Heritage Foods Limited

Heritage Foods Limited 114 instrumental to strengthen its supply chain and improve processes, while ensuring minimal wastage and premium quality. Further, the Company’s expenditure on marketing and advertising would help to reinforce its brand name. RISKS & CONCERNS Type of Risk Description Mitigation Strategy Competition Risk The Company faces competition from dairy co-operatives, larger private and international brands. To stay ahead of the competition, the Company has a well- framed strategy in place: • Know the competition • Winning and retaining the customers • Di ff erentiate • Step up the sustainable competitive advantage • Update its brand image • Look after the existing customers • Target new markets • O ff er online deliveries Climate Risk Extreme weather conditions such as drought, incessant rainfall and natural disasters a ff ect the average milk yield and lead to price fl uctuations, impacting the Company’s pro fi tability. The Company adopts strategic measures such as newer technologies for increased adoption by farmers to address varied climatic conditions and its impact on dairy production. Operational Risk Failure of systems/equipment, occurrence of cyber-attacks may disrupt the business operations, resulting in loss of revenues and reputation of the Company. The Company’s approach to mitigate this risk include: • Identi fi cation of risks and risk areas • Analysis, compilation and assessment of risk levels • Decisions and introduction of risk management model, tools and governance • Right people for the right job • Monitoring and evaluations at regular intervals • Periodic risk assessment Quality Risk The Company’s products are subject to inherent quality/safety issues such as contamination, adulteration or tampering which may result in product recalls and fi nancial losses. Robust Standard Operating Procedures, Good Manufacturing Practices, Process Control, Advanced Product Quality Planning FailureModes and E ff ect Analysis, Supplier Quality Management and Non-Conformances / Corrective and Preventive Actions are the measures adopted by the Company to combat quality risk. Regulatory Risk Inability to comply with the applicable laws and regulations may lead to stringent penalties, claims and reputational damage. The Company has in place sound corporate governance structure and practices in place aligned with the industry. It also has thorough understanding of both regulator expectations and business processes and challenges.At the same time, it ensures greater clarity and con fi dence around the regulatory risk framework. Raw Material Risk Continued volatility in the price and availability of raw materials on account of economic conditions, market demand, production levels could a ff ect the operational and fi nancial performance of the Company. Sourcing of the Highest Grade Materials, Incoming Raw Material Testing and Inspection, Dual Sourcing of Raw Material and Customer-Speci fi c Raw Material Requirements are the steps adopted by the Company to lower raw material risk.