Amul has unveiled plans to invest Rs 5,000 crore to set up about 10 additional milk processing plants in the next financial year. The plan involves setting up two plants in Delhi, three in Uttar Pradesh, one each in Kolkata and Maharashtra and the rest in Gujarat. “This capacity expansion is is line with our aim to achieve a revenue target of Rs. 50,000 crore by 2020,” RS Sodhi, Managing Director, Amul, told delegates at the India Food Forum, which concluded in Mumbai last week.
Speaking at an interactive session on the third and final day at the India Food Forum 2015, Sodhi, in conversation with Sadashiv Nayak, CEO, Future Retail said, “Amul will be able to achieve annual revenues of Rs 20,000 crore this year.”
While increasing milk productivity and improved breeds and feeding practices in India is a challenge for Amul, Sodhi emphasised on the need to encourage the next generation of the rural farmer to remain in animal husbandry business.
“It is possible to earn Rs 40,000 per month with 30-40 cows and buffaloes at project cost of Rs 21 lakh including a loan component of Rs 15 lakh,” he noted.
Unperturbed about the new entrants in the dairy segment from the private sector and MNCs, Sodhi, welcoming the competition, said, “India’s organised sector only constitutes 20% of the Rs 4 lakh crore market size for dairy products in the country and there is space and scope for everyone.”
“Our philosophy for the past 60 years have been to ensure remuneration prices for our 3.5 million members and value for money for the consumer, using the best ingredient at a fair price,” he added.
Stating that butter making was not a rocket technology and every housewife knows how to make butter, Sodhi pointed out that 100 grams of Amul butter was still cheaper than 100 grams of premium soap, which was possible only because of Amul’s philosophy of keeping in mind the farmer and consumer.
Unlike industry practices, where one buys raw material cheaper and realised better in sales, Amul ensures that raw material is at the best price and selling price remains lower compared to peers, Sodhi said.
“Hence, we cannot spend more than 1% of our revenue on advertising while other food companies spend 8-15% annually,” Sodhi added, indicating that its advertising expenditure last year was 0.8%.
Sharing the secret of Amul remaining a youthful brand, Sodhi said, “Most top members of Amul management board are at their first job, at it for over four decades and hence have neither changed their campaign nor the agency. Hence, continuity and consistency in communication has kept Amul young with the butter girl.”