FNB News - “We are launching curd, colostrum products”

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INTERVIEW

“We are launching curd, colostrum products”

Monday, 23 May, 2016, 08 : 00 AM [IST]

Parag Milk Foods Pvt. Ltd, known by brands such as Gowardhan and Go, is one of India's largest private dairies, with an output capacity of 2 million ltr per day. While under the brand Gowardhan, the company offers traditional products like milk, ghee, dahi, and paneer, under Go it has on offer cheese, UHT milk, yogurt, flavoured milk, and buttermilk. It has a niche brand “Pride of Cows” - a unique proposition of Farm-to-Home concept. Further, the company has recently introduced range of whey products - whey protein concentrates, whey permeate and demineralised whey powders.

Parag is the largest private player in UHT milk market where the addressable market is Rs 2,600 crore. In fresh milk, it is the largest private brand in Mumbai, second-largest in Pune and third-largest in Nagpur; amongst top five in Bangalore and Chennai. It is a pioneer in frozen & flavoured yoghurt segment and an important player in curd market in West & South India.

This year, the company is planning to launch new products in health and food supplement verticals and expand with an R&D centre at Manchar. Devendra Shah, CMD, Parag Milk Foods Pvt. Ltd, throws light on the company’s future plans and more in an email interaction with Harcha Bhaskar. Excerpts

Tell us about the infrastructure facilities of dairy plants and chilling centres. How much milk is procured and processed per day? How much has the production and procuring capacity grown over the last five years?
We have two manufacturing units, the Bhagyalakshmi Dairy Farm at Manchar and the other in Palamaner, Andra Pradesh. Our aggregate milk processing capacity is 2 million ltr per day.

How much is the total production of Gowardhan ghee? How has the consumption of ghee increased in the last two years? Is the product exported? If yes, to which countries?
We are pioneer and the biggest player in cow ghee segment where the addressable market size is Rs 61,800 crore. We, at Parag Milk Foods, are engaging in a lot in BTL activities to make our consumers aware of ghee benefits made out of fresh cow milk. Yes, we export ghee to 31 countries.

You have a unique offering ‘Pride of Cows.’ Tell us about its USP. How is the response and how can consumer avail it?
Pride of Cows is the farm to fresh milk which has a high nutritious value. The entire supply chain delivery network has been controlled by the company that means we do not involve any third-party in our distributionship system. The milk processes are automated and maintained at 4⁰Celsius through, i.e temperature is maintained till the Pride of Cows milk reaches at our customers’ doorstep. We have witnessed some significant shift in consumer buying behaviour especially when it comes to fresh and healthy milk. We have received a very positive response from the consumers for Pride of Cows since consumers these days give a huge amount of importance to non-adulteration, nutritious and hygiene factors. They want value for money.

How strong is the Indian market for consumption and production of cheese?
It is visibly very strong. Over the last two decades we have witnessed humungous growth of the demand for cheese in India with more and more people demanding quality cheese. This also is a significant result of the exposure Indians have garnered through the influence of Western culture, especially, the food habits in this case.

How much is the company’s share in cheese market in India? How is cold chain transportation taken care of in distribution of the products?
The marketshare of Go Cheese has grown 32%. Our cold chain transport system ensures the best quality products from the time of manufacturing and processing till the time it reaches the consumers. We, at Parag, follow three types of logistics supply systems which include ambient temperature, chilled temperature and frozen containers.

What R&D is happening in the company? What new products are in the pipeline? Any plans to venture into flavoured yoghurt or ice cream sector in India?
We are soon going to introduce a new variant of curd with a higher protein and lower fat content and cream cheese with a lower fat content for health-conscious consumers. We also intend to introduce colostrum products, which can be consumed as a daily supplement to improve community and general health, introduce several cheese products with low fat, high protein and mineral content. It seeks to add value to and convert milk powder into food supplements and nutritional products for different age groups. Further, it intends to sell premium quality butter and ghee through the farm-to-home concept under ‘Pride of Cows’ brand.

We constantly focus on research and development to distinguish ourselves from our competitors to enable us to introduce new products based on consumer preferences and demand. We have already created a benchmark in the yoghurt sector.

Who are among the significant clients for your products?
Some of the significant clients we serve are Pizza Hut, Taco Bell, KFC, Domino’s and Nestle.

How much was the turnover of the company for the year 2015-2016?
The turnover of Parag Milk Foods Ltd was Rs 1,440 crore (2014-2015).

With the IPO, how much revenue will be raised? How will the money be used by the company?
Out of the total fresh issue of Rs 300 crore to be raised through the IPO, we are planning to utilise Rs 147.7 crore for expansion and modernisation plan.We will set up a research and development centre at Manchar facility (near Pune) to develop new products and processes and a technology centre at subsidiary for training and development activities and focus on animal husbandry.

Has the Russia-India dairy protocol been signed, if not when it is likely to happen?
Since the protocol has been signed by India, we expect the Russian government to reciprocate in two weeks. We would start negotiating terms of trade after that.