Dodla Dairy Limited (DODLA) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Dodlai Daily Limited Q3 F526 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on utter stone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Broadla Sunil Reddy, Managing Director. Thank you, and over to you, sir.

Thank you very much. Good morning to all the participants. On behalf of Burla Dairy Limited, I extend a warm welcome to everyone joining us on our call today. On this call, I'm joined by our CEO, Mr. B.B. K. Reddy, our CFO, Mr. Mubi Mohan Raju, and SGA, our investor relations advisor. I hope that everyone had an opportunity to go through the financial results and investor presentation, which have been uploaded on the stock exchange and our company website. During the quarter, we continue to maintain our revenue growth momentum and register a top line of 1,000,025 pros with a year-on-year growth of 13.75% backed by strong volumes. This quarter performance reflects steady execution across our core business despite a challenging operating environment marked by weather-related impact on product mix and elevated procurement cost. In this backdrop, we recorded an EBITDA margin of 7.7% and a PAC margin of 6.7%. On the volume side, we saw an increase in the volumes from milk sales, herd sales, as well as WAP products on a year-on-year basis. The increase reflects our volume growth in Darla products aided by the inclusion of Osam's full quarter performance and robust growth in the African business. However, bulk sales of S&P and butter drop in negligible levels in Q3 FY26, as compared to 72 crores in the same period last year. This indicates that the entire growth is driven by liquid milk and product sales. Additional value-added products like ghee, lassi, buttermilk, and ice cream, etc., which carry higher margins, had a lower sales contribution during the quarter on a sequential basis due to the onset of earlier winters and severe winters. On a year-to-year basis, these products continue to deliver healthy growth. Typically, our procurement costs come down with the arrival of the plus season. However, the trend was reversed this time around, and we saw about a 2.5 rupees per liter sequential increase in procurement costs. This was primarily due to an industry-wide shortage of milk supply caused by erratic rainfall last year. The increase in price was even higher in regions where we have stronger presence. For instance, Maharashtra increased to about 10 percent, and the other four states was around 6 to 7 percent. The increase in cost was not fully passed on to the selling price, or to the subdued demand during the winter season, therefore focusing on maintaining market share. This created additional pressure on the gross margins. The pricing strategy is in line with industry trends, and we expect the situation to improve in the upcoming quarters. With the combination of these above factors, we have registered a gross margin of 26 percent, as against 28.2 percent in Q3 FY25. We expect some pressure to persist in Q4 FY26, with a revival anticipated as we move into summer. We also took a one-time provision of approximately 6 crores during the quarter towards the revised labor code guidelines, which was counterbalanced by a positive impact of tax reversal relating to earlier years of Rs. 22 crores due to a favorable order at ITAC. In Africa, we delivered strong year-on-year revenue growth of 34.5% during the quarter, driven by a focus on expansion in Kenya markets. We are currently pricing our products competitively to gain market share and scale. In the nine-month end of Africa operations, we have done well in terms of our operations. We have actually increased our EBITDA from 31 crores to 39 crores. Although as a percentage, it might seem slightly on the same percentages, our profitability has increased in the nine months. We see a strong growth potential in East Africa dairy markets, and towards that, we are planning for a greenfield expansion project in Uganda, where they secured a land parcel of 70 acres. We plan to do an indicative capex of around 50 to 60 years over a span of two years. With this, we expect to expand our market share in East Africa from low single digits to high single digits. This will help Gordla Dairy in capturing growing marketing opportunities in East African dairy sectors in the long term. Coming to Orga feed, this business continues to deliver stable performance with double-digit growth. The revenue for the quarter grew by 16% with an EBITDA margin of 11.6. In Q3, there was an inflationary pressure on the raw material prices for the feed business, which we did not pass on immediately to the customers to maintain farmer relationship. This resulted in some additional pressure on the margins. We will be increasing our volumes and growing this business. For the nine months, the Orga business has done well from a 13.4% EBITDA margin to around 14.3% EBITDA margin, which is roughly an increase of EBITDA from 13 crores to 17.6 crores as an absolute number. We continue to focus on product innovation. We have recently launched new offerings such as masala paneer, chocolate, milk, cake, and new flavor ice cream variants. As a people-driven business, a priority remains a strong farmer and customer relationship. We are hopeful that we will reap the benefits of this healthy relationship in the upcoming quarters. Thank you very much.

Thank you, Mr. Sunil Reddy. So I will now walk you through consolidated performance highlights of our business. During the quarter, our meal procurement stood 18.3 lakh litres per day, which is an increase of 7.5% year-on-year basis. The average procurement cost in Q3 FY26 stood 39.8 per litre as FNS 37.3 per litre in the previous quarter, and 35.6 per litre in Q3 FY25. However, we did not pass on the entire increase in cost of the customers. Our average mill sales price for the quarters took 57.7 per litre, which was 57 rupees per litre in the previous quarter, and 55 rupees per litre in Q3 of FY25. This was the primary reason for our margin being under pressure during this quarter. We expect to mitigate this situation in the coming quarters. Additionally, since there is no increase in our fixed expenses pertaining to the awesome business, we expect margin improvement once we start scaling up in terms of revenue. So now upcoming product sales mix hours. Liquid milk sales remained at a healthy level, 13.9 lakh liters per day, delivering a growth of 19.6% on year-long basis. Total value-added products stood 258 pros as a minus 281 pros in Q3 of FI25. Excluding bulk sales, WAP delivered the growth of 23% on year-on-year basis. CURT sales remained stable at 355 metric tons per day with a growth of 15.5% year-on-year basis. Other products like ghee, buttermilk, lussey, ice cream, flourmilk, etc. had a lower contribution compared to Q2 due to early offset of winter on year-on-year basis. These products continue to deliver healthy growth. So, speaking to expansion projects, our Maharashtra project is progressing as per the scheduled timelines, and is expected to start commercial operation by end of FY27. The civil work is under process, and 69-course worth investment has already been done, and we also made a decent progress towards improving OSAM business operational efficiencies. Since, after the acquisition, we are continuously working on improving its quality and upgrade the infrastructure. This will position Osam to improve its contribution towards overall profitability once we start scaling up the revenues. Lastly, as mentioned by Mr. Sunil Reddy, we are also working towards the greenfield expansion in Uganda. The project will be completed in two-phase manner. The phase one will be comprising the diverse dairy portfolio, including flavored yogurt and milk variants like, you know, torn milk, skimmed milk, and cold cream milk. Value-added products also, such as panneas, cheese, ghee, along with the mineral water. Phase two will be expanding the long-life milk, ice cream, and milk powder. This project is expected to start generating revenue by end of FY28. All these initiatives will help us to build a strong base for doterary to capture the continuously growing opportunities in India as well as Africa, and deliver a consistent growth for a longer period of time. We remain committed to discipline, capital allocation, and long-term value creation for all the stakeholders. So, with this now, I request Mr. Murali Mohan Raju to share the financial results.

Thank you, Mr. BDK Reddy, and a very good afternoon to all the participants in the call. Talking about consolidated financial performance in Q3FA26, revenue from operations for Q3 to date 1,025 crores is staying a healthy 13.7 year-over growth compared to 9.01 crores in Q3FA25. Gross profits to date 2.67 crores is a margin of 26%. From this quarter, our fixed Infra-addition towards rent, employees, travel and conveyance costs, and headcount during increase by approximately 250 employees. Higher transport costs due to a product which shift from bulk sales towards liquid milk and value-added products. EBITDA for the quarters, today, 79 crores is an EBITDA margin of 7.7%. Depreciation expense increased to 22 crores compared to 20 crores in the same quarter last year. Other income for the quarter grew by 8.3% to 12 crores on a year-on-year basis. During the quarter, we recorded exceptional items of 5.7 crores representing a one-time impact Due to an increase in gratitude liability arising out of cost service costs on account of changes in labour loss. Additionally, we received 21.8 crores of tax reversal related into earlier year due to favourable order at ITAC. Net profit for the quarter today, 69 crores with net profit margin of 6.7%. Now coming to 9-month FI26 performance. The revenue from operations grew by 8.5% year-on-year and stood at 3,051 crore as compared to 2,010 crore in previous year. Gross profits stood at 8.08 crore up 4.4% on a year-on-year basis. A bid-off for the period stood at 2.055 crore with a bid-off margin of 8.3%. We reported profit after tax of 197 crores with a tax margin of 6.5%. Thank you.

We are open for questions now.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hands-ups while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Kiran from Green Investors. Please go ahead. Yes, you may proceed with your question. As there is no response from the current participants, we will move towards the next question. The next question comes from the line of Sanjay Manial from Dam Capital Advisors. Please go ahead.

Hi, sir. Just have a few questions. One specifically regarding the When are you expected to take the price hike to sort of safeguard from this higher procurement prices, and what quantum of price hike would you require in the near term?

Basically, we will be looking at it more from a point of view of the summer setting and based on the, from a market point of view. So, as the sales volumes start to shoot up, we We normally take the price increase because we will have to compensate the lack of milk. But in terms, the other way around, if procurement does come much earlier and there is more milk, there will be a reduction in procurement and we will anyhow get the benefit of both. I think the arbitrage that we will be looking at at the current moment will be anywhere between 2 to 3 rupees as a requirement of the price increase that we need to do across the board. Roughly, we are now at a 60-61 rupees as an average realization. And with the product mix, we will have to make it to 63 or 64 rupees is where we will be looking at. From a standalone India point of view.

And my second question about the value-added part. So how should we sort of see the entire value-added part over the next, say, few years? How it is likely to grow? And what would be the larger composition of value-added? I think as of now, CURD is the maximum of the value-added part. How this will change? And will it affect our working capital? Because our working capital as of now is pretty lean. Will it also, suppose if the value-added part is sort of higher paneer and other value-added product, will it impact our working capital also over the next few years?

So basically, our value-added product portfolio has in fact grown from 23% to 25% compared last year to this year, it's grown by 2%. It was only the impact of what we had as our bulk sales, which I think was close to around 250 or 300 crores that we had last year. But it's not there this year, but it's showing the overall decline. Otherwise, we've been having good growth in our value-added products from 23% to 25%. Our milk growth has also been growing steadily. Because of the lack of the bulk volume that we have, it is showing a significant draw. Yes, they also, despite having a bad summer where there was no summer and we didn't sell our Rai Raju products, we're still being able to move our value-added portfolio. So, in my view, I think paneer is also beginning to move in from our point of view of sales, which I think has moved from around another one ton to three, four tons. Ice cream is also moving, and curd will continue to move. Paneer will be a new entrant coming in with a volume-based game that we'll be playing with. So, that will be the drivers for our value-added component as a domestic part of India. And I think over a longer period, like I've always been repeating, that it will have around a 30-32% can be the targeted value-added component in the overall composition.

And on working capital points, how is it going to affect the market?

It will be the same, sir, because whatever we do, we either move it through distributors. We have only a very small exposure that we directly sell to the modern retail where it might be a 30-day payment, but that number is very, very small. It will not move the needle at all. It is only the bulk commodity that the working capital will be required for.

Okay, sir. Thanks for the answers.

Thank you. The next question comes from the line of Aditya from Securities Investment Management. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity. Sir, I just wanted to check how the procurement price is trending in Q4. So generally, we see Q4 has higher procurement prices than Q3. So is it the case this year as well?

You see, I think for Q3 itself, our prices have gone up. So Q4 is only a marginal difference of prices. So this is what we anticipate our summer prices to be, that is, up to the March season that we see. And unless there is going to be a significant drop in milk, we don't see any more further price increases happening in Q4.

Understood. Understood. And secondly, now this Africa expansion, so just wanted to understand how big a capacity we are putting in Uganda. And from what I understand, we already have a good market share in Uganda. So, this capacity is for any other country or for Uganda only?

Basically, for Uganda only, what was earlier that we had as our capacity is for the variations that we had as earlier capacity. And that was predominantly designed for our long-life milk. The newer expansion is for entering into a whole new category of pasteurized and day-to-day milk. Mr. BDK will explain it more in detail to you.

Yes, actually, in Uganda especially, we are planning only for the Ugandan market only. In Uganda, the fresh milk sales is very dominant, actually. Loose milk sales is more, especially in Kampala City. So, our existing plant is more than 300 kilometers away from the Kampala City. Now, what we acquired land is closer to the Kampala City, capital city, 100 kilometers closer to the city. So there we are planning a fresh milk in the Kampala city because we have a lot of scope because the local dairy is also fresh milk is selling. And one more, yogurt, you know, capacity is already full, the existing plant, and yogurt plant also now we are planning, you know, bigger yogurt plant in the new capacity. And apart from that also we are planning, you know, see, maybe in future phase two, you know, ice cream, mineral water, and some Indian products like paneer, some ghee, see, because a lot of Indian population also is there. So, we take it as this is now phase 1 and phase 2.

Understood, sir. And, sir, what is the capacity for this expansion and what kind of revenue potential would be possible on full utilization?

So, this now, the new plant, what we are planning now, we are planning to set up a 3 lakh liters capacity.

Double the existing capacity and revenue, you can roughly look at it as being around that 60 rupees liter kind of a scenario. So, even if we do around 1 lakh, we can go to the 100 crores, 150 crores to start with.

Understood. And if you have to understand, what is the current market share in Uganda?

That is a very difficult question because what happens is the unorganized loose milk that is extremely large to get specific data. But I think we can still look at it as a reasonably large in terms of, you know, 3 to 5 lakh liters as the market that we are targeting as in this fresh and pasteurized milk segment along with the yogurt. In yogurt, we are a significant number one, actually.

See, the yogurt market, you know, if you see now, overall Uganda yogurt market is only available to, you know, 1 lakh liters. And then, you know, 50%, almost 40 to 50% we are doing yogurt market. See, this fresh milk, you know, fresh milk, it is totally still, it is unorganized.

Understood, sir. Understood. Sir, next was on Orga feed. So, sir, look at your revenues. They have stagnated around 40 crores for the last three quarters. So, just wanted to get a sense, how is Orga feed doing now? Because I think we were riding for around 180 to 200 crores this year, but I think we fall short on that. So, just wanted to get some sense, how are you doing on that front?

So, basically, Orga feed, like we've always been saying, that this year has been a weather anomaly of the summer not existing, which is also a peak sale for Orga. When there is no feed available, shortage will be there, and the concentrate feed also increases. In spite of that, we've been continuing to do. So, the differential will only be off by a kind of a one-month of a difference in terms of revenue. I think already we are seeing uptake or increase coming in in Jan itself. We are moving from our 5,000 pros to 6,000 tons of consumption. What can you give specifics?

The EBITDA increased to 14.3 in absolute terms, from 13 crores to 17 crores. So that is almost 33% of growth in the EBITDA itself in the Arga Peak. We are going in the right direction as of now, but we agree that there is 1 crore of shortfall in the current quarter.

Sure, sir. Wonderful. And, sir, what was the revenue on EBITDA for OUSAM this quarter?

OUSAM, I think this is the full quarter, and Angel Murli will just be giving you the specifics, sir. Yes.

The revenue for the last time we had only two months, that is 52 crores. For the current quarter, it is 80 crores in the revenue, and EBITDA last time it is 1.3, but this time it is only 85 lakhs because of so much of streamline was there, and SAP implemented, and the infrastructure was also increased.

And that's not, sir.

We are closing some uptick in the month.

Got it. And lastly, sir, what was the project sales amount?

Mr. Arit, we request that you to return to the questions for the follow-up questions. Thank you. A request to all participants, please restrict your question to one per participants. For more questions, please rejoin the queue. The next question comes from the line of Anirudh Dajoshi from ICICI Securities. Please go ahead.

Yeah, thanks for the opportunity. And sir, congrats for a good set of numbers considering the macro environment. Two questions. There is an expectation of L-Lino in this year. So how do you see the milk crisis? Because mostly it may result in higher summer days or maybe weaker rainfall also. So if that happens, how are we protected? And then second question, how are the cooperatives reacting to the milk inflationary situation? Means have they been proactive in terms of taking price hikes or there has not been much price hikes? So how do we see the situation from a competitive perspective also? Yeah, thanks. Thanks for my second.

Thank you very much, Amrita. Basically, in preparation of our Maharashtra itself, we have added a lot more capacity in terms of procurement, Chilling centers, BBK will also give you the specifics as we go forward. It has an ongoing scenario, but your question if there's an El Nino and there's a severe summer that comes in and if the gap between the sales and the procurement does keep on increasing, there will be no other option but to pass on the impact of cost to the customers, and it will happen as a regular process that goes on if the severe El Nino does come in. If not, then if it is a regular year, and I think it is my personal opinion that if the farmers have become more organized, And if we don't see that much of an impact, it will maintain status quo, and we will be able to take a price increase in the summer as the regular other value-added products will start to increase in the summer days, which we missed in the current year, financial year, which we missed in the current financial year. Coming to the cooperative, it is becoming a little more, I mean, I think everybody is sort of maintaining a status quo, not much of a difference. Maybe Amul might have done a little corrections here and there. But otherwise, I think everybody is maintaining a status quo and more or less waiting to watch and see how the mid-February or the beginning of Marches will start to turn around in terms of temperature, climate, and weather. BVK will explain a bit more in terms of the procurement and how we are trying to see to improve our procurement.

Anurudha, if you've seen, you know, last year, the entire year from January to December, we added roughly about 51 locations in the procurement. So, majority, you know, CMCs and some chilling centers. All that infra, whatever we added in this last financial year, that is going to reflect in these coming years. So, I think, you know, the kind of infra what we added, so any kind of situation, you know, will be self-sufficient in our procurement. Maybe any cost, you know, depends upon the overall market scenario, but as far as the volume is concerned, you know, that we have done enough infra, so we will not run short of any procurement.

Yeah, sure, sir. This is extremely comforting. Just one point. This year has been a bit softer for value-added products, considering the rainy season started early, and in fact, it ended also pretty late. So, for next year, do we see higher potential in the value-added products, especially ice cream and curd?

Thank you.

This is very helpful. Many thanks.

Thank you. Thank you. The next question comes from the line of Parasham Jain from VVD Asset Managers. Please go ahead.

Yeah, hi. Good morning, sir. So I have two questions. The first one is specifically with respect to Tami, which is very small right now, but growing at a very healthy case. And as a byproduct, we are also getting very... So, and India as a country, anyways, we have lower protein consumption per capita. So, overall, how are you thinking about growing both paneer as well as whey going forward?

For us, you see, paneer will not be, you know, compared to, in terms of whey, paneer, we will not be having that much of paneer in the next one year that it will come to the extent of looking at whey. In the summer months, we anyhow use the whey into our other fermented products as a regular operational process that we do. We have now moved from a one-ton scenario to a three and a half, four-ton kind of daily sales of paneer, which we are trying to see if we can push it more in terms of growth. I think the whey game will come in once we move significantly larger to 10, 15 tons of paneer per day is when we will start adding the weight requirement. That is as far as the operation it comes on in terms of the operations of what we are looking currently as a standalone. But also the other opportunity that we have is OSAM, where currently it is only 13% of OSAM sale is value-added products, which we think we can also see a significant uptake there, even if we move it back to the 20% or so on the overall size. That will also significantly add to terms of the overall value-added portfolio as we go forward in the days to come. So, paneer and way, that is to your question, and I think from a protein point of view, we are all waiting to see significantly if it is going to move from a niche product to a little bit more of a mass product, and if it does even show some traction. I think most of us are ready to immediately be able to get into the higher protein market, because it's not a very complicated part of the manufacturing side. It's more on the placement and the demand-optic side.

Understood, sir. So the second question is with respect to Maharashtra, given that next year we will start the commissioning or we will commission our factory. So given that you can keep increasing procurement in that geography to begin with, what would be the ramp-up plans in Maharashtra? Because you are already doing a lot of procurement in that state.

Right now we are doing around 2 lakhs, 2 lakhs, 10,000 procurement for Marasta. We have planned, you know, so this financial, end of this financial year, our own procurement will be around 5 lakhs. So the infra we are already creating, we have taken out manpower, the people are in the field, and we keep on expanding, we are adding new field incentives. So before commencing our plan, you know, we will have in Marasta only about 5 lakh liters. Yes. Addition will be another 3 lakhs. Existing is 2 lakhs. So, addition will be 3 lakhs procurement in this financial year.

That is from a Maharashtra point of view. Understood, sir.

Thank you, sir, and all the best. Thanks, Rajinder.

Thank you. The next question comes from the line of Abhishek Mathur from Systematic Group. Please go ahead.

Yes, sir. Thank you for your opportunity. First question is on the Uganda capacity expansion. So what is the current utilization for Kenya and Uganda, if you can give, and also for India? How will this 50 to 60 crore be funded through, will it be through internal accruals, and when is the plant commencing for Uganda? That's my first question.

Okay. So thank you very much, Abhishev. See, basically what is happening is our Kenya plant is also reaching almost full capacity utilization. Uganda, although we have a capacity that we keep declaring as relaxed, We are looking at getting more of the opportunity of the fresh side of milk, and considering both the distance that is required and the pasteurization segment, which is larger than the UHT segment in Uganda. We want to be in the whole milk cycle of the Ugandan country, and I think by going into the fresh milk, we'll do well. And also, as BVK was saying earlier, this gives us opportunities because now we have got a well-entrenched sales distribution and collection scenario with even the addition of the other things, although it might be small like middle water or the ice creams in the days to come. We will be a significantly large player there. So that is the reason why we are looking at it as an expansion to make sure that even for the next five, six years, we will be able to be very comfortable without looking and also diversify our portfolio into other Indian products like paneer, which can cater to the local population as well as the Indian diaspora. Now, bringing it to the point of the capital requirement, we generate healthy profits in Uganda, and we will redeploy only those profits. We don't need any additional money unless we see some opportunity of interest arbitrage or any other such things. Otherwise, we have enough of internal approvals to take care of our own requirement of capital growth.

And, sir, when is the plant commencing?

Two years from now, sir, we think it will be in the end of the financial year, 28.

Great, sir. And just one last bookkeeping question for me. If you can give the console overall realization and the VAP realization for the third quarter.

Well, the console for the third quarter, the VAP realization, VAP realization, console, right, sir?

The console realization is 59 rupees, console, okay? Standalone for the quadri is 60.3. And when you talk about only milk realization is 58.15 for the standalone, console 57.68. And, sir, for VAP?

For the VAP console?

Just a minute. I just, Mudri will give you the details for the VAP realization and...

WAP realisation in India per litre is basically it's a mix of 251 for the value-added products, but it is around 486 rupees.

And at the console level, sir, for the WAP?

WAP is a mix only.

Console level, that will be the console level.

Console level only. But DDL India, if you talk about only DDL WAP, it is 65 rupees because it more depends on the product mix. LDL, it is only 80 rupees. And fat products, it is a 486 for DDL India.

Understood, sir. Maybe I'll take it offline. Just a final one. In response to an earlier question, you said that in Maharashtra, you will have five Lajitas per day by the end of the current financial year before commencement of the plant. Where is the five LLPD? Where is the three extra LLPD coming from? Just wanted to clarify that.

See, the surrounding this is only, we are targeting only from our main plant, 150 kilometers radius. Today, we are setting a plant closer to the solar pore, 30 kilometers before solar pore, and we are concentrating only a couple of districts closer to the plant. So, radius is roughly about 152, 175 kilometers radius, we are concentrating.

And to add to it, there is plenty of availability there, and that's the reason we have also started the infrastructure, like we explained earlier, of these CMCs and chilling centers that we are being creating. So that, I think, it's a balancing act of when the plant comes closer to production, when do you push your procurement? So that is the way it will go forward.

All right, sir. Thank you for the responses and all the best. Thank you.

Thank you. The next question comes from the line of Praveen Kumar from Equities Capital Advisors. Please go ahead.

Yeah, hi. Thanks for the opportunity. I had a couple of questions. The first one was on the procurement in terms of the ex-OSAM kind of a procurement growth. So there, that growth seems to have been only about 1%, 1.2% year on year. So this wanted to understand, despite the contribution of Maharashtra to the procurement, if this ex-OSAM procurement has only grown 1.2%, does that indicate that procurement in a non-Maharashtra kind of geography We have kind of taken a dip during the year, and if you could throw some light on that.

No, no. Last year also, it was inclusive of Maharashtra, which Maharashtra also had, I think, 1.5 or 1.6 lakh liters of procurement was already there. It was not just that it came in the current year. Current year, maybe it increased as a, what is it, it was only the dosang that came in as additional. Yes, like we were saying, the whole reason of the shortage of milk in terms of the flush season, There has been absolutely no flush. It's been continuing to maintain only a flattish kind of growth in terms of being very flat in terms of volume of milk. And that is the reason why the whole reason of the price is increasing, sir.

So excluding also, GDM India, the growth of the procurement is 3.74%.

Q3.

Right, right. No, I was looking at more from a Q3 to Q3 perspective. That growth seems to have been pointing.

Sir, it is always too flat. One percent down, it is always too flat.

That's the whole reason, sir. Like last year, there was what we call as a flush available. This year, there has been absolutely no flush.

I understand. And the other quick question was on the margins. I think for a nine-month basis, the EBITDA margin is somewhere around 8.3%. So, I just wanted to understand, you know, previously you had talked about margin ranges being between 8% to 9% to 11%. So, do you still think, you know, given the current challenges, that is a range that can be maintained over the next two to three years, or you will look at it differently?

That is a range. Like I said, it's always, you know, it's a one-quarter issue. Like we had, in fact, it's a summer quarter not having the range as well as the winter not having flushes of any, you know, unique kind of a scenario. And even in that scenario, we've been able to maintain our average 8% margin. So it is only optimism that it can only go up and not come down. So in a good year like last year, it will go up to the 10-11%. If it is a bad year, it will move up to the 8-9% kind of a margin, which we have been saying all the time. I understand.

Thanks for the response.

Thank you. The next question comes from the line of Deepak from Unify Capital. Please go ahead.

Hello, sir. Thank you for the opportunity. So, first question, how much was the India volume growth, or X of OSA, in liquid milk and in VAP separately?

Yeah, India, total overall growth, including the bulk business, milk is 4%, excluding milk, that is, VAP is minus 3, because these are, last year we had around 312% of the bulk business. If you exclude the bulk, with regard to the milk business, we have gone by 3%, and non-milk, 3%, so 3.5%, so overall average is also 4%. But if you see the excluding the bulk, the revenue, when you talk about, so 9% was the growth in the milk, and 11% was the growth in the non-milk, without bulk. So overall, the revenue was increased by 10%. Okay.

The follow-up question to this is, you know, what's the company doing to increase the growth rate in terms of distribution touchpoints or sacrificing on pricing? Because the growth rate for the company has fallen quite a bit. So, if you can give some sense on this. And second question is, you know, the margin trajectory that you spoke about that this quarter would be the lowest. How should we look at it from a margin standpoint from Q4 and next year, given that you have visible moving parts, procurement prices, your own price hikes, competition? So how should we view growth and margins put?

So, I think we are, you know, doing this lower volume growth for us, I think, actually, we are taking it as, you know, even a tough year where we have lost one entire summer, and also having the price pressure in the winter time, we are able to maintain at least a 4-5% growth, I think, is more from a point of view of what the work has been done in terms of brand recognition and deeper penetration that is happening. And I think it depends, again, right, of the slight improvement in seasonality, and this should have been a little more to come up to the 7, 8 percent very easily. Entire summer quarter that was lost is the reason why the overall is dropping, and also a good, reasonably bitter winter that has been existing now, and we expect that to come back to the 8, 10 percent of volume, which we always keep saying. That is in the little longer term. Short term for this quarter, we will know by end February or March, we can see what the uptakes and volumes are going to be like. Now, the other question coming to the margins that we are looking at, I think we will be able to maintain the 8, 8.5% margins for the coming quarter also with the consolidate level of all Africa and all that. And there might be a slight dip from the India side because if you look at HR foods, it will be a little larger in terms of two quarters and there will be a lower margin there since we set it right. So that might bring it down a bit in terms of the overall, but it will be very small. Overall, we will be able to maintain these 8% to 9% margins for the first quarter and for the year.

Awesome. Got it. And so you mentioned about the Maharashtra procurement plan. So if you can talk about the revenue plan from Maharashtra from starting the first year, how much revenues do you expect to come? And is it entirely B2C milk, B2B milk, and what kind of margin would you make in the first year, considering the product mix and also the manufacturing cost that you have to intake?

So, roughly, we can look at the 500 to 600 crore of revenue in the first year coming in, because I look at it very simply as a BVK, there's even a 3 lakh increase with a 200 crore per lakh litre, even if I consider it to be base commodity kind of a business also, that will give that kind of 500 kind of crore of revenue. Thank you. We will also be pushing more of the consumer key and other such things. So, the variation can be put in store only bulk and nothing we do also can be between 3-4% or 5% and it can move to 7-8% of the regular operation. So, that is the range that it will be at and considering the 500-600 crore kind of a top line, purely Maharashtra additional.

Understood. And sir, from Uganda, what should be the similar financial trajectory looking like for the new plant that we are putting up, the top line that we should build in, and the margins, I suppose, are higher in Africa?

Yes, sir. So, Uganda is still two years away. We will have to wait and see exactly what we will time out at the time, but we are going at it now, at least to start with in a year of operations commencement, adding at least a hundred crore of revenue. And normally, when Uganda is also a little higher in terms of EBITDA margins, we can think of 15% kind of EBITDA margins on what we are going to be adding in the year one of operation itself. So in a couple of years, as soon as the plant turns on, that is the kind of operation size we're looking at. And in the longer term, it has also got the much larger potential of growing. If we can cross the 1.5 lakh liters kind of milk and product portfolio, it will be significantly larger.

Got it. Last question, sir. What's the balance amount of CAPEX spending for the Maharashtra plant? How are we looking to fund it? And Uganda, apart from the land, how much CAPEX will be needed?

Basically, Murali will give the specifics. I think Uganda, as you said, it's a two-year-long process. We're taking an additional 50-60 crores for Uganda. And regarding Maharashtra, Murali will give you that.

We have planned for 280 crores of capex. Out of that 69 crores we already spent, 212 crores is yet to be spent.

But all the orders have been placed. It's only the timing of everything coming into place in government.

And the funding of this would be internal accruals, right?

As of now, we are planning for a subvention scheme, but the application is in process. If that happens before March, we will do that. We will utilize that. Otherwise, we will go for the internal accruals. As of date, we have around 630 crores in the bank. So, we'll utilize that.

Thank you so much. Thanks.

Thank you. The next question comes from the line of Siddharth from Chanakya Wealth Creation. Please go ahead.

Hi, thanks for the opportunity. Just wanted to understand you spoke about the milk shortage. A, are you seeing a milk shortage being more accentuated in cow milk or in buffalo milk?

Sir, if you see the milk procurement in the first quarter, second quarter, third quarter, slightly overall procurement is coming down in India. Even in the buffalo milk also, not much of growth. See, first quarter we have done standalone in DDL 16.75 lakhs, but second quarter it became 16.7 and third quarter it became 15 lakhs. So, we are now, fourth quarter, we are expecting, and see, now averaging at only 1,400 likes. So, again, you know, the first quarter of the next year, so May, it may go up.

So, basically, our buffalo is very, very small portion. So, we are majority only in cow. And it's, I think, it's an overall, all the areas, the impact is there. It's not only being one area here and there, at India.

Got it. And therefore, in that context, the reason I was asking that is, the bulk stock sales that were there this year, Sir, how should one think about those in context of the coming financial year, you know, this procurement strategy, do you see those bulk fat sales sort of coming down? Because they are both margin and working capital intensive, margin dilutive and working capital intensive.

Yes, sir. We didn't have any bulk this year itself. Like, if you take the quarter, last year, the same quarter, we had around 70 crores. This year, it was zero, almost negligible. It was only... We might, in fact... We might become net buyers rather than net sellers if there is a remaining shortage in the quarter coming up. So, in fact, whatever you've been gearing up on Maharashtra will only work out positive for us in terms of getting more milk into the system, even if the drought sort of tends to continue.

Got it. The second question was in terms of milk procurement prices being different across states, you know, with Maharashtra having added, are you seeing the weighted average price move up for your procurement? And therefore, in context of, you know, that plan of 5 lakh liters per day, how should one think of procurement prices on a weighted average basis?

So, Maharashtra, because it's got a lot more of a commodity player, the yo-yo effect is significantly higher in Maharashtra. Like I said, if you compare it, this year, Maharashtra has gone up 10% compared to the rest of the states going by 6%. But when the drop happens, Maharashtra also drops significantly. So, I think as an average, we normally see Maharashtra to be a lower-priced player than a high-priced fast player. It is only that it goes through that little bit of that high and low seasonality that comes into play. So, that is what it will be, and the overall basket will always sort of not be significantly larger. It will be in the averages, they will all be the same.

Got it. Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one. The next question comes from the line of Reisham Mehta from GreenEdgeWealth. Please go ahead.

Thank you. So, so clearly this has been, you know, a challenging quarter. And if I were to look at, you know, the India standard on numbers and exclude fat revenues, right? So, there's been a challenge here in terms of growth for the last one and a half years, almost two years now, right? So, in FY25, if I were to exclude, you know, the FAT revenues, we grew at 7% versus FY24. And even if I look at the first nine months, and if I were to exclude the FAT revenues from the India standalone numbers, we seem to have grown in no single digits. So, what is the challenge here in India, standalone numbers excluding FAT? So, are there, you know, certain, you know, gaps or, you know, specific challenges, gaps in terms of execution, which, you know, we are trying to fix or if you would like to talk about? And also in that context, you know, what, is there some market share loss that has happened in the India business? Because if I look at our peers, the two Southern listed peers, right, they have still grown in their India business, right, over the last almost two years. So, and also, your market share estimates, if any, are they based on internal estimates, or do we subscribe to any syndicated data like Nielsen's? Yes, sir.

It's not syndicated data. Our market share estimates are only our own. But compared to the things that we're saying as the volume growth, that we look at it as a 4%, I think, even though the listed tiers do not be significantly different in terms of it. It is only the value add or the bulk sales that keep adding the differential of moving it around. The major issue that we think is that, you know, the cooperatives which are normally as comparatively sell it at a less than, we are more of a, I mean, the private sector being more at a premium sale. The B2B business is not something that we normally get to, and I think from the overall consumption pattern, most of the states we are there that the conversion from unorganized to organized is sort of over, and it's only the organized consumption growth that we are trying to cater to and keep getting more of the market share that grows. There are no more white spaces that are available. That is why we are doing our acquisitions and growing into northern India and certain territories where there is more of a white space availability. Existing markets, that is the reason why we look at them as, that is the reason that we see lower trends. The unorganized to organized is declining A, and the B2B going to more of the cooperators on a pricing ground. And we taking up more of the premium consumer market share is where it will be there.

So, from the southern markets, would it be fair to say that we have fairly, you know, become like a mature player there? Is that what you're trying to suggest? And hence, the route to grow in Indian markets would largely be, you know, inorganic?

Inorganic, yes, from the liquid milk side. But I think, again, we'll have a little more opportunity coming from the product side, where the consumption pattern in the southern states as the GDPs are growing up. More than liquid milk, it will start adding into the paneers and the curd and the lassi and buttermilk. Those will start moving in more. The value add will start moving in a little more, and the liquid milk will also move, but not in that significant volume.

And, you know, the second question is on the price hikes. So I think you did allude to, you know, the price hikes, which will be taken when the summer sets in. So, would it be fair to say that, you know, we won't be able to take price hikes before March end or early April, which means any uptick that we see in terms of margin will largely happen in, you know, the Q1 of the next financial year?

Not that way, but I think the definition of summer is going to be where we'll have to wait and watch if the temperatures start moving up in, say, mid-February, early March, then the uptake will start happening from March. So, in which it will be from April onward, definitely, because I'm sure these cold weather waves are not going to continue from the last year to the current year also, and El Nino is what the prediction is that it will be the other extreme now of severe summers.

So, the last question is basically on the Africa business. So, for nine months, what's been the broad revenue split between Uganda and Kenya? And even between these two nations, do we see any differential in the margins? And also, if you could explain, we've seen huge inflation in the African business as well. So, typically, what is the seasonality or cyclicality in terms of huge inflation?

So, Africa also does go through a seasonality of the winter rains, monsoon, and summer coming in. Uganda is a low-volume, high-margin country of operation. Kenya is a significantly larger volume, and comparatively to Uganda, maybe 2-3 percent in terms of margin being a lower margin. And we also have the interplay between Uganda and Kenya. As these two countries, sometimes when there is a shortage, if Kenya allows, we move more cheaper milk from Uganda into Kenya, and if the country does not allow it. So as a combined margin is what we maintain as both as, that's the reason why we call it as Africa, because it's sort of interlinked as both the countries. Kenya, I think, I mean, my market number is just my estimates or our company's estimates. We think of it as a 40 to 50 lakh liter kind of a market that is there in Kenya in comparison to a Uganda maybe being a 10 to 12 lakh liter kind of a market. So that is where we operate as overall. And Murali will give you the specifics of the Kenyan revenue, Ugandan revenue.

Yeah, overall revenue we are at around 354. Out of that, the major revenue LDL is 229 crores and CDDL is 142 crores.

LDL being Uganda and CDL being Kenya.

CDL being Kenya. There will be some interest in the transaction. 229, Uganda. Kenya is around 142.

And like Muddli was saying, we will have intra-company. Like I said earlier, sometimes we do sell products from Uganda into Kenya also.

The overall turnover, as I said, after the intra-company, it is 354 crores.

This is nine months, right?

Nine months. Nine months.

And so just one follow-up to the first question. Why don't we subscribe to some, you know, syndicated data like Nielsen or something of that sort?

Any specific questions? But they are not correlating to what our ground reality says. But we will try to see, and maybe offline, if you can help us in recommending anything, we will also try to see how that scale will work for us.

Sure, sure. And so lastly, just a clarification, Uganda has 200 to 300 with higher margins versus Kenya, right? All right. Thank you so much. All the best.

Thank you, ma'am. Thank you. A reminder to all participants, anyone who wishes to ask a question, may press stop and run. The next question comes from the line of Ankit Shah from White Equity. Please, Bert.

Thanks for taking my question. Sir, I just wanted revenue and EBITDA for Africa business for current quarter and same quarter last year if you can sell that.

Yeah. Current quarter revenue Africa is 133 crores. Last year, same quarter, it is 98 crores. So, there is a 34 crores of increase was there. That is almost 35%. Second, EBITDA, current quarter rate is 17 crores. Last year, it is 8 crores. That is an increase of 8.7 crores. So, overall, there is a 1.5% of increase for the quarter. Nine-month period, if you see, 31 crores increased to 39 crores. That is a 77% increase in the EBITDA. Revenue is 276 crores to 354 crores. That is, 77 crores increase. That is, 28% of revenue increase.

Right.

So, I said, our margins have actually improved in Africa, whether we look at this quarter or mine month.

That's right.

Yes, sir. Our revenues have improved in, sorry. Our margins have improved in Africa, sir. As a percentage, there might be lower because they had a significant growth in volume, but as an absolute number, there is an improvement.

Okay. All right. Thank you. Thank you. The next question comes from the line of Ventana from Common Capital. Please go ahead.

Oh, yeah. Hi, sir. So, my question is, so Dodla has always been basically the first mover in taking price hikes, but this time you say that you have not taken price hikes to maintain market share. So, I just wanted to ask, what have other players done in the market in terms of price hikes?

Nobody has taken a price hike per se, because like we said, it's normally, we have a surplus in the winter months, and then there's more of a procurement gain. There's a peculiar time when we didn't have anything in the winter months itself, and in the winter months itself, markets are subdued. I think it will be in another couple of months, once we see how the summers pan out, that there will be the price increases that will have to be passed on to the customer. So I think, like we always say, that the impact normally, which used to be a quarter, which used to take time to decide where to sterilize and pass on, this year it is extended not for one quarter, but maybe for a little more than a quarter that it is there. So we'll have to make the call, I think, as the following months come into play and we see how the weather patterns play out.

Okay. Okay, thank you. So next question. So I just wanted to know, see all, most of your peers are, you know, increasing their VAP shares, and so how do you see that as a competition?

So VAP, even our shares have increased. If you look at it, minus the bulk sales that we have done, we have grown from 23% to 25%, which is 2%. We keep saying that because the overall pie is larger, that's not difficult to say that more than the 2% growth that we look at. And also when we look at OSAM that we have added as an acquisition in a consolidated basis, that will bring it down a little more because there Africa has been only, sorry, OSAM and Bihar has only been 13%. I think once we improve that in the overall we will show, but I think stand-alone we have grown from 23% to 25% in the WAP compared to last year. In spite of having a bad summer where we didn't sell any of the higher-value added WAP products like Lassie, Thank you, ladies and gentlemen.

That was the last question for today. I now hand the conference over to the management for closing comments. Thank you, and over to you, sir.

Thank you very much, everyone, for joining us today on our earning call. We appreciate your interest in Bhavladary. If you have any further queries, please contact SGA, our investor relation advisor. Thank you very much once again. Have a great day.

Thank you all.

Thank you. On behalf of Dodala Dairy Limited, that concludes this conference. Thank you for joining us. Irini, we now disconnect your line. Thank you.