We expect our export sales to have an increasing momentum, Devendra Shah, Chairman, Parag Milk Foods
One of India's finest private sector businesses, Parag Milk Foods Ltd., is the owner of well-known household brands like Gowardhan Ghee, Go, Topp Up, and Avvatar.
The company has been rapidly diversifying its revenue with growing popularity in international markets, which has been backed by its expanded scale of operations, extensive distribution network, and large market share.
Mr. Devendra Shah, Chairman of Parag Milk Foods mentions, "Our export sales has contributed 1.5% to the overall revenues in FY22 and our products have received positive reviews in key markets such as the Middle East, South East Asia, Africa, along with the Indian subcontinent. In the future, we intend to accelerate this momentum."
With its emphasis on product verticals and operating leverage, it is one of the select companies that reap the dual benefit of being a diary company with FMCG play. Under the "Avvatar" brand, they were the first to introduce a made-in-India B2C whey protein powder and value-added items contributed a staggering 68% of their overall sales even in the midst of a global pandemic.
Shah says, we provided our customers with distinctive solutions even before they were aware they needed them, we were aware that branded packaged milk, which delivers greater quality and guarantees safety, will replace loose liquid milk and value-added products will be the necessity for the future. Even the significance of sports nutrition in the nation was anticipated by us.
Our premium brand offerings, which concentrate on farm-to-home initiatives and operate online using a subscription model, were expanded throughout the pandemic. Additionally, for our fast-moving beverage segments, we continued to introduce products at various pricing point in FY22. We added mango milkshake and mango lassi in our portfolio and as a first in the category of affordable whey we have launched our whey-based drink - RAPID at the price point of INR 10/- in two flavours lemon and orange which comes in 125 ml pack. This is backed by a completely new line of infrastructure to establish a larger footprint. The initial consumer response has been very encouraging."
Bhagyalaxmi Dairy Farms Private Ltd., branded as Pride of cows is a wholly-owned subsidiary of Parag with a unique farm-to-home initiative, allowing customers to access milk processed without any human interference utilising cutting-edge technology and best practices from around the world. The company declares that its target market is anyone looking for quality products and since Pride of Cows is a premium brand offering it invested heavily in digital marketing to raise awareness and exposure. Elaborating on the future plans Mr. Devendra Shah said, "We operate on a subscription basis and provide our Pride of Cows milk in four cities: Mumbai, Pune, Delhi, and Surat while Pride of cows Ghee is sold pan-India. We were able to reach more customers during the pandemic because we are subscription-based and individuals looked for uninterrupted food options online. During the epidemic, we added Ghee, Paneer, and Curd to our portfolio of premium brand items under the Pride of cows brand."
Parag was impacted by a slowdown in the hotel, restaurants and catering segment during lockdowns across the country coupled with low revenue from liquid milk to institutional customers amid the pandemic. The financial statements for FY22 echoed these sentiments with the company reporting a loss due to a write-down in inventory. Offering his views on the latest financial performance Mr. Devendra Shah said, sustaining character assumes higher importance. Like other companies, we could have resorted to all sorts of measures to reflect profitability but we decided against giving up our USP in the long run for short-term profitability. The prime USP of all our products is that they are processed from 100% cow's milk so we collected every drop of milk that arrived at our factory. We anticipated selling these value-added products but our plans got disrupted due to lockdowns, guidelines by health departments and new rules with respect to infant food. Even in view of these circumstances which were beyond our control we adhered to the storage norms by FSSAI and wrote down inventory. Despite the business being on a strong footing, the reported financials have shown a loss on account of write down which is a one-time phenomenon. This development will not have any impact on the going business operations and financials ahead."
Parag Food Milks is the 2nd largest player in cheese in India with a 35% market share and its inventory days are high primarily because it maintains a high inventory of cheese, which requires a certain ageing process and of butter, which is used as a buffer raw material for the production of ghee. The inventory values also increased significantly during the year due to an increase in milk procurement prices. In accepting inventory, it built strong goodwill and relationship with farmers who are the key stakeholders given the highly fragmented farmer base and seasonality in milk production and secured their interests.