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Heritage Foods Ltd.

BSE: 519552 Sector: Agri and agri inputs
NSE: HERITGFOOD ISIN Code: INE978A01027
BSE 15:24 | 28 Jun 269.30 -0.70
(-0.26%)
OPEN

268.55

HIGH

271.00

LOW

265.50

NSE 15:09 | 28 Jun 270.00 0.05
(0.02%)
OPEN

270.00

HIGH

271.35

LOW

265.75

OPEN 268.55
PREVIOUS CLOSE 270.00
VOLUME 2246
52-Week high 565.00
52-Week low 250.25
P/E 11.53
Mkt Cap.(Rs cr) 1,250
Buy Price 269.00
Buy Qty 37.00
Sell Price 269.90
Sell Qty 46.00
OPEN 268.55
CLOSE 270.00
VOLUME 2246
52-Week high 565.00
52-Week low 250.25
P/E 11.53
Mkt Cap.(Rs cr) 1,250
Buy Price 269.00
Buy Qty 37.00
Sell Price 269.90
Sell Qty 46.00

Heritage Foods Ltd. (HERITGFOOD) - Chairman Speech

Company chairman speech

Dear Members

I am pleased to present to you the 29th Annual Report of "Heritage FoodsLimited" (the Company) for the financial year 2020-21. At the outset we trust youand your family are keeping well in the unprecedented pandemic COVID-19. The year gone byin many ways has been a challenging one with the onset of the COVID-19 outbreak andeventual lockdowns which brought a new order to the world. Even as India was graduallyrecovering and even kick-started its vaccination drive in the fourth quarter of the yearthe second wave of Corona Virus is likely to pose a downside risk to economic activity.

The national lockdown to curb the spread of the virus had a drastic impact on theIndian economy including the dairy industry which is a source of livelihood for millionsof Indians. An estimated seven million small marginal and landless farmers rely ondairying to earn a livelihood. The demand and supply of dairy products was subject to theCOVID-19 situation and torrential rains.

Milk procurement prices continued to remain low because of low demand from HoReCa anddue to fall in out of home consumption. The industry handled the challenges well byensuring uninterrupted supply of milk and milk products across the country. Despite thepandemic the sector is perched atop the crest of a U-curve and the years ahead areexpected to be fruitful in terms of top line and bottom line.

Weathering challenges

A long and winding journey was embarked with moments of glory and despair but Heritagemanaged to not just survive but thrive. We steered the tough environment by furtherfortifying our strengths and leveraging newer opportunities. Besides protecting ourcurrent business base we geared up to make the organization more efficient to take on theshort-term challenges.

Being a responsible organization we implemented safety measures to ensure thewell-being of our employees. We also assured our consumers an uninterrupted supply of milkand milk products through home delivery and leveraged the e-Commerce channel. TodayHeritage is one of India's dairy companies enjoying the respect of more than 0.3 millionstrong farmer community engaging in milk procurement of 1.3 million liters per day.

Key industry highlights

For more than two decades India has been the largest milk producer country in theworld. During FY 2019-20 the nation produced 198.4 million tons (MT) of milk about 22%of the world's total milk production. India's milk production grew at a CAGR of 4.5% overthe last 20 years as against the world's milk production which grew by a CAGR of around2%. During the last six years India's milk production has been growing by 35.61%. WithIndia being billed as one of the most attractive global opportunities from a consumptionperspective the dairy sector is projected to keep witnessing a larger quantum of privateinvestment. Rising disposable incomes growing consumer preference for branded andvalue-added milk and milk products and increased awareness of nutrition is driving demandfor dairy products in India.

As per a study on the demand for milk conducted by the National Dairy Development Board(NDDB) the estimated demand for FY 2030 at an all-India level will be 266.5 millionliters per day. The rural sector has an estimated share of 57% in total consumption. Theper capita consumption in urban areas (592 ml) remains higher than the rural areas (404ml) even in the FY 2030 projections.

Year in review

Before we proceed to talk about our performance during the financial year we areextremely sad to share with you the sad demise of our erstwhile chairperson Shri. DevineniSeetharamaiah who left for heavenly abode on July 19 2020. He was credited to haveimbibed the best governance standards within the Company. This been a huge irreplaceableloss to the Company.

At Heritage our liquid milk and curd volumes contracted YoY owing to subduedout-of-home (OOH) consumption and the withdrawal of operations from Punjab and Rajasthanas a part of the rationalization exercise and the disruption caused by unprecedentedrains in Hyderabad and several parts of Andhra Pradesh. However there was a gradualdemand revival towards the start of Calendar Year 2021 as several academic and educationalinstitutions started opening up in many states with summer setting in and with demandfrom HoReCa reviving. However we at Heritage are carefully moving forward onprocurement based on actual requirement.

Financial performance

Talking about our performance highlights for the year we sold 1.0 million liters ofliquid milk per day during the FY 2020-21 compared to 1.1 million liters per day sold inthe previous FY 2019-20. Our Net Turnover stood at

Rs 24070.29 million compared to

Rs 26811.06 million in the previous year while our Net Worth stood at

Rs 5937.64 million vs Rs 4623.31 million earlier. EBITDA stood at

Rs 2565 million compared to Rs 1403 million while Profit Before Tax was

Rs 2010 million compared to Rs 724 million in the preceding year. Revenueof Heritage Nutrivet Limited our wholly-owned subsidiary stood at

Rs 1215.26 million compared to

Rs 1038.54 million previous year.

The cost of dairy inputs in India have been rising which continued to constrain ourmargins increased. Our dairy revenues were Rs 24065 million in FY2021 from Rs26794 million in FY2020 while the value-added segment reported (19.34%) year-on-yeardegrowth in revenues at Rs 5825 million compared to Rs 7221 million inthe previous fi scal year. Another key development of the year was that our entire stakein Future Retail and Praxis Home Retail was sold and the proceeds were used for repaymentof long-term debt. With this we aim to accelerate our focus and investment in the dairybusiness growing our national presence adding more geographies enhancing procurementand increasing capacity.

Strengthening market linkages

Dairy farmers form the backbone of our business and their empowerment is a core valueat Heritage. As a means to this end we undertake several measures to address thechallenges faced by dairy farmers and to secure them in a highly cyclical business. Someof these include providing free veterinary care supplying high-quality cattle feed atsubsidized rates and mitigating risks through insurance policies (for farmers andcattle). With our efforts we have helped farmers grow their household income and advancetheir living standards. We also facilitate financial support for cattle purchase andcattle insurance resulting in cattle yields rising over the past few years and creatingpotential employment generation.

Way forward

We are looking to the future with positivity well placed and underpinned by the B2Cnature of our business and our strong return ratios. What also gives us the confi dencefor industry growth is the growing per capita availability of milk in the country. India'sper capita milk availability which stood at 130 grams per day during 1950-51 has morethan doubled to 374 grams per day in FY 2017-18 as against the world estimated averageconsumption of 294 grams per day. We continue to keep an eye on our mission of achieving Rs60000 million turnover although the timeframe is being recalibrated to deliver thetargeted revenue given the economic headwinds and industry challenges.

Vote of thanks

India is steadily poised to combat the menace of the pandemic. We are hoping ferventlythat the nation succeeds in fl attening the curve in the shortest possible time and willovercome the challenges thrown by the virus. At Heritage we continue to be hopeful of aresurgence in economic activity and return of normalcy very soon.

As we weather this crisis at Heritage I take this opportunity to thank our employeesfor their unwavering support. This would not have been possible without their relentlessefforts.

Stay safe and healthy.
With best regards.
N. Bhuvaneswari
Vice-Chairperson & Managing Director

.