INDIA: Kwality eyeing supply network investment
Indian dairy Kwality is seeking an investment of US$80m to grow its milk procurement network in north India, just-food understands.
"We are open to any collaboration," said Sidhant Gupta, director of Kwality. He said his company would accept investment from a variety of sources - but wanted one solid initial investor. "We need a chunk of investment in the beginning to start the process."
Kwality wants to expand its existing supply network of 200,000 producers. Kwality, which sells products under Dairy Best brand, said dealing direct with small producers increases supply quality over dealing with traders. "Through the farmers we get high quality milk," Gupta explained.
He said such an extensive procurement network was "the biggest strength of Amul [India's largest milk brand]" and insisted that there was room for Kwality to grow such supply systems: "80% of India's growing dairy industry is still unorganised and there is lot of scope for investment."
Kwality, which also exports to 28 countries, would use increased milk supplies to produce new products including flavoured milk, fruit yoghurt, regular yoghurt and packaged butter. It already sells liquid milk.
Gupta is confident that there is growing demand for these products: "Amul, which is the most popular brand in Delhi supplies only 2.2m litres of liquid milk every day, while city's total demand is 7.5m litres."
Last week, Kwality moved to cool reports that it is in talks with Rabo Equity Advisors - the investment arm of Rabobank - over a potential stake sale of around 15%.
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