PARAG MILK FOODS LIMITED

Investor Presentation
August 2019
Safe Harbor
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Parag Milk Foods Limited (the “Company”), have been
prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall
not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be
made except by means of a statutory offering document containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no
representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and
reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may
consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded

Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are
individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to
known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the
performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide,
competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological
implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks,
as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results
expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation.
Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is
not responsible for such third party statements and projections.

2
Contents

1 Q1 FY20 Financials & Key Developments 4 Historical Financial Highlights

2 Company Overview 5 Vision 2020

3 Industry Dynamics 6 Annexures

3
Q1 FY20 Financials & Key
Developments
Consolidated Financial Analysis – Q1 FY20

Revenue (Rs. Mn) EBITDA (Rs. Mn) Product wise Revenue Break-up (Rs. Mn)

+14.6% -4.6%
6,297 596 569 5,495 6,298
5,494
12.6% 13.4%
21%
19.3% 18.1%

7%
Q1 FY19 Q1 FY20 Q1 FY19 Q1 FY20

PAT (Rs. Mn) Margins (%) 66.1% 16% 66.9%

EBITDA% PAT%
-2.7%
283 275
9.0% 1%
10.9%
1.9% 1.7%
4.4% Q1 FY19 Q1 FY20
5.1%
Skimmed Milk Powder Milk Products
Liquid Milk Others
Q1 FY19 Q1 FY20 Q1 FY19 Q1 FY20

5
Key Highlights

• Consolidated Revenue from Operations for Q1 FY20 reported a growth of 14.6% YoY to Rs. 6,297 million as
Revenue compared to Rs. 5,494 million in Q1 FY19.
• Growth was driven by an increase in revenue from Milk Products by 16% YoY to Rs. 4,211 million.

• Gross Profit for Q1 FY20 registered a growth of 1% YoY to Rs. 1,684 million as compared to Rs. 1668 million in Q1
FY19.
 The compression in gross margins was mainly due to increase in milk procurement prices.
Gross Profit  Due to drought effect of last year and delayed monsoons, feed availability was severely constrained leading to stress at
farmer level. Therefore, raw milk prices paid to farmers increased sequentially during the quarter.
 We have already passed on the raw milk price increase by combination of increased consumer prices and reduced trade
discounts. The full effect of this correction will come from Q2 FY20.

• EBITDA for Q1 FY20 de-grew by 4.6% YoY to Rs. 569 million as compared to Rs. 596 million in Q1 FY19.
EBITDA
• EBITDA Margin for Q1 FY20 stood at 9.0% which was impacted mainly due to decline in gross margins.

• PAT for Q1 FY20 stood at Rs. 275 million as compared to Rs. 283 million in Q1 FY19. PAT Margin were healthy at
PAT 4.4% in Q1 FY20.

6
Consolidated Profit & Loss Statement
Particulars Q1 FY20 Q1 FY19 YoY Q4 FY19 QoQ
Revenue from Operations 6,297.4 5,494.2 14.6% 6,721.5 -6.3%
Raw Material Costs 4,612.9 3,826.6 4,731.2
GROSS PROFIT 1,684.5 1,667.7 1.0% 1,990.4 -15.4%
Gross Margins 26.7% 30.4% -370 bps 29.6% -290 bps
Employee Expenses 267.1 204.2 258.9
Other Expenses 848.8 867.2 1,294.3
EBITDA 568.5 596.2 -4.6% 437.3 30.0%
EBITDA Margin % 9.0% 10.9% -190 bps 6.5% +250 bps
Other Income 28.1 17.8 63.3
Depreciation 132.9 135.5 94.2
EBIT 463.8 478.5 -3.1% 406.4 14.1%
Finance Cost 93.2 101.4 78.1
Exceptional Items - - -
PBT 370.6 377.1 -1.7% 328.4 12.9%
Tax Expense 95.5 94.4 15.5
PAT 275.1 282.7 -2.7% 312.9 -12.1%
PAT Margin % 4.4% 5.1% -70 bps 4.7% -30 bps
Other Comprehensive Income 0.2 -0.4 3.2
Total Comprehensive Income 275.3 282.3 -2.5% 316.1 -12.9%

Amounts in Rs. Million

7
New Product Launch - Avvatar Rapid

Sport Nutrition Whey Protein Market Size –

Rs. 1,400 – 1,600 Crs

Growing at more than 25% CAGR

Strengthens our Health and Nutrition Portfolio

Product Features –

 Only hydration drink in the 5900mg Whey Isolate

149kcal Energy 123mg Calcium
Fastest absorebed whey protein isolate
category fortified with whey Blend of carbohydrates and sugars for an Plays a vital role in muscle contraction
that helps reduce muscle protein
instant and sustained burst of energy and helps build healthy bones
protein breakdown/catabolism

 Makes an ideal intra-workout

611mg Electrolytes 1300mg BCAA 20mg Vitamin C
drink, unlike caffeine-based drinks Quick replenishment of lost electrolytes Promotes protein synthesis and speeds Acts as a antioxidant that helps fight the
caused by sweat loss during intense up recovery after intense damage caused to the body during
that tend to dehydrate the body
training, thus minimizing cramps training/workouts strenuous workouts

8
Launch of Pride of Cows in Singapore

Launched its Farm-to-Home premium milk brand Pride of

Cows in Singapore

The company will be airlifting the milk from India’s largest

dairy farm, located in Manchar, near Pune to Singapore

Singapore enjoys a reputation as a place for the well-

heeled and has one of the largest per capita incomes in
the world, making it an ideal region to expand the brand

Future Plans :
 Aim to double the Pride of Cows revenue over the next two years
 Plan is to expand the product portfolio by introducing new variants under Pride
of Cows

9
Marketing Campaigns & Consumer Engagement Initiatives
GO Cheese collaborates with Chhota Bheem GO Cheese Campaign – Har Tasty Cheez Mein GO Cheese

The new campaign is an effort to educate

consumers on Go cheese being the key
ingredient in their most loved dishes like
Mall activations were pizza, fries, burgers and street food, which is
conducted in 5 cities being consumed almost every day outside
(Mumbai, Bangalore, their home at various QSRs & hotel chains
Chennai, Nashik, Delhi)

Co-branded TVC ran on POGO Channel where GO Cheese Go Cheese TVC Campaign - One can check the TVC on YouTube:
collaborated with Chhota Bheem. #HarTastyCheezMeinGoCheese https://www.youtube.com/watch?v=R5DoewJqX1g

Gowardhan Ghee Gowardhan Dahi Beverages

Gowardhan Ghee – Festive Promotions Gowardhan Dahi being promoted on Digital

Point of Sale Material for Beverages
& Social Media Platforms

10
 Company Overview

Sustainability

Innovation
Parag at a Glance

Strong State-of-the-art Strong

170+ SKU’s 7 Brands Ranked #1
Relationships Facilities Distribution
Aggregate milk Gowardhan
processing capacity
Pan-India Go
Established Strong of 2.9 mn litres per Diversified product Parag Milk Foods
Distribution Network Pride Of Cows
Relationships with day with the largest portfolio with 170+ was ranked #1 in
of 19 Depots, over
over 2 lakh farmers Cheese production SKU’s that cater to a Topp Up Fortune India's 'Next
140 Super Stockists
and over 3.5 lakh capacity in India of wide range of Milkrich 500‘ from #67 last
and 3,000+
retail touch points 60 MT / day and a customers year
Distributors Avvatar
Paneer Capacity of
20MT / day Slurp

12
Evolution of the Company

1992 1998 2005 2008 2010 2011

Parag Milk Foods Ltd founded Commissioned Manchar Birth of Bhagyalaxmi Commissioned “Go Cheese Palamaner plant was Birth of ‘Pride of Cows’, a
in 1992 with one purpose: plant and began manufacturing Dairy Farm - India’s most World” - India’s largest cheese established with a First-of-its-kind premium
To deliver Fresh Milk Traditional products like Butter modern dairy farm with manufacturing plant with a world-class UHT facility farm-to home milk brand
and Diary Products and Ghee under the brand, the finest International capacity of 40 MT per day
‘Gowardhan’ Equipments

2014 2015 2016 2017 2018 2018

Realising the needs of our Relaunched the brand Got listed on the bourses, Launched a 100% Whey Extended the Health & Established our third
institutional clients, we Parag with a new identity thus becoming a Publicly protein under the brand Nutrition Product Portfolio manufacturing facility in North
launched B2B Whey Protein branded and owned entity Avvatar by adding Go Protein Power & India in Sonipat, Haryana on
Avvatar Advance Mass Gainer acquiring Danone’s
manufacturing facility

13
Our Diverse Product Portfolio catering to all segments of customers

Brands Target Customer Group

Positioning

 Household consumers seeking premium

quality cow’s milk
 Health enthusiasts
Premium

 Children and the youth primarily for direct

consumption
 On-the-go consumption as source of
instant nourishment
Modern

 Traditional Indian recipes and

cooking ingredients
 Indian households
Traditional

14
Our Brand Power

2nd Largest Player in Cheese in the India with

Pioneers of Fresh Paneer with a 75 Day Shelf Life
35% Market Share

Leaders & Pioneers of Cow Ghee category

Own one of the Largest Cow Farms in India
under Brand ‘Gowardhan’ Ghee

India’s First Company to launch a truly made

Leading private player in UHT Category under the
in India B2C Whey protein powder under
Brand ‘GO’
Brand ‘Avvatar’

Converted waste into value-added products like

Introduced the concept of Farm-to-Home
organic fertilizers from cow manure and urine
milk under the brand ‘Pride of Cows’
under brand ‘Bhagyalaxmi Dairy Farms’

15
 Last mile availability from ‘Farm to Fork’
Pan-India Reach Distribution Network Route-to-market Strategy

Depot

Super Stockist
Jammu 19 Depots
Jalandhar
Parwanoo
Karnal Fresh Milk
Delhi Siliguri Guwahati
140+ Exports

Jodhpur
Udaipur
Jaipur Kanpur Patna Super Stockists Products
General
Trade

Ranchi Modern
Ahmedabad
Surat
Indore Kolkata 3,000+ Bulk Business
Trade
Nagpur Raipur
Mumbai
Manchar
Cuttack
Distributors
Direct
Hyderabad
Goa
Palamaner
3.5 lakhs+ Institutions
Business HORECA
Bengaluru Chennai
Retail Touch points
Calicut Andaman & Nicobar
Cochin • Dedicated Sales and Marketing team comprising of over 800 personnel
• Sales force Automation –Better visibility of Supply Chain Management

Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness
16
Partner with Leading Institutions and Quick Service Restaurants

Interact with Customers at

Customization of the Maintaining the Strong/ Long term
the Inception Phase of
product according to the Exclusivity of the Relations with
the Product and even help
Need Product Customers
them to curate a menu

Supplies To:

Prominent Burger Chains Major FMCG companies

Leading Pizza Chains Hotels, Restaurants and Food Chains

17
A Pan-India Manufacturing Footprint

Key Features : Parag’s Manufacturing Footprint

State-of-the-art Technology
Newly Acquired • One of the Largest Cheese Plants in India
Facility from Danone
Sonipat Plant, Haryana • India’s 1st state-of-the-art fully integrated Whey
Protein Plant

• Fully automated Paneer Plant

Manchar Plant, Raipur

• World-class UHT facility
Pune Nagpur
Vashi & Vasai • India’s most Modern Dairy Farm
Hyderabad Manufacturing
Location
 Houses Over 2,500 Holstein Friesian Cows
Processing Location
Palamaner Plant, AP
Mysore  With an Average yield of 20-25 litres per cow vs
Trichy
India’s Average of 4-5 litres per cow

• Newly Acquired Sonipat Facility & Infrastructure

Key Categories Capacity
Milk Processing 2.9 mn litres per day  Currently has a Milk & Curd Processing Unit
Cheese 60MT per day
 Future Plans to install processing units for pouch
Paneer 20MT per day milk, flavoured milk, pouch butter milk, cup
Ghee 110 MT per day curd, misthi doi as well as expand the existing
yoghurt facility
Whey Processing 6 lakh litres per day

Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness
18
Farmer Relationship is an Integral part of our Business

3-tier Milk Procurement Process Procurement Network Farmer Services

Village collection centres Never Say No for Milk

procure milk Correct Quantity &
Tier 1 Quality
from over 2 lakh farmers
in 29 districts
Haryana Supplying Cattle feed at
subsidized rates
Rajasthan Uttar
Pradesh
Transparent Milk Pricing

Milk is then transported to Madhya

Tier 2 nearby Bulk Milk Coolers Pradesh
Building Relationship
(BMC) and chilled
Maharashtra with Farmers
Improving the
Productivity of Cows

Andhra
Pradesh Free Vaccinations for
The chilled milk is then Karnataka
Cattles
Tier 3 transported in tanks Tamil Future Sourcing States post Free Health Camps for
Nadu Danone’s plant Acquisition Cattles
to our dairy plant
Current Sourcing States

Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness
19
Integration of Technology across all verticals

Business intelligence and Seamless integration of our

Analytics captured through manufacturing facilities, cold
SAP chain and our distribution
network of super-stockists &
retailers

Theory of Constraints
(Vector) Dashboard for live
monitoring of order taking Sales Force Automation helps
and past trends of retailers to increase productivity and
enhance the time spent on
driving sales

Our systems provide real- Distribution Management

time analysis of the quality System helps with inventory
and quantity of milk management and provides
procured us with secondary sales data
in real-time

20
Board of Directors

Mr. Devendra Shah Mr. Pritam Shah

Chairman Managing Director

Mr. B. M. Vyas Mr. Sunil Goyal

Director Independent Director

Mr. Narendra Ambwani Mr. Nitin Dhavalikar

Independent Director Independent Director

Mrs. Radhika Pereira Mr. Ramesh Chandak

Independent Director Director

The Board consists of well qualified personnel with a strong understanding on the Procurement & Production Processes with a wide
gamut of Industry experience in the Dairy and Consumer Space backed by innovative abilities to make the company a successful Dairy
FMCG company.

21
Our Management Team
Mr. Venkat Shankar Mr. Shashikant Dalmia Ms. Akshali Shah
Chief Executive Officer Chief Financial Officer VP – Strategy (Sales & Marketing)

He has more than 15+ years of experience in the He has been with the group for the last 7 years and An MBA in Family Managed Business from S.P. Jain
FMCG (Food) space with his most recent stint with has handled various functions which include Direct Institute of Management & Research, she is actively
Britannia Industries Ltd as the VP & Head of the Taxation, Costing, Treasury & Risk Management, involved in branding, marketing & advertising
Dairy Business. Prior to that he has spent 14 years in Corporate Finance & Accounts, Budget Planning, strategy, category intelligence & competitive
Pepsico Sales & Marketing and 9 years in Private and Liaising with Government authorities as well as analysis. She has also played a key role in the
Equity across numerous regions of India which has various accounting functions at Plant level. He is revamping the corporate identity of company.
helped him gain the experience of various trade and also involved in the strategic initiatives of the
consumer behaviours. He has also managed multi- Group’s International business and Long-range
functional and P&L responsibilities. He has a PGDM planning. He is a qualified Chartered Accountant.
degree from IIM Ahmedabad and an Engineering
degree from IIT Kanpur.

Mr. H.S. Oberoi Mrs. Rachana Sanganeria

President - Cheese Manufacturing Company Secretary & Compliance Officer

A Mozzarella Cheese manufacturing expert, he has a Qualified Company Secretary and an Associate
B. Tech degree and over 52 years of extensive Member of the Institute of Company Secretaries of
experience in the dairy industry. India. She also holds a Bachelor’s degree in
Commerce and LL.B. degree from the University of
Mumbai. She has over 18 years of experience as a
Company Secretary.

22
Our Strategy for Value Creation
Increase Operational Efficiencies Focus on Health & Nutrition
Leverage in-house technological, R&D capabilities Introduce healthy & nutritious product variants like
to:  Whey protein powder for mass consumption and in
 Maintain strict operational controls different formats
 Enhance customer services levels  Colostrum products – as daily supplements
 Develop customised systems & processes Operational Health &  High protein, low fat cheese products
Efficiencies Nutrition

Increase Value-added Product

Strengthen Our Brands
Portfolio
 Enhance brand recall through strategic
 Offer wider range of farm-to home products
branding initiatives Value- under ‘Pride of Cows’
 Increase Ad spend on diverse channels Brands added
including television, newsprint, digital media  Focus on health & nutritional aspect in
Product developing premium products
 Sell whey protein directly to consumers in the
form of a branded product

Increase Milk Procurement Milk Product

 Strengthening existing farmer relations
Procurement Reach Enhance Product Reach
 Offer quality & quantity based incentives  Strengthen distributor & stockists base to
 Set up new collection centres & reach new achieve higher retail penetration
districts  Introduce low unit price products in Tier III cities
 To add 75 new bulk coolers, 100 automated  Identify specific states and regions in India to
collection systems increase sales volumes

23
Industry Dynamics
Indian Dairy Market

Indian Dairy Market (US$ 107 Bn)

Organised Dairy Market Unorganised Dairy
(US$ 15 Bn) Market (US$ 92 Bn)

Traditional Milkmen / Self Consumption at Home

Cooperatives (US$ 7 Bn) Private Dairies (US$ 8 Bn)
Vendors (US$ 34 Bn) (US$ 58 Bn)

Milk production volume break-up Marketable Milk volume break-up Organized Marketable Milk volume
by Marketability by Segment break-up by Segment

54% 46%
70% 30% 45% 55%

Unorganised Organised Cooperatives Private Players

Self Consumption Marketable Milk

Source: IMARC Report – Industry size is as per market realizations

Amounts in US$ Billion, 1US$ = INR 67 25
Tremendous Growth Potential across Product Segments

Liquid Milk Ghee Paneer Curd

+15.0% +14.8% Traditional Products Growth

9,761 7,358
90,567 20,403 +14.8% +14.8%

CAGR of

22,403
39,119
5,149
9,224
2,448
4,373
1,851
3,239
15%
2010 2014 2020E 2010 2014 2020E 2010 2014 2020E 2010 2014 2020E

UHT Milk Flavoured Milk Cheese Whey (Powder)

Modern Products Growth 716 881

1,552 149
+26.4% +25.3% +27.9% +25.8%
CAGR of
26% 149
388
75
194
75
179
15
45

2010 2014 2020E 2010 2014 2020E 2010 2014 2020E 2010 2014 2020E

Source: IMARC Report

Amounts in US$ Million, 1US$ = INR 67 26
Historical Financial
Highlights
Key Financial Highlights

Revenue (Rs. Mn) EBITDA (Rs. Mn)

+13.5% +20.2%
23,957
2,235
19,545 1,933
14,441
1,072

FY15 FY18 FY19 FY15 FY18 FY19

PAT (Rs. Mn) Margins (%)

EBITDA% PAT% ROCE%

+39.1% 1,207 17.2%
15.4%
871 12.1%
9.9% 9.3%
7.4%
322 4.5% 5.0%
2.2%
FY15 FY18 FY19
FY15 FY18 FY19

FY15 Pre IPO On Consolidated Basis

28
Key Financial Highlights

Working Capital (In Days) Operating Cash Flows (Rs. Mn)

-5.6% +159.5%
72 68 1,591

613

FY18 FY19 FY18 FY19

Fixed Assets Turnover Ratio Debt to Equity

19.5%
6.0 0.4
5.0
0.3

FY18 FY19 FY18 FY19

On Consolidated Basis 29
Consolidated Profit & Loss Statement
Particulars FY19 FY18
Revenue from Operations 23,956.6 19,545.1
Raw Material Costs 16,573.6 13,678.9
GROSS PROFIT 7,383.0 5,866.2
Gross Margins 30.8% 30.0%
Employee Expenses 949.9 735.2
Other Expenses 4,198.1 3,198.1
EBITDA 2,235.0 1,932.9
EBITDA Margin % 9.3% 9.9%
Other Income 102.6 120.0
Depreciation 501.9 506.0
EBIT 1,835.7 1,546.9
Finance Cost 357.9 357.3
Exceptional Items - -
PBT 1,477.9 1,189.6
Tax Expense 270.7 319.0
PAT 1,207.2 870.56
PAT Margin % 5.0% 4.5%
Other Comprehensive Income 1.0 -3.1
Total Comprehensive Income 1,208.2 867.5

Amounts in Rs. Million

30
Consolidated Balance Sheet

Particulars Mar-19 Mar-18 Particulars Mar-19 Mar-18

ASSETS EQUITY AND LIABILITIES
Non-current assets Equity
Property, plant and equipment 4,023.4 3,922.7 Equity Share capital 839.4 838.9
Capital work-in-progress 290.3 204.0 Other equity 7,432.0 6,282.8
Other intangible assets 34.5 47.5 Sub-total - Shareholders' funds 8,271.4 7,121.6
Biological assets other than bearer plants 337.6 290.9 LIABILITIES
Financial assets Non-current liabilities
Investments 5.3 5.1 Financial liabilities
Loans 3.5 3.5 Borrowings 646.2 635.2
Other financial assets 130.0 95.6 Provisions 40.8 35.5
Deferred tax assets (net) 166.7 75.2 Other non-current liabilities 0.0 58.2
Other non-current assets 219.2 119.7 Sub-total - Non-current liabilities 799.8 728.8
Sub-total - Non-Current Assets 5,210.4 4,764.0 Current liabilities
Current assets Financial liabilities
Inventories 4,628.8 4,379.3 Borrowings 1,497.5 2,001.5
Financial assets Trade payables 2,971.0 3,032.6
Trade receivables 2,786.5 2,517.2 Other financial liabilities 725.7 742.5
Cash and cash equivalents 73.5 310.0 Other current liabilities 75.7 113.0
Other Bank balances 46.9 186.0 Provisions 13.9 13.8
Other current assets 1,674.3 1,658.7 Current tax liabilities (net) 178.4 61.5
Sub-total - Current Assets 9,209.9 9,051.3 Sub-total - Current liabilities 5,462.0 5,964.8
TOTAL - ASSETS 14,420.4 13,815.3 TOTAL - EQUITY AND LIABILITIES 14,420.4 13,815.3

Amounts in Rs. Million

31
Vision 2020

32
Vision 2020

FY 2018 FY 2020

Revenue Rs. 1,955 Crs Rs. 2,700 – 3,000 Crs

EBITDA
Margin*
10.5% 11- 12%

ROCE 15.8% 18-20%

* Includes Other Income 33

Annexures
India’s Favourable Dynamics offer Huge Opportunities

Rising Middle Class • Middle class households to grow from 255 million in 2015 to 586
million in 2025 at a CAGR of 8.7%
Population & Income • Rising income & disposable income to drive consumption of milk
Levels & dairy products

India – GDP Growth

7.5% • Urban population expected to increase from 31.2% in 2011 to

7.1% 34.5% in 2021
6.4% Urbanisation • Preference for clean, hygienic & ready-to-eat milk & dairy
products to boost organised dairy industry

Simon India Limited

• Milk being important source of vital nutrients especially for
Changing Dietary vegetarians, consumers are shifting away from cereals to milk &
Patterns with focus on dairy products
FY14 FY17 FY20E*
Milk • 31% Indian population is vegetarian, ensuring continuous demand
for milk & dairy products

• Increasing quality & safety concerns increasing demand for

Shift to Packaged Food to packaged food, in particular pasteurised packaged milk
drive Organised Market • Organised market share to also increase to 26%, in value terms, by
2020

Source: IMARC Report

* As per World Bank report on Global Economic Prospects – January 2018 35
India Contributes > 20% of Global Milk Production
Top Milk Producing Countries (Million MT)
Global - Animal Wise Milk Production - 2017
Countries 2017 2018E 2019E 2020E 2027E CAGR
11.5% 3.5%
India 169 174 181 188 244 3.7% Cow

EU – 28 164 167 167 169 177 0.8% Buffalo

USA 98 98 99 100 105 0.7% Goat & Others

85.0%

Pakistan 54 56 58 59 70 2.8%

China 40 43 44 45 50 2.3% India - Animal Wise Milk Production - 2017

Russia 31 31 31 31 31 0.0%

45.0% Cow
Brazil 29 30 30 31 36 2.1%
Buffalo
New Zealand 21 22 22 23 25 1.5%
55.0%
World 823 844 859 875 994 1.9%

Source: IMARC Report, Ministry of Animal Husbandry, Dairy & Fisheries and FAO 36
Milk Production in India

Liberalization of the sector in

1991 led to entry of private
players
Dr. Verghese Kurien initiated 244
operation Flood to increase Milk
Production
188
+4.3%
169

116

78
+2.8%
51
30
17 20 21

1950 1960 1970 1980 1990 2000 2010 2017 2020E 2027E

Milk Production (Million MT)

Source: Ministry of Animal Husbandry, Dairy and Fisheries 37

Ghee Market (Butter Oil/Cooking Oil/Clarified Butter)
India’s Ghee Market Size (in US$ Million) Key Highlights

20,403
17,985
13,836
15,791 • Ghee is traditionally used as cooking oil in Indian
+16.0%
10,582
households
8,030
6,030
3,075
4,463 • It is the 2nd largest category in the Indian dairy
industry after Liquid Milk
2007 2009 2011 2013 2015 2017 2018 2019E 2020E
• The organized market is currently 20% of total,
and is growing rapidly at a CAGR of 17%
Organized vs Unorganized Sales
15.0% 15.0% 16.0% 17.0% 18.0% 20.0% 20.0% 21.0% 21.0% • Parag is present in the “Cow Ghee” category and
are not only pioneers of the category but also the
most sought after brand in the segment
85.0% 85.0% 84.0% 83.0% 82.0% 80.0% 80.0% 79.0% 79.0%

• The Cow Ghee segment is growing faster than the

2007 2009 2011 2013 2015 2017 2018 2019E 2020E
overall Ghee market and has higher margins

Organised Unorganised

Source: IMARC Report

1US$ = INR 67 38
Cheese Market
India’s Cheese Market Size (in US$ Million) Key Highlights

513 • Cheese is one of the fastest growing segments

410 among dairy products in India
328
+25.3% 263 • Rise in food service outlets and changing food
204
134
164 habits are major drivers
85 106
54 69

• Earlier, the cheese market in India was dominated

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
by block cheese, slices and cubes

Cheese - Value Market Share • Through innovation Parag has achieved a

7.0% leadership position with a 1/3rd market share
7.0%
Amul
9.0%
• Parag dominates the Institutional & HoReCa
42.0% Parag Milk Foods
segment
Britannia
Dynamix
35.0% • Maharashtra is the biggest market for cheese
Others
consumption, followed by Gujarat, Delhi, Tamil
Nadu and Uttar Pradesh

Source: IMARC Report

1US$ = INR 67 39
Paneer (Cottage cheese)
India’s Paneer Market Size (in US$ Million) Key Highlights

9,761 • Paneer is to India what cheese is to the Western

8,582 world and is an integral part of many Indian
7,522
+16.8%
6,597 recipes
5,030
3,806
2,896 • Paneer is the third largest segment in the milk
1,940
1,358 products category

2007 2009 2011 2013 2015 2017 2018 2019E 2020E

• Paneer is consumed like vegetables in Indian
households and therefore purchased fresh on a
Organized vs Unorganized Sales daily basis
1.6% 1.9% 2.0% 2.3% 2.6% 2.9% 3.1% 3.3% 3.5%
• With innovation in manufacturing & packaging,
Parag has created a long-shelf life Fresh Paneer
98.4% 98.1% 98.0% 97.7% 97.4% 97.1% 96.9% 96.7% 96.5% made from 100% cow milk

• Due to hygiene and consistency in taste, the

2007 2009 2011 2013 2015 2017 2018 2019E 2020E trend towards branded packaged paneer is
Organised Unorganised gaining momentum

Source: IMARC Report

1US$ = INR 67 40
Curd (Dahi)
India’s Curd Market Size (in US$ Million) Key Highlights

7,358
6,478
5,687 • Curd industry has transformed from being a
+15.4% 4,940
3,746 product that was traditionally made at home to a
2,836 branded & packaged product
2,134
1,597
1,179
• The organized curd market is growing rapidly at a
2007 2009 2011 2013 2015 2017 2018 2019E 2020E CAGR of 20%+ with even higher growth in metros

Organized vs Unorganized Sales • With a distinctive home-made recipe and made

of pure Cow milk, our curd is well-positioned to
4.0% 4.0% 5.0% 5.0% 6.0% 6.0% 7.0% 7.0% 7.0% dominate this category in major markets

96.0% 96.0% 95.0% 95.0% 94.0% 94.0% 93.0% 93.0% 93.0% • Parag has significant presence in major metros
like Mumbai, Pune, Nagpur, Hyderabad,
Bangalore & Chennai and is now expanding into
Delhi NCR and nearby markets of North & East
2007 2009 2011 2013 2015 2017 2018 2019E 2020E
Organised Unorganised

Source: IMARC Report

1US$ = INR 67 41
UHT & Beverages
India’s UHT Market Size (in US$ Million) India’s Flavoured Milk Beverages Market Size (US$ Million)

1,552
716
1,239
582
985 463
+28.4% 791 +25.5% 373
493 239
313 149
194 60 90
104

2009 2011 2013 2015 2017 2018 2019E 2020E 2009 2011 2013 2015 2017 2018 2019E 2020E

Key Highlights Key Highlights

• In 2014, the UHT milk market accounted for less than 1% of the total • Flavoured milk represents one of the fastest growing segments in the
milk market and ~5% of the organized milk market Indian dairy market due to:
• However, with benefits like safety, convenience and longer shelf life, • Indian consumers slowly substituting carbonated soft drinks
usage of UHT milk is increasing at a fast pace in major metros with healthier options
• Milk deficit areas are switching from milk powders to UHT milk
• Advent of single serve, re-sealable bottles and tetra packs
• Parag has established itself as a the largest private player in this which has made milk convenient for use and easier to
segment distribute

Source: IMARC Report

1US$ = INR 67 42
Whey Protein

Key Highlights
Sports Health &
Category Nutrition Nutrition
Segment Segment
• Whey Protein market is estimated at 35,000 MT, translating
US$ 225-300 US$ 225-300 into business potential of US$ 450 Million, growing upwards
Market Size Million Million
of 25%
• Parag has the most integrated & largest whey processing
Historical facility in the country and intends to dominate this market
25-30% 25-30%
Growth Rates
• We have introduced ‘Avvatar’ whey protein in the sports
nutrition category and are in process of launching various
Target Mass consumers products under the Health & Nutrition segment as well
Athletes, Sports
like children,
Consumer Enthusiasts, Gym-
Group goers
women, aged • Parag intends to not only have the Health & Nutrition
people
business as 7% of its portfolio in the medium term, but more
importantly, intends to drive its profitability and growth for
both Cheese & Whey businesses
Almost 100% Few Large MNCs
Market Players Imported Products are present

Source: IMARC Report

1US$ = INR 67 43
Liquid Milk Market
India’s Liquid Milk Market Size (in US$ Million ) Key Highlights

90,567 • A majority (77%) of the milk sold in India is

79,015 unorganized and in the form of loose milk sold by
68,731
+16.4% 59,791 milkmen
45,090
33,896
25,463 • The organized sector in liquid milk is highly
18,060
12,910 fragmented with several regional players and co-
operatives
2007 2009 2011 2013 2015 2017 2018 2019E 2020E

• Consumers are shifting from loose liquid milk to

Organized vs Unorganized Sales branded packaged milk due to safety and quality
15.0% 16.0%
concerns
17.0% 18.8% 20.8% 22.9% 24.0% 25.1% 26.3%

• The organized liquid milk market is growing faster

85.0% 84.0% 83.0% 81.2% 79.2% 77.1% 76.0% 74.9% 73.7%
than the unorganized market

• Parag has a strong presence in urban parts of

2007 2009 2011 2013 2015 2017 2018 2019E 2020E West and South India and is currently the largest
Organised Unorganised
private player in Mumbai

Source: IMARC Report

1US$ = INR 67 44
We are present in all key Cow milk procuring States
In Million MT
Milk % Share of CAGR Cow Milk CAGR
Sr. % Share of
States Production Total Milk for last Production for last
No Cow Milk
(2016-17) Produced 2 years (2016-17) 2 years

1 Tamil Nadu 7.6 4.6% 2.9% 7.1 93% 3.1%

2 Karnataka 6.6 4.0% 3.5% 4.6 70% 2.6%

Haryana

Uttar 3 Maharashtra 10.4 6.4% 4.4% 6.2 60% 8.2%

Rajasthan
Pradesh
4 Bihar 8.7 5.3% 5.8% 5.2 60% 9.2%
Madhya
5 Madhya Pradesh 13.4 8.2% 11.7% 6.6 49% 14.7%
Pradesh

6 Gujarat 12.8 7.8% 4.6% 5.8 45% 7.7%

Maharashtra
7 Rajasthan 19.4 11.9% 6.9% 7.1 37% 7.9%

8 Andhra Pradesh* 16.9 10.3% 12.3% 5.3 31% 12.1%

Andhra
Pradesh 9 Uttar Pradesh 27.6 16.9% 4.6% 8.6 31% 16.2%
Karnataka Future Sourcing States post ramping
up Sonipat plant operations
Tamil 10 Punjab 11.3 6.9% 4.4% 3.2 28% 3.1%
Nadu Current Sourcing States
11 Haryana 9.0 5.5% 6.6% 1.7 19% 17.8%

India Total 163.7 100.0% 5.8% 70.2 43% 8.2%

*Including Telangana

Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness
Source: Ministry of Animal Husbandry, Dairy and Fisheries 45
Contact Us

Company : Investor Relations Advisors:

Parag Milk Foods Limited Strategic Growth Advisors Pvt. Ltd.

CIN: L15204PN1992PLC070209 CIN: U74140MH2010PTC204285

Name: Natasha Kedia Mr. Rohan Adhiya / Mr. Deven Dhruva

Email: natasha.kedia@paragmilkfoods.com rohan.adhiya@sgapl.net / deven.dhruva@sgapl.net

Phone: +91 22 4300 5555/ Ext: 631 +91-9833219522 / +91-9833373300

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