Hatsun Agro Product Limited, India’s largest private dairy company, plans to tap new markets to distribute its Arun Icecreams.

Arun Icecreams aims to fortify its position in Seychelles through increased marketing efforts. New markets are looking to be tapped in the US, African and Gulf regions.

In 2022-23, Arun Icecreams was introduced to the new export markets of Singapore and Maldives. With the initial response from consumers being mostly positive, the company is now looking to expand distribution and improve its product range. The company produces 1.96 lakh kg per day of ice creams, ice cream cakes, and kulfis, , the company’s 2022-23 annual report says.

Challenges

Despite phenomenal growth in milk production to become the largest milk producing country in the world, dairy exports from India face a number of challenges. Unclear logistical planning, inexperience with border control and distribution laws like Customs clearance, unforeseen tariffs, a check of compliance with local rules and regulations, understanding legalities for each market, financial risk in currency exchange rates, not being sure of the products selling in the export markets and not having a diverse work force are just some of the problems that may appear before the goods even enter the market.

For Hatsun, export contributes 0.1 per cent of the total revenue, which was ₹7,257 crore in 2022-23.

Strong position

Arun Icecreams, which has been there for nearly 50 years, enjoys a strong position in the South. Hatsun produces various innovative ice creams in a variety of formats like bars, cones, tubs and cups.

HAP Daily I Plus mainly stocks Arun Icecreams. With over 3,600 outlets, HAP Daily has expanded its reach in to traditionally strong markets like Tamil Nadu, Pondicherry, Karnataka, Andhra Pradesh and Telangana and has started to make inroads into Maharashtra, Kerala, Orissa, Goa, Chhattisgarh, Madhya Pradesh, West Bengal, Jharkhand, Gujarat and the Andamans.

HAP Daily products are sent to stores from kiranas and premium supermarkets to various outlets. This increases availability and expands the brand’s reach to a wider consumer base. These retail outlets offer tremendous growth potential to franchisees.

HAP leverages mega cold storages situated in the state of Tamil Nadu at Salem, Kanchipuram, Karur, Palacode, Tirunelveli, Red Hills; in Andhra Pradesh at Kasyapuram; in Telangana at Shadnagar and Govindapur. The Govindapur Plant of the company is Asia’s biggest plant of ice cream, to meet its peak ice cream demand during the summer months of April and May, the annual report says.

Milk procurement

Hatsun company procures milk by sourcing it from about 4,50,000 farmers spread across 12,000 villages on a daily basis. This process is done in most of the South Indian states – Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and the state of Maharashtra.

It operates more than 1,200 rural milk procurement routes with an assigned route plan, which determines the pick-up timing and schedule for the milk procurement vehicles to reach the Hatsun milk chilling centres. During FY 2022-23, your company procured milk at an average of 29.70 lakh litres per day (LLPD) against 29.94 LLPD during FY 2021-22.

Ratings

In January, CRISIL Rating reaffirmed its rating on the bank facilities of Hatsun at ‘CRISIL AA-/Stable’. Hatsun has established market position supported by strong brand, particularly in South India with a portfolio of established brands, superior brand equity, well-spread distribution and procurement networks, and an aggressive marketing strategy.

At the time of filing this report, the company’s share price on the NSE was trading at ₹1,074.80, down by 0.65 per cent.

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