Mother Dairy hikes milk rate by Rs 2 per litre from tuesday

Coca-Cola president T Krishnakumar said on Wednesday that the company is ‘interested’ in the dairy space, but added he would not comment further on whether Coca-Cola has placed a bid to acquire GSK Consumer’s Horlicks milk food drink brand, which is on the block. “I can comment on what the company is doing in terms of organic growth. Beyond that I cannot comment,” he said at a media roundtable.

The beverage major ended the April-June 2018 quarter with double digit volume growth, for fourth consecutive quarter of double-digit revenue growth and second back-to-back quarters of double-digit volume growth, with the core sparkling portfolio also growing in double digits.

Apart from Horlicks, Kraft Heniz’s Complan health drink is also up for sale. Krishnakumar declined comment on whether Coca-Cola was bidding for either of the two brands, saying that it was speculation. Coca-Cola in June had mandated Citi to help it in the bidding process, which other firms such as ITC and Hindustan Unilever are also learnt to be considering.

Coca-Cola has been on expansion spree of its brand to include juice and juice drinks, flavoured waters and dairy-based beverages and tea in line with rapidly changing consumer preferences.

Dairy firm Ananda is looking for a land to set up a new processing plant in eastern Uttar Pradesh and plans to invest about Rs 50 crore to open 1,100 retail outlets in the national capital by 2020, a top company official said.

Noida-based Ananda Dairy, which achieved a turnover of Rs 1,500 crore in the last fiscal, has three manufacturing plants at Bulandshahr, Gajraula and Pilkhuwa in Uttar Pradesh (UP) with a processing capacity of 12 lakh litre milk per day. The company has also taken on lease two plants at Kanpur and Moradabad with 6 lakh litres capacity.

"We are identifying land in eastern UP to set up a new processing plant. This is part of our commitment to invest Rs 500 crore in the state which was made during an investor's summit held this year," Ananda group CMD R S Dixit told PTI.

The plans would be of 4-5 lakh litre processing capacity, he added.

Dixit said the company is also strengthening its retail presence and has already opened 400 company-owned outlets, of which 400 stores are in the national capital and the rest are in UP and Uttarakhand.

"We plan to have 1,500 outlets in Delhi by 2020 from the current 400 stores. In Delhi, we opened 105 stores on a single day in February and another 200 stores on a single day in June," Dixit said, adding that the company was opening many stores at metro stations.

Asked about investment plans, he said retail stores are taken on lease and it costs anywhere between 3-5 lakh per store depending on the size and location of the outlet.

The rental of each store is below Rs 15,000 per month.

Dixit said the company sells pouched milk and other dairy products except for cheese and ice cream.

On the turnover, he said the company achieved a revenue of Rs 1,500 crore in 2017-18 and is growing at 25-30 per cent annually.

"We are targeting to reach Rs 3,200 crore turnover by 2020-21," Dixit said in a statement.

Ananda Dairy has also started exporting dairy products. It shipped cheese and some other products to the US.

Talking about issues faced by the dairy sector, Ananda's CMD said the government should consider reducing GST on ghee from 12 per cent as it is high.

The branded and packaged cheese attracts 5 per cent GST, while there is no GST on loose cheese, he said and sought that the government should address this anomaly.

With the commitment to provide its customers with quality dairy products at an affordable price and closer proximity, Dairy manufacturer Ananda has unveiled 200 new company outlets in the Delhi/NCR market space.

According to the reports, the company announced an investment worth Rs 10 crore, which reiterates its vision to give its valuable consumers, a direct access to the wide variety of nutritious and pure milk and milk products.

With this extensive expansion, Ananda aims to focus on an overall growth of 30 percent along with descent job creation.

The company, with its focused approach towards rapid expansion is all set to chalk its strategy to eye a bigger piece of the North market. Ananda envisions meeting its target of launching over 500 company outlets whilst achieving a projected turnover of Rs. 1,500 crore by the end of FY18.

“With the inauguration of 200 company outlets, we take pride in breaking our previous record of launching 105 Ananda outlets in one-single day. On achieving this milestone, we are delighted to make available our diverse product range, at a closer access to our consumers,” said Radhey Shyam Dixit, Founder and Chairman, Ananda Group told ANI.

With this massive single-day launch, Ananda is aiming to give its consumers a holistic experience, by opening up the company’s entire fresh and wide dairy produce range, including confectionery and bakery items for them to purchase.

Moreover, well-trained professionals, who are able to guide consumers to the right products, based on their unique dietary requirements, will staff the stores. Ananda’s philosophy is to create happier consumers with its portfolio of 75+ products that adds positive value to their health and contribute to their overall well-being.

The Q1 profit margins for the dairy industry this year have seen a sharp decline as compared to that of Q1FY17. While Chandrababu Naidu-promoted Heritage Foods posted net profit of Rs 17.11 crore last year, this year, it has only been Rs 10.37 crore. Similarly, Kwality Ltd reported a sharp decline in its June quarter profits to Rs 27.88 crore, from Rs 42.27 crore a year ago, while Umang Dairies posted a loss of Rs 2.90 crore compared to a Rs 1.48 crore profit. Interestingly, net sales of both companies jumped by 7 per cent and 11 per cent, respectively.

Companies with increased focus on value-added products, such as Parag Milk Foods and Hatsun Agro Products, however, have maintained their profit margins in the June quarter despite interruption in milk supply due to the farmers' mass protest and roadblock. While organised sector players are adjusting increase in compliance cost of GST (goods and services tax), rollout without an increase in product prices, unorganised sector players are considering raising milk prices by Rs 2-4 a kg to pass on the increased cost burden to consumers. "

"Gross margins of Heritage Foods were impacted by an increase in milk procurement cost which the company was unable to pass on to the consumers completely. EBITDA margins at 4.4 per cent was also hit by loss making Reliance Dairy business and increase in other expenditure which grew by 37.8 per cent yoy a function of higher branding expenditure. However, the company is confident with initiatives taken on cost optimization and expectation of lower milk procurement cost post monsoons. We expect the recovery to be gradual," said Dhaval Mehta, an analyst with Emkay Global Financial Services Ltd.

According to R S Sodhi, Managing Director, Gujarat Cooperative Milk Marketing Federation (GCMMF) which sales Amul brand dairy products, "Milk prices had declined drastically over the last one year. Milk prices, therefore are recovering. Prices are likely to remain stabilised now."

"We intend to increase our direct procurement to over 50% over the next 3-4 years. This would accelerate the transition towards B2C by enabling faster shifting of our product mix towards consumer products, primarily fresh milk and value-added products. With our persistent focus on B2C segment, strong position in north markets, and planned product rollouts of value-added products, we shall continue to witness strong growth in the forthcoming years. We believe favourable demographics such as rising disposable income and changing consumer lifestyle would further support our growth story," said Nawal Sharma, president & head business transformation, Kwality Ltd.