‘Quality focus to aid pvt cos gain in dairy sector’

The dairy sector in India grew at a compound annual development price (CAGR) of 10 per cent between 2014-15 and 2019-2020 as extra gamers moved in the direction of the organised from the unorganised market, world advisory agency o3 Capital has mentioned in a report.
“As the world’s largest producer & consumer of milk & milk products, India contributes to 30% of the global milk production and a domestic consumption market of $94 billion. The sector has witnessed significant structural changes over the years, with consolidation being amongst the most notable theme,” the agency mentioned.
The share of personal gamers within the dairy sector, which was 45 per cent by monetary yr (FY) 2019-20 to more likely to additional increase over the following 5 years to achieve 50 per cent as shopper desire for larger high quality and hygienic product will increase. Going forward, the alternatives for personal sector dairy corporations, will additional improve with rising per capita consumption of milk and shopper desire shifting in the direction of value-added merchandise slightly than simply milk, the report mentioned.

“Liquid milk and traditional VAP (value-added products) fetch lower margins, however they deliver high RoCE (return on capital employed) due to limited investment in capex (capital expansion) and working capital. On the other hand, emerging VAP attract higher margins, however, fetch lower RoCE due to significant investment in capex,” the advisory agency mentioned in its report.
The entry of newer gamers available in the market within the personal phase in addition to present incumbents increasing the attain of their distribution networks of their core geographies can also be more likely to contribute to the enlargement of personal participant dairy market, the report mentioned.
Geography-wise, North India remained the most important producer of milk, accounting for 50 per cent of the whole manufacturing of India, whereas the highest ten states accounted for practically 80 per cent of the milk and milk merchandise made within the nation.