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Parag Milk buys Danone’s dairy facility in Haryana

Listed dairy major Parag Milk Foods Ltd announced on Thursday that it will acquire French food giant Danone's Indian manufacturing facility for Rs 30 crore ($4.6 million).

Maharashtra-based Parag Milk said in a stock exchange filing that the purchase of Danone Foods and Beverages India Pvt. Ltd's facility at Rai in Haryana's Sonepat area was aimed at expanding its presence in the northern part of the country.

The facility produces curd, yogurt and other related products.

Danone had announced in January said that it would exit its dairy business in India and focus instead on its nascent nutrition business in the country.

The company attributed the decision to the fact that its dairy and related units were making minimal contributions to annual revenue.

Its Sonepat facility subsequently stopped producing fresh dairy products.

Parag operates manufacturing facilities in Pune and Andhra Pradesh.

"The acquisition of the said manufacturing facility will help Parag Milk Foods Ltd in capacity addition and developing strong presence in Delhi and NCR," the company said in a statement.

Founded in 1992 as a milk distributor, Parag Milk has developed into a dairy-based branded consumer products company.

It sells products such as cheese, milk, yogurt, whey protein, and dairy-based beverages under the Go, Gowardhan, Topp Up and Pride of Cows brands.

The company listed on the stock exchanges in May 2016 with a Rs 760 crore ($117 million) initial public offering (IPO).

It has a 33% market share in the cheese market. Milk contributes 20% of its total turnover while other dairy products and beverages make up for the remaining 80%.

India is the world’s largest producer of milk but the country’s dairy market is highly fragmented and is dominated by local milkmen and regional brands.

Kwality Ltd and Mother Dairy Fruit & Vegetable Pvt Ltd dominate the north while Hatsun Agro and Tirumala are leaders in the south. Then there are larger co-operative players such as Gujarat Cooperative Milk Marketing Federation (GCMMF), which sells its products under the Amul brand.

Britannia Industries Ltd and Nestle India are among the other players in the dairy markets.

Danone had forayed into India’s dairy market in 2010, a year after ending a joint venture with biscuits major Britannia Industries. The tie-up was one of India’s longest running business partnerships.

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