Growth pangs

Mother Dairy fruit and Vegetable Private Ltd (MDFVPL)— the second-largest liquid milk marketer after the Gujarat Cooperative Milk Marketing Federation (GCMMF)—has ambitious plans of taking its turnover to a billion dollars, or close to Rs 4,000 crore by 2010. For the year ended at Rs 2,204.62 crore. Before that, however, MDFVPL would want to get out of the red—its net loss last year stood at Rs 32.62 crore.

Paul Thachil, CEO, MDFVPL, has his reasons for the red ink. “The prices of fresh milk and milk commodities have seen an unprecedented surge over the last two-andhalf years due to growth in domestic demand and very high international prices. Our price increases were phased out with a view to reduce the overall impact to our consumers,” he says, explaining the loss. But the big plan is to sharply focus on its core area of operation—Dairy, which accounts for almost 70 per cent of earnings.

The company, subsequent to all the consolidation and amalgamations of divisions under one entity, has six verticals within. These are fresh milk, fresh dairy, ice creams & frozen vegetables, oil/ghee, modern retail format stores and institutional sales. “We today see certain overlaps and synergies in our business and we have been working on maximising this,” says Thachil.

The company started its expansion outside Delhi only in 2003 and today has different footprints for each of its brands across segments. Its Dhara brand, for oil, has the largest reach by far across the country and is available in stores from Ladhakh to Port Blair. Fresh milk, under the Mother Dairy brand, is available in Delhi, Hyderabad, Mumbai and Saurashtra. Mother Dairy ice cream is available all over the north, in Mumbai and in Kolkata; this year MDFVPL will target more towns in the western parts of the country. Mother Dairy butter and cheese is available in the top six cities (Delhi, Mumbai, Ahmedabad, Kolkata, Hyderabad and Bangalore). Fresh dairy (curd) is available in Delhi and entered Mumbai six months ago; the range includes Mother Dairy’s set curd, a pro-biotic range under B-active, lassi and flavoured milk. Finally, frozen vegetables under the Safal brand are available in about 100 top towns across the country.

Thachil, formerly with HLL (now Hindustan Unilever Ltd), has been systematically working to make his organisation more competitive in terms of quality and service. “Dhara has been a consistent top performer in our stores across the country for some time,” says Rajiv Sharma, Senior Category Manager, Staples, Food Bazaar, a national supermarket chain. Sharma offers another insight: “The other plus in favour of Mother Dairy and Dhara is that they have managed to customise their oils to different regional requirements.” For instance, Dhara has just entered the market with imported olive oil, packaged and marketed under the Daroliva brand. The range is also being broadened from the existing mustard, groundnut and sunflower to include soya bean and cotton seed oil.

But market sources and competition suggest that going forward the huge challenge for Mother Dairy would be its lack of any captive source of supply for milk. For instance, GCMMF with its brand Amul, and Nestle have captive suppliers of milk, which Mother Dairy lacks; it tends to pick up the excess supply of dairy farmers. Thachil reveals there are plans of finalising captive supply, as well as setting up captive third-party plants that would be exclusive to it: “Over the last few years, we have also developed three captive sources for our large and growing requirements of milk—the seven Saurashtra districts in Gujarat, several districts in west and central UP and the Chittoor district in Andhra Pradesh.

— Shamni Pande