Patidars and Marathas

  • Harish Damodaran


There is in Gujarat a dairy conglomerate belonging to some 2.5 million farmers. Like any other business undertaking, it operates on strictly commercial principles. With an annual turn-over of Rs 4,000 crore, the Gujarat Cooperative Milk Marketing Federation Limited (GCMMF), along with its affiliated district unions, is India’s largest food company and owns one of its most adored consumer brands: Amul.l But its way of doing business and servicing shareholders does not conform to the regular schoolboy rules of companies. To start with, its shareholders are not based in Mumbai or Delhi, let alone Geneva or New York. Most of them live in Gujarat’s hinterlands, owning one or two, sometimes more, milch animals. Secondly, they are not bothered about the value of their shares; since these are not traded in the first place, the issue of capital appreciation or booking losses does not arise. For them, earnings per share, dividend yields, and price-earning ratios are of no consequence. What matters is how much money the company is able to pay for every litre of milk that it procures from them. The company’s job is not to maximize the return on capital invested by its shareholders (which is only incidental), but to maximize the return on the raw material they supply to its dairies. And that is in turn a function of how efficiently the milk is processed and marketed.


Sugar Mill Sugar Factory Uttar Pradesh Linear Alkyl Benzene Private Limited Company 
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© Harish Damodaran 2008

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  • Harish Damodaran

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