Key Financial Ratios as per SEBI Listing Obligations and Disclosure Requirements (Amendment) Regulations, 2018 Particulars 31 March 2023 31 March 2022 Current ratio 1.44 1.60 Debt equity ratio 0.22 0.02 Debt Service coverage ratio 14.26 2.77 Return on equity ratio / return on investment ratio 9.43 16.19 Inventory turnover ratio 9.28 10.76 Trade receivables turnover ratio 139.86 162.60 Trade payables turnover ratio 57.92 51.63 Net capital turnover ratio 24.04 25.40 Net Profit Margin (%) 2.05% 3.84% Return on capital employed 10.60 19.95 Growth strategy Expanding market presence in existing markets The Company strives to leverage its wide distribution network to expand deeper within existing geographies like metropolitan cities and tier 2 cities. Additionally, the organisation is reinforcing its market reach in those regions where it already exists, chiefl y through brand-building initiatives. Revamping the product segments The Company is creating a cost-eff ective supply chain to meet the growing demand for value-added products through ongoing innovation, product portfolio expansion and customer satisfaction. Enhancing manufacturing facilities The Company employs best practices to enhance capacity utilisation, operational metrics and profi tability. Driven by the desire to continuously outperform, the Company uses fl exible and aff ordable processors. The Company intends to use its Capex funds for the procurement, maintenance and improvement of its current processing and cold chain facilities. Privileging the farmers In order to increase farmers’ income and improve their socioeconomic status, the Company directly purchases milk from farmers while also helping them improve the yield of their dairy animals. Outlook The Company intends to enhance the quality of its services in locations where it already operates. Being aware of the shifting demographic factors such as changing lifestyles, rising disposable incomes and the transition towards leading a healthier lifestyle, the Company is trying to leverage its penetration strategy to expand its consumer base. The Company has a positive outlook with a targeted EBITDA margin of 7-8%. It is expanding its value-added product portfolio and capitalising on the industry’s projected doubledigit growth. The Company’s focus on bolstering demand, expanding its distribution network and boosting its eff iciency measures will contribute to sustained growth. Investments in value-added products, milk procurement and marketing campaigns are aligned with the Company’s long-term growth aspirations. Risks and concerns Type of Risk Description Mitigation plans Strategic Risk Competition: The Company is facing competition from local, domestic and international players. The Company is implementing a number of marketing initiatives, including digital campaigns, in an attempt to mitigate this risk. Considering the differentiated products of the competition, the Company plans to increase the share of value-added product sales over the next few years. Changing consumer preferences: Consumer taste shifts might negatively affect the demand for the value-added products of the Company. To meet the changing consumer demand, the Company is actively identifying shifting consumer wants and launching a variety of and value-added products. Heritage Foods Limited | 31st Annual report 2022-23 146
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