The dairy company, Kwality, has pledged to raise USD89.3 million from KKR

India: The country’s privately owned largest dairy firm, Kwality, is about to raise USD89.3 million from an American private equity giant Kohlberg Kravis Roberts & Co. (KKR). Kwality would use the investment to meet the capital expenditure for further strengthening milk procurement infrastructure and increase processing capacity by 9.5 lakh litres per day. Apart from this, the company would also be using the investment to repay some of its high-cost debt to improve cash flows and augment brand building activities. 

The Indian dairy industry is attracting the foreign players backed by tremendous growth during the last few years. The industry has witnessed the entry of major players in the recent past such as French dairy giant Lactalis which had acquired Tirumala, South India's second-largest dairy, and Anik Industries. With liberalisation of foreign investments, the industry is expected to attract more foreign players.

According to TechSci Research, the investment by KKR would help the company in expanding its base in the country and capture a better market share in the country. The company’s investment in value added products such as cheese, paneer, table butters, tetra-packs, flavoured milk and yoghurt would help the company to attract a huge consumer base.

According to a recent report published by TechSci Research, “India Dairy Products Market By Type, Competition Forecast and Opportunities, 2011–2021”, the market for dairy products in India is projected to grow at a CAGR of over 7% during 2016-2021. In 2015, North India dominated the country’s dairy products market, on account of increasing per capita expenditure, rising youth population, introduction of value added dairy products, changing consumption patterns, and growing penetration of international players. India dairy products market is witnessing a shift towards healthier products such as probiotic drinks, yogurts, etc., is propelling growth in India dairy products market. Continuous population growth, liberalization of trade policies and rising investments in advertising are driving the country’s dairy products market. With new domestic and international players foraying into dairy products market in India, the market is witnessing introduction of various non-conventional dairy products such as flavoured yogurts and probiotic drinks, milk with low fat and cholesterol content, different cheese variants, etc.