Modern Dairies Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE & DEVELOPMENTS

India milk production is estimated to have increased by 6.6% to 176.35 million tons during the last financial year. Milk production in the country is 165.4 million tons during 2016-17 and 176.35 million tons (provisional) during 2017-18.

With the rapid transformation of the Indian consumers happening in terms of their habits and requirements, there is an exponential growth in the demand of branded milk, fermented milk products and other Value Added Dairy Products like Cheese, Paneer, Yoghurt and Flavored Milk etc.

OPPORTUNITIES AND THREATS

With the rising disposable income of the Indian consumers, the markets witness increase in consumer willingness to go in for branded packaged dairy products with assurance of quality. There is a wide scope for companies having good brand image with impeccable packing and quality of the product. The growth in demand of Value Added Dairy Products has created ample opportunities for organized dairy plants to introduce products to meet consumer aspirations. On the international front the commodity prices continue to be low, thereby making the export from India unviable at present.

RISK AND CONCERN

Like any agro based industry, the dairy industry is also dependent on the vagaries of nature which affect the production of milk. The milk being perishable can’t be stored for processing at a later stage.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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 Company’s program of internal controls, audit plans and results, recommendations of the auditors and management’s responses to those recommendations.

FINANCIAL PERFORMANCE AND RESULTS OF OPERATIONS

During the year under review, the Company achieved

Net Sales and Other Income of Rs. 46729 Lakhs as against Rs. 45774 Lakhs in the previous year.

The Company is still facing the uneconomical situation for manufacture of export dependent product casein, which was non- operational most of the time due to high domestic milk prices and low international prices of Casein.

Looking to the market situation, company focused on domestic products. Operational team is putting best efforts to increase its presence in the domestic market. The Company products are very well accepted in the market. The company hopes to improve its sales volumes and margins with these efforts in the time to come.

As stated above, the company continues to focus on sale of Fresh Dairy Products like milk in sachets and fermented dairy products. The team is continuously striving to improve the operations and performance through sale of these products in the Modern Dairies Brand. In general, with the improved spending power of the consumers the domestic market particularly for fresh dairy products is growing.

Further, the company is already doing private label work for leading institutions and operating team is working to enhance its volumes with the esteemed customers.

It is important that with normal rainfall expected during this year, the production and availability of milk is expected to be good.

HUMAN RESOURCES

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.

CAUTIONARY STATEMENT

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 Company’s operations such as Government policies, political and economic developments and such other factors are risk inherent to the Company’s growth.

By order of the Board of Directors
For Modern Dairies Limited
Krishan Kumar Goyal
Chairman and
Place: Chandigarh Managing Director
Dated: 11th August, 2018 DIN: 00482035