Omfed hopes to turn profitable in 2nd half of FY17

To set up new automated plant at Rs 244 crore cost

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The Odisha State Cooperative Milk Producers’ Federation (Omfed) expects to turn in profit in the third and fourth quarters of this financial year, staging a recovery from 2015-16 when it posted Rs 23 crore loss largely due to high logistics cost incurred on despatching milk out of the state for processing.

"In the April-June quarter, we have incurred loss of Rs 2.3 crore but we aim to break even in the second quarter. In the third and fourth quarters, we hope to make some profit. As we had to send milk outside the state because of capacity constraints, we incurred expenditure of Rs 12 per litre. But, we have managed to cut losses by realising conversion charge of one rupee per litre from the dairy farmers," said M S Padhee, managing director of Omfed.

In last financial year, Omfed despatched 19.2 million litres of milk to states like Madhya Pradesh and Bihar for processing. During this financial year, it has sent 7.2 million litres but has stopped its despatches from August 10 due to mounting losses. Omfed collected the conversion fees from its farmers from June 11 to August 31 this year.

Instead, Omfed is selling surplus raw milk to Jharkhand and Chhattisgarh. Omfed has stepped up its milk procurement by 10,000-12,000 litres per day and was now procuring 0.5 million litres of raw milk every day. Going ahead, Omfed’s focus will be on upgrading quality and effective marketing of its processed products.

"We are coming up with a new premium raw milk product- ‘Super Milk’ with higher fat percentage. The product will hit the market during the upcoming Puja," said Padhee.

Omfed is also banking on a new, automated dairy plant coming up at Barang in Cuttack district. National Bank for Agriculture & Rural Development (Nabard) has sanctioned loan of Rs 244 crore from the Rural Infrastructure Development Fund (RIDF) for this plant. National Dairy Development Board (NDDB) has been engaged as the consultant for this project. The plant would process surplus milk from the farmers and produce processed products like ice cream, paneer, curd and milk powder.

The plant is expected to be commissioned in two years. Besides this, Omfed would also enter into a memorandum of understanding (MoU) with a Chhattisgarh state owned company for establishment of an ultra heat treatment (UHT) plant at Cuttack. Omfed would provide its excess raw milk to this plan which would convert to toned milk, ghee, butter and other milk products in tetra packs. The proposed plant is set to start full scale operations at the end of March 2017.