Heritage Foods Ltd
NSE:HERITGFOOD
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Heritage Foods Ltd
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Ladies and gentlemen, good day, and welcome to Heritage Foods Q4 FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Dr. M. Sambasiva Rao. Thank you. And over to you, doctor.
Thank you very much, and good evening. I welcome all the participants to the Q4 earnings call of Heritage Foods today. I particularly thank the participants for joining today in spite of the restrictions around our movements. I'm sure most of you must be joining from home. And we are still finding some members to join from our side while we have connectivity issues. Right now, Mr. Prabhakara Naidu, CFO.
Good evening, sir.
Mr. Umakanta, Company Secretary.
Good evening, sir.
Mr. Samba Murthy, Head of the Dairy business.
Good evening, sir.
Myself, 4 of us are available. And Ms. Brahmani is trying to join the call but she's unable to get through. Any minute she might be online. Now I start the highlights of the quarter 4 financial year '20. On stand-alone basis, we achieved a net turnover of INR 643 crores compared to INR 625 crores of the same quarter last year with a 3% increase. The EBITDA for the quarter is INR 26.5 crores against INR 51 crores of the previous year same quarter. In PBT core business is INR 9.72 crores for this quarter versus INR 34.8 crores the previous same quarter. But if you take the impact of investment, the fair value impact of the investments of the company, PBT comes to negative INR 207 crores. In view of the fall in the share price of the Future Retail Limited by about INR 375 in this quarter on 101 crore 33 lakh shares attributed to the P&L. So that has created this negative impact at the EBITDA level. Otherwise, the core business is INR 9.72 crores PBT for the quarter. And PAT is INR 6.79 crores on the core business. The full financial year on stand-alone basis for Heritage Foods, net turnover has grown by 8% that is INR 2,681 crores compared to INR 2,482 crores of the previous financial year. EBITDA for the current financial year is INR 140 crores, against INR 192 crores of the previous financial year. EBITDA, INR 142 crores for the current financial year against INR 192 crores of the previous financial year. PBT for the core business during the current financial year is INR 72.4 crores versus INR 128.6 crores during the last year. After considering the fair value through P&L of the investments made in FRL, PBT for the current year is INR 144 crores negative versus INR 128 crores positive last year. This is again impacted by the fall in the share prices of Future Retail where we had investments. And PAT for the core business for the current year is INR 57 crores versus INR 83 crores from the previous financial year. Now I move on to consolidated results for the quarter 4. This includes Heritage Foods, dairy business, renewable energy and subsidiary company, Heritage Nutrivet Limited, which handles feed business, which is a 100% subsidiary of Heritage Foods and a trust of the Farmers Welfare, Heritage Farmers Welfare Trust. That numbers are also consolidated here. So at quarter 4 for the consolidated level, the net turnover is INR 653 crores against INR 635 crores of the previous year same quarter with a 3% growth. EBITDA quarter 4 consolidated level, INR 27.9 crores against INR 48 crores of the previous financial year. PBT core business, INR 9.72 crores versus INR 34.82 crores last year. And PAT, INR 7.2 crores current year fourth quarter versus last year, INR 20 crores. Now I move on to consolidated level results for the full financial year '19/'20. Net turnover of the company is INR 2,726 crores versus INR 2,515 crores, which is 8% growth of turnover. And EBITDA for the consolidated level, INR 135.5 crores versus INR 192 crores last year. And PBT at the core business level, INR 72.4 crores versus 100...
[indiscernible]
Yes, minus -- what's the number? [ 63.74 ] after adjusting HFWT's higher expense over income of INR 8 crores. And PAT is [ 48.4 ] versus [ 82.85 ] last year. So during this year, as you have seen, the overall margins were down compared to previous year, mainly attributable to the steep increase in the milk prices and prices of milk powder. Coming to the volumes. Our procurement during the quarter 4, milk procured is 12.67 lakh liters per day versus 14 lakh liters during the previous year same quarter, this is a 9.5% drop in the volume procured. And sales volume during this year quarter 4 is 10.94 lakh liters per day versus 11.15 lakh liters last year, it's about 2% drop in the sales volumes. Value-added products you take, there is a growth of 6% during the quarter. That is INR 165 crores during this year quarter compared to INR 155 crores during the last year's same quarter. The contribution of value-added products in this quarter is 26% versus 25% in the last year same quarter. Full year -- full financial year value-added products grew by 16.6% during this year. That is INR 619 crores to INR 722 crores during the current year. Contribution increased from 25% of last year to 27% during the current year. We have an annual 2% incremental increase of the value-added products contribution. Production capacity as of March 31, 2020, we have chilling capacity of 20 lakh liters, processing capacity of 25.7 lakh liters, milk packing capacities of 17 lakh liters. Coming to the CapEx. During the current financial year, we have invested INR 107 crores in Heritage Foods and INR 3 crores in Heritage Nutrivet Limited. That's the current year's investment compared to last year. Last financial year, Heritage Foods invested INR 103 crores, Heritage Nutrivet invested INR 25.5 crores for a new cattle feed plant commissioned last year. Coming to the debt status. As of March 31, 2020, we have a long-term loan of INR 197 crores at HFL level. INR 15 crores for HNL, that is Heritage Nutrivet Limited. Working capital, we have utilized INR 83 crores in the Heritage Foods and INR 5 crores in the Heritage Nutrivet. The total fund-based debt is INR 197 crores plus INR 83 crores, INR 280 crores in Heritage Foods. In Heritage Nutrivet, INR 15 crores plus INR 5 crores, INR 20 crores. That's the total fund-based debt. These are broadly the highlights of this quarter and financial year. I now stop here and request the participants to give their suggestions, feedback questions. Thank you very much.
Sir before that, as just an update, we have Mr. Brahmani online with us now.
Good. Thank you.
[Operator Instructions] First question is from the line of Nitin Gosar from Invesco Mutual Fund.
Can you repeat? I couldn't hear.
Yes, it's Nitin Gosar from Invesco Mutual Fund.
I'm Nitin Gosar from Invesco Mutual Fund. Two questions from my side, sir. One is I wanted to understand how does management see milk business in current environment? And if you could touch upon different attributes while addressing this question with regard to procurement, distribution, pricing capability or the ability to price the product, plant utilization, 4, 5 points if you can touch upon this.
You are referring to lockdown -- post-lockdown situation?
It's not pertaining to this lockdown itself. It's more about is this situation going to enable us to further aggravate the way we do business? Or is it going to be business as usual, even in...
Yes, basically, you're talking to post-lockdown only, right?
Yes, yes, yes.
I just wanted clarity on that. Certainly, I'll be explaining the details. We are very happy to declare in the past 2 months, with the kind of activities we have done to contain the spread of virus and the safety precautions we have taken as per the government of India guidelines coming from time to time from Health Ministry. None of us, none of us have been affected by this virus personally, at a family level, personal level, right from our farmers who are supplying milk, to our agents who are handling milk, drivers transporting, workers handling in the processing centers, distributors, nobody -- we have been keeping track of it. No one has reported any positive case, and we are operating in a safe environment. We have taken enormous steps to protect ourselves in terms of creating hand wash stations at every place with running water and soap. Masks are distributed, sanitizers distributed, disinfectants spread in the plants, on the vehicles. And movement with the same precautions everywhere, at office level, market level, our clients. So we are very happy to declare we have been able to protect ourselves from this virus. Coming to [ last ]. Entire supply chain is intact, right from village to consumer distribution. We have [indiscernible] liters of milk from our farmers during this period post-lockdown. Rather, it increased by 15% approximately. Our procurement operations were going on very smooth. We have taken all the permissions required as milk and milk products are declared as essential commodity in every state government and at the central government level also. So all over the operational areas, we have secured passes for operating our plants, vehicles, staff movement, et cetera. So no disturbance, except for first 4, 5 days of the initial period, March 24 to 30, when system not ready to accommodate these requests. They themselves were taken by surprise. We had difficulty in the first 4, 5 days. But overall, at the end of it, now after 2 months, I would say, we haven't lost a liter of milk from our farmers. All the farmers have given more milk than what they were giving earlier. And we have been able to make timely payments all through this period, whether it is weekly or 10 days or 15 days. We have different areas, different practices. In certain areas, we make payments once in a week. In certain areas, we make once in 10 days. In certain areas, we make once in 15 days going by the local practices. Money transfer has happened to all the farmers who have supplied milk. So coming to the clients, all 18 milk processing plants we have, every plant was functioning on all the days. Not even 1 shift, we have closed the plant. It's a continuous 24-hour operations on all the packing stations and dairy factories. There was no impact of any nature, except, as I said initially, first 4 days, we had some difficulties in vehicle movement, vehicles -- milk tankers were waiting for longer time. The traffic issues and unloading issues, drivers issues. But 4 or 5 days, we recouped everything and operations got normalized. And all the milk is processed immediately and distributed or stored. Certain days, certain areas, we had excess milk. We converted the excess milk into milk powder and butter and stored for the usage in the future months. The shelf life is 1 year. So we have no problem in terms of the excess milk received. We converted and stored for our captive consumption purpose. Coming to the sales, all the markets we have been able to service inside home, at-home consumption. We have been able to ensure uninterrupted supplies to all our consumers and distributors and the parlors, modern retail stores. We have lost some sales in the out-of-home consumption, in the malls, hotels, restaurants, railway stations, bus stations, whatever impulse products, ice creams, flavored milk, plastic bottled milk. These are the value-added products we sell in the points of strict consumption outside home. Those volumes have dropped. Some items like ice creams dropped significantly. Certain items dropped a bit. But now things are looking up and even ice creams are picking up. Otherwise, milk distribution, curd supplies, there were no issues at all. We have some setback of value-added product sale volumes. Coming -- talking about the way forward from now, our milk procurement, no issues. Factory has no issues. Sales are picking up. Demand is reviving even outside of home. In most of the markets, the shops are open, the railway stations are open, bus stations are open. Except restaurants and malls, all other places, consumption started happening outside of home. So we will see in a few weeks' time, we will come -- we will see the full revival of the demand for these essential products.
And sir, on pricing, are we getting the right price? Or are you still running a gap on the pricing of the product?
As prices -- sale prices, there is no issue. They are continuing at the same level. Procurement prices, there were some drops in certain cash -- milk-shared areas where there is a surplus milk and many people were not able to dispose. That benefit is coming to us. And that surplus milk, we are converting into powder, and powder is now at a lower price compared to what it was in the month of March. So that would help us in recovering the margins also in the coming -- in this quarter and the later.
And sir, second question, pertaining to the expirations that we expected. How should we see it from the outside? We have seen in last 3 years, 2 milk cycles, low milk and high milk cycles. And now we have COVID. Should we assume that the larger sector like you or the corporate sector like you are much more better off in the last 3 years in terms of going from here on? And in terms of capital, because of the encashment opportunity we had one of the financial assets which we could have sold off and could have funded our CapEx. Do you think that opportunity not have been visible right now, we can still continue with the CapEx program that we have laid out earlier?
Yes. Coming to the last point, so encashment opportunity wasn't there. We are still in the lock-in period as far as the shares are concerned. 3 years lock-in period would be over in the next months. There was no opportunity earlier in case we wanted to encash. But now we see things may shape up, and that might revive itself, but that's something we have to watch out. Coming to the funding for the CapEx, we never depended on this for CapEx. What we have been planning for the last 2 years, and we planned for next 3 years also, around INR 100 crores CapEx per annum was what we anticipated to achieve our volume ambitions. That INR 100 crores was coming through debt funding and internal accruals. That if we want to pursue the same level of investments, capital is not going to be constrained from the -- without increasing our debt equity ratio. It would not be -- currently, it's maybe around 3.35 or so, our ratio. It won't be altering much. Our debt repayment and borrowings would be always matching of little -- plus or minus 10%. Internal accruals from debt funding model can support our growth plans. There is no need to look for the encashment of the investments. That's not going to be an issue for the growth. And as a sector, yes, we are better placed because our supply chain infrastructure, cold stores, cold chain and the brand strength is there to ensure inflow of milk, whatever milk we require. Last financial year was the most difficult year in terms of milk procurement because the production was low, availability was low. We were repeatedly representing to government of India from December to March for import of milk powder duty-free to meet the shortages in the country. That was a scenario we went through. So that low production cycle is over by March. And this year, of course, because of this change in the public health scenario, the shortage is now disappeared. It is now balancing. The milk availability and milk sale is balancing now. Another 2, 3 months, we will go through the lean season of summer. There, again, the deficit scenario may appear again if the demand revise. But from -- come October, there should be normalcy in milk production and availability. As we went by a deficit year, we may come back to a normal year or even a surplus year for the next milk cycle commencing from October.
[Operator Instructions] The next question is from the line of [ Raghav ] from Kotak Mutual Fund.
Yes. Sir, first of all, just wanted to clarify, did you mention that the milk procurement has increased by around 15% Y-o-Y? I could not hear that properly.
Yes.
Okay. On a Y-o-Y basis, the milk procurement so far in the quarter is up 15%, right?
Yes, yes.
Okay. Okay. Secondly, what could be the average milk procurement price and milk selling price so far in the quarter? Is it possible to share?
Quarter 4?
No, no, Q1.
Q1, it's a bit early now. We will come back later.
Sure. But is it fair to say that...
I have the data. Only thing, regulations don't permit us to talk.
Sure, sure. So is it fair to say that milk spread should now sort of improve on a Q-on-Q basis? Meaning in 1Q, the spreads will be better as compared to 4Q or still uneven?
Yes, it will be better.
[Foreign Language] It will be better. Okay. A couple of more questions. One is that is there any sort of seasonality in 1Q? Meaning do we have any dependence on marriage or Horeca demand in this particular quarter?
For the value-added products, yes, there is a dependence on the markets to be normal. Like there is to be a lot of consumption for weddings, functions, congregations, all that disappeared now for the value-added products.
And how much of that would be, sir -- how much of the business would be that, sir, products?
At least around 30% of the volumes of value-added products depend on this market opening.
The next question is from the line of Prashant Kutty from Sundaram Mutual Fund.
Sir, firstly, just a clarification, you said 30% of the volumes of value-added products is based in impulse and out of home. Is that the right assessment?
Yes. Correct.
So it also includes the ice creams and all of that, sir?
Yes, yes.
So how much of it would have come back? Because you said that except for restaurants and, let's say, malls, most of them have sort of come back. So what part of it would have come back up to you?
Maybe 5%.
5%.
Of the 30%, about 5% have come back?
Yes, yes.
Okay. Okay. Sir, second -- the first question is basically in terms of -- as you said, the volumes in the quarter was impacted. Could you probably cite us a reason for the same as to why our volumes impacted in the quarter? Or is it -- because it's a daily essential product. There is nothing like a hoarding which happens or something towards the last 10 days or something of that sort? Any reason as to why volumes were weak versus expected?
Broadly, 2 reasons we can say. One, the excellent weather conditions of this year compared to weather conditions from last year. Last year, February, March were very hot months, summer was early. This year, March, there was no summer at all. It was a very normal month. Even in April, there was no temperatures rise outside. Only in the May month, we could see. So there was a delay in arrival of summer this year, and the temperatures were low. So the consumption of this summer-oriented products was low. Second, the last 7, 8 days of March, there was dislocation due to the lockdown. So there was drop in the sale in the last week of March.
Okay. So it's not for this quarter...
The last week was most affected because we were not organized for meeting the overnight lockdown imposition. It took 3, 4 days even to realize how to organize, how to get into markets. And by the time we realized, markets were shut. So the 1 week had an impact in the month of March.
Okay. Okay. Because sir, the reason as to why I asked...
It was 7 days out of 90 days.
True. No, the reason as to why I asked this is, sir, because one product which probably did not face any supply constraints even during the lockdown has been actually milk. So I was just wondering as to why should have milk probably seen a...
Milk impact was related to out-of-home consumption. Home consumption was normal. Out-of-home -- also milk consumption happens in offices, restaurants, tea shops.
So that was impacted.
Functions, railway stations, airports, bus stations, everywhere, milk consumption happens through beverages. So all offices were closed suddenly. So the entire milk consumption in the office is down, and that much consumption do not happen at home. So that's the impact of milk. Home consumption, absolutely no issue. Actually, it increased. Home consumption increased, but it did not substitute the lost consumption out of home. Imagine, out of home, how many times people take tea, coffee a day, either at workplace or shops or markets, wherever you are. That is what has affected.
Okay. Got it. Got it. So as per your estimate, sir, like you said, 30% of volume is value-added product, which is out-of-home consumption. How much would that be for milk, sir, as per your estimate?
It will be around 10% for us. But for some people, it will be more. See, those people who depend on Horeca segment, kind of bulk suppliers, et cetera. Like a factory, for example, a factory is having 1,000 workers, there is a caterer who supplies food for them. There's a brand which supplies milk to the canteen. So that is gone because factory is closed. So like in all -- entire country, all the production points are closed, market points are closed. The milk gets consumed there also in a different form. It can be -- it can be curd, it can be buttermilk, it can be supplied as milk, tea, coffee, everywhere that out-of-home consumption points have disappeared. Some companies depend more on that segment. Some companies depend less on that segment. We depend less on that segment. Therefore, our impact will be lower on the milk. Some people depend more on that segment. Their impact will be higher. But impact is similar on all the out-of-home consumption products.
Sir, so as you said, it's about 10%?
Yes.
Sir, my second and last question is on the EBITDA margin profile, sir. What was the EBITDA margin profile for the fourth quarter or let's say, for the year 2020 milk current production segment? Could you say that? And what's the outlook...
Prabhakara will answer to you.
Good evening. My name is Prabhakara. EBITDA margin for Q4 '19/'20, milk, 1.5%. For full financial year, that is actually 2019/'20, is 3.76%. Value-added products, Q4 '19/'20 is 10.86%. And for full financial year, 11.12%.
And what will be the PAT losses, sir?
PAT losses for Q4, 12.56% loss. And for full financial year, 9.63%.
What's the outlook on the margins, sir? Because while you said that procurement prices might come up a bit, retail prices have been up. So what's the outlook going forward on both milk and value-added products? Because why I'm asking this is also because, like you said, that out-of-home consumption is impacted. Is there a case that your margin profile could be slightly better? Because in out-of-home consumption, you had relatively lower margins? Is that an estimate there?
Margins should be better during this year -- this quarter, this year, for 2 reasons. One, the milk procurement prices are a bit down after the lockdown in certain markets. And the sales are improving in value-added products from last 1 week, 10 days. That will improve the margin profile of the quarter. SMP price also has come down. So that also -- as the cost of raw material for us is down.
The next question is from the line of Percy Panthaki from IIFL.
First question is, during the quarter, your milk procurement volumes were down around 10%. So can you just tell us what is the reason for this decline?
There's a shortage of milk availability, as I explained earlier. During this year, it was one of the lowest production and availability year, wherein all the companies in the country represented to government of India for import of milk powder because we were not able to source milk. In 1 or 2 situations, government of India also had conveyed meetings of all dairies in the country and about to take a view on the imports for the summer. Then this lockdown happened and the situation has changed. So the whole issue of the financial year was less availability of milk due to various factors.
Okay. Understood. And while you said that after lockdown, the procurement prices have come down. But as they stand today, are they actually lower on a Y-o-Y basis? That means 12 months ago, the price that was there for procurement versus what you are saying today, is today's price actually lower?
Yes.
Okay. So just putting 2 and 2 together, if basically your final output price has -- is going to be higher Y-o-Y and your procurement price is lower Y-o-Y, you should see a gross margin expansion Y-o-Y for Q1?
Yes.
Okay, sir. Secondly, just wanted to understand this Future Retail share. What is the status on that?
We have 2,78,00,000 shares in their company. And our lock-in...
1,78,00,000.
Sorry, 1,78,00,000 shares are in that company. The lock-in period of 3 years will be ending in the month of June. So we will have freedom to sell from the July onwards. We haven't taken any view on that because of the current price scenario of the script.
Okay. Okay. I thought the lock-in ended on 1st of April. That's not the case, is it?
There are certain formalities for completing the closing day. So those some limited issues were there. It extended up to June. That is that the 2017 June, we completed all the requirements to fulfill the definition of the closing day. But technically, it was 31st March, we handed over the business. 1st April onwards, it would be 3 years. So this April 1 would be the completion of 3 years. But the definition in the agreement is some closing day formalities are there, the listing of shares and allotment of shares, registration of certain properties, et cetera, that was over in June. So therefore, we have to take a reference date from June to this year June.
Bookkeeping question. Your overall sales growth is 3%. Your volumes are down 2%, which would mean that pricing is around plus 5%. But actually, your pricing at least for liquid milk is plus 14%. So why are these numbers not adding up?
You have to see the period of comparisons, which period to which period you are comparing is the issue.
All 3 numbers which I spoke about are Y-o-Y numbers. So your volumes are down 2% Y-o-Y. Is that right?
No, no, no. Volumes are not down 2% Y-o-Y. That is Q4 of FY '20.
Q4 of FY '20 compared to Q4 of FY '19, right?
Yes, yes.
Yes. So that is down 2%. Your sales, overall sales growth is 3% and the pricing is up 14%. So these 3 numbers are not sort of matching. I think the missing item is the fat sales. So if my calculation is correct, the fat sales versus Q4 '19 would be down quite materially, then this would tally. So is that correct? And if so, can you give me the numbers?
So if we could put it this way, that milk procurement price for the fourth quarter of the past financial year increased by 17.11% compared to the year before. Our realizations increased only by 13.66%. So the gap according to these numbers would be 3.5%, something of that.
The next question is from the line of Viraj -- sorry from Rajesh SivaKumar from Unifi Capital.
Sir, in Q4, we saw that the liquid milk sales were down by 2%, while the curd sales -- I'm talking of the volume number, while the curd sales were down by 7%. In Q1, we have a higher bar, if you take Q1 FY '20. Do you think you can match last year's Q1?
Last year's Q1 has a different set of factors compared to this year. Last year Q1, temperatures were very high. We had an extended summer until June end. Monsoons came in July. This year's summer, Q1, we have pandemic around us, and monsoon is announced by 1st June, 1 month early arrival of monsoon compared to last year. So the last year's volumes to this year volumes will not be comparable mainly because of this lockdown issue and the weather factors.
Okay. Are you seeing better offtake, sir? Because weather has turned adverse for the last few weeks in May.
But the people are not outside.
Okay. Okay. Sir, and can you give the procurement price at which you exited March? Because obviously, you're saying you can't give the current price, but you can give the exit price as on March 31, 2020, right?
Yes.
Because INR 38.46 is the average for the full quarter.
It's that March month. We can give you the average number for...
March...
Milk procurement.
Sir, the reason why we are asking this is because obviously, the exit rate should be much lower than the average that we are staring at. And this should help us calculate how the scenario would look like in Q1. That is the reason why we are asking the drop in procurement price.
No. I mean, I do have the average numbers currently available. But I think our team we'll have to come back to you on the exit numbers.
Yes. Sure. I'll reach out to them. And coming to these Future Retail shares. So would you continue to have the derivative instrument which would continue to offset the movement in the underlying shares?
Accounting treatment?
Yes.
No, no.
Can you repeat the question, sir?
So basically, until now, we are offsetting the movement in the underlying shares using the derivative instrument, right? Post this M2M loss, which we took, would you continue to offset that movement in the MTM of those shares?
In the fourth quarter, the entire upside sharing is actually -- has been written back. So there is no upside sharing because if the price comes down below INR 240. So this INR 240, actually there is no P&L account impact. The price comes from below INR 240. As of March 31, the referral price is INR 78.35. So last year, the derivative liability that is related to upside sharing is INR 294 crores. That has been reversed actually in this financial year because the price has come down to INR 78. Last year, the price was INR 450. Now the price is INR 78. The difference is INR 375. So the INR 375 multiplied by 1,33,00,000 shares, which is fair value changes on 1,33,00,000 shares is the -- should be rooted to P&L. And the investment price difference is INR [ 511 ] crores. Then in offsetting this INR 294 crores, net is INR 217 crores is recognized in the P&L as an expenditure, net debt -- net affected by -- in the P&L profitability.
Okay. So until the price of INR 240, it will be open, right?
Till INR 240 -- below INR 240, it affects the P&L. Above INR 240, it doesn't affect the P&L. [ What you will see ] is going to be affected.
Okay. And from now on, would you take MTM on a quarterly basis, assuming it moves...
We recognize this. Of course now, it is INR 70 -- INR 78. If it increase to INR 80 or INR 85, P&L is going to be with positive number.
Got it. Got it. Sir, what is the -- are we having any high-cost SMP on our balance sheet?
There's nothing called high-cost SMP because it gets valued quarter-to-quarter.
The next question is from the line of [ Pradesh Kumar from Insight Edge ].
I have a few questions. Sir, I'm just rephrasing the previous question. If we can get Q-o-Q change in our milk procurement price, if you are in a position to reveal that, that will also be really helpful.
Sorry, how do you like know?
Q-o-Q change in our average milk procurement price. Q1 FY '21 versus Q4 FY '20 average...
I think...
Q1, I don't know whether it is 1 year.
So far, Q1 so far.
This is Brahmani here. The data point that we can give -- the data we can -- we have.
We are also in the market. Is it right to talk Q1 numbers today?
What I mean sir, Q1 so far, not exactly complete Q1, quarter-to-date whatever has been average procurement price.
Even today, even as of today also, I mean I've been guided not to talk Q-o-Q...
Then it's okay. Sir, today, I can understand.
What we can give you is full year last year versus Q4 last year, since those numbers are available and we're able to share. So the full year of FY '20 procurement price average was INR 35.55 per liter. This in Q4 was INR 38.46.
Okay. Second thing is for our CFO. I mean, if he could explain me this other comprehensive losses? I mean, what portion of the investment has been routed this other comprehensive losses and what is routed to normal P&L? Any color will be of great help.
Okay. So to explain that, in the 2017/'18, the company policy, the whatever -- the shares we have allotted -- FRL has allotted 1,78,00,000 shares, sir. Out of that, 75% of shares, that is actually 1,33,84,000 shares, any fair value change in these shares, it is to be routed through P&L. And the remaining shares, 44,62,000 shares, any fair value change between the reporting periods, that is routed through OCI. So in the full financial year 2019/'20, P&L is impacted with the INR 217.12 crores and OCI is impacted at INR 170.59 crores.
Okay. And what has been the advertisement expense for FY '20?
FY?
'20, the year gone by.
That is in '19/'20, the total for the full financial year, P&L is impacted INR 217 crores, and OCI is impacted INR 170 crores, INR 170.59 crores. This is for full financial year. For fourth quarter also, because up to third quarter, there is no P&L impact. So the entire P&L impact has resulted in fourth quarter only. That is also for the full financial year, INR 217.12 crores. But OCI, for full financial year, INR 170.59 crores. Up to third quarter, there were some positive numbers. So that is the reason in the fourth quarter, OCI figure has come down from INR 170 crores to INR 117.99 crores, fourth quarter.
Okay. And what has been the advertisement expense for FY '20 -- '19/'20?
Yes. It's about -- this is Brahmani here and the expense was 0.3% of the turnover. For marketing expenses overall, which includes artwork; point-of-sales material; promotions; and retainership for agencies; advertisement, if any; and all of these things, anything that -- digital marketing expenses, et cetera. So overall, marketing expenses were at about 0.3% of the turnover.
About INR 8 crores in rupee value.
Yes.
So we expect this number to hold for FY '21 as well?
It might go up, and we will monitor after the markets open up. Now the campaigns are not possible anywhere except online. So once the markets open up, we'll have to review the situation. To rebuild the demand, we may have to spend some resources on that.
The next question is from the line of [ Vishal Shweta from Mutual Fund ].
Sir, as you said that last 7 days of Feb '20 -- I mean, the business was delocated -- dislocated. Possible to share what was your milk volume growth and the value-added products growth in, say, Jan and Feb, if you don't consider March, just for Jan and Feb?
January, Feb growth. January to January, February to February, data points are not readily available month-wise, we can give later.
Okay. So I -- exact number, if it's not there, it's okay. But just as a trend, was the value-added product both, say, in Jan, Feb in double digits? I mean, they reported 6% for...
Usually, growth comes in February, March for value-added products after the winter season is over. In the markets we operate, January is still considered as winter only. February, March are the 2 months where we really get the growth. These 2 months, this year, this last -- in the last period, the temperatures were not high. The summer was late. So that's why we couldn't see any growth in that. Secondly, as iterated by...
No, sir. I understand -- I was -- but anyways, we are looking at all numbers on Y-o-Y basis, so Jan, it's on Jan of last year. But anyway, I'll take those number offline if you don't have that readily available.
Readily, month by month, we don't have. We have quarter.
Yes. I just wanted to check because the Jan, Feb combined numbers still had decent growth like we had earlier in value-added products and all. So I'll take the numbers later. Secondly, I mean, I think this was asked earlier also, so in the fat revenue, the fat sales we do, how much was the fat sales in this quarter?
Just a moment.
And if you could give the corresponding number in the last -- same quarter also, Q4 of last year.
Fat turnover, you are talking about, sir?
Yes, yes.
INR 23.59 crores in Q4 of current year. And last year, it was actually INR 64.36 crores.
Okay. There's a big decline in that. That's what actually explains. Okay. Okay.
That's because there was no surplus milk this year compared to last year.
Correct. And lastly, I understand -- I mean, obviously, we might have a constraints in sharing the Q1 number. But just if you -- or as a trend what we saw milk volume -- liquid milk decline in Q4. In Q1, at least, are we seeing growth or are we still will in de-growth?
Discuss Q1 later, if you don't mind. Each one of you are trying to ask differently. But I'm bound by the...
The next question is from the line of Viraj Mehta from Equirus PMS.
Sir, just wanted to understand that the share that we have of FRL, post INR 400 crore, we were supposed to split the profit 50-50 till INR 500 crores. And those INR 500 crores, the profits belonged to the [ Future Retail ]. Now what I want to understand is the decision and the price at which we could sell, is it only in our control? Or does the contractual agreement say that they will have a say in our selling price and time because they also have a percentage of profit after price?
No, no, they have no say. It is freedom of Heritage to time it whenever Heritage wants to sell at whatever price. They have no say in that.
Okay. I got it. And sir, the second question I wanted to ask was, is the margins in Horeca segment for us are lower? And our percentage of Horeca, both in [indiscernible] and in milk, if you can quantify?
We don't have Horeca sales directly. Our sales are point-of-sale consumption, I'm talking, that is the malls, hotels, restaurants, shops, street side, all these sales have disappeared. But some of our distributors do sell small quantities to these hotels and restaurants nearby. Our margin structure remains same wherever they fell. There is no difference in the margin structure for company. Some of the distributors do undertake supplies to some canteens and motels in their localities, but we don't have a direct Horeca activity with the company.
The next question is from the line of [indiscernible], [ Angel Broking ].
Just 2 questions. If I do the arithmetic difference between your procurement price is INR 38.46 and milk sales is INR 46.26. So I get a difference of INR 5.8 for Q4. So is the spread is large in the positive territory for Q1 or it is lower than that number?
This quarter?
Yes, Q1 of FY '21.
Current quarter, we are not discussing, sir.
No, I don't want the number. I'm just saying, is it positive or it is lower than INR 5.8?
I will read the rule book again, somewhere I will not...
Let me not harp on. We have seen the value add...
[indiscernible] have not touched the rule book once what is permitted, whether trends, numbers, no other...
Mr. Rao, it's okay, fine, no problem. We are more curious because the competition has said that...
I completely agree with you. I wish I had all the freedom to talk.
No. Mr. Rao, the reason why I'm asking, your competition has declared these numbers and they said that they have a lot of benefit. Now you being a listed entity, you are running by the rule book, so I have no issue on that. So let me ask the other questions. You have said that in Q4, we had the run rate of 165.5 crores for value add. This number looks a bit lower if I look at the past. Can you break up which segment is -- or what subsegment growth is lower?
Yes. He wants 165 crores breakup, which product grew, which product did not grew. Sorry, we're just trying to figure out. Please go ahead.
Q4 to Q4, curd from INR 126 crores of last year Q4 to INR 138.34 crores. And main product is that. There are other products around there, can I read it?
Yes. Yes, please.
Then butter milk, there is a slightly de-growth of around INR 4.34 crores to INR 3.03 crores. Then paneer has gone up from INR 6.4 to INR 8.6 crores. There are other small products are there. From INR 155 crores to INR 165 crores.
Okay. Got it. Just a follow-up on that. What is the ice cream sales, if you can provide, Q4 versus last time this?
INR 23 crores -- INR 22 crores.
Middle ground or not...
Around...
INR 4.54 crores current quarter, sir, Q4 '19/'20.
Okay. And last year?
FY '20. Last year number, [ 1.21 ]. Last year, INR 5.72 crores.
Ladies and gentlemen, this is for today's time. That would be the last question for today. I now hand the conference over to Dr. M. Sambasiva Rao for closing comments. Thank you, and over to you, doctor.
I, once again, thank all the participants for showing interest in our brand and company. And I assure you as much information as possible, I'll be sharing. I will also recheck how much more I can definitely -- I can pass on during this running quarters. We would like to give certainly every information that is permissible, be as transparent as possible. We, as a company, believe in transparency and accountability. We'll see both aspects and come back in future months -- future calls. Thank you once again for participating in spite of the regulations around working timings and movements, et cetera. I'm wishing you all a good health and take all precautions from this fast-spreading virus in India. Thank you very much.
Thank you, everyone.
Thank you very much. Yes, thank you. Ladies and gentlemen, on behalf of Heritage Group, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines.