Heritage Foods Limited

STATUTORY REPORTS Board’s Report 29 th Annual Report 2020-21 | 63 Export: From India, the export of dairy products has increased to countries like Bhutan, Afghanistan, Canada, Egypt, and the United Arab Emirates. Key growth drivers of the market: India’s livestock sector is regarded as one of the largest in the world with a bovine population of 299.90 Mn, which comprises of cow’s and bu ff alo’s. The growth of the Indian dairy and milk processing market is ensured by the steady supply of milk which is the primary raw material for this industry. The major challenge faced by the Dairy Industry is the organization of the supply chain and logistics. The good part is that challenges are nothing but opportunities in disguise and in order tomeet this challenge headon, proactive steps need to be taken to empower farmers and provide a stronger supply chain for them to rely on. Even though India is the largest producer of milk in the world, the industry itself is largely unorganized, with only 28 percent of the total milk produced being channelized in an organized manner. The fi rst step to countering this would be to shift the focus to smaller dairy farms, which sometimes lack veterinary facilities and basic nutritious fodder etc. Increasing Demand for Milk and Value-Added Products With an increase in the spending power of the population, the demand for milk and other value-added dairy products is expected to increase in the coming years. In order to meet the rising demand, there needs to be a marked shift from the unorganized to the organized sector. Moreover, consumers now-a-days are not only hold greater buying power but also health conscious regarding what they consume. There is thus a necessity to provide healthy dairy products which can be readily consumed. This creates an opportunity for boutique dairy farms to set up local operations providing fresh cow or bu ff alo milk to consumers. Over and above with people having less time these days, the demand for premium value added products such as probiotic yoghurt, cheese, milk shakes etc. are on the rise. These products not only have a higher margin but also have a longer shelf life which makes the supply chain easier and cost e ff ective. The organised dairy sector is poised for healthy growth in coming years. Milk production CAGR of 5% over FY12-FY20 coupled with 5-6% in fl ation indicates 10% growth in revenue terms. Organised players account for just 28% of the overall milk market and expect their share to grow going forward. Also expect rising milk procurement prices to be passed on by B2C players, resulting in stable margins. Government Initiatives: Government is progressively taking initiatives to promote the dairy industry in India, in which inclination towards cattle breeding, clean milk production, dairy development, and feed fodder management are included. The Department of Animal Husbandry, NDDB, and other government a ffi liated institutions manage these initiatives in a constructive way. Utilizing the available resources for dairy industry to their full extent is the main objective behind these initiatives. The manner in which Dairy industry would enhance milk production and upgrade milk processing technologies, is also supervised by these departments. Your Company is a market leader in the curd segment and is now looking to expand its product basket by entering into the fastest growing product like Yoghurt, through a Joint Venture Company. The motto of your company is to empower farmers by doing the following activities • Facilitating loans for the purchase of cattle through commercial banks/ NBFCs • Facilitating cattle insurance; • Conducting veterinary camps for animals at frequent intervals; • Supply of high quality cattle feed and fodder seeds; • Helping to source good productive animals; • Supply of milk analyzers for ensuring accurate measurement of milk quality and • Ensuring timely payment to farmers. In its bid to become a pan India player, your Company has expanded its collection and distribution of products to 11 states in India coveringSouth,West andNorth India. It has almost 100% direct procurement network of 0.3 million dairy farmers across eight major milk producing States namely, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Rajasthan, Punjab and Haryana. The direct route of milk procurement enables it to maintain quality. The company also operates 189 bulk coolers, chilling plants and procured 1.3 Million liters of milk per day. It operates 18 own processing plants with installed milk processing capacity of 2.7 million liters per day. Your Company procured 1.3 Million litres of milk daily from 0.3 million farmers across eight states. The milk is directly procured from farmers which ensures greater consistency in milk quality and consistency in supply. The company’s installed processing capacity is 2.7 Million liters per day and chilling capacity is 2.13 Million LPD. After processing 1.3 Million litres milk is sold to about 1.5 Million households on a daily basis and the remaining is converted into value added products and products are available across 11 states viz. Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Uttar Pradesh and Uttarakhand.