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Dairy Market – India February 2014
Executive Summary Market
Consumption of dairy products has grown considerably worldwide Demand for dairy products is expected to escalate despite the recent surge in prices
Challenges
Drivers
Drivers & Challenges
Trends
—Growing Income and Consumption —Rapid Urbanization —Favorable Demographics —Rise in Bovine Population —Growth of Sub Segments and Other User Industries —Marketing Campaigns —Growing Retail Market
—Inadequate Supply of Feed and Fodder —Shortage of Cold Storage Units —Poor Supply Chain and Distribution Facility —Rise in Packaging Costs
Exhibitions and Events Increased Global Attention Product Innovation Growth of Regional Milk Producers Corporate Activities Major Players
Competition
Company A
Company B
DAIRY MARKET IN INDIA 2014.PPT
Company C
2
•Macro-Economic Indicators •Introduction •Market Overview •Market Segmentation •Consumer Insights •Import & Export •Drivers & Challenges •Government Rules & Policies •Government Participation •Trends •Competitive Landscape •Strategic Recommendations •Appendix DAIRY MARKET IN INDIA 2014.PPT
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Economic Indicators (-/-) GDP at Factor Cost: Quarterly INR tn 15 14 d1 c1 13 b1
d2 c2 b2 a2
12 a1
c4 b4 a4
c3 b3 a3
11
Q1
Q2 2010-11
Q4
Q3 2011-12
2012-13
2013-14
Inflation Rate: Monthly % 2.0
p
1.5
s q
1.0
t r
0.5 0.0
Jun 2013 - Jul 2013
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
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Oct 2013 - Nov 2013 4
Global consumption of dairy products has grown remarkably over the past few years Global Dairy Market – Overview • Consumption of protein-based food items are witnessing upward trend in the global market • Milk and other dairy products hold an important position in normal diet and their consumption is also growing • World milk production in 20-- was found to be ~A mn tonnes
Country Ranks – Milk production-wise (20--) Rank
Country
Milk Production (mn tonnes)
1st
EU-27
a1
2nd
India
a2
3rd
USA
a3
4th
China
a4
5th
Russia
a5
6th
Brazil
a6
Note*: EU (European Union)
Consumption share of milk (20--) Milk
Other Beverages
X% Share of consumption of milk out of total global beverage consumption
Y%
Change in Global Protein Consumption Meat N1%
P1%
Dairy
N2%
P2%
Fruits & Vegetables
N3%
P3%
N4%
P4%
N5%
P5%
19--
20--
Cereals Others Dairy consumption grew by a% between 19-- and 20--
5
The Indian dairy market is expected to witness remarkable growth…
SAMPLE
Indian Dairy Market – Overview (1/4)
• Indian dairy industry is huge and has gained substantial growth momentum over the past few years • Dairy products have gained popularity among consumers due to various factors such as increasing income levels, hectic lifestyle and convenience associated with their consumption Being the world’s largest producer and consumer of dairy products, India represents one of the most lucrative dairy markets
• In comparison with other products such as wheat and rice, milk penetration among consumers is as high as ~9-% • In 20--, Indian dairy market was valued at ~INR x tn
Market Size & Growth INR tn Y%
x1
x2
x3
20--
20--
20--e
x4
20--e
x5
20--e
x6
20--e
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x7
20--e
x8
20--e
x9
20--e 6
Domestic milk consumption is very high in both urban as well as rural markets
SAMPLE
Dairy Market Segmentation – Rural and Urban Share of Consumer Expenditure on Dairy Products (20--) Urban Consumers
Rural Consumers Y1%
X1% Dairy Other Food Items X2%
Y2%
• Expenditure on dairy products account for a significant share of the consumer’s wallet • Increased affordability is one of the reasons behind this growing trend
Consumption Share of Milk (20--) Urban Consumers • In India, almost entire amount of milk produced gets consumed domestically • Demand for processed and packaged dairy products is high in the urban market
Rural Consumers
A1%
B1% Consumes milk Do not consume milk A2%
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B2%
7
Import of Major Types of Dairy and Processed Dairy Products (1/5) Whole Milk
Major Importing Nations – Value Wise (20--) Volume
INR mn
b2
Value X3%
‘000 Kg
b3
X2%
a2
0 20---20--
a3
b4 a4
20---20--
20---20--
0
Skimmed Milk
0
n2
Value
MALAYSIA PHILIPPINES
SAMPLE
20---20--
POLAND
‘000 Kg
n3 Y%
n4
p2
p1 200—20--
FRANCE
Major Importing Nations – Value Wise (20--) Volume
n1
GERMANY X1%
a1
INR mn
SWITZERLAND
X4%
b1
20---20--
X5%
p3
p4
20---20--
20---20--
0
Note: HS Code 04022910 (Whole Milk), HS Code 04021010 (Skimmed Milk) DAIRY MARKET IN INDIA 2014.PPT
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Drivers & Challenges – Summary
SAMPLE
Drivers Growing Income and Consumption Rapid Urbanization
Challenges Inadequate Supply of Feed and Fodder Shortage of Cold Storage Units
Favorable Demographics
Deficit in Power Supply
Rise in Bovine Population
Poor Supply Chain and Distribution Facilities
Growth of Sub Segments and Other User Industries
Rise in Packaging Costs
Marketing Campaigns Growing Retail Market
DAIRY MARKET IN INDIA 2014.PPT
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SAMPLE
Trends – Summary
Exhibition and Events
Increased Global Attention
` Key Trends
Product Innovation
Growth of Regional Milk Producers
Corporate Activities
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Competitive Benchmarking (2/5) Key Ratios of Top 3 Companies – Operational Basis (FY 20--) (1/3) %
Operating Margin x1 y1
Net Margin
SAMPLE x2
y2
x3
x4
0 Player A
Player B
Player C
• Player B recorded operating margin of x2%, higher than that of Player C which recorded operating margin of x3% but lower than that of Player a which recorded operating margin of x1% • Net margin for Player A, Player B and Player C are y1%, y2% and y3% respectively, wherein Player A has the highest net margin among these three companies
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SAMPLE
Public: Domestic Company – Player A (1/5) Company Information Corporate Address
xx
Tel No.
xx
Fax No.
xx
Website
xx
Year of Incorporation
xx
Ticker Symbol
xx
Stock Exchange
xx
Offices and centers – India
Noida
Head Office
Products and Services Category
Products/Services
Key People Name
Milk Products
Designation
Just milk (UHT), Fresh cream, ice cream mix, instant dessert mix, coffee creamer, dairy whip mix
DAIRY MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Player B (2/5) Financial Snapshot
Key Ratios
Total Income INR mn
s1 0
t1 20--
t3 t4
t2
0 20--
20--
20--
Financial Summary • The company incurred a net profit of INR mn in FY 20--, as compared to net profit of INR mn in FY 20-• The company reported total income of INR mn in FY 20--, registering a decrease of % over FY 20-• The company earned an operating margin of % in FY 20--, an increase of percentage points over FY 20-• The company reported debt to equity ratio of X in FY 20--, an increase of Y% over FY 20--
Indicators
Value (27/01/2014) xx
Total Enterprise Value (INR mn)
xx
EPS (INR)
xx xx
PE Ratio (Abs)
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
20--
20--
20--
20--
2.38
3.65%
1.27%
5.32%
5.35%
-45.80
9.58%
55.38%
28.71%
6.77%
-57.43
11.55%
68.98%
33.80%
7.71%
-65.18
6.12%
71.29%
39.53%
8.63%
0.68
2.26%
1.58%
6.54%
5.44%
6.53
10.80%
4.27%
13.99%
11.38%
0.46
1.84%
1.38%
5.19%
4.36%
10.45
32.72%
22.26%
41.23%
23.94%
-0.04
95.93%
95.97%
92.38%
94.35%
-2.75
11.68%
14.43%
15.81%
13.27%
-0.48
1.78%
2.26%
2.33%
2.95%
-45.43%
1.90
3.49
2.79
2.93
-20.13%
4.27
5.34
2.55
2.64
491.55%
0.19
0.03
0.14
0.26
414.47%
0.16
0.03
0.12
0.20
27.93%
2.28
1.78
3.27
1.91
45.63%
8.04
5.52
5.41
4.24
32.11%
0.45
0.34
0.68
0.77 1.33
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Key Financial Performance Indicators Market Capitalization (INR mn)
y-o-y change (20-----)
Profitability Ratios
s4
s3
s2
Particulars
Net Profit/Loss
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
66.63%
1.26
0.76
1.18
150.45%
2.65
1.06
1.84
2.01
22.78%
0.48
0.39
0.84
0.96
Improved
DAIRY MARKET IN INDIA 2014.PPT
Decline
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Public: Domestic Company – Player A (3/5) Key Business Segments
Key Geographic Segments
Real Estate
India
Services & Commodities Trading
100%
Dairy Milk & Milk Products
80% 60% a1 c1
a2 c2
a3 c3
b1
b2
b3
0% 20--
20--
20--
a4
c4
b4
40%
X%
20%
India is the only geographic segment in which the company has been operating for the last four years
0%
20--
20--
Business Highlights Description
Overview
News
SAMPLE
• It engages in the production and marketing of dairy milk and milk products in India • The company is recognized as one of the leading producers of UHT milk, premium range of flavored milk, ultra pasteurized milk and UHT toned milk, among others In addition to dairy business, the firm is engaged in in real estate business, corporate and strategic advisory services and business process outsourcing services
DAIRY MARKET IN INDIA 2014.PPT
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Public: Domestic Company – Player A (4/5) Business Highlights Description
News
Manufacturing Facility
• Its manufacturing facility is well equipped with state-of-the-art dairy processing equipment from Denmark and France • The environment-friendly plant is spread over a sprawling area of ~20,000 sq meters • Modern technique of Ultra Heat Treatment (UHT) with direct steam infusion is deployed • Aseptic packaging in co-extruded multi-layer PE (Polyethylene) and EVOH (Ethylene Vinyl Alcohol) film is done
Quality Assurance
• It adheres to ISO 9001 & 22000 principles that ensures production of high quality and safe milk and milk products • Raw materials procured are matched with internal as well as external quality standards • Processing and dispatch of finished goods is done strictly in adherence with the standard specifications
SAMPLE DAIRY MARKET IN INDIA 2014.PPT
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Public: Domestic Company – Player A – SWOT Analysis (5/5)
SAMPLE
•x
•x
S
W
O
T
•x
•x
DAIRY MARKET IN INDIA 2014.PPT
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Private: Domestic Company – Player A (1/5) Company Information
Corporate Address
SAMPLE
Offices and centers – India
xx
Tel No.
xx
Fax No.
xx
Website
xx
Year of Incorporation
xx
Noida
Head Office
Products and Services Category
Products/Services
Key People Milk
Token milk, full cream milk, toned milk standardized milk, double toned milk, cow milk, skimmed and UHT toned
Dairy Products
Plain dahi, probiotic dahi, sweet dahi, lassi, fruit flavored lassi, plain chach, tadka chach, flavored milk, paneer, butter, cheese, ghee and ice cream
Name
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Designation
17
Private: Domestic Company – Player – Shareholding Pattern (2/5) Shareholders of the Company as on 05/06/2013
Ownership Structure Public financial companies
Name
No. of Shares held
A
-
B
-
Total
X1%
X2%
X3%
20--
20--
20--
-
SAMPLE
Ownership structure corresponds to Date of AGM: 30/09/2011, 19/07/2012 and 05/06/2013 DAIRY MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Player A (3/5) Financial Snapshot
Key Ratios
Total Income
Net Profit/Loss
Particulars
y-o-y change (20-----)
20--
20--
20--
20--
0.53
0.98%
0.45%
2.65%
-0.02%
0.02
0.04%
0.02%
2.74%
0.06%
0.02
0.05%
0.02%
2.74%
0.11%
0.55
0.87%
0.31%
39.23%
0.77% -0.06%
Profitability Ratios INR mn a1
a2
b1
b2
a3
b3
a4
INR mn
b4
0
0 20--
20--
20--
20--
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
• The company incurred a net profit of INR mn in FY 20--, as compared to net profit of INR mn in FY 20--
Liquidity Ratios
• The company reported total income of INR mn in FY 20--, registering an increase of % over FY 20--
Leverage Ratios
• The company earned an operating margin of % in FY 20--, an increase of - percentage points over FY 20-• The company reported debt to equity ratio of x in FY 20--, an increase of y% over FY 20--
3.49%
1.49%
8.08%
371.51%
24.21%
10.93%
-0.08%
1.51
2.68%
1.17%
8.08%
-0.06%
8.57
13.80%
5.23%
37.72%
-0.35%
-0.53
99.02%
99.55%
97.31% 100.02%
0.00
0.00%
0.00%
0.00%
0.00%
0.26
1.42%
1.16%
1.15%
1.59%
-5.66%
1.01
1.07
4.91
5.24
-48.88%
0.15
0.30
1.84
1.71
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Financial Summary
2.00 347.31
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
43.24%
5.06
3.53
3.70
3.39
7.14%
0.83
0.78
0.79
0.77
78.94%
0.69
0.39
2.33
-0.01
20.59%
14.02
11.63
14.04
17.48
4.63%
2.73
2.60
3.01
2.92 3.10
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
-0.51%
3.50
3.52
3.24
601.91%
377.52
53.78
4.07
3.84
43.13%
21.48
15.01
14.13
12.82
Improved
DAIRY MARKET IN INDIA 2014.PPT
Decline
19
SAMPLE
Private: Domestic Company – Player A (4/5) Business Highlights Description
News
Overview
• Texttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttext texttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttext • It is involved in manufacturing and selling of milk and milk products in India and abroad In addition to the milk business, it is also engaged in other food business segments, including edible oil, fresh fruits & vegetables, frozen products, juices, beverages, processed foods and grocery items Texttexttexttexttexttexttexttexttexttexttexttexttext Texttexttexttexttexttexttexttexttexttexttexttexttexttext Texttexttexttexttexttexttexttexttexttexttexttexttexttext
Infrastructure
• In the manufacturing plant, milk processing is controlled by process automation whereby state-of-the-art microprocessor technology is adopted to integrate and completely automate all functions of milk processing to ensure high product quality, reliability and safety
Quality Assurance
• It has ISO 9001:2008 (QMS), ISO 22000:2005 (FSMS) and ISO 14001:2004 (EMS) certifications
Distribution Network
• In addition to the normal distribution system, it has its unique distribution network of bulk vending milk booths, retail outlets and mobile units • It markets ~3.2 mn liters of milk daily in the markets of Delhi, Mumbai, Saurashtra and Hyderabad DAIRY MARKET IN INDIA 2014.PPT
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Private: Domestic Company – Player A – SWOT Analysis (5/5)
SAMPLE
•x
•x
S
W
O
T
•x
•x
DAIRY MARKET IN INDIA 2014.PPT
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Appendix Ratio
Calculations
Ratio
Calculations
Operating Margin
(Operating Income/Revenues)*100
Current Ratio
Current Assets / Current Liabilities
Net Margin
(Net Profit / Revenues) *100
Cash Ratio
Profit Before Tax Margin
(Income Before Tax / Revenues *100
{(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}
Debt to Equity
Total Liabilities / Shareholders Equity
Debt to Capital Ratio
{Total Debt / (Shareholders Equity + Total Debt)}
Interest Coverage Ratio
EBIT / Interest Expense
Fixed Asset Turnover
Sales / Fixed Assets
Asset Turnover
Sales / Total Assets
Return on Equity (ROE) Return on Capital (ROCE) Return on Working Capital
(Net Income / Shareholders Equity)*100 EBIT / (Total Assets – Current Liabilities)*100 (EBIT / Working Capital) *100
Return on Assets
(EBIT / Total Assets)*100
Return on Fixed Assets
(EBIT / Fixed Assets) *100
Operating Costs (% of Sales)
(Operating Expenses / Sales) *100
Current Asset Turnover
Sales / Current Assets
Administration Costs (% of Sales)
(Administrative Expenses / Sales) *100
Working Capital Turnover
Sales / Working Capital
Interest Costs (% of Sales)
(Interest Expenses / Sales) *100
Capital Employed Turnover
Sales / (Shareholders Equity + Total Debt)
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Sources of Information
PRIMARY RESEARCH Interviews Leading Industry Vendors and Distributors Industry Experts
SECONDARY RESEARCH Print Media
Electronic Media
Leading Newspapers
Company Websites
Magazines and Journals
Online Consumer Goods Magazines
Annual Reports of Companies
Open Sources
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