Creamline Dairy Products, a Godrej Agrovet firm, has stated that the sector is under pressure due to a rise in fuel and packaging material prices.
A day after Amul announced a 2 increase in milk pricing per litre, Bhupendra Suri, Chief Executive Officer of Creamline Dairy Products Limited, told the media that the prices of gasoline and packaging material have gone up, putting pressure on the sector. Larger milk prices, on the other hand, would mean higher profits for farmers.
The business, which reported revenues of 287 crores in the third quarter ended December 31, 2021, noted in its investor presentation that there was a “significant rise in input costs including milk procurement, shipping, and packaging paired with no pricing increases.” “This had a significant impact on EBITDA margins,” it stated.
The EBIDTA (earnings before interest, taxes, depreciation, and amortisation) margin plummeted to 0.05 percent in the quarter, down from 5.4 percent the year before. The firm intends to end the fiscal year with a revenue of Rs. 1,200 crores.
High-quality segment
When questioned if the rise of specialised rivals seeking to tap into the high-value milk category’s potential posed a danger to the existing companies, he said his company was contemplating entering the sector.
“We might join the section in the next four to five months,” he remarked.
The sector was on the verge of restoring pre-epidemic levels of demand, which had dropped during the pandemic.
“The market is coming up rapidly,” he said, “but there is still a 3-5 percent lag (from pre-pandemic levels).”
He stated that the company’s purchase had not been halted throughout the outbreak. “The inflows have not been disrupted.” He explained, “We utilised the milk to make value-added items.”
The company wants to increase the value-added goods’ proportion of sales to 40% in the next two years, from 65:35 now.
Creamline Dairy Products Limited’s Chief Operating Officer, Pramod Prasad, stated that the company invests roughly $30-40 million each year on capacity development and upgrades.