ITC Ltd shares rose over 1% to Rs 218.35 on the BSE in Thursday’s intra-day trade after the company announced that it would add over 5,000 farmers this year to its milk sourcing base in West Bengal and Bihar. The company, which joined the dairy market less than four years ago, today collects milk from approximately 20,000 farmers in these two states. 

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Sanjay Singal, ITC’s chief operating officer (dairy and beverages), stated that the business will focus on selling fresh dairy goods such as pouch milk, curd, paneer, and lassi in West Bengal and Bihar over the next two years, where it now serves 42 markets and plans to expand to a few more.

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“These two are big markets and being a new entrant we want to expand and deepen our presence here before venturing into other states,” he said.

In the fresh milk category, ITC has a market share of around 10% in Bengal, 15-20% in Bihar, and approximately 20% in lassi.

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The company sells packaged dairy beverages such as milkshakes in the North and South, as well as ghee across the country. According to Singal, ITC does not have a supply chain for chilled dairy goods like butter and cheese and so has yet to decide on a launch. ITC is yet to decide whether to increase milk pricing, despite competitor Amul raising prices by Rs 2 per litre beginning in March.

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Singal stated that there has been significant cost pressure on procurement and for farmers in the last year as a result of an increase in fodder prices and freight, but ITC was yet to decide on any price increases. 

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Singal further stated that ITC will penetrate the base of milk merchants that deliver milk straight to houses in order to use their services. On Wednesday, the company debuted lactose-free milk in pouches in West Bengal, at nearly half the price of its nearest competitor.