Parag Milk Foods Ltd. has entered into an agreement with the French foods company Danone to acquire its manufacturing facility in Sonipat, Haryana, for an unspecified amount.
The facility was up for sale after Danone closed down operations of this unit three months ago owing to distribution issues concerning its diary business which included flavored yogurt, lassi, misti doi and milk.
Post acquisition, Parag has plans to add a few more manufacturing facilities for production of pouch milk, flavored milk, butter milk and curd.
The company will have a total investment of ₹ 30 crore in this facility, including the cost of acquisition of the facility, said Vimal Agarwal, CFO, Parag Milk Foods.
The deal was expected to close in 6 to 8 weeks after completion of regulatory requirements and other approvals, he said.
“The acquisition is a strategic investment in strengthening Parag Milk Foods’ fresh category distribution in the North and North-East regions of India,” the company said in a statement.
North India, a key market
“North India is one of the key markets for Parag Milk Foods. Given that dairy products hold a large space in many households here, consumption of milk and milk products is the highest in this region,” said Devendra Shah, chairman, Parag Milk Foods.
“The acquisition of the manufacturing facility of Danone will strengthen our product offerings and leverage our strength in distribution of various products,” he added.
Currently, the products that are sold in North India are supplied from the company’s Manchar plant in Maharashtra. The company has another manufacturing facility in Andhra Pradesh that caters to markets in South India.
“This acquisition will bring us closer to the end-consumers and will give us an edge to understand the consumer preference in North India and expand our product offerings. This will be in line with our long-term strategy to make the goodness of cow’s milk reach different parts of the country,” said Akshali Shah, senior vice-president, strategy sales & marketing, Parag Milk Foods.
The manufacturing plant is spread across 5,500 sq. meters, and its current milk processing capacity is 0.75 LLPD (lakh litre per day) along with curd processing capacity of 15 metric tonnes.
