|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
Indian dairy industry eyes inorganic growth path
|
|
Saturday, 31 October, 2015, 08 : 00 AM [IST]
|
|
Nandita Vijay, Bengaluru
|
|
fiogf49gjkf0d Indian dairy industry, having reached the milestone of being the largest producer of milk in the world, is now looking for its next phase of growth. In the emerging phase, the market signals a rising demand for innovation in nutritious products and packaging besides improving operational efficiencies.
Another key trend for dairies in the country is to go public to raise funds or engage in discussions for an acquisition. Factors such as evolving tastes and preferences, higher affordability, are driving the Indian dairy segment to garner higher profitability.
There was also an imminent increase in the venture capital and private equity investments in the sector. It is reported that in 2008, IDFC and Motilal Oswal invested in Parag Milk Food Pvt. Ltd around Rs 60 crore through its India Business Excellence Fund and had partly exited when IDFC was roped in raising Rs 155 crore in 2012.
In 2013, Prabhat Dairy Pvt. Ltd received Rs 140 crore fund infusion from Rabobank Group and India Agribusiness Fund. Then the Ahmedabad dairy major went on to go in for an Initial Public Offer to raise Rs 300 crore for debt repayment and capital expenditure.
Credit Analysis & Research Limited (CARE) Ratings report, points out, “IFC invested into Modern Dairies Ltd and Blackriver Investment pumped in a substantial amount into Dolda Dairy Ltd. Fidelity Growth Partners, India, along with participation of the existing social venture investor, Aavishkaar, invested in Odisha-based Milk Mantra Dairy Pvt. Ltd.“
It is also reported that in January 2014, the largest global dairy player, Groupe Lactalis SA, acquired the 18-year-old Hyderabad-based Tirumala Milk products for Rs 1,750 crore or $275 million. This was a 100% acquisition by Groupe Lactalis. Danone from France went on to storm the Indian dairy market with a range covering flavoured curd, yoghurt to attract India’s new-age consumers. Nestle India acquired 26% stake in Indocon Agro & Allied Activities Pvt. Ltd and Hatsun Agro Products Ltd acquired 100% stake in Jyothi Dairy Pvt. Ltd.
Over the last 40 years, the co-operative business model is seen to have dominated and successfully proved to entrench itself within the agrarian landscape of India. This has proved to be a comprehensive platform where innumerable services covering periodic cattle inoculation, insurance and artificial insemination are seen. From an infrastructural perspective, it ensured the need to install milk coolers at village level to enhance productivity and convenience. All these efforts only led to a dependable source of income for the farming community, according to Karnataka Milk Federation officials.
The country’s leading dairies include Amul, which is part of Gujarat Cooperative Milk Marketing Federation Ltd; Mother Dairy, a wholly-owned subsidiary of the National Dairy Development Board (NDDB); Karnataka Milk Federation with Nandini brand; Kwality Limited; Tamil Nadu Co-operative Milk Producers’ Federation Limited, which is known for its Aavin brand; Kerala Co-operative Milk Marketing Federation with Milma brand; Orissa State Cooperative Milk Producers Federation with OMFED; Dudhsagar Dairy; Andhra Pradesh Dairy Development Cooperative Federation with Vijaya brand; Dynamix Dairy; Prabhat Dairy; Parag; Macro Dairy Ventures Ltd; Lactalis Tirumala; Punjab State Cooperative Milk Producers' Federation Ltd (Milkfed); Verka; Niligris; Hatsun; Mukunda Dairy; Gokul Dairy; the face behind 'Kaveri' milk brand in Karnataka; Parm Dairy; Heritage Foods; Erode-based Milky Mist Dairy Products Pvt. Ltd; Umang Dairy; and Modern Dairies.
Nestlé, Danone and Lactalis are the top three largest global dairy companies which have a significant presence in India and competing head-on with brands like Amul, Govardhan and Nandini.
According to Union government’s department of animal husbandry, dairy & fisheries, the country’s dairy sector is valued at Rs 3.7 lakh crore and produces around 17 per cent of world’s total milk production. Annual growth rate is about 10 per cent. Although the unorganised sector accounts for 85 per cent of the milk production, there is an aggressive organised sector which will spur a transformation of the country’s dairy industry.
According to dairy experts, there are more dairies in the country to tread the path of the inorganic growth to have faster access to latest technology and modernisation.
To increase profits, Indian dairy producers need to focus on value-added dairy products (VADPs), as per CARE Ratings report. Around 42% of the total milk produced in India is purchased by consumers directly from milk farmers in a raw form. The remaining 58% goes for processing and is sold as processed milk and milk products like curd, yogurt, buttermilk, lassi, butter, ghee, ice cream, frozen desserts, cheese, paneer, khoa and milk powder including skimmed and whole versions, according to CRISIL Report 2015.
The dairy industry is now investing in latest technology across process and packaging. It is working to understand the flexible, optimised solutions hiring experts to advice.
The dairy segment is expected to touch 200 million tonne by 2022 from 150 million tonne in 2014. Currently 20% of the milk is generated by the organised sector covering co-operatives and private entities. The remaining 85 per cent of the market is dominated by the unorganised sector.
The demand for milk variants like flavoured versions, use of cheese, processed cheese and milk-based sweets for festivities is driving the demand for value-added products.
Experts view that value-added milk products are growing currently at around 25% every year and are expected to notch the pace till 2019-20.
The improved revenue generation has led to wide scope for product innovations, enhance cold storage which increases shelf life, increase in production capacity, and improve processing-packaging technology which has seen an aggressive expansion of retail stores pan-India. From Amul to Nandini parlours, the city is dotted with offerings to the new-age consumer, noted a panel of experts from the Dairy Science College, Bengaluru.
State cooperatives dominate Indian dairy landscape
Karnataka Cooperative Milk Producers' Federation Limited (KMF) is the apex body in Karnataka representing dairy farmers' co-operatives. It is the second-largest dairy co-operative amongst the dairy cooperatives in the country with 1.5 lakh ltr per day liquid milk processing facility. In South India, it stands first in terms of procurement as well as sales. Its brand Nandini is the household name for pure and fresh milk and milk products.
The federation has 14 milk unions throughout the state, which procure milk from primary dairy cooperative societies (DCSs) and distribute milk to the consumers in across rural and urban markets in Karnataka. Chamarajanagar Milk Union has started functioning as 14th Milk Union on KMF after bifurcation from Mysore-Chamarajanagar Milk Union.
The first-ever World Bank-funded Dairy Development Programme in the country started in Karnataka with the organisation of village level dairy co-operatives in 1974. The Amul pattern of dairy co-operatives started functioning in Karnataka from 1974-75.
In May this year, GCMMF which markets the popular Amul brand of milk and dairy products has registered highest ever growth of 51% in the last two years, to achieve turnover of Rs 20,733 crore during 2014-15.
In March this year, Prabhat Dairy set up new lines of production for value-added milk-based products such as cheese, paneer and shrikhand at its Shrirampur facility in Ahmednagar district of Maharashtra. The cheese versions are Mozzarella, Cheddar and Processed.
The plant is expected to commence commercial production of these products in fiscal 2016. It has automated production facilities with advanced equipment at Shrirampur in Ahmednagar and at Navi Mumbai, with an aggregate milk processing capacity of 1.5 million litre per day as on March 15, 2015.
“Our facilities are in close proximity to our milk procurement region as well as target market and we have in-built capacities to expand retail consumer product offerings,” stated Vivek Nirmal, joint MD, Prabhat Dairy.
Technology adoption in Indian dairy
From KMF to Parag Foods and Britannia Industries are now looking at the market for solutions to package fresh milk.
According to Rajat Kedia, director, Manjushree Technopack, using multilayer, additives and blends is the trend . The need for this arises with higher shelf life demands. There is a specific need to opt for novel packaging concepts specifically for perishable foods like milk. Packaging has been a high priority for the dairy sector. Plastic packaging solutions have emerged as one of the attractive options in dairy packaging innovation. It has introduced consumers to the simplest conveniences such as longer shelf life, ease of handling consumption and storage.
Schneider Electric has now a range control systems and electrical distribution solutions which would transform the Indian dairy industry. “We are committed to bring its global experience and innovation in dairy industry for its Indian customers. The organisation has started with a dedicated team of experts catering only to our dairy customers,” said Urvil Modi, director, food & beverages segment, Schneider Electric.
|
|
|
|
|
|
|
|
|
|