💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue declined 2.02% to INR 1,649.53 Cr in FY25. Segment performance: Animal Feed revenue was INR 1,382.2 Cr (83.8% of total), declining 7.2% YoY; Oil Cake Processing revenue was INR 210.68 Cr (12.77% of total), growing 51.3% YoY; Dairy revenue was INR 56.65 Cr (3.43% of total), growing 3.49% YoY.

Geographic Revenue Split

The company maintains a leading market share in Kerala, which remains its primary revenue contributor. It is actively expanding its footprint in Tamil Nadu, particularly in the dairy and cattle feed segments, to offset demand erosion in subsidy-impacted markets.

Profitability Margins

Profitability saw a significant recovery in FY25: Net Profit Margin improved from 1.05% to 5.54%; Operating Profit Margin (EBIT/Revenue) rose from 1.61% to 7.59%; Return on Net Worth surged from 8.02% to 35.01%.

EBITDA Margin

EBITDA margin improved significantly to 7.26% in FY25 from 2.01% in FY24, driven by moderation in raw material prices for animal feed and improved realization margins in the oil cake processing division.

Capital Expenditure

The company is exercising capital discipline, deferring heavy investments in capacity or advertising until profitability stabilizes. Historical liquidity is strong with INR 162 Cr in unencumbered cash and mutual fund investments as of March 2025.

Credit Rating & Borrowing

CRISIL reaffirmed ratings at 'CRISIL A-/Stable/CRISIL A2+' for bank loan facilities (INR 96 Cr) and fixed deposits (INR 25 Cr). Interest coverage is robust at 51.55 times, up from 9.56 times YoY.

⚙️ Operational Drivers

Raw Materials

Key raw materials include maize, de-oiled cakes, and coconut oil cakes. These are susceptible to high price volatility, with historical operating margins fluctuating between -0.1% and 9.1% due to input cost swings.

Import Sources

Not disclosed in available documents, though the company mentions tracking global market dynamics and optimizing import strategies for the Oil Cake Processing Division.

Capacity Expansion

Current capacity is not specified in MT; however, the company operates multiple animal feed plants, oil cake processing units, and dairy facilities. Expansion is currently focused on market reach in Tamil Nadu rather than immediate physical capacity hikes.

Raw Material Costs

Raw material costs are the primary driver of margins; softening prices in FY25 allowed EBITDA to rise to 7.26%. The company uses strategic sourcing and long-term procurement planning to mitigate volatility.

Manufacturing Efficiency

Manufacturing efficiency is managed through technology-driven ERP systems and regular internal audits across all operational units to ensure control adequacy.

Logistics & Distribution

Distribution is handled through an extensive network of over 1,300 dealers. Logistics costs are impacted by global energy market volatility and regional infrastructure constraints.

📈 Strategic Growth

Expected Growth Rate

3.06%

Growth Strategy

Growth will be achieved by expanding market share in Tamil Nadu, exploring new geographies, and realigning the dairy portfolio toward premium, high-margin ice cream variants. The company is also implementing selective price adjustments across SKUs to improve realizations.

Products & Services

Cattle feed, processed milk (6,054 KL sold in FY25), ice cream (1,540 KL sold in FY25), and coconut oil cake.

Brand Portfolio

KSE (formerly Kerala Solvent Extractions Ltd).

New Products/Services

Strategic shift toward premium ice cream variants to replace low-margin frozen desserts; dairy division achieved a turnaround profit of INR 26.4 lakhs in FY25.

Market Expansion

Targeting Tamil Nadu for dairy and feed expansion and exploring newer geographies to offset demand erosion in subsidy-heavy markets.

Market Share & Ranking

Leader in the cattle feeds industry in Kerala with a 60-year vintage.

🌍 External Factors

Industry Trends

The cattle feed industry is characterized by intense competition from state-run entities and unorganized players. There is a trend toward nutritionally balanced feeds, though a price-sensitive farmer base limits premium segment growth.

Competitive Landscape

Key competitors include state-run Kerala Feeds Ltd and Kerala Co-operative Milk Marketing Federation Ltd (Milma), alongside small unorganized players.

Competitive Moat

Durable moat built on a 60-year brand vintage, a dominant regional market position in Kerala, and a robust distribution network of 1,300+ dealers and on-call veterinary support.

Macro Economic Sensitivity

Highly sensitive to agricultural commodity prices and rural demand. Geopolitical tensions disrupt commodity markets, raising transportation costs and import price volatility.

Consumer Behavior

Shift in the dairy segment toward premiumization and profitable sub-segments like high-margin ice cream variants.

Geopolitical Risks

Global market dynamics and geopolitical tensions are monitored as they directly impact the cost of imported raw materials and energy.

⚖️ Regulatory & Governance

Industry Regulations

Operations are heavily influenced by government-regulated retail prices for milk in Kerala and subsidies provided to cooperative competitors, which limit pricing flexibility.

Legal Contingencies

The company noted that balances in accounts, except for banks and a few trade receivables, are subject to confirmation. No specific High Court or Supreme Court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Raw material price volatility (maize/oil cakes) and government pricing interventions in the dairy sector are the primary risks, potentially impacting margins by 4-5%.

Geographic Concentration Risk

High concentration in Kerala; expansion into Tamil Nadu is a strategic move to diversify geographic risk.

Third Party Dependencies

Dependency on a large network of 1,300+ dealers for distribution; credit exposure to these dealers is tightly managed.

Technology Obsolescence Risk

The company uses an in-house developed ERP solution that is not yet a full-fledged end-to-end solution, identified as a 'Key Audit Matter' due to potential IT control gaps.

Credit & Counterparty Risk

Increased dealer and distributor credit exposure in the ice cream and dairy divisions; Debtors Turnover Ratio remains high at 1274.86 times.