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INTERVIEW

“GST rollout will result in formalisation of unorganised dairy segment”
Monday, 19 June, 2017, 08 : 00 AM [IST]
Harcha Bhaskar, Mumbai

Kwality Ltd, one of the fastest-growing dairy companies, with a strong presence in Northern India. Its manufacturing units are located in Haryana, Uttar Pradesh and Rajasthan.

It offers a innovative range of milk products, including low-cholesterol ghee, pure ghee, pure cow ghee, butter, instant dairy creamer, dairy mix, skimmed/whole milk powder, milk in pouches, curd, paneer, lassi, chaach, milk in tetra packs, sterilised flavoured milk, yoghurt and cheese.

The company has increased its focus on the export of dairy products from India. It is one of the leading exporters of dairy products from India, exporting to over 28 countries spanning continents like Asia, Africa and Australia.

In an email interaction with Harcha Bhaskar, Sanjay Dhingra,managing director, Kwality Ltd, talks about the latest trends in the dairy sector and the company’s increasing procurement and network with farmers in the northern part of India.

Excerpts:

Could you share information on Kwality Ltd’s infrastructure facilities, such as dairy plants and chilling centres? How much milk is processed per day and dispatched?
What are the other dairy products thatare manufactured?

Kwality Ltdhas six ultra-modern, state-of-the-art processing plants. While four of these are in Uttar Pradesh, one is in Haryana and one is in Rajasthan. These plants together can process 4.3 million litre of milk per day. We procure milk directly from around 3.5 lakh farmers across 4,700 villages through a network of 24 milk chilling centres across the three aforementioned states.

Our plants can manufacture all variants of milk in poly packs and tetra packs; different variants of dahi, chaach and lassi in poly and tetra packs; flavoured milk and shakes, milk powders, butter, cheese, cow ghee, regular ghee and an exclusive product, Livlite (85 per cent less cholesterol ghee).

Which are the various villages and centres from where the milk is procured?How much is the per day collection of the milk?
Kwality has its own network to procure milk directly from 3.5 lakh farmers across 4,700 villages through a set-up of 24 milk chilling centres across Rajasthan, Uttar Pradesh and Haryana.

The company derives 22 per cent of the total daily milk requirement directly from farmers and balance through milk aggregators operating in various milk shed areas in North India.

How is this milk further divided to be used in the processing of various dairy products?
What are the various quality checks done at the various steps of manufacturing?

Supporting the strong infrastructure, the company has a dedicated and experienced team of professionals that conduct 61 stringent quality checks before any product is released from the plants for consumers’ homes.

The result is a seamless transfer of supreme quality across the value chain from the farm to the customer, ensuring that our consumers enjoy the best of taste and health.

Our various quality accreditations, like Food Safety System Certification (FSSC) 22000, reflects the highest quality standards we follow to deliver safer food products to consumers.

The milk which is directly procured from farmers is used in our consumer products division for poly pack milk, poly pack curd, chaach and the tetra pack range of products, while the milk procured from aggregators is used for products like ghee, flavoured milk, butter, milk powders, etc.

Currently, which are your strong markets in India, for the consumption or distribution of which products and how much?
Kwality has established a strong position in the key markets of North India, including Jammu and Kashmir, Punjab, Uttarakhand, Uttar Pradesh, Himachal Pradesh, Haryana, Rajasthan and Delhi and the National Capital Region (NCR).

All these northern markets have a reasonably high dairy consumption, and our products are available in both general and modern trade outlets, including select online platforms.

What are the various technologies that are used in manufacturing the products?Are they from India or imported? If imported, from which country?
Kwality Ltd’s plants are state-of-the-art facilities that use the latest technologies used by the dairy industry.

Some of the commonly-used processes in dairy industry are pasteurization, centrifugal separation, sterilisation and spray-drying. The majority of our equipment is imported from European countries, while some are sourced from high-quality Indian manufacturers.

We have recently commissioned our Tetra Pak plant in Softa, Haryana, for our ultra-high temperature (UHT) range of products.

Our plant in Softa is a state-of-the-art vertical layer plant that houses the Tetra Pak unit (making and packing) on the second floor. The Tetra Pak line has the capability to pack approximately 15,000 packs per hour.  

What are your new product launch and expansion plans?
Kwality is in a business transformation phase from being a business-to-business (B2B) to a strong business-to-consumer (B2C) player.

Our endeavour is to become one of the strongest dairy brands in India in the near future. As a part of this strategy, we would launch a bouquet of value-added but differentiated consumer products in the following categories - flavoured milk and shakes, butter, ghee, paneer, cheese and yoghurts, amongst others.

We have recently launched our range of UHT milk and cream in Tetra Packs. These are fortified with Vitamins A and D and have been widely accepted by consumers.

What are the various innovations happening in dairy sector in India? How do you see the Indian market for flavoured yoghurt and desserts in the future?
There are a lot of innovations taking place in the dairy sector, and dairy companies are coming up with products that cater to the nutritional requirements of people at large.

Kwality has launched its UHT range of milk fortified with Vitamins A and D. Two glasses (250ml each) of Kwality UHT milk meet 80 per cent of the daily recommended dietary allowance (RDA) requirement of Vitamins A and D*.

[* Source: As per the Indian Council of Medical Research (ICMR), 2010]

The market for flavoured yoghurt and desserts will grow owing to the changing consumer preferences and a host of other factors, including:

  •  Convenience – On-the-go consumption;
  •  Sedentary lifestyles,
  •  Healthier choices of food and
  •  Guilt-free pleasure

Who are the significant clients (companies, hotels, caterers and restaurants) that the company has tied up with?
We have classified our client base into the following buckets:

  • Marquee clients [Hindustan Unilever Ltd (HUL), Britannia, Dabur, Dr Oetkar, McVities, Priyagold, etc.];
  • Religious institutions and
  • The hotel, restaurant and cafe (HORECA) segment

Is your company into exports? If yes, to which countries, and what products?
Kwality has emerged as one of the largest exporters of dairy products from India. The company exports to over 28 countries across Asia, Africa and Australia, including Japan, the United Arab Emirates (UAE), Seychelles, Bangladesh, Sri Lanka, Jordan, Nigeria and Morocco, amongst others.

Apart from exports from India, Kwality has established Kwality Dairy Products- FZE, a wholly-owned subsidiary in the UAE’s free trade zone. The company is engaged in trading.

It imports dairy products from India, Australia, New Zealand and European countries, including Turkey, Ireland, Holland, Poland and Ukraineand sells it in both domestic and international markets, including the Gulf Cooperation Council (GCC)and Middle-Eastern countries, Bangladesh, China, Thailand and African countries, amongst others. The subsidiary clocked revenue of Rs 740 crore in financial year 2016.

What is the projected turnover for the year 2017-2018?
As a part of the strategic transformation journey from B2B to B2C, our focus is on bottom-line enhancement, while the topline will be maintained.

What are your views on the goods and service tax (GST) rate for milk? What is the projected effect of it on the dairy industry?
The goods and service tax (GST) roll-out would significantly benefit the dairy sector, as the majority of dairy products are in the lower bracket of zero per cent, five per cent or twelve per cent.

It would result in the formalisation of the unorganised segment, improve operational efficiencies through reduction of logistics, compliance and inventory management costs.

We recommend that the GST on ghee should not be more than five per cent.
 
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