Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Dodla Dairy Ltd (NSE: DODLA) Q4 2026 Earnings Call dated May. 18, 2026
Corporate Participants:
Dodla Sunil Reddy — Managing Director
Venkat Krishna Reddy Busireddy — Chief Executive Officer
Murali Mohan Raju Reddycherla — Chief Financial Officer
Analysts:
Praveen Kumar — Analyst
Abhishek Mathur — Analyst
Unidentified Participant
Aditya Khandelwal — Analyst
Ankit Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Dodla Daily Limited Q4FY26 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 the 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 participant lines will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dodla Sunil Reddy, Managing Director of Dodla Dairy. Thank you. And over to you sir.
Dodla Sunil Reddy — Managing Director
Thank you very much. Good morning to all the participants. On behalf of Dodla Dairy Ltd. I extend a very warm welcome to everyone joining us on our call today. On this call I’m joined by our CEO Mr. BVK Reddy, CFO Mr. Murlimohan Raju and SGA, our Investor Relations advisors. I hope everyone has had an opportunity to go through the financial results and investor presentation which have been uploaded on the stock exchanges and our company’s website. Now coming to the business financial year 2026 was a year that tested the dairy industry.
Milk supplies remained constrained for most of the year. Procurement cost inflation was sharp and erratic. Rainfall affected demand for certain value added products in some regions. Against that backdrop, DURLA daily delivered resilient performance. Revenue growth was 11% year on year. EBITDA margin stood at 7.5% and a PAT margin of 6.5%. Notably, the performance is overall on the healthy basis. FY25 which was which delivered an exceptional growth of almost 20 years over the previous. To better understand the trends of the dairy industry, one should look at the three to four year cycle.
On that basis our four year CAGR stands at a healthy level of 16%. Based on our growth and expansion plans for the next three to four years, we are confident to maintain or even surpass this CAGR number in the long run. The pressures we faced were industry wide. In such tough times, the diversifications which we have built via Africa and Orga Feed played a critical role. Now coming to the quarter performance. During the quarter we recorded our highest ever revenue growth for the fourth time in a row with a top line of rupees 1074 crores reflecting a year on year growth of 18% primarily driven by Volume expansion.
EBITDA for the quarter stood at 5.5% and PAT margins stood at 6.5%. Margins remained under pressure due to elevated milk procurement costs and a calibrated pricing strategy. An increase in procurement price was not fully passed on to the selling price to maintain the market share. Our pricing strategy is in line with the overall industry. Going forward, the situation is turning positive. Milk supply is improving which would result in a normalization of procurement costs for milk sales. Some price hikes will also be considered.
Some trends are already visible where a few of the northern players have already increased their milk prices. Our value added product segment witnessed steady performance during the quarter Due to operational variability. The overall VAP portfolio could not grow to its full potential. Once our planned expansion fully stabilizes our planned expansion directionally, we are confident that the VAP mix will improve further. This growth will be delivered by curd, paneer and ice cream and broadly we are Targeting closer to 32 to 34% in terms of VAP contribution, Africa business recorded a revenue of Rupees 151 crores reflecting a robust growth of 48% year on year driven by more than 60% growth in liquid milk sales.
As a result of continuous increase in the scaling of business along with better operational efficiency, we have achieved our highest ever ebitda number of rupees 18 crores in Africa and this is for the quarter the fourth quarter. The decision that we took 12 years ago to extend our footprint in Africa has now become an important engine for long term growth of the company. We see Africa scaling towards 15 to 18% of consolidated revenue by FY28 supported by a phase two expansion in Uganda which will include pasteurized milk and milk products that will be sold in Uganda.
Orgasmit business delivered a strong revenue growth of 23.2% year on year with a slight dip in margin as a factor of higher raw material costs and expansion of our footprint of distribution. This business complements our core dairy operation to the strategic angle. It helps in strengthening farmer relationships through assured feed supply and creating an important loyalty loop in our procurement network. OSAM business reported a steady progress with our focus remaining impact on enhancing operational efficiencies in this business to improve profitability.
I also would like to welcome Ms. Douglas Silpa Reddy who got appointed by the board as a senior management personnel for strategy and transformation. Silpa has spent considerable time understanding the business across verticals and now she’s increasingly taking responsibility in the strategic and operational areas. Now speaking about the operation expansion project, our Maharashtra project is progressing as per the scheduled timelines and is expected to start commercial operations by the end of FY27.
The work is under progress and rupees 106 crores worth of capex has already been deployed cumulatively across 25 and 26. We have also made decent progress towards improving our operational efficiencies of the OSAM business, improved its product quality and upgraded the infrastructure. We should continue in this direction till margins are at par with the overall company level margin. We were also allocated a seven acre land parcel by the Dr. Industrial Area Development Authority for a dairy project which will call for additional investment of around 4.4 crores towards the land.
The project is presently under consideration and further details shall be disclosed after board approvals on the Uganda Expansion plan. We acquired 70 acres of land parcel for a greenfield expansion. Total CAPEX budgeted for this project is currently around 60 crores including land as well as the plant. It will be executed in a phased manner and will be completed by year end of 29th. Before I hand over to BDK, let me share our directional views for FY27. We expect revenue growth to be in the low to mid teens supported by OSAM’s full year contribution, Africa continuing on its current trajectory and an 8 to 9% organic growth in our India business.
We are expecting a gradual Gross margin recovery of 50 to 100 basis points over FY26 level as procurement normalizes and our pricing actions take effect. Effective tax rate will return to the normal 25 to 27 range post completion of the favorable tax orders we received in FY26 on capital allocation. Let me articulate the firm clearly. Our priority order is first fund growth capex where Maharashtra, Uganda and our current regular capex are both covered from our internal accruals. Second regular dividends.
Third selective bolt on acquisitions where we see procurement or distribution synergies. The combination of strong company fundamentals, a clean balance sheet, healthy cash flows and all of these growth initiatives underpins our commitment towards a disciplined capital allocation and long term sustainable growth of the company. With this brief I will now hand over to our CEO of the company, Mr. B.V. P Reddy. Thank you very much.
Venkat Krishna Reddy Busireddy — Chief Executive Officer
Thank you Mr. Sumil Reddy. I will now walk you through the consolidated performance highlights of our business during the quarter. Despite a shortage of milk in overall industry, our milk procurement level remains stable at 18.5 lakh liters per day which is an increase of 13.4% on a year on year basis underscoring the strength of our procurement network long standing farmer relationship. The Average procurement cost in Q4FY26 store 31 rupees per liter as against 38.7 per liter in the previous quarter and 37.4 litre Q4FY25.
However, we did not entirely pass on this increase in cost to the consumers. Our average mill sales price for the quarter stood 58.4 per liter which was 57.7 per litre in the previous quarter. This was primary reason for our margin being under pressure during the quarter. To give some context, our standalone India EBITDA margin for the quarter reflected sharpest quarter of the procurement cost inflation in the cycle. The consolidated EBITDA margin of 5% was supported meaningfully by Africa and Agafield the which together delivered around 22 crores EBITDA in Q4 on 9 months basis.
Our standalone India EBITDA margin was approximately 6 to 7% in Q4 represented cycle crow. We expect this begin to recover in Q1FY27. We also witnessed some cost pressure in packing and logistic cost among other things due to the shift of bulk sales in higher liquid milk and milk product sales. Speaking of Africa, we continue with our growth momentum in the Kenya market. The business is now seeing the benefits of scale with profitability improving steadily. We continue to price our products competitively to strengthen market presence and remain confident of gradual improvement in markets.
Now coming to our product sales mix, Dodla recorded its highest ever mill sales of 14 lakh liters per day driven by the continuous efforts to our team towards expanding the geographic reach across India and Africa. Total value added products took rupees 2,969 million as against 2,841 million in Q4 FY25 excluding bulk sales, WAP delivered growth of 21% on year on year basis. Third sales volume reported a healthy growth of 15.4% on year on year and stood at 442 kilometric tons. In terms of value, curd sales grew by 19.1% on year on year basis.
Products like curd, paneer, buttermilk, flour, milk, lassi etc. Delivered a recent growth whereas other products remained neutered due to seasonal variance. Within the orga feed business the revenue growth is healthy and the utilization levels also are scaling up in a good way. However, raising the raw material input costs have not been fully passed on to the farmers in order to sustain long term delicacy into low milk supply environment. High tend competitively intensity. Some modernization in the input cost is expected in the upcoming quarters which would improve the profitability of this business, our pricing strategy in line with the overall industry and we also see an opportunity to increase milk price in the near terms to pause on some part of elevated procurement cost.
We are also witnessing some modernization in procurement costs as the milk supply in the industry is coming back. Hence we expect a gradual improvement in the margin going ahead. With the strong underlining fundamentals and expansion plans in place. We remain focused on effective execution and achieving long term objectives while delivering profitability growth. Now I would request our CEO Mr. Murree Mohan Raju to share the financial highlights for the quarter. Thank you,
Murali Mohan Raju Reddycherla — Chief Financial Officer
Thank you Mr. Dinike Reddy and a very good morning to all the participants on the call talking about consolidated financial performance in Q4FY26. Revenue from operations for Q4FY26 stood at10.74 crore making its highest ever quarterly revenue growing 18.11% on a year on year basis from 910 crore in Q4FY25 gross profit to date to 47 crore with a margin of 23%. Employee expenses for the quarter should add 52 crore up approximately 27% from FY25 primarily reflecting source of inclusion Maharashtra Greenfield expansion under Kenya plant ramp up.
Other expenses stood at 141 crore compared to 123 crore in the corresponding quarter last year. While other expenses remained broadly in line with the revenue as a percentage of sales. The increase in absolute terms was primarily driven by increase in infrastructure related expenses including rent, employee travel and the conveyance cost due to an increase in the headcount of the employees. Higher transport costs owe into shift in product mix from bulk mill towards liquid milk and vap. We reported EBITDA of 54 crores or the quarter with an EBITDA margin of 5%.
Depreciation expense increased to 22 crore during the quarter as again as 18 crore in the same period last year. Other income for the quarter stood at 20 crore including 10 crore of interest. Income Tax Refund Pertaining to interest on a tax refund Following a favorable ITAT in Q4 we recorded an exceptional item that is 3 crores worth of reversal on the one time labor core expenses which was recorded in Q3FY26, an exceptional expense of 5.7 crore was recognized in the previous quarter pursuant to the revised Labor Code guidelines.
However, the actual impact was lower than initially estimated due to the restructuring of salary component. Additionally, the company recorded a tax reversal of 79.2 crore for the quarter relating to earlier years following favorable orders received from the itad. This tax credit represents the final portion and Accordingly, no further impact shall be reflected from the next quarter onwards. Net profit for the quarter today 70 crore with net profit margin of 6.5%. I want to call out the one off support to Q4 part explicitly.
The 70 crore reported Q4 part includes 29 crore earlier tax credit which I just mentioned and 10 crore of interest income on the related tax refund. Excluding these two one off items, our Q4 underlying part is approximately 40 crore for the full year. FY26 reported part of 267 crore includes total one off benefits of approximately 70 crores I.e. 58.7 crore of earlier tax credit through the year and 10 crore of related interest income. Adjusted FY26 parties therefore approximately 215 crore with an adjusted pad margin of around 5.2%.
This is the clean baseline against which FY27 should be evaluated. Now coming to FY26 performance. Revenue from operations grew by 10.9% year on year to the highest ever 4125 crore compared to 3720 crore in the previous year. Revenue remained over 1000 crore for all the quarters of FY26. Gross profit increased by 3.3% year on year to 1055 crore EBITDA for the year today 309 crore with EBITDA margin at 7.5%. The company reported a profit after tax of 267 crore translating into a PAT margin of 6.5%.
The company generated healthy cash flow from operations of 295 crore during the year while total cash and cash equivalent to date 649 crore as of 31st March 2026. This includes cash and bank balance over cash and bank plus our current as well as non current investment as all of those are liquid in nature. Our debt to equity remains under control at 0.03 level. The capital investment done in FY26 is about 430 crores. This includes around 271 crore of expansion capex in Hrpur, 80 crores in Maharashtra during FY26.
Taking a cumulative Maharashtra spend across FY25 and FY26 to 106 crore against a total project envelope of 280 crore and the balance 73 crore of wind and capex for FY26. The board has recommended a final dividend of 5 rupees per equity share. With this we conclude this 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. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Praveen Kumar from Equitas Capital Advisors. Please go ahead.
Praveen Kumar
Hello? Yeah, hi. Thanks for the opportunity. I had a few questions. The first one was can you give us a sense of what is the steady state margin that we can expect in this current environment? Because earlier in the call you had specified 50 to 100 basis point improvement margin improvement from FY26 levels, which would still take you to about 8% at an EBITDA level 8 or 8 and a half, which is at the lower end of the earlier margin band which you were referring to. So are you recognizing a structural lowering of the steady state margin that you can achieve or is it like, are you saying that FY27 is a year in transition and then onwards there are factors which can take it upwards?
Yeah, that’s my first question.
Dodla Sunil Reddy
So thank you very much for the question. I think it’s more in terms of being cautious with this whole uncertain environment that we are in because none of us are able to take sure of what is going to be. Pricing of fuel, pricing of plastics, the whole agriculture under impact with urea production. None of this is very clear for us. So that is what it’s leaving. We’d rather be on the cautious side of taking what can be, what we can achieve even by considering all the uncertainties that are there.
This is more a 27 year kind of year where, you know, taking into consideration uncertainties what is going on. But we are trying to give this kind of guidance.
Praveen Kumar
So just as aside to that, do you see, for example, when you’re talking about the urea issues, etc. On one hand it can indirectly impact your feed business, but on the other hand, if farmers are constrained on the agricultural side of things, they might focus more on the livestock part and might improve on the dairy procurement side. So could you throw some light on that? You’re
Dodla Sunil Reddy
Exactly right. If there is drought and less of agriculture, then animal husbandry steps in to become acts as a buffer for the farmers to grow. But like I said, we are not too sure where that’s going to head. Right. Is El Nino actually going to play out and more procurement pricing coming in. So that is the reason we are being more cautious because you have a weather which is normally there as an Uncertainty. But added to that the uncertainty of the war and the pricing that is coming. So keeping that into consideration, we are being more cautious.
Praveen Kumar
So to understand you, you are saying that post FY27, assuming some of these things normalized, you can get back to a more normal kind of. It will come back to
Dodla Sunil Reddy
The normal. Yeah. And also one more thing is like in these uncertain times, right, we have to be very careful of taking care of both the ends of the chain, that is the farmer and the customer. If we go and unreasonably try to kill the customer, then we lose. Not only consumption will start taking a dip. If we are unreasonable with the farmer, long term impact in terms of productivity also will get hit. So keeping both into consideration is why we are being more cautious than being aggressive.
Praveen Kumar
Understood. And on the VAP mix, can you throw some light on how are you trying what are the steps that you’re taking to reduce the seasonality on that? And I think you had already indicated some kind of a mix stable mix you want to get to. But if you can throw some light on how do you know plan to reduce the seasonality part of it to the extent. Because a lot of your existing products in the VAP are somewhat seasonal in nature.
Dodla Sunil Reddy
Yeah. Basically seasonality impacts three major products for us. One is ice cream which does not move the needle signature because the smaller portion is the overall buttermilk. Lassy and Curd are the ones which majorly go up into the seasonality. That I think will be very much a southern consumption habit that if there is more summer, people shift more towards the fermented products. We are trying to see that if it becomes a throughout the year product, what was exclusively two to three months, we are trying to extend that to a six month period to see that people start using it as a refreshment rather than worrying about it as a summer product.
On the other hand, products like Paneer have improved for us. Paneer has seen a significant growth that has come in in the local consumption once placements are in place. And also that we are looking at things like our flavored milk which is also expanding and growing at a bit of a steady state. Growth that we’re looking at growing those products, I think in the days to come, depending on customer habits and health grounds, we will think that even buttermilk and such will become a regular product.
Other than that, I think the shift will not be. We will not be able to change customer habits dramatically.
Praveen Kumar
Understood. And the last question was on the, on osam, what operational changes incrementally are you driving to, you know, converge OSAM margins with overall company margins and
Dodla Sunil Reddy
Explain in detail. Yeah. The operational margin that we’re looking at. Osam see basically broadly it’s on all fronts, right. It is on production, it’s on market and it’s on procurement. I think the operational efficiencies are your thing. I’ll ask BVK to give you more in detail what all of the operational efficiencies
Venkat Krishna Reddy Busireddy
In
Dodla Sunil Reddy
OSAM that we have undertaken which will help us improve our market.
Venkat Krishna Reddy Busireddy
Yeah, yeah. See, you know, when we see we have implemented SAP and a lot of infra correction we have done, a lot of stress is being driven towards quality and a lot of logistics cost. No, everything, you know, streamlined. So since, you know, once we acquired, you know, in a couple of months it took, you know, maybe in the coming year, you know, you will see further refining and a lot of operational efficiencies.
Praveen Kumar
So what kind of time will it take for it to converge and how does this, you know, you’re talking about now new land allocation and spending on that for expansion further in Bihar. So how do you, how does that affect the margin convergence trajectory?
Dodla Sunil Reddy
So presently what we’re looking at it is the land because the government is opposition. That’s only for a future project which will not be immediate but more like we said, have to go through the board approvals and get it. But existing operations improvement itself, what we’re looking at, we look at between 6 to 12 months will be that you will see the all the improvements getting into effect fully and then on it will come back to the regular margins as the overall company structure. Thank you. Thanks.
I’ll fall back with you.
Operator
Thank you. Next question is from the line of Yash Goenka from Africa Capital. Please go ahead.
Venkat Krishna Reddy Busireddy
Hi, thank you for taking my question. My question is on the cycle, do you see anything different about this current dairy cycle?
Dodla Sunil Reddy
Hi. Yes. What we have seen is there’s a significant like as usual when the summers come in, you’re seeing a significant offtake in volumes increasing in the first quarter. That is one on the sales side where we see the significant improvement happening in the product mix given the better realization over the previous last year, the same period, but on the other end procurement was still under stress. We are seeing improvement time and we hope that maybe in another month or so that will also start to improve.
I think Maharashtra and Karnataka have improved a bit in terms of productivity. We are waiting to see how the productivity in Tamil Nadu, Andhra and Telangana and other places will come into place. So the shift has happened in the proper manner. On the sales side, procurement is also on track. We hope to see better results coming in the next month or so.
Venkat Krishna Reddy Busireddy
Okay. Secondly, our corporate is raising the prices in all the. All the regions you are operating in the southern states.
Dodla Sunil Reddy
We have. They have increased the selling prices. Amul and Mother area increase the two rupee selling prices. We have already taken the price increase in the month of March itself. Mid March itself. We are taking the increase. So the cooperatives are just following the increase that we have taken to compensate the bus.
Venkat Krishna Reddy Busireddy
And over the next two to three months would you be further taking price hikes and what would that range be?
Dodla Sunil Reddy
We won’t be taking price hikes per se but we will be trying to correct certain things that are there. Right. Like if our. For example, if the packaging material, it will be only minor corrections that we will take, not a major price correction. Because already we have a significant headroom over the cooperatives that are there. We will only correct more on the procurement side.
Venkat Krishna Reddy Busireddy
Okay. Lastly, just to confirm, you said that margins will be reverting to mean by FY28, right? Yes. Okay. Thank you.
Operator
Thank you. Next question is from the line of Abhishek Mathur from Systematics Group. Please go ahead.
Abhishek Mathur
Yes. Hi sir. Thank you for the opportunity. I just wanted to check what is the. What is the mid procurement cost that you’re seeing currently as of today, what is that level and and also with the pricing that you have taken so far as of today, what is what part of the cost inflation is currently covered already as of as of mid May. That’s what I wanted to check first.
Dodla Sunil Reddy
Murali will answer that. Abhishek. But what you’re saying is what is the price increase in procurement and what is the price increase in sales to have compensated the price increase, Correct?
Abhishek Mathur
Yeah, broadly. Yes. I just wanted to check. You give the number for the procurement cost for the fourth quarter. But what is it today and the pricing that we have taken so far since we’ve indicated we are not planning any further major hikes. What part of inflation is covered as of now?
Murali Mohan Raju Reddycherla
Yeah, majority the procurement price in line with whatever the March price is. There is no major increase. Okay. Whatever we provided As a consolidated 37.36 to 40.97 that is a 9.7 of growth or there year on year is the same thing. Is continuing it at a standalone it is a 9.3%. Okay. We have passed
Dodla Sunil Reddy
On around. To answer your question, I think we have passed on around one rupee of the inflation in the sales recovery that we have already done currently that we are doing. We’re anticipating the procurement improves. We should get on another rupee or so will be coming down in the procurement price.
Abhishek Mathur
Great. So if I’m hearing correctly as of mid May there is no sequential increase from the number that you gave out on the procurement cost front. Is that the right understanding to take?
Dodla Sunil Reddy
Yes, that’s the right understanding. No price reduction. But we are anticipating certain areas of price reduction become effective in end May.
Abhishek Mathur
All right sir. And second question is for FY27. If you can indicate what are the CapEx that we are planning and what will be its breakup. I think you have given the the FY26 to FY28 capex number. But for what will be that number for FY27. And also just from bookkeeping numbers. If you can share the the console overall realizations and the VAP realizations for the fourth quarter. Yeah, that’s it.
Dodla Sunil Reddy
Yeah. So basically regarding the CAB, I will give you the numbers specifically about the CapEx up to the current year and in the future CapEx that we are looking at broadly it will be the highest number which will keep coming from Maharashtra, Osama, Africa business. I think Murali will give you the specifics in terms of what we are looking at our CapEx and also the. You wanted the fourth quarter numbers, right?
Unidentified Participant
Yes sir.
Dodla Sunil Reddy
Yeah. Both of them. FY26 fourth quarter numbers which I will. Fourth
Murali Mohan Raju Reddycherla
Quarter.
Dodla Sunil Reddy
You want the Capex numbers or.
Murali Mohan Raju Reddycherla
No sir,
Abhishek Mathur
I was asking. I was asking for the capex number for FY27 and for the fourth quarter just needed the console overall realization and the VAP realization.
Dodla Sunil Reddy
Yeah, one minute. So the fourth quarter console realizes. Sorry, you wanted to realize. Okay.
Murali Mohan Raju Reddycherla
Overall budget for the FY27. What we have consider is.
Dodla Sunil Reddy
One minute we’re just building up the number.
Murali Mohan Raju Reddycherla
So what? Yeah, sure,
Dodla Sunil Reddy
Sure.
Murali Mohan Raju Reddycherla
So 65 crores for the regular CapEx what we consider around 33 crores. We have considered service and hardware around 7 crore. And overall standalone we are expecting around 120 crores of CapEx. Q4. Yeah. That’s what is projecting object
Dodla Sunil Reddy
Without considering the Maharashtra project. Maharashtra
Murali Mohan Raju Reddycherla
Out of 280 crore. 20 crores we have spent in FY 2585, 86 crores we spend in FY 26 and balance 100 crores. 180 crores are planned to spend in FY 27.
Dodla Sunil Reddy
Those will be the broad areas of expense capex that we’ll be spending.
Abhishek Mathur
Right. And the realization. Sir,
Dodla Sunil Reddy
The fourth quarter realization for consolidated I’ll just consolidated
Murali Mohan Raju Reddycherla
61.19. Okay. That is the overall sales relation of it including the product.
Dodla Sunil Reddy
And you want also the procurement price for fourth quarter.
Abhishek Mathur
No. So just needed the consult realization and the vapor realization for the fourth quarter.
Murali Mohan Raju Reddycherla
So for the milk procurement we will talk about when you liquid consolidated sales only. So it is 55.16 of last year. Q4.2 we said it is 56.16 but when you talk about fiscally of India 56.05 to 56. Sorry, 56.15 to 58.25 that is 2.10 increase in the milk sales realization Especially without the considering the. Blended. So I could tell you the blended price basically at a standalone. Standalone it is 60.72. Sorry, 60.892 it is reduced to 60.54 because the product mix was changed because of the bulk sale we are exited.
So that way there is a reduction. It shows in the values data consolidated number.
Abhishek Mathur
Sorry, the vap consolidation was what sir?
Murali Mohan Raju Reddycherla
60.54.
Abhishek Mathur
Great. That’s it for me. Thanks and all the best sir.
Operator
Thank you. Next question is from the line of Aditya from Securities Investment Management. Please go ahead.
Aditya Khandelwal
Yeah. Hi sir. Thanks for the opportunity. So I just wanted to understand what kind of price inflation we are seeing in our packaging and stage cost. So is it manageable now or it’s going through the roof and how are you looking to.
Dodla Sunil Reddy
So I think packaging material as a number has gone up by 30%. Most of the plastics that are there and we use a lot of the plastic has gone up by 30%. That small corrections is what we have passed on to the consumers in terms of the price corrections that we have taken. So we are anticipating that the plastic prices will remain at the current elevated levels only because there was some government support that came in in the middle in terms of excise duty reduction and such. So unless something dramatic happens, we’re thinking that it will hold forth at the current 30% increase over the previous year.
Aditya Khandelwal
And so now with increasing petrol costs, how are you looking at our freight cost going forward?
Dodla Sunil Reddy
So the current 3 rupees I think temporarily for a month or so we will have to look at it and we will absorb because a portion of it will be passed on to the transporters itself because we take price corrections only periodically and we normally try to keep it for that period and if it remains at three. So that’s the whole reason which I think there’s a certain uncertainty of times. We don’t know whether it’s going to remain at three. Is it going to go up to six or seven? So that is the reason. We’ll wait and watch, I think for another at least fortnight or a month before we decide how to take it forward in terms of price.
Aditya Khandelwal
In such an inflationary scenario, is price increase the only solution for us? Or there is an option for grammar reduction also in our
Dodla Sunil Reddy
So grammar reduction which we normally used to do. We will not do much this time because it is not helping in terms of the consumers are also able to realize what is happening as grammage reduction towards price. I think it is going to be a blend today that we are going to do in terms of mooting up. What do you say? Procurement, operational efficiency and marginal increase in pricing. It will be a blend of all the three for us. The way I look at it is we need to cover cost and to improve margins, maybe we need to increase the rupee or so more in terms of pricing.
If we are able to manage 30, 40 paisa overall in procurement. 30, 30 paisa operationally and 20, 30 paisa in terms of the front end, we should be able to improve our margin. And also because overall our volume growth is there. Percentage might be a little on the lower side, but the absolute number will be higher because the volumes in the first quarter are seeming to be pretty reasonable in terms of the size of the sales that we are getting.
Aditya Khandelwal
And sir, you know, there is expectation of intense summer this season and El Nino. Now in such a scenario, while we would be positively benefited because of higher vaccines. But on the flip side, you know, the milk series, which might also take a hit which would impact the procurement costs also. And with the milk inventory in the system pretty low. How do you see both of these things intermingling with each other and impact on margins going forward? And what would be the factors, you know, things you would look at going forward, which will give you the confidence of improving margin outlook for the company
Dodla Sunil Reddy
Broadly, like we said, the fluctuations will not be dramatic. If there is a severe drought, it is a two way soap for us. Certain areas where there is a drought, animal husbandry improves because there is no other income for the farmers. They concentrate more on animal husbandry and therefore production normally improves. And also the sales mix, if it continues to be high on the value added product side because of higher summers and more buttermilk and lucky that goes up. Our average realization increases because of the product mixing.
So it sort of helps us in a manner of speaking to keep our cost going. That is what we said. But we Are more worried about the other costs that are going to shoot up dramatically more than the price of milk itself. None of us are certain about where will this price of fuel will be stopped. Because if you look at it on people and this is my view and please correct me if I’m wrong, $60 to $120 in my simple mathematics for barrel means it’s 100% price increase which would translate even to a 25 or 30% increase for us on fuel which is not yet shown.
We are not sure whether it is going to go up at 20% of fuel or only going to remain at the current levels. So I think once we get more of a clarity on this we can think of where on we are going to pass on how much for the customer, how much from the farmer and how much in terms of operation efficiency.
Aditya Khandelwal
Okay, and now when I look at your liquid milk sales volume excluding USAM so we have been growing at more than 9%. So just wanted to understand what would be the growth in India specifically because Africa would be the major part driving growth. We just wanted to understand what is the liquid milk seen selling growth in India for the last two three quarters.
Dodla Sunil Reddy
So we will continue to grow with that volume terms of 5 to 6% in terms of liquid milk. Although the current year we did excluding bulk we did including value added we did 9.4% of growth. We think that we will continue to maintain an average growth in terms of including value added to the 10% of volume growth.
Aditya Khandelwal
What I wanted to understand was we did not increase the milk prices because in the presentation we mentioned that we wanted to gain market share. So in the last two three quarters has our liquid milk sales volume growth seen an uptick?
Dodla Sunil Reddy
Liquid milk volume I have seen an uptick, yes or no. But value added we are pushing more that has been that has seen a significant uptake. Liquid milk has seen an uptake of around 5% to 6% whereas value added has grown up by 16.
Aditya Khandelwal
Understood, understood. And also what is the USAM revenue and EBITDA for this order
Dodla Sunil Reddy
For the fourth quarter of this year?
Murali Mohan Raju Reddycherla
Yes, basically 2.7 crore. And overall. Okay, I’ll talk about even revenue Also for the Q4 the revenue is 81.9 crore EBITDA of 2.7 crore and full year it is a 214.7 crore and EBITDA is 4.8 crore.
Aditya Khandelwal
Okay, and what kind of gross margins does USAM make?
Dodla Sunil Reddy
Gross margins of OSAM would be around 21%.
Aditya Khandelwal
Okay. Okay. And just a last one question. Sorry. Can you repeat, sir,
Dodla Sunil Reddy
If you move up to the 25% soon
Aditya Khandelwal
And this will be majorly due to price size and improvement in vapnics.
Dodla Sunil Reddy
Yeah. You know, price hikes, improvement in VAP mix and also the efficiencies that we were talking about, increasing our own procurement, bringing down freight cost, cutting down on losses and all that will help.
Aditya Khandelwal
Understood, Understood. And so just last one question. Now in orga fee we have seen a drop in margins. But what I understand that there has been a reduction in maize prices and margins should actually have improved. So what is the reason for this drop in margins in orga fee?
Dodla Sunil Reddy
So basically, although maize prices I would say that have reduced now, it will only be what we buy now will be used later. But I think the maize prices overall did go up and not come down. That is number one and number two, earlier days like when you are operating in a closer proximity of our area, we had the advantage of other operating costs like freight. Now since we are expanding our volume and expanding into other areas, we have impact on freight and we have to be also competitive with the local producers.
For example, if I am sending my cattle feed to sell in Maharashtra, the transport cost from selling from Kuppam to Maharashtra will add on the margin pressure. And the pricing in Maharashtra in terms of the local competition will be there. But we’re still maintaining that 11% margins that we are. And we think we’ll continue to maintain that kind of margin.
Aditya Khandelwal
Thanks for answering your questions. I’ll go on back in with you.
Operator
Thank you. Ladies and gentlemen. In order to ensure that the management will be able to address questions from all the participants in the conference, finally limit your questions to two per participant. Should you have a follow up question, please rejoin the queue. We will take our next question from the line of Pradhu Yumna Chaudhary from Bowhead, India. Please go ahead.
Venkat Krishna Reddy Busireddy
Yeah. Hi. Am I audible?
Dodla Sunil Reddy
Yes sir. Yes, sir.
Venkat Krishna Reddy Busireddy
So my first question was on the butter prices. Last few quarters due to elevated butter prices is one of the reasons why we saw milk procurement rates being higher. So what is the latest on the global bulk prices and global SMP prices and why were they really elevated previously?
Dodla Sunil Reddy
So butter prices and powder prices are elevated because the like we said last year was a low productivity in terms of milk availability coming down and therefore the stocks have been depleted. And now only now in terms of this volume stocks will be built up. That is the reason why we have removed our bulk sales and not done bulk sales. Because we don’t have the extra butter that we produce but we have sort of compensated it by increasing our milk procurement that we have. And I think SAP did turn out to be a small amount of a net buyer and that is the reason why the whole market surprises are elevated.
Venkat Krishna Reddy Busireddy
So my question was more on the global butter and SMP prices. Not really India’s perspective because we saw a lot of butter.
Dodla Sunil Reddy
Yeah. So global prices also in the similar manner what happened was they are actually I think coming now they’re looking at it as an oversupply. And India’s export of butter is not much. It’s mostly ghee that we export in terms of fat for the Indian diaspora which is there. That is what consumes more of the fat exports that India.
Venkat Krishna Reddy Busireddy
So right now we are seeing these prices coming down. The export prices for Bata and smp.
Dodla Sunil Reddy
No, not coming down. They are maintaining the same state as what they were earlier. We are not much into exports. I don’t have the specific numbers but I don’t think they’re coming down.
Venkat Krishna Reddy Busireddy
But that’s not a risk to our people that the milk procurement prices would start coming down. We do not expect that elevated global data and SMP prices would be a risk to the.
Dodla Sunil Reddy
Not much because I think the number of exports that we see out of the country is not that significant to change pricing patterns as much as also imports are very restricted because we have UN structure so that we don’t get the flood of imports coming in. It will broadly be dependent on domestic consumption and production. Not much of variation due to exports.
Venkat Krishna Reddy Busireddy
And so that my last question is on the cogs mix. If I were to look at a cost of goods sold for India business especially so how much would be. What would be the mix of that? Like how much would be milk as a percentage of your cogs? How much would be packaging material? What about logistics? If you can give that. And the second question would be on the Maharashtra side. I think we are performing close to 2.5 LLPD already from Maharashtra but we don’t have any bulk sales as of this quarter. So where is this really going in terms of sales?
Operator
I’m sorry sir, we are not able to hear you. If you are speaking.
Ankit Shah
Can you hear me now? Hello.
Operator
Yes, you are audible. I am asking this to management. Team. Are you able to hear us? Ladies and gentlemen, the line for the management has been disconnected. Please hold while we get some back.
Unidentified Participant
It. What’s.
Operator
Ladies and gentlemen, thank you for holding. We have management connected now. Over to you sir.
Dodla Sunil Reddy
Sorry everyone for the disconnection. I just now Murali will Give the breakup of the cost that you had asked for earlier in the last call. Overall
Murali Mohan Raju Reddycherla
The compound data. If you see the breakup for the full year it is a 74% and employee expenses is around 4.9%. And transport cost is 7.3. Foreign C is around 1. Conventional source is 1% and balance all over is 2. Legal traveling, security, all those. So overall the other expenses is coming to 13.2. Excluding the employment benefit expenses, that is 18.1%.
Venkat Krishna Reddy Busireddy
So.
Murali Mohan Raju Reddycherla
Okay,
Venkat Krishna Reddy Busireddy
Sorry, how much?
Murali Mohan Raju Reddycherla
3.5%
Venkat Krishna Reddy Busireddy
Is the packing expense. And what about logistics expense in this
Murali Mohan Raju Reddycherla
Logistic expenses? 7.3%.
Venkat Krishna Reddy Busireddy
And remaining else is all milk.
Dodla Sunil Reddy
74% out of that only packing material is three and a half out of the 74 plus 7.3% transport
Venkat Krishna Reddy Busireddy
And 64 around 64 would be nice.
Murali Mohan Raju Reddycherla
Yes. Transport is not exclude excluded. 74.4 plus transport. 7.3. You have to add for the transport input
Dodla Sunil Reddy
And output.
Murali Mohan Raju Reddycherla
Yeah. Transport includes the four legs. That is a village to the chilling center. Chilling center to the plant plan to the sales office, sales office to the customer. All the transports are included. Apart from that the loading, unloading, charges, the freight carry forward 15 and the contract level who are works under the transport of that
Dodla Sunil Reddy
All the cost comes to 7.3%. It doesn’t come in the 74 of raw material. 74 of raw material includes 3.5% of pack
Venkat Krishna Reddy Busireddy
And remaining is all milk. Right? 74 minus 3.5. Yeah. Mr.
Operator
Chaudhary, you may please rejoin the queue for more questions. Thank you. We will take our next question from the line of Asher from DT portfolio managers. Please go ahead.
Unidentified Participant
Hello. Hi Sandeep. Hi Murali. Hi Sunny. Hi Murali. Just wanted to know how are you thinking of the risk of El Nino on your gross margins? I think earlier in the call you referred to like a 50 to 100 basis points improvement in your gross margins. So how are you thinking of that?
Dodla Sunil Reddy
Basically we are very confident that milk procurement should come back normal. It cannot be there and the prices will drop in milk procurement. And that itself should give us that difference in our margins.
Venkat Krishna Reddy Busireddy
Because
Dodla Sunil Reddy
If you look at it as what we’re saying is one person or 100 bits of price margin, as you see, average realizations are around 60 rupees. We’re looking at a 65 correction that we know.
Unidentified Participant
Yeah, that’s fair. Thank you. And so my second question is a little more broad. Your Africa business seems to be going strong and like growing a lot. What is going right then? How do you see that continuing into the future?
Dodla Sunil Reddy
So I think what is going right is basically Uganda, we have become a significantly large player and in Kenya we’re just beginning to see that. And Kenya is a, a much larger market than Uganda. Earlier we used to cater from Uganda to Kenya and due to the border disputes we were not able to cater to it properly because there would be restrictions on how much we could spend. Once we have now entered in Kenya with our own operations and our own plant and having the stability of the product, we are able to do better.
And I think in terms of comparison, like we said, it’s more keeping your quality in the improved quality, making sure that operational efficiencies are maintained. And we have still a smaller market share in Kenya and that gives us growth opportunities.
Venkat Krishna Reddy Busireddy
And like you said
Dodla Sunil Reddy
In Uganda we are expanding. Earlier we were into long life products only now we are entering into the pasteurized and other milk products.
Unidentified Participant
Okay, perfect. Thank you.
Operator
Thank you. Next question is from the line of Darshan from assetsi Mehta Institutional equities. Please go ahead.
Ankit Shah
Yeah, hello,
Operator
You may please proceed. Yeah,
Ankit Shah
Thanks for the opportunity. And I actually just wanted curd sales in rupee terms for this quarter. Q4
Dodla Sunil Reddy
Curt sales Q4 in rupee terms. Right. Darshan.
Ankit Shah
Yes.
Murali Mohan Raju Reddycherla
Consolidated card sales of 230 crore. And for the full year it is 845.7 crore.
Ankit Shah
All right. And secondly just wanted to understand is there any considerable difference between procurement and realization, you know, costs and realizations between domestic overall business and osam? And if we were to like you know, just see a broader trend, do they move in tandem or are there certain gaps between the trends?
Dodla Sunil Reddy
Okay, so I was not able to get the question clearly. But also. But what you’re saying is the difference between OSAN price realization and the rest of India price realization, am I correct? So. In the VAP portion than in here. Muria will give you the specific numbers.
Murali Mohan Raju Reddycherla
So with regard to Dudladay India. So basically the milk regulation is around 58.1 and whereas HR crisp that is OSAM is 55.7 and VAT excluding the fat product it is 64.2 for the regular whereas for HR groups it is 98.8.
Ankit Shah
Okay, got it. All right. Yeah, I’ll get back.
Venkat Krishna Reddy Busireddy
Thank
Ankit Shah
You. Thank
Operator
You. Next question is from the line of Deepak from Unifi Capital. Please go ahead.
Venkat Krishna Reddy Busireddy
Hello sir. Thank you for the opportunity. Congrats on good top line growth. But my questions were on the margin profile of the company. Sir, if you can explain as to how you will get to the hundred to fifty bps margin expansion that you’re talking about in EBITDA for FY27. Given that procurement costs are still elevated at the March levels, freight costs are up, employee and other expenses are also. The costs are up by anywhere around 15 to 20%. So if you can explain firstly the gross margin trajectory that we should start looking at from Q1 and then the below cross margin line items that is under your control, employee and other expenses as well.
So yeah, I would like to hear your strategy on that.
Dodla Sunil Reddy
So you’re right Deepak. Basically the employment expenses this year we actually bought it down in terms of the existing operational by only a 5% 6% increase. But the overall impact is still at 11% because of the new wage code impact that is there. All these costs including packaging that you’re looking at and all that would have taken up our cost by maybe a rupee, rupee and a half, we are expecting that the procurement prices should come down to the rupee and a half to two. And because of the product mix improvement, our realization is on the higher side as a combination of these two.
Like I explained earlier, our 100% 1% increase represents roughly one rupee one and a half rupee of price overall efficiency that we need to build up which we think will come once the following quarters because normally price will come down. It will not come down for one and a half years. It should come down as productivity increase.
Venkat Krishna Reddy Busireddy
Okay, so if I hear you right, so are there any structural circumstances which occur in the March, sorry the May month or the June month which, which would lead to this price reduction. And I don’t understand as to why
Dodla Sunil Reddy
Maharashtra and Karnataka have got a significant upward growth in the meat procurement. So you will start seeing Maharashtra prices sort of correcting a little bit to because of the growth that is coming in. And similarly when the seasons of the rest of the operations come in, you will see a drop.
Venkat Krishna Reddy Busireddy
So next thing I wanted to understand on the price hikes, you know your strategy on not taking more price hikes when you have the opportunity as the corporate is also taking. So I just want to understand your mindset on taking more price hikes. Maybe you’re not taking it right now. Will you take it later in the future? I just wanted to understand on the pricing action from the company
Dodla Sunil Reddy
Because we have basically taken a price hike in March which the cooperatives have only followed later now in May. So we will again take the next round will be as I said, the uncertainty of the fuel prices, packing material and all that have to settle down and Once we see what the impact of that is going to be in terms of sort of a stable state, then the price hikes will again come in from all of us. It’s only now that the difference in terms of us and the cooperators are significantly higher. We don’t want to keep expanding that more and more.
Venkat Krishna Reddy Busireddy
Okay. And lastly on the volume growth for both the liquid milk and vap, you mentioned that VAP had some operational challenge. So if you can allude to what operational challenge? And secondly, what kind of growth have you seen to the seasonal, to the season which has started in April. So if you can call out that and any improvement that you’ve seen in the growth rates for milk. Sir.
Dodla Sunil Reddy
Yes, our milk growth rates have maintained around that four and a half, 5% even in the current scenario. But we have seen significant increase in the WAP growth. Like we normally say that our summers of WAP will be higher. So our WAP rates have been. Growth rates have been significantly higher. We are around 16, 17% WAP growth.
Venkat Krishna Reddy Busireddy
Okay. And so if you can. I’m sorry to interrupt, Deepak.
Operator
I’m really sorry. You may please reach for more questions. Thank you. Next question is from the line of Rehan Bakri from Omayo Advisors. Please go ahead.
Venkat Krishna Reddy Busireddy
Yeah, hi. Am I audible? Yes, sir. Yeah. So my first question is regarding the impact of an increase in fuel price by 1 rupees on the logistic cost.
Dodla Sunil Reddy
Basically when you look at fuel prices, the 3 rupee increase currently will have an impact of us and maybe not bias that much in terms of 0.5% is what the impact would be. But as I said, if we delay giving it to our transporters, normally they take a hit for a 15 day process and then we go in. So currently it will only be a small hit of 0.25% that we look at. But once we are sure of what the fuel prices are going to be stable at, then we can make a call of how to pass it on.
Venkat Krishna Reddy Busireddy
Okay. And my second question is regarding the Africa business and what can be the sustainable growth number to look for there?
Dodla Sunil Reddy
The sustainable growth numbers in terms of volume. We are confident of maintaining the 20% kind of growth numbers in the current year.
Venkat Krishna Reddy Busireddy
Okay.
Operator
Does that answer your question?
Venkat Krishna Reddy Busireddy
Yeah, actually I wanted to know the value as well in terms of the sustainable growth
Murali Mohan Raju Reddycherla
In terms of value. Basically last year, 20%, 600
Venkat Krishna Reddy Busireddy
Crores. Yeah. Okay, that answers my question. Thank you.
Operator
Thank you. Next question is from the line of Aniket Shah from White Equity Investment. Please go ahead.
Venkat Krishna Reddy Busireddy
Thank you for Taking my question, sir, regarding the Africa sales, can you split it between Uganda and Kenya for F25 and F26?
Dodla Sunil Reddy
Uganda and Kenya break up for 25 and
Venkat Krishna Reddy Busireddy
26. Uganda is almost stable. 1.45 to 1.5 lakh. So see now this is last year we have done, you know, FY25, 181 lakh 80,000. Out of that, you know, 1 lakh 45,000 from Uganda and balance, you know, 30,000 from 35,000 from Kenya. And the FY26, you know, the similar number, you know from Uganda we have done 145, 150. And the total number, what we have done average is 227. 2 lakh 27. So 227. So 1 lakh 50,000 minus balance 87 90,000 liters average we have done in Kenya.
Aditya Khandelwal
Yes. So F26 volume growth has largely come from the Kenya piece.
Venkat Krishna Reddy Busireddy
Yes.
Aditya Khandelwal
Okay. Yes.
Unidentified Participant
If you can give the Africa EBITDA numbers. We have the revenue numbers. But F25, 26 and Q4 F25.
Venkat Krishna Reddy Busireddy
Number, you know in 25 it was 11% ebitda and 26 is 11.3% ebitda.
Unidentified Participant
Okay. And sir, the last question I have is on the Maharashtra plan. So where are we on the procurement in Maharashtra in terms of black L per day and do we see it going to 5 lakhs till end of 27.
Venkat Krishna Reddy Busireddy
So right now you know the average procurement, Maharasha, what we are procuring is 3 lakhs average right now, last couple of months onwards. So once season comes, you know, by end of this year we are targeting, you know, minimum 5 lakhs.
Unidentified Participant
Thank you for taking my question. Thank
Venkat Krishna Reddy Busireddy
You.
Operator
Thank you. That was the last question for today. I would now like to hand the conference back 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 please contact SGA or industry relation. Thank you very much.
Operator
Thank you. On behalf of Dodla Dairy Limited. That concludes this conference. Thank you all for joining us today. And you may now disconnect your line.
Unidentified Participant
Thank you.