The country's largest dairy player, Gujarat Co-operative Milk Marketing Federation (GCMMF), which markets Amul brand of dairy products, recorded 11% growth in its top line in FY16.
The country’s largest dairy player, Gujarat Co-operative Milk Marketing Federation (GCMMF), which markets Amul brand of dairy products, recorded 11% growth in its top line in FY16. For the last two fiscals, growth has slowed down for GCMMF — it grew 14% in FY15. Prior to that, for six consecutive years, it grew at over 20%. Apart from facing competition from smaller dairy players, GCMMF is facing pressures due to fall in milk prices globally. The company continues to pay the farmers high prices which it paid in the past. GCMMF managing director RS Sodhi, in an interview with FEs Rahul Thekdi, is, however, confident that GCMMF will meet its target of a turnover of Rs 50,000 crore by 2020. In FY16, the company’s total revenue stood at Rs 23,005 crore. Excerpts:
GCMMF had clocked a turnover of R20,733 crore in FY15. In FY16, it was around Rs 23,005 crore, up 11%. In FY15, you grew 14%, one of the slowest in the past eight years, due to fall in global prices. Before this you were growing at 20% for six years. What kind of growth do you see this year?
Our growth is intact. Amul is the only co-operative where farmers are getting slightly higher price than what they were getting in 2014. The prices farmers were getting for their milk in 2010, have doubled today. We will achieve our turnover target of Rs 50,000 crore by 2020.
Could you please provide the category-wise growth details of Amul products?
Our growth has been on the back of volume growth. For instance, products like Amul cool and lassi tetra pack grew by 20-30%. Every category has seen growth in double digits.
Are you facing pricing pressures? You increased milk prices earlier this month by up to Rs 2 per litre in Delhi and Gujarat due to increase in production cost. Any plans to raise them further? Globally, prices of milk and dairy commodities are going down but you continue to pay the farmers higher prices. Will this not affect your rate of growth?
After two years we increased the prices in the country as cost of production has grown 15% compared with the last year. We are happy if farmers are getting good price for their produce.
The total branded dairy product market in the country is around Rs 70,000-Rs 75,000 crore, of which Amul has over 25% share. With more players entering the market, how do you plan to grow your market as well as your share further?
We are investing around Rs 600-800 crore per annum, we are getting 12-13% more milk compared to last year. Delhi is the biggest market, we have started new plants in Rohtak and Faridabad. In September, we are starting plants in Kanpur and Lucknow. We also are putting up new factories in Kolkata and Mumbai. In Gujarat also we have started a new factory. There is a lot of hope for new players to enter the market, we are happy to see more players entering the market.
Which are the leading categories from which you expect future growth?
Growth is expected from fresh products like milk curd and butter milk, beverages and other products. We are expecting 10% – 30 % growth in each of these category. We are also adding two new products in the Mithai section this year, rasmalai and rasgulla.
What are GCMMF’s future plans?
The most significant aspect of the dairy industry is procurement of milk. Firstly, we are expanding to new markets out of Gujarat. Second, we are expanding in the processing market by putting up new plants. Third, we are also expanding our distribution market since dairy products are perishable so you need to have a very good distribution system.