Amid high inflation woes, Indian housewives would have to shell out a few extra bucks for their daily milk requirement. Gujarat Cooperative Milk Marketing Federation Limited (GCMMF), which owns Amul brand, is set to increase milk prices in the range of 5-7 per cent for different category of milk anytime this month, informed top GCMMF official on Monday.
"The costs have gone up for farmers due to inflation. Hence, in order to keep farmers interested in dairy industry, we have to revise prices. However, the price rise will not be as severe as it was in past one and a half years. We are looking to increase milk prices in the range of 5-7 per cent anytime in the current month," said R S Sodhi, managing director, GCMMF.
The impact of the price rise will result in an increase of around Rs 2 per litre in different varieties of milk, which GCMMF sells in different parts of the country, including Mumbai, Uttar Pradesh, Madhya Pradesh, Rajasthan and Delhi.
"The increase in excise duty after the union budget would affect two of our products, ice cream and milk powder. It would increase the cost of our packaging materials. But so far we have absorbed the duty hike for liquid milk," he said.
"Last year the procurement price was increased by 11 per cent, while this year we will give 14-15 per cent more prices to farmers," added Sodhi, who was in Ahmedabad to launch company's latest whey protein malt beverage brand - Amul PRO on Monday.
According to Sodhi, milk procurement to rise especially from Gujarat. "Amul is going to get about 40 per cent more milk from Gujarat and our peak procurement in the state has reached to 144 lakh litres per day (LLPD) against 120 LLPD reported last year. The growth in procurement is due to increased procurement prices for the farmers," he said adding that out of total milk procurement, about 70 per cent is used for liquid milk, while 30 per cent is used for value added products.
Currently, GCMMF pays an aggregate Rs 32 per litre for buffalo milk (7 per cent fat) and Rs 21-22 per litre for cow milk. "We pay maximum procurement price in the entire country and that is the reason, the number of member farmers with GCMMF has increased to close to 3.1 million," maintained Sodhi.
Giving the sales estimate for the financial year 2011-12, Sodhi informed that GCMMF's turnover for the year stood at around Rs 11,660 crore with about Rs 100 crore worth of exports. The turnover grew by about 20 per cent on a year-on-year basis, however it was lower than the previous estimate of Rs 12,000 crore. "We anticipated about 30 per cent growth in sales over last year, but the sales picked up only after Diwali this year," he said.
According to him, the said turnover excludes turnover of those dairies which are associated with GCMMF and sell milk under the brand name of Amul. "Hence, calculating the turnover for Amul brand, it would be more than Rs 16,000 crore," he said. Adding further, he informed, "Next year we are looking at better growth of about 25 per cent with focus on some new launches and increased sales from milk." According to him, liquid milk contributes about 40 per cent to the total turnover, while 60 per cent comes from other products.
... chalks out investment plan of Rs 3000 cr over the next five years
GCMMF has chalked out an ambitious investment plan for the next five years. The federation is likely to invest Rs 3,000 crore over the next five years towards capacity enhancement and new product development, a senior official informed.
"We are planning to set up at least six new milk processing plants in different parts of the country. The plants in Delhi, Mumbai and Saurashtra are likely to be operational by this year end. While we are also planning plants in Kolkata," said R S Sodhi, managing director, GCMMF.
GCMMF, the federation of milk cooperatives has a combined milk processing capacity of around 14.5 million litres per day, which it intends to increase to about 18 million litres per day over the next five years. "Looking at the pace of growth in the dairy industry and increasing milk procurement, we would require additional milk processing capacities, for which we will invest Rs 3,000 crore," informed Sodhi, on the sidelines of the launch of its whey protein malt beverage - Amul PRO.
With the latest launch, Amul to compete with some of the chocolate-flavoured milk additive brands such as Boost, Complan, Bournvita and Horlicks in the Rs 2500-crore to Rs 3000-crore milk additives market. Amul aims to achieve Rs 300 crore sales target or 10 per cent of market share in the first year of its launch.
"This is superior to other brown health drinks brands in cost and in nutrition value. This makes nutrition affordable to consumers," said Sodhi. Amul PRO is aimed to cater to children between age group of 2 years to 15 years.
Amul, which has achieved the total turnover of Rs 11,660 crore for the year 2011-12, holds commanding market share in branded butter market in India with 85 per cent share, while the federation is exploring milk additive market by the latest launch.
