Prabhat Dairy Limited is an integrated milk and dairy products company in India catering to institutional as well as retail customers. We produce fresh, dry, frozen, cultured and fermented dairy products, including pasteurized milk, flavoured milk, sweetened condensed milk, ultra-pasteurised or ultra-high temperature (UHT) milk, yoghurt, dairy whitener, clarified butter (ghee), milk powder, ingredients for baby foods, lassi and chaas. We sell our products under our retail consumer brands as well as ingredient products or as co-manufactured products to a number of institutional and multinational companies.
Prabhat Dairy has also started the Ghar Jaisa Dahi campaign in Mumbai and Pune with a heavy focus on its curd based value added products.
The company is targeting around 15000 outlets in the two cities. It is going to handle a volume of around one million litres of milk this year. The volume is going to be a constant challenge for them owing to the back to back years of drought that Maharashtra has been facing. The company has no major capex plans lined up. However, it is constantly expanding its milk procurement base to several other districts in Maharashtra. “We are already running at 55 to 60 percent capacity utilisation. First our aim is to bring this capacity to the optimum level.”
The company. More details are gathered as our Adil Abbas Naqvi gets in conversation with Vivek Nirmal, Joint MD, Prabhat Dairy.
Q. Tell us more about the details of your company and the products that you offer food processing industry.
Established in 1998, Prabhat Dairy Ltd is an integrated milk and dairy products company in India catering to institutional as well as retail customers. We produce fresh, dry, frozen, cultured and fermented dairy products, including pasteurized milk, flavoured milk, sweetened condensed milk, ultra-pasteurized or ultra-high temperature (UHT) milk, yoghurt, dairy whitener, clarified butter (ghee), milk powder, ingredients for baby foods, Cheese, Paneer lassi and chaas.
Prabhat majorly has two business verticals B2b and B2c. In B2b segment company focus on premium dairy ingredients that are supplied to leading Indian companies and major MNC’s in India. In consumer space, company focus on daily nutritional products such as Ghee, Dahi, Lassi, Shrikhand etc.
Recently we had started Food Service Division that will supply products to HOTEL, RESTAURANT and CATERERS. The major objective of this division is to provide Quality products and Service to this segment. The major strength of Prabhat is its procurement network that has been developed in these years. Today Prabhat connects to more than 85000 thousand farmers on daily basis and collects 9 lakh liters of Milk daily.
Q. How big is the Indian dairy market and what is your share?
India is the world’s largest milk producing nation with 18% of the total milk production globally. India showed the most notable increase in production over the last two decades, where the general trend has been a secular rise in the production by most of the developing countries.
Q.Tell us about the growth in the market and what kind of growth are you envisaging by 2016.
At present, about 42 per cent of the total milk produced in India is purchased by consumers directly from milk farmers in a raw form and it is the remaining 58 per cent which goes for processing and is sold as processed milk and milk products.
The processed milk and milk products segment is expected to record about 12-13 per cent CAGR between 2013-14 and 2016-17. Growth will be driven by several factors such as changing lifestyle of consumers, growth in the food services industry, increasing urbanisation, rising need for convenience, better health awareness among end-users, etc. This year Prabhat is focussing on its consumers business and building its distribution network.
Q. Your company is the leading manufacturer in Dairy products. How do you maintain your position in an industry which is fast growing with new competitors?
Over the years company has been able to develop a good milk procurement network and 2 state-of-the-art manufacturing facilities. The procurement network is build in the high cow milk producing area and one of the manufacturing facility is in Navi Mumbai which is the largest Dairy products consuming city in India. So strategical location gives us edge over the competition.
Q.How good has been Prabhat Dairy recent performance? Any diversification or expansion plans in the pipeline? What are your strengths?
Overall performance of the company is very good. Currently company has made its products available in 10 states of India. Already company had started its Cheese plant last year which is one of the India’s largest cheese plants. Also company had started manufacturing Paneer and shrikhand recently. Presently company doesn’t have any diversification plans as such.
Q.Which Prabhat Dairy product would you say is the most popular among your consumers?
All the products are popular among the consumer but to name few are Dahi, Lassi, Chaas, Paneer etc
Q.Does government helping the Dairy industry, as it has to or do you satisfy with the government’s help?
Dairying in India is not just an economic activity. It is an integral part of our society, our culture. No other industry can claim to touch lives of millions of farmers; more than half of them landless. Given market access, remunerative prices to farmers, dairy can become a potent tool for equitable growth and income distribution. The government should train the farmers with different aspects of Dairy. Many more new dairy technology institutes on the lines of the ones in Karnal, Anand, Udaipur, Bangalore should be announced. The major problem in India starts at the procurement level where adulteration and other malpractices take place. So government should encourage more and more farmers to make Dairy as a source of Income. Farmers should be educated on Fodder, breeding, Medication and cattle management.
Q. So what’s the secret of your success?
Prabhat is known for its Manufacturing and Procurement excellence. They have been the major contributor towards the company success. Over the years Prabhat has been working with leading MNC’s which believe in quality of products and manufacturing excellence that has led the company to set high standards and success overall.
Q. What are the challenges that you face in terms of market penetration and rival competition?
I believe there is enough chunk of business for everyone in the dairy industry. And as far as competition is concerned the Milk production is growing at a rate of 4.3% while consumption is growing at 5% leaving a gap between demand and supply. So there is huge gap between demand and supply, which gives enough opportunity in the industry to explore.
In the coming days the industry will be driven by value added products. Growth for value added products are driven by several factors such as changing lifestyle of consumers, growth in the food services industry, increasing urbanisation, rising need for convenience, better health awareness among end-users, etc.
Q. What are your future plans?
The Major revenue of the company comes from B2b segment. Recently, we started concentrating on increasing our Retail business and it is expected to be 50% of the total revenue of the company in the coming years. Our major focus will be on high margin value added products such as Cheese, Paneer etc.
