Parag Milk Foods enters fresh cream market with Go brand

Parag Milk Foods Ltd one of the leading private dairies in India, based in Maharashtra,  launched its fresh cream under the brand name Go, is eyeing household penetration in this largely unorganised segment, apart from institutional sales to drive growth, reported Business Standard.

Parag, which claims to be have a fresh cream product made from cow milk.Fresh cream is a largely unorganised market, with over 85-90 per cent of the market lying in the unorganised segment. The size of the organised market, which is dominated by institutional segment, is estimated to be around Rs 1270 crore and it is growing at a CAGR of 17 per cent between 2007 and 2014.

Devendra Shah, chairman and managing director of the Rs 1500 crore dairy company that is also eyeing to go public in about four to five months time said, "There is huge potential in the fresh cream segment in India as only 20 per cent of the market is organised. There is huge potential to be tapped."

The northern region remains the biggest market for fresh cream with 37 per cent share in total consumption. It is followed by the western & central region with a 26 per cent share, southern region with 23 per cent and lastly the eastern region accounts for 14 per cent share in consumption.

Another significant development, recently Parag has also filed a draft red herring prospectus (DRHP) with the market regulator for its initial public offer (IPO).

Parag has plans to expand its cheese capacity from a current 40 tonnes per day. The cheese market in India is estimated to be about 29,000 tonnes per annum valued at about Rs 850 crore and is clocking a 25 percent growth rate.

Currently, Parag has a 2 million litres per day processing capacity at its two plants Manchar (Maharashtra) and Palamnar (Andhra Pradesh). It procures milk from 23,000 farmers. In FY15 its average milk procurement stood at one million litres per day, growing at 16.5 per cent since 2006.