Organised Dairy Industry’s Revenue To Grow 14-16% This Fiscal: CRISIL

New Delhi, Aug 18 (KNN) Strong demand for value-added products and stable milk consumption will help India’s organised dairy industry revenue to grow 14-16 per cent this fiscal, said rating agency CRISIL.

The rating agency’s report pointed out that with raw milk supply improving, there will be fewer price hikes and profitability will recover 20-50 basis points. Last fiscal, disruptions in raw milk supply had led to multiple hikes in retail milk prices, pushing up the topline 19 per cent but impacting profitability.

Crisil Ratings Senior Director Mohit Makhija said, “We believe the strong revenue growth in VAP (Value Added Products) seen over the past few years will continue. This fiscal, the segment should grow 18-20 per cent and consequently, the share of VAP in overall revenue could rise to 40 per cent from 35 per cent four fiscals back.”

He also said that given that demand from both retail and institutional segments remained strong, the share of VAP will continue to rise and on the other hand, liquid milk revenue will grow 8-10 per cent this fiscal backed by steady demand.

“In this milieu, given healthy balance sheets, the credit profiles of organised dairies will remain strong,” he said.

The overall revenue growth of 14-16 per cent this fiscal will be driven by healthy volume growth of 9-10 per cent and by higher realisations. Last fiscal, milk procurement prices had risen 14 per cent on account of several challenges on the supply side such as significant increase in fodder cost, impact on yields due to cattle disease and disruptions in artificial insemination schedules.

The credit risk profiles are expected to remain stable as capex will be funded by a prudent mix of debt and equity, the report added.  (KNN Bureau)