'Organised dairy sector to grow over 22% in next 3 years'

Organised dairy sector has been growing 22 percent annually for the last five fiscals (2011-15) and is expected to grow even faster over the next three years, according to Crisil. Rising disposable income and increasing quality consciousness would lead to greater preference for branded milk and milk products, the agency said. Organised dairy sector has been growing 22 percent since FY 2010-11 as compared with 17 percent growth witnessed by the entire industry during the period, it said.

It added that as the consumer shift accelerates, the revenue share from organised segment could rise to 25 percent by FY 2017-18 from 19 percent in FY 2014-15. The organised segment rakes up revenues of Rs 75,000 crore at present. The processing capacity is expected to rise 40 percent in three years through Rs 15,000 crore investments.

"Crisil expects the organised channel to incur a capital expenditure (capex) of about Rs 15,000 crore by FY 2017-18 to shore up milk processing capacity to around 1,050 lakh litres per day, or a significant 40 percent jump over FY 2014-15. These expansions will strengthen milk procurement," it said. On their part, organised dairies have been sharpening focus on value-added products, investing in brand-building and scaling up operations, particularly in processing and milk-collection infrastructure.

"Crisil's analysis of a combination of procurement penetration and milk production helped identify the key capex geographies for the organised players. It shows that northern India, especially Uttar Pradesh, Punjab and Haryana - which are big on milk production but have low organised dairy penetration - will witness the highest capacity addition," Crisil Ratings Director Anuj Sethi said. "Also, nearly a third of the overall capex is expected to be undertaken by the largest domestic dairy player, Gujarat Co-operative Milk Marketing Federation (which sells under the 'Amul' brand), through its member co-operatives," he added.