Hatsun completing expansion by March

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New milk powder plant coming up at Palacode in TN.

Hatsun Agro’s milk powder and milk products plant coming up at Palacode, Dharmapuri district in Tamil Nadu.
Hatsun Agro’s milk powder and milk products plant coming up at Palacode, Dharmapuri district in Tamil Nadu.

R. Balaji

Dharmapuri, Jan. 6 Hatsun Agro Product Ltd expects to complete its over Rs 100-crore expansion programme by March giving it a higher capacity to handle liquid milk processing and milk ingredients production.

Mr R.G. Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd, said the company is expanding the milk processing capacity to 27 lakh litres a day from 18 lakh litres. It now procures more than 15 lakh litres of milk daily and has plans to increase this to about 20 lakh litres during 2009.

The company, the largest private sector dairy that will cross Rs 1,000 crore in turnover this year, had announced the expansion programme to strengthen its milk procurement and processing infrastructure and production of milk powder and other ingredients. The expansion is being funded through own funds and debt.

Hatsun, which reported sales of Rs 540 crore in the first half of the current fiscal, is in three major segments – sales of branded liquid milk, ice creams and milk ingredients. Branded liquid milk (Arokya and Komatha), and ice creams (Arun Ice Creams), which constitute about two-thirds of the business, have not been affected by the slowdown, Mr Chandramogan says. International prices of milk powder hit a low but things are now looking up.

New unit

The new milk powder plant with a capacity to process about 8 lakh litres milk a day coming up at Palacode in Dharmapuri district is to start production in March. Over the last one year, the company has set up milk processing and packaging facilities in Kumbakonam, Palacode and Madurai, with one more to come up in Kangeyam in mid-2009.

The objective of the dispersed locations is to give the company efficiency of reach to procuring milk from dairy farmers, processing and supplying to the consuming centres. Logistics costs have a significant impact on the business, and the company is making a concerted effort to control it, he said.

Milk powder prices have hit a low of $1,800 a tonne, and Mr Chandramogan says the market has bottomed out and prices can only swing upwards. The dairy industry in New Zealand, Australia and the US has culled livestock to balance output with demand and it is only a matter of time before prices increase.

Hatsun’s new powder plant coming up at Palacode will go on stream in time to tap the upswing in the international market, he said.


The ice cream business is also set to grow with the company doubling its capacity with a million-litre-a-month ice cream plant coming up in Salem. The company expects ice cream business to grow by about 30 per cent in the current year on sales of about Rs 45 crore in 2007-08. With the new plant its contribution is set to increase significantly.

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Hatsun plans rural retail foray

(This article was published in the Business Line print edition dated January 7, 2009)
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