Dodla Dairy: Churning the Business of Milk in India

Dodla Dairy, a family owned dairy business based in the southern state of Andhra Pradesh, India, has successfully made its mark on the Indian liquid milk industry, but now needs to move to the next level. The company is considering a backward integration initiative into the dairy farming business, but is faced with internal limitations of capital constraint and limited risk propensity.

D. Sunil Reddy, the managing director of Dodla Dairy, is looking at the option of getting an external partner on board via private equity. This would not only help him to bring in the needed resources, but also provide him with the expertise to rapidly enter into the dairy farming sector, which is a relatively new area for him. However, he must decide carefully, would the benefits of bringing in an external private equity partner be worth the dilution of control that would come along with this option?

This case study can be used to teach students the challenges faced by family owned agribusinesses in fast changing emerging markets, and the impact it would have on the traditional way in which they operate.

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