Devendra Shah, Chairman & Managing Director, Parag Milk Foods Ltd
June 24, 2016
"We propose to set up a research and development center at our manchar facility to develop new products and processes and a technology center at our subsidiary for training and development activities and focus on animal husbandry."
Devendra Shah, Chairman & Managing Director, Parag Milk Foods Ltd received a Bachelor of Commerce degree from Pune University. After graduating in commerce, Shah dabbled in other businesses like clothes retailing but it was not until 1989 that he found his true calling—the dairy business. He also holds reputed positions in various ventures like Director- Bhimashankar Sahakari Sakhar Karkhana, Pargaon, Secretary of National centre for Rural Development. He also promotes India’s largest cow farm called Bhagyalaxmi Dairy farm.
Parag Milk Foods is a manufacturer and marketer of dairy-based branded foods in India. It commenced business in 1992 with collection and distribution of milk and has now developed into a dairy-based branded consumer products company with an integrated business model, manufacturing a diverse range of products including cheese, ghee (clarified butter), fresh milk, whey proteins, paneer, curd, yoghurt, milk powders and dairy based beverages targeting a wide range of consumer groups through several brands.
Replying to Yash Ved of IIFL, Devendra Shah says "We propose to set up a research and development center at our manchar facility to develop new products and processes and a technology center at our subsidiary for training and development activities and focus on animal husbandry."
What outlook do you see for the dairy food sector?
The Indian dairy industry is divided into the organized and unorganized segments. The unorganized segment consists of traditional milkmen, vendors and self-consumption at home, and the organized segment consists of cooperatives and private dairies.
In 2014, 30% of the total marketable milk in India was processed by the organized segment with private players processing 55% and cooperatives 45% of the total marketable milk in the organized segment.
During 2010 to 2014, the organized segment grew at CAGR 20.7% whilst the unorganized segment grew at a CAGR of 14.2% during the organized segment at 20% by value in 2014. The organized segment is expected to grow at a CAGR of 19.5% between 2015 to 2020, accounting for approximately 25.5% of the Indian dairy industry by 2020. The unorganized segment is expected to grow at a CAGR of 13.2 % during the same period, and is expected to account for 74.5% of the total Indian dairy industry by 2020.(source : IMARC report).
What is your current production capacity? Are you increasing its production capacity?
We have two manufacturing facilities in Maharashtra and Andhra Pradesh. The milk processing capacity for both the units is 20 lakh lit milk per day. The cheese plant which is situated at Manchar produces 40 MT cheese per day.
In 2005, we setup our Bhagyalakshmi Dairy farm at Manchar with an aim to educate farmers about best practices of breeding, feeding, animal management and improving capacity. Our dairy farm is fully automated with 200 Holstein breed cows with higher yields of superior quality milk.
We have invested significant resources over the last few years to install additional plant and machinery and other technological infrastructure at our facilities, including for our UHT, cheese and whey products and we expect to derive benefits from these investments in the near future.
Any plans to add new manufacturing facility?
We are not adding any new manufacturing facilities as of now but improving the existing ones. We constantly focus on research and development to distinguish over selves from our competitors to enable us to introduce new products based on consumer preferences and demand.
We propose to set up a research and development center at our manchar facility to develop new products and processes and a technology center at our subsidiary for training and development activities and focus on animal husbandry. We indent to increase the share of our value added product portfolio by focusing on health and nutrition to cater to evolving consumer trends.
What are your plans for global market?
In 2000, we began exporting our products to South East Asia, Middle East and we exprted our products to 31 countries overseas.
Cheese, Ghee, Pander and Milk powder are some of our primarily exported products.
Brief us about your financials?
Over the years, we have established a strong track record of growth and financial performance. Our total revenues grew at a CAGR of 21.6% from Rs. 6596.78 million for the financial year 2011 to Rs. 1440.47 million, for the financial year 2015.
Our net profit after tax grew at a CAGR of 161.8%from Rs. 6.27% million for the financial year 2011 to Rs. 294.72 million, for the financial year 2015.
The volume of the milk procured by us increased at a CAGR of 11.47% from 0.68 million liters per day, for the financial year 2011 to 1.05 million liters per day for the financial year 2015.
What is your revenue mix?
Our revenue from the sale of manufactured goods accounted for Rs 13,289.78 million, or 92% and Rs 9, 593.24 million, or 88.2% of our total revenues for the financial years 2015 and 2014 respectively.