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Prabhat Dairy, a milk and dairy products manufacturer, has signed a strategic alliance with Denmark-based DLG Group, as part of its plans to foray into animal nutrition business.
For the Mumbai-based firm, this is part of its planned backward integration as intends to venture into animal nutrition business.
Copenhagen-headquartered co-operative Dansk Landbrugs Grovvareselskab (officially DLG Group) is into production of high-quality vitamin-mineral feeds and farm supplies.
Strengthening feed biz
“The strategic alliance is part of Prabhat Dairy’s plans to venture into animal nutrition business, which includes cattle feed, nutrition supplements and animal genetics, by launching a separate business. At present, cattle feed forms a major part of animal nutrition in India and the move is to capitalise on its huge potential,” a source close to the development told BusinessLine.
“For the Indian company, this is backward integration to its milk and dairy products business,” the source said.
Further, this will also help the firm to strengthen its production chain and build its association with the farmers. The supply of superior quality animal nutrition products will help in increasing milk yield.
Financials
The financial details of the agreement could not be immediately ascertained. When contacted, a Prabhat Dairy spokesperson declined to comment.
India’s animal feed industry — which primarily comprises cattle feed and poultry feed — is expected to be worth $30 billion by 2020.
PE fund India Agribusiness holds a 14.37 per cent stake and French development financial institution Proparco holds an 8.68 per cent stake in Prabhat Dairy.
Prabhat Dairy’s product offerings include pasteurised milk, flavoured milk and sweetened condensed milk among others.
Its integrated business model encompasses all aspects of the dairy industry value chain, including cattle feed supply, engaging with farmers on cattle health and milk production and procurement of raw milk among others.
Manufacturing units
In an earlier investor presentation, Prabhat Dairy said it was expecting to post ₹2,000 crore in revenues by FY20 from the present ₹1,500 crore.
The company, which has two manufacturing facilities — in Navi Mumbai and Srirampur, Ahmednagar — also intends to double its general retail reach to 2 lakh stores by 2020.
In 2018, Prabhat Dairy started with two new packing stations at Solapur and Amravati, increasing the total number to four.
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