Milco joint venture with India’s Amul to boost dairy industry

Sri Lanka’s state owned dairy company Milco, Highland and 31 dairy farms belonging to National Livestock Development Board (NLDB) is to be taken over by the India’s Amul Dairy company in a Sri Lanka-India joint venture (JV).

The shareholder agreement, which will lead to the establishment of the JV that will consist of Indian as well as Sri Lankan shareholders, is being finalised, a high official of the Ministry of Livestock and Rural Community Development disclosed.  

NLDB and Amul will get a 51 per cent stake in the new venture, while the government is selecting the local shareholder with 49 per cent shareholding, he added.  

Amul is under the ownership of the Gujarat Cooperative Milk Marketing Federation (GCMMF) based in Anand, Gujarat in India.  It is controlled by 3.6 million milk producers.

GCMMF, which will manage the commercial aspects like marketing and branding, is devising a business plan and the financial details. NLDB will manage the development side of the dairy sector like setting up co-operatives, breeding, fodder, nutrition etc, he explained.

There were several attempts in the past to modernise and improve the diary sector in Sri Lanka by restructuring or privatising state owned Milco company and its dairy farms. 

Milco, amidst allegations of attempts to privatise the company, has launched ‘Sri Lanka’s Milk Revolution’ through a corporate plan in popularising fresh liquid milk countrywide and thereby making the firm commercially viable and profitable in 2012.

The then chairman of the company, Sunil Wickremasinghe told the Times Online that a sum of Rs. 1 billion had been allocated to develop dairy farming and other industry related activities in Sri Lanka.

He noted that in addition to this massive investment, the private sector has agreed to invest around US$80 to 90 million to set up new dairy farms in the country, but this initiative has not been implemented at that time.  

A similar attempt was made to enter into partnership with Amul  during the tenure of former Sri Lankan President Chandrika Bandaranaike Kumaratunga who initiated the formation of ‘Kiriya Milk Industries of Lanka (Private) Limited’ in 1998.

The project failed to become a reality due to workers’ protests after which NLDB withdrew from the agreement, he disclosed. (Bandula)