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Heritage Foods Ltd.

BSE: 519552 | NSE: HERITGFOOD | Series: NA | ISIN: INE978A01027 | SECTOR: Food Processing

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Jul 09, 16:00
256.15 -3.75 (-1.44%)
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256.35 -2.60 (-1.00%)
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Annual Report

For Year :
2018 2017 2016 2014 2013 2012 2011 2010 2009

Chairman's Speech

Dear Shareholder’s

Over a period of two decades, we have witnessed a journey of growth and excellence at Heritage. The year under review saw changes happening at the economy as well as the industry level. We also completed our first financial year post acquisition of Dairy brands from Reliance Retail Limited last year. As we operate in the complete value-chain of the dairy system, I am happy to state that the year was good for the farmers and consumers.

India, the fastest growing economy in the world experienced a cyclical trend during the year. The country saw a short term set back with a fall in GDP to 5.3% in the 1st quarter of the year, and then saw it rebound to 6.5% in the 2nd quarter Introduction of Goods and Service Tax (GST) during the year also created ripples across various sectors, eventually easing out the challenges with passing time.

The dairy industry was driven by various changes during the year. One, enhanced branding and packaging by leading players to grab a larger market share. Two, volatility in milk procurement prices during the second half of the year. Despite this, the industry witnessed an increase in milk output from 5.13 crore tonnes in summer season of FY17 to 5.38 crore tonnes in summer season of FY18.

As we operate in a competitive consumer-driven market, we continue to evolve as a company and embrace the challenges and opportunities that come along. We spent around RS.9.9 crore during the year towards rejuvenation of brand, silver jubilee celebration and advertisement. We have registered a growth of 25.25% in our revenue driven by 22.43% growth in value-added products.

The introduction of our operational efficiencies and value-creation philosophy helped increase the revenue this year

Like we had mentioned last year, we are building a ‘future-ready’ Heritage. During the year we took some strategic steps that will help shape our business better and create value for stakeholders. We began expansion plans for a plant in Haryana. Completion and commissioning of which will allow us to shift our packing operations from third party plants to in-house. While this would bring cost benefits, it would also help us market better in our northern market. Second, we acquired plant of Vaman Milk Foods (a third party packaging unit) near Chandigarh. This aligns with our belief of marketing products in innovative packaging solutions that deliver nutrition and wellness. Third, while we expanded capacities for curd at our existing plants in Telangana and Andhra Pradesh, we acquired a third party plant near Hyderabad. We invested around RS.182 crore during the fiscal that would strengthen our business and position us to emerge as a national dairy player

The dairy farmers remain at the heart of our business operations. As we expand our market presence across the country, we are also expanding our farmer community. Our total farmer community stands at 3 lakh farmers helping us procure 13.20 lakh litres of milk. We continue with our endeveour to provide greater value to our farmers, empowering them with opportunities for growth and being a partner for success.

As we make progress and take greater strides, we continue to adopt a vigilant governance framework. Our robust internal control environment, protective and seamless information technology and ethical business practices form a strong fundamental base to our sustainability. The result, we won second consecutive Golden Peacock Award for Corporate Governance organised by the Institute of Directors, in association with The Institute of Company Secretaries of India, New Delhi.

Going ahead, we shall continue our transformation of making Heritage an emerging dairy company with a wide product range delivering nutrition and wellness to our consumers. We remain rooted to our promise of driving inclusiveness across the value-chain of our business as we march towards our mission of achieving RS.6000 crore topline by FY2022. We came out stronger in FY 2018 and remain optimistic of achieving results in the coming years. An empowered and trusted farmer community, enriching portfolio, widening market presence and delightful customer base will enable us to build a sustainable enterprise delivering value to stakeholders.

Seetharamaiah Devineni