Tirumala Dairy to set up plant in India

India-based Tirumala Dairy plans to invest Rs50bn ($907m) over the next three to four years to set up an integrated dairy plant in Guntur, in the southern state of Andhra Pradesh, to boost its production capacity.

The integrated dairy project will feature a milk processing centre, a milk products unit, a captive power project and will have more than 2,000 cows and buffalos.

The dairy plant, established over an area of 2,900 acres, will have a production capacity of ten lakh litres a day.

According to the company, it has already acquired the land for the project near Vinukonda in Guntur district, and the plant is expected to become operational by 2016 or 2017.

Tirumala Dairy plans to fund the investment through a combination of banks, private equity and its own resources, and US-based private equity firm Carlyle is likely to invest in the project and raise funds through overseas agencies.

Carlyle India Advisor managing director M Shankar Narayanan that the firm would like to continue to support Tirumala Dairy, and may also assist the company in case it goes for an IPO.

In June 2010, Carlyle invested about Rs1.1bn ($19.97m) to buy 20% stake in Tirumala, which used the investment to expand infrastructure in the states of Tamil Nadu and Karnataka.

Established in 1998, Tirumala Dairy sells nearly 12 lakh litres of milk a day through its dairy plants and packing stations in Andhra Pradesh, Tamil Nadu and Karnataka, and holds a 10% market share in these areas.

The dairy company, which had a turnover of Rs12bn ($217.89m) last year, plans to achieve sales of Rs20bn ($363.15m) in the next three years.

Tirumala produces a wide range of branded dairy products such as pasteurised milk, Indian style yoghurt, butter, ice cream and other dairy derivative products.