Profit is the oxygen for companies in the stock market. As a person breathes and survives on oxygen, companies grow when they make profits. Only a profitable company can generate returns in stock markets. Well, in this regards, Amul has been a great revenue generator. It has been growing at more than 18%. Still, if one needs to gain benefits from Amul, one will have to open a milk factory with them. Yes, you read it right. This is because it is a cooperative society and hence is not listed on the stock exchange.
Brief introduction of Amul
AMUL stands for Anand Milk Utpadak Ltd. It is based out of Anand, Gujarat, and is the largest dairy producer in India and the eighth largest in the world. It compromises around 17 cooperative bodies. It basically collects milk from farmers and sells it under its brand. It also shares the profits with associated farmers. So, unlike other private companies, lakhs of farmers are the real stakeholders of the company. This implies that it is not a private company but a cooperative society.
What is a cooperative society?
A cooperative society is a group of common people who work together with the intent to grow. They work on the principle of self-help. Their primary goal is to support each other and everyone makes a profit. Respective State’s Society Act governs them.
Why is AMUL not listed on the stock market?
Below are the various reasons:
- For any company to be listed in the stock market, it has to launch its Initial Public Offering (IPO) but AMUL cannot do this as it is a cooperative society and not a private company.
- It purely works for the farmers associated with them and shares around 80 paise for every Re 1 they make.
- Since farmers are the real stakeholders, so they do not have to distribute their shares in public.
Check out our video for more information: