Financial aid has come from the Rashtriya Krishi Vikas Yojana (RKVY), which comes under the Union agriculture and dairy development ministry.
The funds will also go towards the modernization of its existing plant and an effluent treatment plant.
Dattaray Ghanekar, managing director, Gokul dairy, said it has started ground work for the construction of a satellite dairy at Shirol tehsil with a daily processing capacity of 1.5 lakh litres of milk.
Capacity will be increased to two lakh litres a day.
“The financial assistance will widen the reach of the dairy to collect milk from Shirol, Jaisinghpur and from Hatkanangale to Miraj,” he said.
Gokul's biggest consumers are in Mumbai, Navi Mumbai, Thane and its suburban areas.
The dairy has a daily production capacity of 40 tonnes each of milk powder and desi butter. It produces six tons of ghee a day. One lakh litre milk pouches are packed in its plant near Kolhapur daily.
The proposal for financial aid was pending for a long time according to Ghanekar. The total cost of the project is $8.1m, of which $4m has been sanctioned by the RKVY.
The rest of the amount has to be raised by the dairy itself.
The dairy collects 6.25 lakh litres of milk every day of which only 80,000 litres come from Karnataka and the rest is produced in the district itself.