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Feb, 26 2015

M&M to enter dairy biz, may acquire good brand in the segment

Being the largest farm equipment player and also a leading entity in the agri segment, foraying into the dairy sector would only complement its business cycle.

Mahindra Agri business is planning to enter Rs 3-trillion Indian dairy sector through a Rs 150 to Rs 750 crore acquisition of a brand that has good supply chain and branding in place, reported PTI.

“Money is not a problem when it comes to a good dairy brand. We can invest anything between Rs 150 crore and Rs 750 crore. But we are particular about the brand name and the supply chain,” a senior official of the Mahindra Group firm, who wished not to be named, told PTI on the sidelines of a CII- organised SME summit.

More than 80 per cent of the over Rs 3-trillion dairy sector is in the unorganised space and this offers a huge opportunity for the company that is the largest farm equipment maker in the world by volume.

The group will target at entering the high-end space makes better business sense as this sector is mostly unorganised.

About the rationale for the diversified Group to enter the milk business, the official said being the largest farm equipment player and also a leading entity in the agri segment, foraying into the dairy sector would only complement its business cycle.

Mahindra ShubhLabh Services, a Group entity, has emerged as the largest grapes exporter by working directly with farmers. It undertakes contract farming of grapes in Maharashtra and provides farmers with technical support.

Dairy can supplement farmer incomes in tough times and act as a hedge against climate risks, he said, adding the company wants to replicate the supply chain success in grapes collection in the milk segment too.

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