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Amul to invest Rs 3,000 crore by 2020 to fund expansion

Livemint:  June 30, 2016

New Delhi: Amul, the milk and dairy products brand from Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF), will invest about Rs.3,000 crore to increase its milk processing capacity and to expand presence by 2020, said R.S. Sodhi, managing director, GCMMF, in New Delhi on Wednesday. Sodhi was meeting media persons in New Delhi to announce the co-operative’s support to the Indian team for Rio 2016 Olympic Games as its official sponsor. Amul’s association with Indian Olympic Association (IOA) to promote the multi-sport event will cost the co-operative a sum of Rs.1 crore and it will launch a series of advertising campaigns to promote this association in the coming months.

Responding to questions on Amul’s future plans, Sodhi said that Amul will spend Rs.600-800 crore every year to increase its milk processing capacity. At present, the company has the capacity to process 2.8 crore litres of milk per day which will be increased to 3.2 crore litres by March 2017.

“We will also enter Bihar, Jharkhand, Kerala, Odisha and certain parts of the north-east region starting with Guwahati. We’ll try to cover these states by March 2017,” Sodhi said.

According to the MD, the co-operative plans to start operations at its two new plants in Kanpur and Lucknow in next 2-3 months. “We have invested Rs.450 crore to set up these plants” said Sodhi, adding that the co-operative will be able increase the average amount of milk procurement by 20 lakh litres per day, from 1.7 crore litres to 1.9 crore per day in 2016-17.

In August 2015, Amul had announced that it would treble its cheese production capacity by investing Rs.750 crore. Of this, Rs.150 crore was spent at Anand facility to double capacity to 80 tonnes per day. “We also spent Rs.600 crore in setting up a new plant in Gujarat’s Palanpur which will be operational from next month,” Sodhi added.

Dheeraj Sinha, chief strategy officer, South Asia at advertising agency Leo Burnett identified Amul’s initiative to support Indian team at Rio 2016 Olympics as an effort to garner visibility across different media platforms. “Rio Olympics is a high velocity event and will get the brand a lot of visibility, he said.

“Milk and nutrition is not too far away from athleticism as an idea.But all depends on how Amul connects its products to the performers. Amul has to find a human appeal and an interesting way to celebrate India’s bit at Olympics,” Sinha added.

On 2 June, Amul increased milk prices by Rs.2 per litre in Delhi and Gujarat due to increase in production cost. “There would not be any further hike in prices,” Sodhi said.

In 2015-16, GCMMF registered 11% growth in its turnover, to Rs.23,005 crore from Rs.20,733 crore in 2014-15. India’s dairy market is estimated to cross $140 billion by 2020, from about $70 billion in 2013, according to a 2013 study by Investor Relations Society (IRS), a global network of investor relations professionals.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.