Madhavaram is a neighbourhood in North Chennai best known for its milk colony. In the early 1990s Aavin, the state-owned cooperative, decided to set up base here and since then, it has become its central dairy. The suburb has transformed itself from being a relatively unknown neighbourhood to now having many a multi-storied structure and becoming a part of the city’s efficient transport system.
Tucked away in a corner of Madhavaram is Tirumala Milk Products’ corporate office. The large glass building is no more impressive than any other in the vicinity and betrays no sign of its ownership. In January 2014, Tirumala was acquired by Groupe Lactalis SA (Lactalis) of France for around Rs.17.5 billion. Globally, Lactalis is a €20 billion company with a presence in over 40 countries with 240 manufacturing units.
Tirumala is a Rs.20-billion company; its revenue was Rs.14 billion at the time of the buyout in 2014. It makes most of its money — 80% — from fresh products such as milk, dahi, lassi and buttermilk, and the remaining from value-added products such as paneer, ghee and ice cream. Tamil Nadu is its largest market, bringing in 30% of the revenue; Karnataka contributes 25%, and Andhra Pradesh and Telangana together 45%.
It is a humid Saturday and Rahul Kumar has just asked for some black coffee. His room is spartan and the table is filled with papers to be looked at. “I travel at least two days a week to be in the market and have just got back,” he says, explaining the messy table. Kumar has been the managing director of Lactalis India since March 2014 after a two-decade stint at Amul. The announcement to acquire Tirumala was done two months before he joined and that has been followed by the buyouts of Anik Industries’ dairy business with its Rs.4 billion turnover for Rs.4.7 billion in 2016 and the milk-product business of Prabhat Dairy with a Rs.15.45-billion turnover for Rs.17 billion (or 1.1x sales) this January
After the buys, Lactalis in India has a revenue of Rs.34 billion and procures 2.6 million litres of milk per day, highest among private playersin the country. Hatsun procures 2.3 million litres per day (mlpd).
Taking the inorganic route in India has been a first for an interna