An eight-year-old dairy company from Gujarat is on track to generate Rs 350 Cr in revenue in FY24

The market size for ghee in India reached Rs 2,907 billion in 2022 and is expected to hit Rs 5,137 billion by 2028, a growth rate of 9.84% during 2023-2028, according to IMARC Group.

Despite the intense competition and presence of players such as Gujarat Co-operative Milk Marketing Federation, Mother Dairy Fruits and Vegetables., and SMC Foods, eight-year-old Shree Radhe Dairy Farm & Foods is making a space for itself in the dairy segment.  

In FY22, Radhe Dairy registered a turnover of Rs 50 crore, and in FY23 its revenue doubled to Rs 100 crore. 

The company’s plan for FY24 is to cross Rs 350 crore in revenue and enter the B2B HoReCA segment.

Radhe Dairy also aims to take its products, especially ghee, to the Middle East. 

“We also plan to venture into the international market and are planning to export to the UAE,” founder Bhupat Sukhadiya tells SMBStory. 

The journey to building a multi-crore dairy company, popularly known as Vastu Dairy, from Gujarat has been challenging, he says.

Starting up

In 2003, after finishing his M.Com (Masters in Commerce) from a university in Junagadh, Gujarat, Sukhadiya ran an automobile business for around a year. When a job opportunity from DMM Food Products, a private dairy company knocked on his door, he decided to shut the business and started working on its facility in Vapi.

He began his journey in the dairy industry in a junior role in administration with a salary of Rs 2,500 a month. Over the course of around five years, he got promoted to a position where his role was to oversee the whole production process and his salary increased to Rs 12,000 a month. 

During this period, he aspired to expand his knowledge beyond production and delve into the market aspects of the business, but unfortunately, that opportunity did not materialise. 

In 2010, he moved to Surat with the aim to establish his own business in dairy. “I tried contacting a few people there with the production experience I had, but due to the lack of market knowledge nobody wanted to come onboard. Finance became a major challenge for me,” Sukhadiya tells SMBStory.

Undeterred, he opened a dairy retail counter.

The turning point came in 2012 when he seized an opportunity to start a trading business in Varachha, Surat, representing DMM's products. This business gave him some financial stability. 

Despite initial success in trading, Sukhadiya aspired to establish his own brand in ghee. With an initial investment of Rs 40 lakh from his personal savings and bank funding, he established Shree Radhey Dairy Farm in August, 2015, and launched the brand Vastu in Surat. 

With this investment, he established a 2,400-square-foot manufacturing plant about 25 kilometers from Surat. 

“Because of the connections in the market from trading, we garnered positive attention for the brand,” says the founder. The high-quality, preservative-free ghee and appealing packaging distinguished them from the competition.

Challenges in expansion

Expansion to other states came with its share of challenges. “Many distributors were reluctant to pay in advance as the product was new, while the company had to bear the cost of raw materials, straining its working capital,” says the founder.

Faced with these challenges, Sukhadiya sought advice from a sales professional, who suggested switching to an advance payment model. This strategic move changed things for the company. 

It adopted a strict policy of receiving advance payments from distributors, ensuring a sustainable business model. This enabled the brand to expand its distribution network beyond Gujarat, reaching Maharashtra, Rajasthan, and eventually establishing a pan-India presence in two lakh retail stores with a network of 2,200 distributors. 

The company launched its ecommerce operations about a year ago and is currently available on platforms like Amazon, Flipkart, JioMart, and its own website.

The manufacturing unit has transformed from 2,400 square feet to 75,000 square feet with increasing demands. It has a production capacity of 40 tonnes per day.

“The driving factors for this growth are the addition of new channel partners, team expansion, and increasing brand’s presence in Central, Northern and Eastern regions of the country where it was negligible before,” says Sukhadiya. From 2022-23 it added 20 new superstockists and 300 distributors. The team size of the company has also increased from 200 to 300.

“We also revamped our brand and packaging for a better visual connection and appeal. This gave a lot of push to sales,” he adds.

Product portfolio and future plans

Shree Radhe’s portfolio includes 45 SKUs under the brands, Vastu, Vastu Gold, and Goshala, with the primary focus on ghee. 

The products cost from Rs 600 per kg to Rs 3500 per kg. 

“While normal cow ghee accounts for 80% of sales, the brand also supplies milk and buttermilk to Surat and its surrounding areas,” says the founder.

In terms of competition, Vastu Dairy distinguishes itself by focusing solely on ghee production and continuously researching different milk types to create the best ghee variants.

To accommodate future growth and upcoming export operations, Vastu Dairy plans to establish a manufacturing facility that will increase its production while prioritising hygiene and quality.

Driven by the vision to provide employment opportunities, Sukhadiya also plans to double the team size to 600 by FY24.