Amul

CHAPTER: 8 FINANCE Turnover

AHMEDABAD: The Gujarat Cooperative Milk Marketing Federation (GCMMF) whi h !arket" the popular A!ul #rand o$ !ilk and dair% produ t" ro""e" the & #illion dollar "ale" turnover !ark' During the $inan ial %ear &()(*))+ GCMMF regi"tered a topline growth o$ &&'),+ a hieving turnover o$ -" .//0 rore' The re"ult" o$ the ape1 #od% o$ the dair% ooperative" in Gujarat were de lared on &)"t 2une &())+ in the 3/th Annual General Meeting o$ GCMMF'
Year
Milk procured (in kg !
"ale #urnover (R $ In lack!

%&&&'&( %&&('&% %&&%'&. %&&.'&* %&&*'&, %&&,'&+ %&&+'&) %&&)'&8 %&&8'&%&&-'(& %&(&'((

%))8*&8+( %,8+-%**. %,)-,))%+ %,,8,+*., %)+(,&.)* %-)*.+%*+ .%**(&,.+ *&()(8+(+ *+8,8)(.+ *-8&...(& ,(,-&&&&&

,&-(*+8)8 *88.* ,*,-. +&&*) )&-%% 8(+.% (&))(% (.)8&) (+--8%(((*&

Financial Per/ormance on #0e 1a i o/ Pro/i#a1ili#2 3 4i5uidi#2 Anal2 i Rela#ion 0ip 6e#7een Curren# Ra#io 3 8pera#ing Pro/i# Ra#io Year %&&('&% %&&%'&. %&&.'&* %&&*'&, %&&,'&+ %&&+'&) %&&)'&8 %&&8'&%&&-'(& %&(&'(( r Rela#ion 0ip 6e#7een Curren# Ra#io 3 Ne# Pro/i# Ra#io Year %&&('&% %&&%'&. %&&.'&* CR %$)&% .$%*& %$.)+ NPR &$.(* &$*&, &$*+) CR %$)&% .$%*& %$.)+ %$.** %$(.+ ($).8 %$(.+ ($+,% ($.-* ($*.( 8PR 88$.8& 8-$.*% -&$*+& -&$(--($&., -&$-,) -%$()8 -($8). -%$,8& -*)$-&+ '&$*(,

%&&*'&, %&&,'&+ %&&+'&) %&&)'&8 %&&8'&%&&-'(& %&(&'(( r

%$.** %$(.+ ($).8 %$(.+ ($+,% ($.-* ($*.(

&$,%. &$*+( &$,&* &$*%( &$*(&$*.+ &$**& '&$.%.

Capi#al #ruc#ure
A!ul i" o*operative organi4ation there$ore there i" nothing like !arket value o$ "hare whenever A!ul need" $und" it i""ue ade5uate nu!#er o$ "hare+ #ut onl% to it" "hareholder or !e!#er" o$ "o ietie" and not to the other"' The apital "tru ture o$ $ir! would generall% denote the ratio o$ own apital do the #orrowed apital' The apital "tru ture thu"+ indi ate" how the apital ha" #een rai"ed

C6-*"en"itive 7rgani4ational 6tru ture AM89 i" a three tier o*operative organi4ation' The $ir"t tier i" the o*operative "o iet% at the village+ o$ whi h: !ilk produ er" are voluntar% !e!#er"+ !anaging the o* operative through a de!o rati all% ele ted .*!e!#er !anaging o!!ittee+ and doing #u"ine"" #% pur ha"ing !ilk $ro! !e!#er" and "elling it to the di"tri t level o* operative' There are !ore than ))+((( o*operative" in village" o$ Gujarat' The "e ond tier i" the di"tri t o*operative that pro e""e" !ilk into !ilk produ t"+ !arket" lo all% and "ell" "urplu" to the "tate ooperative $or national and international !arketing' There are )& di"tri t o*operative" ea h #eing !anaged #% a );*!e!#er #oard ele ted #% the ollege o!pri"ing the no!inated repre"entative" or hair!en o$ the village o* operative"' Third tier i" the "tate level o*operative * the Gujarat Co*operative Milk Marketing Federation (GCMMF) re"pon"i#le $or national and international !arketing o$ !ilk and !ilk produ t" produ ed and "old to it' The GCMMF i" !anaged #% the #oard de!o rati all% ele ted #% and $ro! a!ong"t the hair!en o$ the di"tri t o*operative"' The entire three*tier "tru ture with the GCMMF at it" ape1+ i" a uni5ue in"titution #e au"e it en o!pa""e" the entire hain $ro! produ tion o$ raw !aterial to rea hing the on"u!er with the end produ t' Ever% $un tion involve" hu!an intervention: &3'<( lakh pri!ar% !ilk produ er": 3;+((( rural work!en in !ore than ))+0(( village "o ietie": )&+((( worker" in ); dair% plant": /;( !arketing pro$e""ional": )(+;(( "ale"!en in di"tri#ution network and <((+((( "ale"!en in retail network' A u!ulation o$ hu!an apital i" "ine 5ua non $or the develop!ent and growth o$ an% enterpri"e or e ono!%' The

GCMMF i" "en"itive toward" C6-' =t #elieve" that te hnolog% and apital are repli a#le input" #ut not the hu!an apital' A!ul (Gujarat Co*operative Milk Marketing Federation)+ =ndia i" the large"t $ood produ tion organi"ation in =ndia and have ontri#uted their growth and "u e"" to their o*operative ulture+ o*operative networking+ !arket a u!en+ re"pe t $or #oth produ er and the on"u!er and their ontri#ution to "o ial integration a!ong !e!#er" o$ di$$erent #a kground"' The% ai! to provide re!unerative return" to $ar!er" and !e!#er"' >hen the &(() Gujarat earth5uake "tru k+ the A!ul -elie$ Fund donated ;( !illion =ndian rupee" to re on"tru ting " hool"' 6A9E6 During the %ear+ "ale" o$ our Federation regi"tered a 5uantu! growth o$ &&'. per ent to rea h -"' ;&;;'0) rore" (-"' ;&';; #illion)' Thi" i" an e1tre!el% i!pre""ive growth+ when viewed $ro! the per"pe tive o$ )3'0 per ent growth that we had a hieved in &((<*(/ and &. per ent growth a hieved in &((;*(<' 7ur "ale" per$or!an e ha" #een on"i"tent in re ent %ear" and we are on$ident o$ !aintaining the"e e1 ellent re"ult" in the o!ing %ear"+ a" well' =n glo#al ter!"+ our turnover i" ? )'3 #illion+ at the e1i"ting urren % e1 hange rate' >e are al"o plea"ed to note that our Federation ha" done re!arka#l% well in !o"t o$ the value*added on"u!er pa k"' 6ale" o$ A!ul Milk in pou he" have grown #% 0@, in value ter!"' =n &((/+ A!ul Milk wa" laun hed in 2aipur and wa" re eived enthu"ia"ti all% #% on"u!er"' Aou h !ilk i" the large"t ontri#utor to the turnover o$ the Federation' 8HT Milk ha" al"o "hown an i!pre""ive growth o$ <(,' >e have e1panded our range in 8HT !ilk ategor%: through the re ent laun h our innovative al iu! enri hed variant+ A!ul Cal iB' Following the "u e""$ul laun h o$ A!ul Cool Ca$D la"t %ear+ we laun hed A!ul Cool Coko in &((/+ #e au"e o$ whi h our "ale" in the Flavored Milk "eg!ent ha" "een an e1ponential in rea"e o$ 3.,' 7ur poli % o$ ontinuou" produ t innovation wa" a orded glo#al re ognition+ when we re eived the pre"tigiou" =nternational Dair% Federation Marketing Award &((/ $or the laun h o$ A!ul Aro#ioti = e* rea!' 7ur "ale" in A!ul Aro e""ed Chee"e have "hown on"i"tent and ver% i!pre""ive growth+ %ear a$ter %ear' =n &((/*&((@+ we re orded &/, growth in "ale" $or A!ul Aro e""ed Chee"e+ %et again' At the "a!e ti!e+ we al"o !anaged to a hieve 5uantu! growth o$ 3., in the "ale" o$ A!ul Chee"e 6pread' =n the =n$ant Milk Food ategor%+ our #rand A!ul"pra% regi"tered a growth o$ ).,' =n the dair% whitener "eg!ent+ A!ul%a re orded a growth o$ al!o"t &(,' >e !anaged to regi"ter dou#le*digit value growth in Butter+ de"pite inten"e o!petition in thi" ategor%' =n our e$$ort to en"ure that all "e tion" o$ our "o iet% are a#le to a$$ord A!ul Butter+ we have given "pe ial e!pha"i" to low unit value pa k"+ in our !arketing e$$ort' =n line with the prevailing trend o$ wellne"" and health* on" iou"ne""+ we have re entl% laun hed A!ul -edu ed 6alt Butter' E1tending our poli % o$ innovative produ t laun he"+ we have introdu ed A!ul Aro#ioti Dahi whi h ha" helped to in rea"e our "ale" in the urd ategor% #% 3;,' 6in e there i" a growing de!and $or pure and natural produ t" in =ndia+ we have introdu ed pure natural vanilla i e* rea! in a wide range o$ pa k "i4e"' 7rgani"ation "tru ture =t all "tarted in De e!#er ).0< with a group o$ $ar!er" keen to $ree the!"elve" $ro! inter!ediarie"+ gain a e"" to !arket" and there#% en"ure !a1i!u! return" $or their e$$ort"' Ba"ed in the village o$ Anand+ the Caira Di"tri t Milk Cooperative 8nion (#etter known a" A!ul) e1panded e1ponentiall%' =t joined hand" with other !ilk ooperative"+ and the Gujarat network now over" &')& !illion $ar!er"+ )(+0)) village level !ilk olle tion enter" and $ourteen di"tri t level plant" (union") under the overall "upervi"ion o$ GCMMF' There are "i!ilar $ederation" in other "tate"' -ight $ro! the #eginning+ there wa" re ognition that thi" initiative would dire tl% #ene$it and tran"$or! "!all $ar!er" and

ontri#ute to the develop!ent o$ "o iet%' Market"+ then and even toda%+ are pri!itive and poor in in$ra"tru ture' A!ul and GCMMF a knowledged that develop!ent and growth ould not #e le$t to !arket $or e" and that proa tive intervention wa" re5uired' Two ke% re5uire!ent" were identi$ied' The $ir"t+ that "u"tained growth $or the long ter! would depend on !at hing "uppl% and de!and' =t would need heav% inve"t!ent in the "i!ultaneou" develop!ent o$ "upplier" and on"u!er"' 6e ond+ that e$$e tive !anage!ent o$ the network and o!!er ial via#ilit% would re5uire pro$e""ional !anager" and te hno rat"' To i!ple!ent their vi"ion while retaining their $o u" on $ar!er"+ a hierar hi al network o$ ooperative" wa" developed+ whi h toda% $or!" the ro#u"t "uppl% hain #ehind GCMMFE" endeavor"' The va"t and o!ple1 "uppl% hain "tret he" $ro! "!all "upplier" to large $rag!ented !arket"' Manage!ent o$ thi" network i" !ade !ore o!ple1 #% the $a t that GCMMF i" dire tl% re"pon"i#le onl% $or a "!all part o$ the hain+ with a nu!#er o$ third part% pla%er" (di"tri#utor"+ retailer" and logi"ti " "upport provider") pla%ing large role"'Managing thi" "uppl% hain e$$i ientl% i" riti al a" GCMMFE" o!petitive po"ition i" driven #% low on"u!er pri e" "upported #% a low o"t "%"te!'

8rgani a#ion
Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), is India's largest food product marketing organisation with annual turnover (2 !2"!#) US$ 2.54 billion. Its dail pro"ure!ent is appro# $% !illion lit per da !e!bers. It is the $pe% organisation of the &air' Cooperatives of Gu(arat, popularl' known as ,-MUL,, which aims to provide remunerative returns to the farmers and also serve the interest of consumers )' providing *ualit' products which are good value for mone'+ Its success has not onl' )een emulated in India )ut serves as a model for rest of the ,orld+ It is e%clusive marketing organisation of ,-!ul, and ,Sagar, )randed products+ It operates through -. /ales 0ffices and has a dealer network of 1 cream, dealers and ! lakh retailers, one of the largest such networks in India+ Its product 2aneer, chocolates, and traditional Indian sweets, etc range comprises milk, milk powder, health )everages, ghee, )utter, cheese, 2i33a cheese, Ice" !ilk &ro! $'($4 village !ilk "ooperative so"ieties) $* !e!ber unions "overing 24 distri"ts) and %.$+ !illion !ilk produ"er

GCMMF is India's largest e%porter of &air' 2roducts+ It has )een accorded a 45rading 6ouse4 status+ Man' of our products are availa)le in 7/$, Gulf Countries, /ingapore, 5he 2hilippines, 8apan, China and $ustralia+ GCMMF has received the $29&$ $ward from Government of India for 9%cellence in &air' 2roduct 9%ports for the last !# 'ears+ For the 'ear 2 )' :"! , GCMMF has )een awarded $29&$+ 4Golden .rop/ 4 for its outstanding e%port performance and contri)ution in dair' products sector

For its consistent adherence to *ualit', customer focus and dependa)ilit', GCMMF has received numerous awards and accolades over the 'ears+ It received the ;a(iv Gandhi <ational =ualit' $ward in!::: in >est of $ll Categor'+ In 2 instituted )' >usiness ,orld+ In 2 =ualit' $ward " 2 Federation 2 GCMMF )agged India's Most ;espected Compan' $ward #, it was awarded the 5he IMC ;amkrishna >a(a( <ational

# for adopting noteworth' *ualit' management practices for logistics and $ward for pro)iotic ice cream launch in 2 ?+

procurement+ GCMMF is the first and onl' Indian organisation to win topmost International &air' Marketing

5he $mul )rand is not onl' a product, )ut also a movement+ It is in one wa', the representation of the economic freedom of farmers+ It has given farmers the courage to dream+ 5o hope+ 5o live+ GCMMF 0 -n 1vervie2 @ear of 9sta)lishment !:?#

Mem)ers <o+ of 2roducer Mem)ers <o+ of Cillage /ocieties

!? &istrict Cooperative Milk 2roducers' 7nions (!A Mem)ers B ! <ominal Mem)ers) #+!. Million !A,:!-

5otal Milk handling capacit' per da' !A+. Million litres per da' Milk Collection (5otal " 2 !2"!#) Milk collection (&ail' $verage 2 !2" !#) Cattlefeed manufacturing Capacit' /ales 5urnover "(2 !2"!#) -+AA )illion litres !2+? million litres 1.: Mts+ per da' ;s+ !#?#1 Crores (7/ D 2+1- >illion)

C;I/IE ;ating for GCMMF

Sales .urnover !::-":1 !::1":A !::A":? !::?":. !::.":: !:::" 2 2 2 2 2 2 2 2 2 2 " ! !" 2 2" # #" -" 1 1" A A" ? ?" . ." : :"!

3s 4!illion5 !!!!#?: !11!..22!:2 22!.1 221.. 2##A1 2?-1? 2.:-! 2:221 #??#A -2??. 1211A?!!# . 1#

US $ 4in !illion5 #11 -1 -11 -:# -:# 1 1 1?1 A!A A?2 .1 ! 1 !#21 !1 !? 2!?2 21 21-

2 ! "!! 2 !!"!2 2 !2"!# ./e 6rodu"t 3ange >readspreads

:??-2 !!AA. !#?#1

$mul >utter, $mul Eite, &elicious 5a)le Margarine $mul 2asteuri3ed 2rocessed Cheddar Cheese, $mul 2rocessed Cheese /pread,

Cheese ;ange

$mul 2i33a (Mo3arella) Cheese,$mul 9mmental Cheese, $mul Gouda Cheese, $mul Malai 2aneer (cottage cheese), 7tterl' &elicious 2i33a

Fresh Milk

$mul Gold Full Cream Milk AF fat, $mul /hakti /tandardised Milk -+1F Fat, $mul

5aa3a 5oned Milk #F fat,$mul /lim B 5rim, $mul Cow Milk 765 Milk ;ange $mul Gold -+1F fat Milk, $mul /hakti #F fat Milk, $mul 5aa3a !+1F fat Milk, $mul Eite /lim"n"5rim Milk, $mul Fresh Cream $mul Full Cream Milk 2owder, $mul'a &air' ,hitener, /agar /kimmed Milk 2owder, $mulspra' Infant Milk Food, /agar 5ea and Coffee ,hitener $mul Gool Flavoured Milk, $mul Gool Cafe, $mul Gool Goko,$mul Gool Millk /haake, $mul Gool Chocolate Milk,<utramul 9nerg' &rink /tamina Instant 9nerg' &rink <utramul Malted Milk Food $mul Masti &ahi (fresh curd), $mul Masti /piced >utter Milk,$mul Eassee, $mul Flaav'o @oghurt $mul 2ure Ghee, /agar 2ure Ghee

Milk 2owders

Milk &rink 6ealth &rink >rown >everage Curd 2roducts 2ure Ghee

/weetened Condensed Milk $mul Mithaimate Mithaee ;ange (9thnic /weets) Ice"cream Chocolate B Confectioner' $mul /hrikhand, $mul Mithaee Gula)(amuns, $mul >asundi,$vsar Eadoos /undae ;ange, pro)iotic,,sugarfree and pro)iotic $mul Milk Chocolate, $mul Fruit B <ut Chocolate, $mul Choco3oo, $mul >indass, $mul Fundoo

Market Share
The brand positions itself as a brand of both masses and classes, unlike competitors like Nestle. Gujarat Co-operative Milk Marketing Federation (GCMMF), owners of Amul brand of milk and dairy products, posted sales of Rs 11,670 crore for the year ended March 2012, almost 55% more than Nestle Indias Rs 7,541-crore sales. Amul owns 85 percent share in butter market and 75 percent in cheese share market. It may be mentioned here that Amul is the market leader in Rs 600 crore cheese market in India with 65-66% share. It also has 88% market share in butter, 63% share in infant milk and 45% market share in dairy whitener. Amul also enjoys a 26% share in the 25,000-crore packaged milk market. With expected growth rate of 20 percent, 12% growth rate can be attributed to price rise and another 8 percent to rise in demand for dairy products.

Amul Marketing Strategy

In order to maintain costs at lower levels, Amul India has never spent more than 1% of its budget on advertising. However it has still been successful in creating the same impact, it created 60 years ago through its simple yet appealing ad campaigns. Talk about universally recognizable Brands grown in India, and one prominent contendor is the Amul mascot, a cute and chubby girl usually dressed in a polka dot. Over 45 years of existence, the brand has always given a fresh flavour to Amul Mascot.

Interesting Ad Shila ki makhani

The Amul Girls and its new Witty avatar was the brain child of Sylvester da Cunha, the managing director of the advertising agency AS. The ads were designed as a series of hoardings with designs relating to day-to-day issues. Amul Dairy Cooperatives, on the occasion of completing its 50 years of advertising, launched a book called Amul India. Following the idea of thoughtful advertising , 35 years ago the brand created magic with its Mero gaam Katha parey the title song of national award winning film Manthan, which told the story of Amul model of co-operatives.

Amul Co-operative Model

The Manthan music video has an unique emotional appeal. To recreate the magic, in 2012 brand came up with a fresh commercial with the lines like khush rahe tera beta beti in the new music video. It shows how the efforts of a rural milk producer takes care of nutritional requirements of a child of a urban mother.

Amul Ad Khush Rahe Tera Beta Beti

Amul Brand Basket

Brand Amul owned and managed by Gujarat Cooperative Milk Marketing Federation (GCCMF) has 123 brands listed under its name. Liquid milk however contributes to 40% of the Amuls revenues.

Amul Products

Amul Production Facilities

One of the best known examples of policy success in India has been the successful implementation of white revolution and equally celebrated is the role of the brand in making this event a big success. From two diary cooperatives and 250 litres of milk per day to a network of 31 lakh dairy farmers, who are members of more than 15,000 village cooperatives. (Source:http://www.firstpost.com/election/farmer-empowerment-isamul-model-better-than-retail-fdi-551382.html) Milk producers sell their produce to village co-operatives, which is affiliated to district milk co-operative union and then in turn to the state level milk marketing federation. A network of 8000 distributers makes Amul products available at over 4 lakh retail outlets in India. GCMMF is expanding its production capacity by 25% to meet the growing consumer demands and plans to invest in INR 3000 crores in 9 new milk plants in India in next 4-5 years.