Today we are going to talk about 36 lakh farmers and their army is more than 50 lakh cows and buffaloes.
And the 3 crore liters of milk they give you a day, they take it to 18600 plus collection points.
And what is its product life? Only 4 hours.
If I give a data sheet to a supply chain expert and tell him to design its network, he will say that it is mathematically impossible.
Because there is no factory supplier here. There are 36 lakh different farmers here. And everyone has 1-2 cows and buffaloes.
So much fragmentation, so much perishable product and zero inventory time. This business should fail.
But still it doesn’t fail. As per the latest data, this system has made a revenue of 65,911 crores in FY25.
And if you think which company is this, let me tell you. We are talking about Amul, whose turnover has touched 90,000 crores overall.
And the biggest shock is where normal FMCG companies give 15-30% of their revenue in logistics and marketing. The cost structure of Amul is completely different.
Out of every rupee of Amul consumers, 80-85 paise is given back to the farmer. In just 15-20 paise, processing, packaging, marketing, logistics, everything is managed.
This efficiency is no magic. This is India’s most complex just-in-time operating system.
Today, in Groww Edge with me, Jayant Mundhra, we will decode the Amul grid. We will see how data has connected 18600 plus villages and how this whole model of milk is disrupting the energy and fintech ecosystem.
So, let’s get started.
The First Mile: Replacing Trust With Technology
First of all, let us trace the supply chain. The first critical point of this grid is the first mile.
Imagine, 18600 plus villages where lakhs and lakhs of farmers bring their cow and buffalo milk every day.
If the old-fashioned register and pen runs here, then the water, milk and corruption will eat up the entire system.
So, Amul has replaced trust with technology.
AMCU – Automatic Milk Collection Unit
They have installed AMCU in the villages, that is, automatic milk collection units. This machine works in three simple steps.
- First of all, identity, where the farmer taps his RFID, that is, the smart card, and the data gets locked.
- Then comes weight, where the digital scale measures the weight and the manual entry gets blocked.
- And the last step is quality, where an ultrasonic analyzer scans the milk.
The data says that in just 40 seconds, the exact percentage of fat and SNF comes out. Before the milk falls into the tank, an SMS is sent to the farmer.
Transparency 100%, Trust Deficit 0%, and this is White Revolution 2.0.
Fitbits for Cattle: Moon Wearables & Stellapps
But wait, Amul is not only tracking the milk, it is also tracking the cows and buffaloes.
For a while now, it is using Fitbits for cattle, which are called Moon Wearables.
There is a technology startup called Stellapps, which makes a wearable device that fits in the cow’s neck.
If the cow is going to get sick, then its activity level starts to drop, which software sends an alert to the farmer first. That is, the doctor reaches there before the milk decreases.
Why is this genius? Because if the cow’s milk goes into the tank, then the antibiotics will spoil the whole batch. Amul is trying to fix the quality where it starts. That is, the animal itself.
The Physics Challenge: Bulk Milk Coolers (BMC)
The data has been collected. Now the challenge is of physics.
The raw milk temperature is approximately 35 degrees Celsius. At this temperature, the bacteria doubles every 20 minutes.
You only have 3-4 hours to save milk. Earlier, trucks had to race. They had to collect twice a day. Which means high amount of stress and high amount of cost.
But Amul changed the thermodynamics. He installed BMC at the village level. That is, Bulk Milk Coolers.
This machine cools the milk to 4 degrees Celsius. At 4 degrees, the bacteria go into a coma. And the spoilage stops.
And because the milk is safe now, the truck does not need to come and go twice a day. It comes and goes once in 24 hours.
This one shift has reduced the transportation cost by 30%. This is called logistic decoupling.
The Algorithm: Genetic Algorithm & Reverse Logistics
But now let’s talk about the algorithm. Well, thousands of trucks are on the roads. Which road to decide?
Amul uses the genetic algorithm. Let me explain in detail. The computer makes thousands of roads. And it optimizes the volume kilometer.
And yes, look at the use case of reverse logistics in trucks.
Empty miles in logistics means the truck running empty. This is the biggest loss.
When Amul’s truck returns from the dairy to the village, it does not come empty-handed. It comes with cattle feed and veterinary medicines. Which is sold to the society.
Farmers have an app on which they put the order of their feed or their requirements. And the truck comes with the delivery. And the money is automatically deducted. This is adjusted by the next milk bill of the farmer.
That means the truck is always full. That is why their cost structure is so lean.
And the crates that come back, they are counted by AI cameras. So that there is no manual mistake and the supply chain is set.
The New Economy: BioCNG and the Gobar Economy
But friends, it does not end here. With this, Amul’s view has started to fall on a new economy. Which is called energy.
Farmers have one more thing other than milk. Which is called cow dung.
Amul and Banas Dairy have started the BioCNG revolution. Here I have some solid data. Let me tell you.
Well, in Banas Kantha, Amul has started the first BioCNG plant. This plant produces 1.5 tons of BioCNG daily. That is the amount of fuel that can run more than 850 vehicles.
Apart from this, they have also operated two more plants in Gujarat. But this is just the beginning.
Maruti Suzuki and Banas Dairy have made a partnership. Through which they have said that they will invest 250 crores in Gujarat. To build more of these four plants.
And the plan of the National Dairy Development Board is even bigger than this. They are setting up 15 such biogas plants in 6 different states.
The process is very simple. Farmers bring milk in the morning. Along with that, they also bring their cow dung. Sell the system. And through that cow dung, BioCNG is made. And along with that, fertilizer is made. Biomanure is made.
The impact of this is that the farmer is not only producing food. But also producing energy. Amul’s vehicles run on this CNG. And the money stays in the villages.
What an amazing circular economy.
The Last Mile: Money, Credit & the Moo Score
No, and well, the stories do not end. The last part of the supply chain is money.
As I told you, Amul returns 80-85% of the money earned to the farmers. But the biggest revolution comes of credit.
The farmers of the villages do not have CIBIL score. That is why the bank does not give them loans easily.
But Amul has pouring data. The system knows whether this farmer was consistent in the last 5 years or not. How much milk he gave, he did not give.
And along with that, the device of Stellabs on every cow. They use that to find out the Moo Score. To find out how efficient the cattle is. How much yield comes from it.
And using all this data, the bank is able to assess the creditworthiness. This data never existed before. Amul cracked the whole model.
Conclusion: India’s Strategic Bio-Asset
So the whole story is in front of you. Just think.
- 36 lakh farmers.
- More than 50 lakh cows and buffaloes.
- 18,600 plus villages.
- Minimum logistics cost.
When you make this supply chain so efficient. Then you build a cost wall in the market.
The biggest dairy companies in the world cannot enter India. Because they cannot compete with Amul’s efficiency.
Amul is not just a brand. It is becoming India’s strategic bio-asset.
It is a proof of the system that if technology is used to connect India. Then nothing is impossible.
So check the data. Read more.
And with this, I am Jayant Mundhra signing off. Stay tuned to Groww Edge. See you next time.
