Dodla Dairy Ltd (NSE: DODLA) Q2 2025 Earnings Call dated Oct. 24, 2024
Corporate Participants:
Dodla Sunil Reddy — Managing Director
B.V.K. Reddy — Chief Executive Officer
Murali Mohan Raju — Chief Financial Officer
Analysts:
Nandita Rajhansa — Analyst
Aniruddha Joshi — Analyst
Abneesh Roy — Analyst
Vinamra Hirawat — Analyst
Mythili Balakrishnan — Analyst
Jainis Chheda — Analyst
Tanish Mehta — Analyst
Rishabh Gang — Analyst
Abhishek Mathur — Analyst
Nikhil — Analyst
Jayvansh Mehta — Analyst
Naitik — Analyst
Resha Mehta — Analyst
Deepak Pawar — Analyst
Praful Siddharth — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Dodla Dairy Limited Q2 FY’25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants’ lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sunil Reddy, Managing Director. Thank you, and over to you, sir.
Dodla Sunil Reddy — Managing Director
Thank you very much. Good morning and seasons greetings to everyone on the call. On behalf of Dodla Dairy Limited, I extend a warm welcome to everyone joining us on our call today. I hope everyone had the opportunity to go through the financial results and investor presentation, which has been uploaded on the stock exchanges and on our company’s website. In continuation of our exceptional start to the financial year ’25, we are pleased to announce that Dodla has once again delivered a healthy performance, achieving its highest-ever revenue of INR998 crores for the second quarter financial year ’25. We have also witnessed benchmark performance in value-added products, which accounts for 39% of our total revenues during the quarter. The company has declared an interim dividend of INR3 per equity share. This is our first-ever dividend since listing.
Talking about opportunities, Q2 marks the end of the flush season and we have built-up sufficient inventory to be able to deliver milk throughout the year with consistent quality throughout the rest of the year. So Dodla brand is synonymous with consistent quality and purity and has a very-high recall value in South India. Our brand presence is not limited to Tier-1 cities, was also expensed to Tier-2 and Tier-3 cities. We continue to invest in various brand-building activities to maintain our brand recall.
Now I would like to take a minute to update you on our recent land acquisition in Maharashtra. On the back of favorable raw-material prices, we entered the state about three years ago and established a strong procurement footprint. Today, we procure approximately 2 lakh liters per — or per 2 lakh liters of milk per day from this region. Our target is to take this procurement to around 7 lakh liters per day in the next three years. With such a large procurement, we foresee a requirement of an integrated manufacturing setup. Towards this, we have acquired 35 acres of land in Maharashtra. We are in the process of finalizing our project plans for an integrated plant. Once these are crystallized, we will communicate it to you.
The Indian industry is undergoing a structural shift and buoyancy that we have seen in the recent times and we will continue to buck the trend. Seasonality is inherent in our business, but broadly, we intend to maintain a healthier mix of VAP in line with the current performance on an annual basis. We expect margins to stay in the same ballpark and if things improve, we might be able to pass the savings on to our farmers and consumers. With this brief, I will now hand it over to CEO of our company, Mr. B.V.K. Reddy. Thank you very much.
B.V.K. Reddy — Chief Executive Officer
Thank you, sir. As Mr. Sunil Reddy stated the opening remarks, we witnessed a healthy performance in Q2 ’25 on an overall basis. We achieved highest-ever quarterly and half yearly revenue along with the stable margins. Due to significant butter and S&P sales in the quarter, we also recorded our highest-ever quarterly VAP sales. Ghee continues to perform well. During the quarter, we were able to procure 17.2 lakh liters of milk average. This was around 16.9 lakh liters of the same-period last year. Average milk sales were 11.6 lakh liters per day, an increase of 7.2% on a year-on-year basis. Curd sales stood to grew by 14.7% on year-on-year basis, 328.8 metric tons, while VAP sales registered growth of 93.5% on year-on-year basis to reach INR378 crores.
Sharing a few statistics on the procurement price for India business. Our average selling price stood INR68.2 per liter during the quarter vis-a-vis INR57.6 per liter for the same period of the last year. The increase was mainly due to bulk sale of butter and S&P. Our average procurement price INR34.9 per liter during the quarter and the same period of last year INR39.1 per liter for the same-period of the last year. Since we made a price cut in the previous quarter, this time around, we have kept our milk prices unchanged and are confident to sustain our robust volume throughout the year. Further, our efficiency in milk procurement from the farmers continue to help us manage our raw-material cost.
During the quarter, our Africa business delivered top-line of INR94 crores, which compromises 9.5% of total sales. Due to delayed monsoon, the procurement prices in the geography increased significantly. Recently, some pressure on the margins with the onset of monsoon, this has already begun to reverse in this quarter. The EBITDA margin in Africa for the quarter was 5.5%. On the other hand, Orgafeed, which is our animal feed business reported revenue of INR32 crores, representing 3.2% of our total sales. In the upcoming quarter, we expected strong festive demand for the ghee as well as sweets. Further, we will continue to pursue better S&P sales as a part of our VAP portfolio.
Now I would request our CFO, Mr, Murali to share the financial highlights of this quarter. Thank you.
Murali Mohan Raju — Chief Financial Officer
Thank you, Mr. B.V.K. Reddy sir, and Sunil sir and a very good morning to all the participants on the call. Talking about our quarterly performance in Q2 FY’25, the revenue from operations came in at INR998 crores versus INR768 crore in Q2 FY’24. In the quarter, our gross margin stood at 25.5%. There is a compression in GP margin on account of higher procurement cost in Africa. Employee expenses increased by 17% on a year-on-year basis. On an absolute basis, this is in line with Q1 FY’25. Other expenses, which are semi-variable in nature increased by 16.1% on a year-on-year basis. We reported an EBITDA of INR96 crores as against INR70 crores during Q2 FY’24 with a margin expansion of 50 bps. The net profit for the quarter stood at INR63 crore and margin of 6.4% is an improvement of 67 bps.
Coming to our performance in H1 FY’25, the revenue from operations came in at INR1,909 crores versus INR1,591 crores in H1 FY’24. We reported an EBITDA of INR201 crores as against INR131 crore during H1 FY’24. The net profit for the year stood at INR128 crores and margin of 6.7%. With strong performance in H1 FY’25, the company generated INR342 crores in cash from operations, solidifying our — the overall balance sheet position. With this, we conclude the presentation and open the floor for further discussion.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Nandita Rajhansa from Marcellus Investment Managers. Please go ahead.
Nandita Rajhansa
Hello.
Dodla Sunil Reddy
Yes, ma’am.
Nandita Rajhansa
Yeah. So sir, congratulations on an exceptional quarter. I mean, it’s commendable with the kind of operational performance that you keep [Technical Issue] yours. So my question was largely on the inventory side. So we saw that there was a INR150 odd crores drop in the inventory levels. Is this seasonal or is it structural? Can we see further inventory dip in the future going forward in FY’25 or is it going to rise?
Dodla Sunil Reddy
Basically it is the structural, ma’am. Whatever we had built up as inventory in the previous year is what we are liquidating in the current year. And once I think we are now entering into more of the lean season which comes in, I think we will see a further dip in inventory going forward.
Nandita Rajhansa
Okay. So further dip in inventory is expected?
Dodla Sunil Reddy
Yes.
Nandita Rajhansa
Understood. Thank you, sir.
Operator
Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go-ahead, sir.
Aniruddha Joshi
Yeah. Sir, congrats for a really excellent set of quarter this time. Just two to three questions from my side. One, how do you see the milk procurement prices be moving in, let’s say, H2 for this year? And again, means what is the outlook on the milk prices in FY’26? That is question one.
Secondly, also, how do you see the — in a way, cattle feed prices shaping up? So in a way because it is the raw material for the farmers, so how do we see that moving forward?
And in terms of the — in a way, profitability, is the sector near the peak of the profitability? So how should we think about the profitability going forward? Yeah. Yeah, that’s it from my side.
Dodla Sunil Reddy
Okay. Thank you very much, Aniruddha. I think regarding cattle feed, I asked BVK to answer whether the prices will go up or not. Broadly speaking, when we look at the procurement prices of the current year of ’25, there will only be marginal increases and we don’t think that it will go up substantially and status quo will be maintained. Regarding financial year ’26, we will have to wait till the summer of April, May, June comes in to play to see if this trend will continue or whether it will not continue. But bringing it in relationship to Dodla, we will continue to be aggressive on our procurement and try to maintain a higher procurement.
Regarding profitability, although I would say that we can maintain the status quo very comfortably, we will try to pass on any other benefit for the sake of growth. Broadly speaking, we will be able to maintain this absolute number and growth in the form of the absolute number, whether it is the trade-off between the larger quantities of commodity that we have got or if it is going to be the price increases or the increase that we get from our milk and milk products. Like we have been saying, we will be concentrating on an absolute profitability number increasing in tandem with our historical growth rate, but we will use our reaction to see whether we can manage with our own internal — internal between profitability.
Regarding cattle feed prices, I will ask BVK to —
B.V.K. Reddy
See, adding to say Mr. Sunil Reddy comments on the procurement also. See, the third quarter already one month is now we are very close to first month of third quarter and still prices are very stable, slightly maybe after Diwali, the milk procurement is going to go up for November, December. I don’t foresee any challenge in the procurement and maybe the prices may go up in the fourth quarter, not in third quarter much, number one that is. Number two, our feed is very stable and raw-material prices are very stable. Now maize and other prices also now see last one month I’ve seen yesterday also reviewed, prices are very stable. We are expecting a similar growth and the same profitability margin in Orgafeed also.
Aniruddha Joshi
Okay. Okay. Sure, sir. Understood. Now in terms of last question from my side, there is a good amount of cash on the balance sheet. Now I understand that the company has been evaluating in a way inorganic opportunities and as and when you are doing acquisitions also, we have seen that. But any immediate plan with that the excess cash on the balance sheet.
Dodla Sunil Reddy
So one is, as we have already announced in my talk earlier, we are giving an interim dividend and as we’ll try to see if INR3 per share, we will also be looking at by end of the year to see if it will be a little more of the dividend which will come in. We will start deploying a bit of the cash now on expansion in Maharashtra that we are doing now. And we will be looking forward for acquisitions as always. So I think immediate horizon, I don’t think there is anything we were looking at some which is not panning out, but we will be looking for acquisitions too.
Aniruddha Joshi
Okay. Okay. Sure, sir. Understood. This is very helpful. Yeah. Thank you.
Operator
Thank you. The next question is from the line of Abneesh Roy from Nuvama Wealth Management Limited. Please go ahead.
Abneesh Roy
Yeah, thanks. Congrats on the good set of numbers. My first question is on the entire controversy of Tirupati ghee and the analogue panneer, which came in Zomato in Delhi. So how widespread is this issue of all this mixing of fats, animal fats in ghee by the other smaller players, for example? And similarly in terms of panneer etc, if you could comment how widespread is the analogue panneer consumption? I’m sure in the branded space, it will not be there. But is there an opportunity for you to really seize this and do branding exercise and gain market share from some of the local and unorganized players in some of your markets?
Dodla Sunil Reddy
Basically regarding Tirupati, it is very controversial, but from an industry point of view, it is mostly that adulteration we have normally foresee comes from oils, not from lad as such. That is what I personally believe I think even the test reports will allow to that. And regarding analogue panneer, and other such products, they’ve always been in the market. It is predominantly between a price versus value. Like we were alluding to, I think as more and more awareness does come in, I think labeling requirements are becoming stringent and the norms are becoming even more stringent. And we will be actively trying to make customers more aware of what they require. Like for example, now even if there was a bit of a roughness about A2 milk where there was a notification given whether it should not be labeled or should be labeled because there is no testing and again, it was bought back things with labeling. But I think all of us are going to be doing our bit in terms of customer awareness and we are confident that it will help us as we go-forward because I think with the GDP of India growing and per-capita and consumption is also increasing, people will want better-quality products and we think all this is good and favorable in our terms because we will be able to educate the customers more.
Abneesh Roy
Sure. And one follow-up. So in terms of mixing of oil with ghee, again in terms of the local players, is that a very widespread issue? Because when I see pricing of ghee, the range is quite wide. So we are very premium ghee also and then we have got all the branded players in a tight range of, say, 10% pricing in terms of range. So how come there is so much of differentiation in pricing and how widespread is the oil mixing in terms of — in terms of ghee?
Dodla Sunil Reddy
So I think I can categorize it as broadly three categories. So, one which would be the super-premium ones, which people try to say it is done by the [indecipherable] method, I have done this and those are insignificantly small volumes compared to the overall pie. Although the per unit price will see — you will find ghee at INR1,000, INR1,500 a KG, the volume is very small and it’s a very niche kind of a market. The much lower prices where I think if what you’re alleging to will be mostly taken into the B2B scenario where people really don’t care and they’re looking at price. But the larger companies like all of us who are now fighting the battle of B2C and trying to be there, invariably will be along the same lines. It depends on the distances where we are, some might come out a slight bit more premium in terms of — because of the brand that they’re established. But broadly speaking, the more organized will be in a similar range when it comes to B2C. You will have the niche players with a very small volume on the top and the bottom of B where it’d be catered to a wide range of people.
Abneesh Roy
Sir, my second question is on the overall category FMCG in terms of consumption. So this time if you see the results of Nestle, HUL, Dabur and others also and DMart also, there is a slowdown which everyone is pointing towards in terms of the big cities. So if you could tell us in your markets how the big city consumption compares with the rural areas in your market for you?
B.V.K. Reddy
Our market, we have been seeing growth, sir because whatever we are selling the same names like DMart and whatever where we are retailing also we have seen reasonable offtake and uptake coming in. So we are seeing no slowdown, but the growth to be maintaining growth trajectories even in the big city.
Abneesh Roy
So you’re not worried because of the very high food inflation, vegetable inflation, you are not seeing any kind of impact for you in —
Dodla Sunil Reddy
Because this year, I don’t think we have taken much of price increases. In fact, because of — on the back of good procurement prices, we have further made it more comfortable for the customers and passed on a bit of the margin profile to the customers. So we don’t see much of pressure on our growth.
Abneesh Roy
Understood. That’s all from my side. Thanks a lot.
Operator
Thank you. The next question is from the line of Vinamra Hirawat from JM Financial Limited. Please go ahead.
Vinamra Hirawat
Hi, sir. So a few questions. Firstly, will there be any impact from the excess rainfall in South India in October in our Q3 numbers?
Dodla Sunil Reddy
Basically, it’s a seasonal vvariance depending on how much of impact it will be with the cyclone, maybe we’ll lose a couple of days of sales or revenue, but the difference will be very small. It won’t be significantly impacting compared on quarter-on-quarter. It will maintain a good quarter and continue to grow. As you — as a seasonal impact of what we had previous, you will find a little bit of a difference, but nothing major. Because now we are spread across all the four or five states, so we don’t get impacted with rainfall in one particular area being that much or one being lesser.
Vinamra Hirawat
Okay. Okay, makes sense. So regarding the VAP, should we expect similar growth in the sale of butter and skim milk powder? And want to know what the margins for these two products are?
Dodla Sunil Reddy
So basically, sir, like we said earlier, skim milk powder will not have much of a margin because we will look at it from a seasonality point-of-view and how we sell it. Regarding ghee, we are again pushing a lot of it going through B2C rather than bulk butter. So between bulk butter and S&P powder that we are selling, we might have a very small margin, which there is a reason why you might see a little compression happening between Africa prices [indecipherable] and butter in terms of gross margin. But like we always keep saying, we keep in mind the absolute number growth and keeping that in mind, we keep offloading our butter and ghee keeping making sure our absolute profitability number increases.
Vinamra Hirawat
Okay. And just finally, can you divide the sales volumes of liquid milk between India and Africa? I think we have the sales volume numbers, but just wanted it for India and Africa and can you give it for FY’24 as a whole and Q1 and Q2 of FY’25.
Dodla Sunil Reddy
So basically, you’re saying you want milk number of Africa and milk number of India for the whole year of FY’24 and half yearly of FY ’25, correct?
Vinamra Hirawat
Yeah. So the sales volumes just divided that in India and Africa?
Dodla Sunil Reddy
BVK will answer that.
B.V.K. Reddy
I will answer, sir. Last year you know see Africa — see India was 13.47 lakhs in FY’24 last year and Africa was 1,11,000 FY’24 and this H1 of ’25, so India is 14.13 and whereas in Africa is 1.78.
Vinamra Hirawat
Sorry, this is procurement or this is sales?
B.V.K. Reddy
This is only sales.
Vinamra Hirawat
Sales volumes, right, liquid milk?
B.V.K. Reddy
Yes.
Vinamra Hirawat
Okay.
B.V.K. Reddy
You want procurement number also?
Vinamra Hirawat
No, the sales is fine. Thank you.
Operator
Thank you. The next question is from the line of Mythili Balakrishnan from Alchemy Capital Management. Please go-ahead.
Mythili Balakrishnan
Hi, I hope I’m audible.
Dodla Sunil Reddy
Yes, ma’am.
Mythili Balakrishnan
Congrats, sir, on a good set of numbers. Just had a couple of questions. One, could you quantify how much of the value-added products were bulk products this time around?
Dodla Sunil Reddy
Yes ma’am. We will — so basically, it is only S&P that is there. Murali will give you the specific number of how much the bulk number was.
Mythili Balakrishnan
Out of this INR378 crores, just wanted to get a sense of how much is bulk kind of products.
Murali Mohan Raju
Yeah. So bulk madam, for the full half year, we are saying that butter is around INR153 crores and S&P is around INR48 crores we have said in the full half year madam.
Mythili Balakrishnan
And for the quarter —
Murali Mohan Raju
Overall in the Q1, the breakup is like INR35 crores in Q1 and INR166 crores in Q2. That was the breakup.
Mythili Balakrishnan
Got it. Just wanted to get a sense, right? If we look at the gap between the procurement and the sales, it’s still a healthy gap that we have. So we will continue to see these kind of sales as far as the S&P and bulk butter is concerned, right?
Dodla Sunil Reddy
Yes ma’am, they will continue to happen.
Mythili Balakrishnan
Got it. Got it. And in terms of the milk, right, we are seeing now an uptake as far as the volumes are also concerned and coming now at 6%. Is that the trend that you are seeing should continue into the festive and beyond that as well? With geography increase —
Dodla Sunil Reddy
October, November, December, we would see a little bit of muting of milk and milk products because of the weather being colder, products like curd and things do come down a bit, which will be offset by a little by the ghee sales that we’re doing. It is more because now we are aggressively pushing brand marketing and we’re pushing it a lot more that we are seeing this uptake. I think we will maintain maybe if not similar growth, but we will maintain growth. We’ll maintain some kind of growth in the coming quarters too.
Mythili Balakrishnan
Got it. Got it. And my last question was on capex. We have not had a very-high capex so-far this year. Just wanted to get a sense if there is something that we can expect in the second half, especially with the land acquisition done for the Maharashtra plant.
Dodla Sunil Reddy
We will be having a little bit of capex going-forward. I think because the Maharashtra plant acquisition, land has just begun, we will start doing work will commence now. And other capex is which we are doing, I think we are on-target with whatever we have budgeted for the capex, which is to the extent of —
Murali Mohan Raju
Regular capex madam, we have spent around INR43 crores in the full half year that was — which is in-line with our normal trend. And only Maharashtra, we are able to come up with the proper Maharashtra also —
Dodla Sunil Reddy
Maharashtra, we have acquired 35 acres land and further some more land also we’re going to acquire. And by end of this November, we will start civil operations. So the clear picture, the clear total project costs we’ll give in next quarter. So some capex —
Mythili Balakrishnan
Capex will be spread over two years, right —
Dodla Sunil Reddy
— in the third and fourth quarter.
Mythili Balakrishnan
Got it. But the capex will happen over just in FY’25 only or will it spread over to FY’26 as well?
Dodla Sunil Reddy
It will spread over ’26 also. Maximum capex will happen in ’26.
Mythili Balakrishnan
Maximum in FY’26. Got it.
Murali Mohan Raju
’25 to ’26 financial year.
Mythili Balakrishnan
Got it. And if you could just give us some points on the Africa business, how has it seen in terms of volume growth, in terms of what are your plans there as far as value-add, etc., is concerned?
Dodla Sunil Reddy
So Africa has actually done well in terms of volume, ma’am, BVK will give you the specific numbers. And also profitability on an absolute number basis has maintained growth. Also on a percentage basis, it’s taken a slight beating because of low milk — high milk prices in Kenya when there was a shortage of milk. But we are very confident in the coming — remaining six months, Africa will do well for us. It will be doing in terms of good numbers. We would also say that we are — the dividend that we are declaring now is actually coming from our proceeds from Africa, which was in Singapore, which are getting back to India in terms of that and that is what we’re dividending now to our shareholders. BVK will give you more specifics about how we — the growth that we have seen in terms of volume and where we are now.
B.V.K. Reddy
Yeah, last year, we have done only 111,000 liters, but now see H1, we have done almost 1,78,000 liters. So roughly about 58,000 liters, 60,000 less growth from the Africa because since we have seen commenced new operations from Kenya that has started only in the month of March this financial year. So that has given around 30,000 liters additional volume. And also existing plant from Uganda also, there is a volume offtake high. So put together 55,000 to 58,000 liters, the more volume has come from Africa.
Dodla Sunil Reddy
And also the product range and milk have been maintaining the same proportion between yogurt that we are one of the largest sellers of yogurt and milk that we sell in [indecipherable] milk.
Mythili Balakrishnan
Got it. But as of now, we are still ramping-up Kenya and the focus is on that. So there is no — but that’s not much more investment which is going to happen in Africa.
Dodla Sunil Reddy
No, no more investment, not in the near-future till we stabilize both Uganda and Kenya, there will not be investment there. Yes.
Mythili Balakrishnan
Thanks a lot and congratulations on a very good set of numbers.
Dodla Sunil Reddy
Thank you,, ma’am.
Operator
Thank you. [Operator Instructions] The next question is from the line of Jainis Chheda from Spark PWM Private Limited. Please go-ahead.
Jainis Chheda
Good morning, sir, and congrats on the good set of numbers. A couple of questions from my side. First is that in fact in Q2 FY’25, gross margins on a Q-o-Q basis as well as on Y-o-Y basis have come down. Of course, you mentioned that Africa was one of the factors. But I suppose Africa contributes roughly 10% of the total revenue while 90% is still from India. So any particular reason why you didn’t pass-on the price changes to customers in the current quarter?
Dodla Sunil Reddy
So Africa is one thing, sir, because Africa normally it’s seasonal and it is in tandem with the season. This year the season was a little bit lower and then again, October itself is recovered and back to normal. So that is a normal trend that we do and we don’t do it immediately as a pass-on because it’s not permanent in nature and it’s only that one, two months differential which is going as per sanction. The other reason is also the butter and ghee — butter and S&P that we have sold, the volume or so sale in those is higher, although the margin might be a little smaller in that. Combination of these two is the reason why you see a gross margin drop marginally. But on an absolute number basis, we’ll keep growing.
Jainis Chheda
Exactly. So that thought if you can like going-forward, if it’s possible for you to share a segmental breakup in terms of margins as well in terms of VAP and milk, that will give us a bit more clarity in terms of where the things are moving forward. So that’s one suggestion from my side.
Dodla Sunil Reddy
We will be giving the segmental numbers. We’ll put it up on the websites also.
Jainis Chheda
And second question to do is how — where will we peak in terms of our share of value-added products in total revenue at what percentage? Because it has been going up significantly higher in last three quarters. So where do we see it being stabilized in terms of percentage share of total revenue?
Dodla Sunil Reddy
So I think it will be in the same current trend what we are maintaining. We’ll be in the same trend of what we are seeing as value-added products. I think now this year, we’re showing it as 39%. We will continue to keep it in those ranges of 39% to 40% is what we think it will be.
Jainis Chheda
Right. So in terms of steady-state margins, we can assume it’s somewhere plus or minus 100 bps from the current levels?
Dodla Sunil Reddy
Yes, sir.
Jainis Chheda
Okay. Thank you so much. That’s from my side. I’ll join the queue.
Operator
Thank you. The next question is from the line of Tanish Mehta from ithought PMS. Please go ahead.
Tanish Mehta
Hi. So my first question is regarding your Africa business. So for the quarter, EBITDA margins in Africa business were one of the lowest, which is at 9%. So if you could just give the reason for that? Okay. And my second question was regarding the inventory levels also and they have gone up in Africa and I was wondering whether it is a seasonal thing or do we anticipate a rise in procurement rising and that’s why building up inventory?
Dodla Sunil Reddy
No sir, it’s basically that as we said, the seasonality when it came in is why Africa inventory was went up a little bit because it’s between Uganda and Kenya and where we do cross-border sales is sometimes when we get permission, we try to move more milk from Uganda. And if it is not there, we sell it in Kenya only. So that will be a smaller difference. In terms of profitability, although the prices went a little steeply because of a more shortage, that is why you see the difference, but I think it corrected instantly once the rains have come and you’ll see that in the current quarter where the movement upward will happen rapidly.
Regarding the inventory levels of India, I think we will continue to keep bringing that.
B.V.K. Reddy
Yeah, yeah. It has reduced already. If you see last March, we are at around INR390 crores. Now we are at INR231 crores. There is a INR147 crores of reduction in inventory. And whatever we built-up in the current six months that also we sold-out. So we’ll continue like a very aggressive like a net buyer only, okay? And yeah, net seller.
Tanish Mehta
Okay. Thank you. And my second question was regarding the Orgafeed registered at 13% margins in H1. So are these margins sustainable or is it because of higher feed prices, which may fall down in the future?
Dodla Sunil Reddy
No, it will be sustainable. So plus or minus 100 bps this way that way depending on the commodity, but otherwise because it’s — we basically are doing it more as more efficient now our bigger plant has come into operation. I think we can maintain this.
Tanish Mehta
Okay. Okay. Yeah. Thank you so much. Appreciate it.
Operator
Thank you. The next question is from the line of Rishabh Gang from Sacheti Family Office. Please go ahead.
Rishabh Gang
Hello, sir. Thank you for the opportunity. Am I audible?
Dodla Sunil Reddy
Yes, Rishabh, you are audible, Rishabh.
Rishabh Gang
Yeah. So with respect to the expansion plan in Maharashtra, if you can just share some information on what are the current operations on the distribution front in Maharashtra as well as any broad game plan for Maharashtra that you have? And by when like can we start expecting the distribution to start like to increase? And how do you look while assessing where to enter and what are your return requirements or payback period in mind like while doing this kind of capex?
Dodla Sunil Reddy
BVK will give more definitive answers about the Maharashtra when we start to do and what is our penetration. But regarding returns, we normally plan returns between five- to eight-year period is what we look at as getting the return on investment back, whether it is an acquisition, whether we do our own greenfield, that is regarding the return. I think BVK will give you the specifics of when we will start the operation and what we look at as growth —
B.V.K. Reddy
Maharashtra, we are already procuring 2 lakh liters of milk every day and we have been in the operation since three years. Now recently, we acquired land. And by ’26 April — by ’26 April, we are planning to start — commence our operations in Maharashtra. So maybe it will take 15, 16 months-to complete the project. So it is an integrated project. So there we’ll make milk, curd and also S&P, butter and ghee.
Rishabh Gang
And what is the land cost?
Dodla Sunil Reddy
So for now, see 35 acres land we have taken for INR10 crores and because it’s a converted land and not realization cost, everything is added INR1 crore. So it has become INR11 crores over now. So further, some more land also we’re going to acquire because since we are planning to set-up a bigger plant, 10 lakhs, 10 lakh liters capacity plant. So some adjoining lands also we may acquire.
B.V.K. Reddy
It is also going to be done in a staged manner. We’ll start the Stage 1, Stage 2 because we’re looking at it as a significantly large plant for us.
Rishabh Gang
Also, any guidance that you give regarding the revenue and the margins for next one or two years?
Dodla Sunil Reddy
We will maintain the status quo what we are doing currently, sir, the 10% by volume and 15% by value is what we keep targeting and maintaining the profitability also at current levels is what we will be pushing forward for.
Rishabh Gang
Also on the inventory side, like how much inventory of milk powder do you actually carry at the moment?
Dodla Sunil Reddy
So milk powder inventory we are carrying now, I think exact number will be given by —
B.V.K. Reddy
September ’24, sir, S&P we have around 4,200 tonnes we hav.
Rishabh Gang
And in terms of value?
Dodla Sunil Reddy
In terms of value, that would be around S&P and butter put together INR240 crores is a inventory value.
Rishabh Gang
Around INR111 crores. Only S&P. Just a last question. And what is any distribution strategy for the value-added products that you have in states where we don’t have any procurement function, right, where we are just selling this VAP like icecream and all. Do we have —
Dodla Sunil Reddy
[Technical Issue] sir, we are doing ghee as a major push, which we are now selling across pan-India, which we do a bit in the Northern Indian states also, but we will be doing more of the icecream because it will be in areas where we operate and we concentrate because we have the advantage of having their own cold chain across the states where we operate. We’re also pushing more of branding and pushing through the market. So we will see a little bit of uptake in our largely consumer sales, which will add to our growth in value-added products.
Rishabh Gang
All right. Thank you so much, sir, for the insights.
Dodla Sunil Reddy
Thank you, sir.
Operator
Thank you. The next question is from the line of Abhishek Mathur from Systematix Group. Please go ahead.
Abhishek Mathur
Yes, hi, sir. Thank you for the opportunity. And just coming back to the gross margin decline that we saw in the quarter. You shared that one reason was the higher amount of butter and S&P that we sold where there are margin is smaller and volume is higher. So if possible, if you can share the proportion of butter and S&P in the total VAP sales that we have and also the indicative margins for these two segments? And also secondly, if you can share the consol procurement, milk procurement cost and consol sales realization for the quarter. That’s it. Thanks.
Dodla Sunil Reddy
So if I can get the question right, you want to know the consol sales volume and price for liquid milk and you want the breakup of the quantum of fat and S&P that we have sold?
Murali Mohan Raju
[Technical Issue] VAP sales is around INR401 crores. Out of that INR200 crores is the bulk sales, plus INR23 crores is VAP product. So total out of INR4,030 crores, INR200 crores is this one, okay. And second is the question is —
Dodla Sunil Reddy
— the quantity of milk and the consolidated volume of procurement and sale of milk.
Murali Mohan Raju
Okay. Milk procurement consolidated is — for the — half year — for this quarter is INR17.2 per procurement of this and overall last year it is 16.78.
Abhishek Mathur
So just needed the consol milk procurement cost and the realizations per liter.
Murali Mohan Raju
Okay. Procurement consolidated cost for this quarter is INR34.64. And revenue realization is 66.86 for this quarter, including S&P and butter.
Abhishek Mathur
Thank you, sir. And if possible, if you can share the indicative margins for the butter and S&P segments within VAP?
Dodla Sunil Reddy
Yes, we’ll try to send it to you after the call, sir. Again, just to bifurcate bulk and consumer and retail little and we’ll send that to you.
Abhishek Mathur
Sure. Thank you, sir. That’s all from me. Thanks.
Operator
Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead.
Nikhil
Yeah. Hi, good morning and congratulations on good set of numbers. I had two questions. One — one is on the — there was a question which someone asked on next two years and you said we will try to maintain our profitability at this level. And even in — during the beginning of the call, you said we will focus on more on absolute earnings growth. While if I go back to our previous calls, we used to say that our EBITDA margin should remain in that 9% to 10% range. So is there a change in how you are thinking or do you also believe that this kind of profitability of 9% to 10% may not sustain in future and that’s why focus is more on absolute growth versus maintaining the margins. How are you looking at like?
Dodla Sunil Reddy
So basically what we’re saying is we will maintain this 9% to 10% margin growth. So for expansion of margin, maybe there might be a little correction here and there in terms of because the top-line might increase even more dramatically if we go into more of a commodity in one year of a season. So we will try to maintain the same EBITDA margins and therefore the absolute number will also continue to grow. Even if there is a slight correction in terms of the EBITDA margin in terms of percentages, the absolute number will continue to be healthy and grow stronger because overall revenue might increase. If the other way around, if it is a little bit of a lesser revenue, you might see the EBITDA percentage increasing. So that EBITDA percentage, not to consider that as a final number, but more the absolute numbers is where as a business, we take a call in terms of when we have opportunities to grow more rapidly and when we see that the growth is coming in. We’d rather push more growth and take maybe a slight correction in terms of EBITDA. And the other way around happens, we push the EBITDA and keep the absolute number the same or improve the absolute number.
Nikhil
Okay. And second question was on the inventory. And Sunil sir, you had mentioned in previous meetings and calls that we would now focus on building inventories. Now if I look at our inventory level today, we are back to like two years back. So over the next six months, we would continue to follow the strategy, which we started last year of building inventories during the flush season to move over the weaker season and then probably liquidating or is there a change in that thought process?
Dodla Sunil Reddy
It’s the same proposition. We will be continuing to aggressively keep pushing our procurement and going-forward and improving our procurement and keeping the inventory levels. So we might use it to our own — a little bit of more to our manufacturing facilities available with us in terms of conversion to the season. We might be doing a month or two of corrections here and there, but we will overall maintain a better inventory position.
B.V.K. Reddy
Not only that, normally in the fourth quarter, there will be no butter movement. Normally butter movement sales will not happen in the month of January, February, March, April, that particular months. That’s why we will see inventory levels are slightly high. But as you know, in the second-quarter now when festive season starts, the prices also will be better and the movement also better. That’s why we have seen a lot of offtake in the second quarter.
Nikhil
Okay. But over the next six months, there again will be a larger inventory.
B.V.K. Reddy
Yeah, it will be building up.
Nikhil
Okay. And last question, you were also looking at entering the Eastern markets. So any developments over there like —
Dodla Sunil Reddy
That will be — that’s the reason we’ll be pushing Maharashtra, sir. The Eastern markets I think will be postponing for a while because we are trying to enter and we’re not finding suitable opportunities. As and when they come up, we’ll go-forward to the Eastern markets.
Nikhil
Okay. Thanks. I’ll come back in queue.
Operator
Thank you. The next question is from the line of Jayvansh Mehta from Care PMS. Please go ahead.
Jayvansh Mehta
Yeah, good morning, sir. Thank you so much for the opportunity and congratulations on a good set of numbers. Most of my questions have been answered. So sir, basically what you’ve declared a dividend of INR3 interim for — in the recent quarter. So will it be like — will we be maintaining the 15% payout in the future or are we looking at some other investments of cash?
Dodla Sunil Reddy
No, we will be trying to maintain this, sir as a dividend policy going-forward, we will keep declaring dividend is what we are looking as our regular feature.
Jayvansh Mehta
Okay. And sir, secondly, sir, if we like remove the butter and skimmed milk part of sale, then VAP has not really grown so much. Are we seeing a slowdown in the value-added sales?
Dodla Sunil Reddy
No, so the VAP in terms of absolute number has grown because the overall pie is looking bigger, the percentage might seem smaller, but VAP has also grown for us in terms of the number that it is there in terms of curd has grown, if you compare last year from INR378 crores to almost INR400 crores in the current year in terms of what curd has grown.
Jayvansh Mehta
Okay, sir. Last question was, sir, can you like you said we will be acquiring more land for the Maharashtra capex. So what are the total capex have been looking at Maharashtra, if you can just give a rough number if you have it?
Dodla Sunil Reddy
The rough number right now, sir, because we will — between INR200 crore to INR250 crores is what we are looking at as an overall project cost, which will be done in stages. We will have more specific numbers by the end of December when we start to move forward.
Jayvansh Mehta
And sir, lastly to confirm that we are expecting it to commence from April ’26, right?
Dodla Sunil Reddy
April ’25 — targeting April ’26 or maybe a little earlier, a little later one, two months this way that way can be the range.
Jayvansh Mehta
Okay. Thanks so much. That’s it from my side and thank you, all the best.
Dodla Sunil Reddy
Thank you so much, sir.
Operator
Thank you. The next question is from the line of Naitik from NV Alpha Fund. Please go ahead.
Naitik
Hi, sir. Congrats on a good set of numbers. My question is, can you give us the mix of S&P plus butter in the VAP? In VAP, can you give the mix between, say, S&P plus butter and rest of the VAP?
Dodla Sunil Reddy
S&P plus butter will be one and then we will not be concluding green to that because that’s B2C that we have. I think will Murali can give you the specific.
Murali Mohan Raju
S&P we have done around 21,000 liters. Basically it’s around INR210 crores. So the value-wise INR40 crores we are saying and butter we have around INR126 crores. So if you remove these overall VAPs, we have done around INR189 crores in the VAP and fat products around INR22 crores, that is almost on INR211 crores we have done in the products other than S&P and bulk.
Naitik
211. And how do you see this going forward? I mean, is the mix going to remain similar or otherwise —
Dodla Sunil Reddy
If we have done well, our panneer, for example, is almost doubled from what we were selling previous year. There is a slight mutation because of icecream because of too much of rains and monsoon, otherwise it would have been far better, but we are doing well with our curd, consumer ghee and panneer, all have grown for us.
Naitik
Okay. Okay.
B.V.K. Reddy
And ghee also like consumption, last year we done around INR11 crores, now we have done around INR21 crores. There is substantial increase in the ghee consumer sale.
Naitik
Got it, sir. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Resha Mehta from GreenEdge Wealth Services. Please go ahead.
Resha Mehta
Sir, I [indecipherable] one just wanted to understand with such sharp spike in your butter S&P sales, so would it be fair to assume that with this new inventory policy that we have, it would be very normal to see such spikes in butter S&P sales going forward?
Dodla Sunil Reddy
You won’t see such spikes, but because this current year is where we have actually moved up from being a net buyer to a net seller. So the years going-forward, we will enhance going to be as a proportionate of our growth. Whatever we do as overall B2C, maybe this will contribute the same levels of what we are now. So you won’t see spikes, but we’ll be maintaining more equivalent in terms of profitability because this will help us in maintaining our price stability. And for — like I’ve been explaining earlier, if there is a reduction in price of milk, the selling of butter and the powder might seem to be a little lower-value, but milk compensates for that in terms of profitability. And the other way around when there is a shortage of milk and milk prices go up, these will give us more profitability. So this will be easing out, I say. In terms of growth, the spikes will not be there, but as an overall growth, this will also fuel the growth in terms of the percentages because we are adding a whole new segment of growth for us.
Resha Mehta
Right. And a related question, so we don’t have the numbers handy for margins of each of these products S&P, butter and the rest of value-add products handy. If you could just share that and just a clarification here. So you mentioned in the previous participant that almost half of the INR380 crores of VAP sales came from butter and S&P in this quarter. And also were there any fat provisions for this quarter that we took?
Dodla Sunil Reddy
No provisions made for this quarter. No provisions made. And basically like margins is whatever we had done as our March NRV and that’s what we are looking at and selling and there is no provisions that we are making and the status quo maintains on profitability.
B.V.K. Reddy
We are reversing the presence whatever we made it in the earlier periods. Based on the sales, we are reversing it. So we always mark-to-market. So there is no change in the mark-to-market prices over the last five, six months. So we are following that conservative approach. We are in line with whatever we have estimated.
Resha Mehta
So no provisions and also — so zero provisions for this quarter and also out of INR378 crores of VAP revenues for this quarter, how much of that comes from S&P and butter? And again, S&P and butter would essentially be all bulk sales or would there also be some B2C element there?
Dodla Sunil Reddy
Yeah. In what we call as butter and the butter and powder is what skim milk was powder and butter, Murali will give you the specific details. We also sell a portion of the ghee in terms of our consumer retail, which has increased. So specific numbers, Murali will give.
Murali Mohan Raju
Total, madam, for this quarter, we had done around INR378 crores of turnover. Out of that S&P is around INR40 crores and butter is around INR126 croresif we remove it. So we have done around INR211 crores of other than bulk, B2C–
Resha Mehta
Which is including the INR22 crores.
Murali Mohan Raju
Yes, including it.
Resha Mehta
And S&P and butter is all bulk sales and ghee is all B2C that we do, right?
B.V.K. Reddy
Yes, yes. So last year the same quarter after removing the business B2B sale, it is around INR195 crores, there is a growth we have seen it.
Resha Mehta
Right. And lastly, just on the Africa business. So Kenya specifically, so since you’ve just started operations in Kenya, just wanted to understand the seasonality. So would in around, let’s say, Q2, would it be normal for there to be milk shortage there? And so on an annual basis, would it be fair to assume that Africa margins will dip in Q2? And so if you could just explain the seasonality in terms of milk in Kenya? And second, since you’ve guided for a value growth of 15% and if we look at this financial year, H1, we’ve already done a 20% top-line growth. So would you want to revise your top-line growth guidance at least for the current financial year?
Dodla Sunil Reddy
Ma’am, regarding Africa, BVK will give you more specifics. This is what we look at as 20% that we have already done and 15% of what we have been committing. So in the dairy industry, the seasonality does play a role of 2%, 3%, which will be up in one year, which will be lower in one year. Our guidance that we normally given 15% growth is saying that on an average CAGR growth is what we maintain. So I think this year will be a good year, maybe next year might be a little lower year, but we will maintain in the range of the 15% as we grow forward. Regarding Africa, BVK will explain about the seasonality in Kenya and how we are doing it.
B.V.K. Reddy
Yeah. Kenya especially now the — for Q1 normally the prices gross margin will be very-high. If you see from Q1 to Q2 this year, especially from 40% to 25%, it has dropped because of that gross margin is impacting that. Normally, in the Q2 gross margin, gross margin is less, see, last couple of years also we have seen. And this year also this year is slightly higher side because of delayed monsoon. So that is a variation. Otherwise, Q3 again it will come back.
Resha Mehta
Okay, in Q2, what was the gross margin you mentioned, sorry.
Dodla Sunil Reddy
So this financial year, first-quarter it was 43% and second-quarter is only 20% to 25%.
Resha Mehta
Got it. Got it. All right. Thank you. That’s it from my side.
Dodla Sunil Reddy
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Deepak Pawar from Vasuki India Fund. Please go ahead.
Deepak Pawar
Hi, am I audible?
Dodla Sunil Reddy
Yes, sir. Deepak.
Deepak Pawar
Yeah. Congratulations on the good set of numbers. I have two questions. First is [Technical Issue]. And secondly —
Dodla Sunil Reddy
You are breaking up, Deepak sir.
Deepak Pawar
Hello. Am I audible?
Dodla Sunil Reddy
Yes, sir.
Deepak Pawar
So do we procure milk from cooperatives?
Dodla Sunil Reddy
No, we don’t procure milk from cooperatives. In India, we don’t procure milk from cooperatives. In Africa, we procure at a village level what is called an association of people, not a cooperative.
Deepak Pawar
Okay. And second question would be, sir, that White Revolution 2.0. Would there be any benefits to us?
Dodla Sunil Reddy
White Revolution 2.0 is more in terms of the whole industry trying to get better and talking about a larger play that India will be in the global scale. So that is what our Honorable Home Minister has announced, saying that we will try to get organized cooperative to be larger, productivity to increase. So all these are the right signs for the overall business to grow from India as a country, like they wanted to do foot-and-mouth free, which will give us a larger global label in the future as we go forward.
Deepak Pawar
So no direct or indirect benefits to us?
Dodla Sunil Reddy
No, sir. No benefits, sir.
Deepak Pawar
All right. Thank you.
Operator
Thank you. The next question is from the line of Praful Siddharth from Shravas Capital. Please go ahead.
Praful Siddharth
Hello, sir. Congrats on good set of numbers. I just wanted to know what’s the sales realization during the quarter — the consol sales realization.
Dodla Sunil Reddy
Yeah, consol number realized —
Murali Mohan Raju
56.86 is the consol for this quarter. Standalone 68.16.
Praful Siddharth
Just the milk, just the liquid milk, what’s the sales realization?
Murali Mohan Raju
No, it is not the milk, it’s a combined number. Only milk price you want, standalone is basically 55.60 only milk, yeah, sorry 55.1.
Praful Siddharth
Got it. So sales realization is 67 on consol level and procurement IS INR35, correct?
Murali Mohan Raju
Yes, sir.
Praful Siddharth
Okay, thank you. Thank you. That’s it from my end.
Operator
Thank you. Ladies and gentlemen, due to time constraint, we’ll take this as a last question. I now hand the conference over to the management for closing comments.
Dodla Sunil Reddy
Thank you everyone for joining us today on this earnings call. We appreciate your interest in Dodla Dairy. If you have any further queries, you can please contact SGA, our Investor Relation Advisor, and we’ll get back to you as soon as possible with all your queries. Thank you.
B.V.K. Reddy
Thank you.
Operator
[Operator Closing Remarks]