Gujarat Cooperative Milk Marketing Federation (GCMMF), India's largest dairy cooperative and owner of Amul brand, saw its sales increase at a higher clip of 18.6 percent for 2016-17 to Rs 27,085 crore from Rs 22,972 crore in the preceding fiscal. The business had grown at 10.8 percent earlier (Rs 20,733 crore for 2014-15/Rs 27,085 crore in 2015-16).
The three main streams of revenue for the Federation are: butter, milk and ice cream; it also sells milk powder, beverages, ghee, butter, cheese, pizza cheese, ice-cream, paneer, chocolates, and retails milk products under the Sagar brand.
GCMMF has 3.60 million producer-members (dairy farmers), or 22.8 percent of the total 15.8 million and accounted for almost 41 percent of the total milk procurement (15.58 million tonnes) from dairy cooperatives in India last fiscal, Anuradhara Basumatari, associate director of India Ratings said in her note.
The Federation's profit margins are low, given the objective of ensuring high returns to dairy farmers. "Operating EBITDA margins remained below 1 percent during FY11-FY16 as profit maximisation is not the objective of the federation by virtue of its cooperatives structure. The federation returns 85paisa/INR earned on sales of milk and dairy products to milk producers, thus operating at low margins," Basumatari wrote.
The analyst rated IND A1+ for GCMMF's commercial paper (loan) for Rs 500 crore, the agency said in her note.
GCMMF was established in 1973 and was India's largest largest exporter of dairy products in 2015-16, accounting for 22.6 percent Rs 754 crore.