Parag Milk Foods Limited approves Rs 205 crore expansion

Parag approved approximately Rs 205 crore on November 3, 2026, to quadruple paneer capacity to 80 metric tonnes per day (MT/day) by June 2027 and double cheese capacity to 120 MT/day in FY28, expanding its value-added, protein-led dairy production capability.

What capacity expansion has Parag approved?

Parag has approved approximately Rs 205 crore of investment in new paneer and cheese manufacturing capacity. The paneer project accounts for approximately Rs 100 crore and will raise capacity at Manchar and Palamaner from 20 MT/day to 80 MT/day. The company said the capacity will serve both regular paneer and high-protein paneer.

The cheese project accounts for a further Rs 105 crore and will increase cheese capacity from 60 MT/day to 120 MT/day. The two projects each add 60 MT/day of capacity in their respective categories, although the November 3, 2026 announcement does not disclose a plant-wise investment split, the split between regular and high-protein paneer, or the funding method.

When will Parag commission the new capacity?

Parag expects the paneer expansion at Manchar and Palamaner to be commissioned by June 2027. The timetable places the paneer increase from 20 MT/day to 80 MT/day ahead of the stated completion target for the cheese project, which is FY28.

Parag has targeted completion of the cheese capacity doubling from 60 MT/day to 120 MT/day during FY28. The company did not provide a specific month for cheese commissioning, construction milestones or a phased commissioning schedule, making this timeline less precise than the June 2027 target for paneer.

How much will Parag's paneer and cheese capacity change?

Parag's planned paneer capacity will increase fourfold, while cheese capacity will double. Paneer capacity is set to rise by 60 MT/day from 20 MT/day to 80 MT/day, and cheese capacity will also rise by 60 MT/day from 60 MT/day to 120 MT/day.

Paneer starts from a base of 20 MT/day, one-third of cheese's 60 MT/day capacity, but both projects add the same 60 MT/day. Consequently, paneer has the larger proportional increase, while cheese capacity will remain 40 MT/day above paneer capacity after both projects are completed.

Why is Parag investing in paneer and cheese?

Parag said the investments are expected to strengthen scale across its brands and support its shift towards value-added, protein-led offerings. The approximately Rs 100 crore paneer project specifically covers regular and high-protein variants, linking the expansion to the company's stated focus on nutrition and protein.

The expansion follows paneer's highest-ever quarterly volumes in Q2 FY27, according to Parag, supported by a shift from unorganised to branded paneer and rising protein consumption. Ghee, cheese, paneer and curd generated Rs 778 crore, or 63% of Q2 FY27 revenue, with 20% value growth and 7% volume growth.

Parag's New Age Business, comprising Pride of Cows and Avvatar, reported Q2 FY27 revenue of Rs 154 crore, up 71% year on year and equal to 12% of turnover, compared with 9% a year earlier. During the quarter, Avvatar introduced protein chips containing 10 grams of protein per 30-gram pack, as well as new whey flavours and naturally sweetened whey variants.

What financial performance preceded Parag's expansion decision?

Parag reported its highest-ever quarterly revenue of Rs 1,241 crore for the quarter ended September 30, 2026, up 23% year on year, supported by 12% volume growth. Gross profit was Rs 323 crore, up 24%, while gross profit margin was 26.0%, compared with 25.8% in the prior-year quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were Rs 101 crore in Q2 FY27, up 37% excluding a prior-year one-off item, and the EBITDA margin was 8.1% against 7.3% on the same basis. Profit after tax was Rs 42 crore, an 8% reported decline but 42% growth excluding the prior-year one-off, while the reported comparable margin was 3.4% versus 2.9%.

For H1 FY27, Parag reported revenue of Rs 2,185 crore, with 18% value growth and 8% volume growth. EBITDA was Rs 170 crore, up 23% excluding the prior-year one-off, while profit after tax was Rs 64 crore, an optical decline of 13% but a 12% increase excluding that item.

Conclusion

Parag is allocating approximately Rs 205 crore to add 60 MT/day each of paneer and cheese capacity, though the expansions start from different bases. The projects would take paneer capacity to 80 MT/day and cheese capacity to 120 MT/day, following Q2 FY27 revenue of Rs 1,241 crore and Rs 778 crore of revenue from ghee, cheese, paneer and curd.

The next disclosed operating milestone is paneer commissioning by June 2027, followed by the targeted completion of the cheese project in FY28. Parag also disclosed that its proposed amalgamation of wholly owned Bhagyalaxmi Dairy Farm Private Limited remains subject to requisite approvals, leaving the timing and implementation of that separate transaction unresolved.