Amrit Corp Ltd Management Discussions

The year gone-by was marked by heightened global uncertainties, geo-political tensions and fluctuating commodity prices. The overall trade environment continues to be evolving as multiple announcements around trade tariffs took place. Against the backdrop of challenging global environment, Indian economy continues to demonstrate resilience supported by robust sectoral performance, improving consumption trends and steady GDP growth. The Indian economy remains well-placed with strong fundamentals, a young population and its rising position as a global service provider and an emerging manufacturing hub. However, inflation stayed elevated, impacting disposable income and consumer spending. To support consumer sentiments and liquidity, measures were announced including income tax relief and monetary policy cuts. A good agriculture season supported rural markets.

The International Monetary Fund (IMF) projects global economy to grow at 2.80% in CY2025 significantly lower than the historical average of 3.70% largely due to increasing trade tensions and policy uncertainty. Against this backdrop, RBI maintained Indias GDP growth forecast at 6.50% for both FY 2026 and FY 2027, reflecting confidence in the nations economic trajectory. This stable outlook is supported by private consumption, particularly in rural areas and substantial public sector investments. On the inflation front, RBI projects retail inflation at 4% in FY 2026 which will provide policy space for further rate cuts to support economic activity. Further, according to the IMD, south-west monsoon is expected to be above normal in 2025 which will support reigning in inflation. Upside rise to inflation, however, could emanate from global uncertainties leading to pressure on rupee and imported inflation.

Despite global economic challenges, including continued geo-political tensions and inflationary pressure, Indias economic outlook remains positive. India is poised to sustain its growth trajectory, supported by structural reforms and advancement in technology. The governments proactive measures in fiscal policy and infrastructure development are expected to foster a resilient and dynamic environment.

Indias dairy industry has emerged as one of the largest and fastest growing segments of the countrys agricultural economy. As the largest producer of milk globally, India has built a robust and dynamic dairy sector that significantly contributes to GDP, rural employment and nutrition security. With increasing demand, evolving consumer preferences and technological advancements, the industry is poised for substantial growth in the coming years.

The story of Indian dairying is one of inspiring transformations, from a country that was once dependent on imports for its milk supply to becoming the largest producer of milk in the world.

Currently, with milk production reaching 239 million tonnes, India alone contributes a quarter to the global output. Today, the milk produced in the country is valued at INR 18,975 billion, making it the largest agricultural produce by value, even surpassing the combined value of cereals, pulses and sugarcane. The industry contributes 5% to the national economy and directly supports more than eight crores farmers.

The growth in dairy industry in India is underpinned by a variety of factors. The industry significantly supports the rural economy of the country. Increasing population and a growing middle class are among the most important aspects, which ultimately increase demand for milk, curd and other dairy products. A strong rural backbone of millions of small-sale dairy farmers backs production and supply chain. The government induces dairy development with incentives and also provides subsidy for dairy farming. New technologies, such as modern dairy farming, automatic milking systems, improved efficiency and quality of production. Organised retailing and e-commerce platforms have improved the availability of dairy products. Furthermore, health-conscious consumers are propelling the demand for specialised dairy products, like low-fat or organic milk or protein-based milk products.

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, which has more disposable income, consumers seeking out healthy alternatives to fit in with a more active life-style, 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.

The production of dairy milk & milk products during the year was higher by 2.95% at 12,931 KL as against 12,560 KL in the previous year. For the year under review, the revenue from Dairy operations increased by 0.35% to Rs. 12,695.08 lakhs as against Rs. 12,651.29 lakh in the previous year.

The sales volume of the commoditized products, e.g. liquid milk (UHT/pasteurized/loose milk) and low fat cream, which are low contribution items, is lower by 20.21 % than the previous year as the focus now is on value added products. The B2B products i.e. soft serve mix, cold coffee (pouch) and whipping cream have grown by 4.16%. The lower growth in B2B is mainly on account of whipping cream as we lost a major customer in this segment last year. The private label products business is growing steadily and we are on-boarding some more customers. The high value added products under ‘Cool M and ‘Just brands i.e. ice-cream mix in pouches, instant dessert mix, milk shakes, whipping cream, flavored milk in glass bottles and coffee drinks in aluminum cans are getting increased market acceptance and have grown by 19.20% in comparison to previous year.

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.

The dairy industry has significant potential for further growth and development, particularly in value added products like cheeses, yogurt flavored milk and probiotic drinks. These products offer greater margins and cater to the evolving consumer preferences for health, convenience and variety. The demand for these products is driven by increasing health awareness, rising middle class and changing dietary habits. Diary companies are investing in new product development and marketing strategies to capture this growing segment, diversifying beyond traditional milk products. Technological innovations are playing a crucial role in transforming the dairy industry. This includes advancements in dairy farm management, milk processing, packaging and supply chain logistics.

The long-term outlook of Indian dairy sector is favorable on account of increasing population, increase in per capita consumption, increasing health awareness, 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 continuously carrying out R&D and making necessary investments in technology improvements and packaging facilities of different kinds to strengthen its retail portfolio by introducing innovative milk beverages in the retail market. The Company has also introduced coffee drinks, both in glass bottles and aluminium cans under the brand ‘Just which have received good consumer support. More variants of cold coffee in aluminium cans are planned to be introduced as coffee beverages and drinks are experiencing significant growth in India in recent years. The B2B and private label businesses are also growing with on-boarding of large FMCG companies.

During the year under review, the Company recorded gross revenue of Rs.14,601.53 lakhs as against Rs.16,348.21 lakhs in the previous year. Operating profit (EBIDTA) of Rs. 1,674.06 lakhs has been recorded in the financial year 2024-25 as against operating profit of Rs. 4,206.60 lakhs in the previous year. The lower operating profit (EBIDTA) is also mainly of account of elevated manufacturing & fixed costs, revision of sales price and loss of whipping cream business. The lower operating profit (EBIDTA) is also lower due to reversal of mark-to market income in the second half of the year arising out of downward trend in stock markets.

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.

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 demano 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.