We have eliminated bulk agents, says Hatsun MD

Hatsun Agro Products Ltd, the largest private sector dairy company with a clutch of top brands including Arokya milk, Arun Icecreams and Hatsun dairy products in its fold, has seen its net quadruple in the first quarter of the current year. Its investments in acquisitions and expansions a year and a half back have begun to pay off, says Managing Director RG Chandramogan. The company has also strengthened its milk procurement systems qualitatively and quantitatively to deal with dairy farmers directly. He shares with BusinessLine some of the key developments and the focus on strengthening links with customers that will drive growth for the ₹ 2,900-crore company. Edited excerpts:

The first quarter results have been quite buoyant. What are the factors driving the growth?

The milk procurement base has increased by about 25 per cent over last year. Earlier, we had built up handling capacity and now utilisation of the installed capacities is happening. We now procure about 28 lakh litres of milk daily and capacity utilisation is about 90 per cent in liquid milk plant and nearly 100 per cent in the milk powder plant. At peak procurement, we have handled 29.5 lakh litres of milk.

What is driving the increase in procurement?

We have completely eliminated milk traders, the bulk agents who collect milk from groups of farmers to bring to the chilling centres. More than 95 per cent of the procurement is directly from farmers, with money going into their bank accounts. We are the first in the country to do that. Banks, which are looking to disburse viable agriculture loans, get a huge database of solvent farmers.

We invested over a ₹100 crore in equipment to assess milk quality, based on which farmers are paid. We have put Eko Milk Analyser, an equipment that analyses the milk in front of the farmer at each of our 8,000 milk collection centres across the State. Each machine costs ₹1.25 lakh. Farmer’s are confident and banks are also happy and willing to support them.

What is the status of the expansion plans announced in 2013?

Towards the end of 2013, we did three major investments totalling over ₹200 crore. We expanded into Andhra Pradesh with the acquisition of Jyothi Dairy, set up a greenfield dairy plant in south Tamil Nadu and acquired a cattle feed plant. All these have stabilised over the course of last year and are now paying off.

Jyothi Dairy, which was handling about 65,000 litres of milk daily, has now grown to 2 lakh litres and has a presence in Telangana and Andhra Pradesh. The ‘Santosa’ brand cattle feed business targeting our own dairy farmers has grown to about ₹15 crore a month.

What will drive the next phase of growth?

We are now strengthening our retail and marketing and getting closer to our customers. The traditional Hatsun Distribution Centres are being rebranded as Hatsun Daily and will act as distribution and retail outlets for all of Hatsun Agro products. There are now 2,200 outlets and these would be expanded to over 3,000 in the next year-and-a-half.

Arun ice cream is the largest brand in South India, Arokya is the largest private milk brand. Hatsun Ghee, which is cow’s milk ghee, is a leader in north India and has a substantial share in Tamil Nadu. Ice cream chain Ibaco, with 140 outlets, is picking up. We also have a new brand in Aniva milk sweets in the ready-to-eat segment which is being tested.

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