New Delhi: Diversified conglomerate Jaypee Group has now set its eyes on the dairy sector, where the growing demand-supply gap is only set to widen further.

The group, founded by Jaiprakash Gaur, initially plans to set up a milk processing plant near Mathura with capacity of one million litre milk per day in Uttar Pradesh with an investment of Rs 100 crore.

The capacity addition in the proposed plant, for which work has already been started, and increasing the number of plants, mainly in north India, would be decided depending upon the success of the venture, Group's Executive Chairman and Chief Executive Officer Manoj Gaur told the reporters.

Gaur said the current demand-supply mismatch in the dairy sector, which is mainly responsible for increasing the price of the everyday essential northwards, enthused the Group to foray into the business. “We will try to replicate the success of Amul in North India,” he added.

With around 117 million tones production in 2010, India ranks at top in milk production in the world. According to a report by US Department of Agriculture, India’s milk output is expected to touch 121.5 million tons in 2011.

While the demand for milk has been growing by about six million tons a year, the annual incremental production over the past 10 years has been 3.5 million tones.

A report recently pointed out that demand-supply gap of milk is likely to go up on the back of rising income and growth in per capita consumption.

Gaur said the company has already acquired 25 acres of land near Mathura to set up the processing plant, which will be operational within the next 18 months.

“We will produce and market all kind of milk and milk related products. The National Capital Region will be our main focus of operation initially. However, as we grow, we will sell our products in others parts of North India,” he said.

Jaypee will mainly source milk from the farmers in and around Mathura for processing and also have a company-run farm with around 200 animals to showcase the best possible model of rearing and treating cows to the farmers helping them to get the best possible returns.

The dairy business will come under the fold of its agri vertical, Jaiprakash Agri Initiatives Company (JAICO), Gaur said, adding that the brand name for its milk products would be decided later, but hinted that it would be associated with the name of the group’s founder “Jaiprakash”.