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Amul plans smaller dairy pack sizes for price-conscious rural market

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Gujarat Cooperative Milk Marketing Federation (GCMMF), the producer of Amul brand dairy products, is planning to penetrate rural India with smaller pack sizes of pasteurized milk derivatives. The decision coincides with the organisation’s expansion in urban India through new product innovations.


India’s largest dairy brand, Amul, is looking to launch price-based products with dairy, milk, ghee and other items in Rs 20, Rs 10 and even smaller pack sizes to meet rural demand.



Amul dairy products are available in almost all large markets and mid-sized towns, but a large part of consumer demand comes from rural India.


“There is a big market in rural India. With our unique quality and taste, our dairy products are becoming very popular among rural consumers. Hence, we are planning to launch smaller packs to address this demand,” said R S Sodhi, managing director, GCMMF.


The company is selling Amul dairy products such as curd and ghee in half- and one-litre packs in the urban and semi-urban markets. But, there has been huge demand for such products in Rs 20 and Rs 20 pack size as rural consumers are more price-focused.


“While product quality will remain the same, only pack size will differ for rural consumers, who they are not willing half- or one-litre packs as the entire quantity is not consumed at once,” Sodhi added.


GCMMF has reported consistent growth in turnover the past few years. The firm, which sells milk and milk derivatives, has posted a 13 per cent increase in its standalone turnover to Rs 33,150 crore for the financial year ended March 31, 2019. Its consolidated turnover was also up 13 per cent to over Rs 45,000 crore.


Pouch milk which generates the highest turnover reported growth in almost all markets of its presence. Amul also launched value added products like flavoured milk, chocolates, fruits-based Amul Tru, camel milk and an entire new kulfi range recently to fuel its growth.


Amul Federation, the milk collection arm of GCMMF, has 18 member unions with around 35 million litres of milk processing capacity. The Federation plans to increase its milk processing capacity to 35-38 million litres. The company has more than 3.6 million farmers registered across 18,700 villages in Gujarat and procures around 23 million litres of milk every day. Its milk procurement capacity has grown by 10 per cent in the financial year 2018-19.


“For the new pack launch, we don’t have to make any large investment on production. Production line is already there. We need to change only the pack size in our existing facility,” said Sodhi.


Amul procures milk in local collection centres and distributes it in the area of its presence. For example, Amul has set up collection centres in Maharashtra to meet its consumer demand of milk here.


“The smaller pack size will be a game changer for Amul. With the rural demand of health conscious products is increasing, we forecast tremendous boost in our overall dairy products’ sale,” said Sodhi.

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Market Updates

Top 1,000 listed firms may see tax savings of Rs 37k cr on tax cut: Crisil

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Corporation tax: FY17 might see 1-1.5% cut


CRISIL Research on Sunday said top 1,000 listed companies could see tax savings of Rs 37,000 crore on account of the corporate tax cut.


“Over the past few days, a slew of measures have been introduced to address the slowdown in the Indian economy. Friday’s announcement, however, is the most material…Our analysis indicates these 1,000 companies could see tax savings of Rs 37,000 crore, or nearly a fourth of the total savings anticipated by the government,” it said in a statement.



The drop in tax rate would now bring India at par with most Asian economies, it added.


“CRISIL Research’s analysis of nearly 1,000 companies — spread across 80+ sectors such that they cover more than 70 per cent of NSE’s market capitalisation — indicates that effective tax rates had risen over the past 5 years,” it said.


These companies, including oil & gas and financial services, account for nearly a third of the tax paid by India Inc.


“These estimates are based on profit before tax for fiscal 2019. Given that we expect 5-6 per cent growth in India Inc revenues and Ebitda (earnings before interest, tax, depreciation and amortisation) for this fiscal, the savings could end up a tad higher,” it added.


In a major fiscal booster, the government on Friday slashed effective corporate tax to 25.17 per cent, inclusive of all cess and surcharges for domestic companies.

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Onion shoots up to Rs 70-80 per kg; Centre considers imposing stock limits

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The Centre is mulling imposing stock limits on onion traders as the retail prices of the key kitchen staple have shot up to Rs 70-80 per kg in the national capital and other parts of the country owing to supply disruption in the wake of excess monsoon rains in the major growing states, according to sources.


As per the data maintained by the consumer affairs ministry, retail onion prices rose to Rs 57/kg in Delhi, Rs 56/kg in Mumbai, Rs 48/kg in Kolkata and Rs 34/kg in Chennai last week. The prices were quoted at Rs 60/kg in Gurgoan and Jammu during the same period.



However, trade data showed retail onion prices skyrocketing to Rs 70-80 per kg towards the end of the last week from Rs 50-60/kg in the previous week.


Onion prices are on the rise despite several measures taken by the central government to boost supply.


“The government has taken several measures in the last few weeks to improve the domestic supply and check further increase in prices of onion. However, retail prices have suddenly shot up in the last 2-3 days because of supply disruption due to excess rains in the growing states,” a source told PTI.


It is a short-term supply disruption and if the situation does not normalise in the next 2-3 days and prices rise, then the government may consider seriously imposing stock holding limits on onion traders, the source said.


According to the Met Department, main onion producing regions especially Maharasthra, Karnataka, Andhra Pradesh, Gujarat, eastern Rajasthan and western Madhya Pradesh have received excess monsoon rainfalls in the last two days.


Right now, stored onions are sold in most parts of the country as fresh kharif (summer) crop will hit the market from November onwards, traders said.


Traders further said that there is enough supply of stored onion of the previous year’s crop in the country but its transportation has been affected because of heavy rains.


Much of the onion is stored in Maharashtra, where rains disrupted the transport of the kitchen staple to other parts of the country, said a wholesale trader from Lasalgoan in Maharasthra, Asia’s largest onion market.


At wholesale market of Lasalgoan, onion prices rose to Rs 45/kg last week, when compared with less than Rs 10/kg in the year-ago period.


The Centre has taken several measures to arrest the prices of onion in Delhi and other parts of the country. It is offloading onion from its buffer stock through agencies like Nafed and NCCF which are selling at around Rs 22/kg and state-run Mother Dairy at Rs 23.90 per kg in the national capital

The state governments have been asked to boost supply in their states lifting central buffer stock. Some states like Delhi, Tripura and Andhra Pradesh have shown interest so far.


The centre has a buffer stock of 56,000 tonnes of onion, of which 16,000 tonnes has been offloaded so far. In Delhi, 200 tonnes a day is being offloaded.


Besides, the Centre has discouraged export of onion by increasing the minimum export price and withdrawing incentives. It is also cracking down on blackmarketeers.


Besides rains, prices are under pressure on likely fall in kharif production of this year owing to less planted area under onion on account of excess rains, the sources added.

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FPIs withdraw Rs 4,193 crore from capital markets in September so far

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Foreign investors have pulled out a net sum of Rs 4,193 crore from the Indian capital markets in September so far, but the trend is expected to reverse on the back of fiscal relief measures announced by the government, experts said.


The Centre on Friday slashed corporate tax rates by around 10 percentage points and said the enhanced tax surcharge will not to apply on capital gains arising from sale of any security including derivatives in the hands of FPIs.



“The measures will act as a catalyst for supporting the slowing investment rate, boost corporate earnings, improve aggregate demand as corporates pass on some of the benefits to consumers and attract FPI flows into India,” said Vijay Chandok, MD and CEO, ICICI Securities.


According to latest depositories data, foreign portfolio investors (FPI) withdrew a net amount of Rs 5,577.99 crore from equities while infusing Rs 1,384.81 crore into the debt segment. This translates into a cumulative net outflow of Rs 4,193.18 crore between September 3-20.


Prior to this, FPIs had pulled out a net Rs 5,920.02 crore in August and Rs 2,985.88 crore in July from the domestic capital markets (both equity and debt).


“FPI outflows which have sustained after the budget are likely to reverse after the new big bang announcements by the Finance Minister. The fact that FPIs continued to sell even after the reversal of the surcharge imposed on FPIs, indicated that they were selling because of the slowdown and the poor prospects for corporate profitability.


“These concerns are no longer valid as the reforms can boost investment, growth and corporate profits. FPIs have to return,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.


Stating the reasons for FPI outflows, Ajit Mishra, VP Research at Religare Broking, said “apart from the signs of economic slowdown, valuation discomfort kept uneasiness in FPI intact. However, the announcements from Finance Minister have the potential to revive their sentiments.”

Going forward, “political stability will act as an added advantage for India among other high yield economies. Fiscal stimulus by way of tax rate cuts and removal of surcharge from capital gains on sale of shares should also help in attracting both foreign portfolio and direct investment,” said Vinod Karki, Head – Strategy at ICICI Securities.

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