From keeping a crucial supply chain chugging along to putting over Rs 8,000 crore cash into the hands of farmers, dairy giant Amul has been able to burnish its reputation for efficiency during the lockdown. On Monday, Prabhu Chawla, Editorial Director of The New Indian Express, and author and political economy analyst Shankkar Aiyar, sat down for a chat with Amul's Managing Director RS Sodhi as part of TNIE's Express Expressions, a series of live web casts with people who matter. Excerpts:
S Aiyer: How have you managed to keep the supply chain going in the current period?
RS Sodhi: Even if we want to stop the milk supply chain, we can't. In India, milk is a source of livelihood for 100 millionn families. So, we communicated to all our stakeholders--we said, keeping the supply running is not only a duty, it is in the national interest. I am very happy to say that the supply was not interrupted for a single minute. And, instead of us approaching the authorities, we were proactively given support by the Ministry of Home Affairs, local administration, etc.
But, social permissions were more important for our supply chain partners. For example, some of our distributors had trouble coming back to their villages after distributing milk because some neighbours were raising objections. These problems also had to be dealt with.
S Aiyer: How much milk do you procure now?
S Sodhi: We collect around 26 million litres of milk per day. Now, we are collecting 15 per cent more. Within these past 60 days, we have put Rs 8,000 crore (for farmers) into the rural economy of mainly Gujarat--in cash. Out of that, Rs 800 crore was due to extra procurement. Other businesses were declining, but we procured more.
P Chawla: Would this affect your profitability?
RS Sodhi: There is no loss, because there was no decline in demand for us. In spite of closure of restaurants, household consumption increased later. Whatever we lost in business from restaurants, we made up for from households.
P Chawla: Has your supply chain been affected by any cases?
RS Sodhi: Fortunately, there is no such case till now. In certain villages we procure from, there were positive cases, but we had protocols. We stopped procurement from these places until we were given the green signal from the authorities.
P Chawla: With our PM's emphasis on farmers and the rural economy, do you see a need for a second White Revolution?
RS Sodhi: GoI had decided to use Rs 15,000 crore for a dairy infrastructure fund. With this, you can build infra for 15 million litres of milk per day. With 1 lakh litres of milk in the organised sector, you can create 6,000 jobs--5,000 in rural India and 1,000 in supply chain. With Rs 15,000 crore, you can give 30 lakh rural families a permanent stable source of livelihood.
Now, there is a lot of migration happening to milk deficit states like Bihar, Jharkhand, West Bengal, etc. If these returning migrant labourers can be included in the milk supply chain, they can be provided with very gainful, stable sources of livelihood.
S Aiyer: Is Amul seeking a leadership role in driving a second White Revolution?
RS Sodhi: For rural India, such a revolution is necessary. Agriculture growth is around 3%, but animal husbandry's per annum growth is 14%. It contributes only 4.5% of GDP. There is opportunity here and it is the right decision that the GoI has taken.
P Chawla: Is Amul ready to lead it?
RS Sodhi: Amul is ready… The farmers are ready to lead, and Amul is owned by the farmers. So, yes. Amul is ready to lead.
S Aiyer: If you were to expand to all other states, what is the potential upside?
RS Sodhi: It can multiply. Last ten years our milk procurement increased 9% CAGR. India rate is 4.5-5%, so we are growing much faster. There is opportunity for lot of value addition. But, right now, only one-third of dairy sector is organised.
S Aiyer: What can be done to make Amul a much more global brand? What can we do to capture international markets?
RS Sodhi: We have got all the capabilities to become a global leader. But, India is the world's largest and fastest growing dairy market. The whole world wants to come to India, and only one-third is organised. If I go to Europe or America, these are saturated markets. So you have to snatch market share from other established players. For the same investment, the Indian market will yield more results.
P Chawla: Amul has not peaked yet, but it seems like you have not grown as fast as you could have…
RS Sodhi: Last year, Amul brand's turnover was Rs 52,000 crore. We are India's largest food and FMCG company. Last ten years, our turnover's CAGR was 17 per cent. In 2010, we were at Rs 8,000 crore turnover.
Now, around 40 per cent of our milk is coming from non-Gujarat states. We expand every year and we are going to continue expanding. Each year we have been investing Rs 800-900 crore in new dairy plants and technology across India.
S Aiyer: Does Amul continue to enjoy autonomy and respect from successive governments as it did earlier?
RS Sodhi: Yes, of course. Latest example is RCEP... We realised that the GoI was going for RCEP based on very wrong data, claiming that India is a milk deficit country, etc. But, when we presented our case, the government was immediately convinced by our arguments.