Veena Amul Final

AMUL – THE TASTE OF INDIA

CHAPTER-1

INDUSTRY PROFILE

AND

COMPANY PROFILE

SDCIMS, KOLAR-563101


1. COMPANY PROFILE

Industry Profile

The Dairy Industry in the 1940s

The time line was 1940s. The focal point was Rural Gujarat. At this point of time, the life

of an average farmer in Banaskantha District was very much like that of his/her counterpart

anywhere else in India. His/her income was derived almost entirely from seasonal crops. The

incomes from milk buffaloes were undependable. Milk producers had to travel long distances to

deliver milk to the only dairy in banas – the banas Dairy. Often milk went sour, especially in

summers, as producers had to physically carry milk in individual containers.

Private traders and middlemen controlled the marketing and distribution system for the

milk. These middlemen decided the prices and the off-take from the farmers by the season. As

milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they

had to sell cream and ghee at throw-away prices. In this situation, the private trader made a

killing. Moreover, the government at that time had given monopoly rights to Polson Dairy to

collect milk from banas and supply to Bombay city in turn (about 400 kilometers away).

Hence, India ranked nowhere amongst milk producing countries in 1946.

The Dairy Industry in the Present

India with 134mn cows and 125mn buffaloes has the largest population of cattle in the

world. Total cattle population in the country is an estimated 313mn. More than the transition of

the Indian milk industry from a situation of net import to that of surplus has been led by the

efforts of National Dairy Development Board's Operation Flood. Programme under the aegis of

the former Chairman of the board Dr. Kurien.

Presently the market is valued at around Rs 7,00,000 million. According to FAO

estimates in last three years Indian milk production increased by 4% and world milk production

decreased by 2%. The milk production in India accounts for more than 13% of the total world

output & 57% of total Asia’s production.


http://en.wikipedia.org/wiki/Ghee


Launched in 1970, Operation Flood has led to the modernization of India's dairy sector

and created a strong network for procurement processing and distribution of milk by the co-

operative sector. Per capita availability of milk has increased from 132 gm per day in 1950 to

over 220 gm per day in 1998. The main thrust of Operation Flood was to organize dairy

cooperatives in the milkshed areas of the village, and to link them to the four Metro cities, which

are the main markets for milk. The efforts undertaken by NDDB have not only led to enhanced

production, improvement in methods of processing and development of a strong marketing

network, but have also led to the emergence of dairying as an important source of employment

and income generation in the rural areas.

It has also led to an improvement in yields, longer lactation periods, shorter calving

intervals, etc through the use of modern breeding techniques. Establishment of milk collection

centers, and chilling centers has enhanced life of raw milk and enabled minimization of wastage

due to spoilage of milk. Operation Flood has been one of the world's largest dairy development

programme and looking at the success achieved in India by adopting the co-operative route, a

few other countries have also replicated the model of India's White Revolution.

Today, India is 'The Oyster' of the global dairy industry. It offers opportunities galore to

entrepreneurs worldwide, who wish to capitalize on one of the world's largest and fastest

growing markets for milk and milk products. A bagful of 'pearls' awaits the international dairy

processor in India. The Indian dairy industry is rapidly growing, trying to keep pace with the

galloping progress around the world. As he expands his overseas operations to India many

profitable options await him. He may transfer technology, sign joint ventures or use India as a

sourcing center for regional exports. The liberalization of the Indian economy beckons to MNC's

and foreign investors alike.

India’s dairy sector is expected to triple its production in the next 10 years in view of

expanding potential for export to Europe and the West. Moreover with WTO regulations

expected to come into force in coming years all the developed countries which are among big

exporters today would have to withdraw the support and subsidy to their domestic milk products



sector. Also India today is the lowest cost producer of per litre of milk in the world, at 27 cents,

compared with the U.S' 63 cents, and Japan’s $2.8 dollars. Also to take advantage of this lowest

cost of milk production and increasing production in the country multinational companies are

planning to expand their activities here. Some of these milk producers have already obtained

quality standard certificates from the authorities. This will help them in marketing their products

in foreign countries in processed for.

Factors responsible for growth of dairy industry.

Market demand factors

New technology

Low production cost

Proper utilization of capacity

Government policies.

Various steps taken by government

1. De – liciensing in 1991.

2. Milk and Milk Products order was issued in 1992 under Essential Commodity Act to regulate

production of milk & dairy products.

3. Introduction of one time license to private sector.

4. In 2003, restriction on setting milk processing & milk product manufacturing plants & also the

concept of milk-sheds were eliminated. The amended order emphasized on sanitary, hygiene,

quality & food safety of milk & milk products.

5. contract framing scheme in dairy sector & 10% reimbursement of funds invested by a

processor in strengthening the weak linkage, reduction in excise duty on processed foods &

reduction in corporate taxes.

6. primary dairy co- operative were exempted from paying tax, district & state level will pay

35% tax. In 2006 government reduced 10% tax for private dairy companies only.



7. Duty draw-backs at varying rate for export of some dairy commodities.

8. In 2007 government suspended export of skimmed milk powder due to domestic price rise and

milk shortage as reason. It resulted into losses & it was again permitted to export from October.

AMUL

COMPANY PROFILE

a. Background & Inception

In the 1940s, in the district of Kaira in the State of Gujarat, India, a unique

experiment was conducted that became one of the most celebrated success stories of India.

At that time, in Gujarat, milk was obtained from farmers by private milk contractors and by a

private company, Polson's Dairy in Anand, the headquarters of the district. The company had

a virtual stranglehold on the farmers, deciding the prices both of the procured as well as the

sold milk. The company arranged to collect, chill and supply milk to the Bombay Milk

Scheme, which supplied milk to the metropolis of Bombay, and to cities in Gujarat. Polson's

Dairy also extracted dairy products such as cheese and butter. Polson's Dairy exploited its

monopoly fully; the farmers were forced to accept very low prices for their products, and the

decisions of the company regarding the quality and even the quantity of the milk supplied by

the farmers were final. The marketing and distribution system for the milk was controlled by

private traders and middlemen. As milk is perishable, farmers were compelled to sell it for

whatever they were offered. Often, they had to sell cream and ghee at throwaway prices. In

this situation, the one who gained was the private trader.

Gradually, the realization dawned on the farmers with inspiration from then

nationalist leaders Sardar Vallabhbhai Patel (who later became the first Home Minister of

free India) and Morarji Desai (who later become the Prime Minister of India) and local

farmer, freedom fighter and social worker Tribhuvandas Patel, that the exploitation by the

trader could be checked only if they marketed their milk themselves. In order to do that they

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



of the Kaira District Cooperative Milk Producers' Union Limited (popularly known as Amul)

which was formally registered on December 14, 1946.

The Kaira District Co-operative Milk Producers' Union Limited began pasteurizing

milk for the Bombay Milk Scheme in June 1948. By the end of 1948, more than 400 farmers

joined in more Village Society, and the quantity of milk handled by one Union increased

from 250 to 5,000 liters a day. The success of Amul was instrumental in launching the White

Revolution that resulted in increased milk production in India. It is officially termed as

Operation Flood by Amul. The breakthrough technology of spray-drying and processing

buffalo milk, developed by Mr. H.M. Dalaya, was one of the key factors that contributed to

the Revolution.

Purely by chance, in 1949, a mechanical engineer named Verghese Kurien, who had

just completed his studies in engineering in the USA, came to India and was posted by the

Government of India to a job at the Dairy Research Institute at Anand. Settling down in

Anand was hardly a part of his career plans; however, a meeting with Tribhuvandas Patel

changed his life and changed India's dairy industry.

What Mr Patel requested of Dr Kurien was hardly to bring about such a revolution.

All he wanted was help in solving various problems with bringing into working order some

of the equipment just purchased by his co-operative, especially the chilling and pasteurising

equipment. These items of equipment malfunctioned, leading to the rejection of large

quantities of milk by the Bombay Milk Scheme.

Dr Kurien's involvement with the Kaira District Co-operative Milk Producers' Union

Limited (KDCMPUL; the registered name of the co-operative) grew rapidly. Initially he

merely provided technical assistance in repairing, maintaining and ordering new equipment

but subsequently he became involved with the larger sociological issues involved in

organising the farmers into co-operatives and running these co-operatives effectively. He

observed the exploitation of farmers by the private milk contractors and Polson's Dairy, and

noted how the co-operatives could transform the lives of the members.


http://en.wikipedia.org/w/index.php?title=Mr._H.M._Dalaya&action=edit

http://en.wikipedia.org/wiki/Operation_Flood

http://en.wikipedia.org/wiki/White_Revolution_(India)

http://en.wikipedia.org/wiki/White_Revolution_(India)

http://en.wikipedia.org/w/index.php?title=Village_societies&action=edit

http://en.wikipedia.org/wiki/1948

http://en.wikipedia.org/wiki/Bombay

http://en.wikipedia.org/wiki/Pasteurization

http://en.wikipedia.org/wiki/Kaira_District_Co-operative_Milk_Producers'_Union_Limited


In 1954, Kaira District Co-operative Milk Producers’ Union built a plant to convert

surplus milk produced in the cold seasons into milk powder and butter3. In 1958, a plant to

manufacture cheese and one to produce baby food were added. Subsequent years saw the

addition of more plants to produce different products. In 1973, the milk societies/district

level unions decided to set up a marketing agency to market their products. This agency was

the Gujarat Cooperative Milk Marketing Federation (GCMMF). It was registered as a co-

operative society on 9 July 1973.

On his visit to Anand in 1965, the then Prime Minister of India, Lal Bahadur Shastri,

was impressed by what he saw—a system that procured, processed and delivered high quality

milk to distant markets cost efficiently. Shastri could also see the difference that the income

from milk had made to the standard of living of farmers in the area. What impressed him the

most was that Amul had done all this without government assistance, in marked contrast to a

number of government sponsored dairy programmes that were doing poorly in terms of

procuring and marketing good quality milk and boosting farmers' incomes. Shastri asked Dr

Kurien to replicate Anand's success all over India.

A pattern similar to the Anand Pattern was to be built in other states of India. This

was carried out under a programme launched by the Government of India, entitled 'Operation

Flood'. The operation was co-ordinated by the National Dairy Development Board (NDDB),

a body formed by the Government of India with this specific objective.

The Amul revolution was started as awareness among the farmers. It grew and

matured into a protest movement that was channeled towards economic prosperity. Hence it

set an example for other co-operative dairies across the country, which is why, India has

become the largest milk producer in the world.

b. Nature of the business carried

The Kaira District Co-operative Milk Producers’ Union Ltd. was started in



1946 with an aim of bringing together all the farmers of Gujarat to produce the best

quality milk and milk products with the right value for money. The basic nature, hence, of

AMUL as a whole is to produce milk products and procure milk from the farmers and market

it through Gujarat Co-operative Milk Marketing Federation.

GCMMF Ltd. manages the brand name AMUL and it is an apex co-operative

organization. AMUL is jointly owned by 2.41 million milk producers of Gujarat. Hence it

solely depends on the farmers of Gujarat for procurement of milk to produce milk products.

Other than the above, it provides value added services like

Cattle Feed

Artificial Insemination

Mobile Veterinarians

Fertility Improvement Programme

Productivity Enhancement Programme

c. Vision, Mission & Quality Policy

i. Vision

a. To ensure availability and service of high-quality products at reasonable price.

b. To use the brand as a contract to be honored again and again.

ii. Mission

We, at KDCMPU Ltd. & GCMMF Ltd., endeavor to satisfy the taste &

nutritional requirements of the customers of the world through excellence in

marketing by our committed team.

Through co-operative networking, we are committed to offering quality

products that provides value for money.



iii. Quality Policy

The co-operative structure ensures high standards of quality with the usage of

latest technology & innovations from all over the world to maintain stringent

norms and policies.

It has a dedicated Total Quality Management policy which leads to continuous

improvement through vision, mission, strategy & Human Resource

Development.

Each Dairy has a dedicated Quality Control Department, to update the

products and bring them to world class standard level though no Research &

Development department exists in any of the dairies.

d. Product Profile

AMUL is a brand developed by the farmers of Gujarat. The basic nature of the

business is to gather milk produced by the milch animals and brought in by the farmers and

to pasteurize it for selling and also to make it useful for producing milk products. Hence the

various diversified products are described below.

i. Milk Products

AMUL Gold – Full Cream Milk consisting of 6% Fat

AMUL Shakti – Standardized Milk consisting of 4.5% Fat

AMUL Taaza – Toned Milk consisting of 3% Fat

AMUL Slim ‘n Trim – Double Toned Milk consisting of 1.5% Fat



ii. Convenient Long Life Milk

AMUL Gold consisting of 4.5% Fat

AMUL Shakti consisting of 3% Fat

AMUL Taaza consisting of 1.5% Fat

AMUL Slim ‘n Trim consisting of 0.2% Fat

iii. Infant Milk Food

Amulspray Infant Milk Food/Infant Milk Substitute – formulated on

guidelines set by Codex commission of WHO/FAO

iv. Dairy Whiteners

Amulya, the creamiest among dairy whiteners – contains milk fat, protein,

Lactose, Sugar & Minerals.

AMUL full cream milk powder with vitamins A & D – more milk fat

(27.5%) as compared to normal milk powders.

v. Refreshing Drinks

AMUL Kool and Kool Café in Chocolate, Strawberry, Pista & Vanilla

Flavors

AMUL Lassee – flavored homogenized heat-treated Lassi

AMUL Masti spiced buttermilk – free of color, preservatives, acids and

sucrose sugar

AMUL Stamina, Instant Energy Drink – contains milk solids, sugar, fruity

syrup acidity regulators and vitamin C

vi. Butter



AMUL Pasteurized Butter – made from fresh cream by modern

continuous Butter Making Machine.

AMUL Lite Butter – for the health conscious, low fat, low calorie bread

spread with 26% lower fat and calorie content.

Delicious Table Margarine – Cholestrol free with 80% total fat, 2.5% salt

and fortified with vitamins A and B

vii. Cheese

AMUL Processed Cheese made from Cow/Buffalo Milk using microbial

rennet

AMUL Gouda Cheese – a traditional hard cheese with a sweet and fruity

flavor

AMUL Emmental Cheese – Cherry sized holes, Hazelnut Aroma and

Vacuum packed

AMUL cheese spread – made from soft cheese, cheddar cheese and

common salt in Yummy Plain, Patchy Pepper and Spicey Garlic Flavors

AMUL Pizza Mozarella Cheese – moist, soft and elastic texture and

ability to form strings when hot

viii. Other products

AMUL Fresh Cream containing 25% fat and no preservatives added

AMUL sterilized malai paneer – the only paneer which becomes soft on

thawing

AMUL Milk Chocolates, Fundoo, Bindaaz and Fruit & Nut Chocolates

Nutramul, the brown beverage powder – highest protein content and the

only one with BIS Certification Mark

AMUL Shakti, the health food drink, contains partly skimmed Milk

Powder, Sugar, Vitamins & Minerals



AMUL utterly delicious Heat & Eat Pizza – ready to eat Pizza

AMUL Ice-creams made from fresh milk – 35% richer and creamier than

prescribed standards

AMUL Pure Ghee made from fresh cream – rich source of vitamins A, D,

E & K

AMUL condensed milk – Mithai Mate made from Milk Solids and sugar

AMUL Shrikhand in Badam Pista, Mango, Elaichi and Kesar flavors

AMUL Mithae, Khoa Gulab Jamuns – just heat and eat, which remains

good for 9 months at room temperature

AMUL Basundi for the perfect dessert-delight – concentrated milk based

product with added sugar, flavors and condiments

AMUL Yogi, flavored yoghurt, prepared from pasteurized tonned milk in

Strawberry, Mango, Pineapple and Mix Flavors

AMUL Masti Dahi the smooth flowing curds with smooth taste and

pleasant flavor consistency

e. Area of operation

Though AMUL is a brand name, it is a household name throughout India due to

its quality and value based products. The dairies across Gujarat State prepare different

milk and milk products and GCMMF Ltd. markets them across the country and the

world. So we can say, that though the operational level exists at the state/regional level,

the area of operation is on a Global scale. All the states of the Indian Union have been

connected to the logistical operations of AMUL and hence the supply chain management

is regarded as the best in the country.

It operates/prepares/manufactures in the 25 dairy plants of 13 District Unions in

Gujarat and supplies on the national level to various retail stores across the country.

Their most prestigious customers are the Indian Army. It supplies to various countries

across the world like Gulf, SAARC region, USA, Singapore, Hong Kong, The



Philippines, Cambodia, Japan, Vietnam, China & Australia. It also exports to African

Markets like Sudan & Algeria.

f. Ownership Pattern

AMUL – Anand Milk Union Limited consists of a co-operative structure, with the

owners being the 2.2 million farmers of Gujarat. Hence though some people cite the

structure as bottom up i.e. the farmers decide who will be the Managing Director as well

as the board of directors of the company. The ownership selection process starts from the

village co-operative society level and goes on to the Board of Directors Level. The

process is depicted in steps as below:

i. The village dairy co-operative society is a voluntary association of milk

producers; anyone owning a cow/buffalo can become a member

ii. Every member is entitled to one vote in the society

iii. The managing committee of the village society is elected by the members by

taking their votes

iv. The managing committee so elected elects the chairman and hires employees to

manage the society and for milk collection testing for milk fat, sale of cattle feed,

etc. The total number of village societies in Gujarat hast touched 12,340 with 2.5

million members

v. Primary Milk Producers Societies i.e. the village societies are affiliated to a

district union for example, villages in the Kheda District are affiliated to the Kaira

District Co-operative Milk Producers’ Union Ltd.

vi. The district union owns and operates a feeder/balanced dairy plant and their main

task is fixing milk prices for village co-operatives

vii. Chairpersons of village societies elect Board of Directors and the Board in turn

elects the Chairman of the District Union.

viii. The unions are managed by a professional team led by the Managing Director; the

number of district unions are 13



ix. The final body is the national level federation which is the apex body of district

co-operative milk unions where their main task is to market the milk/milk

products of member unions

x. The chairmen of the district unions are the members of the Board of Directors

who elect the Chairman of the Federation.

xi. The CEO and the MD is thereby hired on a professional basis.

g. Competitors’ Information

There are various competitors to AMUL in various product lines; the most

fiercely competed being the butter and milk segment. Some of the most bullish

competitors are listed below.

i. Britannia Industries Limited

With the motto, “Eat Healthy, Think Better”, the biscuit major is a big

stumbling block for AMUL in the butter and cheese segment, with its cheese

products competing on the same level of AMUL. Though AMUL does not have

any biscuit product lines, the quality of Britannia butter can be compared with

AMUL with some critics placing the butter and cheese products high above

AMUL’s.

ii. Hindustan Lever Limited

With the mission, “to add vitality to life, meet everyday needs for

nutrition, hygiene and personal care with brands that help people feel good, look

good and get more out of life”, this MNC is a thorn in the roses for AMUL. The

only competing product from their stable is the Kwality Walls ice-creams which

is actually much better than AMUL ice-creams.



iii. Cadbury

With the vision, “Life full of Cadbury and Cadbury full of life”, this

chocolate major is a major competitor in the national and international markets for

chocolates of AMUL. Also, it has recently locked horns with Cadbury, for the

malt based drink Bournvita, though it is a long way for AMUL to gain ground to

come on par with Cadbury.

iv. Nestle

With the motto, “Good food, good life”, it has competed with AMUL on

the product lines of chocolates and beverages. Milo is a huge competitor along

with Bournvita, to Nutramul. Essentially all Nestle chocolates are liked along

with Cadbury to push AMUL out of the segment.

v. Dabur

With the motto, “Celebrate Life”, dedicated to the health and well-being

of every household, this is a major competitor in the baby care and beverages

segment with its baby care milk powder and its Real and Active juice products. It

is a known product all over the country and provides stiff competition in spite of

his questioned quality.

h. Infrastructural Facilities

AMUL is widely known for the updated and cut-throat technological machinery it

uses for its productive purposes. The following points depict the infrastructural facilities

right from the village level to the dairy level.



i. It has 12,340 village co-operative societies, with 2.5 million members bringing in

about 5.08 million liters/day.

ii. It has 25 fully functional dairies within the 13 District unions, with world class

milk chilling machines and other product manufacturing machines

iii. It has 3000 automatic milk collection system units for the village unions for

supply of milk twice a day

iv. They have a supply of mobile veterinarians, who reach the village for a sick

animal, faster than a normal doctor does for a sick human

v. They have artificial insemination units, which has so far succeeded in performing

the best practices due to which the progeny of buffaloes have increased thereby

leading to increase in milk production

vi. At villages they have bulk milk chilling systems to ensure milk does not get spoilt

by the time it reaches the dairy for further processing

vii. The total milk handling capacity is 9 million liters per day; there are 5 plants with

1 mlpd capacity; the milk drying capacity is 600 tpd; the peak milk handled is 9

mlpd; Cattle feed manufactured is 2000 metric tonnes.

viii. Huge cream silos at the Anand Dairy for making butter and storage of pasteurized

milk



PRODUCTION DEPARTMENT AT THE KDCMPU LTD.

ix. They outsource milk from 9 dairies across the country for more milk production

and processing.

x. Each village has a small unit working depending on the size of the village, and

every morning and evening, there is a line of farmers/women standing outside the

unit to deliver the milk which goes into the cream remover and the pure milk goes

into the special truck to be delivered to the dairy.

i. Achievements/Awards

AMUL has a lot of achievements/awards to its credit, mostly for its

uncompromising quality and superb innovations. The kudos it has received has attracted

a lot of attention all over the world, and it has a subject of study at premier business

schools including the Indian Institute of Management, Ahmedabad and also as a case

study. The innovations include the following:

Producing Milk powder from buffalo milk was the biggest achievement AMUL

could ever have done, with it being the first to pursue the effort and succeed. V

Kurien and H M Dalaya were the people to do it before anyone in the world; at a

time when the top brass in the world was saying it was impossible

Brought in new machines, and updated machinery every time at the hour of need.

With such world class machinery, with the funding and support of the farmers,

AMUL is where it is now.



AMUL has received various awards in recognition to its unerring commitment to

customers and farmers. They are as follows:

GCMMF Ltd. bagged the Rajiv Gandhi National Quality Award, 1999, in Best of

All Category

The IMC – Ramkrishna Bajaj National Quality Award, 2003, for adopting

noteworthy quality practices for logistics and procurement

APEDA Export Award 2004-05 for best performance in exports of dairy

products.

j. Work Flow Model (end to end)

The work flow model i.e. how one step in the process leads to the other can be

aptly described by the diagram below. It describes the steps in the process of milk

procurement, processing and production of the milk products at the Kaira District Co-

operative Milk Producers’ Union Ltd. otherwise known as the AMUL dairy, Anand,

Gujarat.

The steps can be explained as follows:



WORK FLOW MODEL AT THE KDCMPU LTD.



i. The process at the village level occurs with the milch animals, farmers and village

units being the main protagonists. The milk is taken from buffaloes and cows by

the farmers.

ii. The milk is delivered to the village bulk milk chilling system where it will be

stored to be put onto the special trucks

iii. The milk quantity is measured as also is the fat content in the milk and the price is

given to the farmer accordingly; the rate of one kilo of fat, is Rs. 255/-

iv. The milk is loaded onto special trucks with cooling facility to ensure it reaches the

dairy, on proper time and in proper condition

VILLAGE LEVEL PROCUREMENT OF MILK FROM VILLAGERS

v. The milk truck transfers the milk procured to the dairy and the logistical part

begins by unloading the milk

vi. The milk is unloaded, and sent it to the pasteurizer section to be pasteurized

vii. The milk is heated at 70°-80°C with the help of hot vapors



viii. The milk is then cooled at 3°-4°C for one minute

ix. The next step involves separating the milk by sending it through the separator for

cream and powder preparation; here the process deviates into cream production

and powder preparation

x. After cream is separated from the separator, it is stored at the cream silo; half of

the milk without cream separated is passed through 119°C hot air and sugar &

vitamins are added; the other half of the milk is sent to the refrigeration section,

passed through ammonia gas and water, cooled at 3°-4°C

xi. The cream is sent to the butter blender where TATA salt and food color is added

for the yellow color of butter; milk powder produced for consumption due to hot

air pass and milk produced due to cooling process

xii. For butter, weighing & packing is done in 15 kilo capacity cartons or wrapped in

wrapping machine in terms of 100g/50g/10g/5g packets and 400g tins especially

for the Indian Army. For powder, it is done in terms of 1 kilo/500g/100g and for

milk, it is 500g pouches

MILK RECEIVING STATIONS AND THE CREAM AND MILK SILOS

AT KDCMPU LTD.

xiii. For all three products, price & batch numbers label pasted on all the wrapped

products by the pasting machine



xiv. Later GCMMF Ltd. comes into picture, and along with the Federation it markets,

distributes and sells the products.

k. Future growth & prospects

The milk procurement for 2006-07 was 6.7 million kg/day thus posting a growth

of 4.5% over the past year. The total sales was Rs. 42.77 billion thereby setting a growth

of 13.4%. Considering this, the following points are the future prospects of AMUL.

i. To increase the membership for farmers which is as of now 2.5 million and

increasing; this is being done to include all the villages

ii. A huge prospect is the development of pro-biotic products like ice-creams, etc

thereby increasing market share in health products

iii. Exploring prospects of offering traditional milk products such as khoa

iv. Ensuring sale of popular products in western India to other parts too, especially

South India, where availability of AMUL products are becoming less



CHAPTER-2

McKINSEY’S 7S FRAME

WORK

AND

ORGANIZATIONAL

STRUCTURE

McKINSEY’S 7S FRAMEWORK



Mckinsey’s & Co.’s 7S framework provides a useful tool for analyzing the strategic

attributes of an organization. The Mckinsey’s consulting firm identified strategy as one of the

seven elements exhibited by the best managed companies.

MCKINSEY’S 7S FRAMEWORK



The figure on the previous page illustrates the multiplicity interconnection between the

elements that define the organizations ability to change. The theory helped the managers thinking

about how companies could be improved. It says that it is not just a matter of devising a new

strategy and following it through nor is it matter to setting up new system & letting them

generate improvements.

The 7s model is an anthropological way to understand the culture. The model shows that

corporate success requires the development of both hard Ss (Strategy, System, & Structure) and

soft Ss (Skill, Staff, Shared value, & Style of leadership).

It helps the leader as a

Mental model to understand culture

Guide for change in management strategy

Tool to design initiative holistically

Reminder of hard & soft assets to integrate align & measure.

The 7s’s are

i. Structure –Strategy – the route that the organization has chosen for its future

growth, a plan an organization formulates to gain sustainable competing

advantages.

ii. System--the formal & informal procedure including Innovation system,

Quality control system, management information system, capital acceleration

system, that govern everyday activities.

iii. Style- the leadership approach of the top management and the organizations

overall approach. Also the way in which the organizations employees present

themselves to the outside world, to supplier & customer.



iv. Staff – the organizations human resources refers to how people are developed,

trained, socialized, integrated, motivated & how their carrier are managed.

v. Skill- what the company does best, the distinctive capabilities & competencies

that reside in the organization.

vi. Shared value- originally called super ordinate goals, the guiding concept, &

principles of the organizations value & aspiration often unwritten that go

beyond the conventional statement of the corporate objectives, the

fundamental ideas around which a business built; the things that influence a

group to work together for a common aim.

MCKINSEY’S 7S FOR AMUL

A. Structure

i. Overall Organization Structural Details



CHAPTER-3

FUNCTIONAL AREAS



ORGANIZATIONAL STRUCTURE OF AMUL AND THE DAIRIES

ii. Departments

There are various departments across each dairy in the state. They

can be described as follows

Quality Control

o The main purpose is to design & develop product

o Also responsible for obeying government norms, label

designing, rules and regulations

o One person from Federation is always present at every

QC

o Check for quality problems in the prepared products

o Check Competitors’ products

o Checking entire chain of cold storage in market

o Checking of housekeeping in godowns, temperature,

quality of goods storage

o Helps in government liaison

o Presence of Prevention of Food Adulteration Nominee

Accounts

o To keep in compliance with accounting standards and

procedures at every stage at every level and at each unit



o To oversee and collect and tabulate data regarding

collection of sales, billing, pricing, credit notes, debit

notes, payments, carry-forwards, etc.

o The people in charge are Depo Accountant – in –

Charge and Zonal Accountant – in – Charge

Administration

o Human Resource related activities are performed here,

including employees’ welfare, promotion, appraisal,

pay hike, leave, etc.

Marketing

o Deals with third party, logistics, distribution, sales and

marketing, promotion, pricing, etc.

Co-operative Society Department

o To increase number of co-operative societies in villages

o To educate farmers

o To support and provide animal husbandry

o To support and provide artificial insemination

Information Systems Division

o To control the ERP system called the Entrepreneur

Integrated Application System – EIAS

o Basically being the computer department; handles the

technical part of the entire organization



Purchase Department

o Involved in purchasing of material, equipment and

machines and other basic physical machinery

requirements for daily running of the dairy

Production Department

o Involved in the pasteurization of milk, processing and

preparation of milk products like cream, powder, butter,

cheese, etc. by a refined process and updated machinery

B. Skill

The skills refer to how the training will be given to the employees. Usually the

training program lasts 2 months, depending on the requirement. At GCMMF Ltd., it

takes continuous training through the career. They use both on-the-job and off-the-job

training. They are described as follows.

On-the-job training

Here two skills are imparted to the newly joined employee which are

1. Salesmanship

This skill basically trains the employee on how to

approach, how to open/close calls and retailing skills. He should be

able to convince any retailer. The skill stresses on listening first as

a more important characteristic. It stresses on paying respect and

importance to indifferent people. It also pays attention for fast

decision making, competitors’ information and environmental

scanning



2. Distributor Handling

This skill develops the inner characteristic of enforcing the

employee’s thinking, giving salespersons their space, motivate the

distributors and controlling them.

Off-the-job training

Here two programs are held to develop the skills employee like

presentations and data work. They are

1. AMUL Yatra

This Yatra is a basic training program and tour to any dairy

in particular for the employees to get a feel of belongingness to the

organization. This includes a visit to the village society and

interaction with the farmers to get a feel of the basic roots of the

organization.

2. Competency Development Program

This program develops the other skills like presentations

and data work so each employee feels he is treated as a valuable

asset to AMUL and not only GCMMF Ltd.

C. Style

McKinsey framework suggests that the style of working in each organization

depends on the information flow from top management to bottom level and vice

versa. The aspects of business most emphasized by the members of the top

management tend to be given no attention by people down in the organization

reporting relationships may also convey the style of the organization.



At GCMMF Ltd. and KDCMPU Ltd., a transparency scheme is followed,

wherein each employee has access to all the records of the company, and all

information is shared across the wide levels of the organization. They follow the

following styles:

Top-Down Style

This style is followed at a point when information is needed to be

followed down the order, from the top brass/management to the

operational level. Hence this is applied in two cases. The first is when

there is a product launch i.e. a new product designed is entering the

market, and as such the entire organization is familiar with the new

product. The second case of the top-down style functioning occurs when,

expectations of the employees are looked into, and also the survey results

are tabulated and sent downwards to the operational level.

Bottom-up Style

This style is followed at a point when information is needed to be

shared to the top management about the working of the operational level

and the major problems outside the scope of the middle managers. It also

is followed when the demand of certain products, have to be known. The

production department sends an estimate of the number of units

manufactured and thereby depending on the sales and supply, the top

management makes a decision on the demand required.

Authoritative Style

This style is followed when there is aggressive participation of the

top management to ensure the rules and regulations are strictly abided by,

and when there is slow moving of products or when a particular product is

not selling well in the market.



Participative Style

This style is followed in cases of problem-solving and feedback

when necessary. It is actively followed during meetings when there is a

major/minor decision to be taken amongst the employees to run

machinery/to capture new markets/ to launch a new product. Mostly the

operational level and middle level operates on participative style basis.

D. Strategy

The main and core strategy of GCMMF Ltd. and AMUL on a whole is

simply “Value for Money Products”. The reason for this is that AMUL stresses on

quality rather than gaining profits. When the co-operative society started, it was

clearly stated that all the profits belong to the farmers and other milk providing

members. This was due to Tribhuvandas’ commitment to the farmers, and his

unwavering maintenance of the fact that this would be an organization with quality as

the sole motto. As the motto reads, “The taste of India”, it stresses on the taste and

nothing else.

As far as certain product lines are concerned, like butter and milk, AMUL

is unrivalled due to its continuous research and quality control. It has so far ensured

the prices remain at a low rate, for even the basic consumer. The price for a milk

packet of AMUL Taaza of 500g is around Rs. 8.50 which is affordable for any level

of consumer. The popularity of the product solely depends on the quality hence

AMUL has a separate TQM policy of maintain records of quality control and working

in tandem with the QC department. The farmers are directly involved in the process,

which makes no flaw in the taste and experience.



The AMUL ready-to-eat pizzas, were an instant hit in Ahmedabad and

various cities across Gujarat, when it was launched. At a rate of Rs. 10/- per pizza, it

penetrated the market fiercely and thereby edging out the local competitors, hence

leading to a price war. The strategy here was simple, value for money, as the pizza

was meant for stop-and-go food, and it was tasty. This was the same case with

AMUL ice-creams in the party pack and family pack segment. The rates were pretty

cheap compared to Kwality Walls and Vadilal’s ice-creams, which led to people

citing low prices and quality as picking AMUL for the ice-creams.

Another important product, was the cheese based one. The advertisement,

“Amul Cheese… Yes Please” was a national hit, and led to extensive rethinking of

strategies for the leading MNC’s including Britannia. This was because the value for

money was ensured to the consumers and the lingering taste invoked the consumers

to buy more of the same product.

E. System

The various systems developed in the course of the growth of AMUL have

been a source of inspiration for other co-operative structures or rather a good example

for them. Some of the important systems developed at AMUL are as under

i. Inventory Control System

ii. Order Execution System

iii. EIAS – Entrepreneur Integrated Application System

iv. Distribution System

Out of these, the distribution system was studied to the last detail. It is

described below.



Distribution System

This system is applicable to the city of Ahmedabad on a whole,

and to some extent, the neighbouring districts of Vadodara,

Surendranagar, Himmatnagar, etc.

a. There are four godowns of AMUL at Ahmedabad namely,

Security, Bhoomi, Sachin & Padmavadi. Security is based at

Narol village, Bhoomi and Sachin at Aslali village and

Padmavadi at Naroda village.

b. Sachin and Padmavadi are cold storage warehouses storing

Butter, Cream and Shrikhand. Security and Bhoomi are warm

storage warehouses storing Cool Drinks, Tetrapack Milk, Amul

Masti, Powders, etc.

c. The Manufacturing date & date of expiry is necessary to be

considered.

d. GCMMF Ltd. gives an order to Godhra town warehouse; while

ordering Delivery Number is to be given, which comes from

Anand Headquarters

e. If goods are available, then an invoice number is made, and

goods are dispatched to Clearing and Forwarding Agents.

f. Goods are received till octroi post, where the octroi has to be

paid. Octroi is levied only on flavored substance. So for 1200

boxes, 3% octroi is levied.

g. Goods are received at Security warehouse. An entry is to be

made into the incoming register.

h. Any cases of defective products, the particular batch is not to

be sold, and the batch number is noted down

i. Requirement for Security is decided at GCMMF Ltd. and if it

requires 100 cartons, then a bill of 100 cartons is made.



Information is given to Security and Bhoomi and transporters

are contracted.

j. Two duplicate copies of the bill is filed with Mr. Simon, the

warehouse-in-charge and C & F employee goes to take invoice

from GCMMF Ltd. transporter makes an Lorry Reciept.

k. Transporter reaches where the stock is more in accordance to

whom the bill is made

l. He pays octroi and goes to Security Warehouse with Lorry

Reciept

m. A duplicate copy is served to the transporter and the entry is

made in the dispatch register for outward dispatch.

F. Staff

The staff of AMUL as an organization is huge, concerning the 13 district

unions covering 25 dairies. The staff is described as under in the various levels.

CONSUMERS 2.5 MILLION

10 MILLION HH FARMERS



THE STAFF/MEMBERS OF THE ORGANIZATION

GCMMF Ltd. has 750 employees across the accounting, marketing,

personnel departments. It is such a vast organization and it is surprising to

know that only 750 employees handle the workload of 25 state-of-the-art

dairies across 13 district unions.

There are 13 member unions at the district level, with 10,000 employees

There are 3,600 distributors handling AMUL products and storing and

distributing them

There are 400,000 retailers selling AMUL products to 10 million

households

There are village co-operative societies in the number of 10,000 and above

5000 employees

The owners, the farmers are 2.5 million in number, and still increasing.

G. Shared Value

AMUL has so far always promised on its values and has delivered on

time, value for money products. The shared values can be described below:

Customer Orientation

AMUL always focuses on the customer, hence it has opened the AMUL

dairy at Anand from 3 P.M. to 6 P.M. solely for visitors/customers/farmers to

have a look at the world class dairies.

Commitment to producers

Quality ensured

Innovation all the way

o Creation of AMUL butter girl in 1966



o Topical tone from 1967

o Starting Amul Preferred Outlets to come closer to the customer

Co-operative structure maintained

Excellence in production and delivery

Leadership maintained; no autocratic situations

Sense of belongingness maintained

Employees have pride in working for organization

Employee Satisfaction



CHAPTER-4

SWOT ANALYSIS



SWOT ANALYSIS

Strengths

o Sizeable population of cows & buffaloes

o Huge domestic market for products

o Absolute Monopoly in traditional milk products

o Market leader in major milk & milk products like cheese, dairy whiteners & ice-

creams

o Availability of all kinds of machinery and equipment at most competitive rates in

the world

o Excellent network of Artificial Insemination Centres in the world

o Good infrastructural and institutional support for dairying

Weaknesses

o Co-operative structure - complexity

o Not more than 12% dividend

o Fights between district unions

o FIFO not handled properly

o Financial benefits not available

o Socio-cultural constraints on culling on less/non-productive animals

o Competition between man & animal for scarce land & water resources

o Government working is seen all departments



Opportunities

o Global markets like Africa, South America

o Rural markets for sale of cheese and related products

o Potential for increasing the productivity of milch animals

o Scope for reforms by restructuring Animal Husbandry Departments in states

o Good scope for privatization of animal health care services in selected areas

Threats

o Unregulated competition from national and multinational private companies

o Dumping of cheap dairy products on Indian markets by developed countries

o Unethical practices by unscrupulous private dairy operators

o Inadequate public and private investment in modernization of the sector



CHAPTER-5

FINDINGS

CONCLUSIONS

SUGGESTIONS AND

RECOMMENDATIONS



CHAPTER-6

BIBLIOGRAPHY



wikipedia.org

www.amul.tv

www.amul.com

Case studies from Indian Institute of Management, Ahmedabad

Online Resource Centre

The story of AMUL

Manthan – the movie

Mamooliram – the small big man, a movie about Verghese Kurien


http://www.amul.com/

http://www.amul.tv/

Veena Amul Final

Documents

Transcript of Veena Amul Final