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Parag Milk to invest Rs.450 crore to set up two plants

Posted on Dec 03, 07:30PM | IANS

Parag Milk Foods, one of the largest private dairy players in India, plans to invest Rs.450 crore to set up two more dairy plants in the country.

The state-of-the-art plants, which will come up in northern and eastern parts of the country, are part of the company's plans to increase its processing capacity to 50 lakh litres of milk per day (LLPD) by 2020 from the current 20 LLPD.

It is currently procuring 13 LLPD and wants to reach 20 LLPD in three years.

The company, which also has plans to go public in the next two years, has set annual turnover target of Rs.10,000 crore by 2020. It registered a turnover of Rs.875 crore during 2011-12 and expects it to go up to Rs.1,200 crore during the current fiscal.

The total milk market in India is estimated at Rs.3 lakh crore (USD 65 billion).

Devendra Shah, chairman, Parag Milk, told reporters here Monday that the company would invest Rs.80 crore for expanding processing and manufacturing capacity at its plant at Palamner in Chittoor district of Andhra Pradesh.

"Out of this Rs.35-40 crore is lined up immediately and another Rs.40 crore will be invested after March 2013," he said.

The fully integrated dairy company procures cow milk from four states, including Maharashtra and Andhra Pradesh, where it currently has two plants.

Parag Milk, which owns Gowardhan, Go and Pride of Cows brands, plans to roll out two more brands in next one to two years.

The firm, which focuses on value added products, exports to 25 countries. Exports account for 8-9 percent of its revenues and the same is expected to go up to 13-14 percent during the current year.

"We were once the biggest exporter of dairy products. The government, however, allows exports on and off and because of this we could not develop the trust in those countries," said Shirish Upadyay, senior vice president (strategic planning), Parag Milk.

He said Andhra Pradesh was a key state for them as it is the second largest milk producing state in the country with 11.6 million tonnes annual production. The state is also growing at CAGR six percent, which is higher than the national growth rate of 4.5 percent.

Andhra, which accounts for 8.9 percent of total milk produced in the country, currently witnessing excess milk production with agriculture farmers also taking up to dairy farming due to drought conditions.

The milk procurement rate in Andhra is only Rs.17 per litre against Rs.22 in Gujarat, Rs. 19.50 in Punjab, Haryana and Maharashtra. However, the retail milk price in Hyderabad is higher than even metro cities like Delhi and Mumbai.