Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Heritage Foods Ltd (NSE: HERITGFOOD) Q4 2026 Earnings Call dated May. 12, 2026
Corporate Participants:
Garima Singla — Investor Relations
Sambasiva Rao — President
Srideep N Kesavan — Chief Executive Officer
Analysts:
Sameer Gupta — Analyst
Unidentified Participant
Abhishek Mathur — Analyst
Prateek Kothari — Analyst
Rehan Sayed — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Heritage Foods Q4 and FY26 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 this conference call, please signal an operator by pressing Star then zero on your 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.
Garima Singla — Investor Relations
Thank you. Good morning everyone. I am Garima Singla and it’s my pleasure to welcome you on behalf of Heritage Food Limited. Thank you
Operator
For joining us today for Q4 and FY26 earnings conference call. This call is being hosted by Goindia Advisors. Please note that today’s discussion may include certain forward looking statements. Therefore they must be viewed in conjunction with the risk that the company faces today. On the call we are joined by Mrs. Brahmani Nara, Executive Director, Mr. M. Sama Siva Rao, Whole Time Director, Mr. Srideep K. Sivan, CEO, Mr. A. Rabhakara Naidu, CFO, Mr. J. Samba Murthy, COO Dr. Bridge Mohan, CEO, Heritage Nutrivet Limited and Mr.
Umakanta Barek, Company Secretary and Compliance Officer. I now invite Dr. Rao to present the company’s business outlook and performance. After which we will open the floor. Thank you. And over to you, sir.
Sambasiva Rao — President
Thank you very much for the introduction. Good morning to everyone on the call and thank you all for joining us today at the outset. On behalf of the entire management team at Heritage Foods, I would like to sincerely thank our farmers, employees, distribution partners, customers, consumers, shareholders and all stakeholders for their continued trust and support through what has been one of the most challenging years the diary industry has witnessed in recent times. As we close FY26, we do so with deep gratitude, resilience and optimism for the future ahead.
Now turning to quarter four and the overall performance of financial year 26. The final quarter of the year was shaped by an exceptionally tight milk supply environment, elevated procurement inflation and sustained volatility in dairy commodity markets. What made this period particularly unprecedented was that the industry experienced supply shortages not only during the lean season, but even through periods where availability is traditionally expected to improve. This created significant pressure across procurement, input costs and operating margins for the entire dairy sector.
Despite these difficult external conditions, Heritage Foods demonstrated resilience, stability and execution strength across the value chain. Our teams on the ground remain deeply committed to supporting farmers, ensuring uninterrupted supply, maintaining product quality and serving consumers consistently across markets. Despite one of the toughest operating environments witnessed by the dairy industry in recent years, Heritage Foods delivered resilient revenue performance in Q4 of FY26. Consolidated revenue for the quarter grew 10% year on year to 11,576 million rupees while full year revenue cross the significant milestone of 45,000 million rupees reaching 45,260 million rupees.
This performance reflects the strength of our brand, resilient consumer demand and sustained momentum across value added products. During the quarter EBITDA stood at 522 million rupees with an EBITDA margin of 4.5% while profit after tax stood at 230 million rupees with a PAT margin of 2.1%. Profitably remained under pressure due to unprecedented procurement inflation. However, disciplined pricing actions, improving product mix and continued operational efficiencies helped partially mitigate the impact.
Milk procurement during the quarter declined 7% year on year to 16.38 lakh liters per day reflecting persistent supply side constraints across industry. Average milk procurement prices increased sharply by 8% year on year to 46 rupees 67 paisa per liter in quarter four while for the full year the procurement prices increased 7% year on year to 44.72 rupees per litre amid industry wide milk inflation. Despite these pressures, we remain committed to our Farmer first philosophy, continuing to prioritize timely farmer payments, cattle feed support, veterinary assistance and direct engagement programs, reinforcing long term trust and supply continuity.
On the consumer side, demand remained healthy and encouraging. Milk sale volumes grew 1% year on year to 11.73 lakh litres per day during quarter four and 2% year on year to 11.83 lakh liters per day for FY26. Average milk selling prices improved 4% year on year to rupees 57.80 per liter in quarter four and to Rs. 57.13 per liter for FY26. Supported by calibrated pricing actions, sustained brand strength and stable consumer demand, Value added products once again emerged as a key growth driver for the company.
Categories such as curd, paneer, ghee, ice creams, drinkables and other high margin products delivered strong growth reflecting improving brand preference, deeper market penetration and sustained consumer engagement. Importantly, the quality of growth continued to improve. Value added products remain central to our long term strategy. With WAP revenues growing 18% year on year during Q4, contribution from value added products increased to 35.5% of overall revenues compared to 32.5% in the corresponding period last year, reflecting sustained premiumization and improving revenue mix.
This transformation not only strengthens our profitability profile over the long term, but also improves the resilience and quality of the business. From an operational perspective, our teams continue to focus sharply on efficiencies across procurement, logistics, chilling and digital interventions. These initiatives helped partially offset inflationary pressures and improve execution agility during a volatile environment. Even amidst industry headwinds, Heritage Foods continued investing confidently behind the future.
Our Hyderabad ice cream facility has now moved into production phase while the flavoured milk plant is also nearing operationalization fully. These capacities will strengthen our presence in high growth categories and position us well for the next phase of expansion. By 26 was not an easy year for the dairy industry. From erratic weather patterns and weak flush season to unprecedented butter shortages and elevated procurement costs, the sector faced several challenges at what stands out for Heritage Foods is the resilience of our business model, the dedication of our teams and the trust of millions of consumers and farmers associated with us as we look ahead.
While near term cost pressures may persist for a while, improving milk availability normalization and commodity dynamics, stronger value added products, contribution to revenue and benefits from ongoing capacity expansion give us confidence about the future trajectory of our business. We enter FY27 with cautious optimism, stronger capabilities and renewed determination. Our focus remains clear strengthening farmer relationships, driving premiumization, improving efficiencies and creating sustainable long term value for all stakeholders.
With this I would like to conclude my remarks and open the floor for interaction. Thank you very much.
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 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. We’ll take our first question from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Sameer Gupta
Hi sir, good morning and thanks for taking my question. Sir, first question has two sub questions. So the outlook on milk prices now last quarter we had mentioned that milk prices would remain firm till the advent of cow flush in May. And so here we are in May and are we seeing any signs of moderation And a sub question to this is last year was a good year in terms of rainfall which generally is seen as a positive for next year’s milk production given reservoir levels are healthy and there is ample availability of feed etc.
But this year also has an expectation of below normal rainfall. And now we are seeing inflationary pressures because of the West Asia crisis. So does it change the outlook for milk production in upcoming flesh? Your thoughts?
Srideep N Kesavan
Good morning Sameer, this is Srideep here. First of all I’d like to break down the problem into two, right? One is the volume availability or milk availability itself. And number two is the pricing. Usually whenever there is surplus milk availabilities then the prices often significantly we saw in quarter three as well as in quarter four both impacted in terms of milk availability, surplus milk availability, especially in the regions where we operate, there was a constraint which impacted the prices as well.
As we speak now, we are already seeing supply side improve in regions of dominant cow milk. So you can see that the cow milk flush has started and we are seeing the volumes being increasingly available. But it has yet to reach a place where there is sufficient surplus that the prices will start softening. So on the one hand it is a positive signal which we are all very happy about. But it has still not reached a place where it has started reducing the prices, procurement prices. That’s the first part.
The second is yes, you’re right, last year we had excessive rainfalls. But what we should also note is that rainfall happened at time when rain shouldn’t have happened. So like summer was totally washed out. Whereas during the monsoon there were several areas which had a deficit of rainfall. So the headline here is actually Climatic Gregories, the unpredictability of weather. And this in the last quarterly call also our CEO of Heritage New Tibet explained that it results in animal stress, usually hormones and all get impacted and that results in production declining or animal productivity falling.
We just hope. And again there is, like you rightly said, there is news of El Nino and all. And we are also witnessing on the same side there is good news. There is good summer happening right now. But then what we need is a balanced year. Okay? So we all hope at this point in time, we are hoping that this is a normal year. There would be monsoon as it should be, there is summer as it should be and things will normalize. But it is still too early to say.
Sameer Gupta
Just a follow up here, sir. So let’s say hypothetically this is a below normal monsoon. Will then it have, will it have implications this year itself on the cow or buffalo flush or it won’t matter. And you know that’s not a factor to look at.
Srideep N Kesavan
We shouldn’t speculate. First of all, see as a country India is the largest producer of milk in the world. We have 8 crore dairy producing households. The numbers are just too many and the regions are so India is also very large country with many geoclimatic regions. It’s very difficult to predict exactly how this will go. But then we should also understand there are multiple factors. One factor is the climatic impact on the animal productivity but the other factor is pricing. The farm level prices has never ever reached the level that it is right now.
So we feel, and as I said in the last quarterly call also that we feel at this price level farmers are profitable. And with this we expect more and more dairy farmers or more and more farmers to enter into dairy. And usually this results in production gradually increasing. And despite all other adverse factors it should result in production going up and prices softening. This has to happen. This is a fundamental basis of agricommodity cycle. So. But the thing is we shouldn’t speculate on the timing of this.
At this point in time I can only report that the cow flush has started well and we have seen volumes coming in.
Sameer Gupta
Got it sir. This is very helpful. Second question is on the CAPEX this year so we’ve seen a 380crore capex. Can you give a rough split of where exactly this has gone? Normally we do a 150 to 200 crore kind of a capex. And. And what would be the guidance for the coming upcoming year?
Srideep N Kesavan
Sure, give us a minute. Yeah. So. The bulk of the CAPEX has actually gone in plant production capacity expansion. And just give me a minute.
Unidentified Participant
Sure.
Srideep N Kesavan
Yeah. Sameer, roughly around 300 crores has gone into plant production capacity expansion. The largest proportion of this or large percentage of this has gone into our greenfield ice cream facility which we inaugurated in Hyderabad. We also inaugurated a flavored milk line that’s also a greenfield facility. This is in Tirupati. These are the two main areas where the CAPEX has gone in. We have also expanded our curd production capacity by another 50 tonnes per day. This is all in requirement as per requirement of the season.
So all investment and some small increase in buttermilk etc. So all value added products capacities where we have invested we also invested close to over 20 crore rupees in milk procurement or ceiling center capacity addition. That is in line with our year on year expansion. And the others are all minor capex and in terms of going forward, we have a couple of projects that is work in progress. We are in the process of expanding our Paneer capacity which is growing at upwards of 30% in terms of cagr volume terms which means that every two years we’ll have to almost double our capacity.
So there is a project on Paneer, There is a project on Ghee. Ghee. Consumer Ghee is actually doing very well for us this year. Again we have grown in terms of revenue we have grown upwards of 50%. So there is a project that is undergoing in this. Apart from that we have only regular capex in the pipeline.
Sameer Gupta
So 200 crore should suffice or you expect another year of more than 200 crore?
Srideep N Kesavan
Yeah, no, I think it’ll be around that amount is what we should look at.
Sameer Gupta
Got it. Sir, last question if I may squeeze in with your permission. Hello. Can I go ahead?
Operator
Yeah, please.
Sameer Gupta
So just a bookkeeping number. Bulk fat sales during the quarter and during the year.
Operator
So I believe you’re on mute mode.
Srideep N Kesavan
Bulk fat general. I can say that there was no bulk fat sale but I think CFO will give the exact number.
Unidentified Participant
Bulk fat sale for this quarter is Nothing. Actually only 2.55 crores.
Sameer Gupta
Okay, got it. And
Unidentified Participant
For the full year 37.56 crores.
Sameer Gupta
Got it sir, that’s all for me. Thanks for taking all the questions and I’ll come back in the queue for any follow ups. Thanks.
Operator
Thank you. Next question is from the line of Abhishek Mathur from Systematics. Please go ahead.
Abhishek Mathur
Yes. Hi. Good morning sir. Thank you for the opportunity. Just wanted to check sir, do you feel that due to the milk supply constraints or shortages the growth for us was held back or is currently being held back in any way versus what we could have done for the quarter or for the. For the current quarter. That’s my first question.
Srideep N Kesavan
Volume wise there was no constraint. We managed the volumes. Right. But in terms of pricing we had taken up pricing little more aggressively which might have muted the growth a little bit in terms of volumes. Especially on the milk. In the milk actually our volume growth was only about 1.2%. That was because of aggressive repeated price increases that we had to do to manage the raw milk price inflation. But otherwise supply side those it did not constrain our growth.
Abhishek Mathur
Right. A follow up on that. So the pricing that we took, what was the quantum of that for the previous quarter and currently anything that we are planning on this. On this side,
Srideep N Kesavan
Price increases, numbers. I think this is indicated in our
Garima Singla
Investor
Srideep N Kesavan
Note.
Abhishek Mathur
Yeah. Anything further? Planned sir, in the current quarter.
Srideep N Kesavan
Yeah. So we increased our meal prices by about 3.96% or 4% you could say for the quarter. And you know, across value added products we had increased prices everywhere like curd prices increased by this again a mixed change also is there because different regions might have had different impact. Even paneer we took up prices by 5%, ice cream prices went up by about 13% etc. Yeah. So as we speak now we have again increased prices selectively in several markets as in the month of April and we are continuing to review this in May also we are taking up some more prices.
Good news is that staying strong, the demand is strong and despite price increases we have been able to grow business. So that’s good news. So we are rather than picking pricing up in one shot, we are staggering it and we are taking it by different facts and different regions.
Abhishek Mathur
Right. And so can you quantify the price increase that you’ve taken in April and now in May?
Srideep N Kesavan
Suffices that. Sorry
Operator
To interrupt, the last line was not clear. Can you please repeat Sir. Yan sir,
Srideep N Kesavan
I said I won’t be able to tell you about the prices in in the current quarter but I can tell you that we are actively looking at price increases. We have done price increases as well.
Abhishek Mathur
Right. So secondly just wanted to check what is the salience of cow milk for our production and which are the regions where we are indicating that there has been a cow flush and therefore there is a recovery in supply.
Srideep N Kesavan
We have about 80 percentage cow milk in our mix and predominantly it is the south of India which is southern and coastal Andhra as well as Tamil Nadu and Maharashtra. These are main regions for us.
Abhishek Mathur
All right, great sir, thanks and all the best.
Operator
Thank you. Next question is from Nirmam from Unique pms. Please go ahead.
Prateek Kothari
Yeah, thank you for the opportunity. Just a follow up on the previous participants question. So you mentioned that milk
Garima Singla
Volumes were muted due to the price rise that we’ve taken. But volumes have been poor for quite some time now. So what are the challenges that we are facing, you know, for growing a milk sales, especially the volumes?
Srideep N Kesavan
Yes, I think the first and foremost in as far as milk is concerned, you know, see as a company we are focused on delivering a balanced growth which means that we need to sustain growth momentum in milk at the same time driving aggressive growth in value added products. And it is a fact that as a company we have sustained aggressive growth in value added products in the quarter that went by in quarter four our value added products have grown at 22.5%. And this is value added products including ghee.
And if I remove the ghee also value added products have grown at 18%. But milk growth has been about 6% out of which roughly around 1, 1.2 percentage is volume growth and the rest is revenue priceless growth. There are two factors happening. The first is that in most of our markets actually what is driving aggressive growth for us in value added products is curd. And we are seeing that households previously that used to buy milk and convert part of the milk to curd are now buying curd as well in package form.
Which is great news because the penetration of curd in households even now in south of India is only around 20 to 25%. Which means that 70 to 75% of people are still or 75 to 80% of people are still making curd at home. This is fast changing, especially with the aggressive category building work that we have done in the last four or five years. And this is helping us put ourselves in a leadership position. This is one factor. So the quantity required for the household is now breaking up into milk and curd and curd is coming home directly and hence the milk requirement is falling a bit.
This is one reason. The second reason is increasing competition and I don’t think that I can shy away from this. Every like heritage is now available in North India and West India and all of that in Mumbai, Delhi and all the same way some of the national brands are also coming to our markets. Right. So there is increased competition in all markets. And that’s also another reason why the market is getting more and more fragmented. But see, as far as we are concerned, there are two things that are most important for us.
Number one is that we hold our franchise and we sustain the momentum. Which means that we need to continue to grow and that is what we have delivered. I don’t think in any other quarter we have declared that we have degrown in volumes. We have never. So we are growing. Secondly, what is important for us is that we are aggressively driving growth in value added products to overcompensate for the limited growth in milk. And these two have worked reasonably well for us.
Garima Singla
Does that mean earlier we were expecting about 4% of volume growth in milk volumes? So does that number change going forward over in a normal situation when the supply constraints are not there,
Srideep N Kesavan
There is no supply constraint. But I’m saying yes, that is still our north star. See, the industry is expected to grow at between 3 to 4% as far as milk is concerned. And so it is our aim to grow at that rate. But this is a combination of many factors. It is a combination of like I said, consumers, consumer basket shrinking. It’s also a function of markets fragmenting, channels fragmenting. It’s also a function of various regions. It’s not like While our numbers are 1% growth region wise, there are variances also.
So we. Our aim is still to try and aim and reach that 4 percentage growth target that we have for ourselves.
Garima Singla
Thank you. And all the best.
Operator
Thank you. We’ll take our next question from the line of Resham Jain from VBD Asset managers. Please go ahead.
Garima Singla
Yeah. Hi. Good morning. So I have two questions. So first one is in the current situation how are you seeing cooperative behaving? Especially in Andhra, Karnataka and Maharashtra. Is it similar or are you seeing any difference? And are they also taking price hike?
Sambasiva Rao
We don’t have reported numbers. We don’t have their reported numbers. But all must be going through the same situations in all the regions except in Karnataka where the Nandini has reported in the news that they have achieved good, good volume of milk in this month, the last month. Because there not many people procure milk in Karnataka as there is a price discrepancy. But other states must be in the same board. But no numbers are announced by any of them.
Garima Singla
So no price hikes by cooperative incident like you took 4% price increase. Sorry sir. I missed you.
Unidentified Participant
Yeah.
Sambasiva Rao
Basically
Unidentified Participant
Some cooperatives have increased the prices
Sambasiva Rao
And some other cooperatives have not increased the prices.
Unidentified Participant
In this particularly southern region,
Sambasiva Rao
Kerala increased. Karnataka not increased. Kerala not increased. AP cooperatives increased it. And Telangana cooperative went through elections recently. Maybe we can expect the government’s form.
Garima Singla
Understood. Understood. Sir. The second question is with respect to your north and Mumbai geography. What is the contribution now coming from both this region for you in terms of revenue
Srideep N Kesavan
It’s still less than 10%.
Garima Singla
And profitability because this regions were still in the ramping up stage and profitability was low. Are you seeing improvement there?
Srideep N Kesavan
These regions are still not profitable for us. We are working towards improving the profitability. Maybe this. This current financial year, FY27 could be a year where we will see some improvement. And we get closer to breakeven. At least in one of the regions. Okay.
Garima Singla
Understood. Great,
Srideep N Kesavan
Sir. Thank you. All the best. Thank
Operator
You. Take our next question from the line of Rehan Syed from Srinitra Asset Manager. Please go ahead.
Prateek Kothari
Yeah. Good morning. So I have a couple of questions. First on your. Am I audible right?
Rehan Sayed
Yeah. Yes, sir.
Prateek Kothari
Yeah. So my first question is your. On your extreme facility in Samirpet ramp up. So just wanted to understand could manage the elaborate on the expected utilization ramp up for the Sambir pedestrian facility.
Sambasiva Rao
Can you repeat it please? On some
Prateek Kothari
I found an understanding on your expected utilization ramp up for the submit ice cream facility.
Srideep N Kesavan
Yes sir. So in the first year we are expecting the utilization to be around 35 to 40%. And we had mentioned that it will take us about six years or seven years. Six to seven years to utilize this facility completely. That is assuming that we are able to grow year on year at upwards of 20, 25%.
Prateek Kothari
Yeah. So as management has guided 500 ice cream revenue by FY30 so which implies a sharp scale up. What. So what gives you confidence in achieving this target given the highly competitive nature of this category?
Srideep N Kesavan
Now see the. Okay, see the category is. See there are many things here right to the way to look at it. First and foremost is that this is a very very fragmented category. But it requires an ice cream freezer to sell the ice cream. Which means if you place an ice cream freezer only you are selling, you must be seeing it in your own residential area where you stay.
Prateek Kothari
I
Srideep N Kesavan
Don’t know where you stay, but wherever you stay there’ll be only one brand available. And that brand sells. An ice cream is an impulse product. And if you are in a shop and the product that you get is X or a brand that you get is X, then X is what you consume. You’re not going to walk a half a kilometer to buy the brand, another brand. Right. So that is one. So we have our strength and in those areas of strength or regions of strength we are adding more freezers. And that is what is driving our growth.
And if you have seen our ice cream business in the last four or five years, it is nearly quadrupled. That’s the reason why
Garima Singla
We have
Srideep N Kesavan
Added,
Garima Singla
Otherwise we wouldn’t have added.
Srideep N Kesavan
We are continuing to see that momentum in the market. Right. Second thing that we also need to remember is that very recently we acquired majority stake in Peanut Butter and Jelly limited. It is one of the fastest growing new age ice cream brand and you know it’s available all over India. They sell high protein, zero sugar ice creams. They’re doing exceedingly well. We are co manufacturing for that as well. So that that is also being made in our factory. Now that’s also helping us utilize the plant better.
Prateek Kothari
Okay. Okay, fair enough. And my second question is around your receivable tense that has increased significantly during FY26. So could you please state the key reason behind this? This is increased Link to higher dependence on modern trade and E commerce channels where collection cycles are structurally longer.
Rehan Sayed
Can you please repeat that? Are you asking about payables or receivables?
Prateek Kothari
Receivable days. Can I repeat my question again?
Srideep N Kesavan
See the receivables were higher. Yeah, you’re right. CFO will get the exact number you have. Sir, please.
Unidentified Participant
Receivables previous year it was actually 37.52 crores. Now it has gone up to actually 64.81 crore mainly in MRF. Actually it has gone up by 26 crores.
Garima Singla
Subsequently
Unidentified Participant
They have cleared the actually and after 31st March, actually in the first week of actually the month of April it has come down. But in 30th April it came down to 51 crores. 51.67 crores.
Srideep N Kesavan
So yeah, so March to March is a transitory number. In April that has significantly come down. But even if I take 51 crores and compare it with let’s say previous financial year closing of 35 crores, it has gone up. And primarily it is because of the reason that you mentioned, which is our salience of organized trade is increasing. And organized trade there is receivables, but these are all, you know, large listed entities that we are working with, you know, most of the customers. Right. In all the large organized.
And there is, absolutely, there is. We don’t see any risk. And in terms of number of days these debtors is not more than three weeks. This, there’s nothing which is at risk at this point.
Prateek Kothari
Okay, my last question is that I just want an understanding about how Heritage is transforming into the company. So what are the biggest operational changes underway to support this transition? Because despite brand positioning, a large part of revenue still comes from milk, liquid milk. So which remains a relatively lower margin category. So over that, what time frame can the business generally start assembling an exclusively stand margin supply?
Rehan Sayed
This is Brahmani here. Thanks for the question. I think we are very much thinking in the line of the vision that we have for 2030, which is to be the most admired dairy nutrition company and we’re working strongly towards that. I think. You know, I can’t give you exact numbers, but Q1 itself is looking very interesting for us because our value added product performance is improving significantly given good weather and given the fact that we’re working with channels which are also new age in nature.
So I think we’re working positively in that direction and we aim to increase our value added product contribution towards our overall revenue by 2%, 2.5% year on year going forward. We’re also happy, as mentioned earlier, to say that some of our nutritious products are growing really fast in the market. We’re seeing very good traction in Paneer which is very nutritious by itself north of 30% in terms of growth as of last financial year. Even SKUs such as High protein Paneer are doing well in the market, especially through new age channels.
We’re also happy to share that our yogurts are doing well in the market. We did about 100 tons of sales of our high protein yogurts over Q4 which is good traction over what it was previously. We’re also seeing good traction in probiotic buttermilk which is sold in 500ml packs and which is north of about 25,000 30,000 liters per day in terms of sales. So we’ve really committed to our vision of being not just growing in value added products and improving value for all stakeholders, but also growing in nutritious products and differentiating ourselves.
And another step in that direction has been the partnership for the acquisition of majority shareholding in peanut butter and jelly or getaway ice creams. On the other hand, we are also very committed to our purpose which is doubling farmers incomes every couple of years. And I believe that this is a strong relationship that we have with farmers that secure our procurement going forward as well as share more and more of the benefit with them across our geographies.
Prateek Kothari
Okay, that’s great and thank you for answering my all questions and good luck for upcoming quarter.
Operator
Thank you. We’ll take our next question from the line of Shahzad Shra from DMETER Advisor. Please go ahead.
Garima Singla
Yeah, thank you for the opportunity. A couple of questions. One is when I look at the milk WPI chart, WPI is up from 186 to 192 over the last year which is like a 3, 3.5% increase. This is. Our procurement prices have gone up by 8%. I wanted to understand why is the difference there?
Srideep N Kesavan
Could you please repeat the question please once more? The latter part of the question or maybe the entire question.
Garima Singla
Yeah, I was saying the WPI is up from 186 to 192 which is a three to three and a half percent increase year on year. But our procurement prices have gone up by 8%. So wants to understand why is the difference there?
Srideep N Kesavan
See there is a. The WBI is something that we have put on the charts as reported from a particular source. It may not be the exact number that is Happening, you know, in the market. Actually, you know, it, it’s a country with various representations. We’ll have to look at exactly the weighted average for the regions where we are operating. Number one and number two, the, the wholesale price index is one way to look at it, but another way to look at it is actually the commodities and commodity prices.
So you know, if you look at whether it is S and P or butter and all of that, the inflation which you can look at NCDFI traded values, you will see that the inflation is roughly in the range of 8 percentage. The raw mill prices for us is a reality. And that’s something that is not just reported by Heritage but also by media in general. You can look at daily news sources which will give you a better perspective, but you can’t compare a national average with the regions where we are operating.
Garima Singla
Got it. That’s helpful. And my second question was can we see that margins have bottomed out in this quarter because you’re seeing better supply for cow milk that you’ve stated earlier. You should see a ramp up on ice cream, which is a higher margin business and you’ve taken price hikes and planning to take more price hikes as well. Can we say margins have bottomed out?
Rehan Sayed
This is Ramni. So I think when it comes to margins are a function of two things, right? Increase in growth, especially in value added products for our industry as well as procurement prices. When it comes to the former, we’re seeing very good traction already in this quarter this summer. Unlike the previous summer where it was a washout and there were incessant rains, it’s hot across our core markets and we’re seeing really good traction in terms of volumes when it comes to value added products across the board.
It could be curd, it could be buttermilk, it could be some other drinkables and not just that, even in other products which are value added in nature. So typically speaking volumes should improve during this point in time given a good peak season. But we are just at the beginning of the season so we need to wait and watch how things pan out both on the external condition side and on the procurement side.
Garima Singla
Okay, got it. Thank you and
Prateek Kothari
All the best.
Operator
Thank you. Take our next question from the line of Keshav Garg from Countercyclical pms. Please go ahead.
Prateek Kothari
The first we wanted to understand about the balance sheet. We can see some goodwill, other intangible asset, intangible asset under development which were not there last year. So if you could just tell us that what are these regarding
Unidentified Participant
Good Morning sir. Actually this is Prabhakar, cfo. In the month of actually January we have invested in Peanut PBJL company. So in that regard actually there is a purchase price allocation. Whatever the price that you have paid actual 9 crore. Then there is an agreement between the these two parties to acquire actually additional 20%. So that is a potential equation. Both together the first or second quarter it is going to be around 71% of the equation. In this regard actually there is actually whatever the assets for purchase price allocation we have engaged a consultant to the value the business.
So there is actually then tangible assets are 1.2 crores and intangible assets. I will tell you the broader numbers. Actually one minute.
Srideep N Kesavan
It’s okay. So it’s goodwill is a result of that.
Unidentified Participant
Yeah,
Prateek Kothari
Understood sir. Now what? Hello.
Unidentified Participant
Yeah.
Prateek Kothari
So my second question was that when do you foresee our value added products contribution exceeding 50% of our revenue? And let’s say for the next three to five years. What kind of volume CAGR we are looking at? What is the aspiration for the EBITDA margin? At what level? In a normal year? Not very good, not very bad. What is the steady state kind of EBITDA market margin that you have in mind and how will that for Every let’s say 5 percentage points increase in value added product contribution to our revenue mix how much does our operating margin moves up?
Everything else remaining the same. And sir, lastly sir, is there any advantage of the or disadvantage of being in let’s say Punjab which is not contiguous to our south Indian geography where we are in all the adjoining states and since the revenue is very marginal is there any gain in exiting those operations? Or is the aspiration to become a pan Indian player?
Srideep N Kesavan
Yeah. Okay. Thank you sir. You have asked a lot of questions. I hope I remember and answer. You answer all the questions. So first is with respect to value added products I think our executive director already mentioned this in her comment earlier that we are looking at expanding value added products between two to two and a half percentage every year. Two percentage is what we have delivered in the last four years. And last year actually in fact in FY26 we have expanded our value added product contribution by about 3.3%.
Right. So that’s an exceptionally good year as far as value added products is concerned. But I think on an average you can take about 2.5%. So if I take value added products inclusive of ghee which currently stands at around 40% roughly it will take another four years or so for us to reach about 50%. Right. Maybe maximum five years, but I think we should be able to get there in four years time. This is first question. Second is with respect to ebitda, what you mentioned. So if you recall last year our ebitda was about 8% and this year is about 5.9%.
So we had roughly 2%, 2.1 percentage shrinkage of EBITDA. Right? Now we know that in the milk business there is a cyclicality of plus or minus 2%. We have seen this. Actually you’re all analysts, so you can do the analysis yourself. If you take long term, last two decades, you will see that it goes up plus 2%, minus 2%. This cyclicality is something which is very difficult to get away from this business. Now our median EBITDA is roughly around 7%. So in a good year we go to about 8 or 9 percentage EBITDA and a bad year we are going down to about 5 percentage EBITDA.
Now what is to be noted here is that the fundamentals of the business have improved, which is the reason why I know that this is not a result which you all would have expected or actually will agree to. But actually if the business fundamentals had not improved with this much of inflation, we wouldn’t have been able to deliver 5.9% EBITDA. So actually we have improved. So the way I look at it, it’s about 90 basis points better than our usual delivery, actually. Which means at this point in time, if I look at a positive swing, this can go to about 9.8 percentage also.
Right? But the key point that we are looking at is that the median EBITDA that we have, it’s the normal year of 7 percentage every year we are trying to improve it. So I can say that in the last couple of years we might have moved it close to about 100bps, which is. So now our median is probably around 8%. We are trying to push our median upwards. Our objective is to take the median towards a high single digit, which is about 9%. So that in a bad year like this, our EBITDA will be around 6 and a half, 7%.
And in a good year we’ll even cross 1011 percentage. That is our effort, right? And you will see this happening significantly year on year. You will see this happening primarily due to two levers. Lever number one is value added, product contribution increasing. And lever number two is operating leverage. Now operating leverage is not just with our factories capacity utilization going up, but it is also improving performances in weaker regions like Maharashtra and north of India. Now I’ll come to the last question that you asked.
Which is why are we present in Punjab? See, our presence in Punjab is limited to Chandigarh Tri city. Right. And Chandigarh tri city is a good market for us. We are selling our business products there. See, our strategy is not to spread thin. Wherever we are present, we go deep. So in Haryana for example, we are there in Hisar. But we are not there in Rohtak. So if you go there, actually you see, you will not find the heritage in Rohtak but you will find us in Hisar. We are there in Ambala, but we are not in Kurukshetra.
So there are cities where we are present. But wherever we are present, we are present very, very strongly. We are either number two or number three player. So there is salience in the business. That’s the reason why we are there. And we are building our strength over a period in time. I hope I have been able to answer.
Prateek Kothari
Sure. So is the aspiration to become a pan Indian player or a strong regional player
Srideep N Kesavan
At this point in time? We are going deeper and deeper and deeper in the regions where we are present. We are taking very strong positions in certain value added product categories. For example, we are already nationally top five players in curd, buttermilk, paneer yogurts, ice cream. These are all products where we are betting. And we are building our strength Ghee also. Now we have become nationally top 10 player. As is our milk. Milk also we are among the national top 10 players. So there are products bets that we have taken.
And in these bets we want to get strong. Similarly in the regions or locations where we are we want to become extremely strong. And that’s the way we work. We do not believe in spreading thin. So even in Maharashtra you won’t find us in Nagpur. But we are there in Thane. But in Thane you will find us more and more. So there are regions where we go deep.
Prateek Kothari
Understood, sir. And is there? Sure. I request you to join.
Operator
Back with you please. As we have participants waiting for. Thank you. Ladies and gentlemen, we request you to restrict to two questions at a time please. We’ll take our next question from the line of Rajat Setia from. I thought pms. Please go ahead.
Garima Singla
Hi. Thanks for the opportunity. Sir, two questions. One is what is the reason for lower tax sales in this year? And secondly, on the milk volumes. You said volumes are coming in. And if you can comment on the pricing, raw material, milk pricing. If you can talk about it, that would be great as well. Thanks.
Srideep N Kesavan
Sure. So see the fats actually is lower because of bulk fat decrease. Yeah. So once again I’m just kidding. I’m giving the full year picture right? Last year roughly so the bulk fats have declined by about 70%. 70%. So we used to have 125 crores of revenue in bulk fats. This year the bulk fat revenue, I think CFO read it out earlier, is only 38 crores. Whereas our consumer fats revenue is touching close to 300 crores in revenue. It has grown at 48% which is ghee and salted butter. Right. So that’s actually good news for us.
So consumer business has grown at 48%. The bulk business or commodity business has declined by 70%. Overall if I add both, then the fats have declined by 11%. But otherwise it’s actually a strong positive performance. So one
Garima Singla
Small. The reason why bulk fat fails to come down is because of the consumer rising consumer sales or some other reason as well.
Srideep N Kesavan
There are two reasons. One is actually bulk butter prices were good, very very high. Butter prices were very high last year. So if I had surplus butter I would have actually sold in bulk butter and would have been even profitable. There could be others who would be doing the same. But because we had milk constraint and somebody asked this question, did you have enough milk for your sales? So we prioritize consumer business because that is what is repeatable. It will keep happening next year, the year after next and forever it will come.
Right? So we prioritize consumer business or branded business. And because we did that, we did not go for the opportunistic sale of Balpata where we could have actually booked some sale and booked some profit. Also we rather focused on driving our consumer ghee and consumer butter sale. Right? That’s, that’s the reality.
Unidentified Participant
Is lower because the profitability has come down as compared to the previous year. Another reason is actually
Garima Singla
No, no, the mint prices.
Unidentified Participant
You know,
Garima Singla
Procurement prices. What is the scenario right now?
Srideep N Kesavan
Procurement prices. One second. Procurement prices for the last last year Same quarter was 43 rupees 20 paise. This quarter it is 46 rupees 67 paise. And please note the way we report our procurement prices is landed to our factory. So the way you should understand is it chilling center. The way you should understand is that it is procurement price given to our farm gate price given to a farmer plus the operator commission which is actually the village level collection center expenses plus the invert freight is added to it.
Right? So that stands at 47 rupees 67 prices. So it is a increase of 3.
Unidentified Participant
46
Srideep N Kesavan
Rupees 67 paise which is an increase of 3 rupees 47 paise or 8%
Unidentified Participant
For
Srideep N Kesavan
The quarter. And for the full year it stood at 44 rupees 72 paise versus previous year full year price of 41 rupee 92 paise which is an increase of 2 rupees 80 paise. And in percentage it is 6.7% increase.
Garima Singla
And what is the trend in this? I request you to join
Operator
Back the queue please as we are participants waiting for the term. Thank you. Next question is from the line of Hitendra Pradhan from Maximal Capital. Please go ahead.
Unidentified Participant
Hi sir. I hope I’m audible so. Yes, please go ahead. Yeah, so follow up to. You know previously I just wanted to understand the procurement prices. If you can explain, you know what it is linked to. I mean what you indicated is now the. You know, it is basically we procure from farmers, farmer network and all but it is not directly like you know, linked to the WPI index or international prices. And it is kind of regional. So if you can talk about that. Because you know in last two years it has increased by five rupees whereas our mail sale price has increased by three rupees.
So just wanted to understand on the procurement side you know what, how can. What it is, what it is they benchmark with?
Srideep N Kesavan
It’s a. At the end of the day it’s a. In each village there is a supply, demand economics playing, right? It’s a simple math. If I don’t pay that price then the milk goes somewhere else. So you know, so it’s not like you are the only operator there. In each region we have different competition. So like Tamil Nadu is one of our largest procurement regions. There we compete with large private dairy companies like Hudson Agro, Alchemist etc. As well as the cooperative Aavin. So in each region there is a price that is a price discovery happens because of the different prices offered by different companies.
Same is the case with Maharashtra. Wherever we are operating, there are multiple players. So price discovery happens at the village level. And we have algorithms which tell us when we are having shrinkage of volumes and all of that. And then to sustain the volume we have to give the price so that the milk keeps flowing. Right? And of course it’s a small. Even though it’s a very large industry, it’s a small world. Everybody knows everybody’s price. It’s not a secret. So I know, we know the prices of all the players who are operating in our region that the price
Unidentified Participant
Discoveries faster and there is like, you know, competition. Yeah,
Srideep N Kesavan
Yeah, okay. Because the moment anybody increases price, the price circular is circulated. It comes in WhatsApp. Everybody can see the prices. Got it. Thank you. I
Operator
Request you to join back the queue please as we have participants waiting for their turn. Participants are requested to restrict to one question at a time please. Next question is from the line of Kiran from Green Investors. Please go ahead.
Garima Singla
Thanks for the opportunity and firstly congratulations for your fourth one. Kiram, can you use your handset
Operator
Mode please? Your audio is not clear
Garima Singla
Able to hear us?
Operator
Yes, please go ahead.
Garima Singla
Yeah, yeah. Firstly thanks for the opportunity and congratulations on the fourth and final eight row revenue mark. So I just have a couple of questions. One, what is the share of conventional GTE business? Whether it’s the new trend of E Com and Quickcom and what is the delta margin between these two channels or markets, whatever you call it.
Srideep N Kesavan
Yeah. So general Trade contributes about 80% of our revenue and modern trade contributes Modern trade and E commerce, quick commerce contribute about 20% the revenue. And in terms of margins they’re comparable. Of course you know, it’s the right number to look at. It is product to product, region to region because the mix actually makes a lot of difference. For example, even as we speak now, fats for us make loss. We make about 6 percentage loss in fats. And the contribution of sale of fats through organized trade is much higher because of which the weighted average margins come down or for that matter quick commerce.
Quick commerce. A large percentage of sale is still milk, which milk has got lower profitability compared to value added products. So all these mix being kept aside, the margins are comparable.
Garima Singla
Okay, so you don’t much.
Operator
One question please. Thank you. Next question is from the line of Abhishek Mathur from Systematics. Please go ahead.
Abhishek Mathur
Yes, thank you for the opportunity. Just one question. What is the trend that you’re seeing on the fodder cost for the farmers? Do you see the fodder cost for the farmers inflating or how is the trend you’re seeing now? That’s it.
Srideep N Kesavan
So if I understand the question that you’re asking the farmer, you know. Yeah, the fodder coast as of today. If you remember the last time when I shared three months ago during the summer, the fodder is getting little weaker, the availability gets weaker. The second input which I would like to share with everybody is that we have fortunately a good surplus on the energy crops like corn, the maize. What we have and we do not have much of exports as in today prices are relatively helpful to us. That means the farmer is having energy, you know, surplus forage.
But at the same time the difficulty is coming from the protein side, the fodder which having a similar availability but the prices are on the higher side. So overall to conclude on your question is fodder side plus the feed side we are in a very good situation. Only the prices are little towards the higher side since November 2025 and continuing until today. But we are expecting to have some reduction possibly in this quarter, possibly by next month itself.
Operator
Thank you. Next question is from the line of Resham Jain from VVD Asset Managers. Please go.
Garima Singla
Yeah, hi. Yeah, hi. So you mentioned that your paneer sales is seeing a very good growth. But while manufacturing paneer you get whey as a byproduct. So what are you doing with whey and any plans to enter into whey protein or is it too small right now to get into it?
Srideep N Kesavan
It’s something that we are considering at this point in time. We are using our whey for various things including we also have certain drinkable that we sell in the market such as glucosetti. This competes with the. Even though it’s very, very small at this point in time. But we are, we are doing some products. But of course, yeah, let’s say bay powder and all are things that we are looking at at this point in time. It’s, it’s. It’s a. See, we need to look at, see the way our capex. I think a gentleman asked in the beginning about our capex philosophy.
Our capex philosophy we take balanced and measured risks and so we balance our capex with projects which have got short gestation such as curd, paneer etc. Very short gestation because the roce of curd is very similar to milk. Right? So. And it generates quick free cash flow and we match that with long gestation projects such as ice cream, etc. So, so there is a. You know, we look at. So there is a plan that we have in the long range and you will see these things coming up. Timing is what we’ll upload.
Operator
Thank you ladies and gentlemen. Due to time constraints, that was the last question for today. I now hand the conference over to Dr. Rao for closing comments. Over to you sir.
Sambasiva Rao
Thank you all for your continued interest in heritage foods and looking forward to interact with you in the course of coming months. Thank you. Good day. Thank
Operator
You on behalf of Heritage Foods Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your line.