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INTERVIEW

"With 14-15%, getting one lakh crore in five years is not a big problem"
Monday, 28 December, 2020, 08 : 00 AM [IST]
Ever since its inception in 1946, Amul with its dairy cooperative model has pioneered the milk revolution in India. In 1965, NDDB was set up to replicate the Amul model everywhere in the country under the chairmanship of the late Verghese Kurien. Under the dairy veteran and later, the dairy cooperative grew exponentially. After recording a turnover of Rs 8,000 crore in 2010, it went on to reach a mind-boggling figure of Rs 50,000+ crore last fiscal. During the pandemic, the dairy has launched 33 new products. With ambitious plans to reach Rs 1 lakh crore in the next five years, GCMMF Ltd (Amul) is eyeing both national and international shores. In a telephonic chat with Manjushree Naik, Dr R S Sodhi, chairman, GCMMF Ltd, throws light on the pandemic, company’s future plans and more. Excerpts:

After more than Rs 50,000 crore turnover last fiscal, the current fiscal is shadowed by the pandemic. How has been the performance of Amul so far?
Pandemic has not impacted food consumption. As far as food is concerned, whether you were eating out or at home, consumption is same. If you look at dairy, it is very important part of food. In the first three months more at home, you were cooking at home. In dairy, pandemic impact is positive.

In dairy over all, only one third is organised, packed or branded and 2/3 is unorganised or unpacked.

During the pandemic, a shift has accelerated from loose or unbranded to the packed segment because consumer is looking for hygiene and safety aspects. Earlier shift was taking place at the rate of 6-7%, during pandemic it has doubled or tripled in some categories.

Like in case of paneer, cheese, ghee or milk instead of buying loose, people preferred buying packed. Also consumers are buying for home consumption as ingredients. Paneer, cheese, even condensed milk, chocolate. Earlier same consumption, the institution buyer or HoReCa buyer was not buying the best product or brand, they were buying the cheapest brand. When you buy it yourself you will buy the best brand, which you perceive is made out of pure ingredients. Also, which is available and affordable. In brands, the trustworthy brand.

Amul meets all these four criteria - it is trustworthy, only pure ingredients not synthetic, it is affordable and it was available.

Overall in our consumer product, during pandemic, growth has been around 15-20%. In case of chocolate it doubled, for paneer 60-70%. In spite of HoReCa sector nil growth, first two months zero, then gradually started increasing month after month, today it is -30%, which will explain. More than that has covered by the consumer products segment. So our sale in consumer products is plus.  We have suffered in HoReCa as well as commodity business. We got 16-17% more during the pandemic as small players were not buying milk. That extra milk we converted into commodities like SMP, white butter and that stock we were holding as the market had gone down, now market has started looking up. Overall we are getting the same volume. In 4-5 months we will cover up with normal growth.

So it will be beyond last fiscal turnover, this time?
Yes, it will be beyond the last fiscal year, definitely.

The ice cream sector, especially, has taken a severe beating. What kind of losses have been recorded? What has been done to recover the deficit?
During March-April they were minus by 85%, then 60%, then 50%. Last month it was 5-10% more than the previous fiscal. Whatever loss has happened you cannot recover. Because March-April-May-June we sell 60% of ice cream that we lost. Overall, in ice cream the business in financial year has been down by 30%. But what we did is in the first 4-5 months we started using them for distribution of our other products - dairy products and fresh products. In plants also we do not have exclusive ice cream plants. For Amul, loss of ice cream is not a business loss. But exclusive ice cream players have suffered. That cannot be recovered, loss is gone, consumption is gone. We used the same supply chain for other products. But for other players selling only ice cream it is not possible.

Apart from the sales drubbing due to continuous lockdowns, the industry is suffering due to Covid-19 protocols such as social distancing and 50% attendance norm. What has been the experience of Amul in this regard?
Lockdown was declared on March 24 but on March 12 itself we have started communicating to our supply chain partners regarding the safety measures one has to take specially in 18,500 village coop societies at milk collection centres, where we have 36 lakh farmers coming twice in a day to pour milk. Like social distancing and also sanitisation we started taking care of all these. Because milk was exempted nothing stopped all the field factory and warehousing people were coming 100% and doing their duty. You can’t do this or pack the product sitting at home or work from home. Only people who are doing accounting and billing job can work from home. Our head office did not stop for a single day. We were working in the office only every day.

During Covid we started compensating the people with extra wages and incentives. We started paying 20% more wages or incentives whether it was a transporter, distributor, retailer, worker… everyone. Food also, three times langar was there. I don’t think we had to force anybody. Everybody says this is the time when the nation needs you for uninterrupted supply, than just job. So everybody did their best.

During lockdown, you have launched 33 new products like haldi doodh, tulsi doodh and panchamrit. How are the new launches doing across the country?
We are launching every month 2 ½ products. We were sitting at office only so we could come up with conceive, develop, analyse and launch these products. The response was good. Haldi doodh, tulsi doodh etc. is a niche segment and doing good.

What have been the supply chain and other related challenges during the lockdown period?
In regard to supply chain, first was communicating, milk exempted so farmers were communicated that milk will be procured and paid the same price and all the transporters communicated, all the approvals were taken saying milk is exempted so you have to allow these people. State to state rules were different, we had to talk to local collectors, police heads. We have to see to it that our associates come to work especially our packaging suppliers, we have to ensure that their plants are also exempted. We have to speak to various collectors, Ministry of Home Affairs, milk or milk products hence need to be allowed, basically coordination.

You have plans for edible oil, potato processing, ready-to-eat, frozen foods and more. Elaborate.
Our main focus will be milk, milk and milk. We started buying so that with our intervention they get better price. But we have India’s biggest most celebrated frozen supply chain and also found that our farmers who are supplying milk can also grow potatoes or other things. We have been working on frozen potato for last two years and got very good response. Putting our own plant at Rs 100 crore in Banaskantha district where lot of good quality potatoes are grown.

India being the world's largest importer of edible oil, what difference are you planning to make to this? With potato processing, do you have plans for potato products like chips and more?
We have only the frozen category. We are into frozen category as that is our core competence and advantage. In frozen products we have potatoes and frozen dairy based products such as paneer samosa and paneer parantha. In edible oils, we have launched 4-5 types. Already we have taken over edible oil plant of a local cooperative. We are running it and selling it within Gujarat.

Give us details on your new plants and product launches and the investment plan for the same in the future.
Investment and new products is a continuous exercise. Every month we come up with three new products, it is continuing but during coming time our emphasis is on launching new fresh products. Now we are coming up with lot of fresh sweets and bakery and products also. Lot of beverages we have launched like Amul Seltzer. These are the new products we are focussing on right now. We are setting up new plants in Kolkata, Varanasi, Delhi, Andhra. In Gujarat, India’s biggest plant at an investment of Rs 500 crore at Rajkot. Every year Rs 600-800 crore investments in new products and this will continue.

Amul is likely to hit the magic figure of Rs 1 lakh crore in 5 years. How this will be possible? What kind of vision you have for the company in regard to sales in India and abroad?
Our turnover in 2010 was Rs 8,000 crore already multiplied, growing at the rate of 14-15% so getting one lakh crore in five years is not a big problem. Our business is increasing and we have to work on 3E strategies; Expansion and procurement within and outside Gujarat; Expansion with Rs 600-800 crore investment across India; and Expansion in our distribution network where we are opening new offices. Last week we opened at Leh. We have a modern set up at Leh for all our products and penetrate into Leh and Ladakh.

As far as exports are concerned, we are doing Rs 700-800 crore investments. We are the largest exporters of dairy products in India.

Generally, when it comes to export it is a known fact that India’s exports are minuscule compared to its imports. Elaborate.
India is world’s largest market, fastest growing market only 1/3 is organised so maximum potential for the world in India.

Tell us about your R&D, innovations and collaborations in this regard.
We have a separate R&D department. We have 82 plants and people here work on it. We come out with innovations in all categories. We launched Amul Seltzer - cola with juice and milk. We have lot of innovations and developing a continuous exercise. We do not have any collaborations.

What you think about the protests by farmers against the three farm laws?
One has to understand and appreciate farmers are concerned with their livelihoods. Disparity between rural and urban income is increasing day by day. Farmers are not getting a good deal. I feel this free market is a good deal for the farmers like milk. Farmers can sell and buy from anybody just like milk. Clear communication has to be there. There are people involved who are going to lose lot of money so they are instigating the farmers. Overall liberalisation is a good step like we have done in case of industry in 1991 and in case of dairy long, long time ago. We have to explain and get things done.
 
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