Amul to acquire Heritage Foods' dairy plant in Punjab for Rs 21.2 cr

Gujarat Cooperative Milk Marketing Federation (GCMMF)'s flagship Amul Dairy is set to acquire Heritage Foods Ltd's dairy plant in Punjab for Rs 21.20 crore.

Heritage Foods Ltd's Board of Directors on Friday approved the sale of "all tangible assets" of the dairy plant located at Bhambri village of Fatehgarh Sahib district in Punjab, the company said in its filing with exchanges. The move is part of its business rationalisation in northern India. The board approved the sale to Anand-based Kaira District Milk Producers Union Ltd (Amul Dairy), the flagship dairy under GCMMF.

On its part, GCMMF is evaluating the acquisition proposal, with its board likely to take a call soon, even as it looks to expand operations in Punjab to cater North India for liquid milk, curd and buttermilk, among other dairy products.

"We are considering the proposal for acquisition. We are anyway expanding our operations in northern India, especially Punjab and need more production facilities as our sales are increasing," R S Sodhi, managing director, GCMMF told Business Standard.

Currently, GCMMF has two smaller plants in Punjab that largely manufacture liquid milk, curd and buttermilk and is looking to expand capacity for the same in the state.

According to Heritage Foods Ltd's filing with stock exchanges, the Bhambri plant in Punjab carries a net worth of Rs 21.10 crore and contributed 1.88 per cent or Rs 46.63 crore in terms of revenue from operations to the company's total Rs 2,482 crore turnover in fiscal year 2018-19.

NDDB, Amul oppose dairy import talks with New Zealand and Australia

Amul, the country’s biggest milk brand, and its parent, the National Dairy Development Board (NDDB), have reiterated their staunch opposition to import from New Zealand and Australia.

This comes prior to an important meeting between the commerce ministry and dairy sector entities on the contentious negotiations regarding the proposed 16-nation Regional Comprehensive Economic Partnership (RCEP).

The latter is India’s most ambitious trade pact under negotiation. Based on India’s existing free trade agreement with the 10-country bloc of the Association of Southeast Asian Nations (Asean), the ambit will cover all major nations with which Asean has trade deals — China, India, Japan, South Korea, Australia and New Zealand.

Sources said NDDB chairman Dilip Rath has, in a letter to Union commerce secretary Anup Wadhawan and animal husbandry secretary Atul Chaturvedi, said any decision to reduce the tariff barrier would encourage import of cheaper milk powder. Which would put the livelihood of India’s dairy farmers at peril.

“Our country will be again pushed into a state of import dependence, jeopardising nutritional security,” goes the letter.

The meeting in question, officials said, is expected to be attended by senior representatives of domestic and multinational dairy companies in India. It has been called to solicit their views on RCEP negotiations and its implications.

Under RCEP, tariff barriers on a host of items are expected to be lowered. The country’s dairy industry says it directly and indirectly supports tens of millions of farmers, the bulk being small and marginal ones.

New Zealand is the world's largest exporter of milk and dairy products, accounting for a fifth of the global total at $5.4 billion in 2018, according to the International Trade Centre. India’s dairy sector says even 5 per cent of New Zealand’s dairy export is nearly 10 times India’s current import at $28 million. “In the last five-six months, milk prices have moved up from Rs 20-21 a litre to around Rs 31 a litre in the open market, while feed costs have risen from Rs 15 a kilogram to Rs 22.

Therefore, the production cost of milk is Rs 24-25 a litre, while the procurement price is Rs 31, allowing farmers to make some profits. If at this juncture cheap imports are allowed, the market will crash, devastating the livelihood of millions of farmers,” a senior industry official said. He said skimmed milk powder prices in international markets are Rs 160 a kg; in India, it is Rs 280-290 a kg.

“To make a kg of milk powder, you need 10 litres of milk. So, if cheap imports flood Indian markets, we would be forced to lower our procurement price by at least Rs 10-11 a litre, which would hurt farmers,” the head of a leading dairy firm told Business Standard.

Amul hikes milk prices by Rs 2/ltr in Delhi, Maharashtra other markets

Dairy cooperative Amul said Monday it will increase milk prices by Rs 2 per litre in Delhi, Maharashtra and other places from Tuesday because its production cost had increased.

Prices will go up in Gujarat, West Bengal, Kolkata, Uttaranchal, Maharashtra, and other places. A 500 ml pack of Amul Gold in Ahmedabad will cost Rs 27, Amul Shakti Rs 25, Amul Taaza Rs 21 and Amul Diamond Rs 28.

Amul will not change cow milk prices in Gujarat, after a revision two years ago in March 2017.

Gujarat Co-operative Milk Marketing Federation Ltd, the cooperative which manages Amul, said in a statement there the price of cattle feed has increased by over 15 per cent.

In the last two years, domestic and international dairy markets have witnessed adverse conditions. The industry has seen a steep decline in prices of commodities such as skimmed milk powder (SMP), whole milk powder (WMP) and butter oil.

"This had resulted into decline in producer prices of milk across India leading to adverse impact on milk producers. However, the milk cooperatives of Gujarat continued to pay remunerative prices of milk to its producers and the average final price of milk paid to our producers has increased from Rs 710 per kg fat in 2017-18 to Rs 730 per kg fat in 2018-19," the federation said.

Amul, which passes on almost 80 paise of every rupee paid by consumers to the milk producers, looks to provide remunerative milk purchase price to producers through the price hike.