Milk is industrialist Mukesh Ambani’s newest business muscle and his corporate dairy is looking for refrigerator space at mom and pop stores, in addition to vending from Reliance Retail stores.
With the beginning of sale of ‘Dairy Pure’ through general milk retailers, as opposed to mostly through Reliance Retail-owned stores now, the company expects further growth in this business, according to a PTI report.
The milk business turnover grew nearly 3-fold to over Rs 178 crore last financial year.
Living up to its reputation of entering a market with a competitive edge in terms of pricing, Reliance Retail is trying to lure customers with 10 per cent extra milk in every packet than that of its rivals for the same price.
When asked, the company spokesperson said that Reliance Retail was expanding and further strengthening its milk retailing business through its ‘Dairy Pure’ brand.
Besides Reliance stores, the milk brand is also being sold “through general trade (including milk retailers) in Haryana, Punjab, Andhra Pradesh, Tamil Nadu, Rajasthan, NCR (National Capital Region) and Himachal Pradesh,” the spokesperson added.
On their part, rivals are welcoming a large corporate in the market saying it would benefit both farmers and customers, but are not perturbed by the competitive pricing as they consider it too small a player as yet to eat into their pie.
Amul, the country’s largest milk retailer, believes a sizeable market presence cannot be built overnight in milk and needs strong procurement and marketing network.“Reliance Retail’s milk brand has not got much presence in the market as yet. But it is good for the market to have more players and entry of a large corporate house would be beneficial for farmers as well as customers,” Amul’s Chief General Manager R S Sodhi said.
The market is mostly dominated by state cooperatives.
Asked whether Amul would lower prices following the competitive offer from Reliance, Sodhi said no such plans were on the table as the company was not worried over lower pricing by Reliance Retail, as it had no significant presence as yet.
Still, Reliance Dairy Foods Ltd, the milk and other dairy products subsidiary of petrochemicals and refining major Reliance Industries, saw its turnover grow nearly three-times last financial — from Rs 65.77 crore in 2007-08 to Rs 178.05 crore in 2008-09.
However, its loss after tax widened from Rs 3 crore in 2007-08 to Rs 4.5 per cent in the last financial year. The company believes the business would grow further as it was also looking at expanding product portfolio as also processing and packaging facilities.
“We see this business further growing with the extension of our product portfolio. Reliance Retail currently has its processing and packaging facilities in Andhra Pradesh, Haryana and Rajasthan and would look at expanding this over a period of time in other states,” the spokesperson said.
The official, however, declined to comment on investments to be made for expansion as also its targeted market size for the dairy business.
Reliance Dairy Foods’ total assets stood at Rs 82.23 crore at the end of the last financial year, up from about Rs 39 crore at the end of 2007-08, according to the information in Reliance Industries’ annual report.
Source: Agencies
