Ladies and gentlemen, good day, and welcome to Dodla Dairy Limited, Q3 FY 2026 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 your touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dodla Sunil Reddy, Managing Director. Thank you, and over to you, sir.
Thank you very much. Good morning to all the participants. On behalf of Dodla 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.V.K. Reddy, our CFO, Mr. B. Murali Mohan Reddy, 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 continued to maintain our revenue growth momentum and register a top line of INR 1,025 crores, 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 broad backdrop, we recorded an EBITDA margin of 7.7% and a PAT margin of 6.7%. On the volume side, we saw an increase in the volumes from milk sales, curd sales, as well as VAP products on a year-on-year basis. The increase reflects our volume growth in Dodla products, aided by the inclusion of Osam's full quarter performance and robust growth in the African business. However, bulk sales of SMP and butter dropped to negligible levels in Q3 FY 2026, as compared to INR 72 crore 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, et cetera, 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 flush season. However, the trend was reversed this time around, and we saw about INR 2.5 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. This increase in price was even higher in regions where we have stronger presence. For instance, Maharashtra increased to about 10%. In the other four states, it was around 6%-7%.
The increase in cost was not fully passed on to the selling price, owing to the subdued demand during the winter season, therefore focusing on maintaining market share. This created additional pressure on the gross margin. 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%, as against 28.2% in Q3 FY 2025. We expect some pressure to persist in Q4 FY 2026, with a revival anticipated as we move into summer. We also took a one-time provision of approximately INR 6 crore during the quarter towards the revised labor code guidelines, which was counterbalanced by a positive impact of tax reversal relating to earlier years of INR 22 crore, due to a favorable order at ITAT.
In Africa, we delivered strong year-on-year revenue growth of 34.5% during the quarter, driven by a focus on expansion in Kenyan markets. We are currently pricing our products competitively to gain market share and scale. In the nine months ended of Africa operations, we have done well in terms of our operations. We have actually increased our EBITDA from INR 31 crore to INR 39 crore. 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 we have secured a land parcel of 70 acres. We plan to do an indicative CapEx of around INR 50 crores-INR 60 crores 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 Dodla Dairy in capturing growing marketing opportunities in East African dairy sectors in the long term. Coming to Orgafeed, 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 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 INR 13 crore to INR 17.6 crore as an absolute number. We continue to focus on product innovation. We have recently launched new offerings such as masala paneer, chocolate paneer, milk cake, and new flavor ice cream variants. As a people-driven business, our 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. With this brief, I now hand over to our Chief Executive Officer of our company, Mr. B.V.K. Reddy. 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 milk procurement stood 18.3 lakh liters per day, which is an increase of 7.5% year-on-year basis. The average procurement cost in Q3 FY 2026 stood INR 39.8 per liter, as against INR 37.3 per liter in the previous quarter, and INR 35.6 per liter in Q3 FY 2025. However, we did not pass on the entire increase in cost of the customers. Our average milk sales price for the quarter stood INR 57.7 per liter, which was INR 57 per liter in the previous quarter, and INR 55 per liter in Q3 of FY 2025. This was a 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 Osam business, we expect margin improvement once we start scaling up in terms of revenue. So now, upcoming product sales mix. Our liquid milk sales remained at a healthy level, 13.9 lakh liters per day, delivering a growth of 19.6% on year-on-year basis. Total value-added products stood INR 258 crore as against INR 281 crore in Q3 of FY 2025. Excluding bulk sales, VAP delivered a growth of 23% on year-on-year basis. Curd sales remained stable at 355 metric tons per day, with a growth of 15.5% year-on-year basis. Other products like ghee, buttermilk, lassi, ice cream, flavored milk, et cetera, had a lower contribution compared to Q2, due to early onset of winter on year-on-year basis. These products continue to deliver healthy growth.
Speaking to expansion projects, our Maharashtra project is progressing as per the scheduled timelines, and is expected to start commercial operation by end of FY 2027. The civil work is under process, and INR 69 crore worth investment is already been done. We also made a decent progress towards improving Osam business operational efficiencies. Since after the acquisition, we are continuously work 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 a greenfield expansion in Uganda. The project will be completed in two phase manner. The Phase I will be comprising the diverse dairy portfolio, including flavored yogurt and milk variants like, you know, toned milk, skimmed milk, and full cream milk.
Value-added products also, such as paneer, cheese, ghee, along with the mineral water. Phase II will be expanding the long-life milk, ice cream, and milk powder. This project is expected to start generating revenue by end of FY 2028. All these initiatives will help us to build a strong base for Dodla Dairy to capture the continuously growing opportunities in India as well as Africa, and deliver a constituent 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. B. Murali Mohan Reddy to share the financial reviews.
Thank you, Mr. B.V.K. Reddy, and a very good afternoon to all the participants in the call. Talking about consolidated financial performance in Q3 FY 2026. Revenue from operations for Q3 stood at INR 1,025 crore, maintaining a healthy 13.7 year-on-year growth, compared to INR 901 crore in Q3 FY 2025. Gross profits stood at INR 267 crore, with a margin of 26%. From this quarter, our fixed expenses include impact of Osam in fullness. Employee expenses for the quarter increased by 30% to INR 52 crore on a year-on-year basis. Other expenses increased broadly in line with the revenue as a percentage of sales, and stood at INR 135 crore, compared to INR 118 crore in Q3 FY 2025.
However, in absolute terms, there was an increase, which was primarily driven by the volume growth of 15% on total dairy value, infra addition towards rent, employees, travel and conveyance costs, as headcount during increased by approximately 250 employees. Higher transport costs due to a product mix shift from bulk sales towards liquid milk and value-added products. EBITDA for the quarter stood at INR 79 crore, with an EBITDA margin of 7.7%. Depreciation expense increased to INR 22 crore, compared to INR 20 crore in the same quarter last year. Other income for the quarter grew by 8.3% to INR 12 crore on a year-on-year basis. During the quarter, we recorded exceptional items of INR 5.7 crore, representing a one-time impact due to an increase in gratuity liabilities arising out of past service costs on account of changes in labor laws.
Additionally, we received INR 21.8 crore of tax reversal relating to earlier year due to favorable order at ITAT. Net profit for the quarter stood at INR 69 crore, with net profit margin of 6.7%. Now, coming to nine months FY 2026 performance. Revenue from operations grew by 8.5% year-on-year, and stood at INR 3,051 crore as compared to INR 2,810 crore in previous year. Gross profit stood at INR 808 crore, up 4.4% on a year-on-year basis. EBITDA for the period today, INR 255 crore, with EBITDA margin of 8.3%. We reported profit after tax of INR 197 crore, 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 one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets 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 participant, we will move towards the next question. The next question comes from the line of Sanjay Manyal from DAM Capital Advisors. Please go ahead.
Hi, sir. Just have a few questions. One, specifically regarding 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 in, based on the, from a market point of view. So as the sales volumes start to shoot up, we normally take a price increase because we will have to compensate that lack of milk. But in terms, the other way around, if procurement does come much earlier and if 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 INR 2-INR 3 as a requirement for the price increase that we need to do across the board.
Roughly, we are now at INR 60-INR 61 as an average realization, and with the product mix, we will have to make it to INR 63 or INR 64 , is where we'll be looking at from a standalone India point of view.
Okay. Okay, sir. 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 for 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 to 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 INR 250 crore or INR 300 crore that we had last year, that is not there this year. That is 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 drop.
Yes, there are also with the—despite having a bad, you know, summer, where there was no summer and we didn't sell our high-value products, we've still been able to move our value-added portfolio. So in my view, I think Paneer is also beginning to inch up from our point of view of sales, which I think has moved from around 1 ton to 3-4 tons. Ice cream is also moving, and curd will continue to move. Paneer will be a new entrant coming in with the 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.
I think over a longer period, like I've always been repeating, that that it'll have around a 30%-32% can be the targeted value-added component in the overall composition.
On working capital front, sir, how it would impact the working capital?
For us, it will remain 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 won't move. 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. 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. So 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. But 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, sir. And sir, 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?
It's basically for Uganda only. What was our earlier that we had as our capacity is for the flush, the variations that we have 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. B.V.K. will explain it more in detail to you.
Yes, actually, in Uganda especially, you know, we are seeking planning only for Ugandan market only. In Uganda, you know, the fresh milk sales is very dominant actually. Loose milk sales is more in, especially in Kampala city. So our existing plant is, you know, more than 300 km away from the Kampala city. Now, what we acquired land is, you know, is closer to the Kampala city, capital city, 100 km closer to the city.
So there we are planning fresh milk in the Kampala city because we have a lot of scope, because the local dairies 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 II, 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 up. This is, you know, Phase I and Phase II.
Understood, sir. And sir, what is the capacity for the, 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.
So
Yeah, doubling the existing capacity. And revenue, you can roughly look at it as being around that, INR 60/liter kind of a scenario. So even if we do around 1 lakh, we can go to INR 100 crore-INR 150 crore to start with.
Understood. If I have to understand, what is the current market share in Uganda?
That is a very difficult question, because what happens is, 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, 3-5 lakh liters, as the market that we are targeting as in the fresh and pasteurized milk segment, along with the yogurt. In yogurt, we are, we are equivalent number one, actually. See, the yogurt market, you know, if you see in the overall Uganda yogurt market is only roughly about, you know, 1 lakh liters. And then, you know, 50%, almost 40%-50% we are doing yogurt market. See, the, this fresh milk, you know, fresh milk, it is totally still, it is unorganized.
Understood, sir. Understood. Sir, next was on Orgafeed. So if I look at your revenues, they have stagnated around INR 40 crores for the last three quarters. So just wanted to get a sense, how is Orgafeed doing now? Because I think, we are guiding for around INR 110 crores-INR 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, Orgafeed, like we were 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 cattle feed available, shortage will be there, and so concentrate feed also increases. In spite of that, we have 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 January itself. We are moving from our 5,000 tons to 6,000 tons of specifics.
Last year, if you see Orgafeed quarterly revenues, which was very, like 31, 32, 34, and 33, average around INR 33 crores. But if you see current quarter, we are at...
On quarter basis, there is 16% growth in the revenue, and on nine months period also, there is almost a 24% growth in the revenue. Even if you see bottom line also, even for the quarter, little lower side, but if you see nine months period, we are at 13.4% of EBITDA, increase to 14.3. In absolute terms, from INR 13 crore to INR 17 crore. So that is almost a 33% growth in the EBITDA itself in Orgafeed. We are going in the right direction as of now, but we agree that, there is INR 1 crore of shortfall in the current quarter.
Sure, sir. Understood. Sir, what was the revenue and EBITDA for Osam this quarter?
Osam, I think this is a full quarter, and I think Murali will just be giving you the specifics, sir.
Yeah. The revenue for the, last, last time we had only two months, that is INR 52 crores. For the current quarter, it is INR 80 crores is the revenue. And EBITDA, last time it is INR 1.3, but this time it is only INR 85 lakhs because of so much of streamline was made, and SAP implemented, and infrastructure was also increased.
Understood, sir.
We are seeing some uptake in the market.
Got it. Lastly, sir, what was the current fleet amount?
Mr. Aditya, we request that you to return to the questions for the follow-up question. Thank you. A request to all participants, please restrict your question to one per participant. For more questions, please rejoin the queue. The next question comes from the line of Aniruddha Joshi 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 El Niño in this year. So how do you see the milk prices? 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 sake.
Thank you very much, Aniruddha. Basically for, you know, in preparation of our Maharashtra itself, we have added a lot more capacity in terms of procurement, chilling centers. B.V.K. will also give you the specifics as we go forward. It is, as an ongoing scenario. But to your question, if there's an El Niño and there is 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 Niño does come in.
If not, and if it is a regular year, and I think it is my personal opinion, that is, 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 for as the regular other value-added products will start to increase if the El Niño summer days are good, which we missed in the current year, financial year, which what we missed in the current financial year. Coming to the cooperatives, it is becoming a little more hazy. 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, more or less waiting to watch and see how the mid-February and or the beginning of March will start to turn around in terms of temperature, climate, and weather. B.V.K. will explain a bit more in terms of the procurement and how we are trying to see to improve our procurement.
Amruta, if you've seen our 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 we-- I think, you know, the kind of infra what we added, so any kind of situation, you know, we'll 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?
More than ice cream, we, we are confident that our paneer and curd will move up the sale. And Osam also, which we have acquired, has a little lower in terms of value-added products there as consolidated. But I think from a standalone of India minus Osam, we will increase our paneer, curd, and because if the summer comes as we say El Niño, the what we missed out on the first quarter of this year will again come back and will be showing stronger growth. And I think it will do well for us this year.
Okay. Sure, sir. Very helpful. Many thanks.
Thank you.
Thank you. The next question comes from the line of Resham Jain from DSP Asset Managers. Please go ahead.
Yeah. Hi, good morning, sir. So, I have two questions. The first one is, specifically with respect to paneer, which is very small right now, but growing at a very healthy clip. And, as a by-product, we are also getting whey. 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, say, in terms of whey, paneer, we will not be adding 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, let's say, a 1-ton scenario to a 3.5-4 tons kind of a 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 whey requirement.
That is as far as the operation is concerned in terms of paneer and protein requirement coming from our operations or 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 product, 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 whey, 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.
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, it's not a very complicated, part on the manufacturing side. It's more on the placement and the demand uptake side.
Understood, sir. So the second question is with respect to Maharashtra. Given that, next year, we will start, the commissioning or we will, we'll commission our factory. So, given that, you can keep increasing procurement in that geography, to begin with, what could be the, like, the ramp-up, plans in Maharashtra? Because you are already doing lot of procurement in that state.
No, right now we are doing around 2 lakh 10 thousand procurement from Maharashtra. 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 on the field, and we keep on expanding. We're adding new chilling centers. So before commencing our plant, you know, we will have in Maharashtra, roughly about 5 lakh liters. Okay. Addition will be another 3 lakhs. Existing is 2 lakhs, so additional there will be 3 lakhs procurement in this financial year. That is from a Maharashtra point alone, sir.
Understood, sir. Thank you, sir, and all the best.
Thanks, Resham.
Thank you. The next question comes from the line of Abhishek Mathur from Systematix Group. Please go ahead.
Yeah, hi, sir. Thank you for the 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? What will—how will this INR 50-INR 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, Abhishek, Abhishek. So basically, what is happening is our Kenya plant is also reaching almost full capacity utilization. Uganda, although we have a you know, capacity that we keep declaring as 3 lakhs, effectively, from a curd point of view, that plant has reached its own fulfillment. And the UHT lines and the other lines that we have still have that growth of capacity. But like Mr. B.V.K. had explained earlier, now this 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 pasteurized milk segment, which is larger than the UHT segment in Uganda, we want to be in the whole milk cycle of the Ugandan country.
I think by going into the fresh milk, we'll do well. And also, as B.V.K. 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, mineral water or the ice creams in the days to come, we will be a significantly large player there. That is the reason why we are looking at it as an expansion, to make sure that even, over 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 accruals to take care of our own requirement of capital growth.
When is the plant commencing?
Two years from now, so we think it will be in the end of the financial year, 2028.
Okay, sir. Just one last bookkeeping question from me. If you can give the consolidated overall realization and the VAP realization for the third quarter.
Well, the consol for third quarter, the realization, VAP realization consol, right, sir?
The consol realization is INR 59 . Consol, okay? Standalone for the quarter is 60.3. And when you talk about only milk realization, is 58.15 for the standalone, consol 57.68.
Sir, for VAP?
Okay.
For the VAP consol.
Just a minute. I think Murali will give you the details for the VAP realization and
VAP realization in India per liter is basically, it's a mix of INR 251 from the value-added products, so it is around INR 486 .
The consolidated level, sir, for the VAP?
VAP it is a mix only. That's what,
Consolidated, consolidated level will be. That will be the consolidated level, I think.
Consolidated level only. But DDL India, it's only, if you talk about only, DDL VAP, it is INR 65, because it more depends on the product mix. LDL, it is only INR 82, and fat products, it is INR 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 5 lakh liters per day by the end of the current financial year, before commencement of the plant. Where is the 5 LLPD? Where is the 3 extra LLPD coming from? Just wanted to clarify that.
The surrounding districts only. We are still targeting only from our main plant, 150 km radius. So we have, you see, we are, we are setting up plant, you know, closer to Solapur, 30 km before Solapur, and we are concentrating only couple of districts closer to the plant. So radius is roughly about 150- 175 km radius we are concentrating. And to add to it, there is plenty of availability there, and that's the reason we have also started that infrastructure, like we explained earlier, of these CMCs and chilling centers that we have been creating. So that, I think, we will have—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. Thanks.
Thank you.
Thank you. The next question comes from the line of Praveen Kumar from Acuitas Capital. 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 just 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 of the non-Maharashtra kind of geographies has 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. This was. It was not just that came in the current year. Current year, maybe it increased by the, what is it? It's only the Osam 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. So it's been continuing to maintain only a, a flattish kind of growth of, in terms of, you know, growth of being very flat in terms of volume of milk. And that is the reason why the, the whole reason of the price is increasing, sir.
Sir, excluding Osam, GDN India, the growth of the procurement is 3.74%.
Q3.
Right. Overall. Okay.
That is for the nine months, confirmed.
Nine months.
Right, right. No, I, I was looking at more from a Q3 to Q3 perspective. That, that growth seems to have been point two-
Yes, it is almost flat, again.
1% down, it is almost kind of 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.
Understood, understood. And the other quick question was on the margins, right? So I think for a nine-month basis, the EBITDA margin is somewhere around 8.3%. So just wanted to understand, you know, in previously you had talked about margin ranges being between 8%-9% to 11%. So do you still think, you know, given the current challenges, is that a range that can be maintained over the next two to three years? Or you will look at it differently.
That will be the range. Like I said, it's always, you know, it's one quarter issue, like we had. In fact, it's a summer quarter not having the rains as well as the winter not having flush. It's a very, 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 by 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.
Understood. Thanks for the response.
Thank you. The next question comes from the line of Deepak from Unifi Capital. Please go ahead.
Hello, sir. Thank you for the opportunity. So first question, how much was the India volume growth ex of Osam 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. The last year we had around 300,000 of the bulk business. If you exclude the bulk, with regard to the milk business, we have grown 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. So the follow-up question to this is, you know, what's the company doing to increase the growth rate in terms of distribution touch points 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 variable moving parts, procurement prices, your own price hikes, competition? So how should we view growth and margins both?
So I think, we are, you know, you know, doing this lower volume growth for us, I think is actually we're taking it as, you know, even a tough year, where we have lost one entire summer, and also having the pricing, 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, 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% 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% of volume, which we always keep saying, that is in the short term, 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
the margins that we are looking at, I think we will be able to maintain this 8%-8.5% margins for the coming quarter also with the consolidated level of all, all Africa and all that. 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'll 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%-9% margins for the first quarter then for the year.
Awesome. Got it. Sir, you mentioned about the Maharashtra procurement plan. If you can talk about the revenue plan from Maharashtra from starting the first year, how much, 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'd have to intake?
So roughly, we can look at INR 500 crore-INR 600 crore of revenue in the first year coming in, because I look at it very simply as a, B.V.K. said, even a 3 lakh increase with a INR 200 crore per lakh liter, even if I consider it to be base commodity kind of a business also, that will give that kind of a INR 500 kind of crore of a revenue. That, again, I'm giving you two sides. One side saying it would only a pure commodity, and we are stuck with a 3%-5% kind of an EBITDA margin. That can add that we have the INR 500 crore-INR 600 crore into a 3% will be the INR 18 crore-INR 20 crore of EBITDA.
If the volume of other products and sales comparatively in the matching sales go up even a little more, because even local sales of Solapur will start, and we will be in the initial phasing time, that can also move up to 7% or 6%-7% as in just that piece of the operation itself. Because we will also be pushing more of the consumer ghee and other such things. So the variation can be, if it is pure only bulk and nothing we do also, can be between 3%-4% or 5%, and it can move to 7%-8% as a regular operation. So that is the range that it will be at, and considering the INR 500 crore-INR 600 crore kind of a top line, purely Maharashtra additional.
Understood. Sir, from Uganda, what should be the similar financial trajectory looking like for the new plant that you're putting up? The top line that we should build in, and the margins I suppose, are higher in Africa.
Yes, sir. So Uganda, because it's still two years away, we'll have to wait and see exactly what we plan out by that time. But we are going at it now, at least to start with in a year of operations commencement, adding at least INR 100 crore of revenue. And normally, when Uganda is also a little higher in terms of EBITDA margin, 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 that, you know, much larger potential of, growing.
If we can cross that 1.5 lakh liters kind of a milk and product portfolio, it will be significantly larger.
Sure, sir. 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 would be needed?
So basically, Murali will give the specifics. I think Uganda will, as you said, it's a two-year-long process. We're taking an additional INR 50 crores-INR 60 crores for Uganda. And regarding Maharashtra, Murali will give you that. We have planned for INR 280 crores of CapEx. Out of that INR 69 crores, we already spent. INR 212 crores is yet to be spent. But all the orders have been placed. It's only the timing of everything coming into place and going on.
The funding of this will be internal accruals, right?
As of now, we are planning for subvention scheme, but the application is in process. If that happens before March, we'll do that. We'll utilize that. Otherwise, we'll go for the internal accruals. As of date, we have around INR 630 crore in the bank, so we'll utilize that as well.
Sure, sir. Thank you so much. Thanks.
Thank you. The next question comes from the line of Sidharth from Chanakya Wealth Creation. Please go ahead.
Hi. Thanks for the opportunity. Just wanted to understand, you spoke about the milk shortage. Are you seeing a milk shortage being more accentuated in cow milk or in buffalo milk? And in that context, how should one-
For us, so B.V.-
Yes, sir. Sir, if you see the milk procurement in the first quarter, second quarter, third quarter, slightly, you know, overall procurement is coming down in India. Even in the buffalo milk also, see, not much of growth. See, first quarter, we have done, you know, standalone in, see, DDL, you know, 16.75 lakhs. But second quarter, it became, you know, 16.7 lakhs, and third quarter, it became, you know, 15 lakhs. So we are now, fourth quarter, we are expecting and see, is now averaging at only 14.5 lakhs. 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, sir. We are majority only in cow. It's, I think, it's an overall, all the areas, the impact is there. It's not only been one area here and there, in India.
Got it. Therefore, in that context, the reason I was asking that is, the bulk fat sales that were there this year, how should one think about those in context of the coming financial year? You know, based on 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. So that's why we didn't have any bulk this year itself. Like, if you take the quarter, last year, the same quarter, we had around INR 70 crore. This year it was zero, almost negligible. It was only INR 1 crore. We might in fact INR 68 crores. We might become net buyers rather than net sellers, if there is a re- remaining shortage in the quarter coming up. So in fact, whatever we've been gearing up for 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. Failing which, we will then be moving back to our ability of, moving into the commodity. But as of now, we don't see any commodity happening in the near term.
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 the commodity players, 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 price player than a, you know, high price cost 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'll 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 Resha Mehta from Green Edge Wealth. 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 standalone 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 FY 2025, if I were to exclude, you know, the fat revenues, we grew at 7% versus FY 2024. 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 low single digits. So, so what is the challenge here in India standalone numbers excluding fat?
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 face 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? Yes, sir, so that's-
It's not syndicated data. Our market share estimates are only our own. But, compared to the things that we are saying as the volume growth, that we look at it as a 4%, I think even with the listed peers, it will not be significantly different in terms of it. It is only the value add or the bulk sales that keep adding the differential or 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, and we are more of a, I mean, the project of being more at a premium sale. The B2B business is not something that we normally get to.
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's more of white space availability. Existing markets, that is the reason why we look at them as more the lower. That's the reason that we see lower trends, that unorganized to organized is declining, A, and the B2B going to more of the cooperatives 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 market would largely be, you know, inorganic?
Inorganic, yes, from the liquid milk side, ma'am. But I think again, we'll have a little more opportunity coming from the product side, where the consumption pattern, the southern states, as the GDPs are growing up, more than liquid milk, it will start adding into the paneer 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 volumes.
Right. 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, ma'am. 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 or early March, then the uptake will start happening from March. Failing which, it will be from April onwards, definitely, because I'm sure this cold weather waves are not going to continue from, you know, last year to the current year also. And El Niño is what the prediction is, that it will be the other extreme now of severe summers.
The last question is basically on the Africa business. For nine months, what's been the broad revenue split between Uganda and Kenya? And even between those, these two nations, do we see any differential in the margin? And also, if you could explain that, what is. So we've seen milk inflation in the African business as well. Typically, what is the, you know, seasonality or cyclicality in terms of milk inflation there?
So Africa also does go through 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, also comparatively as to, to Uganda, maybe 2%-3% 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, 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, and, and my market number is just my estimates or our company's estimates.
We think of it as a 40-50 lakh liter kind of a market that is there in Kenya, in comparison to Uganda maybe being a 10-12 lakh liter kind of a market. So that is where we operate overall. And Murali will give you the specifics of the Kenyan revenue, Ugandan revenue.
Yeah, overall revenue, we are at around INR 354 crore. Out of that, the major revenue, LDL, is INR 229 crores, and DDKL is INR 142 crores.
LDL being Uganda and DDKL being Kenya.
DDKL being Kenya. There will be some intercompany transactions. INR 229, Uganda. Kenya is around INR 142.
And, like Murali was saying, but we will have intracompany. Like I said earlier, sometimes we do sell product from Uganda into Kenya also.
The overall turnover as a consolidated after the intercompany, it is INR 354 crore.
This is nine months, right?
Nine months, yes.
Nine months.
Sir, 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-
Most of the data that we have already subscribed, it is ways vastly varying from what they give to what we see on the ground. The compatibility is becoming different because the company, the company definition of the area itself is becoming very difficult. Like for me, what Hyderabad city definition is, whether it's a pin code of Hyderabad, or some people will say that the geographical area in terms of a ring road being verified. When we compare that to the on-ground reality, the variations are being significant. That is the reason we do get some data, but they are not correlating to what our ground reality says. We will try to see, and then if maybe offline, if you can help us in, you know, recommending anything, we'll also try to see how best way can work for us.
Sure, sure. Then lastly, just a clarification, Uganda has 200-300 with higher margins versus Kenya, right?
Yes.
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 star and one. The next question comes from the line of Ankit Shah from White Equity. Please go ahead.
Thanks for taking my question. Sir, just wanted revenue and EBITDA for Africa business for current quarter and same quarter last year, if you can tell that.
Yeah. Current quarter revenue, Africa is INR 133 crores. Last year, same quarter, it is INR 98 crores. So there is a INR 34 crores of increase was there. That is almost a 35%. Second, EBITDA, current quarter, it is INR 17 crores. Last year, it is INR 8 crores. That is an increase of INR 8.1 crores. So overall, there is a 105% of increase for the quarter. Nine months period, if you see.
Yes, please go.
The INR 31 crore increased to INR 38 crore. There is a 77% of increase in the EBITDA. Revenue is INR 276 crore - INR 354 crore. That is INR 77 crore increase, that is 28% of revenue increase.
Right. So as such, our margins have actually improved in Africa, whether we look at this quarter or nine months. That's right, right?
Yes, sir, our revenues have improved in. Sorry, our margins have improved in Africa, sir.
Yes.
As a percentage, that might be lower because we had a significant growth in volume, but as an absolute number, there is a great improvement.
Okay, okay. All right, thank you.
Thank you. The next question comes from the line of Vandana from Korman Capital. Please go ahead.
Yeah. Hi, sir. So, my question is, sir, so Dodla has always been basically the first mover in taking price hikes, but this time you say that you have not taken price hike 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 game. This is 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 it, stabilize 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.
We'll have to make that call, I think, as the following months come into play and we see how the weather patterns play out.
Okay. Okay, thank you, sir. Next question: So I just wanted to know, see all, most of the, your peers are, you know, increasing their VAP shares, and so how do you see that as a competition currently?
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%. And we keep saying that because the overall pie is larger, but now it is 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 the consolidated basis, that will bring it down a little more because there, Osam and Bihar has only been 13%. I think once we improve that, then the overall will show, but I think standalone, we have grown from 23% to 25% in the VAP, compared to last year.
In spite of having a bad summer, where we didn't sell any of the higher value-added VAP products like lassi, buttermilk, and ice cream, which also came down. In spite of that, we have grown 2%.
Got it, sir. Thank you so much.
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 earnings call. We appreciate your interest in Dodla Dairy. If you have any further queries, please contact SGA, our investor relations advisor. Thank you very much once again. Have a great day.
Thank you, all.
Thank you. On behalf of Dodla Dairy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.