Financial Daily from THE HINDU group of publications
Saturday, Jun 12, 2004
Agri-Biz & Commodities
Dairy & Dairy Products
Marketing - Strategy
Corporate - Outlook
Amul to expand liquid milk biz to other cities Targets Rs 3,400-cr sales for current fiscal; looks at Pak for foray
Anand , June 11
THE Gujarat Co-operative Milk Marketing Federation (GCMMF), which has set a target of Rs 3,400 crore sales for the current fiscal, is looking to liquid milk sales in more cities to keep the smile on the face of the Gujarat farmers.
Mr B M Vyas, Managing Director, GCMMF, told Business Line the game plan was find lucrative equations within the value chain of milk - in pouch, in tetrapacks, in the sterilised form, and as fresh cream - before looking at the value-added forms.
Having made an entry into Pune with the acquisition of the Kapila Dairy in 2003, following similar forays in Mumbai, Nagpur and Nasik, the company has decided to tread cautiously for at least a while. This comes even as it had in the past followed inorganic growth as a philosophy, having taken over the Tarapur plant of Vadilal and Kwality's Nagpur dairy.
"The GCMMF has decided that there is no need to go in for spectacular acquisitions when there are umpteen number of dairy processing plants that can be hired out. Our next foray - whether it be Jaipur, Kanpur, Bhopal or Lucknow - would see us testing the waters with rented facilities first before setting up our own processing plants. Similarly, we are targeting 100 supermarkets in top cities with proximity to Indian by way of Amul tetrapacks," Mr Vyas said.
The Amul brand has already entered Hong Kong, Singapore, Colombo, Katmandu and the Gulf cities of Dubai, Kuwait and Muscat. Amul has now trained its guns on Jakarta, Kuala Lumpur and Dhaka. Amul is sold in 300 shops across 13 cities in the US, this market alone good for Rs 10 crore out of Rs 80 crore earned from exports.
Even as GCMMF brushes aside talks of a tie-up with Wal-Mart as a drop in the ocean, Pakistan is being evaluated as a potential market for Amul milk. "Pakistan, with annual imports up to 20,000 tonnes of milk, is an obvious target for fresh liquid milk to be ferried from Jamnagar to Karachi in a matter of one hour, once the Governments agree. Similarly, Sri Lanka, with its proximity to Tamil Nadu, is again a potential candidate to import liquid milk, given that it imports 60,000 tonnes of milk powder. Clearly, with India's annual milk production already at 91 million tonnes and likely to touch 94.9 million tonnes this year, players such as Amul need to look at such markets," Mr Vyas said.
The GCMMF had closed 2003-04 with a turnover of Rs 2,883 crore. This came even as the Dhara oil portfolio, a significant part of GCMMF sales at Rs 345 crore last year, no longer remained a part of the federation's basket of products. Thus, the Rs 2,745-crore turnover in 2002-03, minus Dhara sales, settled at Rs 2,400 crore, resulting in an 18 per cent growth for milk and allied products under the Amul umbrella in the last fiscal.
However, the company's hopes of plugging the space left by Dhara with Amul Kool remained unfulfilled as the flavoured milk could rustle up a sale of only Rs 35 crore.
"The GCMMF has set a target of Rs 3,400 crore for the current fiscal as we are looking to take up the sale of liquid milk to Rs 1,000 crore from Rs 600 crore at present. This would push milk as the single biggest entity, ahead of milk powders at Rs 700 crore. Out of the 12 strategic markets identified for carving out Amul's presence in milk, we are going to push ahead with Jaipur and Kanpur in the comings days", he said.
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