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Dairy Market – India
February 2014

Executive Summary
Market
 Consumption of dairy products has grown considerably worldwide  Demand for dairy products is expected to escalate despite the recent surge in prices

Drivers
—Growing Income and Consumption —Rapid Urbanization —Favorable Demographics —Rise in Bovine Population —Growth of Sub Segments and Other User Industries —Marketing Campaigns —Growing Retail Market  Exhibitions and Events  Increased Global Attention  Product Innovation  Growth of Regional Milk Producers  Corporate Activities Major Players

Challenges
—Inadequate Supply of Feed and Fodder —Shortage of Cold Storage Units —Poor Supply Chain and Distribution Facility —Rise in Packaging Costs

Drivers & Challenges

Trends

Competition

Company A

Company B

Company C

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•Macro-Economic Indicators •Introduction •Market Overview •Market Segmentation •Consumer Insights •Import & Export •Drivers & Challenges •Government Rules & Policies •Government Participation •Trends •Competitive Landscape •Strategic Recommendations •Appendix
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Economic Indicators (-/-)
GDP at Factor Cost: Quarterly INR tn
15 14 d1 c1 13 b1 12 a1 11

d2 c2 b2 a2 Q2 2010-11 2011-12 2012-13

c3 b3 a3

c4 b4 a4

Q1

Q3 2013-14

Q4

Inflation Rate: Monthly %
2.0 1.5 1.0 0.5 0.0

p s q r t

Jun 2013 - Jul 2013

Jul 2013 - Aug 2013

Aug 2013 - Sep 2013

Sep 2013 - Oct 2013

Oct 2013 - Nov 2013 4

MOBILE INTERNET MARKET IN INDIA 2014.PPT

Global consumption of dairy products has grown remarkably over the past few years
Global Dairy Market – Overview
• Consumption of protein-based food items are witnessing upward trend in the global market • Milk and other dairy products hold an important position in normal diet and their consumption is also growing • World milk production in 20-- was found to be ~A mn tonnes

Consumption share of milk (20--)
Milk Other Beverages

X% Share of consumption of milk out of total global beverage consumption

Y%

Country Ranks – Milk production-wise (20--)
Rank 1st 2nd 3rd 4th 5th 6th Country EU-27 India USA China Russia Brazil Milk Production (mn tonnes) a1 a2 a3 a4 a5 a6

Change in Global Protein Consumption
Meat N1% N2% N3% P1% P2% P3% P4% P5% 20-5 Dairy Fruits & Vegetables Cereals Others
Dairy consumption grew by a% between 19-- and 20--

N4% N5% 19--

Note*: EU (European Union)

The Indian dairy market is expected to witness remarkable growth…
Indian Dairy Market – Overview (1/4)

SAMPLE

• Indian dairy industry is huge and has gained substantial growth momentum over the past few years • Dairy products have gained popularity among consumers due to various factors such as increasing income levels, hectic lifestyle and convenience associated with their consumption
 Being the world’s largest producer and consumer of dairy products, India represents one of the most lucrative dairy markets

• In comparison with other products such as wheat and rice, milk penetration among consumers is as high as ~9-% • In 20--, Indian dairy market was valued at ~INR x tn

Market Size & Growth
INR tn Y% x3 x4 x5 x6 x8 x9

x7

x1

x2

20--

20--

20--e

20--e

20--e

20--e

20--e

20--e

20--e 6

DAIRY MARKET IN INDIA 2014.PPT

Domestic milk consumption is very high in both urban as well as rural markets

SAMPLE
Y1%

Dairy Market Segmentation – Rural and Urban
Share of Consumer Expenditure on Dairy Products (20--)
Urban Consumers X1% Dairy Other Food Items X2% Y2% Rural Consumers • Expenditure on dairy products account for a significant share of the consumer’s wallet • Increased affordability is one of the reasons behind this growing trend

Consumption Share of Milk (20--)
Urban Consumers • In India, almost entire amount of milk produced gets consumed domestically • Demand for processed and packaged dairy products is high in the urban market A1% Consumes milk Do not consume milk A2% B2% Rural Consumers B1%

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Import of Major Types of Dairy and Processed Dairy Products (1/5)
Whole Milk
Volume INR mn b1 a1 0 20---20-20---20-a2 a3 20---20-X2% b4 a4 20---20-0 b2 Value b3 ‘000 Kg X3% X5% X4% X1% SWITZERLAND GERMANY FRANCE MALAYSIA PHILIPPINES

Major Importing Nations – Value Wise (20--)

Skimmed Milk
INR mn Volume n2 n1 0 p1 200—20-20---20-Value n3 n4 p3 20---20-p4 20---20-0 ‘000 Kg

Major Importing Nations – Value Wise (20--)
POLAND

SAMPLE
Y%

p2

Note: HS Code 04022910 (Whole Milk), HS Code 04021010 (Skimmed Milk) DAIRY MARKET IN INDIA 2014.PPT

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Drivers & Challenges – Summary
Drivers
Growing Income and Consumption Rapid Urbanization Favorable Demographics Rise in Bovine Population Growth of Sub Segments and Other User Industries Marketing Campaigns Growing Retail Market

SAMPLE
Challenges
Inadequate Supply of Feed and Fodder Shortage of Cold Storage Units Deficit in Power Supply Poor Supply Chain and Distribution Facilities Rise in Packaging Costs

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Trends – Summary

SAMPLE

Exhibition and Events

Increased Global Attention

` Key Trends

Product Innovation

Growth of Regional Milk Producers

Corporate Activities

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Competitive Benchmarking (2/5)
Key Ratios of Top 3 Companies – Operational Basis (FY 20--) (1/3)
% Operating Margin x1 y1 Net Margin

SAMPLE
x2 y2 x3 Player C x4 Player B

0 Player A

• Player B recorded operating margin of x2%, higher than that of Player C which recorded operating margin of x3% but lower than that of Player a which recorded operating margin of x1% • Net margin for Player A, Player B and Player C are y1%, y2% and y3% respectively, wherein Player A has the highest net margin among these three companies

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Public: Domestic Company – Player A (1/5)
Company Information
Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange xx xx xx xx xx xx xx

Offices and centers – India

SAMPLE
Noida

Head Office

Products and Services
Category Products/Services

Key People
Name Designation

Milk Products

Just milk (UHT), Fresh cream, ice cream mix, instant dessert mix, coffee creamer, dairy whip mix

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Public: Domestic Company – Player B (2/5)
Financial Snapshot
Total Income INR mn s3

SAMPLE
Key Ratios
Particulars s4 t4 0 20--

Net Profit/Loss

y-o-y change (20-----)
2.38 -45.80 -57.43 -65.18 0.68 6.53 0.46 10.45

20-3.65% 9.58% 11.55% 6.12% 2.26% 10.80% 1.84% 32.72%

20-1.27% 55.38% 68.98% 71.29% 1.58% 4.27% 1.38% 22.26%

20-5.32% 28.71% 33.80% 39.53% 6.54% 13.99% 5.19% 41.23%

20-5.35% 6.77% 7.71% 8.63% 5.44% 11.38% 4.36% 23.94%

Profitability Ratios
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets

s1 0 t1 20--

s2 t2 20--

t3

20--

Financial Summary
• The company incurred a net profit of INR mn in FY 20--, as compared to net profit of INR mn in FY 20-• The company reported total income of INR mn in FY 20--, registering a decrease of % over FY 20-• The company earned an operating margin of % in FY 20--, an increase of percentage points over FY 20-• The company reported debt to equity ratio of X in FY 20--, an increase of Y% over FY 20--

Cost Ratios
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
-0.04 -2.75 -0.48 -45.43% -20.13% 491.55% 414.47% 27.93% 95.93% 11.68% 1.78% 1.90 4.27 0.19 0.16 2.28 95.97% 14.43% 2.26% 3.49 5.34 0.03 0.03 1.78 92.38% 15.81% 2.33% 2.79 2.55 0.14 0.12 3.27 94.35% 13.27% 2.95% 2.93 2.64 0.26 0.20 1.91

Liquidity Ratios
Current Ratio Cash Ratio

Leverage Ratios
Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio

Key Financial Performance Indicators
Indicators
Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Abs)

Value (27/01/2014)
xx xx xx xx

Efficiency Ratios
Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
45.63% 32.11% 66.63% 150.45% 22.78% 8.04 0.45 1.26 2.65 0.48 5.52 0.34 0.76 1.06 0.39 5.41 0.68 1.18 1.84 0.84 4.24 0.77 1.33 2.01 0.96

Improved

Decline

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Public: Domestic Company – Player A (3/5)
Key Business Segments
Real Estate Services & Commodities Trading Dairy Milk & Milk Products 100% 80% 60% a1 c1 b1 0% 20-20-20-a2 c2 b2 a3 c3 b3 a4 c4 40% 20% 0% 20-X%

Key Geographic Segments
India

b4 20--

India is the only geographic segment in which the company has been operating for the last four years

Business Highlights
Description News

Overview

• It engages in the production and marketing of dairy milk and milk products in India • The company is recognized as one of the leading producers of UHT milk, premium range
of flavored milk, ultra pasteurized milk and UHT toned milk, among others  In addition to dairy business, the firm is engaged in in real estate business, corporate and strategic
advisory services and business process outsourcing services

SAMPLE
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Public: Domestic Company – Player A (4/5)
Business Highlights
Description News • Its manufacturing facility is well equipped with state-of-the-art dairy processing equipment from Denmark and France • The environment-friendly plant is spread over a sprawling area of ~20,000 sq meters • Modern technique of Ultra Heat Treatment (UHT) with direct steam infusion is deployed • Aseptic packaging in co-extruded multi-layer PE (Polyethylene) and EVOH (Ethylene Vinyl Alcohol) film is done

Manufacturing Facility

Quality Assurance

• It adheres to ISO 9001 & 22000 principles that ensures production of high quality and safe milk and milk products • Raw materials procured are matched with internal as well as external quality standards • Processing and dispatch of finished goods is done strictly in adherence with the standard specifications

SAMPLE
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Public: Domestic Company – Player A – SWOT Analysis (5/5)

SAMPLE
S O W T

•x

•x

•x

•x

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Private: Domestic Company – Player A (1/5)
Company Information

Corporate Address

SAMPLE
xx xx xx xx xx Products/Services

Offices and centers – India

Tel No. Fax No. Website Year of Incorporation

Noida

Head Office

Products and Services
Category

Key People
Milk Token milk, full cream milk, toned milk standardized milk, double toned milk, cow milk, skimmed and UHT toned Plain dahi, probiotic dahi, sweet dahi, lassi, fruit flavored lassi, plain chach, tadka chach, flavored milk, paneer, butter, cheese, ghee and ice cream 17 Name Designation

Dairy Products

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Private: Domestic Company – Player – Shareholding Pattern (2/5)
Shareholders of the Company as on 05/06/2013
Name No. of Shares held X1% X2% X3%

Ownership Structure
Public financial companies

A

-

B

-

Total

-

SAMPLE
DAIRY MARKET IN INDIA 2014.PPT

20--

20--

20--

Ownership structure corresponds to Date of AGM: 30/09/2011, 19/07/2012 and 05/06/2013

18

Private: Domestic Company – Player A (3/5)
Financial Snapshot
Total Income Net Profit/Loss

Key Ratios

SAMPLE
Particulars y-o-y change (20-----)
0.53 0.02 0.02 0.55 2.00 347.31 1.51 8.57

20-0.98% 0.04% 0.05% 0.87% 3.49% 371.51% 2.68% 13.80%

20-0.45% 0.02% 0.02% 0.31% 1.49% 24.21% 1.17% 5.23%

20-2.65% 2.74% 2.74% 39.23% 8.08% 10.93% 8.08% 37.72%

20--0.02% 0.06% 0.11% 0.77% -0.06% -0.08% -0.06% -0.35%

Profitability Ratios
INR mn a1 a2 a3 a4 INR mn Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets

b1 0 20--

b2

b3

b4

0 20-20-20--

Cost Ratios
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
-0.53 0.00 0.26 -5.66% -48.88% 43.24% 7.14% 78.94% 99.02% 0.00% 1.42% 1.01 0.15 5.06 0.83 0.69 99.55% 0.00% 1.16% 1.07 0.30 3.53 0.78 0.39 97.31% 100.02% 0.00% 1.15% 4.91 1.84 3.70 0.79 2.33 0.00% 1.59% 5.24 1.71 3.39 0.77 -0.01

Financial Summary
• The company incurred a net profit of INR mn in FY 20--, as compared to net profit of INR mn in FY 20-• The company reported total income of INR mn in FY 20--, registering an increase of % over FY 20-• The company earned an operating margin of % in FY 20--, an increase of - percentage points over FY 20-• The company reported debt to equity ratio of x in FY 20--, an increase of y% over FY 20--

Liquidity Ratios
Current Ratio Cash Ratio

Leverage Ratios
Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio

Efficiency Ratios
Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
20.59% 4.63% -0.51% 601.91% 43.13% 14.02 2.73 3.50 377.52 21.48 11.63 2.60 3.52 53.78 15.01 14.04 3.01 3.24 4.07 14.13 17.48 2.92 3.10 3.84 12.82

Improved

Decline

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Private: Domestic Company – Player A (4/5)
Business Highlights
Description News

SAMPLE

Overview

• Texttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttext  texttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttexttext • It is involved in manufacturing and selling of milk and milk products in India and abroad  In addition to the milk business, it is also engaged in other food business segments, including edible
oil, fresh fruits & vegetables, frozen products, juices, beverages, processed foods and grocery items  Texttexttexttexttexttexttexttexttexttexttexttexttext  Texttexttexttexttexttexttexttexttexttexttexttexttexttext  Texttexttexttexttexttexttexttexttexttexttexttexttexttext

Infrastructure

• In the manufacturing plant, milk processing is controlled by process automation whereby state-of-the-art microprocessor technology is adopted to integrate and completely automate all functions of milk processing to ensure high product quality, reliability and safety • It has ISO 9001:2008 (QMS), ISO 22000:2005 (FSMS) and ISO 14001:2004 (EMS) certifications • In addition to the normal distribution system, it has its unique distribution network of bulk vending milk booths, retail outlets and mobile units • It markets ~3.2 mn liters of milk daily in the markets of Delhi, Mumbai, Saurashtra and Hyderabad
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Quality Assurance

Distribution Network

20

Private: Domestic Company – Player A – SWOT Analysis (5/5)

SAMPLE
S O W T

•x

•x

•x

•x

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Appendix
Ratio
Operating Margin Net Margin Profit Before Tax Margin Return on Equity (ROE) Return on Capital (ROCE) Return on Working Capital Return on Assets Return on Fixed Assets Operating Costs (% of Sales) Administration Costs (% of Sales) Interest Costs (% of Sales)

Calculations
(Operating Income/Revenues)*100 (Net Profit / Revenues) *100 (Income Before Tax / Revenues *100 (Net Income / Shareholders Equity)*100 EBIT / (Total Assets – Current Liabilities)*100 (EBIT / Working Capital) *100 (EBIT / Total Assets)*100 (EBIT / Fixed Assets) *100 (Operating Expenses / Sales) *100 (Administrative Expenses / Sales) *100 (Interest Expenses / Sales) *100

Ratio
Current Ratio Cash Ratio Debt to Equity Debt to Capital Ratio Interest Coverage Ratio Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover

Calculations
Current Assets / Current Liabilities {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)} Total Liabilities / Shareholders Equity {Total Debt / (Shareholders Equity + Total Debt)} EBIT / Interest Expense Sales / Fixed Assets Sales / Total Assets Sales / Current Assets Sales / Working Capital Sales / (Shareholders Equity + Total Debt)

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Sources of Information

PRIMARY RESEARCH
Interviews Leading Industry Vendors and Distributors Industry Experts

SECONDARY RESEARCH
Print Media Leading Newspapers Magazines and Journals Annual Reports of Companies Electronic Media Company Websites Online Consumer Goods Magazines Open Sources

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Thank you for the attention
Dairy Market – India report is part of Research on India’s Food & Beverage Industry Series. For more detailed information or customized research requirements please contact:
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