indepth analysis on amul dairy

8/14/2019 Indepth Analysis on Amul Dairy

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Chapter 1

Evolution of AMUL

Before the cooperative movement began, middlemen who supplied milk to the consumers

were exploiting the dairy industry in the Kaira District. It began as a response to this

exploitation and put an end to it. It grew because it responded to the farmers

financially as well as with services. It has thrived because farmers who have a stake in

its success, own it. And because it has been managed by capable professionals and

strengthened by dedicated scientists, technologists and workers, it has forged ahead.

Today in India, there are 75,000 dairy cooperative societies, spread all over the country

with a membership of 10 million. The farmer in the village is now assured of a better

future thanks to these cooperatives. Recently one of the European Embassies in Delhi

requested Amul for information on the five biggest "companies" in the dairy business.

The first three are in the cooperative sector - The Gujarat Cooperative Milk Marketing

Federation (GCMMF), The Kaira District Cooperative Milk Producers' Union Limited

and The Mehsana District Cooperative Milk Producers' Union. The Kaira District

Cooperative is the second best in the country. It helped to create GCMMF, the apex body

of all cooperatives in Gujarat.

The Root Cause

In the forties one firm - Polsons, dominated the dairy industry. Established by a rather

enterprising gentleman who discovered that Kaira District, of what was then Bombay

Presidency, produced a good deal of milk. He established a creamery and for a while the

name Polsons was synonymous with butter - much as Amul is today.

One of Polson's businesses was to supply milk to Bombay. As Kaira district was an

abundant source of the commodity, Polson was chosen to procure it from there. He in

turn, entered into an arrangement with a number of contractors who actually went to the

villages and collected the milk. Everyone was happy. Bombay received reasonably good

quality milk and Polson made a handsome profit. The contractors too managed to earn

large margins by over quoting the farmers. It was only the poor farmers who were

unhappy for it. They invested in the animal feed and fodder and they put in their labor.


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Yet, it was they who received the smallest share of the Bombay consumers' rupee. The

arrangement benefited everyone but them.

The First step: formation of Kaira union

Realizing that something needed to be done about the unequal balance of wealth, they

turned to Sardar Vallabhbhai Patel for advice. Sardar Patel knew that their only chance of

earning a decent income was when they themselves gained control over the resources

they created. He also knew that the cooperatives offered them the best chance of gaining

that control. So he advised them to stop selling milk to Polson and form a cooperative of

their own. In his opinion they were to own their own dairy unit. He said, "Throw out

Polson and his milk contractors". They followed his advice and the Kaira District

Cooperative Milk Producers' Union (AMUL) was born, in 1946. By good fortune, they

could get as Chairman - Shri Tribhuvandas Patel, an equally remarkable man. Heunderstood the concept of cooperation and he understood people. His integrity was

absolute. Because the farmers of Kaira district trusted and respected Tribhuvandas Patel,

the cooperative was able to pass through some very difficult times and eventually become

a model of cooperative dairying throughout the world.

The Kaira Union began with a clear goal, to ensure that its producer members received

the highest possible share of the consumers' rupee. This goal itself defined their direction.

The focus was on production by the masses, not mass production. By the early 'sixties,

the modest experiment in Kaira had not only become a success, people began to

recognize it as such. Farmers came from all parts of Gujarat to learn. They went back to

their own districts and started their own cooperatives. The result - Together, the district

milk producers unions of Gujarat own the Gujarat Cooperative Milk Marketing

Federation, which markets the milk and milk products manufactured by its owners. The

Federation's turnover was over Rs. 1700 crore making it the largest in the food industry.

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MARKETING,

MANAGEMENT,

ECONOMICS

MARKETING MANAGEMENT,

ACCOUNTING,

HUMAN RESOURCE,

ORGANIZATIONAL BEHAVIOR,

FINANCIAL MANAGEMENT

COST ACCOUNTING

VISIT


In 1964, the then Prime Minister Shri Lal Bahadur Shastri came to inaugurate cattle feed

factory owned by Amul near Anand. Impressed by the cooperative's success, he

expressed his wish to "transplant the spirit of Anand in many other places". He wanted

the Anand model of dairy development replicated in other parts of the country. With

institutions owned by rural producers, which were sensitive to their needs and responsive

to their demands, it was an ideal tool for progress. The National Dairy Development

Board was created in 1965 in response to this call.

Amul: The origin

The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the

Himalayas. Similar is the story of Amul, which inspired 'Operation Flood' and heralded

the 'White Revolution' in India. It began with two village cooperatives and 250 liters of

milk per day, nothing but a trickle compared to the flood it has become today. Today

Amul collects processes and distributes over a million liters of milk and milk

products per day, during the peak, on behalf of more than a thousand village cooperatives

owned by half a million-farmer members. Further, as Ganga-ma carries the aspirations of


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generations for moksha, Amul too has become a symbol of the aspirations of millions of

farmers, creating a pattern of liberation and self-reliance for every farmer to follow.

The start of a revolution

The revolution started as awareness among the farmers that grew and matured into a

protest movement and the determination to liberate them. Over four decades ago, the life

of a farmer in Kaira District was very much like that of his counterpart anywhere else in

India. His income was derived almost entirely from seasonal crops. The income from

milch buffaloes was undependable. Private traders and middlemen controlled the

marketing and distribution system for the milk. As milk is perishable, farmers were

compelled to sell it for whatever they were offered. Often, they had to sell cream and

ghee at throwaway prices. In this situation, the one who gained was the private trader.

Gradually, the realization dawned on the farmers that the exploitation by the trader couldbe checked only if marketed their milk themselves. In order to do that they needed to

form some sort of an organization. This realization is what led to the establishment of the

Kaira District Cooperative Milk Producers' Union Limited (popularly known as

Amul) that was formally registered on December 14, 1946.

The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June 1948. An

assured market proved a great incentive to the milk producers of the district. By the end

of 1948, more than 400 farmers joined in more village societies, and the quantity of milk

handled by one Union increased from 250 to 5,000 liters a day.

Obstacles: Springboards for success

Each failure, each obstacle, each stumbling block can be turned into a success story. In

the early years, Amul had to face a number of problems. With every problem came

opportunity. A chance to turn a negative into a positive. Milk by products and

supplementary yield, which suffered from the same lack of marketing and distribution

facilities, became encumbrance. Instead of being bogged down by their fate they were

used as stepping-stones for expansion. Backward integration of the process led thecooperatives to advances in animal husbandry and veterinary practice.

Milk by products: An excuse to expand

The response to these provided stimulus for further growth. For example, as the

movement spread in the district, it was found that the Bombay Milk Scheme could not

absorb the extra milk collected by the Kaira Union in winter, when the production on an


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average was 2.5 times more than in summer. Thus, even by 1953, the farmer-members

had no assured market for the extra milk produced in winter. They were again forced to

sell a large surplus at low rates to the middlemen. The remedy was to set up a plant to

process milk into products like butter and milk powder. A Rs 5 million plant to

manufacture milk powder and butter was completed in 1955. In 1958, the factory was

expanded to manufacture sweetened condensed milk. Two years later, a new wing was

added for the manufacture of 2500 tons of roller-dried baby food and 600 tons of cheese

per year, the former based on a formula developed with the assistance of Central Food

Technological Research Institute (CFTRI), Mysore. It was the first time anywhere in the

world that cheese or baby food was made from buffalo milk on a large, commercial scale.

Another milestone was the completion of a project to manufacture balanced cattle feed.

The plant was donated by OXFAM under the Freedom from Hunger Campaign of the

FAO.

To meet the requirement of milk powder for the Defense, the Kaira Union was asked by

the Government of India in 1963 to setup additional milk drying capacity. A new dairy

capable of producing 40 tons of milk powder and 20 tons of butter a day was speedily

completed. It was declared open in 1965. The Mogar Complex where high protein

weaning food, chocolate and malted food are being made was another initiative by Amul

to ensure that while it fulfilled the social responsibility to meet the demand for liquid

milk, its members were not deprived of the benefits to be had from the sale of high value-

added products.

Cattle: From stumbling blocks to building blocks

Traditionally dairying was a subsidiary occupation of the farmers of Kaira. However, the

contribution to the farmer's income was not as prominent as his attachment to dairying as

a tradition handed down from one generation to the next. The milk yield from animals,

which were maintained mainly on the by products of the farm, was decidedly low. That

together with the lack of facilities to market even the little produced rendered the

scientific practice of animal husbandry irrational as well as unaffordable. The return on

the investment as well as the prospects of being able to market the product looked very

bleak. It was a vicious cycle reinforced by generations of beliefs.

The Kaira Union broke the cycle by not only taking upon themselves the responsibility of

collecting the marketable surplus of milk but also provided the members with every


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provision needed to enhance production. Thus the Kaira Union has full-fledged

machinery geared to provide animal health care and breeding facilities. As early as late

fifties, the Union started making high quality buffalo semen. Through village society

workers artificial insemination service was made available to the rural animal population.

The Union started its mobile veterinary services to render animal health care at the

farmers' doorstep. Probably for the first time in the country, veterinary first aid services,

by trained personnel, were made available in the villages. Fully qualified staff mans the

Unions 16 mobile veterinary dispensaries. All the villages are visited bi-monthly, on a

predetermined day, to provide animal health care. A 24-hour Emergency Service is also

available at a fee (Rs. 35 for members and Rs. 100 for non-members). All the mobile

veterinary vans are equipped with Radio Telephones.

The Union runs a semen production center where it maintains high pedigreed Surti

buffalo bulls; Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred bulls. The

semen obtained from these bulls is used for artificial breeding of buffaloes and cows

belonging to the farmer members of the district. The artificial insemination service has

become very popular because it regulates the frequency of calving in cows and buffaloes

thus reducing their dry period. Not only that, a balanced feed concentrate is manufactured

in the Union's Cattle Feed Plant and sold to the members through the societies at cost

price.

Impressive though its growth, the unique feature of the Amul sagas did not lie in the

extensive use of modern technology, nor the range of its products, not even the rapid

inroads it made into the market for dairy products. The essence of the Amul story lies in

the breakthrough it achieved in modernizing the subsistence economy of a sector by

organizing the rural producers in the areas.


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Chapter 2

Production Function

Introduction

Explosion of the production technology and changes in technical field is going to bring

out revolution in the industry sector which eventually gives stand to study and favors the

come backing subject i.e. production and management.

Production and operation management is planning, organizing, staffing, directing and

controlling of all the production system those portion of organization that convert inputs

into products and services. In general production system takes raw material, personnel,

machines, buildings and other resources and produce products and services.

The core of production system is its conversion subsystem where in workers; raw

materials are used to convert inputs into products and services. This production

department is at heart of the firm, as it is able to produce low cost products and superior

quality in timely manners.

Thus, there arises enormous need of giving due importance to this department as a whole

and a strong concrete base being foundation pillars of a manufacturing organization, if

the intention is to succeed domestically and globally.

Co operative Milk Producing Societies in Gujarat

Following are the cooperatives that function under GCMMF.

Ahmedabad Dist Coop Milk Producers Union Ltd, Ahmedabad. Soc: 433, Mems:

52,428. Av Milk Proc: 90,000 lpd.


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Banaskantha Dist Coop Milk Producers Union Ltd, Palanpur. Soc: 1,130, Mems:

97,251. Av Milk Proc: 295,000 lpd.

Baroda Dist Coop Milk Producers Union Ltd, Baroda. Soc: 783, Mems: 156,691. Av

Milk Proc: 225,000 lpd.

Bharuch Dist Coop Milk Producers Union Ltd, Bharuch. Soc: 289, Mems: 37,900.

Av Milk Proc: 38,000 lpd.

Bhavnagar Dist Coop Milk Producers Union Ltd, Bhavnagar. Soc: 190, Mems:

25,532. Av Milk Proc: 23,000 lpd.

Gandhinagar Dist Coop Milk Producers Union Ltd, Gandhinagar. Soc: 56, Mems:

13,000. Av Milk Proc: 46,500 lpd.

Junagadh Dist Coop Milk Producers Union Ltd, Junagadh. Soc: 400, Mems: 41,500.

Av Milk Proc: 73,000 lpd.

Kaira Dist Coop Milk Producers Union Ltd, Amul Dairy, Anand. Soc: 943, Mems:

513,280. Av Milk Proc: 740,000 lpd.

Kutch Dist Coop Milk Producers Union Ltd, Kutch Dairy, Madhapar. Av Milk Proc:

25,000 lpd.

Mehsana Dist Coop Milk Producers Union Ltd, Dudhsagar Dairy, Mehsana. Soc:

1,020, Mems: 292,800. Av Milk Proc: 704,402 lpd.

Panchmahal Dist Coop Milk Producers Union Ltd, Godhra. Soc: 1,133, Mems:

126,510. Av Milk Proc: 112,000 lpd.

Rajkot Dist Coop Milk Producers Union Ltd, Rajkot. Soc: 193, Mems: 29,620. Av

Milk Proc: 50,000 lpd.

Sabarkantha Dist Coop Milk Producers Union Ltd, Sabar Dairy, Himatnagar. Soc:

1,315, Mems: 200,482. Av Milk Proc: 322,346 lpd.

Surat Dist Coop Milk Producers Union Ltd, Sumul Dairy, Surat. Soc: 864, Mems:

160,000. Av Milk Proc: 300,000 lpd.

Surendranagar Dist Coop Milk Producers Union Ltd, Surendranagar. Soc: 486,

Mems: 31,000. Av Milk Proc: 30,000 lpd.


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Valsad Dist Coop Milk Producers Union Ltd, Vasudhara Dairy, Valsad. Soc: 348,

Mems: 35,900. Av Milk Proc: 74,400 lpd.


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Plant Layout

Plant layout is the overall arrangement of the machine tools, handling equipments,

storeroom and other various accessories required for facilitating production in a factory.

These arrangements are pre-planned with the results that the building has been

constructed to fit a layout of a given process.

AMUL plant is indigenously worked out with facilitation of various production processes

and production of multi products under one plant. The total plot is nearly about 2.27 kms.

Separate buildings are provided with required arrangements of machine tools handling

and computers connection through the control room to fit for varying product-

manufacturing departments.

The plant is engaged in producing milk, ice creams, milk powder and ghee. Entire

department is uniquely provided with facilities for the processing each product. There are

4 production departments and packaging departments pertaining to each product

respectively.

Thus, plant layout encompasses all production and service facilities and provides for the

most effective utilization of the men, materials and machines constituting the process. It

is the master blue print of coordinating all operations.

A good layout results in elimination or minimization of accidents and hazards and cost

while increases the output. Thus a good layout specifically is observed to be beneficial on

the following grounds:

Efforts minimization

Fewer material handling will be provided manufacturing units cost will be lover

Bottlenecking of production will be eliminated

Total item in process will be less

Specialization of operations is facilitated

Less inspection will be required


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Production control will be easier to achieve

Plant investment can be held to the necessary minimum

Plant and equipment obsolescence may be less

Wastage space will be eliminated

Thus, a true beneficiary is provided to the plant through good and sound planning for

plant layout.

Operating Analysis

Amuls only source of raw material is Village Milk societies. Milk is brought from suchvillage milk societies every morning and evening. This milk is then sent to the dairy

plant. In the dairy plant the milk is processed i.e. it is made free from germs.

Milk Processing

The entire process of milk can be divided into following steps:

Steps:

Milk Processing Chart:

Collection of Raw-Milk

Electronic Milk Test

Methyline Blue Reduction Test

Purchasing And Standardizing Process

Separation Process


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Quality Check

Packaging Process

Cold Storage

Steps in Production Process

1. Collection of Raw Milk

Raw milk is collected from different co-operative societies of Gujarat. About 122000

liters of raw milk is collected per day. Before this milk is sent to the laboratory for testingthe FAT & SNF proportion, the milk is separated from the raw milk. The milk is taken

from the chilling centers to Ahmedabad with the help of trucks.

After collecting the samples of milk, they are taken to the laboratory ,where two types of

tests are conducted.

Electronic milk test

Methyline blue reduction test

Electronic Milk Test


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Before pasteurizing the milk the samples are taken to the laboratory. In the laboratory

with the help of machine called electronic milk tester, the proportion of SNF & FAT is

checked with phosphate solution. When the colour of the milk becomes yellow, it is sent

for pasteurisation.


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Methyline blue reduction test

Another test, which is taken in the laboratory, is called Methyline blue reduction test.

This test is conducted for checking for how long the milk will remain fresh. To check

this, 10 ml of milk is taken and 1 ml of methyline blue solution is added to it. It is then

kept under water at 57-degree C. After one hour, if the solution losses its colour than it is

called raw milk. If the solution remains the same even after 5 hours than it is considered

as fresh milk, which remains constant for a long period of time.

The dairy fixes the proportion of FAT & SAF.

MILK SNF FAT

Buffalo 9% 6%

Cow 8.5% 4.5%

After laboratory gives green signal and confirming the raw milk at the reception dock is

brought in to the house connected with the pump is sent to the milk processing plant. This

is than chilled below 4 degree C. and then stored in milk silos. After that milk is

processed which has two steps i.e. pasteurising andstandardizing.

2. Pasteurising & standardizing

After collecting and checking and conducting laboratory tests, the pasteurising process is

conducted. To pasteurized the milk means to kill all the germs in the milk by a particular

method which was invented by a scientist called James Pasteur and so the name

pasteurisation.

In pasteurizing, the milk is first heated at 72 C to 76 C for 15 seconds and then it is

immediately cooled below 4 C. By this method they destroy the pathogenic bacteriapresent in the raw milk. But if the right degree of temperature is not provided there are

chances that the milk might still contain germs. After this process some milk goes to

separator machine and remaining is proportionately sent for standardization.


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Standardization process is known such as it bifurcates the milk in 3 categories varying

according to that FAT & SNF contents. The equipment named OSTA. Auto

standardization adjusts the fat directly. The computer is just ordered whether gold or

standard milk is to be rationed and the same will be received with appropriate contents.

Ready Milk = Pasteurised + Standardized.

3. Separation process

Separator machine separates two kinds of products, skimmed milk & cream, through

channels. There are 100 disks fixed in separator machines, which revolve at 5000 rpm

(revolution per minute). It is taken to the tanks, which has the capacity of 20000 litres.

Whenever the milk is needed from the tank, it is tested in the laboratory and the deficit

proportion fat is added by mixing cream. This process continues for 24 hours.

4 Quality Check

Pasteurized milk is sent for a quality check in the Quality Assurance laboratory of the

dairy plant. Within 14 seconds FAT and SNF proportion is received regarding 30 lack

litres of milk. The total investment put into the lab by the Dairy plant is of Rs. 6 crores.

This laboratory only checks and analyses the powder, milk and ghee. There is a separate

ice-cream analysing laboratory.

5 Packing Process

After this the milk is sent for packing to the milk packing station in the dairy plant. In the

milk packaging station there are huge pipelines and behind each of them there is polyfill

machine from which the material to pack milk comes out. There are 12 such polyfill

machines in the packaging station from which the materials to pack milk comes out.From each of these 12 machines 100 pouches are packed in one single minute.

6. Storage


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Then the milk is sent to the cold storage of the dairy where the milk is stored until it is

dispatched. Here the milk is stored at temperature ranging from 5 C to 10 C, it is

maintained with the help of exhaust fans having silicon chips. About 40000 litres of milk

is dispatched from the cold storage of the dairy plant everyday. The damaged pouches are

kept a side and the milk is once again put to the tank.

Milk Powder

For converting milk powder first of all water content is evaporated in condensing plant.

By this process they get condensed milk, it is used as a raw material. There after the milk

is sent to the drying plant. The spray drying plant is huge in size with a height of 70 feet.

The plant is divided into many floors to enable easy use of the plant. First of all the raw

material i.e. condensed milk is put into the first floor of the plant along with air at 200 C.

By this process the remaining water, which the condensed milk might have retained is

also evaporated and milk comes as powder but this is not the last stage.

This powder is again put in to a machine called milk calendaria, where it is turned in to

real milk powder. Its capacity is 1000 litres per 15 minutes. Then again this milk powder

is put into a Dense Waise Vessel. Here the lumps are removed and uniform milk powder

is sent up.

After processing the powder is sent for quality checking at quality assurance laboratory.

After the quality confirms, this milk powder is differentiated, by adding different flavors

to them like elaichi, chocolate & sugar free milk powder. Thereafter they are packed in

tins and boxes. Afterwards it is stored at storage department.


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Chapter 3

GCMMF: An OverviewGujarat Cooperative Milk Marketing Federation (GCMMF) is the Indias largest food

product marketing organization. It is a state level apex body of milk cooperatives in

Gujarat, which aims to provide remunerative returns to the farmers and also serve the

interest of consumers by providing quality products that are good value for money.

Members 12 district cooperative milk producers' Union

No. of Producer Members 2.36 million

No. of Village Societies 11,333

Total Milk handling capacity 6.9 million litres per day

Milk collection (Total 2003-04) 1.81 billion litres

Milk collection (Daily Average 2003-04) 4.97 million litres

Milk Drying Capacity 511 metric Tons per day

Cattle feed manufacturing Capacity 2340 MTs per day

Sales Turnover Rs (million) US $ (in million)

1996-97 15540 450

1997-98 18840 455

1998-99 22192 493

1999-00 22185 4932000-01 22588 500

2001-02 23365 500

2002-03 27457 575

2003-04 28941 616

List of Products Marketed

Bread spreads

Amul Butter

Amul Lite Low Fat Breadspread

Amul Cooking Butter

Cheese Range

Amul Pasteurized Processed Cheddar Cheese


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Amul Processed Cheese Spread

Amul Pizza (Mozarella) Cheese

Amul Shredded Pizza Cheese

Amul Emmental Cheese

Amul Gouda Cheese

Amul Malai Paneer (cottage cheese), Frozen, Refrigerated and Tinned

Utterly Delicious Pizza

Mithaee Range (Ethnic sweets)

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

Amul Amrakhand

Amul Mithaee Gulabjamuns

Amul Mithaee Gulabjamun Mix

Amul Mithaee Kulfi Mix

Avsar Ladoos

UHT Milk Range

Amul Shakti 3% fat Milk

Amul Taaza 1.5% fat Milk

Amul Gold 4.5% fat Milk

Amul Lite Slim-n-Trim Milk 0% fat milk

Amul Shakti Toned Milk

Amul Fresh Cream

Amul Snowcap Softy Mix

Pure Ghee

Amul Pure Ghee

Sagar Pure Ghee

Amul Cow Ghee

Infant Milk Range

Amul Infant Milk Formula 1 (0-6 months)

Amul Infant Milk Formula 2 (6 months above)


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Amulspray Infant Milk Food

Milk Powders

Amul Full Cream Milk Powder

Amulya Dairy Whitener

Sagar Skimmed Milk Powder

Sagar Tea and Coffee Whitener

Sweetened Condensed Milk

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk

Amul Taaza Toned Milk 3% fat

Amul Gold Full Cream Milk 6% fat

Amul Shakti Standardized Milk 4.5% fat

Amul Slim & Trim Double Toned Milk 1.5% fat

Amul Saathi Skimmed Milk 0% fat

Amul Cow Milk

Curd Products

Yogi Sweetened Flavored Dahi (Dessert)

Amul Masti Dahi (fresh curd)

Amul Butter Milk

Amul Lassee

Amul Ice creams

Royal Treat Range (Rajbhog, Cappuchino, Chocochips, Butterscotch, Tutti

Frutti)

Nut-o-Mania Range(Kaju Drakshi, Kesar Pista, Roasted Almond, Kesar

Carnival, Badshahi Badam Kulfi, Shista Pista Kulfi) Utsav Range (Anjir, Roasted Almond)

Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)

Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry, Black

Currant)


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Sundae Range (Mango, Black Currant, Chocolate, Strawberry)

Millennium Ice cream (Cheese with Almonds, Dates with Honey)

Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi, Shahi

Pista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)

Cool Candies (Orange, Mango)

Cassatta

Tricone Cones (Butterscotch, Chocolate)

Megabite Almond Cone

Frostik- 3 layer chocolate Bar

Fundoo Range - exclusively for kids

SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)

Health Isabcool

Chocolate & Confectionery

Amul Milk Chocolate

Amul Fruit & Nut Chocolate

Brown Beverage

Nutramul Malted Milk Food

Milk Drink Amul Kool Flavoured Milk

Health Beverage

Amul Shakti White Milk Food

Ready to Serve Soups

Masti Tomato Soup

Masti Hot & Sour Soup

Recently launched Amul Ganthiya


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Organisation Structure

Organization Structure is divided into two parts:

External Organization Structure

Internal Organization Structure

External Organization Structure

External Organization Structure is the organization structure that affects the organization

from the out side.

State Level Marketing Federation

District Milk Product Union Ltd.

Village Milk Product Union Ltd.

Villagers

As we know, GCMMF is unit of Gujarat Milk Marketing Federation, which is a co-

operative organization. The villagers of more than 10000 villages of Gujarat are the bases


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of this structure. They all make village milk producers union, district level milk producers

union and then a state level marketing federation is established. The structure is line

relationship, which provides easy way to operation. It also provides better

communication between two stages.


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Internal Organization Structure:

The following is internal organisation chart of Amul:

Organization Structure Chart

Chairman

Managing Director

General Manager

Ass. General Manager

Finance Production Marketing Sales & Purchase PersonnelDept. Dept. Dept. Dept. Dept.

Senior Senior Senior Senior Senior Manager Manager Manager Manager Manager

Finance Production Marketing Sales PersonnelManager Manager Manager Manager Manager


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Accountant Officer Marketing Officer P.R.F.Executive

Officers Supervisor F.S.R. Salesmen Executive

A systematic & well-defined organizational structure plays a vital role & provides

accurate information to the top-level management. An organisation structure defines a

clear-cut line of authorities & responsibilities among the employees of GCMMF. The

Organisation structure of Amul is well-arranged structure. At a glance a person can

completely come to know about the organization structure.

Amul is leaded by the director under him five branches viz. Factory, Marketing,

Accounts, Purchase, Human Resources Department.

Factory department has a separate general manager under him there are six braches viz.

Production, Stores, Distribution, Cold Storage, Quality, and Deep-freezing. This

department takes care of the factory work.

Marketing department has regional senior marketing manager and under him there is a

regional manager. This department takes care of the marketing aspects of Amul.

Accounts department takes care regarding accounts i.e. day-to-day work. Under the

accountant there is one clerk.

Purchase department takes care regarding the purchase of raw materials andmany other

things.Chapter 4

Marketing Function


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Gujarat Co-operative Milk Marketing Federation (GCMMF)

GCMMF was the first co-operative to be set up under operation flood. GCMMFS dairy

plant commissioned in 1994 is one of the most modern and largest plants. It can handle

up to 1million litres of milk per day. The plant also has facilities for pasteurizing and

packing. It was funded by NDDB. GCMMFs milk is sold under its flagship brand Amul.

GCMMF was formed in 1973. As an apex marketing federation of 12 district milk unions

of Gujarat to operate own marketing and distribution network in India and abroad.

GCMMF sales turnover grew by 21% Rs. 15.5 billion to Rs. 18.8 billion including

consignment sales of Rs. 3.7 billion sale of Amul milk in Gujarat and Maharastra

increased by 11% and 16% respectively. Dairy product turnover registered a 19% growth.

Amul butter registered 18% growth. The sale of Amul & Sagar Ghee increased by 47%.

Amul Cheese registered 60% value growth.

GCMMFs sales to the defense services were Rs.233 million during the year, were mainly

to Burma, Uganda and West Africa. The company plans to expand its export markets in

Saudi Arabia and other Middle East countries.

During 1999, launching it in 8 states and 2 union territories extended the Amul ice-cream

brand franchise. Amul ice creams have become Indias 2nd largest brand. Recently it has

commissioned a dairy at Kolkata.

New products launched during the early 2000 were Amul Pizza, Cheese and Amul slice

cheese, Amul paneer and Amul Mithaee range. Safal mango drink has been launched by

Strategic alliance with Safal (A union of NDDB). The product range to be launched

under the Safal brand will include fruit drinks, squashes, pickles, jams, and ketchup and

mango pulp.


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Amul ice-cream brand franchise was extended with launch in 8 states & 2 union

territories. Amul ice cream has become the 2nd largest brand in the country & has

garnered major share in its existing markets in a short time span of 3 years. Amuls main

ice-cream manufacturing facility is located at Gandhinagar which is Asias largest and

most modern integrated ice-cream manufacturing plant and uses world renewed

refrigeration units and an efficient cold chain. GCMMF has become very popular because

of its excellent marketing strategy. GCMMF marketing strategy is to understand the

consumer needs, develop products that provide superior value at fewer prices. GCMMF

has shown a tremendous commitment to the floodwater situations. GCMMF has never

stopped the supply of milk and other milk products. And unlike other competitors, it has

never taken wrong benefits in these kinds of situations. It has developed an excellent

distribution channel to provide its products to the consumers. It has made its products

available in each part of Gujarat & India.

Market Segmentation

Market segment is a very important function for the market department of the GCMMF,

because the market consists of buyers different in many ways. They are different in their

wants resources, locating buying practices. Because buyers have unique needs and wants,

each buyer is potentially separate market.

Geographic segmentation

Under these variables, GCMMF has divided market into different geographic units such

as region, states, cities etc. GCMMF sells its products by geographic segment action like

in the north where production of milk is very high the sale of Amuls product is not much.

But in the western region it is high. GCMMF identifies this kind of variables and deals

with it.

Demographic Segmentation


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Under this variable GCMMF has divided market into several segments such as age,

gender, family, size, income, occupation etc. For each group GCMMF marketing strategy

is different. In milk Amul targets all the class where as in the other products like butter,

ghee, ice-cream etc. it targets to the middle and higher middle class.

Distribution Network

Most producers work with marketing intermediaries to bring their products to market.

The marketing intermediaries make up a marketing channel also called distribution

cannel. Distribution channels are sets of interdependent organizations involved in the

process of making a product or service available for use or consumption.

The Head Office of GCMMF is located at Anand. The entire market is divided in 5

zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and

Chennai. Moreover there are 49 Depots located across the country and GCMMF caters to

13 Export markets.

A zero level of channel also called a direct marketing channel consists of a manufacturer

selling directly to the final customers. A one level channel; contains one selling

intermediary such as retailer to the final customers. A two level channel two

intermediaries are typically wholesaler and retailer. A three level channel are typically

wholesaler, retailer and jobber in between.

GCMMF has an excellent distribution. It is its distribution channel, which has made it so

popular. GCMMFs products like milk and milk products are perishable. It becomes that

much important for them to have a good distribution.


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Distribution Chart

We can see from above figure that GCMMF distribution channel is simple and clear. The

products change hands for three times before it reaches to the final consumer. First of all

the products are stored at the Agents end who are mere facilitators in the network. Then

the products are sold to wholesale dealers who then sell to retailers and then the product

finally reaches the consumers.

Amul Parlors

Amul has come out with a unique concept of Amul Parlours. They have classified them

under four types namely:

Center for excellence

On the Move

Amul Parlours


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Amul Preferred Outlets

Center for Excellence: These Amul Parlours are specifically at a place, which has a class

of excellence of its own. We can find such parlors at the Infosys, IIMA, NID Ahmedabadetc.

On the Move: These parlors are at the railway stations and at different state bus depots

across different cities.

Amul Parlours: These parlors can be seen at different gardens across different cities.

These are fully owned by Amul.

Amul Preferred Outlets: These are the private shops that keep the entire of product

range of Amul. They also agree not to keep any competitor brands in the outlets. They

can keep other brands that are in the non-competitor category.

Amul has more than 200 such outlets right now. It wants to have 1,00,000 parlors by the

end of the year 2010.

Managing Competition

The Indian market is dominated by a large number of small local and regional players.

There are an estimated 150 manufacturers in the organized segment, which accounts for

30-35% of sales and about 1000 units in the unorganized segments of the market. In the

organized segment the significant brands are Kwality Walls , Vadilal, Amul, Havmor,

Mother dairy and Baskins & Robbins. GCMMF is facing very tough competition fromboth in and outside India.

Amul combats competition from its competitors by providing quality products at a price

which its customers value. Along with good quality products and reasonable price the

packaging is also very good. Most of its products are available in many flavors. Excellent


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advertising backs its products and helps GCMMF (AMUL) to leave its competitors a

tough time. Also Amul has come out with Amul Parlours to cater to various segments of

customers. Amul has a very strong Brand Image in the Domestic market. Many products

are exported by GCMMF.

Exports

GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading

House" status. GCMMF has received the APEDA Award from Government of India for

Excellence in Dairy Product Exports for the last 9 years.

The major export products are:

Consumer Packs

Amul Pure Ghee

Amul Butter

Amul Shrikhand

Amul Mithaee Gulabjamun

Nutramul Brown Beverage

Amulspray Infant Milk Food

Amul Cheese

Amul Malai Paneer

Amul UHT Milk (Long Life)

Amul Fresh Cream

Bulk Packs

Amul Skimmed Milk Powder

Amul Full Cream Milk Powder


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The products are exported to 18 countries namely, USA, Kuwait, Qatar, UAE, Yemen,

Bahrain, Muscat, Saudi Arabia, Tanzania, Madagascar, Sri Lanka, Singapore, Nepal,

Bangladesh, Nepal Thailand and Australia.


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Advertising by Amul

Amul has two agencies that look after its entire range of products namely FCB Ulka and

Da Cunha.

FCB Ulka looks after a broad range of products namely, Amul Lite Breadspread, Amul

Shrikhand, Amul Chocolates, Amul Paneer, Amul SnowCap Softy Mix Ice cream,

Amul/Sagar Ghee, Amul Infant Milk Formula 1 & 2, Sagar Tea and Coffee whitener,

Amul Spray Infant Milk Food, Amul Mithaee, Amul Gulab Jamun, Amulya Dairy

Whitener, Mithaimate Sweetened Condensed Milk, Amul Ice cream, Sagar Skimmed

Milk Powder and Amul Whole milk Powder.

Da Cunha looks after the Amul butter. Da Cunha also prepares the very popular Amul

butter billboard campaigns, which we see at various locations. Over and above the Amul

butter, Da Cunha also looks after the Amul Cheese, Cheese spread, Gouda Cheese,

Emmental Cheese, Masti Dahi and Buttermilk, Amul Slim-n-Trim, Amul Taaza and Amul

Gold (all different brands of milk), Amul Fresh Cream, Amul Chocolate Milk, Amul

Fresh Milk and Nutramul.

FCB Ulka also looks after the corporate campaign.


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Chapter 5

Finance Function

Introduction

Financial management is that managerial activity which is concerned with the planning

and controlling of the firms financial resources. Finance is nothing to other but the

money. Money is necessary input for economic activities. In the other wards Finance is

the common denominator for carrying out vast range of corporate objectives. This is a

co-operative unit, so the finance is raised from members by a way of share capital. In this

share capital is limited. This unit has invested so many rupees in the structure of

organization. Amul has a long-term finance project.

Financial Details

Name of bankers

The Kaira District Central Co-op. Bank Ltd.

State Bank of India

State Bank of Saurashtra

UTI Bank Ltd

Corporation Bank

Name of the Auditor: A.B. Gadhvi

Special Auditor (Milk)


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Milk Audit Office

Anand

Financial Analysis

Analysis of Relevant Ratios

Debt Equity v/s Long Term Debt Equity

The debt equity ratio shows the percentage of debt and net worth. Long-term debt to

equity ratio shows the percentage of long-term debt to net worth.

It seems that GCMMF has used more of long term debt as compared to Short term

debt. As a result it has ended up paying more of interest. But as far as the percentage of

debt to equity is concerned the use of debt has been declining over years. Of the total

capital employed debt is more as compared to equity. Thus, it can be concluded that the

stake of creditors and bankers is more in the total capital employed.

Interest Coverage Ratio

Interest coverage ratio is used to test the firms debt servicing capacity. It shows the

number of times interest charges are covered by funds that are ordinarily available for

payment.


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Interpretation

Interest coverage ratio of the firm was 1.84 times in 2001, which has increased to 8.28

times in 2004. This indicates that firm is easily able to pay the interest charges out of itspresent earnings.

Dupont Analysis

Interpretation

The companys profit before depreciation, interest and tax has remained constant over the

years. In 2003, though the sales/CE has increased the PBDIT/Sales ratio has declined.

This can be attributed increasing level of expenditure of the company. But the ROCE has

increased due to decreasing capital employed in the year 2003. Overall ROCE has

remained around 26%.


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Components of ROE

Interpretation

The trend in CE/Net Worth has remained steady over the years except during 2003 where

the CE/Net Worth ratio has declined. This can be attributed to an increase in Net Worth

and a decrease in the Capital Employed. PAT/PBDIT showing an increasing trend, this

can be attributed to the declining taxes over the years. PBDIT/CE ratio has increased in

2003 because of decrease in capital employed and decreased in 2004 due to increase in

capital employed. ROE has increased due to an increase in PAT.

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