Father and sun Gupta of the privately-owned dairy company Karnal Milk Foods Ltd.
G.P. Gupta founded the company in Karnal (130 km north of New Delhi) in 1992, following the government’s liberalisation of the Indian dairy sector. Gupta was one of the larger dairy farmers there who felt that the village dairy co-operatives were paying their dairy farmers too little. A number of larger dairy farmers were located near Karnal. The factory still stands in the middle of his milk collection area. The company gets the milk from its suppliers (often milk traders themselves) tested by a small, local milk testing station.
Greater capacity
In that first year, Karnal processed 100,000 litres of milk every day. Today, that figure is up to 350,000 kg. The company has the capacity to process 400,000 kg milk per day. Annually, the company processes more than 100 million kg milk. In the high season, from October to June, 250 people are employed. That number falls to 150 in the summer period, when the heat is extreme. The milk supply drops of considerably then. This milk goes to make a range of industrial products such as full-fat and low-fat milkpowder in various types of packaging, butter, ghee and coffee creamers. These products find their way to other Indian dairy companies, such as Nestlé India and Mother Dairy, to the Indian army and the pharmaceutical industry and Indian grocers’ shops. By the time they reach their end customers, they could be bearing a private label, the brand of another dairy company or Karnal’s own Super Cow and Karan brand names.
This supply chain also includes foreign dairy products since Karnal also has an import division that buys products all over the world. Its range includes colza oil, lactose, whey protein and sweet whey powder. Major suppliers are New Zealand, Australia and a few European countries, including Switzerland.
‘We have to import,’ indicates Vipin Gupta, son and managing director. ‘The company’s turnover is currently growing at 5 to 6% per year. The reason for this somewhat slow growth is that we don’t actually have enough milk available. The buffalo and cow breeds aren’t able to keep pace with our customers’ growing demand.’ At the same time, Karnal Milk Products is also exporting some of its products, mainly butter and ghee. Important export countries are Bangladesh, Egypt, Saudi Arabia, Pakistan, Nepal, Mauritius and Nepal and, as of recently, China. ‘We have just one important problem with exporting: we have to keep reiterating that 95% of our products consist of a mixture of cow’s and buffalo milk. Other parts of the world tend to offer only cow’s milk dairy products,’ says Gupta.
Cooperation
He stresses that his company is keen to work in an international partnership. A joint venture would be a good option, enabling a foreign partner to input techniques and technology, as well as knowledge of the retail channel. ‘Karnal Milk Products is good for an annual turnover of EUR 20 million. As well as industrial products, we want to produce drinking milk and cheese. Since most consumers have no cooling facilities, we are thinking of UHT products. By cheese we mean the cottage cheese or paneer that is an ingredient in all sorts of Indian dishes,’ explains the managing director. Gupta believes that by focusing on increasing its production of consumer products, the company can improve its profit margins. ‘You see, although the quality of our industrial dairy products is excellent, it is increasingly difficult to maintain an edge in that highly competitive, international market,’ says Vipin Gupta.
Article from India Dossier, ZuivelZicht - 14 december 2005  |