Key highlights

The net sales increased by 7% to Rs 472.84 crore while net profit inclined by 48% to Rs 14.33 crore

Growth impacted due to skimmed milk powder (SMP). Slow down in rural growth also impacted overall demand.

Export business witness good traction with an increase of 42% sales to Rs 18.3 crore.

SMP sales decreased by 31% to Rs 44 crore. Fresh milk grew by 13% to Rs 97 crore. Milks products sales grew by 5% to Rs 326.2 crore. Other revenue decreased by 41% to Rs 5.6 crore.

Reduced focus on SMP and focus on milk based products thus helped improved gross margin. Export order improved due to bulk order from Philippine customer.

Launch 5 New Flavored Cheese Slices during Q2 FY17

Focus on branded Whey products. Plan to emerge India's no 1 domestic company to produce and sell Whey protein to consumer products.

OPM decline due to investment in advertisement and marketing.

Q2 – ASP was up by 1.1% vs avg of the company.

Milk purchase price is 25% higher vs Q2 FY16.

Subdued demand in rural area. As some of the products have good rural presence, it impacted milk product sales. 25-30% of total milk products sales come from rural India. Expanding continuous distribution significantly compared to last year. 300k outlet as of date present milk products.

Milk products sales is primarily B2C. Cheese is also sold to QSR but the company considers it under B2C. About 4-6% goes to QSR.

Milk products portfolio – cheese and ghee are flagship products. Each occupies large portion. UHT milk, flavor milk are another products. Cheese and ghee roughly are of same size.

SMP business is institutional one.

Q2 – have taken price increase in various products. Price hike in cheese is 8%. Fresh milk saw price hike 6-7%.

Cheese - Competition has not taken price hike , its will definitely have impact in short term.

Revenue growth primary came from price hike in H1.

Some of the cheese made is customized as per QSR requirement

Ghee- substantial portion come from rural, it got impacted due to subdued rural demand. Now growth is improving and impact monsoon is yet to see.

Products innovation- variants of cheese had done better.

ASP for the year – 7-7.5% for FY17.

Growth rate will kick at higher speed when new products launches in beverage and whey products happens

Higher inventory – due to festive season and value of inventory has also gone up due to inflation.

Continue to maintain the revenue growth of CAGR 14% (FY16-FY19) and PAT margin improvement from 2.9% to 5% over next 3 years (FY16-FY19)