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Patanjali enters dairy business, to sell cow milk

Livemint logo Livemint 14-09-2018 Sounak Mitra
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Patanjali Ayurved Ltd, the consumer prfroducts upstart founded by yoga guru-turned-businessman Baba Ramdev, on Thursday announced plans to sell packaged cow milk and milk-based products such as curd, chach, paneer and cheese, expanding in the ₹90,000 crore dairy market that has long been dominated by co-operatives.

Patanjali, which has only sold ghee so far among milk products, hopes to generate about ₹500 crore by end of 31 March 2019, and double that the next fiscal year, Ramdev said after unveiling the new products. A packet of milk will be ₹2 cheaper than the average market price, he claimed.

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According to Ramdev, the Haridwar-based consumer packaged goods firm has established a network of 56,000 retailers. “We have also partnered with about 100,000 animal dairy farmers to source milk of only Indian breed cows,” Ramdev said. The company aims to sell 1 million litres of milk every day. The dairy market in northern India is dominated by regional players like Kwality Ltd, Mother Dairy Fruit and Vegetable Pvt. Ltd and Gopaljee Dairy Foods Pvt. Ltd. Amul, owned by Gujarat Co-operative Milk Marketing Federation Ltd, a cooperative, also has a significant presence in parts of north India.

In metro markets, Nestle India Ltd has a stronghold. In the past couple of years, multinationals PepsiCo, Coca-Cola and home-grown biggies such as ITC Ltd have also stepped into the sector.

India’s dairy market is projected to cross $140 billion by 2020, from about $70 billion in 2013, according to a 2013 study by Investor Relations Society (IRS), a global network of investor relations professionals.

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Patanjali, which has struggled to grow in fiscal to 31 March 2018, has also announced an entry into the frozen vegetables market with packaged sweet corn, peas and potato fingers. While ITC entered the segment with Farmland brand in November 2017, Mother Dairy has a stronghold in the northern parts of India with Safal brand, and Canadian multinationals McCain Foods Ltd is a key player.

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On Thursday, Patanjali also announced its entry into cattle feed and feed supplements that will be sold under Dugdhamrit brand and packaged drinking water under Divya Jal brand. After a few years of scorching pace, Patanjali’s growth stalled during the year ended 31 March 2018, Mint reported in May. In financial year ended 31 March 2017, Patanjali had more than doubled its revenue to ₹10,561 crore from ₹5,000 crore a year ago. As part of its diversification strategy, Patanjali said it will now manufacture and sell solar panels, solar street lights, solar hybrid inverter and solar water pumps. Mint first reported on 4 December 2017 about Patanjali’s plans to enter solar business.

This will be the company’s first exposure to the infrastructure sector and comes after its runaway success in consumer products. The government is considering a 30% capital subsidy as part of a new solar manufacturing policy.

Patanjali had acquired Advance Navigation and Solar Technologies Pvt. Ltd, a manufacturer of navigation aid equipment, earlier this year. Currently, the facility has a manufacturing capacity of 120 megawatts. Patanjali plans to invest around ₹100 crore in solar equipment manufacturing and its factory in Greater Noida.

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