Amul: THE UNENDING STORY

PRESENTED BY

STRATEGIC MANAGEMENT

SYNOPSIS: AMUL - THE UNENDING STORY

1. INTRODUCTION TO AMUL

EVOLUTION OF CO OPERATIVE SOCIETY

2. OPERATION FLOOD I, II, III

The Anand Pattern

NDDB: Heralding Changes

Effect on Rural Development

3. PRODUCT LINE

4. BRAND BUILDING

5. VALUE CHAIN

a. ICT

6. CONCLUSION

Amul The Unending Story

Every day millions of people wake up to the taste of Amul, the flagship

brand name of Gujarat Cooperative Milk Marketing Federation (GCMMF)

GCMMF is India’s largest food products organization, responsible for

marketing a variety of milk products produced by different milk cooperative

societies in the India’s western state of Gujarat.

GUJRAT COOPERATIVE MILK MARKETING FEDRATION (GCMMF)

Organization structure

It all started in December 1946 with a group of farmers keen to free

themselves from intermediaries, gain access to markets and thereby ensure

maximum returns for their efforts.

Based in the village of Anand, the Kaira District Milk Cooperative Union

(better known as Amul) expanded exponentially. It joined hands with other

milk cooperatives, and the Gujarat network now covers 2.12 million farmers,

10,411 village level milk collection centers and fourteen district level plants

(unions) under the overall supervision of GCMMF.

There are similar federations in other states. Right from the beginning, there

was recognition that this initiative would directly benefit and transform small

farmers and contribute to the development of society.

Dairy Cooperative Structure and details for State of Gujarat

Second, that effective management of the network and commercial viability

would require professional managers and technocrats.

To implement their vision while retaining their focus on farmers, a

hierarchical network of cooperatives was developed, which today forms the

robust supply chain behind GCMMF's endeavors. The vast and complex

supply chain stretches from small suppliers to large fragmented markets.

Management of this network is made more complex by the fact that

GCMMF is directly responsible only for a small part of the chain, with a

number of third party players (distributors, retailers and logistics support

providers) playing large roles.

Managing this supply chain efficiently is critical as GCMMF's competitive

position is driven by low consumer prices supported by a low cost system.

An Overview

Markets, then and even today, are primitive and poor in infrastructure. Amul

and GCMMF acknowledged that development and growth could not be left

to market forces and that proactive intervention was required. Two key

requirements were identified.

The first, that sustained growth for the long term would depend on

matching supply and demand. It would need heavy investment in the

simultaneous development of suppliers and consumers.

Amul has an annual turnover of Rs.52554mn in the year 2007-08, also

having13 district cooperative milk producer’s union members. Amul having

13141 cooperative societies who supply milk to the dairy, milk procurement

for the last year was 2.69bn liters, which average daily procurement is

coming to 7.4mn liters.

Cooperatives and Economic Development

Before the cooperative movement began, middlemen who supplied milk to

the consumer were exploiting the dairy industry in the Kaira District. It

began as a response to this exploitation and put a 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 us for information on the five biggest

"companies" in the dairy business.

WHITE REVOLUTION

White Revolution was the name of the project entrusted to Dr Verghese

Kurien to make India self-sufficient in milk production. The project literally

helped create a flood of milk thanks to his unique dairy cooperative

movement, which saw India surpassing the US in milk production in 1998 to

emerge as the world's largest milk producer with an annual growth of 5 to 6

per cent as against the global average of 1 per cent.

Dr Verghese Kurien

Kurien quit his job to become the manager of the Kaira District Cooperative

Milk Producers' Union, Anand, (now Amul) where its founder and the 1963

Roman Magsaysay Award winner Tribhuvandas Patel was trying to organise

the 200-odd milk producers of the surrounding Kaira district into a

cooperative for supplying milk to the government-run Bombay Milk

Scheme. Kurien infused the fledgling organisation with his pioneering drive

and expertise in modern technology and management, and powerful

marketing and branding strategies, while at the same time preserving and

vitalising the cooperative spirit of the venture.

The Amul team — farmers and Kurien's professionals — together

confounded the cynics by processing a variety of high-grade dairy products,

several of them for the first time from buffalo milk, and marketing them

nationally against competition from professionally managed corporate rivals.

Kurien also had to forge his way through hurdles created by the "milk lobby"

— the powerful dairy traders and local panchayat and zilla politicians —

whose financial clout depended on their control of the milk trade, which the

cooperative threatened. Kurien's cooperative venture was built on a simple

but compelling logic — mass consumption and mass production must go

hand in hand to bring all round prosperity.

He led the producers in their struggle for command over the resources they

created, a struggle to obtain equitable returns and a struggle for liberation

from dependence on middlemen, a struggle against exploitation. It was an

impossible task, and at times he faced threats to his life.

Kurien's professional life has been dedicated to empowering millions of

humble Indian milk producers, in whom he saw an unsuspected economic

resource and potential at the bottom of the pyramid. Remains his simple but

fail-safe inspiration.

''Without their involvement, we cannot succeed. With their

involvement, we cannot fail...''

Kurien has churned up an economic miracle by turning a milk-scarce India

of the '50s and '60s into a land of surplus by the '70s and brought prosperity

to ten-million grassroots milk producers. When they walk the path to the

local milk collection centres every morning with their pots full of milk, it is

indeed a happy hour for Dr Kurien, the irrepressible milkman of India.

In 2004 India accounted for 15 per cent of the world's total milk production.

Today, 173 milk producers' cooperative unions and 22 federations play a

major role in meeting the demand for packed milk and milk products.

Quality milk, pasteurised, packaged, and branded, is now available in more

than 1,000 cities throughout India, in a national milk grid to reach over 300

million consumers in 550 cities and towns. Over nine million small

producers in 74,000 villages jointly earn an incremental income of Rs2,500

crore from milk.

Over the course of Operation Flood, milk has been transformed from a

commodity into a brand, from rationing to plentiful availability, from loose,

unhygienic milk to milk that is pure and sure, from subjugation to a symbol

of farmer's economic independence, to being the consumer's greatest

insurance policy for good health.

Operation Flood: an unfinished dream

Operation Flood, a programme that Dr Verghese Kurien

implemented as chairman of the National dairy Development Board in three

phases over a 26-year span, created a flood of milk, which eventually led to

India becoming the world's largest milk producer, overtaking the US in 1998.

Dr Kurien made innovative use of a World Bank loan, EEC food aid and the

internal resources of NDDB to go ahead in the White Revolution. It was an

experiment immortalized by noted filmmaker Shyam Benegal in Manthan

(the churning) and one, which Dr Kurien himself put down in black and

white as An Unfinished Dream

.

AMUL FLAG

Operation Flood: Phase I

During the 1970's, dairy products were piling up as a major surplus in

Europe, a phenomenon in which Dr Kurien had seen both a threat and an

opportunity. In the event of these surpluses being dumped in India at rock

bottom prices, it would have prematurely destroyed the fledgling dairy sector

of the country.

The large quantities that India was already importing had eroded domestic

markets to the point where dairying was not viable. Kurien ingeniously

turned this double-edged sword to his advantage and incorporated it as a

golden opportunity into the Operation Flood strategy.

He deployed the European surpluses as an investment in building India's

dairy industry. In an unprecedented initiative, 126,000 mt of skimmed milk

powder and 42,000 mt. of butter oil, obtained from the EEC countries as

food aid, were utilized to finance the programme. It was for the first time in

the history of economic development that food aid was seen as an important

investment resource. Working as an anti-inflationary measure, it provided a

buffer stock to stabilize the Indian market, and was used to prime the pump

of markets that would later be supplied by domestic production.

Funds generated through sale of these commodities were used in the

development of 18 rural milksheds in 10 states and for setting up dairies in

the rural hinterlands and in Mumbai, Delhi, Kolkata and Chennai. This led to

a 60-per cent increase in milk production, which raised from an estimated

20-million mt in 1970 to 32-million metric tones in 1978.

A year-round remunerative market for the milk producers was created and

the sale of milk in the major urban demand centres rose by 140 per cent.

During this phase, Operation Flood linked 18 of India's premier milksheds

with consumers in India's four major metropolitan cities: Delhi, Mumbai,

Kolkata and Chennai.

Operation Flood: Phase II

Impressed by the success of the first phase of the project, the government of

India decided to continue with dairy development through cooperatives but

on a greatly expanded scale. Operation Flood II, which began in 1981 aimed

at building a National Milk Grid linking 136 rural milksheds in 22 Indian

states and the centrally-administered Union territories with the urban demand

centres in the country and creating the infrastructure required to support a

viable dairy industry.

The II phase of the programme was implemented with a World Bank

credit of $150 million and commodity assistance from EEC (216,584 mt

of SMP, 62, 402 mt of butter oil and 16577 mt of butter) and Rs280.87

crore that NDDB raised out of its own resources during phase I.

According to a World Bank audit, of the Rs200 crore that it invested in

Operation Flood II, the net return into the rural economy has been a

whopping Rs24,000 crore per year over a period of 10 years, or a total of

Rs240,000 crore in all. No other major development program has matched

this input-output ratio.

Operation Flood's Phase II (1981-85) increased the milksheds from 18 to

136; 290 urban markets expanded the outlets for milk. By the end of 1985, a

self-sustaining system of 43,000 village cooperatives covering 4.25-million

milk producers had become a reality.

Domestic milk powder production increased from 22,000 tons in the pre-

project year to 140,000 tons by 1989, all of the increase coming from dairies

set up under Operation Flood. In this way EEC gifts and World Bank loan

helped to promote self-reliance. Direct marketing of milk by producers'

cooperatives increased by several million litres a day.

The seed capital raised from the sale of WFP / EEC gift products and World Bank loan

had created, by end 1985, a self-sustaining system of 43,000 village cooperatives covering

4.25-million milk producers.

Operation Flood: Phase III

The third phase of Operation Flood, undertaken from 1987 to 1996 aimed at

consolidating the gains of the earlier phases. The focus of the programme

was on achieving financial viability of the milk unions/ state federations and

adopting the salient institutional characteristics of the Amul Pattern or Amul

Model Cooperatives.

This phase of the programme was funded by a World Bank credit of $365

million, Rs222.6 crore of food-aid (75,000 mt of milk powder and 25,000 mt

of butter / butter oil) by the EEC and Rs207.6 crore by NDDB's own

resources. At the end of May 1995, Rs1, 578 crore had been invested under

the III phases of Operation Flood programme.

At the conclusion of the third phase of Operation Flood III in 1996, 72,744

district cooperative societies in 170 milksheds of the country, with a total

membership of 93.14 lakh had been organised. The targets set had either

been effectively achieved or exceeded.

Phase III (1985-1996) enabled dairy cooperatives to expand and strengthen

the infrastructure required to procure and market increasing volumes of milk.

Veterinary first-aid health care services, feed and artificial insemination

services for cooperative members were extended, along with intensified

member education.

Operation Flood's Phase III consolidated India's dairy cooperative

movement, adding 30,000 new dairy cooperatives to the 42,000 existing

societies organised during Phase 2. Milksheds peaked to 173 in 1988-89 with

the numbers of women members and 'women's dairy cooperative societies'

increasing significantly.

Phase 3 gave increased emphasis to research and development in animal

health and animal nutrition. Innovations like vaccine for Theileriosis,

bypass protein feed and urea-molasses mineral blocks, all contributed to the

enhanced productivity of milch animals.

Phase III of Operation Flood (1985-1996) enabled dairy cooperatives to

rapidly build up the basic infrastructure required to procure and market more

and more milk daily. Facilities were created by the cooperatives to provide

better veterinary first-aid health care services to their producer members.

Conceived as a holistic programme Operation Flood, through dairy

development, achieved:

Cost reduction and technology management. The per capita

availability of milk stood at 192 grams per day at the end of the

third phase of the project, in spite of a substantial increase in

population

Modernization of process and plant technology

Interventions for increase in productivity: annual milk

production, which had stagnated at between 20 and 22-mt during

the 1960s, has steadily increased to over 60-mt

Development and absorption of frontier technologies like DNA

vaccines and genetically engineered bovine omatotropin, embryo

transfer technology and in vitro fertilization of oocytes

Establishment of the 'national milk grid' linking 136 rural

milksheds in 22 states and union territories

The creation of farmer-owned structures

The orchestration of all policies and programs that affect

production

Significant augmentation in rural incomes

Indicator

OF phasesPost-OF phasePhase I Phase II Phase III

Date started July 1970 October 1979

April 1985 April 1996

Date concluded March 1981 March 1985 March 1996 March 2002

Investments (Rs. Million) 1,165 2,772 13,031  

No. of federations/apex milk unions operating

10 18 22 22

No. of milk sheds covered 39 136 170 170

No. of dairy cooperative societies set up (thousands)

13.3 34.5 72.5 74.3

No. of members (millions) 1.75 3.63 9.26 11.06

Average milk procurement (million kg/day)

2.56 5.78 10.99 17.60

Liquid milk marketing (million litres/day)

2.79 5.01 10.02 12.67

Rural dairies (million litres/day)

3.59 8.78 18.09 26.47

Metro dairies (million litres/day)

2.9 3.5 3.88 NA

Milk drying capacity (mt/day)

261.0 507.5 842.0 990.0

Technical inputs        

No. of Artificial Insemination centres (thousands)

4.9 7.5 16.8 22.0

No. of AIs done (million/year)

0.82 1.33 3.94 6.00

Cattle feed capacity (thousand mt/day)

1.7 3.3 4.9 5.2

 

THE ANAND PATTERN

The milk cooperatives under Operation Flood follow the Anand Pattern,

which was pioneered by Dr Kurien when he was General Manager of the

Kaira District Cooperative Milk Producers' Union Limited, Anand. The

success of the operation demonstrated that democratic institutions in villages

within a specific economic sector could help an entire village community to

develop themselves. Dr Kurien looks after the Union from a daily collection

of 500 liters a day in 1948, to one million liters a day in early 1990. He

helped set up similar District Cooperative Unions in six other districts of

Gujarat which eventually federated to an apex body, the Gujarat Cooperative

Milk Marketing Federation Limited. An establishment which Dr Kurien now

heads as Chairman. The Federation covers 13 district cooperative milk

producers' Union.

Fig. The Anand Pattern

The Anand Model is essentially an economic organizational pattern to

benefit small producers who join hands forming an integrated approach in

order to handle their products. The system enables them to obtain the

efficiency and economy of a large scale business. The whole operation is

professionally managed so that the individual producers have the freedom to

decide their own policies. The adoption of modern production and marketing

techniques helps in providing those services that small producers

individually can neither afford nor manage.

Fig. The new Anand Pattern - New

The Anand Model has succeeded largely because it involves people in their

own development and because their interests are safe in their own hands.

Under Operation Flood the entire institutional infrastructure set up at the

village level, the district level and the state level is owned and operated by

the farmers themselves. The Anand model cooperatives have progressively

eliminated middlemen, bringing the producers in direct contact with

consumers. Inspite of opposition to these projects by middlemen and other

powerful vested interests, Dr Kurien has been able to make major

breakthroughs in the dairy and oilseeds sectors supported by the highest level

in the Government of India.

NDDB: Heralding Changes

The past 33 years of the National Dairy Development Board (NDDB) have

seen the birth of India's modern dairy industry. The cooperative movement,

that NDDB helped to create, has become a model for other developing

countries and the international agencies that are concerned with dairy

development.

The Board was created in 1965 in response to Prime Minister Lal Bahadur

Shastri's call to "transplant the spirit of Anand in many other places". He

wanted the Anand model of dairy development, with institutions owned by

rural producers, which were sensitive to their needs and responsive to their

demands, replicated in other parts of the country.

In the late sixties, the Board drew up a project called Operation Flood (OF),

meant to create a flood of milk in India's villages with funds mobilized from

foreign food donations.

The enormous urban market stimulus has led to sustained production

increases, raising per capita availability of milk to nearly 200 grams

per day.

The dependence on commercial imports of milk solids are done away

with.

Modernization and expansion of the dairy industry and its

infrastructure, activating a milk grid.

Marketing expanded to supply hygienic and fair priced milk to some

300 million consumers in 550 cities and towns.

Ninety lakh small producers in 74,000 villages are earning jointly an

incremental income of Rs 2500 crores from milk.

A nationwide network of multi-tier producers' cooperatives,

democratic in structure and professionally managed, has come into

existence. Millions of small producers participate in an economic

enterprise and improve the quality of their life and environs.

Dairy equipment manufacture has expanded to meet most of the

industry's needs.

Imagine every morning and evening, some 9 million farmers carrying potfuls

of milk to their cooperatives, milk that will travel from remote villages to

towns and cities throughout India. Today, these farmers own some of the

largest and most successful businesses in India. Their infrastructure has

returned a greater share of the consumers' rupee to the farmer. It has built

markets, supplied inputs, created value-added processing and products. All

this has happened because farmers' productive capacity has been linked with

professional management in cooperatives.

Effect on Rural Development

A number of field studies conducted by independent

researchers emphatically confirm the role played by milk cooperatives the

progress of the dairy industry. Millions of small farmers isolated in various

parts of the country have gained the strength to sustain their livelihood. The

cooperatives have provided gainful employment and brought them close to

the market. When cooperative dairying started in Gujarat, the dairy industry

was in the doldrums. Production had stagnated and per capita consumption

was falling. Farmers were at the mercy of the middlemen. Today, with about

100 lakh farmer producers, Indian dairy farmers have been shown the way to

prosperity and health. The ideal conditions for long term growth in

procurement have been created.

Modern technologies in animal breeding and feeding have been

adopted by a significant number of farmers.

Modern consumer processing and marketing facilities have been

created all over the country.

Technical input services including animal insemination, balanced

cattle feed / bypass proteins feed, better fodder varieties and

emergency  veterinary health services - have not only helped in raising

and sustaining milk production but have also ensured a better quality

of life in the villages.

Besides creating urban employment in dairy plants, marketing, transport and

distribution, these dairy cooperatives have helped to provide farmers with a

sustainable rural employment program. A majority of the cooperative

members are landless, marginal or small farmers who contribute their

produce of milk at the cooperatives. For these contributors, the income

derived from milk provides their only regular cash flow, transforming

dairying into an economic activity.

The village cooperative is a clean well lit and orderly place. The villages

have gone through a similar transformation ever since the cooperatives began

to operate. When the people of a village see cleanliness, sanitation, hard

work and discipline in the cooperative. When they know that the cooperative

serves them well. It probably inspires them to bring more of these qualities

into their own lives.

The women members of out dairy cooperatives visit their dairies. They are

shown the mysteries of artificial insemination under a microscope. Does not

their knowledge of conception in animals help them to better understand

their own lives and to begin to control what was simply assumed as a matter

of fate?

When out villages people see a veterinarian cure an animal that would have

otherwise died, they learn about the efficacy of the modern medicine. When

they see their income from milk increase as their animals improve, an the

farmer produces better feeds as they ensure better housing and care, they

learn hope. And they learn that it is not fate that determines their future, but

they can take control of their own destinies. In a nation like ours, democracy

whether it be in Delhi or in State capitals rests on a fragile foundation. We

must underpin that democracy with a plurality of rural institutions that

involves direct control of individuals over matters that have immediate effect

on their own lives. They dairy cooperatives of India are such institutions.

Dairy cooperatives are giving a fresh lease of life to farmers in drought-

prone areas. Milk production and unexploitative marketing through the

cooperatives is providing an assured source of income to farmers helping

them sustain themselves against recurring drought. The migrating population

is settling down. About Rs 2,000 crores is being paid to the farmers in their

villages daily -- morning and evening -- which constitutes a large portion of

their income. Operation Flood has, therefore, emerged in India as the largest

rural employment scheme. It has been able to modernize the dairy sector to a

level from where it can take off to meet not only the country's demand for

milk and milk products in the next century but can also exploit global market

opportunities. Thereby capitalizing on the inherent production advantages

that India has, provided that the right policy options are exercised to

overcome some already visible signs of market disorder in the post-

liberalization period. Among them are:

Over-capitalization in the private dairy sector

Ineffective enforcement of standards of processing, hygiene and

quality

A near absence of any monitoring mechanism to enforce market

discipline.

These threats need to be countered to protect the long-term interests of

milk producers, their organizations, as well as of the consumer.

When producers have such structures at their command, they have the means

to ensure that the fruits of science and technology reach all those who

benefit. It is only when such structures exist that farmers develop confidence

in getting an assured remunerative price for their produce. This, in turn

stimulates investment in productivity. Further, farmers also demand the

delivery of services and inputs they need to realize returns on their

investments. Such structures can perhaps educate farmers to the fragile

nature of the environment and the need to conserve it.

One big lesson learnt is that farmers must be respected and trusted. They

may not be educated, or even literate, but they possess common sense and

even wisdom. Frequently, they have shown the ability to rise above narrow

self-interest to act together in pursuit of long-term goals and the common

good.

STRATEGY

AMUL’s business strategy is driven by its twin objectives of (i) long-term,

sustainable growth to its member farmers, and (ii) value proposition to a

large customer base by providing milk and other dairy products a low price.

Its strategy, which evolved over time, comprises of elements described

below.

Simultaneous Development of Suppliers and Customers

From the very early stages of the formation of AMUL, the cooperative

realized that sustained growth for the long-term was contingent on matching

supply and demand. Further, given the primitive state of the market and the

suppliers of milk, their development in a synchronous manner was critical

for the continued growth of the industry. The organization also recognized

that in view of the poor infrastructure in India, such development could not

be left to market forces and proactive interventions were required.

Accordingly, AMUL and GCMMF adopted a number of strategies to assure

such growth. For example, at the time AMUL was formed, the vast majority

of consumers had limited purchasing power and was value conscious with

very low levels of consumption of milk and other dairy products. Thus,

AMUL adopted a low price strategy to make their products affordable and

guarantee value to the consumer. The success of this strategy is well

recognized and remains the main plank of AMUL's strategy even today. The

choice of product mix and the sequence in which AMUL introduced its

products is consistent with this philosophy. Beginning with liquid milk, the

product mix was enhanced slowly by progressive addition of higher value

products while maintaining desired growth in existing products. Even today,

while competing in the market for high value dairy products, GCMMF

ensures that adequate supplies of low value products are maintained.

On the supply side, as mentioned earlier, the member-suppliers were

typically small and marginal- farmers had severe liquidity problems, were

illiterate and had no prior training in dairy farming. AMUL and other

cooperative Unions adopted a number of strategies to develop the supply of

milk and assure steady growth.

First, for the short term, the procurement prices were set so as to

provide fair and reasonable return.

Second, aware of the liquidity problems, cash payments for milk

supply was made with minimum of delay. For the long-term, the

Unions followed a multi-pronged strategy of education and support.

For example, only part of the surplus generated by the Unions is paid

to the members in the form of dividends. A substantial part of this

surplus is used for activities that promote growth of milk supply and

improve yields. These include provision of veterinary services, support

for cold storage facilities at the village societies etc. In parallel, the

Unions have put in place a number of initiatives to help educate the

members.

To summarize, the dual strategy of simultaneous development of the market

and member farmers has resulted in parallel growth of demand and supply at

a steady pace and in turn assured the growth of the industry over an extended

period of time

Cost Leadership

AMUL’s objective of providing a value proposition to a large customer base

led naturally to a choice of cost leadership position. Given the low

purchasing power of the Indian consumer and the marginal discretionary

spending power, the only viable option for AMUL was to price its products

as low as possible. This in turn led to a focus on costs and had significant

implications for managing its operations and supply chain practices.

Managing Third Party Service Providers

Well before the ideas of core competence and the role of third parties in

managing the supply chain were recognized and became fashionable, these

concepts were practiced by GCMMF and AMUL. From the beginning, it was

recognized that the core activity for the Unions lay in processing of milk and

production of dairy products. Accordingly, the Unions focused efforts on

these activities and related technology development. Marketing efforts

(including brand development) were assumed by GCMMF. All other

activities were entrusted to third party service providers. These include

logistics of milk collection, distribution of dairy products, sale of products

through dealers and retail stores, some veterinary services etc. It is worth

noting that a number of these third parties are not in the organized sector, and

many are not professionally managed. Hence, while third parties perform the

activities, the Unions and GCMMF have developed a number of mechanisms

to retain control and assure quality and timely deliveries (see the sub-section

on Coordination for Competitiveness later in the paper for more details).

This is particularly critical for a perishable product such as liquid milk.

Financial Strategy

AMUL’s finance strategy is driven primarily by its desire to be self-reliant

and thus depend on internally generated resources for funding its growth and

development. This choice was motivated by the relatively underdeveloped

financial markets with limited access to funds, and the reluctance to depend

on Government support and thus be obliged to cede control to bureaucracy.

AMUL’s financial strategy may thus be characterized by two elements: (a)

retention of surplus to fund growth and development, and (b) limited/ no

credit, i.e., all transactions are essentially cash only. For example, payment

for milk procured by village societies is in cash and within 12 hours of

procurement (most, however, pay at the same time as the receipt of milk).

Similarly, no dispatches of finished products are made without advance

payment from distributors etc. This was particularly important, given the

limited liquidity position of farmer/suppliers and the absence of banking

facilities in rural India. This strategy strongly helped AMUL implement its

own vision of growth and development. It is important to mention that many

of the above approaches were at variance with industry practices of both

domestic and MNC competitors of AMUL.

According to a research conducted by McKinsey, cooperatives in the US

grew from $67 billion (Rs 3,21,600 crore) in 1983 to $99 billion (Rs

4,75,200 crore)in 1999. Sure, the cooperative movement has suffered on

account of regular competition from their corporate counterparts. But the

basic model remains robust. Ground level participation can work wonders,

especially if it results in the level-by-level integration of a long supply chain.

With an operational structure in place, brand appeal must do the rest. And

here too, cooperative brands have an advantage. Research shows that the

typical consumer prefers a cooperative approach to essential services. People

think of cooperatives as providers of solutions that are reliable and priced

reasonably

PRODUCT LINE

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the

Sanskrit "Amoolya," was suggested by a quality control expert in Anand.

Variants, all meaning "priceless", are found in several Indian languages.

Amul products have been in use in millions of homes since 1946. Amul

Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul

Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and

Amulya have made Amul a leading food brand in India. (Turnover: Rs. 52.55

billion in 2007-08). Amul advantages stems from the following facts – it has

a cost-effective production, it has diversified in value-added products under

the ‘Amul’ umbrella, it has loyal customers, a strong brand recall and a

strong distribution network.

Today Amul is a symbol of many things.

Of high-quality products sold at reasonable prices.

Of the genesis of a vast co-operative network.

Of the triumph of indigenous technology.

Of the marketing savvy of a farmers' organization and

Of a proven model for dairy development.

Introduction of new products and choice of product mix and markets

should be consistent with the growth strategy, and synchronous with growth

in milk supply. GCMMF’s demand growth strategy may be characterized by

two key elements:

(i) Developing markets for its high value products by graduating

customer segments from low value products, and

(ii) Maintaining a healthy level of customer base for its base products

(low value segment).

This strategy often requires GCMMF to allocate sufficient quantity of milk

supply to low value products, thereby sacrificing additional profits that could

be generated by converting the same to high value products

Products Marketed

The management of GCMMF under the new M.D, B. M. Vyas, decided to

foray into many value-added food businesses like ice-creams,

chocolates/confectionery, pizza, baby foods, curd, dairy whiteners,

condensed milk, cheese, retailing and milk additives.

In 1997, Amul launched its ice cream under the ‘snowcap’ brand name. It

positioned its ice cream as the ‘Real Ice Cream’ made from real milk cream.

GCMMF bought an ice cream manufacturing unit in Nagpur and installed a

dairy unit alongside. Amul also improved its distribution network to ensure

greater availability of its ice cream, since availability and visibility are the

two most important factors for success of its ice cream business. Thus, Amul

ice cream could be found in just around the corner shops, local STD booths,

local grocery shops, chemists and bakers, who stocked the ice cream in deep

freezers. Amul is also planning to double its distribution base from the

current 200 to 400 by the end of 2006. According to the ‘Ice cream Mood’

survey, Amul is perceived as being superior in creaminess, taste and price.

In August 1999, Amul launched yogurt in India under the brand name ‘Masti

Dahi’ Masti Dahi is made from pasteurized toned milkand comes in a plastic

bowl covered with an airtight aluminum foil. The Masti brand also includes

ready to eat in tetra packs.

GCMMF, added, “Soup is a milk product and that’s secret. You will come to

know only when you consume it.” Keeping the ingredients a closely guarded,

the company started that one of the reasons to launch soups was to utilize the

already installed equipment for tetra packaging.

In 2000, after 17 years, Amul reentered the carton milk market with the

launch of the long-life milk ‘Amul Taaza’. Long-life milk is one of the safest

and healthiest milk options available to consumers all over the world. It is

bacteria-free and packed in tamper-proof packs. It is a handy alternative to

fresh milk in India. Amul Taaza can be stored at room temperatures for over

180 days and does not need refrigeration until opened. GCMMF is making

all out efforts to promote this healthy alternative through its Amul Taaza

brand. Amul positioned the long life milk as a lifestyle as well as functional

product. It was targeted at the upper middle class homemaker who could use

it for different occasions.

Amul became the undisputed market leader in cheese and in November

2000, it decided to market mozzarella cheese that was used as pizza topping.

According to B M Vyas, “We enjoy 75% of the cheese market. The idea was

to further popularize and sell more cheese.” In June 2001, keeping pace with

new age corporate world of backward integration and diversification, Amul

sold pizzas to market its cheese. Priced at INR 20, the Amul pizza was a

runaway success promoting the GCMMF to go for a bigger plan that

included opening 3,000 outlets in 300 cities across the country.

In 2001, Amul forayed into ready-to-eat stuffed paratha, cheese burger,

paneer pakoda and cheese sandwich segment. The products were marketed

under the brand name ‘Snowcap’ The Snowcap brand also included tomato

sauce and ketchup.

Amul was also restructuring its chocolates business. Seven of its brands

(Amul Bitter, Amul Premium, Amul Crisp, Amul Fruit & Nut, Amul Badam

Bar, Amul Milk and Amul Crunch) that were withdrawn from the market

were to be relaunched soon. Amul tied up with Campco, the Cocoa and

Arecanuts farmers' cooperative in Karnataka and Kerala, for the supply of

cocoa beans. Amul marketed Milklairs, which was manufactured by

Campco. This tie-up was expected to help Amul in the expansion of its

chocolate business.

In 2003, Amul reentered the Chocolate business with the launch of new

brands ‘Rejoice’, ‘Kite Bite’ and ‘Nuts bout u’. The earlier brands Amul

Milk, Amul Fruit and Nut were relaunched. Sanjay K Panigrahi , General

Manager, GCMMF, said, “We intended to take advantage of our already

existing cold chain to get more active in the growing market of molded

chocolates and confectionery.” The strategy of Amul in the confectionery,

market is “to segment the market with brands catering to the ‘impulse’ and

‘teen’ segments, as well as having brands catering to different occasions.”

In June 2004, Amul entered the White health food drink market with ‘Amul

Shakti’, a white beverage. GCMMF was eyeing 10% volume share of the

market within three months of its launch and became the market leader in

this category within three years.

Product Profile Of AmulProduct Category Products

Bread Spreads Amul ButterAmul LiteDelicious Table Margarine

Powdered Milk

Amul Fresh MilkAmul Taaza Double Toned MilkAmul Fresh CreamAmul Cool Flavoured Bottled MilkAmul Shakti Toned MilkAmul Gold MilkAmul Lite Slim and Trim MilkAmul Kool Chocolate MilkAmul Kool Flavoured Tetra PackAmul Masti Spiced Buttermilk

Cheese

Amul Pasteurised processed cheeseAmul Emmental CheeseGouda cheeseAmul Cheese SpreadAmul Pizza Mozzarella Cheese

For Cooking

Amul Sagar Pure GheeAmul Malai PaneerMithai MateCooking ButterUtterly Delicious PizzaMasti Dahi

Desserts

Amul Ice CreamAmul Mithai Gulab JamunsAmul ChocolatesAmul BasundiAmul ShrikhandGulab Jamun MixAmul Lassee

Health DrinksNutramulAmul Shakti Health Food Drink Stamina

CASE STUDY

Introducing higher value products

Beginning with liquid milk, GCMMF enhanced the product mix through the

progressive addition of higher value products while maintaining the desired

growth in existing products.

Despite competition in the high value dairy product segments from firms

such as Hindustan Lever, Nestle and Britannia, GCMMF ensures that the

product mix and the sequence in which Amul introduces its products is

consistent with the core philosophy of providing milk at a basic, affordable

price

Amul focuses on ice-cream; eyes 17% growth to Rs 3,200 crore

Anand: Gujarat Cooperative Milk Marketing Federation (GCMMF), one of

India''s greatest success stories with its Amul brand, is now aiming at a 17-

per cent growth in sales to Rs 3,200 crore this fiscal against sales of Rs 2,746

crore in the previous year.

The federation is expecting each of its products to contribute higher sales this

year as new products are being added to each product line.

The big hope is not surprisingly the Amul brand of ice-creams, which is

expected to contribute Rs 250 crore to the turnover, up from Rs 150 crore

last year. Says GCMMF managing director B M Vyas: "Last year they saw a

good growth in ice-cream, cheese, butter and ghee. They are planning to

launch new products in almost every line that we are in, with specific stress

on ice-creams."

For its ice-cream and milk business, GCMMF has begun investing in

increasing its milk capacity. It recently firmed up plans to invest Rs 100-120

crore to expand this from 1.1 million litres a day to 1.8 million litre a day at

its Gandhinagar factory. The investment will take place over the next two

years.

The cooperative is also planning to expand its production facilities beyond

Gujarat to service other regions in India. GCMMF recently bought an ice-

cream manufacturing unit in Nagpur and is installing a dairy unit alongside.

Through this unit, the organisation has also extended its milk supply to over

10 cities spread over Rajasthan, Madhya Pradesh and Maharashtra.

Amul is now focusing on its supply system. Efforts are on to ensure greater

availability of Amul ice-cream at pushcarts and small outlets. The company

feels that availability is the most important factor in ice cream sales.

Thus, Amul ice-cream can be found in ''just around the corner shops,''

local STD booths, local kirana shops, chemists and bakers, who stock the

ice-cream in deep freezers.

The idea is to ensure visibility and availability, which more often than not

ensures a sale as ice-cream consumed out of home is most often an impulsive

purchase. For ensuring a presence in southern India, the cooperative has tie-

ups with various state marketing federations in that region. For production of

ice-creams it is considering expanding the agreements with other state-

cooperatives as well.

Amul expects to clock sales of 34 million litres during the current year and

the accent will be on offering ''value for money'' products.

The new ice-creams to be launched from Amul this year include a mega-bite

almond cone (the largest volume cone in the country), an orange ice-cream

(Santra Mantra), a Bouncer ice-cream with nuts and essential proteins,

vitamins and minerals for the growing children, a cheese ice-cream and a

sundae in cone for kids in different variants.

Both Amul and Hindustan Lever''s (HLL) Kwality Walls claim to be the

largest selling ice-cream brands in India. While HLL quotes a market

research study by AC Nielson, which puts Kwality Walls at the No 1 spot, an

independent study by Ahmedabad-based Consumer Education and Research

Society (CERS) ranks Amul as No 1, followed by Kwality Walls (among

four brands including Vadilal and four loose samples) on various parameters

of taste, melting quality, weight, fat and sugar content.

Amul ice-cream is positioned as ''real ice-cream'' made from real milk cream,

while HLL''s Kwality Walls is made from vegetable oil and its items are

dubbed as Frozen Deserts.

Why Diversify?

With the liberalization of the Indian economy in the early 1990s, and the

subsequent entry of new players, there was a change in lifestyles and the

food tastes of people. The new team that took over the management of the

GCMMF in the mid-1990s hoped to take advantage of the change. The

management adopted Total Quality Management (TQM) and set for itself

higher benchmarks (in terms of growth). They also diversified the Amul

portfolio, offering a range of food stuffs such as ketchup, jam, ice-cream,

confectionaries, cheese, and shrikhand.11 According to some analysts, this

diversification was probably not entirely demand-driven. Being a

cooperative, GCMMF was compelled to buy all the milk that was produced

in Gujarat.

And with milk production having increased since the mid 1990s, GCMMF

had to make use of additional milk, and hence the pressure to make and

market more and more processed-milk products. Amul had to expand the

consumption base of milk-based products in India.

It planned to make its products (butter and cheese) a part of the regular diet

in most households. Amul launched its new products with the intention of

increasing the off take of its basic milk products, including cheese. This in

turn was expected to increase the earnings of the farmers. The pizzas were

expected to increase the sale of its cheese. The entry into the confectioneries

market was another avenue for increasing milk consumption.

BRANDING

The first products with the Amul brand name were launched in 1955. From

the perky Utterly Butterly Delicious to the vivacious Wonderful Doodh ad

campaigns, the Amul brand tag line, "The Taste of India" is firmly

entrenched in public memory through a wide range of products.

Interestingly, advertisement & promotion (a la FMCG) was not considered to

be enough of value addition and hence the budget was kept relatively small.

Instead, GCMMF preferred a lower price with emphasis on efficiency in

advertising. In this context, GCMMF provides umbrella branding to all the

products of the network. For example, liquid milk as well as various milk

products produced by different Unions are sold under the same brand name

of AMUL. Interestingly, the advertising has centered on building a common

identity (e.g., a happy & healthy “cartoon” AMUL girl) and evoking national

emotion (e.g., the key advertising slogan says “AMUL - The Taste of India”)

The moppet who put Amul on India's breakfast table

50 years after it was first launched, Amul's sale figures

have jumped from 1000 tonnes a year in 1966 to over

25,000 tonnes a year in 1997. No other brand comes even

close to it. All because a thumb-sized girl climbed on to

the hoardings and put a spell on the masses.

Bombay: Summer of 1967. A Charni Road flat. Mrs.

Sheela Mane, a 28-year-old housewife is out in the balcony drying clothes.

From her second floor flat she can see her neighbours on the road. There are

other people too. The crowd seems to be growing larger by the minute.

Unable to curb her curiosity Sheela Mane hurries down to see what all the

commotion is about. She expects the worst but can see no signs of an

accident. It is her four-year-old who draws her attention to the hoarding that

has come up overnight. "It was the first Amul hoarding that was put up in

Mumbai," recalls Sheela Mane. "People loved it. I remember it was our

favourite topic of discussion for the next one week! Everywhere we went

somehow or the other the campaign always seemed to crop up in our

conversation."

Call her the Friday to Friday star. Round eyed, chubby cheeked, winking at

you, from strategically placed hoardings at many traffic lights. She is the

Amul moppet everyone loves to love.

How often have we stopped, looked, chuckled at the Amul hoarding that

casts her sometime as the coy, shy Madhuri, a bold sensuous Urmila or

simply as herself, dressed in her little polka dotted dress and a red and white

bow, holding out her favourite packet of butter.

I am not really surprised with these findings, they fully deserve the

accolades. Can you forget the hilarious hoardings spewed across the city that

give you a hearty laugh everytime you see them.

The research was conducted in nine markets including China, Hong Kong,

Taiwan, The Philippines, Thailand, Malaysia, Singapore, Indonesia and

India. Survey covered 12 major products and service categories. The

research agency interviewed people aged between 15 to 64 years.

“Co-operation amongst co-operatives to serve the interests of the milk

producers and providing quality products to consumers has been the back

bone in Amul’s growth. This brings a lot of passion and energy in the system

which has now been recognized by the consumers through this survey,” said,

BM Vyas, Managing Director, Gujarat Co-operative Milk Marketing

Federation(GCMMF).

Bollywood superstar Shah Rukh Khan’s new look… perfect six pack abs…

new hair do… 

Amul has the longest running Ad campaign in the world! Infact, Amul has

laid claim to the Guinness Book of World Records for the record breaking,

longest running- 39 years - Advertisement campaign.

Box-office debacle of Ram Gopal Verma’s Bollywood movie “AAG” -

Arrival of evil, a remake of yesteryear classic favourite entertainer Sholay

What is even more surprising is that the utterly butterly delicious girl has

never lost here fan following once in those long 30 years. Infact, the

sometimes controversial hoardings are discussed and written about wildly in

the Media.

Infact, in one of the incidences, Amul put up an ad on Husain saying

‘Heroine Addiction’ for which they were taken to court. you can read some

of the instances here

 

Team India celebrate after winning the inaugural ICC WORLD TWENTY 20,

SOUTH AFRICA 2007

cricket World Cup in Johannesburg

The Ad agency behind this 39 year old ad campaign is DaCunha

Communications. Bharat Dhabolkar, a well know Indian personality is well

known for his creative contributions to Amul Ads.

Umbrella brand

The network follows an umbrella branding strategy. Amul is the common

brand for most product categories produced by various unions: liquid milk,

milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream and

condensed milk.

Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya

and Nutramul. The edible oil products are grouped around Dhara and

Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks

bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided

inter-union conflicts but also created an opportunity for the union members

to cooperate in developing products.

CASE STUDY

PIZZA

Industry analysts say that Amul's biggest advantage lies in the fact that it is

not viewing pizza as an end-product as much as a medium for pushing sales

of its own cheese.

``They are interested in making profits from cheese, rather than from pizza.

Given that a six-inch diameter pizza contains around 40 grams of cheese, the

cost of this comes to hardly Rs 5.50 per pizza. So, even at Rs 20 per pizza,

there is enough margin left to be shared with retailers,'' they pointed out.

Snowcap' pizzas from Amul stables soon -- Part of strategy to double cheese

salesHarish Damodaran

THE Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) hopes

to more than double its cheese sales through its recent foray into the

marketing of vegetable pizzas.

The Rs 2,258.80-crore turnover cooperative, better known by its `Amul'

brand name, currently sells about 3,500 tonnes of cheese annually,

corresponding to an estimated 70 per cent market share. Of the 3,500 tonnes,

Mozzarella cheese -- the semi-soft, high moisture, un ripened variety used

for pizza-making -- accounts for roughly 700-800 tonnes.

Amul has targeted opening 3,000 pizza retail franchise outlets all over the

country by the year-end, which, it believes, would boost its annual sales of

Mozzarella cheese alone by over 4,000 tonnes. GCMMF claims that one of

its outlets -- Royal Sweet Mart in Ahmedabad's CG Road-has already

achieved daily sales of 1,500 pizzas within a week of its operation.

``Even if each outlet sells 100 pizzas daily, it would mean sales of three lakh

pizzas per day. Considering that each six-inch diameter pizza consumes 40

gm of Mozzarella cheese, it translates into additional volumes of over 4,000

tonnes,'' said Dr R.S. Khanna, General Manager (North Zone), GCMMF.

Amul's initial gameplan envisages the production of pizza at the retailer's

own end. ``On our part, we will supply them with the cheese along with the

technical training and recipe for pizza-making. Besides, we will negotiate

with bulk suppliers of veget ables and the pizza base to offer these at

wholesale rates to the outlets,'' Dr Khanna said.

GCMMF claims that its pizza marketing strategy would be an `instant

winner', given the `hugely affordable' price tag of Rs 20 per pizza. For the

retailer, the main cost would be the Mozzarella cheese. ``If we offer this at

our bulk rate of around Rs 140 per kg, the retailer would incur a cost of less

than Rs six per pizza,'' Dr Khanna said.

The other major ingredient is the base material, which can be bulk supplied

at Rs 2.50-3 each. Adds to these, the expenses on vegetables and the gravy

sauce, the total cost per pizza would be hardly Rs 11-12. ``The retailer can

easily make a margin of Rs 8-9 per pizza. All he has to invest is around Rs

4,000 for an oven, which he will recover within no time. The cost of setting

up the glowsigns as well as media publicity for his outlet would be fully

borne by us,'' Mr Pawan Kumar Singh, Brand Manager, G CMMF, said.

GCMMF officials clarified that the pizzas would be sold in a new `Snowcap',

rather than the `Amul' brand. ``This is a separately registered brandname for

our new product line, which apart from pizza, includes softies, sandwiches,

burgers, paneer snacks, ice-cream etc,'' Mr Singh said. As volumes pick up,

GCMMF would also explore the possibility of offering pizzas in a ready,

frozen form to retailers.

``We can perhaps have our own bakery to make the pizza base, which is

essentially a mixture of maida, yeast and some sugar. We could even use our

ice-cream cone making facility at Kaira Cans (a GCMMF sister concern) for

this purpose. Similarly, there could be a centralised kitchen for buying and

grading the vegetables, making the sauce, grating the cheese and putting the

ingredients into the base, which then can be sterilised, frozen and shrink-

wrapped into individual pieces before being dispatched in o ur refrigerated

trucks,'' Dr Khanna noted.

Marketing analysts say that Amul's pizza marketing strategy is unique

because it aims at boosting sales of an `elite' product (cheese) by pushing

down prices of another `elite' product (pizza). The maximum retail price for

Amul's Mozzarella cheese is now Rs 48 per 250 gm, while its processed

cheese slices sell at Rs 43 per 200 gm. ``The pizza route would promote sales

of an otherwise premium product as cheese,'' they pointed out.

Dr Khanna claimed that Amul would do to pizza what it has already done for

ice-cream. ``We want pizzas to become a mass consumption item like kulcha

chola or chole bhature. And as in the case of ice-cream, we will force other

pizza manufacturers to also slash prices. Eventually, this would further

expand the market for cheese,'' he added.

Amul is now offering its pizzas in four flavours: plain tomato-onion-

capsicum, fruit pizza (pineapple-topped), mushroom and `Jain pizzas' (i.e

sans onion or garlic)

No trade mark on ''sugar free'', rules Delhi High Court in Cadila -

Healthcare Ltd. Gujarat Cooperative Milk Marketing Federation case

In a landmark judgment delivered by Justice G S Sistani of the High Court of

Delhi, in a case filed by Cadila Healthcare Ltd., Ahmedabad, against Gujarat

Milk Marketing Federation (GCMMF), the marketers of Amul, has ruled that

the descriptive words "Sugar Free" cannot be used as a trade mark and

cannot be owned by any one.

The judge also ruled that Cadila Healthcare cannot be allowed to arrogate its

monopoly to use the expression "Sugar Free" since the expression being

inherently descriptive in nature has become a commonly used word in

relation to foods and beverages. The judge observed that since sugar-free is

not a coined word nor it is an unusual combination of words, and therefore is

a commonly used expression in written as well as spoken English and hence

cannot be monopolized for use by any trade.

The judgment also says it is clear that any descriptive word cannot be

monopolized as having secondary meaning unless that is the only manner

that product can be described and no other.

Justice G S Sistani also made it clear that any popular expression in line of

particular category cannot be owned by any one and it will not be equitable

to allow a blanket injunction for use of popular expression by one party, so

long as it is used as a descriptive epithet and not as trade mark.

He also remarked that while using these words by way of descriptive

expression one should be prepared to take the risk of widespread use of

similar trade mark by fellow traders.

This important judgment would therefore restrict monopolistic use of popular

expressions especially with descriptive nature by few traders. Such

descriptive words therefore would be open to use by anyone in trade and

business.

As a result, Amul can advertise its sugar-free ice-cream using the words

"sugar free", against which Cadila Healthcare had filed the injunction.

DISTRIBUTION

GCMMF is the marketing arm of the network and manages the physical

delivery and distribution of milk and dairy products from all the Unions to

customers. GCMMF is also responsible for all decisions related to market

development and customer management.

GCMMF plays a key role in working with the Unions to coordinate the

supply of milk and dairy products. In essence, it procures from multiple

production plants (the thirteen Unions), which in turn procure from the

Village Societies registered with each Union. GCMMF distributes its

products through third party distribution depots that are managed by

distributors who are exclusive to GCMMF. These distributors are also

responsible for servicing retail outlets all over the country. GCMMF sales

staff manages this process.

In 2003, Amul took the initiative to set up 100 of its own brand retail

parlours under the name ‘Utterly Delicious’, an initiative which would give it

a retail edge over its competitors This retailing initiative included milk

booths and restaurants. Amul is planning to set up around 1,000’Utterly

Delicious’ outlets in the next five years across India.

RETAILING

Retailing of GCMMF’s products takes place through the FMCG retail

network in India most of whom are small retailers. Liquid milk is distributed

by vendors who deliver milk at homes. Since 1999, GCMMF has started web

based ordering facilities for its customers. A well-defined supply chain has

been developed to service customers who order in this manner.

The strategic thrust placed on opening Amul Parlors since 2002 has now

started yielding the desired results. We had anticipated the paradigm shift in

macro economic scenario and the burgeoning threat of organized retailers.

Amul Parlors will enable us to counter the potential threat from competitors.

They will also increase the visibility of the Amul brand in the retail market.

Our own outlets enable us to interface directly with consumers and provide

an ideal platform to showcase our entire range of products.

Through a concerted team effort, we have managed to create 2300 Amul

Parlors in 2007-08, from which a sales turnover of Rs.107 crores was

generated. Our outlets have not only helped brand Amul to become

ubiquitous but also have managed to provide a very rewarding employment

opportunity to hundreds of entrepreneurs across India. During the new

financial year, we have taken a goal of setting up 10,000 outlets by March

2009. To achieve this challenging goal, we have identified certain potential

locations such as Railways, Airports, Universities and Shopping Malls.

DISTRIBUTION NETWORK

Consumers expect marketers to deliver products in the locations and forms

they require. To meet expectations of such demanding consumers,

alignments of our four Distribution Highways of Fresh, Chilled, Frozen and

Ambient products were already made by introducing Project DIL.

Subsequently, a major initiative was taken to enhance distribution network to

smaller towns. About 1200 distributors in small towns across India were

added during this initiative. Today about 3000 Distributors ensure

availability of our products across India, whether it is in Leh or

Lakshadweep, in Kutch or Arunachal. Simultaneously, to augment fresh milk

distribution in various markets of India, approximately 1400 exclusive Milk

Distributors have been inducted.

Last year, we divided the retail market into 14 specific segments to achieve

further distribution efficiency. This year our focus was on inducting

distributors having expertise in servicing such specific market segments.

This initiative is yielding results by way of ensuring wider availability of our

product range.

The role of distributors in our business process has never been more diverse

or more important, as it is today. As a matter of fact, we consider our

Distributor to be the real “Marketing Manager” of our organization. To

enhance business performance of our Distributors, a workshop on Marketing

and Sales Management was designed in collaboration with a premier

business school. The objective of the entire initiative was to upgrade the

knowledge of our Distributors in terms of contemporary Business

Management Practices, so that they can perform well not only as our

business partner but also as Marketing Managers. During the year, 659

Distributors have undergone this programme in 39 locations.

Cold Storage is an extremely essential component in the Federation’s

distribution process. Unfortunately, availability of efficient cold storage

facilities is grossly inadequate in our country. To cope up with the increasing

need of suitable cold stores closer to our markets, we have continued our

endeavour of creating the Federation’s own cold stores this year in various

locations across the country. We now own 24 state-of- the art cold rooms of

different sizes.

To get an exposure to our cooperative structure, our culture as well as

operational systems and processes, every year we invite our distributors,

major retailers and other business partners to Anand, for Amul Yatra. So far,

about 7000 Distributors and other business partners have participated in this

Amul Yatra.

EXPORT

As you are aware, there was a ban on exports of milk powder during initial

six months of the year and hence our export of bulk milk powder was

adversely affected. However, it is my pleasure to inform you that our export

turnover has more than doubled during the year. We have recorded turnover

of Rs 125 crores this year against the last year’s turnover of Rs 60 crore.

However, we have been able to perform extremely well in exports of

consumer packs with very encouraging growth in ethnic Indian products like

Paneer. We are planning to focus more on consumer products and brand

building during the coming years in the global market so that brand “Amul”

can truly become “The Taste of India” to the entire world.

CASE STUDY

Americans to get a taste of India

The recent news that Gujarat Cooperative Milk Marketing Federation had

signed an agreement with Wal-Mart to stock its shelves with products under

its Amul brand name is proof that the 'the taste of India' has finally arrived.

But this is not the first time that Amul will be stepping foot on US soil. Amul

has been in the US since 1998 through Kanan Dairy, which markets Amul

processed cheese, pure ghee, Shrikhand, Nutramul, Amul's Mithaee Gulab

Jamuns to more than 1,000 ethnic Indian grocery stores in the US through a

network of seven distributors.

And this may just be the right time to go full-fledged into the

US market via discount stores like Wal-Mart. Dairy prices -

milk, yogurt, ice cream, cheese - are at record highs primarily

due to lower dairy cattle and high gasoline prices in the milk

trucking industry. Mozzarella cheese prices have been

increasing in the past one year. And mozzarella cheese is an important part

of Amul's product portfolio. Amul decided to go up the food chain and into

the mini-pizza market in India only to proliferate the consumption of

mozzarella cheese, thus giving Britannia a run for its money in the cheese

market.Now, since milk is an integral part of the American diet, consumption

levels will be almost maintained. But, consumers may seek out low-priced

stores like Wal-Mart not only for milk but other dairy products as well. This

will work to the advantage of Amul.

While the potential is enormous, the key to Amul's success will

be its ability to localise. For instance, when big MNCs came

looking to capture a slice of the pie of the growing emerging

markets, they decided to customise their offerings. Like

McDonald's introduction of Aloo Tikki, in deference to the Indian palate or

when Pepsi coined the Yeh Dil Maange More tag-line in India.

Amul will have to customise its products and look outside the ethnic box to

suit the American and other ethnic palates. It simply cannot use its home-

ground strategies in the US and expect to make a mark, even if Wal-Mart

plans to push the brand only in stores and only in states like New York and

New Jersey, where the Indian community is very strong.

Still, with more than 50 per cent of Americans being medically obese, and if

Amul is really looking to capture the hearts of the second- and third-

generation Indians, offering low-fat versions of its brands, would make a lot

of commercial sense.

And baiting the two-million strong Indian community with an

estimated disposable income of more than $88 billion with

ethnic products like Amul Mithai makes commercial sense for

the $257-billion Wal-Mart. As such riding piggyback on chain

stores like Wal-Mart, which has 3,200 stores in the US and another 1,000

internationally, augurs well for Amul.

Amul can be a potentially strong brand in the US. There is certainly evidence

of foreign brands capturing a large part of the domestic market. It has

happened in India - a classic case being Unilever, which adapted and created

products to suit the needs of the Indian population. It has happened in the

US, when Japanese automakers flooded the US car market with cheap cars.

And, it can happen with Amul in the US dairy market.

While Amul wants to focus only on the Indian market

for the moment and is just 'testing' the foreign waters, it has

already travelled to India's neighbouring countries, Singapore

and Hong Kong. And it will now be available in Dubai and

other Middle Eastern countries as well. Amul's export strategy seems to be

paying off. In fiscal 2003-04, Amul's innovative marketing strategies

achieved around a 20 per cent increase in sales to Rs2,893 crore, including

export revenue of Rs50 crore.

Amul has come a long way from 1946 - when it collected only 247 litres of

milk a day - to the six million litres of milk per day it now collects from

about 10,675 separate village co-operative societies throughout Gujarat.

With access to low cost milk, an innovative and almost 'just-in-time' supply

chain, a ready market among the Indian community and 50 years of

understanding milk, Amul can definitely build the 'taste of India' in the US.

The only question is - when?

GCMMF to set up diary plant in Sri Lanka. To upgrade Amul chocolates

Chennai: Dairy major, Gujarat Co-operative Milk Marketing Federation

Limited (GCMMF), will set up and run dairy plant in Sri Lanka at an outlay

of Rs10 crore. Currently the island-country imports around 53,000 tons of

milk powder per annum from Europe.

Speaking about the project, GCMMF chairman Dr Verghese Kurien, says,

"We will set up the plant and run it initially. Once the operations stabilise,

the plant will be donated to a Sri Lankan co-operative society."

Explaining the project rationale, Dr Kurien says, "India has surplus milk but

is surrounded by neighbours who import milk from Europe. It makes good

business as well as diplomatic sense to export milk and milk products to our

neighbours."

According to him, the Tamil Nadu government through its milk federation,

popularly known as Aavin could initially sell milk to Sri Lanka till the

proposed plant starts operating. "It will take at least one year to set up the

plant."

As a part of World Bank mission, Dr Kurien visited Pakistan some time back

to suggest measures to develop the dairy industry there. According to Dr

Kurien the trip was fruitful.

About the non-availability of Amul chocolates, he says that the federation is

in the process of importing and installing machinery to upgrade quality

Earlier, addressing the members of the Rotary Club of Madras he attributed

the success of Amul to marketing. According to him, if co-operatives are to

succeed, then industry professionals and not bureaucrats should run them.

"Marketing skills are needed to succeed and bureaucrats lack that."

Amul scouts for alliances in Delhi NCR to increase capacity

New Delhi: The recent activities of Gujarat Cooperative Milk Marketing

Federation (GCMMF), Paras Dairy and Britannia in the Delhi market

indicate that Mother Dairy, the leader of the milk market in the capital, will

soon have a fight on its hands to retain its leadership position here

Delhi National Capital Region (NCR), among the biggest milk markets in the

country, is dominated by Mother Dairy currently. Amul and NDDB's non-

compete agreement has prevented the former from launching its liquid milk

in the Delhi market till 2003.

With the non-compete agreement having run out this year, Amul fresh milk

was launched in Delhi last month in two variants - full cream and toned -

priced at par with that of Mother Dairy at Rs 18 and Rs 14 per litre,

respectively.

Amul, to its delight, has seen the demand for its milk going up by leaps and

bounds in the city and is now planning to enter into alliances with dairies

located around Delhi such as Indian Potash and Modern Dairy to cater to the

demand.

Amul already has a lease agreement with Kwality Dairy's unit in Faridabad

where it is planning to increase capacity and has also decided to set up a new

5-lakh litre per day dairy plant at an investment of Rs 40 crore in Haryana to

cater to the northern market.

GCMMF officials say the company's milk capacity has already touched

80,000 litres per day (LPD) and have plans to take it to 3 LPD. Amul is now

selling through 2,500 retail outlets and will increase this to 7,500 apart from

covering outlets which are selling Amul butter.

Another player gearing up to unseat Mother Dairy from the leadership throne

is the Rs 400-crore Paras group. The company has hit upon an innovative

strategy of introducing milk vending machines which dispense token milk at

Rs 13 per litre. Paras says this strategy targets the unbranded milk segment

which accounts for 45 per cent of the total milk consumed in Delhi NCR.

The company plans to put up Paras Milk Point (PMP) machines at various

fast-moving consumer goods outlets all over the capital. Over 50 machines -

each costing over Rs 2 lakh - will be installed in phases over the next four

months to cater to toned milk users.

The PMP machines carry about 250 litres of milk and have an in-built

refrigerator. Paras brand currently reaches 9,000 outlets in and around Delhi,

and the group is looking at penetrating fresh markets in the northern region.

Paras' total processing capacity of its three units, one at Haryana and two at

Sahibabad in Uttar Pradesh, is 14 lakh LPD

The Delhi market comprises 40 lakh litres currently and is dominated by

Mother Dairy, which sells 10 lakh LPD. The other organised sector players

are Paras Dairy, which sells 3 lakh LPD, state-owned Delhi Milk Scheme

(2.5 lakh LPD), Gopaljee (1-1.5 lakh LPD) and Britannia 30-40,000 LPD.

Information Communication Technology (ICT)

The use of Information Communication Technologies (ICT) in rural areas of Gujarat by GCMMFL has made the operation of the dairy industry different. While it has always been argued that investments related to ICT made in rural India are not effective, the case of Amul proves that, where there is a will there is a way. Amul has become rural India’s flag bearer in the IT revolution. This paper analyses the use of ICT in the dairy industry by the Gujarat Cooperative Milk Marketing Federation Ltd. The system makes it easy for the farmers to get the cash payment as soon as the milk is delivered.The IT related initiatives that GCMMF undertook include – an ERP initiative to integrate the market related activities. WEB initiatives made the consumer well aware of Amul. ‘Online Stores’ and ‘Portal activities’ like emailing, greetings gave the consumer a better picture of Amul. AMCUS, the Automatic Milk Collection Unit Systems are empowering the farmers by employing IT at village co-operative societies. IT increases the transparency levels in the system and builds the trust among the farmers. Making the system automatic could remove the man in the loop. The use of IT platforms reduces the potential for discretionary decisions.

GCMMF, being a pioneer in the dairy industry become the industry standard. The Total Quality Management and Information Technology initiatives ensured the maximum shelves in the retail stores as well as in customer minds. The dairy sector already uses computers in 4000 rural locations for

Amul’s IT Roadmap

Uses automated milk collection system units for collection of milk

Implemented a customised ERP system which is used in conjunction with GIS

Uses data analysis software for forecasting milk production and increasing productivity

Has connected all zonal, regional and member dairies through VSAT

One of the first five Indian organizations to have a Web presence

Has made IT education compulsory for all its employees

Opted for the .coop domain to position its brand in a distinct way.

processing milk buying/selling transactions in a transparent manner and exposes 500,000 peopledaily to the benefits of IT. The project has been developed through extensive collaboration with the co-operative dairy unions of Gujarat.

AMCUS – Automatic Milk Collection Unit

The GCMMF – Amul has taken the initiative of installing the AMCUS – Automatic Milk Collection Unit Systems at village societies to enhance the transparency of transaction between the farmer and the Co-Operative Society. These systems not only ensured the transparency but also gave Co-Operative societies a unique advantage by reducing the processing time to 10 percent of what it used to be prior to this. GCMMF indeed got the entire supplier information through the systems integration. The information related to members, fat content, volume of the milk procured and the amount payable to the member are accessible to the Co-Operative Society in the form of a database. There are 10755 village co-operatives in Gujarat that are now able to collect 6.1 million litres of milk from 2 million members. Thanks to the use of IT, both transparency and trust have been enhanced.

Dairy Information and Services Kiosk (DISK)

The success of AMCUS prompted the GCMMF to aggressively go on using Information Technology to capture the end-to-end data. GCMMF planned to cover all aspects of the value chain. These plans supports integration of the value chain activities destined towards the “Better Management Practices”. These efforts of GCMMF triggered the changes in the Villages; farmers kept themselves open for the changes. One of the Co-Operative unions “Banas dairy” started with educating the rural about the cattle, cleanliness and so on because of the systems that are already in place at AMCUS. The Dairy Information and Services Kiosk (DISK) is another initiative that is started with the help of IIM (A) by GCMMFL. There are many more in the pipeline of GCMMFL IT Initiatives. Various things like Enterprise wide Integrated Application Systems (EIAS) to integrate the Distribution side of the Supply chain, DISK – to upgrade the application at the Milk Collection Centers and to connect them to the Internet to access a specialized dairy portal with content delivered in the local language have already started giving the fruits to the rural poor, which has persuaded the rural folks to actively participate in IT Revolution of the dairy industry.

The process of collecting the milk before AMCUS was used to be the manual process. The complexity of the operations of village cooperatives increased over the years. Village cooperatives started looking for improving the efficiency of their operations. GCMMF invited 5 to 6 software companies to explore the possibility of automating the process of estimating the fat content in the milk, so as to reduce the delays and to eliminate the waiting time in the queries. “We identified the complexity of the operations that the societies are in. More over day-to-day the farmer will be vexed up with the traditional setup because of human mistakes in calculations and may start doubting the system itself. That made us to look into the problem seriously. To get the best deal to the cooperatives we employed some software companies to automate the whole process”. As Mr. Rathod rightly pointed out the software companies took this assignment as a challenge, moreover the whole business idea itself is promising to them. So the companies started providing competitive software applications to the societies. Offers like training, price discounts increased there after to the village societies. But these entire initiatives have not come without challenges. For instance, GCMMF had to give the systems at free of cost for AMCUS to some cooperative villages to convince the cynical farmers about the benefits of Information Technology. These efforts of GCMMF paid off and the villagers recognized the importance of AMCUS. This helped the diffusion of IT into the rural communities.

Things are ‘changed’

The time that is being taken to collect the milk in a society ranges from 5 to 6 hrs averaging at about 5 minutes per member after installing AMCUS. There is a comparative reduction of more than 75% of time that’s spent on each deal. Each farmer is getting paid for his milk deposited in society’s counter in another counter immediately on a real time basis. Now villagers were able to send their emails from AMCUS to anywhere in the world and DISK is expected to arrive at the village cooperatives this year enabling the villagers to learn from the net and connecting with enterprise systems of GCMMF.The DISK project conceptualized by IIM–A will have the interconnectivity to a dairy portal at a district levels, that serves the information for village cooperative society members.

The application software provide to cooperatives will include:

Data analysis and decision support to help rural milk collection society in improving its performance.

Data analysis to improve productivity the yield from cattle. Farmers with facilities to place orders for goods and service offered

by different agencies in the dairying sector and collaborates on subjects of interest.

The services to be offered at this center are Information service related to dairying. Access to multimedia database on innovations captured by SRISHTI

(NGO working IIMA) from all the villages over Gujarat. Communication facilities such as e-mail, fax, net phone Banking centers for payment for the farmers by using the milk cards

which are already in place. The e-governance and e-procurement. Effective medium of communication to the Gujarat rural

The basic requirements of DISK are already met by the village cooperatives. There might be an upgrade required for the software and hardware in place and an Internet connection would be required. For the portal at the unions, a small server and a leased line would be needed. The union portal can be implemented at a central location at one of the NDDB servers. Projects such as decision support systems and data mining packages are in pipeline of GCMMF action plan. The new E-enabled value chain of GCMMF.

Project Co-Ordination

The project was basically been implemented at the procurement end of the value chain of GCMMF i.e. the supply side. Being the largest cooperative in India AMUL enjoys a vast supplier range. Farmers of Gujarat are today much happier than any other cluster of farmers. They proudly claim that they are with the society. The farmer’s commitment never went down even after

50 years of cooperative movement. Each activity that is taken up by the society are still given prominence in the villages. GCMMF never let this confidence go down. It has provided state of the art facilities and it empowered them to take up new initiatives. When first GCMMF thought about the complexity of the operations of village societies they met the village societies and discussed with them about the problem. When GCMMF announced the implementation of AMCUS, village societies took over the responsibilities from their mentor. The AMCUS changed the operations of village societies, by reducing the response time. The society officials have to face some teething problems in the beginning. Now it has become a usual practice. Now they are arranging Internet sessions in village societies. As there is no hardware cost that is required to be met, the projects such as interconnecting the societies with the supply chain network of GCMMF and the others are under implementation.

The project was being coordinated by the GCMMF and the village cooperative society in which the AMCUS is being implemented. The village society will be responsible for the operation of the system. Starting from the purchase of the hardware to software installation and the service aspects are properly managed by the village cooperative society officials. These societies have the right to select the service provider. GCMMF limited itself as a facilitator by empowering the village cooperative societies. This empowerment model facilitated the rapid diffusion of IT. The village cooperatives learnt quickly with the support of the software companies that are providing them the software, hardware services. These companies also played a major role in enhancing the acceptance of the innovative ICT platform. After automating the milk collection process, it is the turn of DISK to provide the rural population of Gujarat, the required guidance and education. The DISK is in its inception stage. It is being pilot tested in the village cooperatives of Gujarat state. This is being implemented in “Uttarsanda” Milk Society, which is an ideal cooperative for testing. The society has 2200 members and collects $350 worth milk per day. It

has applied for ISO9002 quality certification as part of the TQM movement. The required assistance and support for the pilot test is given by the GCMMF toencourage the village cooperative to participate in the IT revolution. IIM-A is training the rural communities to handle the systems effectively. IIMA is involving small private sector companies to take the DISK project to a large number of rural places.

Project Goals

Success of any project is decided by the objectives and vision it has envisaged at the inception phase. The rural IT empowerment project started by GCMMF had the following objectives:

To build transparency among the farmers towards cooperative society. Training the rural people towards the quality supply of milk. Getting the whole activity chain of GCMMF under uninterrupted

information flow network. To reduce the pilferage. To remove the complexity associated with the village cooperative

society milk collection process. Empowering the rural masses towards self-development activities. To build the competencies in the area of it. To build the transparency and trust amongst the rural people towards

thecooperative system

To face the global competition by effective decision-making.

Project Implementation

Milk is collected at the co-operative milk collection centers located within 5-10 km of the villages supplying the milk. The number of farmers selling milk to these centers varies from 100 to 1000. The daily milk collection varies from 1000 to 10,000 litres. Each farmers is given plastic identity card. At the counter he drops the card into a box that reads it electronically and transmits the identification number to the PC. The milk is emptied into a steel can kept over the weighing scale. Instantly the weight of the milk is displayed to the farmer and communicated to a PC. The can is connected by tube to a big can, which transports milk to the dairy. One operator is required to fill the can. Another operator sitting next to the can takes a 5-ml, sample of milk and holds it up to a tube of an Electronic Milk-tester (a fat testing machine,

which is a local adaptation of an expensive and sophisticated tester made by M/S. ASN Foss Electric, Denmark). The fat content is displayed to the farmer and mmunicated to the PC, which calculates the amount to be paid to the farmer based on the fatcontent of the milk. The total value of the milk is printed on a pay slip and given to the farmer who collects the payment from the adjoining window. The payment is automatically rounded to the nearest rupee and the balance due to the farmer is stored so it can be added to the farmer’s payout for the next day.In many centers the above transaction takes only 20 seconds. The system costsaround $2000 and is currently being supplied by at least two private companies.

There are 70,000 village societies in India, of which 2500 have been computerized. The farmers benefit as payment is now based on a quick and accurate measurement of fat content and weight and is not subject to the individual methods. Traditional methods require hours to calculate the fat content, as the measurement process (the conventional Gerber method requires laboratory equipment and corrosive chemicals) is cumbersome, and payment to farmers is made every ten days due to the time required by the collection centers to calculate the amount due. The IT system enables prompt, accurate, and immediate payment. The queues at the centers are short despite the number of people selling their milk being quite large. As 2500 centers receive milk from 400,000 farmers daily, the ten-minute savings comes to 180,000 man-days per month.The system also reduces the requirement of employees and makes the accounting a real time based one. The profit is calculated on the basis of data received from the dairy regarding the payment made by the dairy to the society for the previous day’s collection. The software can incorporate the revenue from daily milk sales to the local villagers and expenditure incurred by the society. Since the accounts are kept accurate and up-to-date there is less likelihood of reducing corrupt practices. The IIMA E-Governance Centre has built upon the existing application by expanding the database at the milk societies to include a complete history of every cattle owned by the farmers. The basic details of breed and a history of disease, inoculations, artificial insemination and pregnancy are maintained in the system. The data history on milk production by individual farmers is also available in the database at the collection centers.

Project Evaluation Systems

Without effective evaluation, a project implementation is never finished. It might be inline or inbuilt with the system or external to the system. The project evaluation system compares the actual implementation details with those projected showing us the rate of return from the project. This can help in many ways – for creating further course of action, proper controlling measures design, and replicability assessment. In this project there is no evaluation system in place. One of the ways in which the project authorities are evaluating the project is through a feedback. As the village cooperatives do have their own meetings and discussions regularly, the feedback mechanism is strongly enforced into the functioning of the village cooperatives. The increase in number of Village Societies moving towards automation is shown in Fig. “The Kaizen approach”, followed by GCMMF as a part of TQM measures is been used by the village cooperatives in order to tackle the quality measurement issues and solve them.

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Most of the village co-operatives have installed quality management systems and one of the co-operative was nominated ISO certificate. The former Prime Minister of India – Mr. Lalbahadur Shastri, was examined the systems that the villagers are using. He also insisted on the replication of the systems that are in place at Anand. The satisfaction level of villages is shown in Fig, the curve is rising because of the quality management practices.

2007

One of the critical factors that contributed to the success of the project has beenparticipation of the beneficiaries and the systematic communication. The villagefarmers assembling at a pre-specified location in the village will discuss with the secretaries of the cooperative societies and tell them the problem areas. Thesecretary of the society will ensure that action will be taken. Moreover the village members will elect the village cooperative boards. It is purely a democratic setup, which empowers the people. All the external assessment proved that the AMCUS systems were effective. The model is getting replicated in other states. As the user feedback has been positive and GCMMF and village cooperatives are replicating this in other locations. The Feedback system is giving them the right inputs for the improvement of the Cooperative societies. The TQM measures – Kaizen and quality circles are enabling the villagers to push forward their ideas to the officials and the higher authorities are trying to resolve the issues when they came up. The ISO certifications are continuing at the district unions of GCMMF; they are now moving to villages. The TQM initiative that is passed to the village cooperatives by GCMMF transformed.

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Them in a major way. Some of the observations after TQM training to the villagers: The approach, the enclosure and the ambience of the societies have

undergone a face-lift. New methods and items were distributed to avoid wastage. There is an improvement in the quality of milk in terms of acidity and

sour milk. Sabar Milk Union’s records shows a reduction of 2.0% to 0.5% in the

amount of sour milk/curd received from the union. All union dairies have experienced improved microbiological quality

of incoming raw milk in the form of higher “Methylene Blue Reduction” (MBR) time. This will give better shelf life for the milk and milk products.

Programs like – Red Tag Day –for cleaning the Milk Collection centers and Housekeeping were encouraged. And there are many more…

Technical Performance.

The application of Information Communication Technology systems (ICT) for milk collection has been working without any major flaw in 2500 collection centres. The use of ICT helped both GCMMFL and the farmers. In the case of farmers it reduced the delay in getting the money. Rather, it made the operation real time oriented. This improved the cash availability thereby reduced the need for taking loans. Whereas, GCMMFL also benefited. The operations were simplified. The possibilities of errors in estimations were done away with. The farmers were also happy with the operation of the system. The best aspect of the system is the elimination of the waiting system.

The benefits of the AMCUS system

The rural people are getting benefited much by the IT initiatives, started by GCMMF.The benefits of various projects such as DISK are yet to be realized. The followingare the demonstrated benefits of the ICT platform.· Time reduction· Reduction of pilferage

· Reduced human errors· On the spot payments for farmerswastage is reduced· transparency of operation· operational integration

Evolution of IT at Amul

The implementations of ITC systems in Amul took place under the Dynamicleadership of Dr. B M Vyas. He made sure that the problems are eliminated, while implementing. Frequent review helped. The encouragement by Dr. Kurien kept all of them highly motivated.

The milk collection centers at villages co-operative societies, were firstAutomated.

The enterprise wide integration was taken up next. Application and utilization of GIS. data analysis software utilization for milk production estimation andincreasing productivity. VSAT network between all the levels of distribution network and

GCMMF. WEB initiatives-“.coop” domain name, to become the first five Indiancompanies that went for web and cyber stores.

Conclusion

The Amul’s IT operations are based on the principles of collaboration, co-operation and co-evolution as opposed to the conflict, conformation and competition approach followed by brand marketers. Amul remained as the trendsetter in the whole operations. Even though Automated Milk Collection Centers and Dairy Information System Kiosk projects are part of streamlining its supply chain, Amul’s projects delivered a lot of benefits to the rural community. Unlike the others in the industry Amul facilitated the rural mass for in becoming an empowered community. Agricultural Universities and Government Agencies are also getting into the projects of GCMMFL. Amul itself has seen increased revenues. It also experienced effective control over the operations through the

Information Technology Projects. The experience of conceptualizing and implementing an ICT platform for a dairy industry is a challenging task. It is a distributed data architecture. The critical factors that contributed to the success of this project is worth look into: Understanding the baseline operations comprehensively is the starting

point for designing a customer oriented ICT platform. The understanding of ground conditions helped Amul to design the system considering customer needs.

Here again, the implementation was carried out in a limited way and thesystem was expanded after validation. The reputation of the agency was a major factor that increased the acceptance of the new technology.

The new system endowed substantial benefits to the customer. The waiting time for payment was completely eliminated. In any ICT platform if the benefits far out weigh the costs, the rate of diffusion will be high.

Working closely with the supplier, helped in the hardware/softwarecustomization, thereby facilitating the user acceptance. This also lead to user led innovation through a pilot exercise before the actual implementation.

.

Achievements of the Dairy Cooperatives in India

Reach The dairy cooperative network is owned by nearly 12 million farmer

members. These producers are grouped in nearly 1,08,574 village-level dairy

cooperative societies. The societies are grouped in 170 district-level unions spanning 338

districts. The unions make up 22 state-level marketing federations.

Milk production

India’s milk production increased from 21.2 million metric tons in 1968–69 to 88.1 million metric tons in 2003–04.

Per capita availability of milk increased from 112 grams per day in 1968–69 to 231 grams per day in 2003–04.

India’s 3.8 percent annual growth of milk production surpasses the 2 per cent growth in population; the net increase in availability is around 2 per cent per year.

Marketing

In 2003–04, average daily cooperative milk marketing stood at 14.87 million litres; annual growth has averaged about 4.2 per cent compounded over the last five years.

Dairy cooperatives now market milk in about 200 class I cities including metros and some 550 smaller towns.

During the last decade, the daily milk supply has increased from 17.5 to 52 litres per 1,000 urban consumers.

Innovation Bulk vending saves money and conserves the environment. Milk travels as far as 2,200 kilometres to areas of shortage, carried by

rail and road milk tankers. India produces 95 per cent of its own dairy equipment, saving

valuable foreign exchange.

Macro impact

The annual value of India’s milk production amounts to about Rs.880 billion.

Dairy cooperatives generate employment opportunities for about 12 million farm families.

Challenges being faced by the dairy cooperatives and interventions

required to strengthen them

With the opening up of the economy preferential treatments of yesteryears

are no more available to the dairy cooperatives. They are now required to

compete in the open market. The terms of the World Trade dictates removal

of all safeguards put in place earlier to protect the dairy industry from unfair

outside competition. As a result, gradually internationalization of our dairy

business is taking place. This transformation demands the dairy cooperatives

to improve their performance; be it in marketing or quality of products or

governance. A few dairy cooperatives like Amul have done well in the past

in these areas. There are others who are catching up albeit in slow pace and

there are many who need to substantially improve to come to the terms of

open market competition.

While trying hard to improve their performance and professionalising their

functions and governance, the biggest obstacle that the dairy cooperatives

face today is political and bureaucratic interference. Business decisions are

often guided by other than business considerations. The cooperative laws are

unable to provide the protection the dairy cooperatives require to function as

independent business entities. To end this dismal state of affairs, the most

important intervention needed to professionalise the functioning of the dairy

cooperatives is to liberate them from the clutches of the archaic cooperative

laws enacted to establish State control over the affairs of the cooperatives.

Additionally, in line with the developed countries, there should be minimum

laws to control the affairs of the cooperatives. Registrars of cooperatives

should be responsible only for registration of cooperatives, their byelaws and

arbitration as and when required. Routine management and governance

should totally be left to the wisdom of the owners (i.e. members) of the

cooperatives. It is heartening to note that some States have already taken

some positive steps in this regard by enacting liberal cooperative laws; there

are others who are also in the process of doing so.

Currently, the management in majority of the dairy cooperatives carries some

or the other political leanings. As a result, it has become a common practice

that the management of dairy cooperatives, irrespective of performance, gets

superseded or suspended as and when opponent political parties come to

power. In consequence, to ensure continuity of and protection to good

management, depoliticalising cooperative institutions is a must. As business

institutions, the dairy cooperatives from time to time are bound to take hard

decisions. Irresponsible outside interference in the affairs of the dairy

cooperatives is sure to deteriorate performance, eventually making them

unfit for competition. To arrest the trend, the members need to be educated

on governance matters. Adopting standard management practices to restrict

arbitrary decision-making in a way could also be helpful. Also, a few

restrictions in the cooperative laws could be introduced such as limiting term

of members of governing bodies, setting up independent bodies to hold free,

fair and timely election and audit in cooperatives.

Improving quality of products poses a big challenge to the dairy

cooperatives. In today’s highly competitive market demand for superior

quality products is on the rise. The dairy cooperatives are aware of this trend.

They know that there is enormous scope to enhance their share in the world

market too, given that India is the highest producer of milk and that too at the

lowest cost. But to capture the world market the necessary prerequisite is

product quality needs to match international standards. Improvements in

product quality are required to enhance and retain their share in domestic

market also. As quality upgradation is a long process, it calls for, besides

commitment of the management, substantial investment in hygienic milk

production, upgrading plants and machinery, upgrading manpower skills and

setting up facilities for cold-chain storage and distribution of milk and milk

products starting from the farm level. Presently, the dairy cooperatives do not

have the capacity to make such huge investments requiring the Government

support to create institutional facilities for research and development, credit,

training and education etc.

Poor productivity of milch animals constrains rapid development of the dairy

industry. Systematic planning and integrated policies and programmes for

animal breeding, genetic upgradation and feed and fodder management could

only improve the situation. For all these to happen, the Government has to

intervene and create funds (may be called Dairy Development Fund) for such

programmes to be implemented on mission mode integrating various

schemes.

Excess manpower and low skill level of employees are areas of great concern

for the dairy cooperatives. The dairy cooperatives need to shed excess flab in

manpower in order to match manpower productivity as per market demand.

Skill sets of the employees need to improve to benchmark desired

performance. Since the dairy cooperatives generally do not have capacity to

hire high-calibre professionals, the only out is to invest in extensive training

and education to upgrade the skills of the existing manpower. The employees

need to be educated about the merits of scientific and modern management

practices and processes.

Securing members’ participation in the affairs of the cooperatives is another

area where the dairy cooperatives need to work hard. To earn allegiance of

the members, cooperatives need to be responsive to their needs. The dairy

cooperatives have to work out suitable strategies so that they can

satisfactorily meet the requirement of the members. They can do so by

providing required support services to their members for veterinary care,

input supply and selling their milk and all these have to be done at

reasonable cost. Members need to be encouraged to participate in the

business affairs of their cooperatives and they could no longer be treated as

mere suppliers of milk. Deputation of government officers to head the affairs

of cooperatives has to stop to secure members’ participation. Legal

provisions to hold free, fair and timely election are must and have to be

ensured by the Government.

MOVING TOWARDS A GRAND FUTURE

It does not require a crystal ball to sense that dairy cooperatives in India have

a gruelling & arduous journey, ahead of them. The phenomenon of

liberalisation and globalisation cannot be wished away and we have to

prepare ourselves for the future, by leveraging on our inherent strengths. The

core foundation of co-operation is the principle of ‘mutuality’ and pooling of

resources. The very nature of the dairy industry ensures that an organisation,

which wishes to grow exponentially, has to make the best use of all available

resources. Our scope of operations will have to be streamlined, in a manner

that will enhance our cost-competitiveness and effective customer servicing

in all parts of India and abroad. AMUL’S Federation and all it’s Member

Unions will have to work in tandem to achieve this cherished desire.