December 19, 2011

South India's Tirumala Dairy is planning to set up the country's largest integrated dairy unit with an outlay of INR6,000 crore (US$1.1 billion).

The proposed integrated unit would be set up in about 2,900 acre at Vinukonda near Guntur in Andhra Pradesh. Along with the milk processing equipment, the facility would have about 20,000 buffaloes and cows and a two megawatt captive power unit. The facility is expected to start operations in 2015-16. "Apart from conventional milk processing and producing milk products we are also planning to produce organic milk. The facility would produce about 10 lakh litres of organic milk per day," B Brahma Naidu, the company's managing director, said. The primary nature of organic milk production would be in the form of feeding the buffalos and cows organic grass produced in captive farms, he said.

Naidu said the project would be funded through debt and equity in a ratio of 80:20. So far several banks including the State Bank of Hyderabad have evinced interests in underwriting the debt. Carlyle, which bought its stake in Tirumala for `110 crore (US$20.9 million) earlier, too, is expected to participate in the fresh round of equity funding. "We have conveyed our willingness to invest further in Tirumala and support the company by helping it raise funds from the overseas bilateral agencies," M Shankar Narayanan, managing director of Carlyle India Advisors, said. The dairy has registered a sales turnover of about `1,200 crore (US$227.5 million) and with a growth rate of about 30% it is set to touch about `2,000 crore (US$379.2 million) in sales in the next three years.