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Parag Milk Foods, a leading manufacturer and marketer of dairy-based branded food in India, is planning capital investment of Rs 150 crore to expand production capacities at its facilities at Manchar near Pune and Palamaner in Chittoor district of Andhra Pradesh as well as to introduce new lines of milk-based beverages.

Part of the funds will be deployed in a research and development facility, which will help the company come out with its unique offerings, a top company executive said.

“We are in the process of raising money from the capital market and will complete the Rs 150-crore expansion in six to 12 months of mobilising the funds. The money will be spent on expansion and modernisation of existing manufacturing facilities at our two facilities,” Devendra Shah, chairman, Parag Milk Foods told The Hindu .

He said part of the money will also be utilised to improve the marketing and distribution infrastructure of the company. The company has plans to set up a facility for manufacturing of milk-based beverages, a new product line in its portfolio, he said.

“We will also be investing in our subsidiary Bhagyalaxmi Dairy Farm to expand its capacity and to modernize it,” Mr Shah said.

The company will raise Rs 325 crore from the market, out of which Rs 100 crore will go towards retiring debt. The company has debt of Rs 420 crore.

The balance Rs 75 crore will be utilised for working capital requirement and this will help the company to scale up its business in the coming years, Mr Shah said.

 Parag Milk Food

Last week the company received clearance from the Securities and Exchange Board of India (Sebi) to tap the market, but it is yet to decide on the timing, Mr Shah said. The company markets its large range of products under four brand names such as Gowardhan, GO, Pride of Cows and Topp Up.

While all cow milk-based products needed in the kitchen as cooking ingredients are branded as Gowardhan, the GO brand introduced in 2009 is targeted at children and the youth and is primarily for direct consumption such as cheese products, fruit yoghurts and beverages like lassi and buttermilk.

The Pride of Cows brand of premium cow milk supplied through invitation only to a select group of 20,000 customers in Mumbai and Pune and priced at Rs 80 a litre is targeted at household consumers who opt for buying premium-quality cow milk, which is home delivered every alternate day.

It is a farm-to-home concept, directly delivered from the company’s dairy firm near Pune to a consumer’s door step through a subscription model. We have among our customers some top film stars and industrialists from Mumbai. We launched this brand in 2012 and its popularity is growing rapidly among premium customers. This brand is not available at shop floors,” Mr Shah said.

The Topp Up brand of flavoured milk introduced in 2013 is targeted at the youth and is consumed on the move for instant nourishment. The company is planning to introduce new products under this brand name.

“We are creating brand awareness in the different categories through both direct advertising in traditional and online media,” said Mahesh Israni, chief marketing officer, Parag Milk Foods. “We are doing lot of brand promotion through testing of the products trials. We are also doing lot of in shop initiatives and bring the right consumer experience through different initiatives.” The company believes that the quality of its products and innovative packaging will make the difference in the market.