Modern Dairies Ltd Management Discussions.


India has come a long way from being in deficit days to being well embarked to emerge as the worlds largest producer and consumer of milk. During last many years, Indias milk production has been around 4% CAGR as against mere 1.6% CAGR posted by global milk production.

Going ahead, it has been estimated that Indias milk production is around 185mn MT during the year 2018-19. Value added dairy products have been gaining importance with increasing changes in Indias demographic and dietary patterns. It is estimated that, while demand for branded milk is expected to grow by around 15% CAGR, value added dairy products would grow even stronger by approximately 20% plus CAGR driven by increasing share of organized sector within traditional value added dairy products and rising penetration of high- growth emerging value added dairy products.


Led by rising disposable income, and growing consumer preference for branded and value-added milk & milk products, investments by organized players in the sector has been on the rise. The organized players are set to grow at a fast pace.

On the international front the commodity prices continue to be low, whereas domestic prices have seen a sharp increase, thereby making the export from India unviable at present.


The Indian Dairy Industrys long-term structural growth is undeniable and demand shift to organized players is also inevitable with transition to value added dairy products. However, the risks are:

i. Milk price volatility can impact short-term profitability;

ii. Capital intensive nature of value added dairy products can impact short-term Return on Capital Expenditure (ROCE), but it will reduce margin volatility due to vagaries of milk cycle.


To provide reasonable assurance that assets are safeguarded against loss or damage and that accounting records are reliable for preparing financial statements, management maintains a system of accounting and controls including an internal audit process. Internal controls are supported by Management reviews.

The Board of Directors have an Audit Committee that is chaired by an Independent Director. The committee meets periodically with Management, Internal Auditor, Statutory Auditors to review the Companys program of internal controls, audit plans and results, recommendations of the auditors and managements responses to those recommendations.


During the year under review, the Company achieved Net Sales and Other Income of Rs. 5,60,69 lacs as against Rs. 4,67,29 lacs in the previous year and resulting into net profit of Rs. 6,06 lacs against the net loss of Rs. 18,57 lacs in the previous year.

As reported last year, the companys operations team has focused on sale of Fresh Dairy Products like Milk in Sachets, Fermented Dairy Products i.e. Dahi and Chach, Cheese and Fresh Paneer in Modern Dairies brand. Apart from this, our focus has been on increasing the private label business of Fresh Dairy Products with the leading institutions. The companys efforts have started showing positive results. It is a matter of satisfaction to report that the companys operations have shown visible improvement in the current operational year. The Company products are well accepted and operational team is making best efforts to increase its presence in the market. The sales growth is encouraging and the company hopes to improve its performance with these efforts in the time to come.

The company is still facing the uneconomical situation for manufacture of export dependent product i.e. Casein, which was non-operational most of the time this year, being unviable due to low international prices of Casein.

Given market situation as explained above, on account of rising disposable income, rising consumer preference for branded and value added milk and milk products, there is a huge growth opportunity in the sale of these products in the domestic market. The company is continuously working hard to improve the operations and performance through the sale of these products.

In addition to this, the company has focused to increase volume of private label work being done with leading institutions. This is also resulting into increase in the sales volume and margins.


The Company regards its employees as valuable asset and continuously reviews and evolves policies and procedures to attract and retain its pool of technical and managerial personnel through a conducive work environment.

As at March 31st, 2019 the Company had a total workforce of approximately 227 persons, excluding workers/ labour.


The Management Discussion and Analysis Report may contain statements that might be considered forward looking. These statements are subject to certain risks and uncertainties. Actual results may differ materially from those expressed in the statement as important factors could influence the Companys operations such as Government policies, political and economic developments and such other factors are risk inherent to the Companys growth.


Key Ratios % change from previous financial year Reason for change
Inventory Turnover Ratio +90.94% Rise in inventory turnover ratio is due to reduction in average stock during the current financial year.
Current Ratio +53.76% Rise in current ratio is due to increase in current assets and current liabilities.


By order of the Board of Directors
For Modern Dairies Limited
Krishan Kumar Goyal
Place: Chandigarh Chairman & Managing Director
Dated: 13th August, 2019 DIN:00482035