"The Indian dairy industry, currently pegged at $ 70
billion (organised and unorganised), is expected to double by 2020," a
report by Investor Relations Society (IRS) said. The society is a global
network of investor relations professionals.
"On the back of a rise in disposable income and strong
demand for dairy products, the Indian dairy industry is all set to experience
high growth rates in the next 5-6 years." the report said.
While the dairy industry is growing at a compounded annual
growth rate ( CAGR) of 15-17 per cent, the value-added products alone are
growing way beyond 24 per cent, it said.
Milk is the country's biggest agricultural produce,
contributing 22 per cent to agricultural GDP. India overtook the US in 1998 to
become the world's leading milk producer, accounting for over 15 per cent of
the global output, it said.
The industry, which had been a national heritage, is now
re-emerging and catching the eye of investors due to its growth potential, it
added.
Growth in financials of existing domestic players,
diversification into dairy sector by other companies, surge in private equity
deals, entry of foreign firms in the segment are some of the broad indications
that India's organised dairy industry will remain on growth path at least till
2020, the report said.
"The operating margins in value-added products are
almost 2x liquid milk business, thanks to changing consumption pattern due to
rapid urbanisation," IRS Chief Executive Officer Kailash Nichani said.
The milk production alone is expected to cross 200 million
tonnes by 2016 from the current 125 million tonnes.
The government, too, appears to have realised the potential
in this industry and has come up with some proactive measures to guide
investors interested in setting up food processing units in different parts of
India, the report said.
The dairy sector has been liberalised in a phased manner
since 1991. Many private players entered the market to set up processing
facilities in areas with surplus milk.
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