Amul’s revenue growth slows in 2015-16
Other | Photo Credit: Reuters

India's largest dairy organisation Gujarat Cooperative Milk Marketing Federation (GCMMF), which sells its products under the Amul brand, has posted the slowest revenue growth in at least six years in 2015-16.

The firm said on Friday its revenue grew 11% to Rs 23,004 crore for the year ended 31 March 2016. The growth rate has been sliding after hitting a high of 32% in 2013-14.

The group turnover of GCMMF and its constituent member unions, representing unduplicated turnover of all products sold under the Amul brand, rose 13.7% to Rs 33,000 crore from Rs 29,000 crore in 2014-15.

Amul didn’t specify any reason for the slower revenue growth. But like other dairy companies, it has been facing competition in some categories such as ghee from yoga guru Baba Ramdev-backed Patanjali Ayurved.

GCMMF chairman Jethabhai Patel said that milk procurement by Amul has jumped 87% over the past six years while the procurement price rose 90%. This comes at a time when farm-gate prices of milk have fallen in several other countries including New Zealand, he said.

The company said revenue rose after it expanded its milk processing capacity to 28 million litres a day. It also launched new dairy and cheese plants in Faridabad and Rohtak in Haryana and Amreli in Gujarat last year. Besides, it started a new cattle feed plant at Kapdivav village in central Gujarat with a capacity of 800 metric tonnes per day and expandable to 2,000 metric tonnes.

Citing data released by International Farm Comparison Network, Amul said that it is now ranked as the 13th largest dairy organisation in the world and that it is placed ahead of dairy companies Land O’Lakes & Schreiber Foods of the US, Muller of Germany, Groupe Sodiaal of France and Mengniu of China.

India is the largest milk producer in the world but the dairy market is highly fragmented and is dominated by local milkmen, strong regional brands and Amul. The market is seeing signs of consolidation that may bring more vibrancy in a commoditised business.

French giant Groupe Lactalis SA recently agreed to buy the milk products business of public listed Anik Industries Ltd for Rs 470 crore ($70 million). This is the second acquisition by Lactalis—counted among the top three dairy firms in the world—in India in as many years and will help to jump closer to India's top private dairy by revenue—Hatsun Agro Product Ltd.

Lactalis had also acquired India's second-largest private dairy firm Tirumala Milk products Pvt Ltd two years ago from private equity firm Carlyle and its promoters in a big-ticket deal.

India’s milk production and consumption is growing at a fast clip, making it an attractive market for not just global dairy firms but other investors as well. Dairy companies such as Prabhat Dairy, Parag Milk and Dodla Dairy have raised private equity funding. Prabhat Dairy and Parag Milk also went public in recent months, although their initial share sales struggled to attract investors.

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