June 26, 2008

Hatsun Agro Products Ltd, the largest private sector dairy company in India, is expanding its milk processing operations.

R.G. Chandramogan, Chairman and Managing Director, said the company plans to invest over Rs 120 crore (US$28 million) this year to set up two milk processing and packaging centres, each with a capacity of about 2 lakh (200,000) litres a day.

Hatsun handles about 1.6 million litres of milk a day, with logistics accounting for up to 7 percent of milk cost.

The company, which initially had two large processing centres at Kanchipuram and Salem, is now setting up smaller units to disperse their locations geographically and save on logistics costs.

The two new units would come up in Kangeyam and Kumbakonam. These would be in addition to the 1.5 lakh litres a day unit set to start within a fortnight and the recently-commissioned 2 lakh litre unit at Madurai.

The company is also doubling its dairy ingredients - milk powder and milk fats - production capacity to over 180 tonnes a day.

Shareholders also approved at an EGM a share issuance to raise Rs 12 crore (US$2.8 million) to partially-finance the expansion.

They also approved a resolution to raise the borrowing limits of the board to Rs 250 crore (US$58.36 million ) from Rs 120 crore (US$28.01 million ).

The company, reported a turnover of Rs 863 crore (US$201.5 million) for 2007-08, a 27-percent growth over the previous year. Revenues are expected to cross the Rs 1,000 crore (US$233.4 million ) this year.

The company markets liquid milk under the 'Arokya' and 'Komatha' brands, in Tamil Nadu, Karnataka and Kerala.