Mother Dairy is eyeing to double its revenue over the next three to four years from the current Rs 20,300 crore, banking on new manufacturing plants coming on stream, accelerating growth in its value-added products (VAP) portfolio and the rapid expansion of quick commerce. The company expects fresh capacity additions across key markets to drive volumes while deepening its presence beyond its core markets, its top official said.
In an interview with BW Businessworld, Jayatheertha Chary, Managing Director, Mother Dairy Fruit & Vegetable, stated that the company has approved over Rs 2,000 crore of investments over the past two years to expand its manufacturing footprint, with new facilities in Nagpur, Bihar, Punjab, Gujarat and Andhra Pradesh expected to strengthen its national presence. He said quick commerce currently contributes 7 to 8 per cent of the company's overall business and around 25 per cent of its dairy products portfolio and is looking at doubling the share in the dairy products business over the next two years.
Chary also outlined ambitious plans for the Safal business, aiming to grow its over 30,000 tonne pulp business by 2 to 2.5 times over the next three to four years, while scaling value-added dairy categories such as paneer, curd, beverages and protein-led products that continue to see healthy growth. He added that the company will continue expanding its national footprint beyond the 16 states where it currently operates, with a focus on eastern and southern India through a mix of owned facilities and third-party partnerships. Edited Excerpts:
Milk procurement prices remain elevated, while packaging costs have reportedly increased significantly. At what point do cost pressures become unsustainable to absorb?
Last year, milk procurement prices increased by almost 8 per cent. Even input prices for farmers have increased drastically and due to the recent war, packaging material costs have also gone up by over 40 per cent. After the increase in petroleum prices, even logistic costs are going up and are not yet stabilised.
Now that the war has subsided, probably there will be some respite going forward. We are in a wait-and-watch situation. However, since prices have gone up by 8 per cent, we have marginally increased our cost by almost 3 to 3.5 per cent. Being a subsidiary of NDDB, our vision is to give farmers remunerative prices; 80 to 85 per cent of the sales realisation goes back to the farmers, and we always keep the interests of our farmers and customers at the core. As a responsible company, we see that our MRPs are not proportionately increased and strike the right balance between farmers and the consumers.
Value-added products contributed significantly to FY26 growth. Which categories- curd, paneer, cheese, ice cream, beverages or protein-led products- are currently growing the fastest?
Overall, as an organisation, we grew by 17 per cent last year. If you talk about product categories, in paneer, we grew by more than 30 per cent and we are still growing at the same rate. Curd is contributing significantly, which is also upwards of 25 per cent. In beverages also, we introduced our famed flavoured milk in aseptic packaging, which has also contributed in increasing our market share.
Value-added dairy products give you better margins than milk. As mentioned earlier, we are interested in serving our consumers with minimum cost hikes. We always try to balance between farmers and consumers and we do not raise prices much for consumers in milk. The margins in milk are bare minimum. Only these products give us some margins, which helps us to plough back in creating a robust infrastructure for serving consumers, while providing more avenues to the farmers’ produce.
In the last five years, the turnover has doubled to cross the Rs 20,000 crore mark; what is the goal when it comes to the next five years?
We want to put our efforts to double it over the next three to four years, because of new upcoming capacities that will soon be operational. Once our capacities come up, our volumes will go up in those areas definitely. In the next three to four years itself, we will double our revenue.
Earlier, the company said that it is investing around Rs 600 crore in the fruits and vegetable plant in Gujarat and Andhra Pradesh and also Rs 500 crore in the Nagpur milk processing plant. What is the update and what does your future capex roadmap look like?
The investment in Nagpur is Rs 600 crore and we are almost at the verge of completion of the project and hopefully by the end of this financial year, we will get this manufacturing capacity on stream. Apart from that, we have also launched three more new projects, two in Bihar and one in Punjab and capacity expansions have been taken in Tirupati, in Andhra Pradesh.
We have also taken over a plant of Nalgonda-Ranga Reddy Districts Milk Producers Mutually Aided Cooperative Union (Narmul) in Hyderabad. NDDB has signed an MOU. They have a plant and we are refurbishing that plant which will help us in expanding our presence in Hyderabad in a big way.
Mother Dairy still derives over 60 per cent of revenue from Delhi-NCR. What is the roadmap for becoming more nationally diversified and which regions are you planning to enter next?
We are already a national player. We are now available in 16 states. Geographically, we want to be present in every state. If not direct investment, through third-party arrangements, we will enter into many other eastern and southern states wherever we are not present right now. Our aspirations are very clear- we want to be a national player. The aspiration of a national brand is always alive and it is a continuous process, not only with milk but with all our offerings.
Quick commerce and modern trade are changing how consumers buy perishables. How significant are these channels for the company? What is the growth outlook?
Yes, we have leveraged this opportunity. In the last three years, we have doubled our turnover in the quick commerce channel. Now our strategy is that, since they are also expanding to tier 2 and tier 3 cities, we will be expanding along with them. Since we are already present in 16 states, it will help us to logistically get into those towns very easily along with their channel. We are present across all channels and this will be a focus area because this is going very fast.
Currently, quick commerce is contributing around 7 to 8 per cent to our overall business. In value-added dairy products alone, it is around 25 per cent, which we want to double in the next two years.
India is witnessing a surge in protein awareness and the company also introduced its high-protein 'pro' portfolio. How meaningful can protein-led products become over the next five years for you?
We have launched it, tested the market and we have got phenomenal success. Now, our aim is to expand this to other regions. In the last two years, our board has approved over Rs 2,000 crore of investment. We are getting into different geographies with our manufacturing facilities.
It may take one to two years to reach out to all geographies. Once we are ready with our manufacturing facilities, we will bring these products across India. Though we are also trying to work out with our associated plants in a smaller way, but with our plants coming up, we will be present across the country with these new offerings.
What is the current scale and growth trajectory of the Safal business? How do you envision its evolution from a being just a fresh produce operations into a broader foods platform?
In Safal, we have three divisions. One is the retail F&V segment, we have approximately 400 stores operational in the Delhi NCR region. Another one is a frozen segment and the third one is our pulp business, which is led by mango.
Over the last two to three years, we have also concentrated on non-mango portfolio, such as banana, guava, jamun, amla pulp, etc., so wherever we buy these things, our farmers there will benefit from that. Many of the times, farmers do not even have a market for these products. For example, even in mango, if you see last year, farmers really suffered as there were no takers, even at low prices. We tried and supported them wherever possible because we also have limited capacities and it is a huge market.
We are coming up with a new facility in Kuppam, Andhra Pradesh, that will come up by the end of next year and it will become operational. By the 2028 season, we will be able to process mango there. We have plans for not only mango. Banana is in Andhra region, Tamil Nadu also has a lot of banana, papaya and tomato is there. Nearby areas of Bangalore have tomato, so we can do that pulp there.
We are now processing more than 30,000 tonne of pulps. Our aim is that in the next three to four years, we want to grow this business by two to two and a half times. Similarly, in frozen snacks segment, we are setting up our own French Fries factory in Itola in Gujarat, which will also come into stream at the beginning of FY28.
Dhara operates in a category that is highly exposed to global commodity price volatility. How is the brand performing currently?
We are procuring oilseeds like mustard and groundnut directly from farmers through our producer organisations in Rajasthan and Gujarat. We do our bit to help our farmers in this segment as well.
In Dhara, we try to give thrust to indigenous oils as it will help our farmers. Almost 70 to 75 per cent of our portfolio is indigenous oils. We try to give the maximum prices to our farmers. That way, we want to improve their pricing and also reduce the dependency on imports. We did a lot of campaigns also. In fact, Prime Minister Narendra Modi also said recently that consume less oil. We are doing this through our advertisements, through our campaigns. We openly told our consumers, consume less oil. We are doing our bit to help our country to reduce the import burden.
The premium dairy segment, from A2 milk to functional beverages and specialised nutrition, is growing rapidly. Do you see premium dairy becoming a meaningful growth engine in India, or will affordability continue to define the market?
Our aim is to service all kinds of customers. We would like to really service the lower strata of our mass customers by offering them affordable packs at Rs 10 price point. That will continue; that is a trend and everybody would like to be there. A lot of people who cannot afford bigger packs, we want to service them as well.
At the same time, we are now focusing on more premium customers as well, we cannot leave them out. For them, we are bringing new-age products across the portfolio. For example, this year we have launched Raita. This is for the premium customer who wants to have a different taste and convenience. Number two, if you see curd, we have introduced an Ultimate Curd. This is for consumers who really want a better taste compared to a regular curd. It is really doing very well in both modern trade format and general retail trade. Both formats have picked up very well. It is well accepted by all kinds of customers. We would like to be present across all the segments and we do not want to leave any customer unserviced.
What is the status on Exports business? With global dairy prices remaining volatile, do you see the company playing a larger role in exports?
We are a late entrant in the export segment, our journey is just two years old. Unfortunately, because of this war situation, it really affected our business as we concentrated more on the UAE and other GCC countries. But it has again started picking up. Though freight is slightly higher at this point in time, we expect that in the next one to one and a half months, prices will stabilise and our exports will start picking up again.
How is your marketing mix evolving? Which channel is the key priority now, since you have to be relevant to the newer generation as well?
We are also changing as the needs of the consumer are evolving and our marketing team is really working differently to meet those requirements, challenges. We are doing a lot of marquee associations like the IPL, Indian Idol, etc.
Since we are now a national brand, we want to reach out to every consumer across India. We are present in digital media and social media. As far as media mix is concerned, earlier the split between traditional media and digital or new media used to be to the tune of 80:20- 80 towards traditional media, 20 towards digital. Now this 20 has almost moved to more than 40 per cent, our percentage of investments in digital media is increasing significantly, as far as our media mix is concerned. However, the need to make Mother Dairy a national brand will also be done with the help of national media. |
