Quarter summary

• Strategic shift away from bulk commodity sales (SMP and butter) toward branded liquid milk and VAP to improve long-term margin stability.
• Operational integration of the OSAM acquisition is weighing on short-term margins (INR 0.85 Cr EBITDA on INR 80 Cr Revenue) due to infrastructure and SAP implementation costs.

Rationale

• Gross margin contracted from 28.2% to 26.0% YoY as procurement costs rose 11.8% YoY (INR 39.8/liter vs INR 35.6/liter), while average selling price increases were limited to 4.9% (INR 57.7/liter).
• Reported PAT of INR 69 Cr (6.7% margin) was significantly bolstered by a one-time tax reversal of INR 21.8 Cr; excluding this and the INR 5.7 Cr labor provision, underlying operating profitability shows material pressure from unabsorbed raw material inflation.

Quarter summary

• Completed the acquisition of OSAM Dairy, successfully integrating SAP and operational systems within 60 days, adding INR 52.6 Cr to the top line.
• Strategic pivot away from volatile bulk commodity sales (SMP/Butter) toward branded consumer liquid milk and VAP to stabilize long-term margins.

Rationale

• High-quality revenue mix shift: Core business (excluding OSAM and bulk commodities) grew 13% YoY, while low-margin bulk SMP/butter sales were strategically reduced from INR 167 Cr to INR 28 Cr YoY.
• Strong Value-Added Product (VAP) traction: VAP sales (excluding bulk) grew 22% YoY, increasing its contribution to the mix to 27% from 22% in Q2 FY25, driven by curd and paneer.