A simple business that's resilient to slowdown

This would have been a definite multi-bagger stock, only if it were listed! We are talking about the largest food brand in India and the world's largest pouched milk brand with an annual turnover of Rs 67 bn. Well, the people involved know it as Anand Milk Union Limited. We call it 'Amul'...a brand name managed by the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), and jointly owned by some 2.6 m milk producers in Gujarat.

From a humble start in 1946 to now being the largest dairy co-operative in India, Amul has continued to taste success year after year. In the year FY09, for instance, when the entire Indian economy was feeling the heat of slowdown, Amul managed to grow its sales by 28% YoY – faster than the 23% YoY growth recorded in the previous year.

This performance also comes at a time when the international dairy markets are facing slump in demand. A very simple business model and focus on domestic market has insulated Amul from the turbulence in global dairy trade. Over the years, not only has it grown its business several fold, it has also been able to shield its members – the farmers – from all the turbulence in global dairy trade. The co-operative has helped to appropriately diversify the rural economy, thereby protecting rural India from the worst impact of the current economic crisis. It is already providing the best employment option for displaced workers from urban manufacturing sector, who after losing their jobs due to recession, have started reverse migration from cities back to villages.

Following its core philosophy (provide products at an affordable price), it continues to enhance the product mix through introduction of higher value products. At the same time, it has maintained the desired growth in existing products. The company has targeted revenues of Rs 270 bn by the year 2020. And given the pace it has been growing over the years, this seems quite achievable.

But the fact is that, you need to contend yourself by consuming the quality products that the company has to offer. Amul is not listed on the stock exchanges. But if it were, it would have definitely been among our top picks for all kind of market situations.

Source: Amul's website

By POST A RESUME (www.postaresume.co.in)