The Hindu Business Line : Hatsun targets growth in milk ingredients business

Chennai, May 9 Hatsun Agro Product Ltd is in the process of doubling its milk powder and ingredients production capacity with an investment of over Rs 90 crore, which would also enhance milk procurement capacity significantly, according to Mr R.G. Chandramogan, Chairman and Managing Director.

Milk ingredients business including the skimmed-milk powder and milk-fat products accounts for nearly a fifth of the business for the Rs 600-crore company. With the ongoing expansion plan, the business would grow as a share of its turnover, and make it a significant leader in the export business.

Hatsun’s 60-tonnes-a-day milk powder plant is set to commence production by the year-end. Work on the plant has started at Krishnagiri, in addition to its existing plant, at Kanchipuram, where it has another 60-tonne plant. It would double its milk powder production capacity. Also, these facilities each add another 30 tonnes a day of other milk ingredients — milk fat such as ghee and butter. This would mean the company’s total milk ingredients capacity goes up to 180 tonnes a day. Milk ingredients are in demand in a wide range of industries, including food and pharmaceuticals.

Significantly, in terms of milk handling, according to Mr Chandramogan, the new powder plant adds about 7-lakh litres a day of milk processing capacity to its current handling of about 16 lakh litres. This would be a 40 per cent jump in milk handling capacity.

Milk ingredients form a significant part of the company’s business in the domestic and export segment. According to its annual report for 2006-07, on total sales of Rs 585.28 crore, milk ingredients were about Rs 105 crore, with half of it from the export market. (The financial results for 2007-08 are to be announced in June.)

Hatsun sells milk under the brands Arokya and Komatha, and is the manufacturer of the Arun brand of ice creams, its flagship brand.

Hatsun Agro, subject to statutory approvals and clearance by the shareholders, plans to raise about Rs 12 crore through a preferential allotment to individuals and financial institutions. This would be to fund the milk powder plant investment, with the rest coming from internal accruals and debt.

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