Amul eyes Gulf to extend its reach; plans to set up a plant in the region

Amul, India’s largest milk and dairy products producer, is keen on putting up a plant in the Gulf.

“We would like to export fresh milk from India to the Gulf,” says R S Sodhi, Managing Director, Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF), India’s largest food product marketing organisation with an annual turnover of $3.5 billion (2015-16). “We are doing market research and feasibility studies about putting up a plant in the Gulf.”

Sodhi says that the distance from Gujarat to the Gulf is lesser than the distance to Kolkata. “Distance is nothing,” he points out. “We send milk from Gujarat to Kolkata, but Dubai is much nearer.”

GCMMF, which markets its products under the flagship Amul brand, procures nearly 17 million litres of milk daily from more than 18,000 village milk cooperative societies. It has 3.6 million milk producer members.

The company has been exporting products such as srikhand, ghee, butter and cheese to many countries around the world, including the UAE and other Gulf countries. “Consumers’ taste and expectations in the Gulf is the same as in India,” says Sodhi.

Earlier, the cooperative had just one distributor in Dubai, but today it has about four. “We also have an office in Dubai, the only one outside of India,” he points out.

GCMMF, which has a massive turnover of Rs230 billion, exports about Rs3 billion worth of products. The Gulf accounts for about half of these exports. “We produce the best buffalo milk,” says Sodhi. “Whatever milk is produced in the Gulf costs double that of ours. If we export milk to the Gulf, it will be far more economical for consumers.”

It already produces paneer and shrikhand through partners in the US, and markets them under the Amul brand. GCMMF has been growing at a breathtaking pace over the past decade – of 20 per cent annually. “We will continue to grow at this pace over the next few years as well,” says Sodhi.

Interestingly, demonetisation has not affected its procurements and sales and business continues to grow as usual. Farmers are increasingly doing their transactions through banking channels and the role of cash has reduced drastically, he points out.

Though India is the largest producer of milk in the world, the organised sector accounts for just 25 per cent of the production. But this is changing rapidly, as the organised sector raises its share every year.

Many European dairies have also entered the Indian market in recent years, but Sodhi believes they will not be able to make any dent in the country. “Farmers in India not only produce the milk, but they process and market it themselves,” he says. “They get the best price for their milk.”

Importers, however, are concerned about their profits. They never thought that India would be a low-margin market. “They are worried about quarterly results and are not patient to wait for decades for the profits to increase,” he quips.

But the farmers who own GCMMF welcome the entry of both national and international players. “If they enter the business, the system will become more transparent and new technology will also be brought,” notes Sodhi. “Farmers will be the ultimate beneficiaries.”

Asked about Amul’s diversification into the non-dairy sector, he says it would definitely succeed. “But if we put the same time and efforts in the dairy sector, we will get better returns,” adds Sodhi.

Comments

comments