Crisil SME Tracker: Profitability of dairy units will rebound in FY21

Retail milk prices rose by 3-4 per cent during April-December 2019

CRISIL expects a sharp hike in milk procurement costs relative to milk retail prices to deal a huge blow to the earnings before interest, tax, depreciation and amortisation (EBITDA) margins of dairy processors — especially private small and medium enterprises (SMEs) — in the current fiscal year (FY20).
 

The all-India milk procurement cost is estimated to have risen 19 per cent year-on-year (y-o-y) for dairy processors over April-December 2019, and is expected to rise by 18-20 per cent for the full fiscal. The uptick in prices has been fuelled by a 5-6 per cent decline in milk production in the