Our CAGR for past three-years is 40%; We want to grow 5-times in next 5-years: Gyan Dairy Promoters
Let me get a sense of your business operations? When did it start? What products do you offer and what is the positioning? And how has been the annual growth in the last five years?
Jai Agarwal: Gyan Dairy was launched back in 2007 by partnering with small farmers. Today, we are supplying products to 1.5 lakh-plus households through a well-connected network of 421 distributors and 40,000-plus retailers. We are head quartered at Lucknow and are a well-recognized name in the dairy industry, touching a turnover of over Rs 908 crore in fiscal year 2020. We are into processing of dairy products and one of the leading suppliers of fresh milk and dairy products in Uttar Pradesh. Gyan is synonymous with freshness, trust and consistent quality of dairy products that sources, processes, markets, and sells a full line of fresh, fermented, and value-added dairy products.
Our popular dairy product includes full cream milk, toned milk, cow milk, ghee, curd, butter Paneer, Lassi, masala chaach etc. With our tagline "Vishwaas Se Bhara", the brand stands true to its theme 'Shuddh aur taaza, Gyan ka waada'. The brand also has its exclusive retail outlets called Gyan Fresh stores, spread across 53 locations in UP to enhance customer experience by providing fresh and pure dairy products. The CAGR of Gyan dairy for last three years has been 40 per cent. Last financial year, we crossed over Rs 908 crore. And hopefully, we will continue with this aggressive growth going forward as we aim to become an Rs 7,500 crore-plus company by 2025, that’s our vision.
Being prominently a leader in UP, you have just announced your entry into Kanpur. Do you have plans to expand into other states/cities as well? What is your present market share?
Jai Agarwal: We have a robust and aggressive expansion plan; we are aggressively moving eastwards and strategically looking at eastern UP and Bihar markets. We already have a sizable market share in UP and now expanding ourselves towards the East, which is going to be our future market. These markets offer opportunity and has a lot of potential.
We are also increasing our footprint in Bihar with our fermented products focussing on Paneer and Dahi besides other dairy products. Our expansion strategy is to focus on one market, and one region at a time. Our current market share in Lucknow is 18 per cent. In Rest of the eastern UP, in terms of our volume and number, we are at 60 per cent share at Gorakhpur and we are the largest selling private Dairy Brand in the city. Banaras again we are at 17 per cent. In Allahabad, we are at number three position with close to 10 per cent market share. We have recently entered Kanpur and are already touching 10 KL per day.
Going ahead in a medium term, how would you like to further strengthen your business? Is there any plan to introduce more products on the larger platform?
Jai Agarwal: The strengthening of business is happening in three major areas:
* Expansion of Geography
* Expansion of Product Range
* Addition of New Business Vertical
I would emphasis on these 3-things and a bit more on the product side. We have expanded our product portfolio into sweets as a new category and have introduced 'Andaz' range of Indian sweets. We got a lot of acceptance during COVID times, as we launched 'peda' and 'kaju katli' during Diwali. We saw the trend of people preferring packed products, which are safe and hygienically packed. This has given us the idea of entering into this new product category.
We are also putting up a huge 'khoya' plant, which is going to be one of the largest in the country. This will felicitate our khoya marketing as well as take care of manufacturing. This is our one big product strategy. Under 'Paneer' category, we are aggressively expanding the range, which will also strengthen our packaged paneer sales big time.
In future, we are also looking at getting into dairy whitener as a category, now we will be launching it in 10 grams, 5 grams and 500-gram packs. In terms of product-expansion, we are even looking at milk shakes, Gulab jamun mix and much more.
Five years from now, what could be the potential size of your business?
Jai Agarwal: As communicated before, we are looking at Bihar as a new market, Kanpur we have just ventured. We are also looking at couple of more strategic markets in western UP and east of India, from Bihar to Siliguri etc. This is the geographical expansion strategy.
In terms of business expansion, we have launched our new app-based delivery system, clocking 10,000 deliveries every day in Lucknow city. We are soon expanding these services in other cities also. These verticals with COVID times have boomed really well, bringing lot of revenues as well as acceptance. We have gained lot of confidence from our customers with GYAN as a brand.
In five years from now, we are looking at a vision of becoming a Rs 7500 crore-plus company by 2025. We want to grow five times in next 5-years to make this happen.
How has the Covid-19 crisis impacted your dairy business? Have you introduced any new initiatives during the current situation?
Anuj Agarwal: The Covid-19 crisis has certainly been a big setback for every business but fortunately dairy is one of the businesses where we have seen less impact. Dairy is an essential commodity and milk being a daily consumed item, we had received great support from the government towards the distribution and franchise to be kept open to public during the lockdown. We had good amount of support and we were able to supply to all our customers trouble free and uninterrupted.
We have lost some business to HORECA (Hotels, Restaurants, Catering) segment with movement of people restricted to hotels restaurants and cafeteria. The catering business certainly was impacted but the positive side of that is, there is a rise in household consumption. People at home are having high consumption of milk and Covid has brought a culture of consuming hygienically packed/ untouched milk products which enabled organized dairy brand like Gyan to bring that kind of growth to product ranges such as packed Paneer, Khoya, sweets, etc.
We are focusing on value added products and are investing consciously by setting up one of the largest Paneer plant in UP. This will enable us to serve the customer with high quality packed dairy products at a better price point. This will be a turning point for the brand as there is a huge potential in this segment. Under this product category we are seeing huge growth which is close to 50 per cent on volume basis.
Our home delivery system has grown; it was clocking high deliveries. Month on month we have been growing aggressively, from 200 deliveries a day in March, 2020 to 10,000 deliveries a day presently.
In addition to this, we have also expanded our procurement network to around 3000 VLCs (village collection centres) from 2000. We have fastened up the process so that our raw material is collected in a hygienic way from the farmers and processed to ensure that the consumer gets the best quality.
Please explain the back-end eco-system which you have created in terms of engagement and development of dairy farmers? How do you ensure that they produce something which is best in the class in the market?
Anuj Agarwal: Gyan dairy has consciously invested at the backend infrastructure. We are collecting milk from the farmers and we have a very transparent payment methodology and system based on the quality. Because of this, farmers got lot of confidence in our procurement system as they are sure of what quality milk they are pouring, how much and what amount is going to be paid for that. This had led to huge amount of trust in the entire system, motivating them to be a loyal farmers associated with Gyan dairy. So, the entire ecosystem is built in such a way that it is an end to end from farmers to the customer’s table.
Customers are also getting benefitted in terms of getting quality products that is being supplied directly to their home and farmers are getting benefitted in terms of getting the right amount of money being paid in a very transparent way. Moving forward this is going to be one of the most successful farmer-based program in India.
As your company aspires to move to the next level in the coming years, what are the key challenges you envisage for your vertical?
Anuj Agarwal: This industry has its own challenges. Cold chain is one of the biggest challenge, which we face in this industry. Milk has a very short shelf life so cold chain is extremely critical in this business. UP, Bihar and other eastern regions are very hot during summers and winters are very cold. We ensure that our cold chain mechanism is well maintained. We have started building our cold chain network and all our trucks are insulated and refrigerated for long distance transport. We are constantly investing and exploring opportunities to enter into this ecosystem as well.
