Monday, March 18, 2019


CRISIL foresees 14-15% growth in revenue from value-added dairy products
Monday, 09 July, 2018, 08 : 00 AM [IST]
Our Bureau, Mumbai
CRISIL foresees revenue from value-added dairy products (VAP)1 growing at a healthy 14-15 per cent, annually over the next three fiscals, or about 50 per cent faster than the overall sector’s growth rate.

That, along with steady growth in milk sales, should crank up the dairy sector’s revenue to Rs 7.5 lakh crore by fiscal 2021 from Rs 5.7 lakh crore in fiscal 2018.
CRISIL rates over 100 dairy firms, which account for about 60 per cent of the organised segment’s revenue.
A study of business profiles of these firms shows rising income levels, changing lifestyles and increasing health and quality consciousness is leading to higher revenue growth from VAP compared with milk.
“We believe VAP revenues will continue to benefit from rising urbanisation. And with more women joining the workforce, fewer homes would continue the chore of processing milk into curd and butter in the urban and semi-urban areas,” said Anuj Sethi, senior director, CRISIL Ratings.

“Firms with higher VAP share are better placed to take advantage of this,” he added.
With contribution from VAPs rising, operating margins of CRISIL-rated dairies have improved about 50 basis points (bps) to about four per cent (not adjusting for periodical bonus paid by cooperatives to farmers) in three fiscals through 2018. A further 50 bps improvement is likely by fiscal 2021, driven by VAP sales.
Revenue growth will be driven largely by volumes. Increase in realisations will remain muted, given that growth in milk supply will be in line with demand.
But the high growth in VAP will necessitate investments in capacities and infrastructure.
CRISIL foresees organised dairies spending about Rs 14,000 crore over the next three fiscals – similar to the previous three fiscals – to enhance processing capacity by 25-30 per cent and strengthen milk procurement infrastructure.
The investments are expected to be funded with moderate dependence on borrowings, including soft loans from the government’s dairy processing and infrastructure development fund, besides public and private equity.
“Prudent funding mix and better cash generation will keep capital structure of organised dairies satisfactory with gearing of 1.0-1.2 times, in spite of sizeable capex,” said Poonam Upadhyay, associate director, CRISIL Ratings.

“The credit ratio (upgrades to downgrades) of CRISIL-rated dairy firms has been above one time in four out of the past five years, and this trend is likely to continue,” she added.
[1 Refers to all products excluding milk sold in the unorganised market (bulk or loose milk) and pouch milk (all variants such as whole milk, toned milk and double-toned milk).]
Print Article Back FNB News Twitter
Post Your commentsPost Your Comment
* Name :    
* Email :    
  Website :  
Comments :  
Captcha :

Food and Beverage News ePaper
“Regulations & standards work has been completed”
Past News...

Packaged wheat flour market growth 19% CAGR; may reach Rs 7500 cr: Ikon
Past News...
Advertise Here
Advertise Here
Advertise Here
Recipe for Success
Recipe for Success: MasterChef’s hat the most rewarding for multiple hat-wearer Bhadouria
Past News...

Home | About Us | Contact Us | Feedback | Disclaimer
Copyright © Food And Beverage News. All rights reserved.
Designed & Maintained by Saffron Media Pvt Ltd