He left high-paying Intel US job to sell high quality milk

How did you get the idea of entering the dairy segment?

After graduating from IIT Kharagpur, I did my Masters and PhD in Polymer Science and Engineering from the University of Massachusetts, US. Thereafter, I worked at Intel Corporation in the US in chip manufacturing for six years. But I always wanted to do something different in India. Finally, I took a call to return to India after living there for over 11 years. As we have some agricultural lands at Kollegal in Karnataka, I started vegetable farming (baby corn) there. I also roped in other farmers for contract farming. We offered good remunerative prices to farmers, but did not get any margins when we sold them to retail stores. After doing two cycles of this two-month crop, I felt that it would not be a feasible venture. I noticed that baby corn farmers kept some cows as baby corn stalks offered a high protein diet for them. That's how I got the idea of starting a dairy farm in Hyderabad. But I did not have any prior experience in this segment. So, I visited a few existing dairy farms in Hyderabad and Mysuru to gain some knowledge. Finally, I started my own dairy farm on leased land with 20 cows in 2012.

What is the story behind Sid's Farm name?

My elder son's name is Sidharth. When we were thinking about the name, we wanted to give a promise to our customers. That way we coined the name. It's like a promise from a father to son that he is offering good quality milk to him. The milk I am confident of giving to my children, I am giving to my customers.

What was the initial investment? How much have you invested thus far?

The initial investment was around Rs 25 lakh. Of that, we spent Rs 10 lakh on purchasing cows while the remaining I invested on sheds and used for other expenses. Initially, we sold milk in bulk to other companies. But they paid us just Rs 13-15 per litre, while our expenses were double of that, hovering over Rs 25-30 per litre. So, I started selling directly to the consumers in 2013. As demand increased for our milk through word-of-mouth publicity, we began buying from other farmers by paying remunerative prices. Starting with hand packing, we bought a foot-operated packing machine and with further increase in demand, we went for automatic packing equipment. Thereafter, we established a chilling and pasteurising unit in 2014. We now have a 4,000 sq ft milk processing facility of 10,000 litre capacity in 2.5 acres at Shabad near Hyderabad. We also have a dairy farm of around 60 animals in 1.5 acres. We currently employ 110 people. In addition, there are 200 part-time delivery partners. We procure milk from 1,200 farmers. In total, we invested around Rs 5 crore till now. Normally, talented people don't opt for the dairy sector. But we succeeded in attracting talent from IITs, NITs, IIMs and XLRI.

There is an intense competition in the dairy sector in Hyderabad with the presence of local, government, national and international players. How do you differentiate yourself and compete with the big brands?

We only offer high-quality premium milk. That's the reason our prices are 25 per cent higher than others' product in the market. High quality pure milk is our USP. We spent six to seven months to develop high-quality testing standards. Now, we conduct 2,000 tests daily to ensure the best quality. That's what differentiates us from others. Some families buy a packet of our milk for their children while using low-priced milk from other suppliers for other family members' consumption. That shows our customers' trust in our products. We sell pure cow and buffalo milk and curd also. Currently, we deliver 17,000 litres of milk and milk-based products directly to over 10,000 customers. We also sell through some online platforms like Milk Basket.

It looks like the pandemic has not impacted your business adversely...

Yes, the pandemic has not impacted us as milk is an essential item. We also took care of our employees during the pandemic. So, we did not face any labour shortage.

Did you achieve break-even? What is the current turnover?

We achieved break-even in 2019 and declared some profit in the last two financial years. Our annual revenues grew to Rs 44 crore in FY21 from Rs 24 crore in the preceding financial year.

What expansion plans you have lined up? Any plans to foray into other States?

At present, we are supplying milk in several areas of Hyderabad including Kukatpally, Hitech City, Banjara Hills, Jubilee Hills, Secunderabad, Uppal and Dilsukhnagar. We will cover more areas of Hyderabad this financial year. There is a decent market for premium milk in this city as people here are looking for quality milk and also don't mind paying extra for the quality. As per our estimates, 1 lakh litres of premium milk could be sold daily in Hyderabad in the next five years. The current market size for this premium segment is around 25,000 litres. So, there is a lot of scope for growth in Hyderabad itself. In future, we will expand our operations to several other cities and help more farmers.

Do you have any plans to raise capital for the expansion?

If yes, what is the size you are looking at?

We are planning to raise Rs 25 crore in the next six months. We just started consultations in this regard. We will use the funds to expand the existing processing facility or invest in a new facility.

How is the dairy sector doing in Telangana now? Is the Telangana government incentivising such business?

For the dairy sector, the Telangana government is offering incentives and subsidies including subsidy on interest and power tariff. It is very supportive and has good policies like TS-iPASS.

Also, there is a great startup ecosystem in Telangana. My opinion is that no venture should be started by depending on the government subsidies and incentives. However, more and more farmers will take up dairy farming if remunerative price for milk is offered. Dairy plays a big role in the integrated farming model. The governments should work in that direction.

How is the dairy sector doing in India, according to you?

India needs to produce more milk as the demand is growing. There is not enough milk now. Moreover, there are price fluctuations as well. Prices shoot up in summer and fall in the rainy season.