Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
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Background
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India is the worlds largest milk producer and
consumer
124
140
2010 2011
billion litres
Country wise production of milk
.
118
85
86
60
80
100
120
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38
34
31
30
29
23
17 14 12 11 11 10
39
36
31 31
29
24
17
13
12 11
11 11
0
20
40
60
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S FAO
Source: FAO
Global milk production was around 706 billion litres in 2011
Milk powder segment accounts for the largest share in global trade p g g g
Indias share of global trade of dairy products is extremely low due to :
High domestic consumption and regular export bans on high volume products such as milk powder
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Imports limited mainly to premium varieties of butter, cheese due to low shelf life of other products
Uttar Pradesh produces the largest amount of milk in India;
Punjab has the highest per-capita milk consumption
106 Uttar Pradesh
17.3%
17.6%
Uttar Pradesh
State wise per capita milk consumption (2011-12)
(litres)
State wise share in Indian milk production
. 160
134
197
Gujarat
Andhra Pradesh
Rajasthan
10.9%
9.2%
7.6%
10.6%
9.5%
7 7%
Rajasthan
Andhra Pradesh
Gujarat
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72
344
Maharashtra
Punjab
j
7.7%
6.6%
7.7%
7.5%
6.6%
j
Punjab
Maharashtra
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249
102
105
Haryana
Tamil Nadu
Madhya Pradesh
6.2%
5.6%
5.1%
6.4%
5.4%
5 2%
Madhya Pradesh
Tamil Nadu
Haryana
87
67
249
Karnataka
Bihar
Haryana
5.3%
4.2%
5.2%
5.2%
4.3%
Haryana
Bihar
Karnataka
2010-11 2011-12
103
50
India
West Bengal
3.7%
10.6%
3.7%
10.5%
West Bengal
Others
Source: National Dairy Development Board (NDDB), Industry and CRISIL Research
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Buffalo milk has the highest share in production
B ff l 51% C 45% G t 4%
Share in milk production (per
Total milk: ~124 billion litres
Share of animals in milk production in India (2011-12)
.
Buffalo, 51% Cow, 45% Goat, 4%
Share in milk production (per
cent)
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Buffalo, 33% Cow, 39% Goat, 28%
Share in animal count (per
cent)
Total animals: ~115 million
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B ff l C G t
Milk yield and growth in animal count (2011-12)
Parameter Buffalo Cow
1 7
2.2%
3.1%
Buffalo Cow Goat
Domestic milk
consumption
High Moderate
Global milk consumption Low High
1.7
1.3
0.2
0.4%
Global milk consumption Low High
Fat content in milk 7-7.5 per cent 3.5-4 per cent
Yield (Tonnes of milk per animal) 5 year CAGR in animal population
(per cent)
Source: FAO, Industry and CRISIL Research
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Water content in milk 80-85 per cent 85-90 per cent
.
Industry definition, market size and
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government policies
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Classification of dairy products based on
manufacturing process
Milk (124 billion litres produced in 2011-12)
.
Unprocessed milk
(~50 per cent of production)
Processed milk
(~35 per cent of production)
Milk products
(~15 per cent of production)
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Whole milk
~70 per cent of
processed milk
~15 per cent of
processed milk
Toned milk Double-toned milk Skimmed milk
~10 per cent of
processed milk
~5 per cent of
processed milk
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2008-09 2009-10 2010-11 2011-12 2012-13 E
0
20
2008-09 2009-10 2010-11 2011-12 2012-13 E
Source: NDDB, Industry and CRISIL Research
Source: NDDB, Industry and CRISIL Research
Demand expected to grow by 5-6 per cent per annum over the next 5 years
Historic demand growth for milk has been in the range of 4-5 per cent per annum
f f f Increase in future demand to result from expected higher consumption of value-added products
Prices of milk surged by around 12-13 per cent CAGR over the last 3-4 years due to
increase in the feed costs
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Sharp rise in prices of key feeds led to spurt in milk
prices
280 0
Jowar Bajra Maize
Wheat Paddy Sugarcane
200.0
Milk prices Fodder Oil cakes Cattle feed
Indexed MSPs of key crops that constitutes Fodder Indexed prices of milk and key feed in India
.
200.0
220.0
240.0
260.0
280.0
140 0
160.0
180.0
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100 0
120.0
140.0
160.0
180.0
100.0
120.0
140.0
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80.0
100.0
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
80.0
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Source: Office of the Economic Advisor, Ministry of Commerce and Industry, Ministry of agriculture
Prices of all key feeds surged due to a rise in MSPs of key crops
With MSPs of most of the crops showing a rise of around 5-10 per cent in 2013-
14 prices of fodder and thereby milk are expected to rise by around 7 8 per cent 14, prices of fodder and thereby milk are expected to rise by around 7-8 per cent
during the year.
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Market size of dairy and dairy products industry in
India
Classification Market size Branded market share Growth over next 3 years (per cent CAGR)
Data is as of 2012-13 (Rs billion) (per cent) Volume Realisation Overall value
Overall industry 3050 - 3100 60-65 13-15
.
Overall industry 3050 3100 60 65 13 15
Milk 1900-1930 85-90 ~4 7-8 11-12
Curd and Yogurt 190-200 ~10 7-8 10-12 18-20
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Buttermilk and Lassi 100-105 ~5 4-6 10-12 15-17
Ghee 420-425 ~10 ~4 10-12 14-16
Butter 110-115 15-20 ~5 10-12 15-17
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Ice-cream and Frozen desert 35-40 60-65 8-9 ~10 18-19
Cheese 45-50 85-90 8-9 ~10 18-19
Paneer 215-220 10-15 6-8 ~10 16-18
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Animal
nutrition
19%
procurement
systems
22%
Plan period 2011-12 to 2016-17 (Phase I)
Coverage 14 major milk producing states in India
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National Mission on Food
Processing
p g g pp
Also plans to setup various nodal agencies that will test quality of the dairy product and ensure
that any food processing unit will have to register with it, in order to operate
MRTP FERA regulations
MRTP (Monopolies & Restrictive Trade Practices Act) rules and FERA (Foreign Exchange
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Milk market in India at ~Rs. 1,930 billion in 2012-13
49
51
3000
Market size (Rs. billion) Market size (billion litres)
billion litres Rs. billion
45
50 2500
Market size (Rs. billion) Market size (billion litres)
billion litres Rs. billion
Market to grow at around 11-12% CAGR Past trend
. 1930
2152
2399
2675
45
47
49
30
40
50
2000
2500
3000
1730
1930
37
39
41
43
45
30
35
40
45
50
1500
2000
2500
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1930
10
20
30
500
1000
1500
1050
1250
1490
5
10
15
20
25
500
1000
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2012-13 E 2013-14 P 2014-15 P 2015-16 P
0
5
0
2008-09 2009-10 2010-11 2011-12 2012-13 E
Source: Industry and CRISIL Research
Growth expected at around 11-12 per cent; with volumes expected to grow at
around 4 per cent.
Major brands include Amul Paras Mother dairy Britannia Gowardhan Nestle Major brands include Amul, Paras, Mother dairy, Britannia, Gowardhan, Nestle,
Aarey, Gokul, Vadilal, etc.
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Curd and yogurt market in India at ~Rs. 190 billion in
2012-13
225
265
315
250
300
350
Rs. billion
135
160
190
150
200
Rs. billion
Market to grow at around 18-20% CAGR Past trend
.
190
225
50
100
150
200
250
105
120
135
50
100
150
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2012-13 2013-14 P 2014-15 P 2015-16 P
0
2008-09 2009-10 2010-11 2011-12 2012-13
Overview of the curd market in India
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80-85% 15-20%
Share of varieties
(per cent)
Regular curd
Other varieties of curd
(Flavoured, Frozen)
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2008-09 2009-10 2010-11 2011-12 2012-13
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2012-13 2013-14 P 2014-15 P 2015-16 P
Parameter Ghee Butter
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North
~25%
60-65% 35-40%
Share of
markets
(per cent)
Premium
flavours
Branded Unbranded
Branded Unbranded
Source: CRISIL Ratings, Industry and CRISIL Research
Segment expected to grow at around 18-19 per cent annually in value terms, with Segment expected to grow at around 18 19 per cent annually in value terms, with
volumes expected to grow at 8-9 per cent
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Cheese market in India at Rs. 45-50 billion in 2012-13
55-60% 40-45%
Share of buyers
(per cent)
Retail Institutional
Overview of the cheese market in India
.
65-70% 20-25% ~10%
Share of regions
(per cent)
(p )
Urban Metros
Rural
Urban Others
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~60% ~20% 5-10% 5% 5-10%
Share of brands
(per cent)
Amul Britannia Parag Imports Others
Processed Mozarella Gouda
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85-90%
~60%
10-15%
~20% ~10% ~5% ~5%
Share of markets
(per cent)
Share of varieties
(per cent)
Spreads Others
(per cent)
Branded
Unbranded
Source: Industry and CRISIL Research
Growth expected at 18-19 per cent in value terms, with volumes expected to grow
at 8-9 per cent
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Indian paneer market at Rs. 215-220 billion in 2012-13
Demand share across regions Share of brands in the domestic paneer market
South
East
5-10%
.
Other brands
5 7%
South
15-20%
West
15-20%
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Unbranded
85-90%
Amul
8-10%
5-7%
Branded
10-15%
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55-60%
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Key risks
Parameter
Volatility in raw material prices due to adverse environmental conditions, such as weak monsoons, and cattle-related diseases
Sharp rise in MSPs of major crops which constitute feed and fodder for cattle
Larger proportion of sales accounting for low value-added products
Increase in pasteurised milk prices by cooperatives leading to pressure on margins
Sales restricted to one geography, resulting in intense competition from other regional and national brands
Adverse government regulations such as ban of export of milk powder etc
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Financial performance
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Margins to remain flat in 2013-14
selling and
distribution,
7%
Others,
18%
Distribution of costs Aggregate financial parameters
Parameter Units 2009-10 2010-11 2011-12
2013-13
E
.
raw
material,
64% Power and
fuel, 3%
Employees,
5%
18%
Sales Rs million 204,074 249,372 295,748
Sales growth Per cent 22.2% 18.6%
Op margins Per cent 6 5% 5 8% 6 1% 5 5 6%
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Packaging,
3%
Rating distribution
Op. margins Per cent 6.5% 5.8% 6.1% 5.5 6%
Net margins Per cent 1.3% 1.7% 2.1%
Gearing Times 2.20 2.11 2.20
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Median rating : BB Number of companies : 39
PBDIT/ Interest Times 3.07 2.98 3.90
RoCE Per cent 15% 14% 15%
2
1 1
7
1
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AAA AA A BBB BB B C D
Net working capital Days 60-70
Number of cos Nos 25
Source: CRISIL Ratings Prowess Industry and CRISIL Research AAA AA A BBB BB B C D Source: CRISIL Ratings, Prowess, Industry and CRISIL Research
Milk which is the key raw material, to see a price rise of around 7-8 per cent in
2013-14 on account of rise in MSP of key crops.
22
Operating margins to remain flat at around 6 per cent in 2013-14 as the players
are expected to pass on the price rise to the end consumers
Aggregate investments of Rs. 750 - 850 billion
expected by 2015-16
Parameter Units Value
Market size (2012-13) Rs billion 3,050
.
( )
Parameter Units Value
WC Investment Rs billion 450 500 (for next 3 years)
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d WC Investment Rs billion 450-500 (for next 3 years)
Fixed capital investment Rs billion 300-350 (for next 3 years)
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Aggregate investment Rs billion 750-850 (for next 3 years)
Source: CRISIL Ratings, Industry and CRISIL Research
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Interest from PE and VC funds
Timeline Target Acquirer Deal size Stake
August, 2013 Prabhat dairy
Indian Agribusiness Fund & French
development finance institution Rs. 1,400 million -
.
g , y p
Proparco
,
May, 2013 Parag Milk Foods International Finance Corp. (IFC) $ 17 million -
September 2012 Parag Milk Foods IDFC Private Equity Rs 1 600 million 15 20%
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d September 2012 Parag Milk Foods IDFC Private Equity Rs 1,600 million 15-20%
February 2011 Milk Mantra Dairy Aavishkar Venture Mgmt Services - -
May 2010 Tirumala Milk Products Carlyle Asia Growth Capital IV Rs 1,100 million -
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May 2010 Tirumala Milk Products Carlyle Asia Growth Capital IV Rs 1,100 million
June 2008 Parag Milk Foods Motilal Oswal Private Equity Rs 600 million 10-12%
September 2006 Nilgiris Dairy Farms Actis Capital LLP Rs 2,900 million 65%
g y
Source: Industry and CRISIL Research
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CRISIL Limited
CRISIL Limited
www.crisil.com
CRISIL Limited
www.crisil.com
www.standardandpoors.com
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