The Hindu Business Line : Hatsun Agro expanding milk processing units

Chennai, June 24 Hatsun Agro Products Ltd, the largest private sector dairy company in India, is expanding its milk processing infrastructure to intensify marketing and improve efficiencies.

The company has reported a turnover of Rs 863 crore for 2007-08, a 27 per cent growth over the previous year, and expects to cross Rs 1,000 crore this year.

The company markets liquid milk under the ‘Arokya’ and ‘Komatha’ brands, in Tamil Nadu, Karnataka and Kerala, apart from a range of dairy products. It also sells ice cream under the brand ‘Arun’ in the domestic and export markets.

Mr R.G. Chandramogan, Chairman and Managing Director, said the company plans to invest over Rs 120 crore this year to set up two milk processing and packaging centres, each with a capacity of about 2 lakh litres a day.

With the processing plants dispersed geographically, the company moves the milk relatively shorter distances from the dairy farms to the processing plants and to the consumers. The savings would be about 40 paise a litre in milk transport, which adds up to a significant amount for the company —Hatsun handles about 16 lakh litres milk a day. Logistics cost works out to about 6-7 per cent of milk cost.

The company, which initially had two large processing centres (of 5 lakh litres capacity at Kanchipuram and another of 6 lakh litres at Salem), is now setting up smaller units.

The two new units would come up in Kangeyam and Kumbakonam. These would be in addition to the 1.5 lakh litres a day unit set to start within a fortnight and the recently-commissioned 2lakhlitre unit at Madurai.

The company is also doubling its dairy ingredients – milk powder and milk fats – production capacity to over 180 tonnes a day. Milk powder production would increase to 120 tonnes a day from 60 tonnes and milk fat production to 60 tonnes. The expanded capacity would be in place by February 2009, and the benefit would accrue from 2009-10, he said.

At the company’s EGM today, the shareholders approved a preferential issue of ‘zero per cent compulsorily convertible preference shares’ to raise Rs 12 crore. This is to part-finance the ongoing expansion. They also approved a resolution to raise the borrowing limits of the board to Rs 250 crore from Rs 120 crore and subdivision of the face value of shares to Rs 2 from Rs 10 .

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