Department, Phiroze Jeejeebhoy Towers, National Stock Exchange of India Limited Dalal Street, Exchange Plaza, C-1, G Block, Bandra-Kurla Mumbai - 400 001 Complex, Bandra (East), Mumbai – 400 051 Scrip Code:
Slide 2: The Promise of Health and Happiness: Corporate Presentation Q3/9M FY25
The Promise of Health and Happiness Quality From Farm To Table Corporate Presentation Q3/9M - FY25 1
Slide 3: Table of Contents
Table of Contents 1 Q3 & 9MFY25 Highlights 2 Business Overview 3 Strategic Updates 4 Annexure
Slide 4: Q3 and 9MFY25 Financial Highlights
Q3 and 9MFY25 Financial Highlights 3
Slide 5: Q3FY25: Overview
Q3FY25: Overview Procurement volumes peaked to 1.84 MLPD (12.6%) and procurement prices dropped favorably to Rs 41.9/L (2.7% lower), but higher than Q2 by Rs.1.66/Lt. Milk Sales volumes peaked to 1.17 million Lt per Day (MLPD) up 6.08% YoY, but registered a minor dip in avg selling price to Rs. 54.6
Slide 6: Q3 & 9MFY25 Consolidated Financial Performance
Q3 & 9MFY25 Consolidated Financial Performance (Rs. In Mn.) Revenue EBITDA PBT PAT Margins 5.5% 7.2% 3.8% 5.7% 2.9% 4.2% 741 10339 588 431 9411 520 Q3FY25 361 269 Q3FY24 Q3FY25 Q3FY24 Q3FY25 Q3FY24 Q3FY25 Q3FY24 Q3FY25 Margins 4.9% 8.6% 3.2% 6.6% 2.3% 4.9% 1501 2511 2041 30861 28433 9MFY25 1393 661
Slide 7: Q3 & 9MFY25 Consolidated Financial Performance by segment
Q3 & 9MFY25 Consolidated Financial Performance (Rs. In Mn.) Milk Revenue VAP Revenue Fat Products Others 5876 2874 5576 1085 504 454 Q3FY25 2445 936 Q3FY24 Q3FY25 Q3FY24 Q3FY25 Q3FY24 Q3FY25 Q3FY24 Q3FY25 1363 17481 9673 16656 2335 2344 1197 9MFY25 8245 9MFY24 9MFY25 9MFY24 9MFY25 9MFY24 9MFY25 9MFY
Slide 8: Quarterly Consolidated Financial Performance
33 Quarterly Consolidated Financial Performance Particulars (INR Mn) Q3FY25 Q3FY24 Y-o-Y (%) 9MFY25 9MFY24 Y-o-Y (%) Operating Income 10,339 9,411 10% 30,861 28,433 9% Expenses 9,599 8,891 8% 28,350 27,040 5% EBITDA 741 520 43% 2,511 1,393 80% EBITDA Margins (%) 7.2% 5.5% 164 bps 8.6% 4.9% 373 bps D
Slide 9: Q3 Building milk through differentiated proposition
Q3 Building milk: through differentiated proposition Karnataka Maharashtra Hyderabad Special Gold milk to spruce up the portfolio Sampurna A2 Buffalo Milk to enhance FCM segment presence Buffalo Milk to counter premium players Q3 Building VAP: Probiotic Buttermilk as home consumption drink Heritage
Slide 10: Q3 Building VAP: Ghee and Sweets during the festival
Q3 Building VAP: Ghee and “Truly Good” Sweets during the festival Heritage x TVF x ChaiBisket – Engaging with consumers during the festival season from Navratri to Diwali through a unique web series format – SISTERS Season 3 – 10 Episodes Spreading festive goodness through smart Consumer Offers on f
Slide 11: Q3 Creating brand awareness in Newly opened markets
Q3 Creating brand awareness in Newly opened markets New Market Timeline Q1 - Odisha, CG Q2 - East (WB, BH,JH,Mysuru) Q3 - Kozhikode,Faridabad Kolkata Kozhikode Faridabad Durga Puja Unique Outdoor campaign Fresh product launch Fresh Product launch Newly opened Markets – Strengthen presence in east an
Slide 12: Roadmap Ahead
Roadmap Ahead FY24 Aspiration Milk Procurement 1.5 MLPD FY26: 2 MLPD 40% of Revenue mix Value-Added Product Portfolio 30% Of Revenue mix (next 3-4 years) Continuous expansion using E- Geographical Expansion 17 states commerce and Retail outlets Farmer Empowerment and 300,000+ FY26 ~1,500 villages to
Slide 13: Business Overview
TeaLrn ane warriwt®® Business Overview 12
Slide 14: Heritage: Delivering across the Dairy Value Chain
Heritage: Delivering across the Dairy Value Chain Operating as a large FMCG company Winning Model Operational Excellence Business Metrics Balanced Full Stack Portfolio ❑ Deep relation with 15% 3 years Revenue CAGR 3 Decades of Operations 300,000+ farmers, built on (FY24) immutable principles. As on
Slide 15: Strong Volume Led Growth
Strong Volume Led Growth 3 Year CAGR (FY21-FY24) Proven Expertise in Scaling Milk Procurement to Match Driving balanced growth across portfolio, ahead of competition Sales Growth 8% 60% 24% 36% 5% 28% 21% 17% Milk Milk VAP Sales Foods Drinkables Sweets Ice-cream Fats Procurement Sales 14
Slide 16: From Dairy to Your Door: The Journey of Milk
From Dairy to Your Door: The Journey of Milk Milk Chilling Processing Pasteurization Distribution Procurement Centers Plant Centers 300,000+ 199 18 Excess fat separated 2000+ Farmers across 9 states Chilling Centres/Bulk State of the art and converted to fat Vehicles Coolers Processing Plants produc
Slide 17: A balanced portfolio that works in every season
A balanced portfolio that works in every season March-May Jun-Aug Sep-Feb Drinkables, Curd and Ice- Milk and paneer sales Festive and winter period creams lead the sales boom with ‘return to when Ghee, butter and school Sweets sales lead 16
Slide 18: Geographical Footprint
Geographical Footprint Geographical Footprint INDICATORS Milk and Milk Products Sales - 17 States Haryana Milk Procurement - 9 States Telangana Rai Kalluru Narket pally Maharashtra Uppal Shamirpet Sangvi Manor Andhra Pradesh Karnataka Pammaru Bayyavaram B.Kothakota Yadavanahalli Sindhanur Tamil Nadu
Slide 19: Mrs. Nara Bhuvaneswari, Vice-Chairperson & Managing Director
“At Heritage, we drive sustainable shareholder value through innovation, operational efficiency, and environmental stewardship, ensuring long-term growth, market leadership, and prosperity for all stakeholders.” Mrs. Nara Bhuvaneswari Vice-Chairperson & Managing Director 18
Slide 20: Business Model Built on Multiple USPs
Business Model Built on Multiple USPs Federated Supply Chain Strong relationship with farmers Multiple fit-for-purpose Route to Market Strong relationship with all major customers Quality focus and operational excellence R&D and Marketing Capabilities Building a High Margin Product Portfolio Strateg
Slide 21: Federated Supply Chain
Federated Supply Chain Operating as a large FMCG company Procurement Processing (25 kms) 18 Plants (100 kms) Chilling Distribution 199 centres 50-60 kms radius This reduces distance traveled by milk and maintains freshness 20
Slide 22: Strong relationship with farmers
Strong relationship with farmers Milk Procurement: Preferred Buyer Milk procured (LLPD) Milk Sales (LLPD) 16.3 ❑ Transparency and accurate 15.9 measurement 13.2 13.8 13.8 ❑ Fair pricing based on 13.0 12.7 measurement of solids (fat 11.5 11.4 11.1 10.9 11.1 and SNF) delivered 10.4 10.5 10.2 9.7 9.6 ❑
Slide 23: Integrated Distribution Network
Integrated Distribution Network 75% of pin codes in 17 states 16 E Commerce Websites 859 0.18 mn (Retail Trade) Heritage Retail Outlets Parlors (Retail Trade) (Owned Network) BUILD CHANNEL 7200+ AGNOSTICITY 352 Distributors Happiness points (Retail Trade) (Owned Network) ❑ Happiness points revenue i
Slide 24: Building Strong Bonds Through Collaborative Business Planning
Building Strong Bonds Through Collaborative Business Planning Brick and Mortar Ecommerce ❑ Annual Strategic Business Planning with Channel Partners ❑ Fostering Long-Term Partnerships and Unmatched Customer Loyalty 23
Slide 25: Focused on Logistics Efficiencies
Focused on Logistics Efficiencies Freight spends as a % of Revenue 4.6% 4.4% 4.3% 4.2% 3.8% 3.1% 2.9% 2.9% 2.8% 2.8% FY20 FY21 FY22 FY23 FY24 Heritage Foods Ltd. Average Dairy Industry Management aims to reduce operational costs further via operational efficiencies, lower freight and other costs 24
Slide 26: R&D and Marketing Capabilities
R&D and Marketing Capabilities New Product Campaigns Awards Festive Digital campaign ❖ Gold for the “New Product Launch – FMCG” ❖ Silver for “Best use of Integrated Marketing - FMGC” ❖ Silver for “Best Branded Content – FMCG” ❖ Bronze for “Best use of Digital Marketing/Social Media” Promotional offe
Slide 27: Building a High Margin Product Portfolio
Building a High Margin Product Portfolio Strongly Growing VAP Portfolio Product Mix FY21 FY24 ❑ Our strong R&D FAT Others Others 6% 3% FAT 3% capability that enables 8% VAP VAP us to offer a wide array 24% 30% of delicious and highly nutritious value-added portfolio. Milk Milk 59% ❑ VAP products hav
Slide 28: Strategic Working Capital Management
Strategic Working Capital Management Significant Reduction over last one year Working Capital Days 31 30 28 25 23 23 21 18 17 13 FY20 FY21 FY22 FY23 FY24 Heritage Foods Ltd. Dairy Industry Average 27
Slide 29: Diversified and Growing Product Portfolio
Diversified and Growing Product Portfolio MILK – 12 SKUs Dairy Foods - SKUs TOTA L S KU ’ s : 4 1 8 28
Slide 30: Mrs. Nara Brahmani, Executive Director
“We create value by staying flexible, introducing innovative products, and expanding into high-growth markets to meet consumer needs and drive sustainable growth.” Mrs . Nara Brahmani Executive Director 29
Slide 31: Clear Strategic Priorities to Drive Future Growth
Clear Strategic Priorities to Drive Future Growth Synergy in Margin Highly Tech Leadership Expansion Enabled 30
Slide 32: VAP portfolio to Improve Margins
VAP portfolio to Improve Margins Higher Contribution of VAP to Revenue Higher Projected Gross Margins 40% 20.7% 18.4% 30% 27% FY20 FY24 FY28E FY20 FY24 FY28E Factors Driving VAP growth: Industry Growth potential (By Category): Category Organised Market CAGR ( next 7 ✓ Urbanisation Share years) ✓ Uno
Slide 33: Digitally Enabled Operations
Digitally Enabled Operations 1 2 3 DMS Heritage VET+ is a one- Customer Live Application Distributor Management stop solution for milch helps streamline sales and System helps streamlining animal management. costs attributable while the primary and secondary It provides virtual creating a responsibl
Slide 34: Dr. M. Sambasiva Rao, President
“We prioritize the highest standards of quality in every product we produce, ensuring that our consumers receive only the best, fresh, and nutritious dairy options.” Dr. M. Sambasiva Rao President 33
Slide 35: Focussed on Shareholder Value Creation
Focussed on Shareholder Value Creation Consistently Paying Dividend The company maintained its commitment to shareholders by continuing to pay dividends, even during the challenging COVID year. PERCENTAGE OF DIVIDEND OF FACE VALUE 100% 100% 50% 50% 50% 40% 40% 40% 30% 30% 30% FY14 FY15 FY16 FY17 FY1
Slide 36: ROCE and ROE in line with Industry median
ROCE and ROE in line with Industry median ROCE (%) ROE (%) 33% 25% 26% 24% 19% 16% 16% 14% 15% 14% 11% 17% 12% 16% 11% 13% 8% 8% 11% 8% FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 Heritage Industry Median Heritage Industry Median Growth in sales Volumes and growing share of value-added portfol
Slide 37: Heritage: Built on Trust
Heritage: Built on Trust Ryan Fernando One of India’s most loved nutritionist PROBLEM APPROACH SOLUTIONS RECOMMENDATION TESTIMONIAL 70% of the Probiotics are the o While curd and o A healthy gut is the Heritage A-one immune system good bacteria that yogurt have foundation of Probiotic Buttermilk is
Slide 38: Srideep Kesavan, CEO
"At Heritage, we transcend the identity of a dairy company, embodying the essence of a progressive FMCG brand. Rooted in tradition yet driven by innovation, we craft products that enrich lives, inspire trust, and uphold uncompromising quality. Srideep Kesavan CEO 37
Slide 39: Unlocking Convenience with a Dynamic FMCG-Inspired Range
Unlocking Convenience with a Dynamic FMCG-Inspired Range Heritage Foods Limited Heritage Nutrivet Limited (Wholly owned Subsidiary) Heritage Novandie Foods Pvt Ltd (JV) 38
Slide 40: Appendix
APPENDIX 39
Slide 41: India's Dairy Industry: Poised for Significant Growth
India's Dairy Industry: Poised for Significant Growth Indian Dairy market size Steady growth in milk production and Unorganized to Organised shift (in Bn dollars) per capita availability Milk sales (INR Bn) 44% 42% 227.53 41% 39% 37% 35% 125.93 107.11 115.57 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 F
Slide 42: Shifting Towards VAP: Unlocking New Growth Opportunities
Shifting Towards VAP: Unlocking New Growth Opportunities Product contribution to organised Dairy sector Revenue Disposable Personal Income in India (INR Mn) SMP, YOGURT, 296 7% VAP, ICE 2% 273 CREAM, 28% 2% 236 205 201 GHEE, 192 FLAVOURED 11% 173 MILK, 1% VAP 140 156 127 BUTTER , 115 102 6% OTHERS,
Slide 43: Experienced Leadership Team with Proven Expertise
6 Experienced Leadership Team with Proven Expertise Dr. Sambasiva Rao Mr. Srideep Kesavan, CA A. Prabhakara Mr. J Samba Murty, Mr. Umakanta Barik, President CEO Naidu CFO COO Company Secretary Dr. Rao, holding a Post Graduate An MBA from XLRI and a B.Tech A Fellow Member of the Institute He holds an
Slide 44: Board of Directors
Board of Directors Board of Directors Mr. Angara Venkata Girija Kumar Mr. Rakesh Thakur Ahuja Chairperson, Non-Executive Independent Director Non-Executive Independent Director Commerce Graduate, MBA, AIII and a Member of Financial A graduate in Production Engineering from Pune University and Servic
Slide 45: Historical Consolidated Income Statement
33 Historical Consolidated Income Statement Particulars (INR Mn) FY20 FY21 FY22 FY23 FY24 Operating Income 27,259 24,731 26,813 32,407 37,939 Expenses 25,974 22,062 24,906 31,024 35,844 EBITDA 1,284 2,669 1,907 1,383 2,095 EBITDA Margins (%) 4.71% 10.79% 7.11% 4.27% 5.52% Depreciation 501 462 522 56
Slide 46: Historical Consolidated Balance Sheet
34 Historical Consolidated Balance Sheet Particulars (INR Mn) FY22 FY23 FY24 Particulars (INR Mn) FY22 FY23 FY24 Equity And Liability Assets Equity Share Capital 232 464 464 Non-Current Assets Reserve and Surplus 6,344 6,795 7,618 Property, Plant and Equipment 5,705 6,133 6,968 Shareholders Fund 6,5
Slide 47: Strengthening Financial Health: Key Balance Sheet Ratios
Strengthening Financial Health: Key Balance Sheet Ratios Debt/Equity (x) Current Ratio (x) ROCE (%) FATR (x) 0.22 1.7 15.8 5.8 0.16 10.6 5.5 1.4 FY23 FY24 FY23 FY24 FY23 FY24 FY23 FY24 Inventory Turnover ratio (x) Receivables Turnover ratio (x) Payables Turnover ratio (x) Net Capital Turnover ratio
Slide 48: Thank You
THANK YOU Investor Relations Contact Company Contact Garima Singla Mr. Umakanta Barik Go India Advisors Company Secretary and Compliance Officer garima@GoIndiaAdvisors.com hfl@heritagefoods.in M:+91 9780042377 Contact: 040-23391221/22 Sheetal Khanduja Go India Advisors sheetal@GoIndiaAdvisors.com M: