Milco begins making profits with prudent turnaround strategy
State owned dairy company, Milco (Pvt) Ltd has begun making profits with the increase in sales of milk products as a result of pragmatic initiatives taken by the firm along with budgetary support of over Rs.980 million from the Treasury in 2012 and 2013 officials said.
The 2015 budget has made an allocation of Rs. 300 million for Milco in an amendment to the expenditure proposals during the budget debate in parliament as a subsidy for reducing the price of locally made Highland milk powder by Rs.100 per kilo, yoghurt by Rs. 5 per yoghurt and the guaranteed price of liquid milk to Rs. 60 per litre from Rs. 50.
A senior Treasury official said that a special loan scheme is being implemented at a low interest rate, in support of SMEs to promote dairy farms, set up milk collection centres and procure equipment, increase animal feed production, etc.
A Cess of Rs.150 per kilo on imported milk powder and the high Cess on the import of butter, yoghurt and dairy products is to be maintained, to further support the dairy industry.
With the introduction of a new financial and marketing turnaround strategy along with cost cutting exercises and measures to double the milk production, Milco has recorded a profit of Rs.166 million in the current financial year and its milk product sale is yielding revenue of Rs. 700 million per month, Milco (Pvt) Ltd Chairman, Sunil Wickramasinghe told the Business Times in a phone interview on Wednesday. The company purchases 185,000 litres of milk from local dairy farmers daily, the single largest fresh milk collector in the market. This accounts for 50 per cent of the total local milk production, he revealed.
He said that the state owned dairy firm promotes fresh milk as its main focus while producing milk products such as yogurt, cheese, curd, butter, Highland milk powder and condensed milk.
The renovation of the Polonnaruwa milk production factory has already been completed under the programme of modernising and expanding production capacity at Digana, Polonnaruwa and Ambewela factories at a cost of around $40 million to increase fresh milk production and dairy products, he disclosed.
He said the local milk production has increased to 40 per cent of local consumption requirements and around 320 million litres of milk was produced last year. The government has allocated funds for the expansion of the production of MILCO by doubling its capacity and import 20,000 high quality cows to promote small and medium dairy farms and state owned farms.