Heritage Foods Limited (HERITGFOOD) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the Tantalus Systems First Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Deborah Honig, Investor Relations. Please go ahead.

Thank you, operator. Thank you for joining us to discuss Tantalus Systems' financial results and operating performance for the 3 months ended March 31, 2023. Tantalus issued these results in a press release yesterday, which is posted on the company's website. Joining me today on the call from Tantalus Systems here and referred to as Tantalus or the company is Peter Londa, President and Chief Executive Officer; and George Reznik, Chief Financial Officer. During the call, we will make forward-looking statements about Tantalus' business. These statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. Tantalus refers conference call participants either today or in the future to the company's forward-looking statements contained in the presentation and also available on our website at www.tantalus.com. Statements made on this call reflect management's analysis as of today, May 10, 2023. Management does not assume any responsibility or obligation to update forward-looking statements made during this conference call unless required by law. Please note that the financial information referenced on today's call is stated in United States dollars and in accordance with IFRS, unless otherwise stated. The company is also presenting selected non-IFRS financial measures, including gross profit margin, core business expense, adjusted EBITDA, recurring revenue, annual recurring revenue referred to as ARR and adjusted working capital. Tantalus believes that these non-IFRS measures provide meaningful information to investors. However, they do not have a standardized meaning and are not likely comparable to similar measures presented by other issuers. I will now turn the call over to Peter Londa, President and CEO. Please go ahead, Pete.

Thank you, Deborah. Good morning, everybody. Thank you for attending our earnings call to outline our Q1 results in 2023. On behalf of our Board of Directors, George Reznik, myself and the rest of the executive team, I'm pleased to provide an update and share the good results that we've issued as of last night. Calling your attention to Slide 3, we witnessed a number of milestones unfold for the company in Q1. Particularly, we delivered $10.4 million of revenue in the first quarter, which marks the highest level of revenue that our companies has ever generated in the first quarter of a calendar year. This result is on the heels of delivering the highest amount of revenue in a quarter last year Q4 at over $12 million and is a good reflection of the trajectory and the visibility into our revenue plan that the company currently has. In addition to having a solid start to the year from a revenue perspective, we also converted $17.7 million of opportunity out of our sales pipeline through our sales organization. And we highlight this number because it is a new milestone for our company in terms of orders converted in any quarter throughout our company's history. The $17.7 million surpasses our previous high watermark of $16 million set last year. So great growth and effort from the sales organization and I think a good data point for the level of urgency that we're seeing across the utility industry to truly modernize the grid. As part of that $17.7 million, we welcomed an additional 7 new utilities to our user community, which now stands at 278 utilities, and we continue to gain market share as a result of the value we deliver, the support we provide to the utilities around the country, Canada and the Caribbean and I think is a good testament to the direction of our capabilities. A few other highlights our metrics to point out. We did revert back to negative EBITDA in Q1 as we sort of expected in alignment with our plan. As previously communicated, our view is that Tantalus will be EBITDA positive or adjusted EBITDA positive for the full calendar year of 2023, but not necessarily EBITDA positive for each quarter of the year. Part of that ties to the ramp in revenue throughout the course of the year. And also some of that ties to the ongoing investments that we're making in strategic R&D initiatives to bring our Tantalus gateway into the market as well as to deploy our AI-enabled transformer analytics capabilities. Incrementally, in Q1, we saw some incremental expense from sales and marketing or in sales and marketing that tied to both in-person participations at 2 of the largest industry trade shows, which always unfold in Q1 as well as incurring some incremental expense tied to the planning of our in-person users conference, which unfolded for the first time since 2019 during the first few days of April. From a balance sheet perspective, I'm pleased to report that our cash has increased. And as of March 31, we had $8.2 million in the bank. This is exclusive of approximately $700,000 of cash that continues to sit in an account tied to a bit a bond for deployment into the next few quarters. With that, I'm going to turn it over to George and have him walk through our financial results. Go ahead, George.

Thank you, Pete, and good morning, everyone. As reflected on Slide 4, we delivered $10.4 million in revenue for the quarter, representing 12% growth over the prior year period. Revenue contributions from our Software and Services segment was 32% in Q1 2023 and remained in alignment with previous reporting periods. Within our Software and Services revenue segment, we include recurring revenue. As a reminder, a recurring revenue is comprised of Software as a Service or SaaS subscriptions, software maintenance, technical support and hosting services. Recurring revenue recognized during the first quarter of 2023 increased to approximately $2.4 million from $2.1 million in the prior year and represented 23% of total revenue for the quarter. As we continue to deploy more connected devices, we're focused on increasing the recurring revenue contribution to our overall revenue profile. To that end, as of the end of Q1 2023, our annualized recurring revenue, or ARR, meaning the total recurring revenue expected to be recognized over the next 12 months increased to $10 million, reflecting 22% growth from the end of Q1 2022. With respect to our gross profit, we continue to generate strong contributions despite ongoing inflationary pressures on our supply chain and overall costs. As reflected on Slide 5, we delivered gross profit margin of 47% for the quarter, which is fairly consistent with the prior year period. Disaggregating the gross profit margin further, the percent contribution for our connected devices increased to 34% in Q1 2023 due to the product mix, supply chain management and the previously implemented price increase. Gross profit margin from our Software and Services segment remained strong at 74% in the quarter. We believe the continued strong gross profit margin validates our team's ability to navigate through a challenging business environment and demonstrates the value and differentiation of our solutions. Moving down the income statement as outlined on Slide 6. Our operating expenses consist of sales and marketing, R&D and general and administrative items and is exclusive to share-based compensation and depreciation, amortization, noncash expenses. Our operating expenses for the quarter increased to $5.6 million from $5.1 million a year ago. Please note that our Q1 results in 2022 only reflected 2 operating months of Congruitive whereas this year's Q1 results reflect the full quarter. As reflected in our MD&A when comparing OpEx on a quarter-over sequential basis, OpEx in Q1 increased slightly from Q4 over this past year. The increases quarter-over-quarter tied to our continued R&D investment efforts and an increase in our sales and marketing expenses. We generated adjusted EBITDA of negative $692,000 in this quarter, which is similar to the prior year period. While the headline numbers look similar on a year-on-year comparison, we believe the adjusted performance in Q1 of this year reflects an improvement over the last year by approximately $225,000 on a pro forma basis. Given my aforementioned reference of Q1 of '22, only reflecting 2 full operating months with Congruitive. Management is prudently managing our operating expenses while balancing the investments in R&D and increased sales and marketing efforts relative to the growth of our revenue and continued strong gross profit margin contributions. We expect -- we remain committed to reverting back to our history of delivering positive adjusted EBITDA and expect to do so for the full calendar year of 2023. Please note that our net loss has expressed net of significant noncash expenses, inclusive of depreciation and amortization and stock-based compensation. Noncash items impacted the net loss by approximately $600,000 during Q1 of 2023. As reflected on Slide 7, the company ended the first quarter of '23 with $8.2 million in cash, exclusive of $673,000 restricted cash pertaining to a customer bond, which is anticipated to be released in mid-2023. This compares to $5.9 million of cash as of December 31, 2022. As a reminder, we historically witnessed a slingshot impact of cash at the beginning of each calendar year in conjunction with the annual invoicing and collection of our ARR. This link shot of cash helps our team plan and manage our working capital throughout the year and bolsters our ability to execute our operating plan. In addition to the increase in cash, we continue to generate positive adjusted working capital to support the business. The company had total assets of approximately $39 million as of March 31, 2023. The company had total debt of $10.1 million as of March 31, 2023. We renewed our debt facility with Comerica on February 27, 2023, and remain in good standing. The decrease in the total debt balance from the prior quarter is due to the ongoing repayment of the term loan associated with the Congruitive acquisition. As a reminder, we assume $3.3 million of debt through a term loan with Comerica that is being amortized over a 3-year period. We do not plan to use the existing shelf registration prior to its expiration later this summer to raise any additional equity and therefore, have not conducted a review of this quarter's financials with our auditor. Now I turn over the call to Pete to provide an update on the business and the commercialization of our TRUSense gateway.

Thanks, George. Given the impact of our additional R&D investments, associated with the TRUSense Gateway and our effort to commercialize the product and that investment's corresponding impact on EBITDA quarterly. We wanted to provide everybody with a status update on where things stand and provide a little bit more context on what we're working towards. As you'll see on Slide 8, we're working towards the delivery of 3 versions of the TRUSense Gateway. The first 2 referred to as the TRUSense Fiber gateway or TFG and the TRUSense Ethernet Gateway or TEG, are geared towards utilities who have already or are in the process of deploying fiber networks all the way down to the premise. Those fiber networks are intended to not only bolster the performance of the distribution grid, but also enable those utilities to help solve the broadband divide, particularly here in the United States, which surfaced during the COVID-19 pandemic. It's those utilities that formed our advisory committee and helped us both design and now are testing both the TRUSense fiber and the TRUSense Ethernet gateway. To provide some order of magnitude, we have a line of sight to over 200 utilities across the U.S. that have already or are in the process of deploying fiber all the way to the premise, and we believe both the fiber gateway and the Ethernet gateway will provide us with a target-rich opportunity to quickly expand our user community and obviously scale the business moving forward. In terms of where we are, we shared in Q1 the completion of alpha testing of the TRUSense fiber gateway and the commencement of UL certification, UL stands for Underwriters Laboratories, which is a certification process that really any electronic device needs to run through. We continue to monitor our progress with the UL certification team, and that's our current estimate that we should be able to complete UL certification on the fiber gateway and commence field trials towards the latter portion of the summer and into the early fall. Our goal with the fiber gateway is to be available for sale towards the end of this calendar year. And while we do not expect to generate revenue from the fiber gateway, we do expect to convert orders out of our pipeline and from our advisory committee leading to the end of this calendar year. This second version that also ties to utilities deploying fiber is the Ethernet gateway. Similar to the fiber gateway, this not only will help utilities enhance their smart rig capabilities, access much more granular power quality data that really is landmark for this industry. It will also help utilities get behind the meter, which we talk a lot about in terms of accessing command and control of EV chargers and other distributed energy resources such as inverters for rooftop solar panels or storage devices. But in addition to all those good things, the Ethernet similar to the fiber gateway will also enable utilities to deliver broadband services to their customers. And to that end, the Ethernet gateway will need to go through an incremental UL certification. That will then lead to dedicated field trials with members of our advisory committee. And the aim is to have the Ethernet Gateway follow quickly on the heels of the fiber gateway in terms of when it is available for sale. Again, we do not anticipate generating revenue from the Ethernet Gateway in 2023, but do expect to begin converting orders before year-end. Those orders will help drive visibility into 2024 and beyond and certainly serve as further validation of what we're working on. In addition to the fiber and Ethernet Gateway, we also wanted to call out the progress that we're making on the cellular gateway. The cellular gateway is geared for utilities that are not deploying fiber all the way to the premise. And it is from an increasing number of utilities around the country based on their objectives of getting behind the meter to control EV chargers and inverters that we are beginning to accelerate this effort. One benefit that we'll have with the cellular gateway from a timing perspective is that the platform is virtually similar to that of the fiber gateway and will not require an additional UL certification process. It will, however, require FCC review because we'll be leveraging either private LTE and/or 5G cellular networks here in the United States. So as you could see, the time frame of the cellular gateway is a little further pushed into 2024, but we're working aggressively from an engineering perspective and from a product management perspective to bring the cellular gateway to market as quickly as possible. I highlight the cellular gateway today because it is Tantalus first true path to access a broader set of utilities in the U.S., particularly with respect to investor-owned utilities. While a TRUSense Gateway family of products will support public power and electric cooperative utilities, those that are either deploying fiber or those that are not. We believe the cellular gateway provides us with a path to access the largest utilities in the country who are all prioritizing the protection of transformers with improved power quality measurement, and the ability to get behind the meter to control EV chargers and distributed resources. In totality, we believe and continue to gain confidence that the TRUSense Gateway product portfolio, fiber, Ethernet and cellular represent $1 billion of addressable market opportunity for Tantalus to pursue. And as we look to execute on that, we'll continue to provide updates, and we'll continue to show progress to our shareholders. It's that order of magnitude of opportunity, both in terms of dollars and diversifying the types of utilities we can pursue that anchors management's decision with our Board's support to continue to accelerate the R&D effort and the corresponding sales and marketing that are impacting near-term adjusted EBITDA. With that said, a few closing comments. We're very mindful of the impact that EBITDA has in today's market environment, but we do believe management is being prudent in balancing the opportunity before our company the chance to become a first mover with this new product offering in the TRUSense Gateway and fortifying the balance sheet that we currently have. To that end, we continue to build favorable visibility to our revenue profile for 2023 and beyond and are gaining confidence in our ability to deliver another strong year of growth in 2023. We absolutely and continue to believe that Tantalus on a full calendar year basis will deliver positive adjusted EBITDA and enable us to revert back to the predictable quarterly adjusted EBITDA performance that we delivered, leading up to and initially going public. We believe those results are feasible based on the continued favorable trends across the utility industry as utilities work with urgency to modernize their grids. And in terms of being able to deliver product, both existing and the TRUSense gateway, we continue to monitor and manage our broader supply chain. And while we continue to see normalization of the lead times for our products, we are increasing our level of attention and detail with our metering partners to ensure that we have adequate access to capacity within their factories. Incremental to all of these things that are unfolding, we have increased our level of activity with utilities to submit applications towards the 8 identified programs that are providing stimulus funding to utilities. As a reminder, those 8 programs that we've identified amount to over $400 billion of available funds, where Tantalus's solutions, including the TRUSense Gateway are an allowable use of proceeds. And so as we continue to make progress from a financial perspective as we continue to get closer to the commercialization of the TRUSense Gateway. And as we make progress with utilities to open up the pathway for them to access funding, we continue to believe that Tantalus is in a very good position moving forward and on solid ground as we look to execute our plan for the next several years. With that, we'll turn it over, operator, to see if we have any questions from today's call.

[Operator Instructions] Our first question comes from Daniel Rosenberg with Paradigm Capital.

I first want to start with the expense profile. You mentioned the goal of targeting annual positive adjusted EBITDA. I was just wondering the cadence of that? Is it going to be lumpy? Is it really a Q4 or back half of the year phenomenon? How would you characterize it?

Yes, Daniel, George can give you more specifics, but it's going to be a second half of the year initiative, especially as we're still trying to drive through the certification processes and the development work on both the fiber Ethernet and cellular gateways over the next several months. But George, you can provide more specificity there.

Yes, absolutely, Daniel. And so we look at this quarter, we have significant trade show activity and a lot of travel as we emerge out of COVID. We're now meeting with customers and operationalizing our teams as well. So there's an investment there. But as Pete alluded to, it's really front-end loaded this calendar year in the first several quarters of accelerated investment in the TRUSense Gateway, the certifications and commercialization, which also includes customer meetings. As we referred to in our formal remarks, we did have our Tantalus user conference or TUC event for the first time in -- since 2019. That happened this quarter in April, which was very well attended by over 300 people and 100 utilities and with positive feedback from our new products, particularly the TRUSense Gateway and analytics offerings. So that's a bit of an investment to really connect in person again with our user community, which is a real valuable asset of the company. We have a lot of opportunity with our user community with our new products and so investing there. And as we go towards the back half, the OpEx will be more cost efficient. So some of it is timing, some of it is playing a little off there for this market opportunity. And as revenues continue to scale, we see -- anticipate adjusted EBITDA to be positive for the year.

And my second question, I guess, revolves around TRUSense. Could you help us just better understand the customer targeting along the 3 product offerings that you're pursuing? And just are they kind of mutually exclusive customer buckets and then how early can you start to target those cellular kind of larger deployments?

Yes, Daniel, it's sightful. So thanks for that question, and sorry, we weren't more specific in our comments. So I would bucket, I'm just going to go backwards here for a moment and bring up the summary slide on where we stand. So I would bucket -- I'd segment customers into 2 broad categories, regardless of type. There's a bucket of utilities that are -- that have already completed or are in the process of deploying a fiber network that goes all the way to the premise, the premise being a home, a building a factory. There are for the most part, I'd say, for the most part, those utilities fall within the electric cooperative or public power market segment, but there are a few exceptions within the IOU space. But the vast majority of those utilities fall within our traditional market segment, electric co-op and public power. There's been a much larger bucket and order margin made a little over 200 utilities probably fall in that bucket that are deploying fiber. That number might be a little bit higher with utilities that have already completed fiber deployments. The much larger bucket of utilities are those that either will never get regulatory approval, don't have the means or don't have within their states of operation, the ability to deliver broadband services. And we see those utilities. They typically bring fiber to a substation or to a large point of collection for data and then rely on wireless communications down to their meters. Those utilities that don't have fiber all the way to the premise will fall into the category to be applicable for the cellular gateway. And within those utilities, right, that's where the bulk of the investor-owned utilities will sit. And what I'd say is within particularly the utilities that are not investing or able to deploy fiber for a variety of different reasons. We're seeing a few paradigms present themselves. One is that there is an increasing number of utilities that are relying on sort of a first generation of smart metering, most of which is tied to billing with some basic outage management capability. And that either don't have the means, don't have the regulatory approval or don't have the need to necessarily upgrade those physical meters. But in all circumstances, those utilities are looking to fortify their transformers with incremental power quality measurements and are absolutely looking to access and gain command and control of EV chargers and all the good things that are happening behind the meter. So we see a few different scenarios unfolding, particularly across the IOU space and then non-fiber utilities, where the TRUSense gateway is very applicable, particularly as we bring forward a 5G and private LTE version of the product offering. So that sort of segmentation. In terms of your question on timing, sorry to be a little long-winded there. In terms of timing, Daniel, the adviser committee of utilities are utilities that are all in the fiber bucket. And I think as we finalize the fiber version and then quickly finalize the Ethernet version we'll see orders from the advisory committee this year. We'll see those orders translate into some revenue in the first half of 2024. My gut instinct is we'll see ramping of revenue second half of 2024 forwards material. On the cellular side, and particularly with the larger IOUs, we are engaged today with a few IOUs in formulating their plans around a cellular gateway deployment, some tied to initiatives with the regulators, some just tied to initiatives within their smart grid teams. And our instinct is that we'll see on the IOU side piloting of the technology once it's available. If not, the formation of sort of a second advisory committee of IOUs that's just focused on the cellular gateway. For public power and electric cooperative utilities looking for the cellular gateway, I think they'll move faster. And some of those are our existing customers that really want to get behind the meter as quickly and aggressively as possible. So I hope that addresses your question.

No, that's perfect. Glad to hear you're already engaged with speaking to the potentials and look forward to hearing further milestones as you achieve them.

Thank you, Daniel.

[Operator Instructions] The next question comes from Gabriel Leung with Beacon Securities.

Just got a couple of follow-up questions on the TRUSense side of things and maybe just talking about the sales cycle part of things for a second here. So Pete, the -- as it relates to your advisory committee and some of the people that are working -- that already worked on TRUSense, have you spoken to them about what sort of commitments what sort of POs you might expect to see right off the bat once both the fiber and the Ethernet versions of the product are ready for commercial launch?

Yes. So it's a bit difficult to answer in public forum, Gabriel, but I do appreciate the question. Within the advisory committee, there are 2 lines of thinking, some utilities, some of those utilities that want to just directly connect a fiber node right into the bottom of the device that's currently on the screen where the TRUSense gateway is and of itself the point of termination of the fiber network. And then out of our device will come an Ethernet cable. So that's one scenario. A second scenario is some utilities are thinking to use an optical network terminal for broadband as the termination point for their fiber network with then an interconnecting Ethernet core between a third-party optical network terminal and our device where our device is actually delivering the power to that optical network third-party device. So it's really -- I don't think one is better than the other. I think it's really just preference of utility and how they want to try to manage their own workforce and their own processes. Within that, I think we'll see a bell curve of commercialization. I anticipate that some of the utilities will give us a blanket purchase order for the full scale of their deployment. And then from that blanket purchase order provide us with individual orders that are called off based on the terms and conditions. We do that a lot with utilities today with our existing capabilities, and that's what provides us with an awful lot of visibility each calendar year because we know exactly what to expect in terms of number of devices and deployment plans. I think there'll be other utilities that don't necessarily give us the blanket purchase order, but just start to give us orders with great visibility into what their trajectory is. Utilities are conservative by nature. So I can anticipate some of those utilities wanting to go from our field trial to their own sort of initial deployment units in the thousands, hundreds, really so that their team understands what the device does, how it gets deployed, what do they do with the data, how do they configure it inside their existing systems. And as they work through those processes with our project management and account management support, then going full scale and being very aggressive. So I think we'll -- I think as we get closer to commercialization and closer to orders, Gabriel, our intent is to provide some guardrails for investors. It's not realistic that all of a sudden, there is hundreds of millions of dollars of revenue in a quarter. That's not the way this will roll out. I think the $1 billion of opportunity is like over 5 to 7, if not 10-year horizon. And I could see a slow ramp in 2024 with a much more aggressive ramp in 2025 and beyond. So we'll try to model that out. And I think in conjunction with the order of magnitude of what this means for our organization and as we validate with orders, particularly from the advisory committee, we'll try to provide some of that forward-looking guidance or trajectory. I'd also highlight you may recall from our previous earnings call, order of magnitude, that advisory committee represents in and of itself, I'm going to round sort of largely here between $150 million and $200 million of incremental revenue opportunity for this company. And the feedback we have is those utilities will look to roll out their deployments over as quickly as a 3- to 4-year and as long as a 6- to 7-year horizon.

That's great. And maybe just to follow up on -- in terms of sales cycles. Beyond the advisory -- the group of advisory committee of members, as you look into either your existing utility community or new ones, do you expect that there's going to be a high degree of missionary selling for TRUSense? Or do you think that we're mature enough in the whole AMI/AMR stuff that utilities will quickly understand the ROI associated with TRUSense and maybe the sales cycle might be short versus previous sales endeavors?

Yes. So Gabriel, I'd answer that question based on the direct feedback we received from our own customer base in early April at our 2023 users conference I used these words carefully. But as CEO, I was overwhelmed by the favorable response from existing utilities, existing customers that several of them approached us, particularly on the cellular gateway to join the advisory committee or form a subcomponent to the advisory committee and have put their hands up to not only help us complete some of the design work, but the applications and the testing. I think that's indicative of what we're going to see because as we've attended to George's point on some incremental OpEx this quarter or in Q1 through attending Tech Advantage and Distributech to really start marketing this device. We've been somewhat overwhelmed by the inbound inquiries that we are receiving from an increasing number of utilities across all segments, co-op, public power, IOU. So my instinct is with existing customers, we can accelerate that sales cycle. For prospective customers, I think there's some creative things we can do to shorten the sales cycle. And I'll give you an example of that. Several years ago, we were the first to the market to deliver something called [indiscernible] a coated receiver transmitters or reading, meaning our AMI modules, our communications networking capabilities, our system was reverse compatible. It was able to read the legacy one-way paging electric water and gas devices, it unfolded in the 2015, 2016 time frame, if I recall, maybe a little bit earlier than that. It helped us shorten the cycle from a sales perspective because it wasn't deemed to be something new. It was deemed to be an expansion on the return on investment of existing infrastructure. I see that parallel unfolding here with the TRUSense Gateway based on insights that we're gathering. And so I think there are some ways that we can get creative with our sales organization and an expanding sales channel, particularly into the IOU space to try to circumvent what otherwise can be a lengthy process.

Got you. Maybe one last question for me. Just as we sort of go back to the, I guess, your traditional sort of AMI solutions, can you talk a little bit about the sort of the bottlenecks that you saw on supply chain or your own supply chains on your beating partner supply chain. Have those alleviated such that we can sort of expect to see, I think this quarter, you did about 90% year-over-year growth in connected devices, sort of maintain that sort of high teens sort of growth rates on the device side of things, this calendar year?

Yes. I think from our supply chain perspective, I can't compliment the manufacturing and supply chain team enough inside our organization. They continue to work 7 days a week. That's not just lip service. That's really what's unfolding. And I'd say, Gabriel, it's -- we still see some -- I think we're just become adept at navigating through things. But I'd say we've seen in terms of our high-volume components, the lead times are longer than they were pre-COVID-19, but they're normalized at this point. And so that gives us the ability to plan accordingly. I think from a logistics perspective, we're seeing both time and cost on shipping come down. And that's been fairly consistent in terms of trending for the past several months. I think that's going to continue. Where we always have a little bit of exposure is what's happening on our meter manufacturing partners within their supply chain and their own factories. And I'd say we still -- across the board, we have 3 meter manufacturing partners. 2 of them are still quoting lead times that approach a year. So it makes it a little bit harder to plan as we get orders with utilities that want those types of meters. The other partner is significantly below that and improving. But I think we're always very mindful of capacity allocations in the factories. And working as closely as possible with our metering partners to give them the same visibility that we have so they can plan accordingly. So I'd still say it's -- we might see some disruption, not material, but we could see some disruption, in my opinion, through 2023 and beyond. And I'd say we are working very quickly on thinking through how we do everything possible to diversify ourselves away from meter capacity risk. And as we get closer to crystallizing that, we'll have more to share.

That's great. Congrats on the progress.

I appreciate it, Gabriel. Thanks for the questions.

This concludes our question-and-answer session. I would like to turn the conference back over to Peter Londa for any closing remarks.

Yes. Thank you, Operator. Again, thank you all for dialing in at the progress we continue to make is a direct reflection of our entire team's dedication and hard work, which I am so appreciative of and privileged to be a part of a CEO. As I said, I think Tantalus remains in a very strong position relative to the opportunity in front of us, and we are doing everything we can to navigate through what otherwise is remains a challenging business environment, but doing so in a manner that's prudent, that's responsible and taking our shareholders' interest to the highest level of degree possible. With that, we'll look forward to providing updates through Q2 through press releases and look forward to seeing you all again on our next earnings call for Q2. Thank you all for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, everyone. Welcome to the 31st Annual General Meeting of Heritage Foods Limited. This is our fourth successive virtual AGM here live from the broadcasting venue. That is the registered office of the companies. This AGM is convened in fullu virtual manner in compliance with the circular issued by the Ministry of Corporate Affairs and the Securities and Exchange Board of India. The company has taken all eligible steps to ensure that the members are provided with the opportunity to participate in the annual general meeting through video conferencing or other audio visual means on a fast come fast serve basis. All the members who have joined this meeting are by default placed on mute by the host to avoid any disturbance arising from the background noise and to ensure the smooth and seamless conduct of the meeting. The company has appointed NSDL to provide the e-voting facilities by means of remote e-voting and voting at the annual general meeting. Since there is no physical attendance of the members, the requirement of appointing proxies is not applicable. The members who have not voted earlier through remote e-voting can cast their vote during the meeting through e-voting facilities. As the requisite quorum are being present, I am now requesting Bhuvaneswari Madam to chair the meeting. Madam, over to you.

Thank you, Mr. Umakanta. Good morning to everyone. A warm welcome to the 31st AGM of the company. It is 10 a.m. Now with the requisite quorum present, I call the meeting to order. I hope all of you and your loved ones are safe and in good health. Truly, we are in [indiscernible]. However, heritage business with strategies, objectives, long-term goals and new product launches have been usual steady and resilient to external challenges. I request the directors attending the AGM to introduce themselves from their respective locations. Dr. Nagaraja Naidu.

Yes. I'm here indeed. I am Nagaraja Naidu. I'm the Director of Heritage almost since the beginning. Any details I have to do, Madam? I think not necessary I think.

No, not necessary. That's fine.

Yes. Yes.

And then next is Mrs. Srimati Aparna Surabhi.

Yes. Good morning, everyone. This is Aparna Surabhi. Independent Woman Director on the Board of Heritage. I'm attending this meeting from Hyderabad.

Thank you, Madam. And next person is Sri N Vishnu -- Sri Vishnu Raju.

Yes. Good morning, everyone. This is NC Vishnu Raju, Independent Director, attending from Hyderabad.

The next person is Sri Rajesh Thakur Ahuja.

Sir, you're on mute, I think so.

Good Morning. This is Ahuja Rajesh. I'm attending the meeting from Bombay.

The next person is Sri M.P. Vijay Kumar Dhar.

Sir, we have sent a promt on your screen. Please accept that. It seems there is a connection issue with Mr. Vijay Kumar.

Yes. The next person is A. V. Girija Kumar Angara.

Am I audible, madam?

Yes. Yes, sir, you are audible.

Yes. Good morning, madam, and good morning to all. I'm M.P. Vijay Kumar, Independent Director; and joining from my office at Chennai. I'm in private.

Srimati N. Brahmani N.

I think we overlapped, Mr. Vijay Kumar and me. So I'm Girija Kumar. Here non-executive Independent Director in Heritage Foods. Attending this meeting from Chennai.

Yes, Mr. Brahman is present from head office Heritage foods. She has some voice problem. She's not able to speak to today. So I'm introducing again on her behalf.

Thank you. Thank you, one and all. Now I request the key executives of the company to introduce themselves.

Good morning Madam. Good morning to all. I'm Sambasiva Rao, working as President Heritage Foods, attending from Head office Hyderabad.

Good morning Madam. Good morning to all. I'm Prabhakara Naidu, CFO of the company.

Good morning, ma'am, and good morning to everyone. My name is Srideep Kesavan, I'm the CEO of Heritage Foods Limited, joining from our head office in Hyderabad.

We acknowledge the presence of Mr. Sanjay Kumar Jain. Partner, Walker Chandiok & Company LLP. Charter Accountants, statutory auditors of the company; and Srimati Savita Jyoti. Partner Savita Jyoti Associates, Secretarial auditor of the company, who is also acting as scrutinizer for the voting in the meeting to verify and validate the voting results. Good morning, all shareholders. The annual report, including the notice of AGM was sent electronically to you in time. Since the notice was already circulated to all the members, I take the notice convening the meeting as read. The auditor's report on the stand-alone and consolidated financial statements and the secretarial audit report of the company for the year ended March 31, 2023, do not contain any qualification, reservation, adverse remark or any disclaimer. Accordingly, reading the reports is not required. As we look ahead, we are excited about the future of our company. We have a comprehensive road map in place that focuses on expanding our market reach, investing in research and development and enhancing our digital capabilities. Our commitment to innovation will remain at the core of our growth strategy. Our dedication to technology advancements has allowed us to stay ahead of the curve, ensuring that we meet and exceed the customers' evolving needs. We firmly believe that business must not only be profitable, but also socially responsible. We have made significant strides in reducing our carbon footprint and minimizing enrollment impact. Our commitment to sustainable practices extends throughout our supply chain. We are proud of the positive impact we are making on the communities in which we operate through various social initiatives. Transparency, integrity and ethical conduct are the pillars of our corporate governance, principles. We hold ourselves accountable to the highest standards, ensuring that our [indiscernible] making process are fair and equitable. Your trust in our governance practices is invaluable to us -- is valuable to us, and we will continue to uphold these principles. Looking ahead, we are optimistic about the growth opportunities that lie before us. Our strategy strategy's vision involves expanding into new markets within 11 states, leveraging emerging technologies and creating synergies through partnerships and acquisitions. We will continue to invest in our people as they are the driving force behind our success. So I now request President, Mr. Sambasiva Rao to take it forward.

Despite the challenging business environment, mostly on account of economic uncertainty, our company has continued to thrive amidst difficulty. I'm happy to convey that we performed better despite the upheavals coming in our way. We continued on our path to add innovative and unique value-added products. During the year, the company launched several new products in the drinkable and ice cream categories to further enrich our product portfolio. We believe in the future of dairy and in our capabilities of delivering sustained value to our consumers as well as other stakeholders. We have achieved a net turnover of INR 3,287 million in financial year 2023 as against INR 26,429 million in the previous year. We handled 1.59 million liters of milk per day during financial year 2023. The PBT was INR 893 million during the financial year 2023. The Board of Directors recommended a final dividend of INR 2.5, that is 50% per equity share of face value of INR 5 each for the financial year 2023. Coming to our wholly owned subsidiary company, Heritage Nutrivet limited, is one of the leading livestock feed and field supplements players in Southern India, having access to over 3 lakh farmers have achieved a net turnover of INR 1,069 million in financial year 2023 as against INR 946 million in the previous financial year. Heritage Nutrivet Limited, has been closely associated with the farmer community to provide technical support and to share technical knowledge. The cattle field products are prepared with deep understanding of cattle feeding practices, breeding and milk production levels of cows and Buffalos. Heritage Novandie Foods Pvt Ltd, a 50-50 joint venture company between Heritage Foods Limited and the Novandie, France to meet changing consumer preferences and offer value-added products like flavored yogurts and other dairy products. The company is consistently making its efforts for penetrating in the markets and increasing the revenues. The Board is optimistic about the future performance of the company and is taking necessary actions from time to time for making its financial position strong. The company is striving for increasing the sale volumes and be a market leader in various types of yogurts and other niche dairy products in India. We achieved a net turnover of INR 27.63 million in financial year 2023 as against INR 13.96 million in the previous financial year. None of our successes would have been possible without the dedication and hard work of our exceptional employees. They are the driving force behind our accomplishments and I extend my deepest gratitude to each and every one of them. Our commitment to nurturing talent, providing a conducive work environment and fostering a culture of collaboration will continue to be our priority. Before I conclude, I want to express my sincere gratitude to each shareholder. Your unwavering support and confidence in heritage foods have been the bedrock of our achievements. I assure you that we will strive relentlessly to create value and deliver sustainable returns on your investments. In closing, I believe the best is yet to come for Heritage Foods. Together, we will overcome any challenges that come our way and continue to reach new heights. Thank you for being part of this journey, and I eagerly look forward to another year of shared success.

Thank you, President Sambasiva Rao for your comments and observations.

Now the floor is open to the members for questions. [Operator Instructions] We will now invite our first speaker member, Mr. Arunkumar Boppana. Mr. Boppana, I am sending a promt on your screen. Please accept the prompt. You can unmute your audio and video. And you can go ahead with your question, please. Mr. Boppana, I have sent a promt again.

Good morning, everybody. First, I'd be compliment company for the corporate office, lovely corporate Office and the well presented annual report. And for the rights you have given, it's a mini bonus. Thanks for that. And particularly, for handling the political audacity of people who try to tear the heritage fabric with no sense of inclusiveness witch power tenacity because true democracy, it does not -- democracy, they said, dissent has an art of faith not this kind of act which is happening in to you, particularly. My question is, see the population of middle class is going to be about 1 billion shortly. So with the growing consumptions, what is the road map to expand market reach and to raise the opportunities? And what is R&D budget for injecting greater valued existing products? Because innovation is not a product of logical thought, but the results of it is tied to a logical structure. What will be our major buckets in future? What strategy heritage is playing in terms of volume, price and opportunity/ What are the synergies through partnerships and acquisitions in new geographies? Is there any time line? What is the progress on that? And global has a shortage of people with the right skills because skills keep changing every day with the infotech and other developments, and what is the HR budget to reboot and to fill the skill mismatch with new age courses like coding, AI, robotics, et cetera. And this IEPF and KYC issue is a nightmare for all shareholders because I'm not a victim of -- in your company, but I'm sure there are a lot of other people. I am fighting with some other company in Tamil Nadu. I can give their reference to Umakanta. I've already sent to Umakanta. He can negotiate with the company and hand over to the shareholders who are stuck with IEPF so that you get a good bargain. They're asking 13% of the market value. I hope as a part of gesture towards the small shareholders, management will take the right action. Actually, this KYC should be done for voters and politicians that will solve all the problems. I don't know why they are making us suffer. The corporate world is mostly honest only. And the environment, we don't inherit it from our parents, we borrow it from our children. So we must leave it better than we have received it, which we don't. We have lost the rhythm in the nature, we ripped our planet because we have been growing economically, but we're losing ecologically. What is our plan to cut carbon emissions? Crying wolf will not going to help the sheep. Crying about environment without protecting it is not going to help our planet. Our soil is worthed its weight in gold. We must harvest more carbon into the soil than we emit. What are Heritage actions. What are the technological advancements are staying ahead of the curve. And from the overload of Internet I found earlier, our Indian traditional, our farmers were so pure that they did not even need food when the cows fell ill, this is just information for the shareholders and the management. It was one family. Is it true? Any plans for plant-based proteins like eggs, meat, et cetera, for food security without sacrificing flavor, nutrition and quality. And I don't know [cowbi] warm water and emptier stomach is good for weight loss and joint pains. It brings down the glycemic index and never allow blood sugar to shoot up CLA Conjugated linoleic acid, omega-6 fatty acid shrinks body fat and improved blood composition. I think there's an opportunity for [cowbi] and for Heritage [cowbi], I hope you make an effort on that. And lastly, I don't know why all of you are serious there. AGM is what we celebrate. I hope I can bring a smile on you. And before that, I bring a smile or you, let me pay attribute to our founder CBN for his enterprise in spirit and vision, building Heritage, creating a huge impact. Well, ladies and gentlemen, I'm a student of Communication Astrology, Communication is occurring art. We use only program sentences, we mostly gossip and talk negatively. I was telling a corporate guy, the importance of communication and to spend on the HR budget. And you know what he said, he said [foreign language] I said, My dear sir, it is not [foreign language] it is God is good conquer peace. I could not change it, but I would still stick God is good conquer peace. In conclusion, I think the world has forgot to live with dignity and privacy, where to our work will be outstanding while staying out. So let us smell some real leaves and stay committed for the welfare of the country and all the people. With this, I wish you all the best. I'm glad some of you are smiling at least. Thank you very much.

We will move to our next speaker member, Mr. Praful Chavda. Mr. Chavda, I have sent a prompt on your screen, please accept that. You can unmute your audio and video. And you can go ahead with your question, please.

[Foreign Language]

Will invite our next speaker shareholder, Mr. Reddeppa Gundluru. Mr. Reddeppa , I have sent a prompt on your screen, please accept that. You can unmute your audio and video. And then you can go ahead with your question.

Respected Director, Chairperson Nara Bhuvaneswari [indiscernible] [foreign language] My name is Reddeppa Gundluru. I am from Hyderabad. I'm a financial adviser. Sir, as a shareholder, I'm very happy about the company performance for financial '23. I'm very proud of shareholder of Heritage. And also, I have received the annual report as a request in the short notice. I felt very happy. I gone through all the annual report. Very wonderful annual report, which contains all the information, figures very excellently. I felt very happy each and everything, here it is. Like a smooth stuff. Vey quality annual report I have received sir, wonderful. Thank you so much for who is preparing this stream annual report, very wonderful sir. Each and every page, there is a very powerful with the information, each and everything is figured out. Sir, I have never seen this type of preparing by any other company. Thank you so much. And also, I found that there is a wonderful world-class transparent governance. So there is a transparency of [indiscernible] there. Transparency of all ethical, everything is there. I felt very happy. So congratulations to all the KPS of this company, especially company secretary, Wonderful, sir. Sir, I remember still in 25 year if I illustrate and honor my chairman MD and Chairman. So and passing your -- celebrating now to 31st year yes. Sir, year-on-year, we are celebrating with the -- empowering with the farmers also. Wonderful sir. [Foreign Language]. So my company is supposed to dairy farmers and customers delivering the every home with a healthy product sir with the diversified products. So what I'm saying sir every year increasing our diverse products. So with the empowering of farmers, Heritage. [foreign language] And also, thank you so much, madam. Strong operation performance with the construction growth with the construction performance. Thanks and happy for the year, empowering the farmers and also [foreign language]. Sir, my company is posting very good numbers year-on-year, quarter-on-quarter. So thanks to COO team and also my MD, CMD Rao, and also executive directors, special congratulation. And also sir page number 41. Sir award and [indiscernible] [foreign language] woderful achievement, thank you so much. And also best [indiscernible] brand award at the Pride of India brand and 2022, and also most lower brand, awards by the [indiscernible]. [foreign language] No one gets these awards such along. Very good awards, wonderful awards. Thank you so much to team. And keep it up these awards sir. CSR [foreign language]. Under your leadership many students are growing madam [foreign language]. So I gone through all the annual report, I have not found any single question. So yes, I don't want to raise any questions. Just that we have reached very good milestones, very good high reach. So what is the next year plans madam? [Foreign Language] So I would like to thank the entire Board of Directors, especially company secretary. [Foreign Language] So finally, ma'am, we have trust on you. [Foreign Language] So that type of experience we have madam so that is the reason I wish to you good health and to entire board of directors especially [indiscernible] [Foreign Language] There is no single black spot on my company madam, definitely madam. Thank you so much for giving me this opportunity. Thank you so much. I'm very happy.

Thank you so much, Mr. Gundluru. We would like to request the members to kindly limit their speech or queries to 3 minutes, so that opportunity can be given to the other members too. We will also invite our next speaker member, Mr. Bharatraj Kankanala. Mr. Bharatraj, we have set a prompt on your screen, please accept that. please unmute your audio and video, and we will wait for your connection.

Very good morning, entire Board of Directors. I'm Bharatraj from Hyderabad. Entire board of directors sir, First of all, Madam Chairman, I congratulate you for crossing INR 3,000 crores turnover. I congratulate you for reaching the best awards best brand best South Indian. And I'm kind to management for giving the wonderful dividend, 50% dividend. Thank you very much. CSR, wonderful madam. The annual report, the wonderful photos we have seen. Chairman madam, we are present in 18 states and our company is growing. At present, we crossed a daily 2.5 million liters as per my in dynamic leader, Brahmani, what she has promised, she made by company, a debt free company and is she is -- the way she's doing that long visionary, and what she has completed is fulfilling madam. Thank you very much madam. In central part of India, we are -- our presence is not there. Please look into Gujarat, Madhya Pradesh, Chhattisgarh and few parts of the State. Madam chairman, I congraulate and thanks the entire board of directors for giving the [indiscernible] for the right issue, and 100% you fulfill the right issue madam, congratulations. Madam I thank [indiscernible]. Madam chairman I must thank your love and affection about the shareholders. The way you arrange the plant visit madam, I thank the secretarial department. The way they are arranging the plant visit, I'm very happy to visit our Chittoor plant madam. I've the vision of our promotor [indiscernible] Naidu, how he has started the plant in the Chittoor madam. The presence -- the way he select the land, the way he select the area, I'm very wonderful madam because I'm very proud the way he has shown the vision madam. Madam chairman, when plant visit was arranged, with me, Mr. Niraj and Niraj has a compliment when we entered into the plant, when you came to seen it, Chittoor [indiscernible] has taken care of all the hospitality madam. And when we visited our plant, Mr. Ravishankar, Plant manager [indiscernible] regional head manager visited warmly, they welcomed warmly, they show an entire plant. When I visited, one thing I learned, the beauty of our company today, what I learned is any employee who lose Heritage, there will be no interview in other companies. What a beauty madam. This is a way our [indiscernible] madam, they are in the hot cake of employees in Heritage and looking for the employees of Heritage madam. I'm very proud madam, and this all goes to our leader Ms. Brahmani and our leader and president of Prestige. This all credit to them madam. Madam, one thing I want to share, Mr. Niraj has given such a hospitality madam, he tell whatever you want to eat you eat, there is no issues. That is a love madam. This all credit goes to you. I thank the Board madam for giving this opportunity. Madam chairman, I bring to your notice, there are a few brands that are available in our company place, why not introduce Madam. It is most popular brands. One is [indiscernible] and other is [Junnu]. In this dairy product, this is a very best products madam. Every company has been giving the [Junnu] and [indiscernible] Please why not to look into these 2 flavors madam. I'll be more happy madam. And I thank the Board for recognition and giving the designation Senior General Manager [indiscernible]. This is nothing madam [indiscernible] very important madam. I bring to your notice that today we are sleeping so peacefully [indiscernible] because of the [indiscernible] CFOs and CEOs madam. Today, the complaints are so serious. Everyday there will be issues madam, but it will not come to your notice. I know a lot. I meet so many companies. Everyday they still face a lot of challenges from the government and the shareholders but they will not bring to your notice, but they are smoothly handling. The reason is that [indiscernible] very important in our company madam. I thank you for taking our employee care and everything madam. Madam, once again, best of luck to you. I always pray to the God to be safe, healthy and fine. And once again madam, I congratulate our entire team, our Director, Mr. Mukesh, is working hard madam. I'm really surprised madam, the way he's working, I'm very happy madam. Madam one thing I'm saying when [indiscernible] vision, one day will be a proud [indiscernible]. That is, I'm seeing the vision madam. And [indiscernible] please give me an opportunity to meet you personal madam. Before Diwali, I'll be more happy madam. And entire Board of Directors and [indiscernible] thank you, best wishes to you. [indiscernible] you are working hard for us, company and the CFO; and our CEO, Mr. [indiscerible]. Once again, all the best wished to the enitre team and entire Board of Director. Thank you sir. God bless you.

Thank you so much, Mr. We have our next speaker member, Mr. Kamal Kishor Jhawar. we have set a prompt on your screen, please accept that. please unmute your audio and video, and we will wait for your connection. Please go ahead with your question.

[foreign language]

Thank you so much, everyone. We have our next speaker member number 7, Mr. Badri Vishal Bajaj. We are sending a prompt on your screen Mr. Bajaj. Please accept the prompt. And you can unmute your audio and video and then you can go ahead with your question, please. Mr. Bajaj, please unmute your audio and video. Yes, sir, we can see you.

Very good morning, [indiscernible] Chairperson Madam and especially Executive Director [indiscernible]. After he has been on the Board inducted, I'm watching and you -- appreciate that -- have effort and experience, have education has brought it to a level where we stand today to a lot of competition are there in our segment. Sir, one thing is the moderator is inefficient in conducting the AGM because it is already 40 minutes over -- on one contact, there are some [indiscernible] speakers have done underway, where I don't know what is my role and what is my speaker number. There is no participant is -- and without moderator asking anybody to come join, all people are joining. This is inefficiency. Second thing is he himself has contradicted that 3 minutes will be given, but we have given -- I don't know, 30 minutes for four people, very bad. Madam, your speech -- Chairperson's speech talked about social responsibility and we are dependent and accountable for that and your report BRSR report, Sustainable report, I'm gone through, which commits a lot of things in social respect. [indiscernible] In 2018, in your speech, you said that it was around the -- during that time, it was around INR 2,400 crores revenue generation and now we have brought over 3,200 crores. But, why the delay? You said that -- I think INR 6,000 crores in by 2022, but it is because of corona and all the backlog has come. But now Q1 your FY '24 and Q1 [ FY '20 ] if I compare your revenue is going up by 12% and margin has gone up by 84%. Congrats. EBITDA, and you are taking the corona lag to [ next have ] after several coming years. Now second compliment to, I think, Brahmani, the right issue is not actually the right issue. It is indirectly your given bonus. If you go in the accounting, it is a bonus share we have given 1-to-1. And now again it has stuck with original high. So that is the competition we are facing, still you are taking care of the shareholders' interest. Now you have [ zero debt ] a lot of [ awards ] and renewable energy, we are working on that already 10.5 megawatt is here. So this is your accountability is much more [indiscernible] to take the new high. Now I have only 2 questions, Madam. Please consider. One is -- one is our total capacity of all the plants around 26 points MLPD. So in this total capacity, what is the ratio of milk sales and added value product. Reason being asking this question is, simply selling milk is a common thing at a down level right from village to city to other district. Where as added value only gives the profit margin. If you consider -- I have not the name and you may be knowing, where I have diverted a lot of our investments in dairy products. And really, they are making money and they have given market cap to a good high. So just consider this and provide me the added value product percentage in your global 26.5 lakh per day mill capacity. Second one is, I heard all the speakers. Actually, FY '23 revenue, though it is [ roughly ] 18%, but margin has gone down by 35% year-on-year. Margin is important for the company to grow. But even then you have kept the dividend. So the [indiscernible] was up 100%. I can say it is 50% plus 50%. So you have maintained our dividend to the earlier year. So there is no question on that. And -- complement. But only thing is revenue [indiscernible] where other dairy in the segmented product has been the company, the revenue has gone up year-on-year, 22 [indiscernible] 23 [indiscernible]. Sir, now holding the team Heritage, I'm concluding the holding the team heritage to a greater height. If I understand that we are getting a high dedicated support from Sambasiva Rao. I have in person met him a dozen times. And his dedication and right to the ground level of his working since so many years. It is the asset of our company. So I think he needs a lot of compliment as a president. But lastly, the AGM could not be a platform for marketing of like IPF and all, and it should be discouraged. So please take care. And good luck, wishing you good luck for future. Great, Brahmani madam and [indiscernible]. Thank you. Good day.

We will move to our next speaker member. Mr. Amit Kumar [ Chandrane ]. Mr. Amit Kumar, we have sent a prompt on your screen. Please accept the prompt you can unmute your audio and video and please go ahead with your question.

Yes. Greetings to everyone. Our Board of Directors, a Vice Chairperson and Managing Director, Shrimati Nara Bhuvaneswari ji, Executive Director Shrimati Nara Brahmani ji. I'm from Hyderabad. This is the first time I'm attending your AGM, and I thank you for providing this opportunity, especially in our complete strategy department, appreciating the link. I have gone through the AGM report, and it's well presented the pictures and the information in it. It's very good. And the products you have, the wide range of products and the labels are very attractive. I have only a couple of questions. I will put it short. So the rights issue was a great success and have been benefited personally. And I would like to know -- I want to see if the rights issue will be used and what for what purpose it will be used, can you expand and provide the details briefly. And also, there are a lot of duplications happening now. So how the vigilance team is stopping the duplication of your products. And the third question will be like, how many upcoming products are getting to launch in this -- in your company? That's it. And all the very best for upcoming festival. Thank you.

We will have a next speaker member # 9. Mr. [indiscernible] So please go ahead and ask the question. I have sent a prompt on your screen. Mr. [ Monat ], please accept that. You can unmute your audio and video and then you can go ahead with your question. Yes, sir, we have unmuted you. Please go ahead. I'm sorry, we are unable to hear you. Please unmute your audio and you can go ahead with your question. We are unable to hear you due to a possible network issue. We will contact you back. And if your connectivity improves, we will announce your turn again. We will move to our next speaker member. Mr. Vinod Agarwal. Mr. Agarwal, we have on muted you Yes, we can hear you. Please go ahead. We'll wait for the connection for Mr. Agarwal. Mr. Agarwal, please unmute audio, I've sent a prompt to you.

Okay. Yes. Vice Chairman and MD, Madam Bhuvaneswari; our Executive Director N Brahmani; the CFO, Srideep Madhavan; CFO, Prabhakara Naidu; CSO, Umakanta Barik. Good morning in regards to everyone, sir. I have noticed that we have crossed the turnover of 3,200 -- INR 32 billion this year, which is very good against INR 26 billion last year, and the PAT has come down last year due to increased cost of milk production and lower milk output due to annual fee and everything being high, so the profitability was affected. Sir, we've got 215 selling plants with a capacity of 2.65 million liters for daily -- processed 1.4 million liters with our 18 own process plants we have acquired [indiscernible] Dairy food enter the South Tamil Nadu and Kerala market, renewable energy on the environmental front was 10.5 million megawatt capacity, 4.2 megawatt solar and 6.5 wind power. So just one second, Mam. Yes. This is the backside. Sir, our company was founded by Chandrababu Naidu on the principle of delighting every home with fresh and healthy products and empowering every farmer. Certainly, we have to stand by principal we have 3 lakh farmers and you're making timely payments, not mentioning any pay payment days every -- to any farmer in for a single day. It's very good. Now we have really started in 1 state in Andhra Pradesh. Now we had a present in Pan-India with 11 states delivering through 1,900 distributor vehicles, which is very good. We have products selling every day. And the value-added products are also making us good. Like cheese, paneer. We have ended all those [indiscernible], very good madam. 24% was volume growth and 33% was the revenue growth, very good madam. And the R&D spend was INR 1.09 crore last year when -- which is very good, and then we are adding 14 new products this year. And in our -- we are not only a dairy company making -- buying metal and processing milk only, we are also helping the farmers by supplying veterinary animal feed. And taking care of the animal through veterinary doctors visiting them for animal health -- look after. And I said during the year, we added 14 new products and 150 new Heritage stores and maybe entered the state of Odisha also in '23. I'm pleased with the performance of the company. And with the rights issue had given at INR 5 which is a very bonus. I'm very thankful for the company for having done that. I wish the company all the best, the dividend of INR 2.5, which is equivalent to INR 5 of last year for the shareholders because this is on the increased capital, doubling the capital, we are getting INR 2.5. So the payout from the company's profit is the same. I wish the company all the best. Signing off, Vinod Agarwal from Mumbai. Thank you. I was helped by Umakanta Barik to join today's meeting. Thank you.

We will have our next speaker member, Mr. Pramod Jain. Mr. Jain, we have sent a prompt on your screen. Please accept it. Then you can unmute your audio and video. And then you can go ahead with your question Mr. Jain, we have unmuted you. We can hear you. Please go ahead.

[Foreign Language]

Thank you so much, sir. We will go back to our previous speaker, #9, Mr. [indiscernible] Mr. [ Monat ], please accept the prompt and you can unmute your audio Mr. [ Monat ], please go ahead . Mr. [ Monat ], please go ahead, we have unmuted you. It seems there is an issue with your mic. We are unable to hear you, Mr. [ Monat ]. Mr. [ Monat ], please go ahead with your question. It seems there is a technical issue with Mr. [ Monat ]. That was the last speaker. I now hand it over to chairperson. Please go ahead, ma'am.

Thank you. I thank all the members for all the questions and feedback. I appreciate your interest, and thank you for your continued support to the company. So now I request President, CEO and CFO, to respond to the questions.

This is Srideep Kesavan. I shall [indiscernible] to answer some of the questions that were raised. Thank you very much for all the shareholders who raised such interesting questions. Most of the questions actually covered our entire gamut of operation, end-to-end I'm very grateful for that by answering these questions, we are able to cover all aspects of our business. I shall take up some of these questions in combination because many of them address similar concerns. First of all, I think I'll take up the questions raised by Mr. Boppana. Very relevant question, sir. The first question that you raised were on the road map to expand our market reach. And you spoke about the growing middle class consumption. Yes, this is something that we are absolutely leveraging to the best possible ability in our company. Our primary objective, if I can say is that we have, over the last 30 years, built a very strong equity for our brand heritage. which is in many parts of the country is actually the most loved and the most recognized brand. So our primary objective is in expanding this equity or leveraging this equity to drive more consumption. The consumption is already growing in most of these regions. So it's about how we catch all of the tailwind and drive or take most out of the market. So this we achieved by -- Yes. This we are focused on achieving with 3 thrust areas. The first is -- apologies for a small issue with our lights, but I hope you can continue to hear us. The first thrust area is actually going deeper in our existing markets rather than expanding into new geographies, we feel that there is a tremendous opportunity that is there. in our existing geographies, which we are trying to leverage. In the last financial year, we have added 19,000 retail outlets, which is actually an expansion of 17% of our retail universe. And we continue to do that even in the quarter 1 of this financial year, we have expanded or we have continued that momentum. So we will expand the number of retail outlets that we reach. The second is actually making more products available in these retail outlets. So while we have close to about 1.3 lakh retail outlets that we reach on a every single day basis, most of these outlets used to contain milk and curd whereas in the last several quarters, we have made our best efforts to expand the range available in each shop, whether it is in terms of flavored milk, Lassi, buttermilk, our gee, butter, et cetera, all the other products that are there. For example, just ice cream alone, we have expanded into 1,500 outlets in the last financial year. So that's the second thrust area. And the third thrust area is actually expanding into newer channels, which -- where consumers are shopping today, whether it is quick commerce. We have also expanded our heritage happiness points. Today, we have 150 happiness points which help us reach the consumers better. Second, sir, thank you very much for complementing us on the R&D. And there was also a question on R&D from other participants as well. So I'll combine those questions and answer, like there was a question from -- yes, from Mr. Amit Kumar [ Chandrane ] on how many new products are we planning to launch. There was a question and comment from Mr. Praful Chauda on our range of products, et cetera. So I'll combine all of this and give the response. We have today a very strong R&D setup with 7 scientists which is led by one of the industry top scientists. We have spent INR 1.1 crores in R&D budgets in the last financial year alone. And most of this budget has actually gone in developing newer products. And as Mr. Vinod Agarwal had very clearly articulated that we have launched 14 new products in the last finance layer. So most of this has actually gone into the development of the new products. At the same time, we also invest a lot in improving our existing products. So at any point in time, we have many kaizen projects running, which is just continuous improvement of our products. For example, whether it is the improvements in start-up culture for our curd, taste and [ pretaste ] texture and stability improvement. There are many projects that we are running in terms of packaging development, et cetera. We also have invested in a well-equipped R&D facility. Today, we have an R&D facility that has got many advanced equipment such as UHT simulation machine, we have got a mini ice-cream plant inside our R&D facility, where we have batch preparation times, aging times, et cetera. So apart from this, we also have a wide network of partners that we work with. We have many global suppliers, global partners who work with us on start-up culture, global partners who -- flavor houses, global and major flavor houses who help us developing superior products compared to competition, et cetera. Sir, you also asked a question about what are the major strategies at Heritage. I think you were asking whether we are focused on volume or price opportunity, if I understood your question right, sir. So I think for the benefit of all shareholders, we should say that heritage is actually blessed to be in this industry. There is an evergreen industry India is a shining growth engine for the world economy. And within this shining growth engine, dairy is actually the evergreen industry, which continues to grow. We are happy to be in this as per -- if I quote IMARC report of FY '23, which just got released, industry is expected to grow at a rate of 15%. And we also are expecting that the organized industry will grow ahead of that. So our strategy is actually to capture higher than industry growth. And we expect that this will be driven primarily by volume growth. And at the same time, there will always be a value growth or a price growth of about 5% to 6%. So it's about 8 to 9 percentage of volume growth and 5% to 6% is the value growth. And so it is not like you can't choose to grow only volume or value. We have to do both. So our strategies will have access to both. As far as volume growth is concerned, it's purely a function of number of consumers. And as I explained earlier, number of consumers is a function of number of retail outlets. So some of the other member shareholders also ask the questions about our presence, Mr. Bharath Raj asked a question about central part of India? How are we present, Mr. Kamal Kishore Jhawar asked a question about the growth prospects going forward. So I'm -- in all of this, if I could combine all of this, and Mr. Promod Jain also spoke about growth in North India, et cetera. So if I combine all of this and I say that we are expanding. Today, we are in 11 states across the country, which includes -- which includes the -- all the Southern Indian states, but apart from the Southern Indian states, we have presence in Maharashtra and there was a specific question from Mr. [ Praful Chauda ] about Madhya Pradesh, sir. You'll be happy to know that we have just very recently entered Madhya Pradesh as well. We have today presence in Indore, Gwalior and Jabalpur. And It's just been a few months. So it will take us a few months more to establish a larger presence in the state. We are also present in Delhi as well as Gurgaon and the NCR region. We have a very strong presence in many of the cities in Haryana well as the prize city of Chandigarh. So one of the primary things that we do is to expand our distribution network or the number of retail outlets, which will give us more and more consumer access. The second thing, like I said, is to leverage our equity in growing the basket of products per consumer. So if a consumer is already buying Heritage milk, how do we sell more and more value-added products to the consumer. That's the second strategy. And the third, as far as the value growth. So these 2 take care of the volume growth aspect of it. As far as the value growth is concerned, primarily our objective isn't driving more and more contributions from the value-added products portfolio and today, last financial year, we closed with a value-added product contribution of 33%. And it is something that we are committed to grow and towards possibly a 40 percentage contribution from value-added products in the next many years to come. So this growth towards value-added products means that the average revenue per liter also improves for our company. Sir, I shall also take up with permission from President sir. I shall also take up a couple of other questions, which were asked about. One was a question about our manpower strategy, our capability. I think the question referred to new age skills on technology mostly. So sir, as a company, we are highly tech-enabled and this naturally means that our workforce needs to be tech-enabled, they need to have the kind of skill sets that are required in 21st century. And today, we are proud to say that we have a team which are capable of executing routine projects that leverage data science. For example, engineers who have deep understanding of ERP engineers who have deep understanding of machine learning, data analytics, et cetera, are all in-house in our company. But at the same time, this gives us capability to execute to a certain limit. And beyond this, we work with a wide network of technology partners who help us get data science and machine learning capabilities that is helping us evolve in this digital technology space. We also have a very structured learning on development program within the company, which is led by our HR function that is giving essential technology skills to all employees. So whether it is like in terms of advanced Excel and such skills, which are required in today's environment today, I'm proud to say that all our employees have access to these skills. So then, thank you very much for complementing and raising the question on the environment. Yes, of course, it is something that we are deeply concerned and deeply committed to in our annual report, we have made several remarks to that. And I'll call out a few things like, for example, all our plants are ISO certified in energy management systems. We are very, very well within the limits as far as the discharges of affluence and pollutants are concerned. Primarily in terms of Energy. Energy is the main focus area for the company. In the last financial year, our company has improved energy efficiency by 3.3% and which means today, we use 3.3% less units of energy to produce 1 liter of our product compared to the year before. And this is something that we are continuously working on improving and at this point in time, we have more than 2 dozen projects running in the company that is making us more and more energy efficient. And I think President will speak in detail about the renewable energy initiatives of the company. We also are committed to recycling plastic. At this point in time, we have 100 percentage of the plastic that we put out there, equivalent of that quantity, we recycle as we last year alone, we recycled 2,400 tons of plastic as a company. And of course, we have been awarded several times. Last year, we won the National Energy Conservation Award for the eighth consecutive time. And I think that's a recognition of all the efforts that we have made. And there is some questions -- some other questions like I think that Mr. Kamal Kishore Jhawar had asked about growth prospects going forward. I think I have touched upon that in a way. Yes. And Mr. [indiscernible] had asked this question about what are your plans, regions to expand. So I think I have answered that also in a way. Sir, Mr. Praful Chauda sir, asked this question about how many products we have. We have -- apart from milk, we are in 19 products. And these are products in the sense there are sub products or variants of this. For example, if I count ice cream as one product, and let's say, curd one product. Curd itself, we have so many variants, okay? So if I count curd as one, ice cream as one, butter has one, paneer as one, cheese as one. So we have about 19 product that we are presenting sir. Yes. And there was a question from Mr. Amit Kumar [ Chandrane ] about spurious products is something that we have -- I think the legal team is very much on top of maybe Mr. Umakanta can -- detailed words.

Thank you. Thank you, Srideep. I will address a few other aspects, which are not touched by Srideep. Dr. Arun ji asked about M&A activities like we have any strategic opportunities for acquisitions, et cetera. So we focus essentially organic growth aspects only in all categories. But we are also open without any specific target for considering opportunities that come across, like, for example, last financial year in the month of April '22, we acquired Suguna Dairy in Tamil Nadu, which has given us an opportunity to grow further in that milk shed within the vicinity of Coimbatore in Tamil Nadu. Coming to the cow ghee, yes, you have raised a very relevant question. cow ghee is -- ghee and cow ghee, both are becoming popular, and we are taking advantage of the market changes -- more and more people are preferring cow ghee. We are supplying cow ghee not only in South India. We are even sending cow ghee from south to Delhi and surrounding markets of Delhi. As everyone knows, the is integral part of cooking in our country for a long many years. It is loaded with a lot of nutrients like fatty acids, vitamin A, D, E and K. And the anti-oxidants. Vitamin A helps in eyesight, then Omega 3 and 6 are very healthy, unsaturated acids, fatty acids. They are also helpful in maintaining healthy heart and healthy cardiovascular system. Heritage ghee and cow ghee. They are very, very pure, 100% pure without any impurities in it, which ensures delivery of all the healthy benefits to the consumers. So we take this suggestion and further promote use of ghee in our country. Coming to the end use of funds raised through rights issue, asked by Amit Kumar [ Chandrane ], we have raised INR 23.19 crore through rights issue as planned and more than 3x oversubscribed by shareholders. All the money was put to use for working capital management of the company already. Coming to the environmental management -- are concerned for sustainable development. We have already put 10.5 megawatts of renewable energy capacity. Currently, close to 55%, 56% of our energy requirements of the company are met from these renewable energy sources. And we are further expanding our capacity during this year and propose to expand further in the next year to put maximum possible energy from the renewable energy only to the extent the local authorities permit, there are certain restrictions in certain areas in terms of minimum billing requirements, et cetera. Leaving upon that rest of the power requirements we want to use from renewable energy. We would be on course to exit in the next 2 financial years for -- towards this. Also, we are now introducing electric vehicles wherever possible as per the availability, particularly in the movement of milk from village to the chilling centers, we have started the program. Whatever efforts we have to make, we are making to ensure our vehicles from fossil fuels are converted to electric vehicles in the next couple of years' time.

Anything else for Umakanta?

Yes, sir. There is one question left sir. Arun Kumar asked about [indiscernible] IPF. [indiscernible] and there are simple forms there. it is already there In our website and the [indiscernible] sending time and time to the CRO loans, those are in the site [indiscernible] and whenever we are receiving that, we are processing within 48 -- this regarding the IPF, around 85 shareholders have [indiscernible] our IPF since 2 years. There are 7 cases are pending even if the ad says within 30 days, we have to complete for the e-verification, but we are [indiscernible] it for 48 hours. We are also calling to the IPF authorities, basically that taking around 2 to 3 months for clearing this. We are following it and will clear for that. And we have a very few shareholder around 450 shareholder. [indiscernible] out of 45,000 shareholders.

So I thank President, CEO and CFO for the clarification. I hope all your queries are answered. If you still have any queries, you can send your queries via email. Thank you. I thank all the members for taking part and your unstinted support. We cherish your suggestions, which are good for Heritage ecosystem in aspiration, achievement and [indiscernible]. We thank you for the same. Please be safe, stay healthy, your health and lives are important to us. Be graceful, be useful. Keep life simple, live it pleasant.

Honorable Chairperson, our most valued shareholders, ladies and gentlemen. It's my privilege to propose a vote of thanks on this occasion. I, on behalf of the entire team of Heritage Foods and on my own behalf, extend a very heartly thanks to the chair and all of you for sharing with us your findings and opinions today. With your permission, all the directors, and I will log off now. Thanking you very much.

For those who have not exercised their vote at the remote e-voting, which was opened from 9:00 a.m. on Saturday, August 19, 2023 to 5 p.m. on Monday, August 21, 2023, will be open to voting now for another 15 minutes. It will be closed after 15 minutes. The combined results of the remote e-voting and e-voting insta-poll shall be placed at the company's website, www.heritagefoods.in. As well as websites of the stock exchanges where the shares of the company are listed and also would be uploaded on the website of NSDL by the end of the day. I thank all the shareholders once again for participating in the meeting and for their cooperation in transacting today's business. Thank you.