Parag Milk buys Danone dairy factory in Haryana
New Delhi: Parag Milk Foods Ltd on Thursday said it has acquired the dairy factory of Danone Foods and Beverages India Pvt. Ltd, the local entity of French dairy firm Danone SA.
The factory at Rai in Sonipat, Haryana, has the capacity to produce curd, yogurt and other fresh dairy products.
“This acquisition will help expand the company’s footprint in north India and strengthen the company’s distribution of milk, flavoured milk, buttermilk, curd, fresh paneer and yogurt in Delhi, National Capital Region and Haryana,” Devendra Shah, chairman, Parag Milk Foods said.
Parag Milk will initially spend nearly Rs30 crore for the facility and continue to invest on expansion as required, Shah told Mint.
Spread across 5,500 sq. metres, the factory has the capacity to produce 0.75 lakh litres of milk per day, along with a curd processing capacity of 15 metric tonnes.
“We’ll expand the facility for pouch milk, flavoured milk, pouch butter milk, cup curd, mishti dahi and expand the existing yoghurt unit,” Shah said.
Pune-based Parag Milk Foods, which sells milk and milk products under brands such as Go, Gowardhan and Pride of Cows, is a relatively new player in northern India that sells only cow’s milk.
“The acquisition is a strategic investment as it would reduce factory-to-market distance in the northern region for the company,” Shah said. Currently, Parag brings products to the northern markets from its Manchar plant in Maharashtra.
Danone had on 12 January decided to close down its dairy business in India. The French dairy firm, which gets about 48% of its global business from dairy products, had decided to exit the dairy business in India after three failed attempts to crack the country’s estimated Rs80,000 crore to Rs90,000 crore dairy market dominated by cooperatives like the Gujarat Cooperative Milk Marketing Federation Ltd that owns the Amul brand. At the time of exit, dairy accounted for just around 10% of Danone’s total revenue in India.
The dairy market in northern India is dominated by regional players like Kwality Ltd, Mother Dairy Fruit and Vegetable Pvt. Ltd and Gopaljee Dairy Foods Pvt. Ltd. Amul also has a significant presence in parts of north India. In in metro markets, Nestle India Ltd has a stronghold.
India’s dairy market is projected to cross $140 billion by 2020, from about $70 billion in 2013, according to a 2013 study by Investor Relations Society (IRS), a global network of investor relations professionals.
On Thursday, shares of Parag Milk Foods rose 5.12%, or Rs13.95, to Rs286.50 on a day the benchmark Sensex gained 0.28%, or 95.61 points, 34,427.29 points.