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Dodla Dairy Ltd, a leading dairy company in the South, will invest up to ₹70 crore in a greenfield plant near Rajahmundry in Andhra Pradesh.
The capacity of the plant will initially be two lakh litres/day. It will be similar to the one made operational in Choutuppal on the outskirts of Hyderabad recently, according to Sunil Reddy, Managing Director. The new dairy to be located in Kantipudi village will be ready by end of 2018. In the next few years the company plans to expand to other southern States. The Andhra Pradesh plant will be funded through internal accruals and debt if necessary, Reddy said.
The Hyderabad-headquartered company got an investment of $50 million from the Rise Fund, managed by TPG Growth, in May this year. The Fund had acquired a minority stake in one of the PE funds, Reddy said.
The TPG Group should give us good management bandwidth in our future expansion and consolidation plans, he told BusinessLine .
With a turnover of ₹1,200 crore, the company has built a network of 50,000 retail and over 3,500 distributor network across nine States. Its capacity stands at 9 lakh litres/day, acquired from roughly two lakh farmers.
Dodla Dairy, started in 1998 by entrepreneurs Sesha Reddy and Sunil Reddy, has most of its units in the two Telugu States. It procures, processes, and sells dairy products, including fresh milk, butter, ghee, panneer, curd, flavoured milk, doodh peda, ice cream, and skimmed milk powder.
The Rise Fund investment was the second major global investment in the Hyderabad-based dairy companies in the last couple of years and shows a growing interest. In January 2014, Lactalis, the French major, had bought Carlyle Group-backed Tirumala Milk Products Pvt Ltd for an estimated $270 million.
“The milk business is very low margin, but the returns will be good if we play it well. There is consolidation in the dairy sector and we are gearing up to meet the competition. Since our older plants are giving good returns, we are well placed,” he added.
Africa businessDodla Dairy will upgrade and expand the plant in Uganda and explore opportunities to expand in the country and others, he said. The firm had acquired a 25,000 litre/day capacity plant a year-and-a-half ago.
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