Dodla Dairy Limited (DODLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Dodla Dairy Limited Q4 and FY '25 Earnings Conference Call. [Operator Instructions] This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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. On behalf of Dodla Dairy Limited, I extend a warm welcome to everyone joining us on our call today. I hope everyone had the opportunity to go through the financial results and investor presentation, which we have uploaded on the stock exchange and on our company's website. We are proud to announce that Dodla Dairy has completed 30 years of its journey since inception in 1995. Over the past decades, we have grown the business multifold and evolved ourselves into an integrated dairy company, offering a diverse range of high-quality products under the trusted and well-recognized brand, Dodla. In the last 4 years alone, we have nearly doubled our revenue by achieving a CAGR of 18% and have experienced an even faster growth rate in profitability. Additionally, we were able to maintain a very healthy ROCE profile and improve working capital efficiencies, reflecting our focus on sustainable and value-accretive growth. I would like to take a moment to express my gratitude to our entire team, a strong leadership team, including the dedicated general managers heading each business vertical and reporting directly to the CEO of the company. They have collectively played a crucial role in this growth journey. Coming up to the current scenario, this year has been a remarkable year for us as we were able to capture multiple achievements. In FY '25, we evolved from a net buyer to a net seller of S&P and butter. This strategic move was backed by enhanced procurement strength and resulting in better efficiency and control over the margin profile. We were able to maintain stability in our margins during each quarter in FY '25, significantly minimizing the seasonal effects that used to impact our margins. On top of a stable healthy margin profile, we were also able to deliver a healthy year-on-year growth in every quarter for the full year. FY '25 revenue grew by 19% year-on-year and stood at INR 3,720 crores, and we closed the year with a PAT of INR 260 crores. We have started work towards expansion in Maharashtra. It is a greenfield project with a total outlay of INR 280 crores on the stand-alone project itself. And investment in this is through a combination of debt and internal accruals. The plant is expected to be ready by the end of the financial year '27, thereby increasing our processing capacity by 10 lakh liters per day. In addition to that, we were able to add more land near the same location, resulting in a total of 61 acres of land for the dairy business and another 12 acres for the Ografeed business. Now coming to the quarterly performance. I'm happy to announce that Dodla Dairy has delivered a double-digit year-on-year growth for the fourth consecutive quarter in Q4 '25. Our revenues grew by 15.5% year-on-year, reaching INR 910 crores. In Q4, due to summer, it marks the beginning of the lean season for milk procurement perspective and higher VAP offtake. The procurement prices have been rising. And in response to that, we've also taken a price hike during the quarter, which is in line with the industry trends. We have also started witnessing an increase in VAP demand towards the end of the quarter. Our value-added product sales for the quarter contributed 32% of our total revenues, and we expect this demand to continue in Q1 FY '26 and to increase our VAP share. We constantly battle between build versus buy thought process, and hence, the acquisition is an ongoing focus area for us. With a past track record of successful acquisitions, we are well placed to expand our geographical presence. Generally, milk business growth is related to the GDP growth of the country, but we at Dodla believe in outperforming the industry and delivering superior growth through strategic initiatives. The greenfield expansion in Maharashtra is set to be a major drive. Additionally, we are focused on expanding our product reach along with some additions in product portfolio in India as well as African territories. Based on these strong fundamentals, we strive towards continuing our growth momentum. With this brief, I will now hand over to the CEO of our company, Mr. BVK Reddy. Thank you very much.

Thank you, Sunil, sir. Overall, we have seen healthy performance in Q4 '25. Our Indian operations, we witnessed a growth of 11%, driven by a combination of volume as well as value growth. During the quarter, we took price hike of INR 1.19 per liter of milk on a consolidated level, which is in line with overall rise in procurement costs during the quarter. The price increase is a seasonal pattern incorporated in the nature of its business and also in line with the overall industry trend. I would like to assure you that there is no major impact in terms of margin and no concerns from the competitive point of view. Speaking about value-added products, we have started witnessing a surge in overall demand, particularly in products like curd, ice cream, flavored milk, paneer, et cetera. Our curd sales was INR 194 crores, ice cream, INR 11 crores, flavored milk was INR 12 crores and paneer is INR 7 crores. Speaking of international business, we have delivered outstanding results in Kenya and Uganda with a revenue growth of 71% year-on-year basis, crossing the mark of INR 100 crores for the first time since we entered this geography. We also see some improvement in terms of margin compared to previous quarters. Orgafeed business also exceptional performance with year-on-year growth of 48%, along with an improvement in the scale up in the business. We also see a decent margin expansion. Currently, we cater around 30% of our farmers with a capacity utilization still below 50%. Orgafeed is not only providing a strategic edge while maintaining a relationship with the farmers, but it is also strongly positioned to deliver a faster growth in the coming years. Our overall profitability remained in line with the previous quarters in FY '25. Our margins were pretty much stable, as Mr. Sunil Reddy said, rightly mentioned that we were -- we were able to minimize the fluctuations resulting from seasonality trend in the business. We were able to achieve this stability by improving our procurement strength and eventually becoming the net sellers. We continue to implement this strategic and sell S&P and butter as a commodity whenever required. During the quarter, we were able to procure 16.3 lakh liters milk per day on an average. This is around 16.5 lakh liters per day the same period of the last year. The average procurement cost Q4 was around INR 37.36 per liter, which was around INR 35.81 per liter the same period of the last year. The average procurement cost in Q3 FY '25 was INR 35.6 per liter. Average milk sales for the quarter was 11.7 lakh liters per day, an increase of 8.2% on a year-on-year basis. Curd sales stood 383 metric tons with a year-on-year basis, 6.5% growth. And lastly, the VAP sales were INR 284 crores with a growth of 28.2% on a year-on-year basis. Overall, our focus remains intact and enhancing our procurement strength, widening our product portfolio and expanding our distribution reach in new as well as existing markets. We aim to maintain healthy profitability by keeping our VAP sales contribution above the certain level while continuously growing our other business. With this now I request Mr. Murali to share the financial highlights of this quarter and as well as the year. Thank you, Murali.

Thank you, Mr. B. V. K. Reddy, and a very good afternoon to all the participants on the call. I'm happy to share with you that the Board has approved dividend distribution of INR 2 per share, that is 20% of the face value. Talking about quarterly performance in Q4 FY '25. The revenue from operations came in at INR 910 crores versus INR 787 crores in Q4 FY '24. In the quarter, our gross margin stood at 27.2%, which is broadly in line with our full year GP levels. Employee expenses and other expenses remained in line with the previous quarter. We reported an EBITDA of INR 83.5 crores as against INR 75.4 crores during Q4 FY '24. EBITDA margin for the quarter stood at 9.2%. Our depreciation expense stood at INR 18.2 crores. Our finance cost for the quarter remained stable at INR 1 crore in Q4 FY '25. Other income stood at INR 25.8 crores. This includes the provision reversal amount of INR 9.5 crores on the back of securing a favorable Telangana GST Commissioner appeal and also AP High Court order with respect to flavored milk classification. Balance amount primarily consists of return on investments made by the company. Our tax expense was INR 22.3 crores with an effective tax rate of 25%. The net profit stood at INR 68 crores with a margin of 7.5%. Now for the full year performance. Revenue grew by 19% and stood at INR 3,720 crores as against INR 3,125 crores last year. EBITDA margin saw an improvement of 100 basis points and stood at INR 381 crores. Net profit was at INR 260 crores as against INR 167 crores of last year, a growth of 5.9% year-on-year, mainly as a result of higher other income and other efficiency. We see healthy cash flow from our operations, which stood at INR 520 crores. Speaking of cash, our total cash and cash equivalents position as on 31st March 2025 stands at INR 746 crores. This includes cash and bank plus our current as well as noncurrent investments as all of those are liquid in nature. With this, we conclude the presentation and open the floor for further discussions. Thank you.

[Operator Instructions] The first question is from the line of Ashish Pareek from Emkay Investment Managers Limited.

Sir, 2 questions. Firstly, the capacity utilization you mentioned was below 50%. So can you please tell me in the next 2 years, how much of utilization will be reached? And this is before excluding Maharashtra greenfield new project? And secondly, Africa business utilization also?

So basically, the 50% capacity utilization was in the Orgafeed plant because we have just built out a new plant, which had -- compared to our earlier plant, which was around 2,000 tonnes per month, we had built out a plant of 10,000 tonnes per month. This was keeping in view of this growth that we project to have. And that is the reason why although it is not just most -- almost a little more than a year of operation, we have already reached the 50% mark of capacity utilization. So we are assuming that by the time a Maharashtra plant comes into play, we will be able to utilize the older plant and then we will need a new plant to get a capacity utilization. So that was regarding the capacity utilization of Orgafeed. Regarding Dodla Dairy utilization, we are doing a reasonable job. I think we will be around 70% to 75%. And that is also mostly because of we have a couple of plants which are meant to be for the seasonal fluctuations, which is when we have powder, which there's excess milk in the system and we have to convert, we will have the excess. So that is the reason why we have that. I think we will maintain these healthy capacity utilizations on the milk front also. I hope I answered your question, Ashish.

Yes, sir. And second, what was the bulk sale in this quarter and yearly number also on a consol basis?

Basically, the bulk is predominantly only what we look at S&P that we look at our sale of S&P because that is a balancing that we do. I think S&P number will be roughly...

S&P, we have done around INR 110 crores sale...

In the Q4?

No, no, total entire year.

Q4 was around...

INR 29 crores.

INR 29 crores.

The next question is from the line of Aniruddha Joshi from ICICI Securities.

Congrats for a good set of numbers considering the inflationary pressures. So just the question on milk prices. How do you see the milk prices panning out in next, let's say, 1 year? Because we have seen monsoon hitting early in the South India Peninsula. So with the reduction in temperature level, is there any increase in milk production leading to better procurement prices also? Question number one. And then secondly, what is the prices currently for S&P? And what would be the indicative inventory that we would be carrying as of now? Yes.

See, first question, what you have said, early monsoon started in South India, a couple of areas. Shivers already we have experienced, especially in Karnataka, Tamil Nadu, even to a certain extent in Maharashtra also. Prices are already softening. And we have already taken one round of price reduction and maybe we are expecting it will go for one more round also very soon.

And regarding inventory, Aniruddha, we are currently, I think at end of March, we were holding around INR 160 crores of inventory overall. I think out of which only INR 100 crores would be finished goods, the rest would be regular inventory and it's a consolidated inventory of all locations put together. And S&P price, I think BVK will answer on the S&P price.

Yes. S&P in the fourth quarter, we sold roughly about INR 250 and butter, we have sold, bulk butter around INR 430, INR 435. So now S&P is around INR 255, INR 260 range.

Okay. No, sure, sir. Understood. So with softening of milk procurement prices plus the price hikes that we are taking, so should we say that...

We have taken even milk selling price also in the third quarter. Selling price also, we have taken up in across all the locations. So overall, you see that is INR 1.20 roughly about price hike we have taken in the third quarter. And the third quarter slightly procurement price was high, but fourth quarter now only April after May. May from 10 onwards, prices have started already declining. So one round of procurement prices we have already taken up.

The next question is from the line of Resha Mehta from GreenEdge Wealth Advisors.

Sir, so one, I wanted a clarification that what would be our total fat product sales for the full year FY '25? Fat, meaning for S&P and ghee.

Butter S&P and ghee, so basically we classify fat as both butter and ghee. I think Murali will give the specific numbers of butter.

But for the total year, we have sold around INR 202 crores and S&P, we have sold around INR 110 crores. That's what we have told, total into INR 312 crores of B2B business. Second is ghee, consumer ghee, we have sold.

Sorry. So butter and S&P is INR 312 crores, right?

All put together INR 312 crores.

Okay.

And, ghee we have sold around INR 80 crores for the full year.

Okay. So that is roughly around INR 400 crores of fat products. And what was the same number for FY '24?

FY '24, actually, we don't have any butter and S&P sales. We have only ghee sales.

In FY '24, no, we have not sold any S&P. And also butter also, we have not sold much actually. But ghee sales was there, ghee sales, so only 2,500 tonnes -- 2,500 tonnes per day. And that is roughly INR 42 crores -- INR 42 crores to INR 50 crores that has been sold in '24.

Okay. Sir, so that means this jump in fat products, right, from INR 50 crores to roughly INR 400 crores, right?

That is including S&P.

Yes, yes, yes. So fat products.

Earlier, we used to be a net buyer's S&P, so we improved our procurement.

Right, right, right. We had a change in inventory policy. So basically, see, while the headline numbers look great in terms of revenue growth. But if I were to just kind of look at your revenue growth, after excluding these fat products, your seed business and your Africa operations, right, if I look at the core India dairy operations, I think your revenue growth is somewhere in low to mid-single digits, right? So would you say that you would be particularly concerned about this because the peers have kind of grown at a much faster rate. And has it like -- has this been below your expectations also? And if yes, then what were the reasons for low revenue growth in the core India dairy operations when we exclude all of this?

So Resha, what we say when you say core India dairy operations, we are also looking at it from a point of view of procurement to liquid milk sales, curd sales and product sales. When we look at PAT, PAT is adding to a part of the product sales that we have. I think we have grown on an average of the higher single-digit numbers of 6%, 7% in volume even in the liquid milk and liquid curd sales that we have done. And we continue to believe with that, that we will maintain the growth rates of volume of 10% and value addition growth that we normally do. I think a small aberration here or there of 1% or 2% will be more than compensated in the years that come forward. So we are not very much concerned about that, but we are very much more worried -- focused about our profitability margins. We will not produce -- just push volume for the sake of volume. We'll try to balance both. And in the balance, now we are coming to the net seller of commodity rather than becoming a buyer. And that's why you'll see that our fluctuations are also -- we're trying to keep more stable operations.

The next question is from the line of Resham Jain from DSP Asset Management.

Congratulations, sir, for consistent performance. So first is on the overall procurement growth. This year, we have seen procurement growing at close to single digit, mid-single digit. So what is the expectation given that Maharashtra plant will come only in end of '27? For the next 2 years, organically, what is the kind of procurement volume growth which we can do?

Yes. See, this year, we have done an average procurement is roughly about INR 17.1 lakhs in '24-'25. And even in '23-'24 also more or less the same thing. But see, '23-'24, we were having a third-party -- slightly third-party procurement. That third-party procurement in '24-'25 totally closed. That's why you don't see much jump in '24-'25 procurement growth. But actually own procurement growth is there already in '24-'25 also. And in '25-'26, we are already targeting 18 lakhs average. So that only in India and including Africa, it is 20 lakhs. So 17 lakh to almost now we are forecasting 17.1 lakhs to 20 lakhs on a consolidated basis.

So Resham also coming to your point of Maharashtra coming in '27, even before Maharashtra, what BVK was saying that we are planning on this aggressive growth. We are continuing to be progressing with procurement of our own growing, not looking at outsiders or any milk coming in so that we have the advantage of quality and pricing. And that procurement, we will keep pushing aggressively even this year because we still have 2 powder plants of our own and comparing the balancing, we can afford to manage even if there is a surplus in the system.

Okay. So I actually didn't -- what is the growth you are expecting? Is it 10%, 12%.

We are adding 2.5 lakh procurement. We have taken a target of -- 2.5 lakhs, we have taken a target for this '25-'26.

15%, roughly 15% of volume and procurement is what we're looking at growth.

Okay. Understood, sir. Sir, the second question is with respect to the overall margins, given that the procurement prices have started coming down now, while you might take one more price hike, and industry also may do so. So should one expect that margin should be slightly better off sequentially now because in Q1, anyways, the curd sales and the value-added product sales is slightly better.

Resham, we will maintain the same status quo margin profile as percentages of what we are looking. In absolute number growth will continue to be as what we continue to grow. This is predominantly because although on one side, we see procurement prices moving off. Again, the weather cooling and coming earlier, the value-added component in terms of the product mix will not be the same as it used to be in the previous summers. So profitability and growth numbers will continue to be in the same tandem of the double digits that we maintain and grow in the same manner.

Understood. Clear, sir. Sir, last question is with respect to Orgafeed. In the opening comments, I heard that you supply this feed only to 30% of your overall farmer pool. Is that correct?

Yes.

So how are you planning to scale up? And what -- like why not -- because we are operating at 50% utilization, what are the bottlenecks here in terms of getting into or penetrating with more farmers?

Yes. See, actually, the higher capacity feed plant we built only in '23-'24. So actual full production capacity commenced only in '24-'25. So already, we have taken around 40%, 45% capacity utilization in the first year itself. So this year, we are expecting largely -- the last '24-'25, we have done INR 132 crores. Now this year, almost we are expecting INR 200 crores. So we have taken a sizable jump in feed sales. So see that we have taken -- the bottleneck is only to see supply and collect money recover from total from the farmers. That is only the bottleneck.

And also, Resham, as we've been looking at it, we have built it with a view of at least a 3 year. I think it is coming down quicker than that for what we are using our -- the feed plant that we built out. And second thing is also when we are saying Maharashtra, for example, sometimes distances also play a role in terms of pricing of cattle feed movement. So as volumes grow in the areas where we are operating, we'll utilize this facility for our existing operators in and around our cattle feed facilities. And by the time the Maharashtra grows, we will be able to build up further capacities and utilize there.

The next question is from the line of Nihal Shah from Prudent Corporate Advisory.

Congratulations on a great set of numbers. So here, we can see the curd volume going up only by 6%, which is the biggest component in our value-added products. So why was that so in this quarter? And our procurement has reduced in second half of this financial year against the second half of last year. So was that because we are sitting on a good level of inventory that we had piled up last year? Or was there the high procurement cost the reason?

The question of, yes, curd did grow by 6% and what we have also milk, which grew up. That's why we are saying that normally, we look at it as growing at, like I kept saying earlier that our value-added overall in the bucket normally grows by 1%, 2% -- this time, it moved up because of fat and the same trend will continue. It won't grow substantially overnight in terms of the consumption. Coming to the procurement, yes, we did have higher inventory and prices when they were not suitable for being higher, we were able to contain. And third, like we said, we totally cut out all the high cost of procurement, which was coming from any other third party or whichever and improved only our procurement and which is the way we will be going forward. And so that was the reason. And that our procurement was slightly -- it is mostly, I think, controlled by us rather than noncontrollable factor, which now we are again going to be accelerating.

The next question is from the line of Abhishek Mathur from Systematix Group.

Sir, just wanted to check after a strong FY '25, what is our outlook in terms of the volume value growth for the overall business and also for the key segments of VAP, milk and Africa, if you can sort of elaborate? And what will be our plan for geographic or distribution expansion that will support this outlook? That's my first question.

Basically, what we are looking at is, I think we will continue to maintain our -- the CAGRs of what volume that we continue to grow at a double digit in terms of the value and the revenue growth that we are there. We will maintain those growth targets. Africa will not show this significant move as we have seen this year of the growth rates being almost 60%, 70% because I think the Kenya acquisition that came in, we played out well and it has taken a significant year. But this should also maintain in line with that 15%, 16% growth rates is what we are considering even for the Africa business. And also when we look at the Orgafeed, is also we will continue to look at the same 15% growth rates that we look at. So I think we'll maintain those growth rates. The reason why we are saying that is that we don't want to accelerate rapidly or decelerate rapidly, keeping in mind that we have to balance both our procurement and sales in terms of profitability and how do we take it forward. So the same standard statement that we always make that we will maintain our growth rates in view with our CAGR that we have been. But last year was significantly larger, but we cannot expect that kind of a significant jump, but it will continue to be in the high single digits -- sorry, high double digits, sorry.

Right, sir. And just a follow-up on that. What is the plan for our geographic expansion or distribution expansion that will kind of support this? Because if you're saying that Africa will probably not continue to grow at the rate that it has grown, which means the India business has to step up significantly. So what will be the kind of expansion that will kind of support this growth?

India, we are looking at it as we will look at certain other areas of expansion, which we are looking actively in terms of more states to be added for our growth, which can also give us our growth, and we will also see how our depth works. But I think we're also doing well on the other end of our products like, ghee, paneer, which we have almost doubled from last year, and we are hoping to do better. We've also been penetrating into modern trade. We have been trying to get more into online trade, regular existing markets. So with all the initiatives and also we are doing the significant spend on brand. We are hoping that with all that our existing market growth rates also will continue to maintain and additional growth we get from new territories will make our going forward. Our growth -- additional territories will be more in terms of more deeper penetration into Tamil Nadu, Maharashtra, where we are already operating and maybe a few new states as they come across for us.

Sir, would you like to sort of elaborate on which new states or which new territories we are looking at right now?

We will keep looking going forward towards the northern part of the country. We are not -- I think we will be more specific in the coming couple of months as to where it will be. We will disclose that a couple of months later, but we're actively looking towards more north of the country.

Sure, sir. And finally, just a bookkeeping question, sir. If you can provide the consol realizations for the overall VAP and milk sales for the quarter, please?

Come again, sir. Overall for the VAP and milk as 2 segregated items.

Realization?

Yes. Consol realizations.

Actual realizations.

Yes, sir, yes. Consol realizations for overall VAP and milk.

Yes. Consolidation Q4 is INR 60.87. For the full year, it is INR 62.24.

And sir, for VAP and milk also for fourth quarter?

VAP for the fourth quarter, it will be INR 67.25 VAP. Milk is INR 56.16.

The next question is from the line of Disha Giria from Ashika Institutional Equity.

Congratulations on a great set of results. I just had a bookkeeping question. You have mentioned in your presentation that the Africa business had contributed around 10.2% in FY '25. What would that number be for FY '24?

We have done '24, 1,06,000 average sales. Sales, we have done 1,27,000 and 1,11,000 for the entire year '23-'24 and '24-'25, we have done 1,80,000 average.

I think the same percentage also. It would have been -- as a percentage, it would have been the same, Ashika (sic) [ Disha ].

All right. Okay.

Roughly about, we added 60,000 liters last financial year because we acquired in a Kenyan plant. With the Kenyan plant, we added almost Kenya, we got put together, 60,000 liters we added.

The next question is from the line of Nikhil from SiMPL.

Congrats on a good set of numbers. Three questions. One is, see, when we had met your point was that we'll launch ghee in markets because we had a good presence earlier and because product consistency was not there, we were not able to launch and supply the markets. Can you talk about -- because on the numbers you mentioned, it's seen a significant growth. How is the profitability in that business? And how is our market share in markets where we've launched?

Market share in terms of ghee, we will be very small because after milk, ghee is a significantly large thing in the dairy pie that is there. So what we are looking at volume-wise, the percentages will be insignificantly small. But I think we have almost doubled our sale of consumer sales in the presence of markets that we were from almost saying that, let's say, it was 2 tonnes a day to 4, 5 tonnes, 4.5 tonnes a day of sales in the markets. So the markets are now -- we have not yet penetrated as deeply as we were earlier in the northern states. We are now again relaunching, so it will take some time to get there. But in the states where we are present, our presence has started to improve significantly. And I think this year, you will see even more volume. I think we are expecting this volume to also become double from where we are in the past year. So that is where we will take ghee. So over -- we have to also, like we said and you had pointed out rightly, now we want to make sure that we don't pull out of the ghee market in the long run. So that is when we will also start enhancing prices for profitability improvement as we go forward once we create our presence felt over all the places that we want to be.

Just so, eventually, would the profitability at ghee be better than our console profitability of 9%, 10%? Or -- and is it...

It should be around the same percentages or slightly less than a percentage or 2 because of freight or distances of travel, but it can be premiumized over a period of time. But otherwise, it will maintain the same levels of profitability.

Okay. Secondly, in Africa, so this year, we had seen some impact on margins. How do you see the scenario evolving? And where do you see the margins to stabilize? Like would it come back to that 20% level? Or should we consider a 14%, 15% as a sustainable margins over longer term?

So I think our margins were normally in the range of that 15%, 16% and 20% will be an aberration once in a while. I think BVK will answer the rest regarding where -- why is the margins of the last year where and where they will be as we go forward.

Last year, we have taken up the Kenyan plant. So see, we were expanding our market in Kenya market because since it is a new plant. So that's why you see some margin decline in the last financial year. But this year, it is going to come back 13%, 14% average EBITDA levels there.

From a significant base increase.

Yes. And last question, and maybe I missed it and I couldn't understand it properly. You said procurement prices may go down or may remain stable while companies may increase prices. Is that right what you mentioned or...

No, no companies have not increased. Selling prices were already increased, I think, in the third quarter, fourth quarter of last year itself, we have taken price increases. Those increased prices will continue to stay. Procurement prices will come down.

But sir, one point. See, the procurement prices had also gone up because there was a lot of issues at the cooperative level and cooperatives had increased the prices for the farmers. I understand now with rains and probably things and maybe things are better. But will the cooperative also roll back those prices on procurement?

See, basically, it's a supply-demand issue for whoever it matters. And I think even cooperatives will be forced to reduce prices because if you have too much of milk in the system, we normally reduce the prices and a portion of it gets converted into the products and then it will be stored and used. So based on that, so we are anticipating already early monsoons are showing signs of higher milk procurement coming in. And normally, the private sector reacts a little earlier, cooperatives do follow.

The next question is from the line of [ Bhavesh Jal ] from DV Investment Advisory.

So just wanted to ask that in the past, we have done CapEx in Africa business. And as compared to our major competitor who has done -- who has invested amount to build value-added products ecosystem in India. So just wanted to know your outlook, how do you see these both the markets, Africa and domestic market in terms of growth prospects? And also, how are you planning to deploy cash to build Dodla much more stronger brand going ahead?

So basically, when we look at it as the value-add component versus the milk component that we look at it, I think the ratios of what we are at will be maintained because it's the general consumption pie as I keep repeating in terms of the overall dairy consumption pie is in such a manner. Milk will take the lead, followed by ghee, followed by paneer and then followed by other -- the host of other products that come into play. So that is where the pie will be, and we will also be investing accordingly. Like, for example, if we are investing, let's say, in milk, we also simultaneously do a proportionate investment in the curd lines that are required and improving our product mix also in terms of ghee and other products. Coming to Africa, Africa is a great in terms of the return on capital deployed. For example, if you look at our current rates of what we are doing in terms of we have deployed around INR 60 crores of capital roughly, and our returns are also close to that INR 40 crores, INR 45 crores in terms of EBITDA. It's a very highly profitable market, but a difficult market to crack, which we took the time to crack it. There also, we have a little more opportunity in our existing areas for growth. For example, in Uganda, where we are almost a significant share of the country's market, we are now looking at penetrating into pasteurized milk, which we were not there earlier. We were only doing long-life milk and curd. And now we are also looking at penetrating into the other segments there to grow. So Africa will continue to grow after Kenya stabilizes and with Uganda a little bit of expansion of what we have as facilities. We will not look at other countries at the moment in the short term. In the short term, between Africa and Kenya, sorry, Uganda and Kenya itself, we are confident of maintaining the present growth trajectories. And in India, by adding Maharashtra, which will give us a significant move towards our milk movement and also give us new areas for market of Maharashtra for products, we will maintain the same profile approximately as the consumption patterns.

[Operator Instructions] The next question is from the line of Sameer Gupta from India Infoline.

Sir, firstly, on the call, you mentioned that almost around INR 350 crores of excess fat and S&P has been sold in FY '25. But I don't see any impact on margins. And my understanding is that these are almost sold on spot prices with negligible margins. So unless we have benefited in terms of rising prices on this or gains on inventory, margin being stable or actually stand-alone gross margin has seen an increase. Just wanted you to give a clarification on this aspect.

So like I always keep saying the excess stock or inventory always acts as a buffer. When we have a surplus in terms of milk, maybe the commodity price of powder and milk might be lower. But the impact is that we get better benefit from lower milk procurement prices, and therefore, we get a better margin. And the other way around, if there is less of milk in the system, the products do -- I mean the commodity has a price increase and they will help in buffering the margin to make it stable. I think in the current year, to your point of why there's not been a substantial difference or whatever, I think we were able to manage to sell it at the right time and keep the inventory position going at the right sale. So we didn't have a significant increase in margin, neither did we lose money. We maintained our margin profile by keeping our required margin and disposing it as and when it was required. So that's the reason why we were able to maintain. If we do it early or late, sometimes we can get a benefit or loss, but we will try to maintain it at that level where when we get our required numbers of profitability, we try to dispose our inventories.

Again, a follow-up here, sir. So you're saying there is no inventory gain on this INR 350 crores of excess fat in S&P. Is that reading correct?

No, no inventory gain. Neither did we have a loss also. It is almost a little breakeven and a little operational.

So that would imply, sir, that your base business has actually delivered very good margin expansion, if you exclude this S&P and fact. And what would be the...

Yes, maybe 0.5% of margin expansion, because it's overall INR 3,700 crores. It's only been around INR 300 crores or if you remove the fat sales of it, it would be only INR 150 crores. So it is a smaller volume.

Got it, sir. Got it. Second question, sir, you mentioned price reduction. Now I got confused. So we have not taken any price decreases at a consumer level. Is that understanding correct?

Yes, it's only the procurement price reduction, not the sales price.

And how much is the procurement price reduced by? Can you give a number?

I think it will be around INR 1 per liter.

So this INR 36.5 is now INR 35.5, your average procurement price.

Yes, that's what it is.

[Operator Instructions] The next question is from the line of [ Kiran Kumar from Green Investors ].

This is a follow-up question with respect to your answer regarding the bulk sales in an earlier question. Just to repeat the numbers, S&P sale was INR 29 crores in Q4 '25 and the full year number was INR 110 crores, and there was no S&P sale in the previous financial year. What would be the whole bulk sales like including the bulk butter and ghee and S&P all taken together in this quarter, Q4 '25 and whole year and the comparables for the previous year as well to understand the revenue growth, excluding the impact of bulk sales?

So I think Murali will answer the question for you, and he will break it up into total full year of what it was as a difference between bulk sales, right? So Mural go ahead and answer.

So full year, current year butter is INR 202 crores, S&P is INR 110 crores, which is total into INR 312 crores. This was not there in the last year. So for INR 312 crores, if I add INR 80 crores of ghee sales, total sale is INR 392 crores, whereas last year, we have only INR 42 crores of ghee.

Okay, sir. And what would be the figure for quarter?

Sales for the quarter, current year butter is INR 9 crores, S&P is INR 29 crores, overall put together INR 38 crores.

Okay. And ghee?

Ghee is basically INR 19 crores.

Okay. And this is similar figures for Q4 trend, sir?

Q4 '24 for ghee, INR 9 crores, INR 9.89 crores, around INR 10 crores, ghee. INR 10 crores for ghee, right. And no S&P and butter? One ghee. No butter and no S&P.

[Operator Instructions] The next question is from the line of Aditya from Securities Investment Management.

Sir, first question is after the recent round of price hikes taken by most of the players. So what is the current price differential between us and the cooperatives? So has that reduced or has that remained stable?

So the price difference between cooperatives and us is still there with a significant 15%, 20% higher will be the private sector. Although they have taken a price increase, it's not that it's only been maybe they've taken a price increase of INR 5, INR 6 and we are still maintaining our higher prices than them and the gap still maintains.

Especially in Tamil Nadu, Karnataka gap is high.

The gap between us and the cooper is higher?

Yes, it will be around INR 7, INR 8 at least.

Okay. And last year also, the price differential was at similar levels?

Yes, similar levels. It's not much -- there might have been INR 1 this way that way because of price timing of when they increased their prices to when we increased our prices, but almost similar levels were maintained.

Understood. Understood. The second was now this year, we have had around INR 300 crores, INR 350 crores of bulk fat sales. And one of the reasons was last year, we had built up a significant amount of inventory. But when I look at your inventory this year, that has reduced sharply.

No, no, we maintain similar levels of inventory because the season of production happened and then we sold this inventory. Current year also we'll go. Like we said earlier in our spring, we are moving away from being a net buyer to a net seller of powder and butter. This is done more with the view of having our own milk supplies throughout the year. And in the days to come to improve our base quality of milk, we will be able to use fresh milk more and more in terms of throughout the year and maintain product stability also without using powder or other things required for making up of fatter our SNF, which will be there. So I think we will maintain similar levels of inventory again coming in the season of this year.

Yes, add to that, now we have taken more than 2 lakhs aggressive procurement target this year also. That 2 lakhs, it is going to go for only for conversion of butter and SMP. The 2 lakhs procured milk will give you roughly about INR 350 crores, INR 400 crores top line. So indirectly selling in the form of butter and S&P.

Understood. And sir, just last question, what was the curd sales amount in rupee terms this quarter?

For the quarter is it?

Curd sales is INR 193 crores for the quarter.

[Operator Instructions] The next question is from the line of [ Riya from EN Capital ].

Just wanted to understand on the employer's cost. Like do we expect to see any further increase in our employee expense in FY '26?

It will almost maintain our growth rates of what we maintain I think for the overall 5%, 6% increase in the cost. That will always go on a year-on-year basis for what we give as increments. But I think on an absolute number, but we are confident with the overall volume growth as a percentage of the expense this time, it will maintain the same levels as last year.

Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to management for closing comments.

Thank you, everyone, for joining us today on this earnings call. We appreciate your interest in Dodla Dairy. If you have any further queries, please contact SGA, our Investor Relations adviser. Thank you so much, everyone.

Thank you.

Thank you. On behalf of Dodla Dairy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.