Hyderabad-based Heritage Foods Ltd has agreed to acquire assets of Teja Dairy in Raichur district of Karnataka, it said in a stock market disclosure.
The company will invest Rs 60 lakh ($89,000) to acquire the assets that include a dairy plant which has a processing capacity of 20,000 litres per day, it said.
The firm, owned by family members of Andhra Pradesh chief minister N Chandrababu Naidu, has five business verticals—dairy, retail, agriculture, bakery and renewable energy.
In the dairy segment, it has a capacity of 1.4 million litres per day and produces milk and dairy products, including fresh milk, curd, buttermilk, lassi, ice cream, paneer, table butter, milk powder, flavoured milk, ultra high temperature (UHT) milk and dairy whitener.
The company, founded in 1992, has also started dairy operations in the National Capital Region (NCR), Mumbai and Pune markets, away from its stronghold in the South.
Earlier, it had acquired a dairy plant at Sangvi in Maharashtra, which supplies to customers in Mumbai and Pune.
India’s fragmented dairy market, which is dominated by local milkmen, regional brands and milk cooperative Amul, has been seeing signs of consolidation.
French giant Groupe Lactalis SA recently bought the milk products business of Mumbai-listed Anik Industries Ltd for Rs 470 crore ($70 million) in its second acquisition in India in as many years that would help it go neck and neck with India's top private dairy Hatsun Agro Product Ltd in terms of revenues.
India’s milk production grew 4.3 per cent to nearly 134 billion litres in 2013-14 and was projected at 140 billion litres in 2014-15, according to rating and research firm CRISIL.
Output in India has been growing faster than in other large milk-producing nations such as the US and China. On the flip side, consumption in the country has been growing at 5 per cent, leaving a gap between demand and supply.
Like this report? Sign up for our daily newsletter to get our top reports.