Margins for most companies in dairy to be better this year in India

MARGINS THIS YEAR are expected to be better than the previous year for most of the dairy sector companies in India, according to Dairy Quarterly Q4 2018, a Rabobank report.

India is entering its seasonal peak milk production, which will last for three to four months.

As expected, the government has increased export subsidies in order to export surplus SMP. In addition, statesponsored export-linked benefits by Gujarat and Maharashtra, and a minimum support price for raw milk to farmers in Maharashtra are also in play. These benefits may be extended through March 2019.

India exported about 9,600 tonne, compared to 4,750 tonne in the last year. September alone contributed 6,150 tonne. SMP exports are expected to surpass 20,000 tonne by December 2018. The industry estimates that India will export between 35,000 and 40,000 tonne of SMP by March 2019.

Milk production estimates for the current year (2018/19) are expected to surpass 180 million tonne. SMP prices have witnessed upward trend during the last quarter.

Most of the privately-listed companies have shown revenue growth combined with margin improvement over the corresponding period of the previous year. Margins this year are expected to be better than the previous year for most of the companies, with a higher share of consumer-centric retail products.