Booming Indian Dairy

High Growth Prospects

By : Anil K. Choudhari

Bangalore

Dec 28th 2007

What we cover

• Market size

• Industry Growth

• Major Players

• AMUL maintaining Leadership position

• Other players & their plans

• Market forces & Opportunities

Market size

Do you know which is India’s no. 1 crop

• Wheat?

• Rice??

“NO”

• It is Milk with 95 Million tons ( 2006)

• Rice is 92 mi. tons &

• Wheat is only 75 mi. tons

What India Consume

• Liquid milk = MUSD 20,700

• Ghee (Anhydrous fat) = MUSD 5,745

• Khoa/ Chhana/ Paneer = MUSD 6,000

• Milk powder = MUSD 1,170

• Table butter = MUSD 190

• Cheese/edible casein = MUSD 240

• Sweets, ice-cream, etc. = MUSD 2,270

Industry Size = Rs. 191,000 Crores

= MUSD 46,700.00

( 2006 figures, Ex. Rate 1 Crore = 0.25 Mill USD)

Milk production ('000 tonnes) in 2006

• India : 94,579

• USA : 82,462

• China : 31,934

• Russia : 31,100

• Germany : 27,955

• Brazil : 25,750

• France : 24,195

• New Zealand: 15,000

Distribution

• Total milk production of 94.5 mt.

• 77 per cent or 73.1 mt. is consumed as liquid milk,

• 23 per cent or 21.4 mt. converted into products.

• Organized industry handles only 18 per cent or 17 mt of milk

• 36 per cent (34.5 mt.) being handled by private dudhias and unorganized players

• 46 per cent (43 mt.) being retained in rural areas.

• Within the 18 per cent organized sector share,

private and coop. /govt. dairies handle an equal

8.5 mt each.

Where does India stand today

• Dairy Plants processing : 45 mill litres/ day

• Total no. of plants : 748 ( Mostly overcapacity)

• Installed capacity : 82 mill litres/ day

• Value of Products : Rs. 191,000 Crores

Major Players National

• AMUL ( GCMMF) : 3,000 Crores

• Mother Dairy : 900 Crores

• Britannia (dairy business) : 300 Crores

• Nestle ( dairy products) : 100 Crores

Regional

• Hatsun Agro, Chennai : 455 Crores

• Dynamix, Maharashtra : 300 Crores

(Schreiber Foods Inc. )

• Heritage, Andhra : 266 Crores

• Visakha, Vizag : 240 Crores

• Creamline : 160 Crores

• Metro Dairy, Calcutta : 150 Crores

Reference : Govt. ( Co-operative) Private

Indian Top Dairies : Mill Litres

1. Mother Dairy, Gandhinagar : 2.5

2. Dudhsagar, Mehsana : 1.95

3. Dynamix, Pune : 1.5

4. Amul Dairy, Anand : 1.45

5. Banas Dairy, Palanpur : 1.0

6. Mother dairy, Delhi : 1.0

7. Ved Ram & Sons : 1.0

8. Sabar Dairy, Himatnagar : 0.95

9. Hatsun Agro, Salem : 0.8

10. Sterling Agro, Gwalior : 0.8

Indian Top Dairies : Mill Litres

11. Sterling Agro, Etah : 0.8

12. Nestle, Moga : 0.75

13. Gokul, Kolhapur : 0.7

14. Sumul Dairy, Surat : 0.7

15. Bangalore dairy, Bangalore : 0.6

16. Mahanand dairy, Mumbai : 0.6

17. Mother dairy, Calcutta : 0.6

18. Parag dairy, Noida : 0.6

19. VRS Foods, Gwalior : 0.6

20. Vedram & Sons, Bulandsahar : 0.6

Major Co-operatives

• APDDCF

• RCDF

• GCMMF

• MRSDDM

• KMF

• MILKFED

• TCMPF

GCMMF

• Brand : AMUL

• No. of Coop. Unions : 12

• Milk Plants : 19

• Milk Handling Capacity : 10.16 Mill LPD

• Milk Collection/ Day : 6.6 mill Litres

• Sales Turnover : 1050 MUSD ( 2006-07)

Major dairies of GCMMF

• Mother Dairy, Gandhinagar ( 1.6 Mill litres)

• Dudhsagar, Mehsana ( 1.9 Mill litres)

• Kaira Dist. Coop. Anand (0.9 Mill litres)

• Banas Dairy, Palanpur ( 1.0 Mill litres)

• Sabar Dairy, Himatnagar ( 0.9 Mill litres)

• Godhra Dairy, Godhra ( 0.8 Mill litres)

• Sumul dairy, Surat ( 0.7 Mill litres)

RCDF

• Brand : SARAS

• No. of Coop. Unions : 16

• Milk Plants : 15

• Milk Handling Capacity : Mill LPD

• Milk Collection/ Day : 1.6 mill Litres

• Sales Turnover : MUSD ( 2006-07)

MILKFED

• Brand : VERKA

• No. of Coop. Unions : 11

• Milk Plants : 9

• Milk Handling Capacity : 1.5 Mill LPD

• Milk Collection/ Day : mill Litres

• Sales Turnover : MUSD ( 2006-07)

Critical points

• Receiving – the starting point for genealogy and product history tracking. Accurate records of receiving and analysis of variances generally leads to significant economic return.

• Fluid processing – pasteurization, separation and standardization – including product tracking and real-time notifications of problems.

• Batch processing operations for cheese, ice cream, cultured products – including electronic batch records (make sheets) and analysis of efficiencies and material use. Product history reports keep track of correlated data about ingredients, equipment used and processing conditions, providing a basis for yield and quality analysis.

• Filling and packaging operations, including downtime and efficiency analysis.

Major cost savers

• Motors and drives can save usage and cost with minimal investment and operational impact.

• Energy costs are rising. Across the world, various power sources have grown unstable, from overtaxed regional power grids to natural resource shortages to uncertainties related to geopolitical upheaval.

• Government agencies and grassroots groups are urging conservation whenever possible. At the same time, manufacturers are under pressure to maintain or boost throughput, while finding ways to cut expenses, modernize facilities and still play their part in

energy saving efforts.

Issues to Manage

• Inventory

• Warehouse

• Maintenance

• Production

• Lot Tracking

• ERP

Our Course of Action

5 steps to be taken for developing

Business of Food & Beverages

1. Scan Environment

2. Identify Emerging requirements

3. Set new Workforce targets

4. Build future focussed Decision tools

5. Focus today on short term

Opportunities in India

Most of the consumption other than Liquid Milk today & in

future will be of :

• Butter

• Ghee

• Yogurt Set

• Sweets ( Mawa is similar to caramel)

• Cheese ( consumption growing multifold)

• Basundhi/ Shrikhand

• Special Milk Powder

• Sweetened Condensed Milk

Customer Behaviour

• Want to go for proven machinery

• Very Erratic, depending upon management/

market demand, can go for automation

• Very Price sensitive

• Expect 35% discount, whatever you quote

• Relationship is the biggest tool

• Want to share with people who speak their

language