The dairy sector in the country is on a roll. India is the world?s largest consumer of milk but it is also the largest milk producer in the world. This is thanks largely to the spectacular success of Operation Flood as well as of cooperatives like the Gujarat Cooperative Milk Marketing Federation (GCMMF), better known as Amul. Not surprisingly, the Amul experiment has spawned many me-too cooperatives in several other states. It has also attracted several private and foreign players into the sector, which is fast over-crowding. After a 29-year stint with the organisation, 52-year-old RS Sodhi has just been appointed the new managing director of the Rs 8,000-crore cooperative. In a free-wheeling interview with Jyotsna Bhatnagar, the suave Sodhi elaborates upon his journey thus far and the road map ahead for Amul.
You have been with GCMMF for nearly three decades now. How has the cooperative evolved during this period?
I have been part of Team GCMMF since 1982, when this organisation was still in its infancy. Only 9 years before my entry, Dr Verghese Kurien had created GCMMF as the apex marketing body for the dairy cooperative unions of Gujarat. During the formative years, our priority was to create our own distribution network as well as sales systems and structures, and take over these functions from our erstwhile distribution partners such as Voltas and Spencers. Over the years, we have expanded our distribution reach to every major town and city of India, establishing 47 sales offices, appointing more than 3,000 stockists and making our products available in 5,00,000 retail outlets.
How does your cooperative brand hold its own in an era of modern format stores?
Post-liberalisation, with the opening up of the dairy sector, GCMMF underwent a cultural and structural transformation to face competitive challenges from MNCs as well as aggressive Indian private companies. We adopted total quality management across the organisation. To counter the imminent threat of modern format stores and to enhance brand visibility, we created a chain of almost 6,000 Amul Parlours at prominent locations like railway stations, academic and office complexes, bus stands and airports as well as normal commercial areas. Our brand-building efforts continue through initiatives such as Amul Vidya Shree and Amul Vidya Bhushan awards, the Amul Maharani contests and the Amul Chef of India awards. While brand Amul has retained its dominant leadership position in most categories that we operate in, we have also registered impressive growth in business turnover year after year. In the last financial year, our turnover was Rs 8,005 crore and we are well on our way towards another impressive performance this financial year as well.
Milk production still remains an overwhelmingly unorganised activity in India. As a hardcore marketing man, how will you guide Amul to take on this challenge?
Although our turnover will be close to Rs 10,000 crore this year, we have only 4% of the total share of Indian dairy consumption, which still largely comprises of either the unorganised sector or self-consumption by milk producers. Although GCMMF has a commanding 25% share of the organised dairy sector, the organised sector still accounts for only 18% of total dairy consumption in India. This implies tremendous potential for growth at the cost of the unorganised sector.
We plan to focus on expanding category penetration and enlarging the consumer base for most of our product categories. This will enable us to tap the huge potential for branded, packaged, value-added dairy products in both urban and semi-urban India. There will be a specific focus on expanding and streamlining our distribution network to ensure deeper penetration for all categories into towns with less than one lakh population, as well as in semi-urban areas. The aim is to make our entire product range available at arm?s reach of consumers. Our brand-building efforts will focus on enhancing the connect with Young India, with high sense of energy and momentum.
What about new forays?
We will sharpen our focus on value-added derivatives, moving further up the value chain. We will continue to enhance our range of fresh and fermented products. Pouch milk and fresh products contribute almost 40% to our current turnover and the fresh product range will continue to be one of our major growth drivers in the years to come. In line with our practice of continuously gathering and acting upon fresh consumer insights, we will conduct further need-based segmentation of end-users. For selected segments, specific product and packaging mixes will be developed, supported by appropriate marketing mixes and end-to-end communication campaigns. Apart from retail and household segments, we will focus on the needs of other end-users such as food services and industrial segments.
How do you see Amul?s relationship with its suppliers?farmers?
Milk has always been an integral part of Indian tradition and culture. But it has been thanks largely to Amul and the Operation Flood inspired by Amul that India has become the world?s largest milk producer, churning out 112 million tonnes per annum. As we take on the key challenge of enhancing the organised sector?s share, we will be working on enhancing our supply chain network. This will demand more effective deployment of technology, including information technology. But it will also demand safeguarding the interests of our milk producers, namely our farmers. So, we will ensure that our farmers continue to receive remunerative prices and that the maximum percentage of consumers? rupees goes back to the farmers. The technology component here will include helping farmers improve milch animals? productivity. We can encourage farmers who are economically better off to create commercial dairy farms in their village, rather than invest their money elsewhere.
What will the Gujarat dairy cooperative movement look like a decade from now?
Our focus will be to further enhance our leadership status in the Indian dairy industry. We have already documented our plan for the next 10 years, as per which the group turnover for dairy cooperatives of Gujarat will rise to Rs 30,000 crore by 2020. By then, Gujarat dairy cooperatives will double their milk procurement to around 200 lakh litre per day. The processing capacity of our dairy plants will also rise in tandem. Milk procurement infrastructure will be strengthened and 90% of our village dairy societies will be equipped with automatic milk collection systems and bulk milk chilling units. Gujarat?s dairy cooperative unions will increase their cattle-feed manufacturing capacity from the existing 3,600 metric tonnes per day to 12,000 metric tonnes per day. We have also estimated that the total investment for creating all the required infrastructure will be Rs 3,000 crore till 2020, at current prices.
We are also willing to help other dairy cooperatives in India to grow and prosper. We are already buying milk from dairy cooperatives in Maharashtra, West Bengal, Bihar and other states.