Bharat M. Vyas has been the managing director of Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF), the owner of brand Amul, for more than 12 years. In an interview with Mint, BM, as Vyas is referred to by many, discusses the business strategy of India’s biggest cooperative firm, which finds itself under increasing pressure from nimbler private sector rivals. Edited excerpts:
What is the key to Amul’s success?
The difference between Amul and other organizations is that we harness human resources to the hilt and leverage the productivity of every stakeholder in the organization: be it milk producer, employee or distributor. We not only provide employment to milk producers, but leverage their strength to carry forward the White Revolution in the country. We turn them into leaders. For example, we decided that all our milk-producing members must plant a tree on 15 August this year. We achieved this without much ado. Each and every milk collection centre in the village distributed saplings and 2.4 million GCMMF members planted them.
GCMMF’s Bharat Vyas says Indian cattle must be fed better if they have to produce more milk. And this can happen only if the urban consumer is prepared to pay more.
We have held “Vision Mission Strategy Workshop” in more than 5,000 villages. At these workshops, we lay everything on the table—complete data on our members, their cattle, use of technology, everything related to their occupation and life.
The farmers then sit and utilize this information to chart out the future course for the next five years. The members themselves decide on the way to implement their vision.
While you say you are harnessing human resources, employees are leaving Amul to join the private sector.
For individual employees, working for Amul is not about making money alone. It’s much more than that. We are part of nation building and proud of that. Amul has about 10-15% churn of employees and that has so far not impacted our growth. In fact, it provides us an opportunity to bring in fresh blood in the organization. There is nothing to worry about on that front.
Does the vision mission workshop help ensure a brighter future for dairying in India or improved quality of cattle?
The quality of the animal is a function of the living standard of the people. The milk producer spends additional income on her cattle and would not cut down on her basic needs to feed the cattle. If she is poor, the cattle are bound to have poor health. It is not that the Indian cattle are not capable of producing more milk, but if they have a half-empty stomach, they cannot produce more milk. If you want Indian cattle to produce more, the Indian urban consumer should be willing to pay more.
The average cost of milk in India is 60% of the average world milk price. In Europe and the US, milk costs Rs35-40 per litre and in India it’s Rs18-20 per litre. Of this, the milk producer gets Rs12-13.
If you want her to feed her cattle well, she should get more money. Hopefully, things will change and with the standard of living improving in cities, the consumer may not be averse to paying more for her pouch of milk.
What about the state of the dairy industry?
The dairy industry has been growing at more than 4% for over three decades now. The production of milk was 22 million tonnes (mt) in 1971. This has gone up to 98mt in 2007. The per capita consumption is at 100kg in 2007, on par with the global average. And that’s at half the rate of global price.
Won’t a price rise affect milk sales?
The past data does not support the fact. Our motto is that “every” Indian should live 100 years and Amul would help you live that long by supplying quality milk. Studies have proved that if you do not drink milk, probably your life would not be that long. But for this momentum to continue, milk has to be affordable to both the farmer and the consumer. The living standard of the consumer has gone up and that of the farmer must go up for betterment of the cattle and milk production.
How has been the post-Kurien (a key architect of India’s milk revolution, Verghese Kurien) era? Have politicians taken over the system?
The success of a person is that the institution they have built not just survives, but grows even after they have left. Amul today is a growing entity. It is growing faster on the foundation laid by Tribhuvandas Patel and Verghese Kurien. Physically Kurien may not be in the office, but he is very much amid us by his work.
No politician would ever be able to make a dent in GCMMF. Even if they try, they will have to go back and if they do make a comeback, I am sure they would have become wiser. You must understand that GCMMF is not a public sector entity or a company. It is a vibrant and a grass roots organization where every stakeholder has a say. We are growing even in the post-Kurien era, courtesy the ideals of Tribhuvandas and, of course, Kurien.
How has this reflected in the company’s revenues?
We had a turnover of around Rs600 crore about a decade back. This year, we expect to clock a turnover of Rs5,200 crore and next year, Rs6,000 crore.
Each of our product category is today an industry in itself. Our milk gives us a turnover of more than Rs2,000 crore, butter Rs600 crore. It has taken us 11 years to add one zero to our turnover. But now I feel that things are going to grow faster, and we may end up touching a turnover of Rs20,000 crore by 2015. Nobody believed me a decade back and many would find it difficult to believe me even today. But the way things are going on, it will happen for sure. We are also increasing our (retail) parlours from 1,500 to more than 3,000 by the end of this year and to 10,000 in the next two years. Anybody who owns a shop can approach Amul to become a franchisee and we will do the rest.
What are some of the new products that are likely to come from the Amul stable?
I do not want to disclose it at this stage.
Any update on your sugar-free products? You had to withdraw your probiotic ice cream from the market.
We withdrew sugar-free products due to some legal issues. We have relaunched our ice cream in the market and have already begun test marketing of our sugar-free chocolate. We also plan to launch sugar-free coffee shortly. You need to understand the difference between probiotic products and sugar-free products. Probiotics are about certain good bacteria that are either retained or added to the product and have nothing to do with the product being sugar-free. We add probiotic bacteria to our sugar-free ice cream and that helps keep your stomach in good condition.
GCMMF has had issues with various regional milk federations regarding brand Amul. What’s the status?
There is no ambiguity on this issue. Be it Verka, Nandini or any other brand, they are all Amul. We do not compete. We are all Amul.