Less than six months since French dairy major Lactalis acquired Maharashtra-based Prabhat Dairy, there are plans to rejig the latter's product portfolio.

“The ideal milk-to-product ratio for any dairy company is 65:35 where 65 percent of your portfolio is liquid milk and 35 percent is value-added categories like ghee, cheese, butter and flavoured milk,” said Rahul Kumar, managing director, Lactalis India, while speaking exclusively to CNBC-TV18.

At present, nearly 80 percent of Prabhat Dairy’s output is in the dairy product space. Lactalis India’s two other Indian acquisitions, Tirumala Dairy and Anik Industries, have a milk-to-product ratio of 85:15 and 50:50, respectively.

While Lactalis made the Tirumala and Anik acquisitions in 2014 and 2016 respectively, it acquired Prabhat Dairy in January for Rs 1,700 crore.

“We have to get all three companies to be 65:35. So, Anik will sell more liquid milk and Prabhat has to sell more liquid milk to have good brand equity in major cities like Bombay, Indore and Bhopal,” Kumar added.

The company said that the reason behind its big-ticket Prabhat Dairy acquisition earlier this year was the latter’s impressive procurement network.

“Prabhat fit in because it was doing good B2B business and was a supplier to big institutions,” said Kumar. “It was a good move to acquire Prabhat, so as to have control in these categories and channels. They (Prabhat) also had a good procurement network and it is always preferable to acquire a company with good backward integration.”

The acquisition also meant that Lactalis has boosted its milk-product portfolio, which at present accounts 80 percent of Prabhat’s total dairy output.

These strategies come amid Lactalis India targeting multiple geographies within a national dairy market, which it claims is growing between 6 and 7 percent per annum.

“Our next acquisition will happen in North India,” said Kumar, adding “we are looking at several companies in the North given the population density and the sheer number of milk-producing states there.”

The company’s plan is to occupy a market share of 10 percent in each dairy category, pan-India.

“Only 30 percent of milk consumed in India is from the organised sector,” said Kumar. “So, there is plenty of scope to expand the market and bring unorganised consumers into the organised sector.”

Lactalis’ next acquisition in India could see its Indian arm valued at $ 1 billion in the next three years, added the company.

First Published:May 21, 2019 6:04 PM IST