The city-based Hatsun Agro Product, the countrys largest
private dairy, has applied to the government to expand its Salem
and Kanchipuram dairies to 5 lakh litre per day (lpd) and 3.5 lakh
lpd from the current capacity of 3 lakh lpd and 1.75 lakh lpd
respectively. The company has another dairy in Belgaum, handling 1
Hatsun Agro managing
director R G Chandramogan says the proposed organic expansion will
enable the company to penetrate deeper markets in Karnataka and
enter newer markets like Pune. The company at present sells two
brands Arokya standard milk and Komatha toned milk.
"We are also ready
for acquiring dairies that come up for sale," he says. The
company had bought out Ajith Dairy Industries recently. "Once
a commodity item, today milk has evolved into a branded product.
And that is why there is a shakeout of players at the market
place," says Chandramogan.
Though branding of milk
has come to stay, the product is still price-sensitive. For
instance when Tamil Nadu State Cooperative Milk Federation (Aavin)
increased its retail price by a rupee, its sales in Chennai got
reduced. Some private players like Hatsun Agro, after holding
their price line for some days, followed suit and increased their
exerting pressure. When Aavin increased their procurement prices
we had to match so as to retain our supplies," says
Chandramogan. "Hatsun Agro pays 30 paise more to its 75,000
farmers than what Aavin pays to its milk suppliers."
About competing brands
like Subam and Vaishnavi holding their price lines (Rs 12/litre),
he says: "Those brands are coming from Andhra Pradesh where
procurement prices are lower by a rupee or two as compared to
ours. Soon, you will see them matching our MRP." In order to
retain customers in its fold, Hatsun Agro has introduced a monthly
milk-card system for its two brands.
Speaking about the
companys ice-cream division, he says the market has matured and
the division contributes just 17 per cent of the companys
turnover. Hatsun Agros Arun Ice-Cream is the largest-selling
ice-cream brand in the south. Unlike the milk market, competition
in the ice-cream segment is fierce. Even hotel chains like
Saravana Hotels have ventured into this segment.
With his supplies meeting
the demand, Chandramogan is not looking at other milk products
like milk powder, butter and ghee. "Hatsun Agro will close
this fiscal with a turnover of Rs 215 crore; we are targeting a
revenue of Rs 300 crore for the next year."