Dhirendra Tripathi Moneycontrol News
Dairy companies have been on the boil last one year, riding on increasing consumer awareness and appetite for health foods and corporatisation of the sector. Even as the crest is yet to come, Umang Dairies of Bharat Hari Singhania Group, is ready to look beyond the mainstay of milk, according to its Chief Executive Officer C Venugopal.
The company, the name behind DOODZ flavoured milk, White Magic creamer and Dairy Top whitener, is now exploring the possibility of getting into new businesses which will leverage its existing distribution platform. Ready-to-eat business is one of them.
“We are trying to not limit ourselves to dairy alone. We are looking at other categories to enter wherein we can leverage our distribution strength to gain a hold in the market and definitely expand our (topline and bottomline) business. These could be ready-to-eat foods, ready-to-eat snacks, healthy snack options, specialised drinks, high protein drinks. So we are looking at all these opportunities to tap into a larger segment of the market,” Venugopal told Moneycontrol in an interview.
He said the company expected to roll out its new initiative next year, this year being one of consolidation in the dairy segment.
The company recently completed a Rs 30-crore capital expansion at its milk processing plant in Gajraula, 120 kms from Delhi in Uttar Pradesh’s Amroha district. The expansion included a captive power plant and a 1.5 lakh litre per day culture product plant to make butter milk. The culture plant has already hit a daily production of 1 lakh litres.
The Gajraula plant has a total capacity to process over 11.5 lakh litres of milk per day (550,000 litres drying plant and 600,000 litres liquid milk plant).
Another exercise that has occupied the company’s bandwidth in the year gone by was its entry into servicing the hospitality, restaurant and catering business or the ‘Horeca’ segment as it is called in the industry jargon.
"Currently, we are selling only our fresh cream, butter and special kind of butter which they use for whipping and all that stuff. So these are three products which we are offering. But we have plans of increasing the product line as well as increasing the number of distributors who can cater to the Horeca segment. This Horeca segment we don’t cater directly. We go through aggregators," Venugopal said on the company’s plans to exploit the Horeca segment, adding the company planned to deepen its presence in the segment "this year in a big way".
The company expects its capital expenditure to halve to Rs 12 crore-Rs 15 crore in the ongoing financial year. This would be spent on upgrading, existing as well as also creating new facilities at the site for storage etc, Venugopal said. The company, which counts Mother Dairy as a major customer, is executing four more projects for the vegetable and milk retailer.
“These are for milk, new kind of products, new categories of products. We have an ongoing relationship with Mother Dairy which is a healthy relationship,” Venugopal said, while refusing to share more details on the projects.
As the company looks to leverage its existing distribution network to ride more product lines on it, Venugopal said efforts were underway to double its distribution platform this year.
The company currently covers approximately 500 villages through 520 village-level milk collection centres touching around 10,000 farmers. As per AC Nielsen-ORG data, the company reaches approximately 2.5-3 lakh outlets through 450 distributors.
"So we want to reach out to 850-900 distributors and correspondingly we want to reach out to around 5.5-6 lakh retail outlets," he said.
"That is the broad strategy blueprint we have created for ourselves because we feel we are in a unique position as a dairy; we are in a unique position because we have a strong retail presence; we have strong retail brands and we also have dairy products which we can sell. I think there are hardly few dairies who have this kind of unique strength. So to leverage our distribution which is an FMCG distribution which we have, we are looking at these new categories to enter," he said.
The company currently sells its products in east and north-east India, Delhi, UP, Rajasthan, Madhya Pradesh, Chhattisgarh, Maharashtra and Gujarat. The company has no plans to enter any new state in the ongoing year.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
