Private companies make their moves into India’s dairy market
Private equity firms are playing
a key role in facilitating the corporate
take-over of India’s dairy sector. One
of the early private equity deals
occurred in 2010, when the US-based
Carlyle Group acquired a $22 million
stake in Tirumala Milk Products, a
family owned private dairy company
in southern India. Over the next three
years, Tirumala expanded its supply
chain by adding over 100 chilling
stations, increasing the number of
processing plants from five to seven
and expanding its distribution
northwards. Carlyle Group then sold
its stake in 2014 to the French dairy
company Lactalis, the world’s third
largest dairy processor, for US $250
million– more than 10 times what it
initially paid.
Over the past few years,
France’s Lactalis has become one of
the largest dairy companies in India,
second only to Nestlé, which has been
active in India since the 1960s. After
acquiring Tirumala in 2014 and the
dairy division of Indore-based Anik
Industries in 2016, the French
company acquired the dairy business
of Prabhat Dairy as well as its
subsidiary, Sunfresh Agro Industries,
in 2019. Prabhat Dairy has a network
of more than 75,000 farmers in
Maharashtra that collects around
200,000 litres of milk every day. The
purchase of the Prabhat gives Lactalis
two additional facilities in India, giving
it a total of 13, and an overall
procurement sup-ply of 2.3 million
litres of milk per day. Lactalis is
planning to acquire one more company
in northern India, as it aims to take a
market share of 10 percent in each
dairy category across the country.
New Zealand’s Fonterra, the
world’s largest dairy exporter, also
has its sights on the Indian market
either through a preferential trade
agreement or through collaborative
ventures. In August 2018, Fonterra
started a 50:50 joint venture called
Fonterra Future Dairy Partners with
the Kishore Biyani-led Future Group,
Future Consumer. This will establish
Fonterra in India and help fulfil its
expansion agenda. As Fonterra chief
oper-ating officer Lukas Paravicini
puts it, “It will allow us to prepare
the groundwork and make the most
of our expertise as we enter the
world’s largest and fastest growing
market.”14
The objective of Fonterra is
clear. In the words of Teh-han Chow,
who leads Fonterra’s ingredients
busi-ness in China, South and East
Asia, “India remains a massive
opportunity for the New Zealand
cooperative once it inevitably shifts
to being a dairy importer.” He went
on to say, “India is currently balanced
in terms of supply and demand…As
it continues to grow and production
doesn’t keep pace there will
eventually be a need for dairy imports
into India. The question mark is
when”.
( Curtesy: grain. org)
Table 1: Recent private equity deals in Indian dairy
Year
2019
Investor
(country)
Indian target
Danone ManifestoVentures Drums Food
(France) International
Deal value
(US$M)
25
(Epigamia yogurt)
2017 TPG (US) Dodla Dairy
2016 Motilal Oswal PE (India) Dairy Classic Ice Creams
2016 Verlinvest (Belgium), DSG Consumer (India)
Drums Food International
50
15.84
6.39
2016 KKR (US) Kwality Limited 74.90
2015 TVS Capital (India) Prabhat Dairy Ltd. 12.22
2015 Eight Roads Ventures (US) Milk Mantra Dairy Pvt. Ltd. 12.63
2014 Westbridge Capital (Mauritius) Hatsun Agro Products Ltd. 5.18
2013 Capvent AG (Switzerland) Hangyo Ice Cream 4.79
2012 Cargill Ventures (US) Dodla Dairy Ltd.
October - 2019
15.83
17