Heritage Foods Ltd (NSE: HERITGFOOD) Q3 2025 Earnings Call dated Jan. 23, 2025
Corporate Participants:
M. Sambasiva Rao — President
Srideep N Kesavan — Chief Executive Officer (CEO)
J. Samba Murthy — Chief Operating Officer
A. Prabhakara Naidu — Chief Financial Officer (CFO)
Analysts:
Garima Singla — Analyst
Sameer Gupta — Analyst
Aniruddha Joshi — Analyst
Disha Giria — Analyst
Digant Haria — Analyst
Pratik Kothari — Analyst
Naitik Mohata — Analyst
Kiran Kumar — Analyst
Sneha Jain — Analyst
Dhwanil Desai — Analyst
Falguni Dutta — Analyst
Chinmay Nema — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Heritage Foods Q3 and Nine Months FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-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 a touchstone phone. Please note that this call is being recorded.
I would now like to hand the conference over to Ms. Garima Singla. Thank you, and over to you, Ms. Garima.
Garima Singla — Analyst
Thank you. Good morning, everyone. I am Garima Singla, and it’s my pleasure to welcome you all on behalf of Heritage Foods Limited. Thank you for joining us today for this earnings call, where we will discuss the operational and financial performance for quarter three and nine months of FY ’25. This call is hosted by Go India Advisors. Please note that today’s discussion may include forward-looking statements. Therefore, they must be viewed in conjunction with the risks that the company faces.
We are joined today by Mrs N Brahmani, Executive Director; Dr M. Sambasiva Rao, President; Mr Srideep Kesawan, CEO; Mr A. Prabhakara Naidu, CFO; Mr J. Samba Murthy, COO; Mr Upendra Pandey, CEO of Heritage Limited; and Mr Umakanta Barik, Company Secretary and Compliance Officer. So without any further delay, I now hand over to Dr. Rao to present the company’s business outlook and performance, after which we will open the floor for Q&A.
Thank you, and over to you, sir.
M. Sambasiva Rao — President
Thank you very much. Good morning, everyone. Welcome to Heritage Foods Limited Earnings call for quarter three and Nine-Month period ending financial year ’25. As we approach India’s 76th Republic Day, I extend warm — warmest greetings to all. Thank you. The financial results and earnings presentation have been uploaded to the exchanges and I trust you have had a chance to review them. Thank. And it has foodset an extraordinary benchmark over the last three decades by completely transforming the dairy industry.
With an impeccably robust integrated supply-chain a cutting-edge omnichannel presence and the revolutionary federated supply-chain model, we ensure that every product reaching consumer is nothing short of perfection and always fresh of the highest-quality and delivered with unmatched consistency. We have been focused on building a strong portfolio of products, which meets our consumer requirements across seasons and at the same time build a strong consumer engagement with Heritage brand. I’m happy to report that today Heritage has one of the most diverse product ranges.
Our value-added products now account for a substantial 28% of the total revenue, underscoring the continued strength and momentum of this high-growth segment. In anticipation of the festive season, we launched a series of dynamic consumer promotions and high-impact advertising campaigns, including a compelling TV campaign and an exciting scan and win promotion across our and Suites range, further accelerating the growth of our web value-added products. Our commitment and connect with the farmer community is our biggest strength and sets us apart in many ways. Since our inception, we have had no milk holiday. We have had no milk holiday and no farmer has ever been turned away from our milk collection centers.
We have ensured full transparency in collection with fair pricing based on measurement of solids delivered and efficient twice a month or twice a month payment, which helped us build a strong community of over 300,000 farmer families. We have empowered them with veterinary care advanced nutritional guidance and industry-leading best practices. All of this is done while harnessing renewable energy to significantly shrink our carbon footprint, underscoring our commitment to a better tomorrow. Heritage has established a robust and expansive integrated network with a presence across 7,200 distributors, more than 1,80,000 retail outlets about 25 modern retail chains and 16 e-commerce platforms, ensuring widespread accessibility to its products. Additionally, the brand operates with 859 heritage parlors and 352 happiness points strategically placed within its own network — owned network, further strengthening its market reach and enhancing consumer engagement.
The Indian dairy market is on the verge of an explosive growth surge with a stellar 9% overall CAGR and the value-added products category growing at 20 plus annually and India already responsible for an impressive 25% of global dairy production holds immense untapped potential as its per-capita consumption remains strikingly low at 81 kg per year, far below the 200 plus KG per year seen in developed markets. This stark consumption gap presents an unprecedented opportunity for organized players like Heritage to lead the charge and completely redefine the dairy landscape in India. With the nation’s expanding middle-class driven by rising aspirations and the unorganized tech sector still commanding 60% of the market, Heritage stands poised to capture and accelerate this growth, positioning itself as an important player in India’s dairy revolution. This is a once-in-lifetime market opportunity and Heritage is primed to capitalize on it in a way that will reshape the industry for generations to come.
With high asset turnover products such as milk and curd, Heritage Foods is not just well-positioned, but perfectly poised to generate exceptional returns on capital employed, far exceeding industry standards. Even with the inherent seasonality of the dairy sector, we have consistently demonstrated unmatched resilience by effectively managing fluctuations, converting excess milk into premium quality skim milk powder to ensure uninterrupted supply during lean periods. We have crossed INR10,000 million turnover for the third consecutive quarter of year. This quarter, we saw extraordinary demand for butter and gee driven by festive celebrations, which significantly boosted our performance.
Before, I’ll now present some important operational highlights. We procured an impressive 18.38 lakh liters of milk, a substantial increase from 16.32 lakh liters last year. Our dairy milk sales reached an all-time high of 11 lakh 69,000 liters per day, marking a remarkable 6% year-on-year increase. Sales experienced an outstanding growth of 12% year-on-year, reaching 380 metric tons per day, while our value-added products volume saw a surge of 14.3% year-on-year and 17.6% increase in revenue, generating INR2,874 million in revenue.
On the procurement front, we were able to secure milk at an average price of INR41.91 per liter, 2.7% lower than last year, enabling us to keep milk prices stable, while maintaining our confident outlook. The average setting price remained flat at INR54.64 per liter in-quarter three compared to INR55 per liter last year. Now moving on to the financial highlights. First, on a consolidated basis, revenue from operations grew by an impressive 10%, reaching INR10,339 million. EBITDA for the quarter at INR141 million, reflecting 43% year-on-year growth with EBITDA margins expanding to 7.2% from 5.5% in-quarter three financial year ’24.
Profit-after-tax for quarter reached INR431 million, reflecting 60% year-on-year growth with PAT margins expanding to 4.2% from 2.9% in the quarter three of previous year. In addition, Heritage Limited, our wholly-owned subsidiary has also been a major contributor to our overall success, delivering strong growth with 15% increase in revenue to INR509 million, coupled with a 172% rise in PBT, which tallied to INR56 million. We are committed to creating superior shareholder value and appreciate your strong support. With this, I conclude our updates for quarter three and nine months for the financial year ’25.
And now open the floor for interaction. Thank you.
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 and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles you.
The first question comes from the line of Sameer Gupta with India Infoline. Please go-ahead.
Sameer Gupta
Hi, sir. Good morning and thanks for taking my question. Sir, firstly, there has been some firming up in procurement prices. It’s up 4% on a sequential Q-o-Q basis. Generally, we see 3rd-quarter as the buffalo milk/quarter and in — there is an assumption that prices will dip when it’s coming up.
Operator
Sorry to interrupt, sir. So maybe I have question to keep your hands.
Sameer Gupta
Sure, sir. Let me put my hands in. Hello. Can you hear me?
Operator
Yes, sir. Please go-ahead.
Sameer Gupta
Okay. Sir. So basically first question is that there has been some firming up in milk procurement prices on a sequential basis, it’s up 4% and generally 3Q is a buffalo flush season. So one expect some dip here. So has there been any firming up of milk procurement prices for you or is this more of a mix change in terms of regions, buffalo to cow mix, etc? And what is your outlook going-forward for prices?
Srideep N Kesavan
Yeah. Thank you, Mr Samir Gupta for the question. This is Keshwan answering your question. So you’re right, quarter three is usually a buffalo flush season and buffalo milk prices sequentially has come down by INR27 for us per liter to INR71 price a drop average buffalo milk prices for us in Q3 over Q2. And we — but we have seen a marginal increase of 0.3 or 30 per liter increase of cow milk prices in Q3 over Q2. And this has mostly happened in Maharashtra and other cow milk regions for us. The overall increase of INR166 per liter hasn’t — has happened because of mix change. With Q3 flush, more has shifted towards buffalo milk.
That said, your second part of the question is what is the outlook on prices? Usually from now onwards, prices usually firm up. So we are expecting the prices to go up. You — I think we are all expecting prices to go up at least by INR1.5 to INR2 over the next several months. And the transition from flush to lean happens in various stages across various regions. So the net effect will be a weighted-average of all of this.
Sameer Gupta
So sir, my question was more on the weather vagaries or nitty-gritties or exceptions. I know that this is a lean season and prices generally form up, but are there any unusual aspects to the milk procurement this time like the last few years have been impacted by external events. Are there any such thing that you have been noticing?
Srideep N Kesavan
Nothing we are noticing. There’s nothing. Everything is fine. I think the rains have been very good. There is a lot of green that’s available in the rural markets. The concentrated feed consumption has gone up across board and we are seeing normal flush. So I don’t think there is anything. The only reason why prices might firm up is natural course because of overall cost increase across fuel and other things and all of that. So it’s a normal thing at this point in time. We are not witnessing any shortfall of milk.
Sameer Gupta
Got it, sir. Second question is, can you help me with the amount of bulk fat sales this quarter? I think it seems to be on the higher side this time.
Srideep N Kesavan
I will hand over the — see, before I hand over to our Chief Operating Officer, Mr Sam, who will help you with the answer. You one should realize that Q2 and Q3 usually are months when we liquidate surplus fat because we do not carry-forward fat. That’s it. If you see sequentially our fat sale and on B2B has actually tremendously come down. I think Mr will give the numbers.
J. Samba Murthy
Sale is — bulk fat sale is about INR54.66 crores compared to last Q3 of 52.17, almost same compared to the previous.
Sameer Gupta
Got it, sir. This is helpful. I’ll come back-in the queue first.
Srideep N Kesavan
In terms of — yeah, in terms of — if you compare it like last year, INR52 crores was out of INR941 crores of revenue for division. In terms of percentage, this has come down significantly lower now 54 upon 1019.
Sameer Gupta
Got it, sir. This is helpful. I’ll come back-in the queue for any follow-ups. Thanks.
Operator
Thank you. The next question is from the line of Anirud Joshi with ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yeah. Thanks for the opportunity and congrats for good set of numbers. Also, sir, thanks for the improved presentation, which is really very helpful. Sir, in terms of questions, so how should we see milk prices moving in FY ’26, because we have seen in a way almost two years of lower milk procurement prices. So a natural — as in naturally cycle should turn upwards and we should see inflation in milk procurement prices. So are we seeing on that trend or do you see the milk prices may still remain at the lower levels on a year-on-year basis? That is question one.
And secondly, in terms of price hikes, where-is the company because we have seen cooperatives raising the prices, but so-far we have not yet seen the private players hiking the prices. So what is our take on the price hikes also.
Srideep N Kesavan
That’ll answer. Okay. So this is here. Anrota, thank you for your question. We are — yeah, from Q1, I think Q1 of last financial year was when we had seen a peak in terms of milk prices. As far as Heritage was — heritage is concerned, our prices — mill prices had peaked to about INR44 78 by say in Q1 of FY ’24 and now it is about INR4191. So we are roughly INR3 lower than the peak that we had seen in Q1 of FY ’24. So you’re right, for the last almost six quarters, prices have been sequentially coming down and this is the first month when we saw a slight you know turn up even. So basically you could say that we are — we are at the beginning of taking a U-turn, which is why I said one should expect at least a INR1.5 to INR2 price increase on an average basis — weighted-average basis over the next few months.
When will it happen, will it happen in Jan, Feb, March and all is a timing issue of when the flush transitions to lean and also a weighted-average of the procurement that we have from various regions. But I think roughly around INR1.5 to INR2 per liter we should expect despite supply not being a constraint. So while Q1 of FY ’24 was an aberration because there was a supply constraint, supply-demand mismatch. This, I believe is a normal-course of events. So INR2 upon INR40 you can imagine is about INR4 to 5 percentage is the annual inflationary impact that we should see over the next few months. I don’t think that there is any surprise in there.
As far as the market prices are concerned, I take note of the point you’re making that cooperatives have increased the prices and frankly, we are not aware of it, because I think it was sometime beginning of this calendar year, last calendar year 2024 that some of the leading cooperators had increased prices by INR2 and that too was mostly in Mumbai and Delhi and all. So in our markets or rather actually after that particular point in time, nobody has increased prices. So as far as heritage is concerned, we are maintaining the same prices as in Q2 of FY ’24. So for the last six quarters, we have maintained the market mill prices. Obviously, everybody knows that is not possible going-forward. So we are looking at price increases as well.
Aniruddha Joshi
That’s helpful. Second and last question. Some years ago we had introduced multiple value-added products like Yova, Joe Pop, Alpen ice-cream, even we had tried cheese also in a value-added cheese variants also. So I guess any update on that? And considering now we are going geographically, so whether it will be geographical or product growth or it will be geographical plus product growth as well? And anyway update on all these new products that you have done? Yeah, that’s it from my side. Thanks.
Srideep N Kesavan
Yes. So we have — we have a — you can Call-IT like we are a full portfolio dairy player. So we have everything from milk to ice creams. We play across fresh category, we play across ambient value-added product categories. We also play across frozen ice-cream and other categories, right? So — and except for frozen category, we have all other categories across all our locations, whether it is Maharashtra or North of India or and the products that you spoke about cheese, of course, cheese is — we are selling cheese in all markets. Cheese is a much smaller category for us at this point in time, but it is something that is growing in leaps and bounds.
So as you can expect, while milk grows at 5.5%, 6% year-on-year, the value-added products are growing at 14% to 17% depending on the period of the year. And within value-added products, while products like curd and all are growing at 12.5%, our products like and cheese are growing anywhere between 50% to 70%. So the smaller the category, the faster they are growing. And we are seeing robust growth across all categories of our value-added products. I hope I’ve been able to answer the question.
Aniruddha Joshi
Yeah, sure, sir. Thank you. Very helpful.
Operator
Thank you. The next question comes from the line of Disha with Ashika Institutional Equity. Please go-ahead.
Disha Giria
Good morning, team. So I have a few accounting-related questions and a few market-share related questions. So firstly, can you just let me know what is the ice-cream business revenue for the quarter?
J. Samba Murthy
This is sum in so yeah revenue for ice-cream, 15.94 crores in Q3. Q3.
Disha Giria
Okay then secondly, so there has been around 24.81% increase in our other expenses and around 177.46% year-on-year increase in our other income. So what is the reason behind it.
Srideep N Kesavan
This is here, CEO. Before I speak on the other expenses, I’ll request our CFO, Naidu, to speak us about — about the other income.
A. Prabhakara Naidu
Yeah. Good morning, ma’am. And his other income is related to mainly — we have actually surplus funds, which we have kept it in liquid mutual funds, which is giving us in this quarter around 7.3% of gain. So that is the main actually other income that the entire nine months actually INR13.1 crores on account of gain on mutual funds regarded. So other income is because of the gain on mutual funds, right?
Srideep N Kesavan
I hope that is clear, Ms Disha. And on your question on other expenses, yeah. So the expense that you read-out in terms of increase is actually on absolute percentage, absolute the — sorry, let me rephrase that. The expense increase that you referred to is a — is on absolute cost increase and a large part of it is because of the revenue growth and so if I could just read-out the heads that come under other expenses, they are freight, power and fuel, selling and distribution, stores and spares and consumables, rent, repairs and maintenance, et-cetera, etc. So as you can make out, most of these are directly linked to our business. As the business grows, they will grow. So currently, our business in this quarter has grown at about 10.9% on a — on our consumer business — consumer side of the business, which is keeping aside the bulk fat that we sell.
So about 11 percentage on a year-on-year basis, you would expect the expenses to go up because of the variable-cost nature of it. There’ll be a little bit of efficiencies that come in, but that gets mostly all counteracted by the cost increases because fuel is increasing, power is increasing, labor charges are increasing, etc., et-cetera, right? Now apart from that, we have seen about on a percentage to revenue basis, we are seeing two aspects. One is that power and fuel as a percentage to revenue has gone up by about 0.2% and that is a function of, one, a function of unit cost increasing in terms of electricity and other tariff increase.
Second, in terms of the — some of the market spread and the market mix that is changing for us rather than being — that’s actually good for the business because we are derisking by spreading our geographical footprint, right? The second aspect is that our sales promotion and marketing expenses on a percentage basis has gone up by about 0.3% and that’s also something that we are — you could say that we were pretty much aware of — so in-quarter three of last year, sales and sales promotions and marketing expenses used to be out of 0.6%.
Now it is standing at about 0.95%. Certain investors who have been following us for a long-time will know that we had very clearly explicitly mentioned earlier that we want — we would be looking at spending about one percentage of our revenue in marketing expenses. And this is what is primarily driving our revenue forward despite the headwinds that we are seeing in terms of the general economy despite the headwinds we are seeing in terms of adverse weather conditions. So at this point in time, I believe — I believe that all these promotional and marketing expenses increase of about 0.35 percentage as a percentage of revenue has helped us to gain more consumers, gain more consumption occasions and sustain our revenue growth so that when the market bounces back strongly, I think we’ll be on-top of it.
Disha Giria
All right. Thank you, sir. That answers my first question. Coming down to my second question that is, could you give some sense on what is your market-share, especially in the newly opened markets of Eastern India?
Srideep N Kesavan
That’s a very, very, very — see, in fact, actually, we are not measuring any market-share at this point in time in these new markets, because we are very insignificant in this market. So at this point in time, we are not measuring — we are working with what we call as metrics. There are business milestones that we have set for every quarter to achieve and we are fairly on-track of that. We’ve just launched these markets two quarters back. So it’s very nothing much to talk about as far as those numbers are concerned. But as far as our regular core market, core and other markets are concerned, we have gained market-share. We are subscribing to several syndicated tracks as well as we have our own tracking. Both are showing a strong market-share gains in our core and adjacent markets.
Disha Giria
On a year-on-year basis?
Srideep N Kesavan
We are across different categories, right? So it — if I can say that we have seen a more than a percentage gain in value-added products and primarily led by Kurd and.
Disha Giria
All right. Thank you, sir. That answers my question. I’ll get back into the queue.
Operator
Thank you. The next question is from the line of with Green Edge Wealth. Please go-ahead.
Digant Haria
Yeah. Hi, thanks for the opportunity and good to see some new data points in the presentation as well. So, I have two questions. One is for and one is on the cattle field business. So the first question, see is that you mentioned that we are about to enter a leading season. The flush season may be ending and the opex of our company has generally been growing at a higher clip than our revenue because of all the marketing initiatives and expanding our — the network and the delivery infrastructure. So have we seen the margin peak for now? Like we have already seen 50 bps of gross margin erosion in this quarter and some erosion in the operating margins. Do we expect that another next six months will probably be a little more tougher on the margins.
Srideep N Kesavan
Okay, you said you have another question on the fields businesses also. Would you be asking that later?
Digant Haria
Yeah, maybe I’ll just ask it right away that we have seen big improvement in the performance of the cattle seed division. So is it largely to do with the raw-material or has it been our own initiative? Any color on that would be great.
A. Prabhakara Naidu
Thank you for being here. So the improvements was quite favorable in last few months. At the same time, I will say 50% contribution has come from improvement in the operational efficiency. So multiple initiatives we took and those have started contributing, that has led to improvement in the margin part.
Srideep N Kesavan
Right. Yes. Yeah. So on the question on margins, so every quarter, see, we have — within dairy, there are three sub-segments, right? One is milk, the other is value-added products and the third is fats, consumer fats and bulk fats. So let me Call-IT fats. And the mix of these or the ratios of these change in each quarter. In-quarter one, usually value-added products have tremendous contribution. Now value-added products include products such as curd, buttermilk, flavored milk, milkshake, ice creams. These are all very highly summer dependent products. And it also includes other product categories which are growing, but still small like, cheese, and other sweets, right? Now panir, cheese,, sweets, et-cetera, are you could say fairly non-seasonal.
They sell throughout the year. And sequentially because these are small businesses, sequentially they are growing. Every quarter compared to previous quarter, we are growing in these categories. But the larger value-added products, whether it is curd, buttermilk, flavored milk, ice creams, et-cetera, are highly seasonal. Now and which means that quarter one, you will always see a surge of these products and quarter three will be the rock-bottom as far as these products are concerned. Fats, on the other hand, usually surge during quarter three, quarter three October to December period is when gee butter and all is a festive period. That is when butter and all sells. Now it is very important for us to ensure that the margin profiles of each product category is protected or improving. Now if you look at the value-added, if you look at the milk gross margins, compared to-Q1, we have been able to improve the gross margins of our milk by about 1.2% in-quarter three, right? This is despite a little bit of a sequential price — price raw mill price fluctuation, right?
In terms of fat products, we have improved the gross margins by 12%, okay, on fat on fat, right? The only as — the only area where we have seen a kind of a gross margin decline is in value-added products and that is only because of the mix change. Now because ice creams like Mr Sam Aru read-out earlier that while we do about INR100 crore INR110 crores of annual revenue of ice creams, this quarter is only INR15 crores. So the — when something like that happens, you have, you know, the certain number of — certain percentage of costs that are loaded in terms of volumes. They are — you know the variable costs actually increase because of fewer units being produced, distributed, etc. Because of this value-added products come down in terms of margins. And also the mix also changes far more towards milk and fats, which are lower in gross margin. Other than that, we are not seeing any structural problem and plus the marketing costs increasing by about 0.35 percentage that I spoke about earlier.
Other than that, there is nothing structurally changing in the business. The business is strong, fundamentals are good. In fact, actually, we are very confident that we are going to enter Q4 and Q3 next year Q1 in a much, much stronger footing than we were ever before. Because you know whatever, let’s say, for example, if raw mail prices increases by INR2 or something, we are on the verge of increasing our market prices as well and that will be easily absorbed. We are entering a season where value-added products are going to come up surge again. So the ratio will again swing back to as it was earlier. I hope you understand, right? So you can’t — you can’t do compare sequential margins. I invite you and all other investors to look at year-on-year comparison of quarterly margins. And you will see that your company is actually performing strongly on a year-on-year basis.
Digant Haria
Okay. Right. Yeah, yeah. Thank you so much for this detailed explanation, Srip, and I wish you all the best. This is the first time that we are probably entering a lean season and we are still confident of maintaining or improving margins. So it would be very heartening to see that happening over next few quarters. All the best to the team. Thank you.
Operator
Thank you. The next question is from the line of Prateek Kothari with Unique PMS. Please go-ahead.
Pratik Kothari
Yes, sir, good morning and thank you. Sir, first question, this — I mean, in the present — I mean, first of all, thank you for the change in presentation. It’s much more detailed and informative. First on this VAP, right, over three years, we plan to take this from 30% to 40% in — I mean, subsequently, our gross margin also should improve. But in subsequent slides, we have mentioned that we intend to maintain this operating margins in this level of 7, 8% odd. So this delta in gross margin that we’ll achieve, I mean, how do we intend to spend this given that it wouldn’t pass to the operating margin line?
Srideep N Kesavan
Okay. So thank you, Mr Kothari. So it is correct that we are — we intend to take our value-added products to 40 percentage contribution of our revenues and you are yourself witnessing in the last three or four years consistently how it has improved. If you analyze our last three year numbers, you will see that for sure, right? Every quarter also we are in — I don’t think that in recent any of the quarters, we have talked about value-added products coming down in terms of margins. Now that said, first of all, we do not give any guidance and whatever I’m telling you should not be even taken as guidance. But because you asked such a question and it is, yeah no, but I don’t want to give us guidance.
The reason is that, yeah, so the numbers that you’re referring to is a — you could say an all-weather a fair number, because you know you operate in an industry which is cyclical in nature. So we operate in an industry where 75 percentage of our cost is actually sitting in raw-material and we have seen how while fluctuations have happened. We have — we are at this point in time coming off a peak as far as the margin profiles and potentials are concerned. We have seen how there is a gap between raw milk price increases and market milk price increases happens. There is a small delay in passing on the price increases and cost increases to the consumer.
We have also seen how our GDP rate of growth has slightly slowed down and has hit the consumption numbers, etc., across board, especially the consumer companies. Now all of that said, I will hope that you will look at the fundamentals of the business and each and every fundamental number of the business and whatever we have transparently communicated to you will continuously keep improving, which is why on a relative scale, I believe we will continuously perform better than the past. Now whether it will be 7%, tomorrow, if market is conducive, it can even be 9%, right? But those are all statements that we wouldn’t want to make. So hence, it is not a speculative number and it is a all-weather, all-season a fair number assessment. Okay. And we have always maintained that we would like to look at the EBITDA margins in 8%. The question earlier was that was not happening. Now we are all the more confident that we’ll be able to deliver that. That’s the way you should be looked at.
Pratik Kothari
Correct. So actually my question was even at 30% mix, we are achieving that. And our plan is three years out. I mean, one VAP goes up and subsequently the gross margin also goes up. So this delta do we intend to keep…
Srideep N Kesavan
What you’re saying, I understood your question. Your question is at 30% if we are at this level, at 40 percentage, we should be much better.
Pratik Kothari
Why we can be much better or you can use that to invest.
Srideep N Kesavan
Yes. So you should expect all of that to happen. So we are expecting, see, there are many — if I were to unpack that, I’ll say that at this point in time, the — someone earlier, Disha had asked this question about operating expenses increases. Now when others are all growing in single-digits, how is our company growing at 11%? So I’m saying that there are some expenses that we need to incur to keep these headlines growing as well, right? So at the same time, we are investing to create capacities in value-added products, whether it is ice-cream business and stuff like that, which will have certain depreciation costs coming in the future as well. The point is, how can we maintain a healthy growth rate over long periods of time and how can we deliver strong predictable decent EBITDA is the way we are looking at business. Now if things go well, we should be able to outperform these numbers that we have talked about as well. I hope I’ve been correctly clear.
Pratik Kothari
Fair enough. Yes, yes, very clear. Sir, second on this, the fat loss for this quarter, I mean between bulk and consumer, if you can share that data, sir.
A. Prabhakara Naidu
Actually this is, CFO. PAT losses for the current quarter is bulk INR1.29 crores. Consumer INR7.4 crores.
Pratik Kothari
Okay, sure. And sir, one on the distribution. So currently we have about 1.8 lakh retail, few heritage parlors, etc. So over-time, I mean at — I mean, what’s our intention in terms of addition to this? I mean at what run-rate are we currently adding to, be it retail outlets or our heritage or maybe even distributors.
J. Samba Murthy
During the quarter, we have added at about 242 customers in the form of heritage happiness points, agent, product distributors and all. So we are again planning to announce it further in the coming quarters as well. After this point, as on 31st December, it is 350 to 352 points of that.
Srideep N Kesavan
So we should — see, we are — we are adding close to about 35 to 40 heritage happiness points every quarter. But happiness points are not the only distribution initiative we have. We have several others as well. Like CEO just mentioned, we have added more than 200 distribution partners in the last quarter. So distribution expansion will continue to happen in the same guidance. You should expect that.
Pratik Kothari
Correct. And sir, last —
Operator
I’m sorry to you, sir. We request that you return to the questions queue for…
Pratik Kothari
Last clarification if you allow.
Operator
We have participants waiting in the queue, sir, may we request that you return to the question queue, please?
Pratik Kothari
Sure.
Operator
Thank you, sir. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference. Please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue.
The next question comes from the line of Naitik with NV Alpha Fund. Please go-ahead.
Naitik Mohata
Hi, sir. Congrats on a good set of numbers. My first question is, sir, you just mentioned that you’ve seen 10% to 12% gross margin increase in your fag products. So that is very commendable. If you could you know missed out things that has helped to contribute help to increase this gross margins.
Srideep N Kesavan
No, primarily it is a function of prices going up is what I should say. And we are at the point — at this point working on multiple initiatives. For example, the ratio of our key sale through quick commerce and e-commerce partners have increased tremendously. And our revenue realization in quick commerce and e-commerce is naturally higher because we sell smaller pack sized smaller pack SKUs in these channels compared to, let’s say, larger SKUs, which we sell-through wholesale and other grocery channel, which is slightly lesser in terms of revenue yield. But — but a large part of it, I should say, 70 percentage of it is actually driven by prices improving.
Naitik Mohata
Right. And my second question was again on sir, these alternate channels that you’re mentioning, I have seen some — the presence of yours on QuickCom and e-comm increasing, you know in the past couple of months. So just wanted to ask what sort of contribution are we getting from these alternate channels like QuickCommerce and e-commerce right now and how is it growing?
Srideep N Kesavan
It’s growing very, very, very fast for us. In fact, in many of these quick commerce channels, in our core markets, we are market leaders. Currently, as we speak now, the quick commerce channel contributes about 6.5% to 7 percentage of our revenues.
Operator
Thank you. Sir, may we request that you return to the question queue for follow-up questions. The next question comes from the line of Kiran Kumar from InvestNow. Please go-ahead.
Kiran Kumar
Yeah, hi, all congrats for the good set of numbers. INR1,000 crore in the last 3/4. I hope I am audible.
Operator
Yes, are you audible, sir.
Kiran Kumar
Yeah. So I would just limit my question to one. I would like to ask like the current volume growth compared to Q3 FY ’24. The volume of the told you I’ll —
Srideep N Kesavan
Yeah, I’ll — yeah, our Chief Operating Officer will give you the numbers, but primarily if you — if I could just kind of talk about the first point I mentioned, we have not increased prices for the last 18 months or so. So every growth is actually driven only by volumes. Yeah, but he will give the exact number.
J. Samba Murthy
So this is Moti. So milk has grown by — volume has grown by 6.08% and curd has grown by 12.37% value-added products. And overall, value-added products grown by 14%. Volume terms. Volume terms. Yeah. Pardon me.
Kiran Kumar
I think 14% with respect to, product?
J. Samba Murthy
Yeah, value-added products grown by 14.3% in volume terms and revenue terms, 17.8%.
Srideep N Kesavan
And we give more volumes?
Operator
Yeah. Kumar, may we request that you use your handset, sir. Your audio is not clear, sir.
J. Samba Murthy
It gives us. Yeah with sir.
Srideep N Kesavan
We will give you some more product growth numbers just so that you get a sense. So if you — I hope you heard milk at 5.5 percentage growth at 12.5 percentage growth. Value-added products is about 14.5 percentage growth. Now and breakup of the value-added products, some of the products growth.
J. Samba Murthy
I think drinkables, we are growing at about 23.23.2% volume and revenue at about 18% and cheese was — we are growing by 60% volume growth. So revenue also 64% and the sweets we are growing by 38% volume and revenue by 35%. And as cream is — we are growing by volume, we are growing by 71%, so revenue by 66%. These are the — some value — yeah, number of value-added products.
Srideep N Kesavan
I hope this gives a sense of kind of growth we are getting across value-added.
Kiran Kumar
Okay, we can move to the next question. So the next whoever is in the queue. Thank you.
Operator
Thank you, sir. The next question is from the line of Jain with SKS Capital. Please go-ahead. MS. Jain, your line has been unmuted. Please go-ahead with your question.
Sneha Jain
Audible?
Operator
Yes, ma’am. Yes.
Sneha Jain
So just I wanted to ask you what kind of geographical expansion or which areas are we looking at and what would be our growth driver going ahead?
Srideep N Kesavan
Thank you, Sneha, for the question. See, geographical expansion at this point in time has you know, we have — in the last six months, we have entered the Eastern markets, which is basically West Bengal and Bihar, etc. And through Amazon and other e-commerce partners, we are now fairly available across most of India. But I would invite you to think about the business going deeper, more than growing broader, right?
Even in our core markets, which is actually the southern states of India, five states and the other states where we have deep presence, whether it is Maharashtra, NCR, Haryana, et-cetera, we have quite a lot of headroom for growth. So our first and foremost priority is actually deepening in our roots in these markets and growing faster in these markets. And of course, with our ambient and longer shelf-life products like ghee and flavored milk and milkshakes and all of that, we are expanding into East of India and many other markets. We are also — exports business, as you are aware now, we are in the last 12 months, we have been exporting to the US. We have been exporting to Singapore.
We have been exporting to Middle-East. These are markets that we are trying to grow faster and — but still these are all like whether it is East of India or export markets and all of that, these are all at this point in time as far as the company is concerned, very small negligible contributions and they will continue to grow in very-high double-digits, 50%, 60% kind of thing, but still will take some time before they become significant enough for us to — for it to really impact the business.
Sneha Jain
Got it, sir. Thank you so much, Karan.
Operator
Thank you. The next question comes from the line of Dhwanil Desai with Turtle Capital. Please go-ahead.
Dhwanil Desai
Hi, good morning, everyone. So sir, my first question is on the ice-cream side, the recent capex that we are doing, I think it’s going to get optionalized in November ’25. And over next four, five years, INR100 crore ice-cream scale can go to INR500 crores INR600 crores INR700 crore kind of a number. So what are we doing at the ground level to ensure that this capacity that we are putting in get absorbed fast? What are the markets we are targeting? How are how about the freezer network and the distribution. If you can talk to your some game plan around that.
Srideep N Kesavan
Yeah. Okay. So see, we have been in ice-cream. This is something that I should say. We have been in ice-cream for the last 15 years, right? Okay, we launched ice-cream for the first time in 2008, 9. So it’s been a long-time we’ve been in ice-cream business. And primarily because our location was Hyderabad, we focused initially only in Telangana. And in the last few years, ever since COVID, we have started expanding rapidly in south of India, let’s say, for example, Bangalore, Chenna, et-cetera, which is why currently, we are almost out of capacity. We are hitting close to about INR110 crores of revenue this year. And we — that’s the reason why we have gone in for the capex. So even if the current markets continue to grow, we will need capex. So I hope you understand, right?
So the capex, you can first imagine will go to serve the needs of the existing market. That said. The capex is also allowing us to set-up a state-of-the-art factory, which is able to produce the kind of new innovative products which are we don’t have in our portfolio. That will allow us to expand into newer channels. For example, we are not so strong in e-commerce and quick commerce and all of that as with ice-cream. Maybe it will help us to expand in those channels. It will also help us with the additional capacities, expand into adjacent geographies like Maharashtra, et-cetera.
As far as the game plan and distribution is concerned, every year, we have been placing close to about 1,000 to 1,200 freezers. That’s a kind of footprint expansion that we are doing. We have close to about 7,000 stores at this point in time and that will continue to scale like that. So we expect our footprint to grow between 15% to 20 percentage in terms of retail outlets. And you know the sale throughput per store should also increase 5% to 10 percentage because of new innovative products. So net-net, we should be able to drive growth upwards of 20 percentage year-on-year on the ice-cream business. That’s the way we are looking at it at this point in time. I’m giving you broad strokes.
Dhwanil Desai
Yeah, got it, sir. Very helpful. And sir, second question is on the milk side. So our milk sales, you have guided that on the volume side, if industry grows at 2%, 3%, we will grow in mid-single digit in terms of volume. So my question is that given that we are getting deeper into existing geographies, also opening up new markets. And on procurement side, we are really doing well in terms of the volume. So is there any effort or thinking in terms of driving this growth beyond mid-single digit in terms of milk sales volume.
Srideep N Kesavan
Yeah. So yeah. Yeah, we see in the last quarter, it was 6.1%. So if you look at my request is, we can share these numbers with you. Every quarter, if you look at the last eight quarters, it’s gone up from — like it used to be 1%, 2%, then it is 3%, 4%, 5%, 6%. So every quarter, the growth is going up. So our effort and that’s what we are working towards, right? Our effort is to squeeze the maximum of what is possible.
Operator
Thank you. Our next question comes from the line of Falguni Datta with Mansuro Financials. Please go-ahead.
Falguni Dutta
Hello, good morning, sir. Sir, I have not been tracking the sector long enough. So I’ll just two basic questions. What is the milk procurement cost for us for the quarter?
J. Samba Murthy
41 rupees per liter.
Falguni Dutta
41 per liter. What is the milk realization for us?
A. Prabhakara Naidu
54.64.
Falguni Dutta
Okay. And sir, one more, basic question, sir, is there any pattern in the change in milk procurement cost, I mean when typically do the farmers increase or decrease the prices change essentially for the procurement cost. In which co-quarter if that is so?
Srideep N Kesavan
So it’s a free economy. Farmers don’t increase the price. So it’s a competitive thing. It’s usually a — it’s usually a dynamic between different players. But if it follows the simple basic principles of supply-demand when supply-and-demand match, prices remain stable. At this point in time, you would have seen several reports that said that overall volume growth in milk production is around 4% to 5% and consumption growth is also roughly following that number, which is why there is no ups and downs that we are seeing. But that said, different markets have different dynamics.
For example, in the last four or five months, Maharashtra government had given a INR5 subsidy. In fact, actually INR5 incentive for the farmers on-top of whatever is the procurement price that the organizations were paying. You know, certain other and the lean and flush also happen at various periods. For example, the flood season in North India happens usually in the October to February period, whereas in, let’s say, Thoma, the flood season happens sometime between May to December kind of thing. So these kind of things also impact. So some — in some places, there is a lot of excess inventory, the demand is less. So the prices might go down. In certain other places, supply is less and the demand is higher. So it’s actually pure dynamics.
And on-top of it, like I said, the current situation is that everything is stable. There is no problem at all, but there is inflationary pressure. Input production costs are going up, palm prices are increasing. So because of which you should expect about 4% to 5 percentage price increase, right? So it’s very difficult to explain because you said that you’re new to the sector. There are multiple dynamics that plays very complex. There are close to over eight crore milk producers in the country.
Operator
Thank you, sir. Due to time constraint, the last question is from the line of Chinmai Neima with Capital. Please go-ahead.
Chinmay Nema
Good morning, sir. Thank you for taking my question. I just wanted to continue on the milk. Look, the passing on of price variability. Just wanted to understand how does your ability to pass-on the prices compare with industry or just a qualitative commentary would do? And is it largely — and you said there is some delay in this. So is it largely driven by your procurement cycle or is it more to do with how things happen on the distribution front?
Srideep N Kesavan
Is it a function of a lot of things, but if I — if I can just qualitatively, this is SriDeep, qualitatively answer your comment. I should say that our ability to take lead-in pricing is much higher in our core markets compared to some of the markets where we are weak and new. Yeah, I guess like all of these things follow principles of economics, right? So let’s say, for example, in Delhi, I may not have the ability to take a pricing on my own. So we usually move-in cycles with industry pricing, whereas in Southern markets, we move fast and we move. But that said, there is always a — there is a delay because you know, see, usually milk and dairy as a — as a sector is very highly price-sensitive.
Unlike many other product categories, this is something that you buy every single day, every day, it’s a 365 days product, right. So any small price increase actually impacts to a much higher degree in terms of CPI, in terms of a person’s ability to spend, et-cetera. Cetera and consumption also shrinks, market shares change. So we are a little careful in terms of our pricing, timing, et-cetera. And I hope I’m able to answer you, right? And this is mostly only in milk. Moment we move to value-added products, it’s a very different game altogether because for each value-added product follows different cycles.
For example, if it is Paneer, there is no — like home, there’s no — as consumers do not have a direct linkage of Paneer price or MRP to, let’s say, say raw milk price or even market milk price. So those are all like the further we move away from pure white milk, our ability to do pricing in-line with our brand equity is much higher, even in, let’s say, non-core markets. So our primary strategy is to grow value-added products where we have ability to do our pricing, where we have the ability to increase our margin potential, whether it is core market or weak market.
Just one more line I would like to say is that while the company’s average value-added products remain at about 32% or so, in our non-core markets, let’s say, for example, Delhi, NCR or North of India or Maharashtra and all of that, the value-added product contribution there is much higher, 40% or so. Our dependence on milk is low there, which also allows us to build a more profitable business that way because there we have pricing ability as far as value-added products is concerned. I hope I’ve been able to answer that.
Chinmay Nema
Yes, that’s very helpful. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.
M. Sambasiva Rao
Thank you all for participating in this earnings con-call. I hope we were able to answer your questions satisfactorily and at the same time, offer insights into our business. If you have any further questions or would like to know more about the company, please reach-out to our Investor Relations — Investor Relations Managers at Go India Advisors. Thank you all.
Operator
Thank you. On behalf of Heritage Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.