Project Report Amul Pooja 3d4m73

INTRODUCTION OF THE INDUSTRY The collaboration & effort of each member by giving their to another hands as such all returns distributed amongst themes per share & constitution of society. India is a big country in which most of people resides below poverty line. Father of nation “MAHATMA GANDHI JI” is the first man of our country who thought, orates and wrote about the co-operative system to save the country workers from the economics exploitation. After independence and his first visit to Russia our first prime minister “PANDIT JAWAHAR LAL NEHRU” started movement for the upliftment of people by constituting co-operative societies is based on formal president of U.S.A “MR.ABRAHAM LINCOLN” i.e. by the people, for the people and of the people. As the co-operative societies are being constituted by the people after nomination of and of society elects officer bearer themselves under the rules and regulations of such body by their own thinking, which were based their own requirement & then all co-operative efforts done by all the people. The co-operation federation by movement can also known as social revolution .This is the solid way by which producers of villagers () go to directly in managed & associated way and due to better prices of their produces reimburse to them by which their uplift & communal harmony rises day by day. None can raise their finger to that matter dealt by the society worker under the guidance of rules &regulations constituted by the member & an of them have an opportunity to replace any office bearer of his society at the time of annual election which is under the act ed by govt, of India in 1961. During the last 47 years, a co-operative society of our country has struggled hard to win its freedom from economic exploitation using the cooperative daring as its weapon .It has created a formidable business entity .one of that has overcome the toughest challenges emerging as a recognized player in the international dairy industry .This society is known as Gujarat cooperative milk marketing federation Ltd.

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INDIAN ICE-CREAM AN OVERVIEW Ice-cream is a frozen dessert usually made from dairy products, such as milk and cream, and often combined with fruits or other ingredients and flavors. Most varieties contain sugar, although some are made with other sweeteners. In some cases, artificial flavorings and colorings are used in addition to the natural ingredients. The meaning of ice-cream varies from one country to another. like frozen custard, frozen yogurt, sorbet, and gelato and so on.

• ICE CREAM INDUSTRY IN INDIA The ice cream industry in India is in many ways, reflective of overall population distribution. The country’s population is primarily rural with approximately 65% of the population living in villages. It is estimated that only 30% of entire market is “organized”. The Ice-cream industry in India is worth Rs. 2000 crores. The industry can be divided into branded and unbranded market. The branded market at present is 100 million liters per annum valued at Rs.800 crores. In 2008-09, in the branded ice cream market, Amul held the no. one spot with the market share of 38%, followed by Kwality Walls 14%, Vadilal 12% and Mother Dairy at 8%. The per capita consumption of ice cream in India is approximately 300m1, as against the world average of 2.3 liter per annum. Vanilla, strawberry and chocolate together constitute approximately 60% of the market.

BRIEF HISTORY OF ORGANISATION Who is unknown with that moppet, which put the branded milk product on India’s breakfast table? Yes! the amul butter girl which simply said by her baseline “utterly butter delicious AMUL “the butter of amul which has launched in 1945 by GCMMF became very famous in 1967 amongst the majority of people of India by the help of its ment .For 30 odd years the utterly butterly girl has managed to keep her following intact .so much so that adds are ready to enter in the gunnies book of world record being the largest campaign ever. Today people are very frank with brand name of “AMUL” OF GCM.MF Ltd. Now amul has completely set up its goodwill in Indian market. The national dairy development board, with its operation flood programmed, has played a shining role in its growth & development. 2

The institute of rural management “ANAND” (Gujarat) as always has contributed to the prospective building & professionalization of management of co-operative sector. The advertising agency like ASP bankers like (bank of Baroda, standard bank of India, kaira district central co-operative bank Itd. insurances, management, Consultants, suppliers &transport has also given a great help in management. The great strength of GCMMF Ltd. (AMUL) is member union of cooperatives, the spirit of co-operative movement & adherence to fundamental principle of the co-operative. The management of federation elected leaders & office bearers for their valuable guidance, & co-operative. With the of govt, of India &govt. of Gujarat, today GCMMF Ltd. (AMUL) continued toward its progress. Gujarat co-operative milk marketing federation ltd. ANAND India is ed under Gujarat co-operative Societies act 1961.

INDIAN DAIRY INDUSTRY-FACTS & FIGURE Beginning in organized milk handling was made in India with the establishment of Military Dairy Farms. Handling of milk in Co-operative Milk Unions established all over the country on a small scale in the early stages. Long distance refrigerated rail-transport of milk from Anand to Bombay since 1945 Pasteurization and bottling of milk on a large scale for organized distribution was started at Aarey (1950), Calcutta (Haringhata, 1959), Delhi (1959), World (1961), Madras (1963) etc Establishment of Milk Plants under the Five-Year Plans for Dairy Development all over India. These were taken up with the dual object of increasing the national level of milk consumption and ensuring better returns to the primary milk producer. Their main aim was to produce more, better and cheaper milk.

• MILK PRODUCTION India’s milk production increased from 21.2 million MT in 1968 to 88.1 Million MT in 200304. . India is the largest producer of Milk in the World (replacing USA). Per capita availability of milk presently is 231 grams per day, up from 112 grams per day in 1968-69. . India’s 3.8 percent annual growth of milk production sures the 2 percent growth in population; the net increase in availability is around 2 per cent per year.

• MARKETING 3

In 2004-05, average daily cooperative milk marketing stood at 155 lakh liters; ing a growth of 4.2 percent over 148.75 lakh liters in 2003-04.. Dairy Cooperatives now market milk in about 200 class cities including metros and some 550 smaller towns. . During the last decade, the daily milk supply to each 1,000 urban consumers has increased from 17.5 to 52.0 liters.

• INNOVATION > Bulk-vending - saving money and the environment. Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and road milk tankers.NinetyS-five percent of dairy equipment is produced in India, 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 some 12 million farm families. > Dairy Farming is the single largest contributor to the economy (5% of GDP &13% of employment) > Dairy industry represents a huge opportunity being the largest single FMCG Market: Urban Mkt size Rs 33000 Cores and organized sector Rs 11000 Cores representing a huge opportunity for conversion and growth

KEY CHALLENGES BEFORE INDIAN DAIRY INDUSTRY ARE AS FOLLOWS > Ensuring Quality > Procurement and efficiencies in supply chain > Product differentiation and value addition 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 have to withdraw the and subsidy to their domestic milk products sector. Also India today is the lowest cost producer of per liter of milk in the world, at 27 cents, compared with the U.S1 63 cent. 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 4

obtained quality standard certificates from the authorities. This will help them in marketing their products in foreign countries in processed form. The urban market for milk products is expected to grow at an accelerated pace of around 33% per annum to around Rs.83, 500 crores by year 2010. This growth is going to come from the greater emphasis on the processed foods sector and also by increase in the conversion of milk into milk products. By 2010, the value of Indian dairy produce is expected to be Rs 10,00,000 million. Presently the market is valued at around Rs7, 00,000 mn.

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INTRODUCTION

TO

THE ORGANISATION

6

Amul: The Origin

GCMMF, known through its popular “desi brand”, Amul. The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the Himalayas. Similar is the story of Amul which inspired 'Operation Flood' and heralded the 'White Revolution' in India. It began with two village cooperatives and 250 liters of milk per day, nothing but a trickle compared to the flood it has become today. Today Amul collects processes and distributes over a million liters of milk and milk products per day, during the peak, on behalf of more than a thousand village cooperatives owned by half a million farmer . Further, as Ganga-ma carries the aspirations of generations for moksha, Amul too has become a symbol of the aspirations of millions of farmers. Creating a pattern of liberation and self-reliance for every farmer to follow. The brand name AMUL, from the Sanskrit Amoolya, meaning priceless, was suggested by a quality control expert in Anand. The first products with the Amul brand name were launched in 1955. Since then, they have been in use in millions of homes in all parts of India, and beyond. Today Amul is a symbol of many things: Of high quality products sold at reasonable prices, of availability, of service. There is something more, though, that makes the Amul brand special and that something is the reason for our commitment to quality and value for money. Amul is the brand name of 2 million farmers, of 10,000 village dairy cooperative societies throughout Gujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is so special about the Amul saga.In the early days of Kaira Union there was no dearth of cynics. Could ‘natives’ handle sophisticated dairy equipment? Could western-style milk products be processed from buffalo milk? Could a humble farmers’ cooperative market butter and cheese to sophisticated urban consumers? The Amul team – farmers and professionals – 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 tough competition.

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Introduction to the Organizations

Gujarat Cooperative Milk Marketing federation Ltd. (GCMMF)

GCMMF, better known through its Amul brand, is India’s largest food product marketing organization. Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative movement in India. It is a brand name managed by an apex cooperative organization, Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), which today is tly owned by some 2.6 million milk producers in Gujarat, India? AMUL is based in Anand, Gujarat and has been a sterling example of a co- operative organization’s success in the long term. It is one of the best examples of co-operative achievement in the developing world. “Anyone who has seen the dairy cooperatives in the state of Gujarat, especially the highly successful one known as AMUL, will naturally wonder what combination of influences and incentives is needed to multiply such a model a thousand times over in developing regions everywhere.” The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world’s biggest vegetarian cheese brand. Amul is the largest food brand in India and world’s Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.6 million producer with milk collection average of 3 10.16 million liters per day. Besides India, Amul has entered overseas markets w such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of flooding the Japanese markets. Other a potential markets being considered include Sri Lanka. Dr Varghese Kurien, former chairman of the GCMMF, is recognized as the man behind the success of Amul. On 10 Aug 2006 Parthia Bhatol, chairman of the Banaskantha Union, was elected 3 chairman of GCMMF.

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INTRODUCTION AND HISTORY

In the year 1946 the first milk union was established, This union was started with £% 250 liters of milk per day. In the year 1955 AMUL was established. !ri the year 1946 the union was known as KAIRA DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION. This union selected the brand name AMUL in 1955. cj The brand name Amul means “AMULYA”. This word derived form the Sanskrit A word “AMULYA” which means “PRICELESS”. A quality control expert in Anand had suggested the brand name “AMUL”. 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 i and Amulya have made Amul a leading food brand in India. (The total sale is Rs. 6 A billion in 2005). Today Amul is a symbol of many things like of the high-quality A products sold at reasonable prices, of the genesis of a vast cooperative network, i of the triumph of indigenous technology, of the marketing savvy of a farmers’ A organization. And have a proven model for dairy development (Generally known A as “ANAND PATTERN”). In the early 40’s, the main sources of earning for the farmers of Kaira district were farming and selling of milk. That time there was high demand for milk in Bombay. The main supplier of the milk was Poison dairy limited, which was a privately owned company and held monopoly over the supply of milk at Bombay from the Kaira district. This system leads to exploitation of poor and illiterates’ farmers by the private traders. The traders used to beside the prices of milk and the farmers were forced to accept it without uttering a single word. However, when the exploitation became intolerable, the farmers were frustrated. They collectively appealed to Sardar Vallabhbhai Patel, who was a leading activist in the freedom movement. Sardar Patel advised the farmers to sell the milk on their own by establishing a co-operative union, Instead of supplying milk to private traders. Sardar Patel sent the farmers to Shri Morarji Desai in order to gain his co-operation and help. Shri Desai held a meeting at Samarkha village near Anand, on 4th January 1946. He advised the farmers to form a society for collection of the milk. These village societies would collect the milk themselves and would decide the prices at which they can sell the milk. The district union was also form to collect the milk from such village cooperative societies and to sell them. It was also resolved that the Government should be asked to buy milk from the union. However, the govt did not seem to help farmers by any means. It gave the negative response by turning down the demand for the milk. To 9

respond to this action of govt., the farmers of Kaira district went on a milk strike. For 15 whole days not a single drop of milk was sold to the traders. As a result the Bombay milk scheme was severely affected. The milk commissioner of Bombay then visited Anand to assess the situation. Having seemed the condition, he decided to fulfill the farmers demand. Thus their cooperative unions were forced at the village and district level to collect and sell milk on a cooperative basis, without the intervention of Government. Mr. Varghese Kurten showed main interest in establishing union who was ed by Shri Tribhuvandas Patel who lead the farmers in forming the Cooperative unions at the village level. The Kaira district milk producers union was thus established in ANAND and was ed formally on 14th December 1946. Since farmers sold all the milk in Anand through a co-operative union, it was commonly resolved to sell the milk under the brand name AMUL. Initial stage only 250 liters of milk was collected every day. But with the growing awareness of the benefits of the cooperativeness, the collection of milk increased. Today Amul collect 11 Iakhs liters of milk every day. Since milk was a perishable commodity it becomes difficult to preserve milk flora longer period. Besides when the milk was to be collected from the far places, there was a fear of spoiling of milk. To overcome this problem the union thought out to develop the chilling unit at various junctions, which would collect the milk and could chill it, So, as to preserve it for a longer period. Thus, today Amul has more than 150 chilling centre in various villages. Milk is collected from almost 1073 societies. With the financial help from UNICEF, assistance from the govt, of New Zealand under the Colombo plan, of Rs. 50 millions for factory to manufacture milk powder and butter was planned.Dr. Rajendra Prasad, the president of India laid the foundation on November 15, 1954. Shri Pandit Jawaharlal Nehru, the prime minister of India declared it open at Amul dairy on November 20, 1955.

GCMMF TODAY GCMMF is India’s largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat, which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products, which are good value for money. GCMMF markets and manages the Amul brand. From mid-I 990’s Amul has entered areas not related directly to its core business. Its entry into ice cream was regarded as successful due to the large market share it was able to capture within a short 10

period of time - primarily due to the price differential and the brand name. It also entered the Pizza business, where the base and the recipes were made available to restaurant owners who could price it as low as 30 rupees per pizza when the other players were charging upwards of 100 rupees. In September 2007, Amul emerged as the leading Indian brand according to a survey by Syncopate to find out Asia’s top 1000 Brands

Total Quality management: According to Mr. B M Vyas, Managing Director GCMMF: “We’re in between the two extremes – the customer and the farmer. Both expect the maximum intake. In one way, the customer wants to have the best product available at the lower price.To sustain in the business we have to make sure that we give them what they want”. As all these require a tight integration in the supply and value chain activities, GCMMF is able to excel it by educating the farmer and providing him the necessary guidance on one end and on the other end approaching the consumer with the best product and understanding the Indian consumer better. The information technology and total quality management came together to help the GCMMF to gain control on the procurement, processing and distribution functions.

The TQM Model- GCMMF

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I.T. Initiative: According to Mr. B M Vyas, Managing Director GCMMF, “Information Technology is our thrust area from our inception that is because we are marketing the perishable goods. There is every chance that we may collapse in between if we don’t understand the market realities and the village farmers. There should be a 24x7 hrs information flow in between us and the remaining nodes of our supply chain”. The need for coordinating a highly distributed system was clearly understood. Close coordination has been the main feature of the value chain.

The GCMMF Value Chain

Enterprise Wide Systems: EIAS and GIS:-

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GCMMF has connected its Zonal Offices, Guwahati Regional Office as well as Member Dairies, Milk Unions and its own Unit-Mother Dairy through VSAT for seamless exchange of “Online” information. All Sales Offices, C&F points & Wholesale distributors of GCMMF have been connected through T/IP Internet Mail for exchange of information. In addition to the above, GCMMF is using Geographical Information System (GIS) at its Head Office and key Marketing Offices. Using the All India Map in GIS. They are in position to plot zone/depot boundary as well as pointer for zone, depot & distributor locations, which are superimposed by product-wise sales data. The same is being used for sales & distribution planning and review. Moreover, GIS is being used for business planning activity at milk centers and it covers animal census data. This has helped them to know average milk production and productivity of cows and buffaloes in Gujarat and track the animals and trend analysis etc. The EIAS customized ERP packages of GCMMF is designed in such a way that is can be plugged into various points of supply chain,

Managing Complex Supply Chains:Here I am going to describe the breakthrough vision that led to the simultaneous development of the market and supply side through a process of social development and education at AMUL. Here I tried my level best to provide some insights into management of very large supply chains by adapting and integrating a variety of strategies and techniques. This includes building networks, developing trust & values in the network, developing fair mechanisms for sharing benefits across the supply chain, coordination for operational effectiveness, innovation and new technology for gaining competitiveness. It is noteworthy that these successes were achieved within the framework of a network of cooperatives organized in a hierarchical manner. There are many lessons in AMUL’s success not only for the cooperative sector but also for firms who intend to do business in emerging markets.

AMUL’s Journey towards Excellence:AMUL’s journey towards excellence is marked by some critical understanding of the business environment in large emerging economies like India where markets have to be developed by combining efficiency related initiatives with increasing the base of marginal suppliers and consumers. The essence of AMUL’s efforts was as follows:

 It combined market and social development in an emerging economy. It recognized the inter linkages between various environments that governed the lives of marginal 13

milk farmers and the unmet needs of consumers. It also changed the supply chain paradigm in order to reduce the cost to the consumer while increasing the return to the supplier.  It realized that in order to achieve their objectives, it had to benefit a large number of people –both suppliers and consumers. While large scale had the danger of failure due to poor control and required more resources, it also had the advantage of creating a momentum that would be necessary to bring more people into the fold and thereby help more suppliers and consumers.  It also realized that its goal could only be achieved in the long run and this required developing values in people and processes that were robust, replicable and transparent  It also realized that the cooperative would not be independent and viable in the face of competition if it were not financially sound. This implied that AMUL had to develop distinct capabilities that would deliver competitive advantage to its operations. This would include long term cost containment, world-class deployment of technological resources and R&D, and better leveraging of scarce resources.

Characteristics of AMUL’s Approach to Excellence

Managerial

Elements

Implementation Mechanisms

Dimensions Leadership

Charisma,

long

term

vision, Constantly raising the bar,

commitment,

Strategy

promoting a can-do attitude,

trustworthy,

selfless

managerial

style

gain,

strong communication of the vision

(bordering

on to

stubbornness), technocrat, pan-Indian

farmers, consumers and the

vision/nationalism, persuasion

government

Farmer Orientation, technology, cost R&D focus, efficient supply leadership, product variety in later years

chain, simultaneous development of suppliers & 14

markets, financing projects from internal accruals Organization

Network of cooperatives, National Dairy Development

Board,

nature

professional managers

Democratic governance of

of cooperatives, unique composition

and

role

of

board of cooperatives, proactive role of the village societies division at AMUL Marketing

Gujarat

Cooperative

Federation

Milk

Marketing Product mix, pricing, dealer network, managing supply and demand

growth,

ment

Leadership: While Kurien Union (or AMUL) had the of national leaders who were at the forefront of the Indian independence movement, its local leaders were trained in Gandhi’an simplicity17 and had their feet rooted firmly amongst people whom they had mobilized – the poor farmers of Anand. The foremost amongst them was Tribhuvandas Patel18 who had led the movement for the formation of cooperatives of small and marginal farmers in order to compete against investor owned enterprises on one hand, and keep bureaucracy away on the other hand. Tribhuvandas was the first Chairman of the cooperative. His skills lay in organizing the village producers, in making them believe in the power of cooperation and their rights towards improvement of human condition. He is ed as fair and honest person whose highest sense of ability to the of the union laid the foundation of trust between network 19. Another important aspect of his remarkable management style was his gentleness and ability to repose trust in people – he gave complete autonomy to managers of the union and earned complete commitment from them20. Verghese Kurien21 was one such manager who would, first, shape the destiny of the Union and then the milk movement throughout the country. 15

Kurien emerged as the father of the dairy movement in India. He managed to keep the government and bureaucrats away from the cooperative22 and gave shape to the modern structure of the cooperative, worked tirelessly to establish the values of modern economics, technology and concern for farmers within the cooperative. He interfaced with global financing agencies to build new projects at AMUL. He worked with the Unions to bring the best of technology to the plants. He worked with marginal village farmers to create systems that would increase milk yields. He understood that without meeting the needs of customers he would not be able to satisfy his obligations to the farmers. In short, Kurien shaped the destiny of the milk movement in India through NDDB (as it’s Chairman) and particularly at GCMMF and cooperatives in Gujarat. Several young people left better paying jobs to help create a dream of making India the milk capital of the world. Kurien had learnt the persuasive charm of Tribhuvandas through plain speaking and had soon created a cadre of highly capable managers to whom he had delegated both management as well as commitment These leaders were created at the village, district and state levels in different organizations of the network.

K

urien had transformed AMUL from a dream into a major industrial entity – a network of plants, cooperative societies, research centers, an institute for training future managers in rural management, secondary services like veterinary/artificial insemination

expertise/feed factory etc. Kurien’s biggest strength lay in his ability to convince people that the cause of rural farmers was important thus establishing an important shared value. Subsequently, he could convince the government to replicate the AMUL model in almost all states of the country.

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 16

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 multipronged strategy of education and . For example, only part of the surplus generated by the Unions is paid to the 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, 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 . 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. 17

Focus on Core Activities: In view of its small beginnings and limited resources, it became clear fairly early that AMUL would not be in a position to be an integrated player from milk production to delivery to the consumer23. Accordingly, it chose a strategy to focus on core dairy activities and rely on third parties for other complementary needs. This philosophy is reflected in almost all phases of AMUL network spanning R&D, production, collection, processing, marketing, distribution, retailing etc. For example, AMUL focused on processing of liquid milk and conversion to variety of dairy products and associated research and development. On the other hand, logistics of milk collection and distribution of products to customers was managed through third parties.

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 selfreliant 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 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 18

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.

Organization: AMUL is organized as a cooperative of cooperatives (i.e., each village society, a cooperative in itself, is a member of the AMUL cooperative) thereby deriving the advantage of scale and uniformity in decision making. The founders of Kaira Union realized that to fulfill their objectives, a large number of marginal farmers had to benefit from the cooperative – a network of stakeholders had to be built. And once built, it had to grow so as to draw more rural poor to undertake dairy farming as a means of livelihood. The network had to have several layers – the organizational network where the voice of the owners governed all decisions, a physical network of services and product delivery process and a network of small farmers that could deliver the benefit of a large corporation in the market place. More importantly, a process had to be put in place to build these networks. Building an organizational network that would represent the farmers and the customers was the most complicated task. A loose confederation was developed with GCMMF representing the voice of the customers, the Unions representing the milk processors and the village societies representing the farmers. Competition in the markets ensured that the entire network was responding to the requirements of the customers at prices that were very competitive. The task of ensuring that returns to the farmers was commensurate with the objectives with which the cooperatives were setup was achieved through representation of farmers at different levels of decision making throughout the network – the board of directors of societies, Unions and the Federation comprised farmers themselves. In order to ensure that most returns from sales went to the producers, the intermediaries had to operate very effectively and on razor thin margins. This turned out to be a blessing in disguise – the operations remained very “lean” and started to provide cost based advantage to the entire network. AMUL established a group to standardize the process of organizing farmers into village societies. In addition to establishing the criteria for selecting , the group had to

19

train the VS to run the cooperative democratically, profitably and with concern for its . This included establishing procedures for milk collection, testing, payment for milk purchased from member farmers and its subsequent sale to the union, ing, ensuring timely collection and dispatch of milk on milk routes established by the union, etc. The Village Societies Division at AMUL acts as the internal representative of village societies in their dealings with the Union. Cooperative development programmes at the village level for educating & training its have become an important part of the strategy to build this extensive network. Milk procurement activity at AMUL comprises development and servicing of village societies, increasing milk collection, procurement of milk from societies & its transport to the chilling locations, and resolving problems of farmers and village societies. Their stated objective is to ensure that producers get maximum benefits. The Village Societies Division coordinates these activities. Milk collection takes place over a large number of pre-defined routes according to a precise timetable. The field staff of this division also helps village societies interface with the Union on various issues ranging from improvement of collection, resolving disputes, repair of equipments to obtaining financing for purchase of equipment etc. In addition, they are also responsible for the formation of new societies, which is an important activity at AMUL.

Marketing: 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. These activities, which range from long-term planning to medium-term and short-term operational decisions are described below. As mentioned earlier, 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).

20

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. 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”)

Operations: As mentioned earlier, the strategy, design and practices in AMUL’s network are strongly driven by the objective of establishing and operating an efficient supply chain from milk production and procurement to product delivery to customers. Management of this network is built around two key elements – (a) coordination of the diverse elements of the network and (b) use of appropriate technology that includes product, process and information technology and managerial practices and systems. In what follows, we describe various features of these elements that have contributed to the evolution of an efficient supply chain.

Coordination for Competitiveness Robust coordination is one of the key reasons for the success of operations involving such an extensive network of producers and distributors at GCMMF. Some interesting mechanisms exist for coordinating the supply chain at GCMMF. These range from ensuring fair share allocation of benefits to various stakeholders in the chain to coordinated planning of production and distribution. More importantly, the reason for setting up of this cooperative is not amiss to any one in this large network organization. Employees, third part service providers, and distributors are constantly reminded that they work for the farmers and the entire network strives to provide the best returns to the farmers, the real owners of the cooperative.

Technology for Effectiveness: Service to customers required the following: better and newer “products”, “processes” that would deliver the low cost advantage to the network and “practices” that would ensure high productivity and delivery of the right product at the right time. Thus technology or knowledge that was embodied in products, processes, and practices became an important factor in delivering effectiveness to the network of cooperatives. One distinguishing feature of AMUL (in comparison with other similar cooperatives globally) is the large variety in their 21

product mix. Producing them not only requires diverse skills but also knowledge of different types of processes. AMUL dairy led the way in developing many of these products and establishing the processes for other member Unions. Equally impressive are the achievements on process technology. While several continuous innovations to equipment and processes have been done at AMUL, the most significant one has been the development of processes for using buffalo milk to produce a variety of end products. Gujarat (and most of India) is a buffalo predominant area. As more farmers ed the cooperatives, the need to develop a mechanism for storage of increasing quantities of milk became intense. Moreover, the cooperative was established on the promise that it would buy any quantity of milk that a member farmer wanted to sell. The need to store milk in powder form increases as excess milk quantities in winter seasons could then be used in lean summer seasons. Moreover, demand for liquid milk was not growing along with growth in milk production. No technology, however, existed worldwide to produce powder from buffalo milk. Engineers at AMUL successfully developed a commercially viable process for the same – first time in the history of global diary industry. Subsequently, it also developed a process for making baby food out of this milk powder. It has also developed a unique process for making good quality cheese out of buffalo milk thereby converting a perceived liability into a source of comparative advantage – the task was done through process technology research. Most of its plants are state of art and automated. Similar efforts in the area of “embryo transfer technology” have helped create a high yield breed of cattle in the country. AMUL’s innovations in the areas of energy conservation and recovery have also contributed to reduction in cost of its operations. AMUL also indigenously developed a low cost process for providing long shelf life to many of its perishable products.

Growth and Challenges: AMUL’s growth during the past five decades has been fuelled primarily by growth in milk supply with corresponding pricing strategy to generate demand. This growth has been sustained by a two-pronged strategy – (a) growth in the number of member farmers by widening its coverage with more village societies and increasing the hip in each society, and (b) growth in per capita milk supply from its . This growth is achieved by increasing milk yields and by helping raise their investments in cattle. It is worth noting that AMUL has funded these activities from its earnings (instead of repatriating them to the either as dividends or with a higher procurement price). It is expected that AMUL’s growth in the immediate future will 22

continue to rely on this strategy. However, in the new emerging environment, several challenges have become apparent and AMUL network needs to evolve proactive mechanisms to counter these threats. First, competitors are cutting into milk supply by offering marginally higher procurement prices thereby challenging the practice of provision of services for long-term growth in lieu of higher prices in the short-term. Second, for a section of its hip, dairy activity is a stepping-stone for upward mobility in the society. Typically, such move on to other occupations after raising their economic position through milk production. As a result, AMUL is unable to realize the full benefits of its longterm strategy, and finds new (mostly marginal farmers) to replace those who have higher potential and capacity. By progressively increasing the share of higher value products AMUL has been able to grow at a faster rate than the growth in milk supply. A part of AMUL’s growth has come from diversification into other agri-products such as Vegetable oils, instant foods etc. In some of these initiatives AMUL adapted its successful Cooperative organization structure, but the experience to date has been somewhat mixed. More recently, the network is exploring conventional t venture arrangements with suitable partners for diversification into areas such as fast food and speciality chocolates. While it is too early to assess the success of these ventures, challenges involved are becoming quite visible. For example, diversification has resulted in expansion of the network with disparate elements, each motivated by their own objectives. This in turn has led to a lack of focus within the network and dilution in the commonality of purpose. These developments are likely to have serious implications for coordination and control in the network. More important, shared vision and common goal was one of the main planks of AMUL’s growth during the past 50 years, and its dilution is likely to adversely impact the network performance

GCMMF: An Overview Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. 23

:

13 district cooperative milk producers' Union

No. of Producer :

2.6 million

No. of Village Societies:

12,792

Total Milk handling capacity:

10.16 million liters per day

Milk collection (Total - 2006-07): 2.38 billion liters Milk collection (Daily Average 200607):

6.5 million liters

Milk Drying Capacity:

594 metric Tons per day

Cattle feed manufacturing Capacity: 2640 Mts per day

GCMMF AWARDS

 GCMMF bags APEDA Award for 11th year in a row.  AMUL pro-Biotic Ice-Cream gets No. I Award at the World Dairy Summit.  Ramakrishna Bajaj National Quality Award - 2003  AMUL-The Taste of India (GCMMF) receives International ClO 100 Award for resourcefulness.  Rajiv Gandhi National Award - 1999

PRODUCT PORTFOLIO 1. Bread spreads • Amul Butter 24

• Amul Lite Low Fat Bread Spread • Amul Cooking Butter

2. Cheese Range • Amul pasteurized processed Cheddar Cheese • Amul Processed cheese Spread • Amul Pizza (mozzarella) cheese • Amul Shredded pizza Cheese • Amul Emmental Cheese • Amul Gouda Cheese • Amul Malai Paneer (Cottage Cheese)

3. Mithaee Range • Amul shrikhand (Mango, Saffron, Almond Pistachio, Cardamom) • Amul Amrakhand • Amul Mithaee Gulab Jamub Mix • Amul mithaee Kulfi Mix • Amul Avsar Ladoos

4. UHT Milk Range • Amul Shakti 3% Fat Milk • Amul Taaza 1.5% Fat Milk • Amul Gold 4.5% Fat Milk • Amul Lite Slim-n-Trim Milk 0% Fat Milk • Amul Shakti Toned Milk • Amul Fresh Cream • Amul Snowcap Softy Mix

5. Infant Milk Rang • Amul Infant Milk Formula 1(0-6 months) • Amul Infant Milk Formula 2(6 months) • Amul spray Infant Milk Food

6. Milk Powders • Amul Full Cream Milk Powder 25

• Amulya Dairy Whitener • Sagar Skimmed Milk Powder • Sagar Tea & Coffee Whitener • Amul Saathi Skimmed Milk 0% Fat • Amul Cow Milk • Amul Pure Ghee • Yogi Sweetened Flavored Dahi (Dessert) • Amul Masti Dahi (Fresh Curd) • Amul Masti Spiced Butter Milk • Amul Lassee

7. Milk Drink • Amul Kool Flavored • Amul Kool Café

8. Health Beverage • Amul Shakti White Milk Food

9. Chocolate & Confectionery Amul Milk Chocolate Amul Fruit & Nut Chocolate

10. Amul lce-Cream • Royal Treat Range (Butter Scotch, Rajbhog, Malai Kulfi) • Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond) • Nature’s Treat (Aiphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant, Santra Mantra, Fresh Pineapple) • Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae) • Assorted Treat (Choc-bar, Dollies, Frostik, Ice Candies, Tricone, Chocó crunch, Megabite, Cassata) • Utterly Delicious (Vanilla, Strawberry, Chocolate, Chocó chips, Cake Magic) • Pro-Biotic

26

GCMMF TURNOVER

Sales Turnover

Rs. (million)

US $ (in millions)

1994-95

111.40

`355

1995-96

137.90

400

1996-97

155.40

450

1997-98

188.40

455

1998-99

221.92

493

1999-00

221.85

493

2000-01

225.88

500

2001-02

233.65

500

2002-03

274.57

575

2003-04

289.41

616

2004-05

292.25

672

2005-06

377.36

850

2006-07

427.78

1050

2007-08

525.54

1325

2008-09

609

1875

VALUE-ADDED PRODUCTS

Amul had humble, yet solid beginnings. From milk alone, the portfolio had expanded to include some very marketing-intensive products. Amul commissioned IMRB to do a study on what products the customers expected from its stable. Butter and ghee were the old success stories. Flavored mild under the brand name ‘Kool’ has also been accepted as a success story. Over time, Amul expects to collect sufficient data to validate the same. Says R S Sodhi, “We have been trying to figure out how we can dispose of the milk procured. Its

27

52 lakh liters a day, so how does one maximize returns on it? Hence the foray into valueadded products.” Amul outlined its advantages as follows: 1. Cost-effective production, including primarily, procurement of milk from over two million dairy farmers, which in turn, assures poor farmers reasonable prices. 2. Climbing up in the value-chain by diversifying in value-added products, such as milk sweets, ice creams, pizzas, confectioneries, truly as a food company, rather than merely selling milk, to be known only as an organized milk-vendor. 3. Sustained building of loyalty of customers, not by promoting individual products, but all products under the umbrella of its brand, Amul, by investing a good 40 per cent of its ad budget towards brand promotion. 4. Facilitating reach to customers throughout the country by a strong chain of distribution outlets (Amul reached out to five lakh retail outlets and had 2,600 distributors under its fold, and a well-established cold chain). The investment in relationship with business partners: both farmer-based co-operatives and distribution networks for purchasing and selling functions respectively, enables Amul enter into any food category without much time or investment. The key categories were chocolates, ice creams, soups and retail initiatives.

1. CHOCOLATES: GCMMF, which had been lying low for a while with its generic chocolate variants such as Fruit & Nut and Milk, intended segmenting its chocolates, catering to different age groups and categories that were likely to consume its brand. 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.” Having launched an occasion-related sub-brand of Nuts ‘bout U on the eve of Valentine’s Day and Kite Bite for the kite flying festival in Ahmedabad, Amul decided to segment the market with brands catering to the `impulse’ and `teen’ segments, as well as having brands catering to different occasions.

2. ICE-CREAMS: For its ice-cream and milk business, GCMMF had invested in increasing its milk capacity. It firmed up plans to invest Rs 100-120 crore to expand this from 1.1 million liters a day to 1.8 million liter a day at its Gandhinagar factory. The cooperative also planned to expand its production facilities beyond Gujarat to service other regions in India. GCMMF bought an ice-cream manufacturing unit in Nagpur and installed a dairy unit alongside. Through this 28

unit, Amul extended its milk supply to over 10 cities spread over Rajasthan, Madhya Pradesh and Maharashtra. Amul also focused on its supply system. Efforts were on to ensure greater availability of Amul ice-cream at pushcarts and small outlets. The company felt that availability was the most important factor in ice cream sales. Thus, Amul ice-cream could be found in ‘just around the corner shops,’ local STD booths, local kirana shops, chemists and bakers, who stocked the ice-cream in deep freezers. Both Amul and Hindustan Lever’s (HLL) Kwality Walls claimed to be the largest selling icecream brands in India. While HLL quoted a market research study by AC Nielson, which put Kwality Walls at the No 1 spot, an independent study by Ahmedabad-based Consumer Education and Research Society (CERS) ranked 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 was positioned as ‘real ice-cream’ made from real milk cream, while HLL’s Kwality Walls was made from vegetable oil and its items were dubbed Frozen Deserts. There was also stiff competition from the other cooperative, NDDB in the form of Mother Dairy Ice Creams. Amul sold its Ice Cream in New Delhi, India’s biggest Ice Cream market, where its anti-compete agreement with Mother Dairy had expired. Amul had been sourcing its entire Ice Cream requirement for the northern market (including Delhi) from its Gandhinagar plant.

3. SOUPS: Amul introduced ready-to-use (just pour and heat) soups branded ‘Masti’ in tetra packs of one liter. To begin with they were introduced in two flavors - Hot ‘n’ Sour and Tomato. Said Sodhi, “It was a test marketing drive in Gujarat and in a month or two it would be introduced all over India.” And there wasn’t much competition for there were not many companies in India

that

sold

ready-to-use

soups.

Sodhi added, “Soup is a milk product and that’s a secret. You will come to know only when you consume it.” Keeping the ingredients a closely guarded secret, the company stated that one of the reasons to launch soups was to utilize the already installed equipment for tetra packaging.

4. RETAILING: The retailing initiative included not only milk booths, but also restaurants. Amul had also taken the initiative to set up 100 of its own brand retail parlors under the name ‘Utterly 29

Delicious’, an initiative which would give it a retail edge, compared to its competitors such as HLL and Cadbury. Panigrahi estimated Rs. 100 crore in turnover in the three years after launching the `Utterly Delicious’ parlors. As an extension of this retail initiative, Amul also test-launched a restaurant chain under the Utterly Delicious brand at Vashi in Navi Mumbai. Amul wanted to open more of such eateries in Mumbai soon, which would dish out readyto-eat stuff like parathas, lassi, buttermilk, sandwiches and pizzas, using ingredients from Amul and also vending the products already available under the Amul franchise like soups, butter, ghee etc;

DISTRIBUTION NETWORK GCMMF already has a wide retail distribution network, which market its other milk products such as cheese and butter. Hence distribution reach the single most important factor in creating a critical mass is already available. Distribution expansion in emerging markets of Small Towns continued to be a major initiative of our Federation during this year. Almost 500 new Distributors were inducted as Channel partner—mostly in Small towns. At the same time, to cope up with the fast emergence of organized Retail in India, suitable Distribution model was developed during the year for servicing Modern format stores. Along with the changes in ‘consumption occasions’, distribution was expanded to Highways, Railways, Airports, Bus Stations, Schools, Colleges, Industrial Canteens etc. Our Amul Yatra Program ensures that our Distributors visit Anand, thereby, imbibing an appreciation of cooperative philosophy and culture as well as operational systems and processes. Top retailers of the Country also participate in Amul Yatra. So far, 2779 Distributors, 1654 salesman, and 1490 top retailers have participated in Amul Yatra. During this year of 80 key decision makers of top Modern format stores from various Metros have also participated. The company has gone national during FY01 with setting up proper infrastructure facilities of cold storage for eastern markets. It has also tied up with various regional dairy cooperative like Mother Dairy (DELHI) for northern market, Mother Dairy (BANGLORE) for the southern market; and the Patna Dairy Project for increasing its reach. The company presently is said to be in talk with cooperative Dairies in Ujjain and Lucknow for its operations in northern and eastern market. The company also launched a number of flavours during the year and response to HLL’s Max it launched its Fundoo range of ice creams in price category of Rs 1 onwards.

30

SALES During the year, sales of our Federation ed a growth of 29% to reach Rs. 3773.55 crores (Rs. 37.74 billion) including consignment sales of Rs. 39.42 crores (Rs. 0.39 billion). This is a very robust growth rate shown by our Federation vis-à-vis the industry average. I am pleased to note that our federation has done remarkably well in most of the value added consumer packs. Sales of Amul Milk in pouches increased by 31%. UHT Milk has grown in value by 12% with 60% market share. Amul Ice cream achieved a sales value growth of 18%, and has strengthened its position as the undisputed market leaders with 35% market share. Sales of Masti Dahi grew by 25%. The sales of the Amul Cheese range is increased by 18%. Products like Amul Masti Spiced Buttermilk, Flavoured Milk, Amul Fresh Ice cream, Paneer and Mithaimate demonstrated their potential to become dominant brands in the coming few years. New products like Amul Basundi, Stamina, Yogi Flavoured Yoghurt, Kool Café etc. launched during the year are expected to do well in the current year while diversifying our portfolio of offerings the consumer

DISTRIBUTION NETWORK CHART Head OFFICE

ZONAL OFFICE

31

DEPOT

DISTRIBUTORS

RETAILERS

END

32

BREADTH OF GCMMF LTD. (AMUL) PRODUCTS

The federation produces different type of branded milk and milk product with the cooperation of various member unions. The products are as follows: • AMUL Butter • AMUL mithaimate • AMUL Lite bread • AMUL Infant Milk food • AMULKOOL • AMULTAZA Milk • AMUL Dairy whitener • AMUL Instant full cream milk powder • AMUL Fresh milk • AMUL spray infant milk powder • AMUL Cheese powder • AMULEmmental cheese • AMULPasteurised processed cheese • AMUL Shakti • AMULshrikhand • AMULMithaigulabjamun • AMUL Ice cream • AMUL and SAGAR Brand pure ghee • AMUL Chocolates • AMUL Malaipaneer • AMUL FRESH Curd

33

EXPORT

GCMMF LTD (AMUL) regular export branded consumer pack dairy product together to U.S.Persian gulf & Fareast market .The federation has exported large quantities of full & skimmed cream milk powder, natramulya, amuly amithai made and Amul paneer. New market like Madagascar, Russia and Saudi Arabia are being developed building on strong base future. The federation has won the APPEDA award for the Excellence in exports. The major export market is given below: • U.S.A • ZAMBIA • RUSSIA • IRAQ • KU WAIT • U.A.E. • SAUDIARABIA • MUSCAT • NEPAL • SRILANKA • BANGLADESH • TANZANIA • UGANDA • SINGAPORE • QATAR

34

GCMMF MEMBER UNION

 AMUL DAIRY,ANAND  SABAR DAIRY, HIMMATNAGAR  BARODA DMRY,BARODA  PANCHMAHALDAIRY,GODHRA  RAJKOT DAIRY,RAJKOT  DUGDHDHARA DAIRY,BHARUCH  MOTHER DAIRY,GANDHINAGAR  UTTAM DAIRY,AHEMEDABAD  DUGHSAGAR,MEHSANA  BANAS DAIRY,PALANPUR  SUMUL DAIRY,SURAT  VASUNDHARA DAIRY,VALSA

FUTURE PLANNING OF GCMMF LTD.(AMUL) Gujarat co-operative milk marketing federation ltd. (AMUL) will be a outstanding marketing organization, with specialization in a marketing Of fresh and long life food and dairy products. With Costumer focus & information technology integration.

The network would consists of over 100 offices, Seven thousand & five hundred (4000 urban & 3500 rural ) stockiest covering at a last every district headquarters town, serving nearly 10 lakh outlets With a turnover of Rs.10,000 crores and serving several co-operation operatives. GCMMF LTD. (AMUL) shall also create market for its products in its neighboring countries.

35

RESEARCH METHODOLGY

The system of collecting data for research projects is known as Research Methodology. The data may be collected for either Theoretical or Practical Research

RESEARCH DESIGN The report is conclusive one. I visited the place of Jaipur and ed retailers and customers. The efforts were to inculcate a variety of outlets so as to evince the deep information and facts regarding the market mechanism and customer perception about Amul Ice-cream available in the market. FIELD WORK 1. ROUTE RIDING I spent the time in market for collecting the information about the various product of the company at different retail outlets and knowing the opinion of the retailers and as well as customers. 2. DATA COLLECTION I covered the different outlets in Jaipur. Interactions with dealers and the retailers provide me experience, knowledge. It also helped me to get information regarding customer choice and the taste. It helped me out in making my report assessing the Market share of Amul Ice-cream in comparison to other Ice-cream in jaipur and also about their taste and preferences and what should be done to overcome those problems. 3. DIRECT INVOLVEMENT I helped me in knowing the problems of the retailers and market which helped the company to know its strengths and weaknesses.

RESEARCH INSTRUMENTS (a)

Observation :- Careful observation of the outlets were done where

Amul

Ice-cream is being sold along with other companies questions were asked from retailers why they prefer to sell other companies in the same segment 36

where Amul Ice cream is already as everyone knows the good quality and brand image of Amul.

(b) Questionnaire:- Structure non disguised questionnaire and structured disguised questions has been asked from the respondents to collect information about company products and their performance level.

3.1 TITLE OF THE STUDY “Analysis the working and establish the Market for the Brand Amul Ice-cream”

3.2 DURATION OF THE PROJECT 45 Days

3.3 OBJECTIVE OF THE STUDY The sales team at Amul assigned me the project market share of Amul Ice-cream in comparison to other Ice cream in Jaipur with the following broad objectives:1. To collect the information about the sugar free ice cream 2. To know awareness of people towards Amul Sugar free Ice cream among the customers in Jaipur. 3. To know in which segment ice cream are mostly like/preferred. 4. To know the preference of Amul Sugar free ice cream with comparison to other competitive brands. 5. To collect detailed information about the price, supply or any required improvement towards the AMUL Prolife & Sugar free ice cream. 6. To determine the awareness level of variants of Amul Ice-cream among the customers in Jaipur.

3.4 Types of research: Historical Research Design - The purpose is to collect, , synthesize evidence to establish facts that defend or refute your hypothesis. It uses primary sources, secondary 37

sources, and lots of qualitative data sources such as logs, diaries, official records, reports, etc. The limitation is that the sources must be both authentic and valid. Case and Field Research Design - Also called ethnographic research, it uses direct observation to give a complete snapshot of a case that is being studied. It is useful when not much is known about a phenomenon. Uses few subjects. Descriptive or Survey Research Design - It attempts to describe and explain conditions of the present by using many subjects and questionnaires to fully describe a phenomenon. Survey research design /survey methodology is one of the most popular for dissertation research. There are many advantages. Correlation or Prospective Research Design - It attempts to explore relationships to make predictions. It uses one set of subjects with two or more variables for each. Causal Comparative or Ex Post Facto Research Design - This research design attempts to explore cause and affect relationships where causes already exist and cannot be manipulated. It uses what already exists and looks backward to explain why. Developmental or Time Series Research Design - Data are collected at certain points in time going forward. There is an emphasis on time patterns and longitudinal growth or change. Experimental Research Design - This design is most appropriate in controlled settings such as laboratories. The design assumes random assignment of subjects and random assignment to groups (E and C). It attempts to explore cause and affect relationships where causes can be manipulated to produce different kinds of effects. Because of the requirement of random assignment, this design can be difficult to execute in the real world (non laboratory) setting. Quasi Experimental Research Design - This research design approximates the experimental design but does not have a control group. There is more error possible in the results.

3.5 SAMPLING SIZE AND METHOD OF SELECTING SAMPLE SAMPLING Sampling method is used to know the opinion of the customer regarding Amul Icecream and what are the changes they want in the product. SAMPLE SIZE A sample size of 100 individuals was determined on a random basis, which existed in the Jaipur. So that sample size is large to get the right information with less error. As 38

error is inversely proportional to N (size of sample) and this is not so large that any distortion comes in conclusion due to some fault of miscommunication.

METHOD OF SELECTING SAMPL PRIMARY DATA (a) Direct integration with retailers. (b) Integration with company distributors and personnel. (c) Integration with the various customers. SECONDARY DATA (a) From the company website, brochures of various products available in the market. (b) From the competitors website. (c) From various newspaper and magazines.

3.6 SCOPE OF THE STUDY The scope of the study is for improving AMUL’S market share in ice cream ingredients and binding customers loyalty by providing best quality to the customer as well as retailers and also providing best distribution channel as well as possible.

3.6 LIMITATION OF THE STUDY 1) Wide area of Jaipur had to be covered in short span of 45 days. 2) Some of the individuals were very apprehensive about responding. 3) Some respondents could not provide any time for the survey because of their busy schedules. 4) Biasness is the most serious limitation although measures have been taken to reduce the biasness. The survey conducted reveals that though there is an excellent image of Gujarat Co-operative Milk Marketing Federation (AMUL) in market & among the customers. The time spent at Gujarat Co-operative Milk Marketing Federation (AMUL) office, provide me an insight into the corporate world functioning. This opportunity enabled me to learn basics of marketing skills. Also this has been an excellent exposure to the corporate world and has helped me sharpen my skills and knowledge of business environment. This project report is prepared after thorough analysis and in intended to be conclusive and comprehensive. 39

The learning of this project would go a long way in my future assignments which I would undertake.

FACTS AND FINDINGS 1) In the consumer survey it came out that 96% people are aware of Amul Ice-cream. So almost every person is aware about Amul Ice-cream. 2) The two most important media of spreading awareness about Amul Ice-cream are television and wall paintings. 3) Only 37% of people prefer to buy Cup ice-cream rest of them prefer to buy cone icecream. 4) Market share of Amul Ice-cream is less than its competitor Vadilal. In consumer survey it came out that from all the customers of Amul Ice-cream only half of them are there loyal customers, remaining prefer to buy Amul Ice-cream along with Vadilal & other brands. 5) Amul Ice-cream reaches to the customers mostly by the retailers, than by the road side vendors. 6) Most of the customers know about the good taste and quality of Amul Ice-cream as it is shown in analysis that 66% of customers repurchase Amul Ice-cream. 7) Customers rate Amul Ice-cream as good quality Ice-cream 8) About pricing of Amul Ice-cream most of the customers say that it is Average. .9) Some customers also have complaints about the availability of amul Ice-cream.

40

ANALYSIS & INTERPRETATION

ICE-CREAM TOTAL NO OF BRAND:

FIVE

> Amul > Vadilal > Cream bell > Mother dairy > Havmor

MOST PREFERRED:

AMUL

At country level: In 2008-09, in the branded ice cream market, Amul held the no. one spot, with the market share of 38%, followed by kwality waIls 14%, vadilal 12% and mother diary at 8%. On the basis of questionnaire used I found following fact... • Quality of AMUL ice-cream is very good. • All the products of AMUL are health concise. • Company provides innovation in products every year. • Amul ice-cream is most preferred in the area surveyed though vadilal ice-cream is no. 1 with market share followed by Amul ice cream.

CARRYING BRANDS IN JAIPUR a) AMUL 25% b) VADILAL28% c) CREAM BELL 20% d) SARAS 15% e) OTHERS 12% 41

PRODUCTS SALE IN MARKET a) FAMILY PACKS 27% b) CUP&CONE22% c) BARS 18% d) OTHERS 33%

Robust Supply chain 2. The vast and complex supply chain hierarchical network of cooperatives stretches from small suppliers to large Fragmented market 3. Low Cost Stagey 4. Amul adopted a low cost strategy to make it’s products affordable. 5. Diverse Product Mil 6. Amul ice-cream. Milk power, cheese, ghee. chocolotes.naturalml 7. Strong Distribution Network 8. Amul product is available over 500 000 retail outlets across India

1. Income group in the surveyed area —

Less than 5000

15

5000 – 10000

40

10000 – 15000

30

15000 & above

15

42

IncomeGroup 15

15

Lessthen 5000 5000-1000 10000-15000

30 40

15000 & above

Interpretation:•

From the survey it analyzed that minor group of people are below income slab of 10,000.

•

People residing in the surveyed area will be segmented according to there income slab.

2. Do you heard about AMUL ICE CREAM? Yes

85

No

15

Awareness 15%

Yes No

85%

Interpretation:43

•

This survey shows that1. Amul awareness is dominant in the surveyed area. 2. Due to the dominancy distributors having the wider scope in the market place.

3. If, yes then how you come to know about AMUL ICE-CREAM?

Hoarding

20

Television

35

Wall painting

10

Newspapers

25

Household Survey

10

Media spreading awareness about Amul Ice-cream

KnowledgeSources 40 30 20 10 0 Hordings

T.V

Wall Printings

News Paper

House Hold Servey

Knowledge Sources

Interpretation:-

44

•

Television is showing the higher rate of awareness medium for the concerned product.

•

As household survey is not successful for spreading the awareness into the consumer so company has to keep the checkpoint in this medium.

•

Hoarding, Wall painting & newspaper are also the good way of advertising.

4. What type of ICE CREAM do you prefer?

80 Cone Ice Cream Cup Ice Cream

20

ProductLikingStatus 20

80

Cone

Cup

Interpretation:-

45

•

Market potential is good for Ice-cream but the consumption of cup icecream is less than cone ice-cream.

•

Reason for this cause due to the untimely distribution of Cup ice cream as consumer is having the mind set that the Cone ice-cream, so company has to do some awareness programmed regarding this issue.

5. Ice-cream which brand you buy earlier?

AMUL

30

VADILAL

40

ANY OTHER

30

BrandKnowledge 30

30

40

Amul

Vadilal

Others

Interpretation:46

•

Performance wise Amul is in the 2nd position which desalts; it can give better competitive edge to Vadilal.

•

In between of Vadilal & Amul there is minute difference of 45. Which is not a big issue for the Amul?

6. Do you buy AMUL Ice-cream only?

Amul

60

Along with Vadilal & any other

40

LOYAL customers of AMUL Ice-cream

CustomerLoyalty

40 60

Amul

Alongwith Vadilal & any other

Interpretation:-

•

This graph shows the loyalty for Amul which is a good sign for the company. For these loyal customers companies role get increased for these existing customers. like (offers, coupons, etc) 47

7. Where do you buy Amul Ice-cream?

Retail outlet

80

Home delivery

5

Road side vendor

15

Point of purchase

Pointof Purchase 15 5

Retail Outlet Home Delivery Road Side Vendor 80

Interpretation:-

•

The delivery of the Amul Ice-cream is through home delivery boy is very less, so distributors have to increase this number so that they can capture more numbers.

SWOT ANALYSIS

Strengths 48

•. Largest food brand in India •• High Quality, Low Price •:• World’s Largest Pouched Milk Brand •• Annual turnover of US $1504 million •• Highly Diverse Product Mix •• Robust Distribution Network •• Only brand that provide pure milk based products.

Weaknesses > Risks of highly complex supply chain system > Strong dependency on weak infrastructure > Alliance with third parties who do not belong to the organized sector

Opportunities  Penetrate international markets  Diversify product portfolio to enter new product categories and expand existing categories like processed foods, chocolates etc.  Growth of fast food culture in India.  Market share of ice creams is growing at the rate of 18% per year.

Threats • Competitors - Hindustan Lever (kwality), vadilal, cream bell. • Still competition from local brand in ice cream. • Growing price of milk and milk products • MNC’S competition in foreign countries. • Heavy advertising and sales promotion schemes by FMCG companies.

CONCLUSION

49

•

This survey was done to assess the market share of Amul Ice-cream among the customer at various places in Jaipur, so that company can follow the weak points of its policies and make efforts to rectify them in future to increase its market share.

•

Due to improper services & lack of availability most of shopkeepers and consumers are reluctant to deal with Amul.

•

Less margin as compared to other companies, is also one of the prominent factor that retailer don’t want to take Amul.

•

Due to low promotional schemes consumers don’t want to buy Amul Ice-cream.

•

The quality of Amul Ice-cream is good and brand image is also very good but due to poor services and availability it becomes useless.

•

Bad promotional policies of Amul, mostly people do not recall ment of Amul, people don’t know about full range of Amul products.

•

Mostly distributors deals with the retailers who are not enough capable of handling the situation and due to this retailers gets away from brand.

•

Most of customers don’t prefer to buy Amul Ice-cream because of its higher price than its major competitors.

RECOMMENDATIONS & SUGGESTIONS 50

• In order to maintain and increase market share of Amul Ice-cream in the city of Jaipur, the following recommendations regarding distribution and promotional policies are hereby suggested.

• First and the foremost action is that Amul should improve its service and availability.

• Margins should be tailor made; it should be dependent on the sales of particular outlet.

• Amul should do more for the new outlet and for exclusive Amul Parlors. Amul can insist retailers to do home delivery.

• Amul should give some local ment and it should mention exclusive Amul retailer of the city.

• The company’s personnel should head the distributor because the retailers believe in company and not the distributor.

• There should be more distributors for proper supply of products.

• Company should replace the damage product as soon as possible because this problem is very common in all shopkeepers

APPENDIX 51

Guidelines to respondent: The questions are close ended in nature. Each question is followed by few options. Mark (

) the option which best suits you. These are not

correct or incorrect answers. Your response will keep completely confidential and it will used only for the purpose of completion of the project. 1. NAME – 2. ADDRESS-3. INCOME GROUP-a) Less then 5000

b) 5000 – 10000

c) 10000-15000

d) 15000 & above

4. Do u heard about Amul Ice-cream? a) YES

b) NO

5. If, yes how you come to know about Amul Ice-cream? a) Hoarding

b) Television

c) Wall painting

d) Newspapers

e) Household survey 6. What type of Ice-cream do you buy? a) Cone Ice-cream

b) Cup Ice-cream

c) Family Pack

d) Bars

7. If Cup Ice-cream then which of the brand you were buying earlier? a) AMUL

b) VADILAL

c) OTHERS

8. Do you buy Amul Cone Ice-cream only? a) Yes

b) Along with

{(I) PARAG

(II) OTHER}

9. Where do you buy Amul Ice-Cream? a) Retail outlets

b) Home delivery boy

c) Road side vendors

10. Have you repurchase Amul Ice-cream? a) Yes

b) No

11. Why do you buy Amul Ice-cream? Criteria

Excellent

Good

Average

Poor 52

Quality Price Brand Image Services Availability 12. Any suggestions you want to give about Amul Ice-cream? ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ……………………………

BIBLIOGRAPHY .  Philip Kotler Marketing Management

53

 Donald R Cooper & Pamela S Schindler` The McGraw-Hill Business research methods

Net:• www.amul.com •

www.amuldairy.com

• wwwamul.coop • www.indiatimes.com Magazines:• Business Today • Business World

Newspaper: • Times of India • Economic Times

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