Verka feels the heat, as Amul gears to sell milk in Punjab
Much to the discomfort of Verka, Punjab’s indigenous brand of milk and milk products, Amul running one of the largest milk cooperative would start selling liquid milk in the state.Updated: Jan 06, 2015, 10:20 IST
Much to the discomfort of Verka, Punjab’s indigenous brand of milk and milk products, Amul running one of the largest milk cooperative would start selling liquid milk in the state.
Initially 30,000 litre of milk would be sold in the markets of Amritsar, Gurdaspur and Batiala, which would later to expanded to other parts of the state.
Amul made its first plant functional in Batala town of Punjab in the month of November last year, and so far it is sending pasturised and standardized milk in bulk to its own milk plants in Delhi. The official in Amul claims of not competing with Verka, but the latter is feeling the heat.
“They (Amul) are eating into our share and selling milk procured from contractors, which is much easier, whereas we go door to door to the small dairy farmers to collect milk, process it and sell it in the market,” Punjab state cooperative milk producers federation limited (Milkfed) managing director (MD) Dilraj Singh reacted on Amul milk being sold in the Punjab market, parallel to Verka.
MD Gujarat cooperative marketing milk federation, which owns Amul brand, RS Sodhi told HT that surveys have been done across Punjab and there was huge scope. “Initially we are starting from the border belt, Batala, Gurdaspur and Amritsar,” he adds.
According to Sodhi, Amul is procuring 25,000 litres of milk from Punjab and 5,000 litres from Jammu and gradually it would increase procurement of milk. Amul’s daily processing of milk is expected to touch 1.25 lakh litre, and setting up another plant in Khamano which is considered stronghold of Verka, in terms of milk sales and collection. In five years down the line, Amul plant to touch annual turn over to Rs 2,000 crore.
To confront Amul in Batala, Milkfed has intensified its working and have been offering the same rates for milk as Amul is offering. Amul is offering `550 for a kilo of fat. Milkfed had already confronted Amul entry into, Punjab claiming that it lead to unnecessary price war and would lead to competition, which ultimately lead to price war. As a counter move Verka plans to launch milk with 30 days shelf-life but so far there is no proposal on that.
Milkfed is worried that its competitor is cash-rich, with an annual turnover of Rs 22,000 crore and the capacity to process 1.8-crore litres of milk every day in facilities across the country. At Rs 2,150 crore, the Verka turnover is a tenth of Amul’s. And by processing just 13.7-lakh-litre milk a day, it can’t pump as much money in the market as the rival can.
Verka procures only about 5.5% of milk produced in the state. Of the 45% is available for commercial market, it procures only 12%. Small dairies, sweetshops and smaller processing entrepreneurs procure the rest.