JOIN USOur market share will increase and our volumes will go up: Amul’s Sodhi
Dairy giant Amul played down concerns about inflation and forecast a rise in its market share and sales volumes in the current financial year.
Gujarat Cooperative Milk Marketing Federation Ltd, which sells dairy products under the Amul label, expects its turnover to grow by 14-15 per cent in the period, its managing director, RS Sodhi, told DH's Reshab Shaw.
On the sidelines of an event where it unveiled plans to tie up with SAP India to provide digital literacy and technical skills to 15 lakh rural Indians, Sodhi also shed light on Amul's outlook, market share, inflation and its advantages over its competitors. Edited excerpts.
What made you launch this initiative?
SAP India and Amul have been in partnership for the last 12 years. So they approached us saying that there is a gap in digital literacy in our villages, which is much lower than the urban areas, and rural students feel that technology is exclusively for urban India. Secondly, even if they want to learn, they don't have resources. They don't have locally available teaching aids and teachers. They can't go to the nearest city to learn, so the need was how to make it available in the village itself. Therefore, Amul’s infrastructure was married with SAP’s technical expertise, which made this collaboration a reality.
How do you see your business performing this year?
What is good for the farmers is good for Amul. Last year, our turnover was Rs 61,000 crore growing at 18 per cent. And so, I expect Amul to grow by 14-15 per cent in the next fiscal year.
FMCG companies have been grappling with inflation. How do you see that affecting your business?
Food inflation is good for the farmers , especially for India as we are a food-surplus country. It may be bad for Turkey or Lebanon. In the last 30-40 years, growth has mainly come from urban India. Now with inflation, major beneficiaries would be farmers and their income will increase. And food inflation is good for the entire industry, because the additional income is spent and demand is created in the economy. So the FMCG industry is going to grow with farmers' income.
So inflation is good for the farmers, but it puts pressure on the margins of the company. How do you deal with that?
Amul is not working to increase its EBITDA, topline or bottomline, Our objective is to pay good prices for the raw materials to farmers. Pressure is for companies who have been buying raw materials cheaper and selling it at exorbitant prices and cornering a huge gross margin. And suddenly, when input prices increase, they can’t pass on to the consumer, so they are under pressure. Our market share will increase and our volumes will go up, so this is the best time for us.
Amul hiked prices twice recently. Will we see more price hikes?
Only time will tell but it’s very difficult to predict.
Also Read: Milk prices to remain firm: Amul MD
Can you share the export picture and investment plans?
In FY22, we exported products worth Rs 1,450 crore, which was Rs 520 crore in the previous fiscal. As regards to investments, we will continue to pour money into new processing businesses. We invest Rs 800-1,000 crore every year, and that will continue.
Watch the latest DH Videos here: