THE MAN who ignored the banks and turned a mothballed milk factory in Longwarry into a successful export-oriented dairy manufacturer has sold his company for $67 million.
Above: Rakesh Aggarwal will continue to manage Longwarry Food Park. Photo by author.
First published in the 16 January 2015 edition of the Warragul & Baw Baw Citizen.
Rakesh Aggarwal last month sold Longwarry Food Park, producer of milk carrying the popular Gippy Milk brand and other products, to the French-owned Parmalat Australia.
The decision to sell was not an easy one – Mr Aggarwal had been building the business since 2001.
“Yes it was difficult,” he told the Warragul & Baw Baw Citizen.
“The business has grown quite a bit over time and we can see that milk is going to do very well in the future, in fact it’s no longer milk, it’s white gold that we produce in Australia.
“But to get to the next level of growth in the business, the business needed significant investment that we as a family couldn’t make. We made a decision that we needed to find somebody who would be able to take the business to the next level.”
The business has prided itself on being family-owned and, according to the food park’s website, “committed to reinvesting back in the Australian community.” Asked how the sale to a multinational fitted with that idea, Mr Aggarwal said the expansion plans under the new owners would benefit the region.
“I think Parmalat would be able to make the business grow even more and at a much faster rate than what we’ve done,” he said.
“Parmalat has [invested] about $200 million in the last 12 months in Australian export-oriented dairy businesses. I think it would be a great thing for Australia, for Longwarry Food Park, and for the region to have such a strong player which will have export focus to take our dairy products to a world market.”
Mr Aggarwal said he will continue to work at the company despite the multi-million dollar sale.
“I would like to stay back with the business as long as possible. That’s what I enjoy most and this is what all my blood, tears and sweat have gone into and I would like to see the growth.
Mr Aggarwal will also continue to run his food processing and research company Saurin Group, which was not a part of the Parmalat sale.
Several options for funding the expansion of the company were considered before the sale, including a potential float on the ASX. But “this was the best option for the business.”
Planned expansion projects focused on milk powder and UHT milk production.
“There are many areas of growth that have potential for Longwarry,” Mr Aggarwal said.
“One area is UHT, which the new owners plan to do fairly shortly, then we also intend to make our dried milk more diversified, to be able to do more products with [it].”
Longwarry Food Park already exports to around 30 countries. Gippy Milk products are exported to China, Vietnam and the Phillipenes, and other products to countries in South America, Africa, the Middle East and Asia.
“What attracted [Parmalat Australia] to our business was the export-oriented nature of the business,” Mr Aggarwal said.
“It gives them a new market. If you go to any major city in China, in any supermarket you will definitely find Gippy on the shelves.
“I think this site would be an export-oriented place. We export more than 80 per cent of our product even today, and I think that will continue and grow.
“They already have a huge presence in Australia in terms of domestic market, so it will make more sense to export into overseas markets and grow there.”
The Gippy Milk brand was sold as part of the sale and will continue to be used by Parmalat. Fresh milk with the Gippy label is sold in Victoria, South Australia and the Northern Territory.
The food park presently employs around 50 people at any one time, and Mr Aggarwal said under his management that was expected to double in the next three years “but with Parmalat involved I believe growth will be much faster.”
There will be no changes to milk suppliers’ contracts, and it is expected the company will look to source more milk locally as part of its expansion.
Residential expansion a risk
Asked whether he thought residential expansion into farm land was a risk for dairy in West Gippsland, Mr Aggarwal said “we shouldn’t allow the conversion of dairy land into residential land.”
“Dairy is an important and sustainable business model in Australia,” he said.
“It’s one of those products that not many countries can do as well as we can in Australia.
“We as a country must encourage dairying as a profession and keep it growing [to] be the food bowl of Asia and the rest of the world.”
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