Parag Milk to buy Danone’s closed facility to serve northern India

INDIA – Parag MilkFoods on Thursday said it will acquire French food giant Danone’s Indian manufacturing facility for Rs 30 crore (US$4.53 million)

The facility at Rai in Haryana’s Sonepat area produces curd, yogurt among other dairy productsand the acquisition is aimed at expanding Parag’s presence in the northern part of the country.

“North market contributes near 25% of our total sales. This acquisition will help us grow at 35-40% in the northern markets.

“We used to send products from our Maharashtra facility to north. This deal will save us logistics cost,” said Devendra Shah, Chairman, Parag Milk Foods.

“We expect this acquisition to add annual sales of Rs 150 crore (US$22.7 million) to our topline in the next two years.”

Over the past decade, Parag Milk Foods with its major facility in Pune has created brands such as ‘Go Cheese’ and ‘Gowardhan’.

Milk products now contribute two third of the company’s revenue compared with half four years ago while cheese business contributed 21% to the company’s revenue in FY17.

Parag is now the second largest cheese producer with 33% market share.

Market leader Amul has 40% share followed by Britannia at 9% and Dynamix with 7%.

Earlier this year, French foods maker Danone said it will exit its dairy portfolio in India, seven years after it entered the category dominated by Gujarat Cooperative Milk Marketing Federation (GCMMF)-owned Amul and Mother Dairy, besides Nestle.

While India is the world’s largest producer and consumer of dairy, Danone’s dairy business could not compete with bigger players and remained a non-starter.

The size of the country’s dairy sector is estimated at Rs 6 lakh crore (US$90.6 billion), growing at nearly 10% annually.

The organised sector is only 20% of the total dairy sales.

ET Retail

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