French firm Lactalis to buy Prabhat Dairy business for US$238m

INDIA – The French dairy company, Lactalis has reached an agreement to acquire the milk-processing business of Maharashtra-based Prabhat Dairy for US$238.37 million (Rs 1,700 crore).

According to ET Retail, Lactalis, through its local arm Tirumala Milk Products, will acquire Prabhat’s dairy business as well as its step-down subsidiary Sunfresh Agro Industries through a share purchase agreement.

The association with Lactalis – one of world’s largest dairy players will offer this business a strong platform for accelerated growth momentum in becoming one of the largest private dairy businesses in India.

VIVEK NIRMAL, JOINT MANAGING DIRECTOR OF PRABHAT DAIRY

Lactalis acquired Hyderabad-based Tirumala Milk, which is the second largest private dairy company in South India for US$275 million (Rs 1,750 crore) in 2014, marking its entry into the country.

The acquisition expands the company’s capabilities in growing its business outside home, with India providing a promising market for the rapidly expanding dairy industry.

Prabhat, incorporated in 1998, has an aggregate milk processing capacity of 1.5 million litres per day and annual revenue of US$217.74 million (Rs 1,554 crore).

A focus on animal nutrition

With the divestment, Prabhat Dairy said it intends to develop its cattle feed business in various parts of the country and expand into allied businesses such as animal nutrition and animal genetics.

This development further supports Prabhat’s plans to enter and focus on animal nutrition business in India.

As part of these plans, the Hindu Business Line reported that the company had entered into a strategic alliance with Denmark-based DLG Group for expanded commercialization in India.

Under the agreement, two products (Milking Cow and Dry Cow) had been developed in Denmark and shipped to India under a pilot project.

Prabhat Dairy is a supplier of cattle feed under the brand name ‘Annapurna’ to the farmer community.

It then said that it was seeking other opportunities for new ventures to strengthen its production chain and further build on their current strong association with the farmers.

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