1. ECONOMIC & BUSINESS ENVIRONMENT
The Indian economy has proven to be remarkably resilient in the face of the
deteriorating global situation due to strong macroeconomic fundamentals that place it well
ahead of other economies. The year 2022-23 began with the threat of the Omicron variant of
the coronavirus, impending climate concerns and the global geo-political developments,
such as Russia-Ukraine war. Like the rest of the world, India was impacted by high
commodity prices, monetary policy tightening and growth slow-down. Despite all that, India
remained steadfast, becoming the fifth largest economy of the world. Indias ability to
navigate these headwinds and strike a balance between managing inflation and sustaining
growth has been globally acknowledged.
Reserve Bank of India projected net GDP growth for 2023-24 at 6.4% compared to 6.9% in
2022-23. Domestic urban demand has been sustained by strong discretionary spending. The
stronger prospects for agricultural and allied activities are likely to boost local
demand. Strong credit growth, resilient Indian financial markets and the Governments
continued thrust on capital spending and infrastructure have created congenial environment
for investment.
The overall outlook for the Indian economy remains positive. The investments are
expected to see a turnaround and thrust the economy into sustainable growth. Tax buoyancy,
streamlined tax system, rationalization of tariff structure and the digitization
initiatives are expected to boost future capital spending on infrastructure and
asset-building projects. India is likely to grow at a moderate pace of 6% - 6.5% in the
current financial year as the global economy continues to struggle. Growth in the next
year is likely to pick-up as investments kickstart the virtuous circle of job creation,
income, productivity, demand and exports supported by favourable demographics in the
medium term. However, geo-political crises, supply chain reorientation, global inflation
and tight monetary policy conditions will weigh on the outlook.
2. DAIRY BUSINESS
(a) Industry structure and development
India is the worlds largest producer of dairy products, accounting for more than 24%
of worlds total milk production. The industry contributes 5% to the national economy and
directly supports more than 8 crore farmers. Indias dairy industry has grown
significantly over the past 10 years, supported by various initiatives taken by the
Government. The dairy sector plays a prominent role in agriculture and food policy because
it accounts for about 5th of the value of Indias farm exports and dairy
products are traditionally and nutritiously important component of every Indian diet.
As the country consumes almost all of its milk production, India was not active
exporter of dairy products prior to 2000. However, since the implementation of
‘Operation Floods programme, the situation changed significantly and imports of
dairy products reduced to very small quantity. India has now become a net exporter of
dairy products though the countrys share in global dairy trade still remains at
negligible level.
Along with offering profitable business opportunities, the dairy industry in India
serves as a tool of socio-economic development. Keeping this in view, the Government of
India has introduced various schemes and initiatives aimed at the development of the dairy
sector in the country. For instance, the “National Dairy Programme (Phase-1)”
aims to improve cattle productivity and increase the production of milk, expanding and
strengthening the rural milk procurement infrastructure and provide greater market access
to the farmers. On the other hand, the private participation in the Indian dairy sector
has
also increased over the past few years. Both national and international players have
entered the dairy industry attracted by the size and potential of the Indian market. The
focus is being given to value- added products such as cheese, yogurt probiotic drinks,
health/protein drinks and other innovative products keeping in mind the specific
requirements of the Indian consumers.
(b) Opportunities and threats
Although the dairy industry has experienced challenges in recent years, the appetite
and demand for dairy products is on the rise. With a growing middle class, who have more
disposable income, consumers seeking out healthy alternatives to fit in with a more active
life-style and focus on natural ingredients, milk and dairy products are growing in
popularity. While milk has been staple for a majority of population from toddlers to
senior citizens, the health benefits of milk are now being widely recognized including its
contribution to digestive wellness and the advantage of dairy proteins. With consumers
reconsidering their dietary choices, there has been reduction in consumption of
carbohydrates and sugar leading to an increase in protein based diets. Dairy has become an
attractive source of natural proteins and, as such, many dairy products are being
positioned as functional foods and beverages.
As the largest producer of milk in the world, India is a key player in the dairy
industry and the opportunities for growth are significant. However, the dairy industry in
India faces challenges of disorganization with only 20 to 25% of the total milk produced
going through the appropriate organized channels. Another major challenge faced by the
Indian dairy industry is inadequate cold storage/supply chain and logistics facilities.
Even though India is the largest producer of milk in the world, the industry itself is
largely unorganized, with only about one-fourth of the milk produced being channelized
through the organized sector.
(c) Dairy Business Review
The production of dairy milk & milk products during the year was higher by 58.18%
at 12,107 KL as against 7,654 KL in the previous year. For the year under review, the
revenue from Dairy operations increased by 83.11 % to Rs. 10,764.96 lakh as against Rs.
5,878.93 lakh in the previous year.
With the opening of of the QSRs after Covid-19, the Dairy operations have been on a
recovery path. The new products launched last year under the ‘Just brand i.e.
protein shakes, coffee drinks, ice-tea and cold brew milk coffee both in glass bottles and
aluminium cans received good consumer support and have led to increase in volumes. Raw
milk prices continued to be at an elevated level in FY 22-23. This was further accentuated
due to lumpy skin disease in cows adversely affecting the milk production. Due to
inflationary pressures, the overall costs of other inputs were higher during the year. The
utility cost was significantly higher due to spurt in gas prices.
(d) Risks and concerns
The demand for milk and milk products in India is increasing rapidly because of
urbanization, convenience demanded by consumers and shifting of consumers from loose to
packaged dairy products. The growth in bovine population has contributed towards
significant increase in milk production in the country. The livestock sector, however, is
exposed to several constraints. The pre-dominant are low productivity, chronic shortages
of feed and fodder, large population of unproductive cattle, low cattle health care,
immunization & hygienic programs.
(e) Outlook
The long-term outlook of Indian dairy sector is favorable on account of increasing
population, increase in per capita consumption, increase in expenditure on packaged food,
brand awareness, urbanization
and increase in nuclear families. Given the attractive sector dynamics, our constant
endeavor is to expand our product portfolio that resonate with the expectations of our
customers i.e. QSRs, hotels and restaurants. The Company is also carrying out R&D to
strengthen the retail portfolio by introducing innovative milk beverages in the retail
market. The Company has already introduced protein shakes, coffee drinks, ice-tea and cold
brew milk coffee both in glass bottles and aluminium cans under the brand ‘Just from
time to time last year which have received good consumer support.
3. COMPANYS FINANCIAL PERFORMANCE & ANALYSIS
During the year under review, gross revenue is higher by 38.05% at Rs.11,550.44 lakhs
as against Rs. 8,366.86 lakhs in the previous year. Operating profit (EBIDTA) of Rs.367.01
lakhs has been recorded in the financial year 2022-23 as against operating profit of Rs.
1,789.58 lakhs in the previous year.
The gross revenue is higher because of increased volumes of dairy products and rising
input prices. However, treasury operations were adversely impacted during the year. The
stock markets in India have been witnessing high volatility for various reasons including
relentless selling by foreign investors. Another reason for the uneven stock market
behavior is the adverse impact on companies earnings on account of inflationary
pressures, rising interest rates and high energy cost. This has led to erosion in the
value of equity investments (on mark-to-market basis) as on 31st March, 2023.
4. INTERNAL CONTROL SYSTEMS
Your Company has evolved a system of internal controls to ensure that the assets are
safeguarded and transactions are authorised, recorded and correctly reported. The scope of
internal audit covers a wide variety of operational methods and, as a minimum, ensures
compliance with specified standards with regard to availability and suitability of
policies and procedures, extent of adherence, reliability of management information system
and authorization procedures including steps for safeguarding of assets.
5. HUMAN RESOURCES
The Company lays great emphasis on proper management of human resources and believes
that this is the most important ingredient for achieving excellence in performance and
sustainable growth. The management constantly reviews the skill mix and takes appropriate
steps to achieve desired skill mix. For upgrading the skill, special emphasis is laid on
training. Selective and intensive training is being imparted to employees at various
levels.
6. CAUTIONARY STATEMENT
Statements in the Boards Report and the Management Discussion & Analysis
describing the Companys objectives, expectations or forecasts may be forward-looking
within the meaning of applicable securities laws and regulations. Actual results may
differ materially from those expressed in the statement. Important factors that could
influence the Companys operations include global and domestic demand and supply
conditions affecting selling prices, changes in government regulations, tax laws, economic
development regulations within the country, lockdown conditions arising out of pandemic or
otherwise and other factors such as litigation and industrial relations.
|
For and on behalf of the Board |
Haridwar |
N.K. BAJAJ |
June 02, 2023 |
Chairman & Managing Director |
+91-9892691696
