Heritage Foods Limited · NSE:HERITGFOOD
Heritage Foods — Investor Presentation (2013)
51 slides from Heritage Foods's investor presentation, 2013
Slide 1: Investor Presentation FY2013
Investor Presentation FY2013
Slide 2: Disclaimer
Disclaimer The release contains forward-looking statements, identified by words like ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’ and so on. All statements that address expectations or projections about the future, but not limited to the Company’s strateg
Slide 3: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 4: Heritage - Overview
Heritage - Overview Heritage Foods (India) Limited (―Heritage‖) is a leading corporate based out of Hyderabad and operates in the high-growth Food and Retail business segments Four reporting divisions - Dairy, Retail, Agri, and Bakery Dairy (FY2013 Revenue:Rs12686mn EBITDA:Rs1219mn Capital Emp
Slide 5: Heritage - Founder
Heritage - Founder Mr Chandrababu Naidu Nara was the Chief Minister of Andhra Pradesh during 1995-2004. He holds the record of being the longest served Chief Minister of Andhra Pradesh. Heritage was founded by Mr. Nara in 1992 with an objective to assure remunerative prices to milk producers, who ne
Slide 6: Mission & Vision
Mission & Vision Mission • Bringing prosperity into rural families through Co-operative efforts and providing customers with hygienic, affordable and convenient supply of “Fresh and Healthy” food products Vision • To achieve this by delighting customers with “Fresh and Healthy” food products, that a
Slide 7: Consolidated Financial Overview
Consolidated Financial Overview The decline in profit in FY2007 and the suppressed profitability thereon is on account of the initial year of losses in the nascent Retail business 7
Slide 8: Dairy Financial Overview
Dairy Financial Overview CAGR of 25% The decline in EBITDA margin in FY2011 is on account of very rapid inflation in milk procurement prices; depressed fat prices kept the margin low in FY2012 8
Slide 9: Retail & Agri Financial Overview
Retail & Agri Financial Overview Retail Agri Capital Employed in Retail is at Rs585mn and in Agri at Rs340mn. Bakery Div. Revenue in FY2013 stood at Rs41mn and EBITDA at Rs(10.2)mn. Capital Employed stood at Rs112mn. 9
Slide 10: Organization Structure
Organization Structure BOARD OF DIRECTORS VC & MD ED CS PRESIDENT HEAD COO COO COO COO CFO QA & PD DAIRY DIVISION RETAIL DIVISION AGRI DIVISION BAKERY DIVISION FUNCTIONAL FUNCTIONAL FUNCTIONAL FUNCTIONAL HODS‟ HODS‟ HODS‟ HODS‟ 10
Slide 11: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 12: Indian Dairy Scenario
Indian Dairy Scenario In India, as in many developing countries, dairying is a supplementary enterprise to crop farming and highly integrated with the crop production sector Milk production in India is a low-input, low-output farm activity with a smallholder production system, with about three-q
Slide 13: Indian Dairy Scenario
Indian Dairy Scenario Indian Dairy Sector (FY2013) mn tons % share Milk production 134 Retained for consumption 67 50% Marketable surplus 67 50% Processed by Org. sector 26 19% Cooperatives 12 Private sector 13 Source: CLSA Asia-Pacific Markets 13
Slide 14: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 15: Spread of Operations
Spread of Operations • Widest regional footprint in India among privately held dairy companies. Spread across 6 states - Andhra Pradesh - Tamil Nadu - Karnataka - Maharashtra - Kerala - Odisha • Present in the highest milk producing states in India • One of the leading private sector dairy companies
Slide 16: Dairy Categories
Dairy Categories Revenue Split High growth of higher margin Branded Value-Added Products - Curd, Ice Cream, Paneer, Flavored Milk, Sweets Packaging partner (curd) for Nestle 16
Slide 17: Dairy Categories – Pouch Milk
Dairy Categories – Pouch Milk CAGR of 21% Liquid milk is a “fresh” product. Requires daily replenishment 90% of Heritage liquid milk is door delivered through milk agents on a daily basis 99% of liquid milk procured is sold within 24 hrs everyday 99% of the liquid milk is packed in low cost
Slide 18: Dairy Categories – Branded Value Added Products
Dairy Categories – Branded Value Added Products Curd Ice Cream & Frozen Dessert Lassi Paneer 18
Slide 19: FY2013 Key Highlights - Dairy
FY2013 Key Highlights - Dairy 16% yoy growth in turnover to Rs12686mn 4% yoy growth in Milk volume sales to 8.2LLPD (lakh litres per day) 36% yoy growth achieved in Branded Value Added Products sales 49% yoy volume and 55% yoy value growth in Packaged Curd sales (accounts for approx. 64% of
Slide 20: Activity Flow chart
Activity Flow chart Procurement Production Sales and Marketing Milk and Milk Products Milk Milk Excess Fat Converted Products To By-Products Collection of Milk from Packed Milk to Distributors Farmers Distribution Pasteurization, Point Homogenization, Modern *Kirana Standardization of milk Retail St
Slide 21: Distribution Network Structure
Distribution Network Structure One Level Two Level Three Level 87% sales 11% sales 2% sales Sales Office Sales Office Sales Office CFA/CA Agents/Retailer/Parlours Distributors/Stockists Agents/Retailers Distributors/Stockists Consumer Consumer • No of Sales offices 24 Agents/Retailers • No of Distri
Slide 22: Range of Products
Range of Products Fruit n Curd Lassi Cooking Butter PT Butter & Cheese 22
Slide 23: Range of Products
Range of Products Buffalo Ghee hae “A NE ray. ly de ex WS mS Dairy Whitener Skim Milk Powder _tcocream & Frozen pessert Bring Howe Health & Happiness
Slide 24: Welfare Activities for Milk Producers
Welfare Activities for Milk Producers Input Activities • Cattle insurance • Cattle productivity improvement - Health camps, deworming, immunization etc. - Supply of high quality fodder seeds, feed, mineral mixes - Sourcing high quality breeding bulls given to farmers at subsidized rates • Providing
Slide 25: Welfare Activities for Milk Producers
Welfare Activities for Milk Producers Farmers Welfare Trust (FWT) • Cooperative effort between milk producers and Heritage to create village-based fund pool (50-50 contribution) used for local individual and community developmental activities. • Non-supply members can also participate in welfare act
Slide 26: Quality Assurance & Technology
Quality Assurance & Technology Offering premium quality milk and dairy products to customers at reasonable prices • Scientific methods of quality checks at different levels – Industry benchmarks • Dedicated Quality Assurance & Product Development team • State of the art, sustainable infrastructure —
Slide 27: Heritage Parlour
Heritage Parlour • Heritage Parlor is a Modern “Kirana” incubated and pioneered by Heritage • Currently there are 1176 parlors with an average shop area of 100sft • Vision is to nurture entrepreneurship and to enhance inclusive growth opportunities - Owned and managed by franchisees • Selling only H
Slide 28: Heritage Parlour - Product Range
Heritage Parlour - Product Range • Every Category has its own SM (Sales Man) • Timely payment and supply: A SM travels with the delivery vehicle to deliver indent, collect cash, and the next indent • Currently Parlous benefit from existing dairy and retail distribution centers and logistics • Mercha
Slide 29: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 30: Business Profile – Retail Division
Business Profile – Retail Division • Started in 2006 as a logical extension to dairy division to benefit from the food and grocery retail boom in India • Average store area is ~3,000 sft and contains over 6,000 SKUs • A typical store is on 9 years lease • International concepts/standards in branding
Slide 31: Quality & FRESHness
Quality & FRESHness • FRESH is not just a part of our name — It is the essence of the relationship we have built with our customer — It stands for the freshness of the products we sell — It‟s also about the originality of our business model • Direct procurement of fruits & vegetables from farmers/He
Slide 32: High Productivity
High Productivity • High productivity of Rs 1101 per sft per month (FY 2013) in food & grocery retail (supermarket format) business in India • Customer satisfaction due to high quality and wide range of product availability — Sales composition: F&V – 18%, FMCG – 60%, Staples – 22% — Total 18,451 SKU
Slide 33: Well Integrated Supply Chain
Well Integrated Supply Chain • Distribution Centers (DCs) strategically located close to stores. Each of the 3 cities has a DC - Supply chain cost @ 2.93% of sales - The logistics/fleet of trucks for transportation of goods from DC to stores is contracted out • Strong internal control systems: - Hig
Slide 34: Trend of key operational & financial metrics
Trend of key operational & financial metrics 34
Slide 35: FY2013 Key Highlights - Retail
FY2013 Key Highlights - Retail SSS (considering 58 comparable stores) stood at 12.6% in FY2013. NOBs have de grown by 3% and ABV is increased by 15.6% 6% productivity growth in FY2013 on account of 22000 sq ft (approx. 10% of total area) addition at first floor level in 6 stores. Productivity
Slide 36: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 37: Integrated Agri operations
Integrated Agri operations • Pioneers in ―Custom Farming‖ in retail industry. Working closely with farmers and providing assistance regarding • Good Agricultural Practices • Annual crop calendar • Integrated Pest management • Credit linkage • Input supply • Pre/post harvest management • Farmers redu
Slide 38: Integrated Agri operations
Integrated Agri operations • State of the art Pack Houses (processing centers) • Air-conditioned and humidity controlled pack houses with cold storage facilities and ripening chambers at 2 strategic locations with a combined capacity of 300MT per day • Combined capacity expandable to 450MT with mini
Slide 39: Pack Houses Infrastructure
Pack Houses Infrastructure 39
Slide 40: Business overview - Bakery Division
Business overview - Bakery Division • State-of-the-art bakery production facility • Provides backend production services for Heritage Fresh and Private Label • Manufactures a range of breads, puffs, pastries, puddings and custards • European equipment - spiral mixers, digitally controlled laminated
Slide 41: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 42: Quality Assurance & Food Safety System
QUALITY ASSURANCE & FOOD SAFETY SYSTEM Agent Milk collecting through Laboratory tests: (Primary Collection center) strainers • Organoleptic analysis • FAT and SNF Bulk cooler & Chilling center Laboratory tests: • Organoleptic analysis • FAT and SNF • Temperature and extraneous matter • Adulterations
Slide 43: Quality Assurance & Food Safety System
QUALITY ASSURANCE & FOOD SAFETY SYSTEM Laboratory tests: Processing & Packaging • Organoleptic analysis • FAT and SNF plants ( Milk receiving • Temperature and extraneous matter in tankers) • Adulterations • Acidity, COB, Alcohol and Antibiotic test, • MBRT and Microbiological 43
Slide 44: Quality Assurance & Food Safety System
QUALITY ASSURANCE & FOOD SAFETY SYSTEM External lab tests for Milk & Milk products and Water as per: • FSSAI • IS 10500 ( NABL Accredited laboratory) Chemical tests: Microbiological Tests: • Adulterations • TPC • Naturally occurring toxins • Coliforms • Crop contaminants • E. Coli • Pesticide residu
Slide 45: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 46: Dairy strategy – Moving up the value chain
Dairy strategy – Moving up the value chain Focus on own brand value added products Curd Butter milk Frozen Dessert/Ice cream Consolidation in existing markets Expansion to new markets 46
Slide 47: Farm to fork – Integrated Retail Business
Farm to fork – Integrated Retail Business Farmer Pack Houses (F&V) FMCG Bakery Dairy Bulk Sourcing & staples Distribution centers/warehouses Flagship stores Institutional Sales Home Delivery Urban Consumers 47
Slide 48: Economic Activity - Manpower
Economic Activity - Manpower Division Regular Jobs Dairy 1864 Retail 1671 Agri 78 Bakery 43 Grand Total 3656 48
Slide 49: Agenda
Agenda I. Heritage Foods (India) Ltd. – Introduction II. Dairy Industry Scenario III. Business Overview I. Business Overview – Dairy Division II. Business Overview – Retail Division III.Business Overview – Agri & Bakery Division IV. Quality & Food Safety V. Business Strategy VI. Share Holding Patter
Slide 50: Current Share holding pattern
Current Share holding pattern As on March 2013 m n shares % holding Promoters 4.6 40% FIIs 0.2 2% Domestic Institutions 0.1 1% Others 6.7 57% Total 11.6 50
Slide 51: Thanks
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