Heritage Foods earmarks ₹100 cr capex to build dairy portfolio

Will be taking its franchise-led retail formats under Heritage Parlours to new markets. By: PURVITA CHATTERJEE
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Heritage Foods has earmarked a capex of ₹100 crore for enhancing its back-end processes and servicing the trade.
Having set ambitious targets of achieving a revenue of ₹6,000 crore by 2022, the Andhra Pradesh Chief Minister Nara Chandrababu Naidu’s company is also seeking inorganic growth opportunities and joint ventures to grow its dairy portfolio.
“Being a private dairy company, we are seeking acquisitions and these would be potential candidates with expertise in quality management systems and technology. But such potential candidates should not cannibalise any of our existing line of business. Going forward, we would also seek joint ventures in non-conflict categories like fermented milk, nutrition-based beverages and more fat-based products like cheeses,’’ said Nara Brahami, Executive Director.
With a low debt equity ratio at 0.3, Heritage Foods recorded ₹100 crore profit in EBITA, having divested its loss-making retail operations last year to Future Retail. At the same time, it also acquired the dairy business of Reliance Retail for ₹62 crore. Besides, it has recently floated an equal JV with French company Novandie for manufacturing flavoured yoghurts.
“The dairy business of Reliance Retail had a turnover of ₹500 crore and we acquired it for ₹62 crore through debt, equity and internal accruals. We are integrating our operations with them and relocating some of our milk procurement centres now with access to the northern markets,’’ she added.
Besides, Heritage Foods will also be taking its franchise-led retail formats under Heritage Parlours to new markets like the North where it did not have presence in the past, post the buyout of Reliance Retail’s dairy business.
“Today we have about 1,500 Heritage Parlours and these would be taken to new markets where we already have distribution to create exclusivity for our products and also encourage entrepreneurship,’’ said Brahami.
In fact, after the acquisition of Reliance’s dairy business, Heritage Foods has managed to enhance its distribution strengths. “Today we can reach out to 50 lakh households and service 1.2 lakh retailers with about 8,000 distributors,’’ she said.
Heritage Foods has also added new divisions such as veterinary care where it manufactures cattle feed and sells it to both the general trade and its base of 3.5 lakh farmers.
“We can share the same logistics we use for procurement of milk from our existing farmers to sell them cattle feed and derive efficiencies in our operations. Last fiscal we had a turnover of ₹55 crore from this division and want to take it up to ₹400 crore in the next five years,’’ she said.
With a sales turnover of ₹1,880 crore post divesting its retail business, Heritage Foods considers ‘dahi’ as its largest selling value added dairy product in its portfolio.
 
Source: The Hindu Business
Link: http://www.thehindubusinessline.com/companies/heritage-foods-earmarks-100-cr-capex-to-build-dairy-portfolio/article9883937.ece

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