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

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 current fiscal year — due to high temperatures during April-June, and floods in July-August.

Retail milk prices rose by 3-4 per cent during April-December 2019, and are expected to rise 10 per cent during January-March 2020, thus closing this fiscal 5 per cent higher y-o-y.

The impact will be magnified in states such as Karnataka and Haryana, where state governments offer a subsidy of ~4-6 per litre on milk supplied to cooperatives. While large private players are able to match the price offered by cooperatives to obtain the quantity of milk they

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Free voice calls no excuse for poor service quality, says Trai chief

Telcos are citing free voice calls to duck action on poor quality of service, but that will not pass regulatory muster, Trai Chairman R S Sharma said on Sunday, assuring users that the issue of call drops remains on its agenda.

The Telecom Regulatory Authority of India (Trai) head said the watchdog’s earlier provision for a penalty on telcom firms for call drops was successfully challenged in the Supreme Court, but the regulator will continue to work for improving the quality of service.

“Most of the telcos are offering voice free, their argument is that if something is free, how much can you (Trai) punish me because I am not getting anything for that, which may not be correct because they are essentially cross-subsidising,” Sharma said at the Asia Economic Dialogue here.

The comments come amid continuing call drops being experienced by subscribers across the country.

After the entry of Reliance Jio in 2016, voice calling has become virtually free as it is getting embedded in the data plans. This has resulted in entrenched operators losing their biggest revenue stream, which has led to financial troubles.

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Modi unveils 10,000 Farmers Producer Organisations to boost farm income

Aiming to augment agricultural income by helping farmers trade in their produce, Prime Minister today launched 10,000 Farmers Producer Organisations (FPO) all over the country.

Addressing the launch ceremony at Chitrakoot district in Uttar Pradesh, Modi said the government would spend Rs 5,000 crore in the next five years to strengthen FPOs for the benefit of farmers.

“The farmers have always been producers, but with the help of FPOs, they can now trade in farm produce. They will sow crop and also act as skillful traders to get the right prices,” he observed.

On the occasion, he also laid the foundation of UP’s mega infrastructure project, the 296-km Expressway, which is estimated to cost Rs 15,000 crore.

The PM said the Central Government had integrated farm policies with the farmers’ income to maximise the benefits even as he referred to the increase in the minimum support price (MSP), soil health card, neem coated urea and reenergising irrigation schemes to buttress his point.

“More than 85 million farmers’ families have been provided with over Rs 50,000 crore under PM Kisan, of which more

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GDP growth higher than expectations, but no Covid-19 impact spoken of

The GDP numbers that have been released are significant for three reasons. First, the second advanced estimate does not expect growth to change from the earlier projection of 5 per cent for FY20 which is a comfort. Second, the impact of has not been mentioned and hence it implies that is not likely to dent these numbers, which is a positive though the sceptic would remain uncertain on this issue. Third, for Q3, growth has come in at 4.7 per cent, which is higher than expectations and could be the precursor to the even higher growth number expected in Q4, which should be around 5 per cent. The low base effect will help move towards this number, but beyond that there are few signs of a rebound this year, especially with the for Jan showing just about stable growth of 2.2 per cent. IIP growth will be low this month.

The discomforting fact from the numbers is that investment continues to be declining as the GFCF rate is to be lower at 27.5 per cent this year as against 29 per cent last year. This reveals that investment is still stagnant and

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India’s wearables market recorded 14.9 million shipments in 2019: IDC

The wearables market in India recorded an over 168 per cent year-over-year growth in 2019, with shipments touching 14.9 million units, IDC said on Thursday.

Accounting for the largest share of shipment volumes, the earwear category grew five-fold, shipping 8.5 million units, while wrist bands and watches segments touched 5.3 million units and 0.9 million units, respectively.

In the December quarter, wearables vendors shipped a total of 5.1 million units, making it the seventh consecutive quarter of double-digit growth in shipments, IDC said.

It was also the biggest quarter for wrist bands with 1.5 million units shipped in a single quarter, witnessing 30.9 per cent year-on-year growth, it added.

“Ear-worn devices have found huge appeal with consumers, who are spoiled for choice with a variety of models at different price points. Affordable neckbands are leading the charge of migration from wired to wireless in this category,” IDC India Market Analyst Anisha Dumbre said.

At the same time, truly wireless devices with improved battery life and connectivity are attracting users to spend more, Dumbre added.

“As more vendors entered this segment with affordable options,

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Car sales to rise in 2020 on stiumulus measures, discounts, says Moody’s

Car sales in India are expected to be relatively flat this year after plunging 11.8 per cent in 2019 amid slowing economic growth, as per Moody’s Investors Service.

The rating agency also lowered its global sales forecast as the coronavirus outbreak reduces demand and disrupts automotive supply chains.

“We expect Indian to rise 0.5 per cent in 2020, supported by stimulus measures, discounts on new cars that do not comply with Bharat Stage VI (BS VI) emission norms, which will take effect in April,” the ratings agency said in a statement.

But weak consumer demand and tight liquidity will likely limit any improvement in car sales this year, it added.

“In 2021, we expect Indian car sales to rise 2 per cent,” Moody’s Investors Service said.

Commenting on global auto sales, it said, “We expect global auto unit sales to decline 2.5 per cent in 2020, narrowing from a 4.6 per cent drop in 2019, but worsening from the 0.9 per cent decline that we had previously projected for this year.”

The ratings agency expects sales to rebound only modestly in 2021 with growth of 1.5

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