Chapter 1

Evolution of AMUL
Before the cooperative movement began, middlemen who supplied milk to the consumers
were exploiting the dairy industry in the Kaira District. It began as a response to this
exploitation and put an end to it. It grew because it responded to the farmers
financially as well as with services. It has thrived because farmers who have a stake in
its success, own it. And because it has been managed by capable professionals and
strengthened by dedicated scientists, technologists and workers, it has forged ahead.
Today in India, there are 75,000 dairy cooperative societies, spread all over the country
with a membership of 10 million. The farmer in the village is now assured of a better
future thanks to these cooperatives. Recently one of the European Embassies in Delhi
requested Amul for information on the five biggest "companies" in the dairy business.
The first three are in the cooperative sector - The Gujarat Cooperative Milk Marketing
Federation (GCMMF), The Kaira District Cooperative Milk Producers' Union Limited
and The Mehsana District Cooperative Milk Producers' Union. The Kaira District
Cooperative is the second best in the country. It helped to create GCMMF, the apex body
of all cooperatives in Gujarat.
The Root Cause
In the forties one firm - Polsons, dominated the dairy industry. Established by a rather
enterprising gentleman who discovered that Kaira District, of what was then Bombay
Presidency, produced a good deal of milk. He established a creamery and for a while the
name Polsons was synonymous with butter - much as Amul is today.

One of Polson's businesses was to supply milk to Bombay. As Kaira district was an
abundant source of the commodity, Polson was chosen to procure it from there. He in
turn, entered into an arrangement with a number of contractors who actually went to the
villages and collected the milk. Everyone was happy. Bombay received reasonably good
quality milk and Polson made a handsome profit. The contractors too managed to earn
large margins by over quoting the farmers. It was only the poor farmers who were
unhappy for it. They invested in the animal feed and fodder and they put in their labor.
 Yet, it was they who received the smallest share of the Bombay consumers' rupee. The
arrangement benefited everyone but them.
The First step: formation of Kaira union
Realizing that something needed to be done about the unequal balance of wealth, they
turned to Sardar Vallabhbhai Patel for advice. Sardar Patel knew that their only chance of
earning a decent income was when they themselves gained control over the resources
they created. He also knew that the cooperatives offered them the best chance of gaining
that control. So he advised them to stop selling milk to Polson and form a cooperative of
their own. In his opinion they were to own their own dairy unit. He said, "Throw out
Polson and his milk contractors". They followed his advice and the Kaira District
Cooperative Milk Producers' Union (AMUL) was born, in 1946. By good fortune, they
could get as Chairman - Shri Tribhuvandas Patel, an equally remarkable man. He
understood the concept of cooperation and he understood people. His integrity was
absolute. Because the farmers of Kaira district trusted and respected Tribhuvandas Patel,
the cooperative was able to pass through some very difficult times and eventually become
a model of cooperative dairying throughout the world.
The Kaira Union began with a clear goal, to ensure that its producer members received
the highest possible share of the consumers' rupee. This goal itself defined their direction.
The focus was on production by the masses, not mass production. By the early 'sixties,
the modest experiment in Kaira had not only become a success, people began to
recognize it as such. Farmers came from all parts of Gujarat to learn. They went back to
their own districts and started their own cooperatives. The result - Together, the district
milk producers unions of Gujarat own the Gujarat Cooperative Milk Marketing
Federation, which markets the milk and milk products manufactured by its owners. The
Federation's turnover was over Rs. 1700 crore making it the largest in the food industry.

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In 1964, the then Prime Minister Shri Lal Bahadur Shastri came to inaugurate cattle feed
factory owned by Amul near Anand. Impressed by the cooperative's success, he
expressed his wish to "transplant the spirit of Anand in many other places". He wanted
the Anand model of dairy development replicated in other parts of the country. With
institutions owned by rural producers, which were sensitive to their needs and responsive
to their demands, it was an ideal tool for progress. The National Dairy Development
Board was created in 1965 in response to this call.

Amul: The origin

The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the
Himalayas. Similar is the story of Amul, which inspired 'Operation Flood' and heralded
the 'White Revolution' in India. It began with two village cooperatives and 250 liters of
milk per day, nothing but a trickle compared to the flood it has become today. Today
Amul collects processes and distributes over a million liters of milk and milk
products per day, during the peak, on behalf of more than a thousand village cooperatives
owned by half a million-farmer members. Further, as Ganga-ma carries the aspirations of
 generations for moksha, Amul too has become a symbol of the aspirations of millions of
farmers, creating a pattern of liberation and self-reliance for every farmer to follow.
The start of a revolution
The revolution started as awareness among the farmers that grew and matured into a
protest movement and the determination to liberate them. Over four decades ago, the life
of a farmer in Kaira District was very much like that of his counterpart anywhere else in
India. His income was derived almost entirely from seasonal crops. The income from
milch buffaloes was undependable. Private traders and middlemen controlled the
marketing and distribution system for the milk. As milk is perishable, farmers were
compelled to sell it for whatever they were offered. Often, they had to sell cream and
ghee at throwaway prices. In this situation, the one who gained was the private trader.
Gradually, the realization dawned on the farmers that the exploitation by the trader could
be checked only if marketed their milk themselves. In order to do that they needed to
form some sort of an organization. This realization is what led to the establishment of the
Kaira District Cooperative Milk Producers' Union Limited (popularly known as
Amul) that was formally registered on December 14, 1946.
The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June 1948. An
assured market proved a great incentive to the milk producers of the district. By the end
of 1948, more than 400 farmers joined in more village societies, and the quantity of milk
handled by one Union increased from 250 to 5,000 liters a day.
Obstacles: Springboards for success
Each failure, each obstacle, each stumbling block can be turned into a success story. In
the early years, Amul had to face a number of problems. With every problem came
opportunity. A chance to turn a negative into a positive. Milk by products and
supplementary yield, which suffered from the same lack of marketing and distribution
facilities, became encumbrance. Instead of being bogged down by their fate they were
used as stepping-stones for expansion. Backward integration of the process led the
cooperatives to advances in animal husbandry and veterinary practice.
Milk by products: An excuse to expand
The response to these provided stimulus for further growth. For example, as the
movement spread in the district, it was found that the Bombay Milk Scheme could not
absorb the extra milk collected by the Kaira Union in winter, when the production on an
 average was 2.5 times more than in summer. Thus, even by 1953, the farmer-members
had no assured market for the extra milk produced in winter. They were again forced to
sell a large surplus at low rates to the middlemen. The remedy was to set up a plant to
process milk into products like butter and milk powder. A Rs 5 million plant to
manufacture milk powder and butter was completed in 1955. In 1958, the factory was
expanded to manufacture sweetened condensed milk. Two years later, a new wing was
added for the manufacture of 2500 tons of roller-dried baby food and 600 tons of cheese
per year, the former based on a formula developed with the assistance of Central Food
Technological Research Institute (CFTRI), Mysore. It was the first time anywhere in the
world that cheese or baby food was made from buffalo milk on a large, commercial scale.
Another milestone was the completion of a project to manufacture balanced cattle feed.
The plant was donated by OXFAM under the Freedom from Hunger Campaign of the
FAO.
To meet the requirement of milk powder for the Defense, the Kaira Union was asked by
the Government of India in 1963 to setup additional milk drying capacity. A new dairy
capable of producing 40 tons of milk powder and 20 tons of butter a day was speedily
completed. It was declared open in 1965. The Mogar Complex where high protein
weaning food, chocolate and malted food are being made was another initiative by Amul
to ensure that while it fulfilled the social responsibility to meet the demand for liquid
milk, its members were not deprived of the benefits to be had from the sale of high value-
added products.

Cattle: From stumbling blocks to building blocks

Traditionally dairying was a subsidiary occupation of the farmers of Kaira. However, the
contribution to the farmer's income was not as prominent as his attachment to dairying as
a tradition handed down from one generation to the next. The milk yield from animals,
which were maintained mainly on the by products of the farm, was decidedly low. That
together with the lack of facilities to market even the little produced rendered the
scientific practice of animal husbandry irrational as well as unaffordable. The return on
the investment as well as the prospects of being able to market the product looked very
bleak. It was a vicious cycle reinforced by generations of beliefs.
The Kaira Union broke the cycle by not only taking upon themselves the responsibility of
collecting the marketable surplus of milk but also provided the members with every
provision needed to enhance production. Thus the Kaira Union has full-fledged
machinery geared to provide animal health care and breeding facilities. As early as late
fifties, the Union started making high quality buffalo semen. Through village society
workers artificial insemination service was made available to the rural animal population.
The Union started its mobile veterinary services to render animal health care at the
farmers' doorstep. Probably for the first time in the country, veterinary first aid services,
by trained personnel, were made available in the villages. Fully qualified staff mans the
Union’s 16 mobile veterinary dispensaries. All the villages are visited bi-monthly, on a
predetermined day, to provide animal health care. A 24-hour Emergency Service is also
available at a fee (Rs. 35 for members and Rs. 100 for non-members). All the mobile
veterinary vans are equipped with Radio Telephones.

The Union runs a semen production center where it maintains high pedigreed Surti
buffalo bulls; Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred bulls. The
semen obtained from these bulls is used for artificial breeding of buffaloes and cows
belonging to the farmer members of the district. The artificial insemination service has
become very popular because it regulates the frequency of calving in cows and buffaloes
thus reducing their dry period. Not only that, a balanced feed concentrate is manufactured
in the Union's Cattle Feed Plant and sold to the members through the societies at cost
price.
Impressive though its growth, the unique feature of the Amul sagas did not lie in the
extensive use of modern technology, nor the range of its products, not even the rapid
inroads it made into the market for dairy products. The essence of the Amul story lies in
the breakthrough it achieved in modernizing the subsistence economy of a sector by
organizing the rural producers in the areas.
 Chapter 2
Production Function

Introduction

Explosion of the production technology and changes in technical field is going to bring
out revolution in the industry sector which eventually gives stand to study and favors the
come backing subject i.e. production and management.

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

controlling of all the production system those portion of organization that convert inputs
into products and services. In general production system takes raw material, personnel,
machines, buildings and other resources and produce products and services.

The core of production system is its conversion subsystem where in workers; raw
materials are used to convert inputs into products and services. This production
department is at heart of the firm, as it is able to produce low cost products and superior
quality in timely manners.

Thus, there arises enormous need of giving due importance to this department as a whole
and a strong concrete base being foundation pillars of a manufacturing organization, if
the intention is to succeed domestically and globally.

Co operative Milk Producing Societies in Gujarat

Following are the cooperatives that function under GCMMF.

• Ahmedabad Dist Coop Milk Producers’ Union Ltd, Ahmedabad. Soc: 433, Mems:
52,428. Av Milk Proc: 90,000 lpd.
• Banaskantha Dist Coop Milk Producers’ Union Ltd, Palanpur. Soc: 1,130, Mems:
97,251. Av Milk Proc: 295,000 lpd.

• Baroda Dist Coop Milk Producers’ Union Ltd, Baroda. Soc: 783, Mems: 156,691. Av
Milk Proc: 225,000 lpd.

• Bharuch Dist Coop Milk Producers’ Union Ltd, Bharuch. Soc: 289, Mems: 37,900.
Av Milk Proc: 38,000 lpd.

• Bhavnagar Dist Coop Milk Producers’ Union Ltd, Bhavnagar. Soc: 190, Mems:
25,532. Av Milk Proc: 23,000 lpd.

• Gandhinagar Dist Coop Milk Producers’ Union Ltd, Gandhinagar. Soc: 56, Mems:
13,000. Av Milk Proc: 46,500 lpd.

• Junagadh Dist Coop Milk Producers’ Union Ltd, Junagadh. Soc: 400, Mems: 41,500.
Av Milk Proc: 73,000 lpd.

• Kaira Dist Coop Milk Producers’ Union Ltd, Amul Dairy, Anand. Soc: 943, Mems:
513,280. Av Milk Proc: 740,000 lpd.

• Kutch Dist Coop Milk Producers’ Union Ltd, Kutch Dairy, Madhapar. Av Milk Proc:
25,000 lpd.

• Mehsana Dist Coop Milk Producers’ Union Ltd, Dudhsagar Dairy, Mehsana. Soc:
1,020, Mems: 292,800. Av Milk Proc: 704,402 lpd.

• Panchmahal Dist Coop Milk Producers’ Union Ltd, Godhra. Soc: 1,133, Mems:
126,510. Av Milk Proc: 112,000 lpd.

• Rajkot Dist Coop Milk Producers’ Union Ltd, Rajkot. Soc: 193, Mems: 29,620. Av
Milk Proc: 50,000 lpd.

• Sabarkantha Dist Coop Milk Producers’ Union Ltd, Sabar Dairy, Himatnagar. Soc:
1,315, Mems: 200,482. Av Milk Proc: 322,346 lpd.

• Surat Dist Coop Milk Producers’ Union Ltd, Sumul Dairy, Surat. Soc: 864, Mems:
160,000. Av Milk Proc: 300,000 lpd.

• Surendranagar Dist Coop Milk Producers’ Union Ltd, Surendranagar. Soc: 486,
Mems: 31,000. Av Milk Proc: 30,000 lpd.
• Valsad Dist Coop Milk Producers’ Union Ltd, Vasudhara Dairy, Valsad. Soc: 348,
Mems: 35,900. Av Milk Proc: 74,400 lpd.
Plant Layout
Plant layout is the overall arrangement of the machine tools, handling equipments,
storeroom and other various accessories required for facilitating production in a factory.
These arrangements are pre-planned with the results that the building has been
constructed to fit a layout of a given process.

AMUL plant is indigenously worked out with facilitation of various production processes
and production of multi products under one plant. The total plot is nearly about 2.27 kms.
Separate buildings are provided with required arrangements of machine tools handling
and computers connection through the control room to fit for varying product-
manufacturing departments.

The plant is engaged in producing milk, ice creams, milk powder and ghee. Entire
department is uniquely provided with facilities for the processing each product. There are
4 production departments and packaging departments pertaining to each product
respectively.

Thus, plant layout encompasses all production and service facilities and provides for the
most effective utilization of the men, materials and machines constituting the process. It
is the master blue print of coordinating all operations.
A good layout results in elimination or minimization of accidents and hazards and cost
while increases the output. Thus a good layout specifically is observed to be beneficial on
the following grounds:

• Efforts minimization

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

• Bottlenecking of production will be eliminated

• Total item in process will be less

• Specialization of operations is facilitated

• Less inspection will be required

• Production control will be easier to achieve

• Plant investment can be held to the necessary minimum

• Plant and equipment obsolescence may be less

• Wastage space will be eliminated

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

Operating Analysis

Amul’s only source of raw material is Village Milk societies. Milk is brought from such
village milk societies every morning and evening. This milk is then sent to the dairy
plant. In the dairy plant the milk is processed i.e. it is made free from germs.

Milk Processing
The entire process of milk can be divided into following steps:
Steps:
Milk Processing Chart:

Collection of Raw-Milk
Electronic Milk Test

Methyline Blue Reduction Test

Purchasing And Standardizing Process

Separation Process
 Quality Check

Packaging Process

Cold Storage

Steps in Production Process

1. Collection of Raw Milk

Raw milk is collected from different co-operative societies of Gujarat. About 122000
liters of raw milk is collected per day. Before this milk is sent to the laboratory for testing
the ‘FAT & SNF’ proportion, the milk is separated from the raw milk. The milk is taken
from the chilling centers to Ahmedabad with the help of trucks.

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

• Electronic milk test

• Methyline blue reduction test

Electronic Milk Test

Before pasteurizing the milk the samples are taken to the laboratory. In the laboratory
with the help of machine called electronic milk tester, the proportion of SNF & FAT is
checked with phosphate solution. When the colour of the milk becomes yellow, it is sent
for pasteurisation.
Methyline blue reduction test
Another test, which is taken in the laboratory, is called Methyline blue reduction test.
This test is conducted for checking for how long the milk will remain fresh. To check
this, 10 ml of milk is taken and 1 ml of methyline blue solution is added to it. It is then
kept under water at 57-degree C. After one hour, if the solution losses its colour than it is
called raw milk. If the solution remains the same even after 5 hours than it is considered
as fresh milk, which remains constant for a long period of time.

The dairy fixes the proportion of FAT & SAF.

MILK SNF FAT

Buffalo 9% 6%
Cow 8.5% 4.5%

After laboratory gives green signal and confirming the raw milk at the reception dock is
brought in to the house connected with the pump is sent to the milk processing plant. This
is than chilled below 4 degree C. and then stored in milk silos. After that milk is
processed which has two steps i.e. pasteurising and standardizing.

2. Pasteurising & standardizing

After collecting and checking and conducting laboratory tests, the pasteurising process is
conducted. To pasteurized the milk means to kill all the germs in the milk by a particular
method which was invented by a scientist called James Pasteur and so the name
pasteurisation.

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

immediately cooled below 4 C. By this method they destroy the pathogenic bacteria
present in the raw milk. But if the right degree of temperature is not provided there are
chances that the milk might still contain germs. After this process some milk goes to
separator machine and remaining is proportionately sent for standardization.
Standardization process is known such as it bifurcates the milk in 3 categories varying
according to that FAT & SNF contents. The equipment named OSTA. Auto
standardization adjusts the fat directly. The computer is just ordered whether gold or
standard milk is to be rationed and the same will be received with appropriate contents.
Ready Milk = Pasteurised + Standardized.

3. Separation process
Separator machine separates two kinds of products, skimmed milk & cream, through
channels. There are 100 disks fixed in separator machines, which revolve at 5000 rpm
(revolution per minute). It is taken to the tanks, which has the capacity of 20000 litres.
Whenever the milk is needed from the tank, it is tested in the laboratory and the deficit
proportion fat is added by mixing cream. This process continues for 24 hours.

4 Quality Check
Pasteurized milk is sent for a quality check in the Quality Assurance laboratory of the
dairy plant. Within 14 seconds FAT and SNF proportion is received regarding 30 lack
litres of milk. The total investment put into the lab by the Dairy plant is of Rs. 6 crores.

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

5 Packing Process
After this the milk is sent for packing to the milk packing station in the dairy plant. In the
milk packaging station there are huge pipelines and behind each of them there is polyfill
machine from which the material to pack milk comes out. There are 12 such polyfill
machines in the packaging station from which the materials to pack milk comes out.
From each of these 12 machines 100 pouches are packed in one single minute.

6. Storage
Then the milk is sent to the cold storage of the dairy where the milk is stored until it is
dispatched. Here the milk is stored at temperature ranging from 5 C to 10 C, it is
maintained with the help of exhaust fans having silicon chips. About 40000 litres of milk
is dispatched from the cold storage of the dairy plant everyday. The damaged pouches are
kept a side and the milk is once again put to the tank.

Milk Powder
For converting milk powder first of all water content is evaporated in condensing plant.
By this process they get condensed milk, it is used as a raw material. There after the milk
is sent to the drying plant. The spray drying plant is huge in size with a height of 70 feet.
The plant is divided into many floors to enable easy use of the plant. First of all the raw
material i.e. condensed milk is put into the first floor of the plant along with air at 200° C.
By this process the remaining water, which the condensed milk might have retained is
also evaporated and milk comes as powder but this is not the last stage.

This powder is again put in to a machine called milk calendaria, where it is turned in to
real milk powder. Its capacity is 1000 litres per 15 minutes. Then again this milk powder
is put into a Dense Waise Vessel. Here the lumps are removed and uniform milk powder
is sent up.

After processing the powder is sent for quality checking at quality assurance laboratory.
After the quality confirms, this milk powder is differentiated, by adding different flavors
to them like elaichi, chocolate & sugar free milk powder. Thereafter they are packed in
tins and boxes. Afterwards it is stored at storage department.
 Chapter 3
GCMMF: An Overview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is the India’s largest food
product marketing organization. It is a state level apex body of milk cooperatives in
Gujarat, which aims to provide remunerative returns to the farmers and also serve the
interest of consumers by providing quality products that are good value for money.

Members 12 district cooperative milk producers' Union

No. of Producer Members 2.36 million
No. of Village Societies 11,333
Total Milk handling capacity 6.9 million litres per day
Milk collection (Total – 2003-04) 1.81 billion litres
Milk collection (Daily Average 2003-04) 4.97 million litres
Milk Drying Capacity 511 metric Tons per day
Cattle feed manufacturing Capacity 2340 MTs per day

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

1996-97 15540 450
1997-98 18840 455
1998-99 22192 493
1999-00 22185 493
2000-01 22588 500
2001-02 23365 500
2002-03 27457 575
2003-04 28941 616

List of Products Marketed

Bread spreads
• Amul Butter
• Amul Lite Low Fat Breadspread
• Amul Cooking Butter
Cheese Range
• Amul Pasteurized Processed Cheddar Cheese
 • Amul Processed Cheese Spread
• Amul Pizza (Mozarella) Cheese
• Amul Shredded Pizza Cheese
• Amul Emmental Cheese
• Amul Gouda Cheese
• Amul Malai Paneer (cottage cheese), Frozen, Refrigerated and Tinned
• Utterly Delicious Pizza
Mithaee Range (Ethnic sweets)
• Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)
• Amul Amrakhand
• Amul Mithaee Gulabjamuns
• Amul Mithaee Gulabjamun Mix
• Amul Mithaee Kulfi Mix
• Avsar Ladoos
UHT Milk Range
• Amul Shakti 3% fat Milk
• Amul Taaza 1.5% fat Milk
• Amul Gold 4.5% fat Milk
• Amul Lite Slim-n-Trim Milk 0% fat milk
• Amul Shakti Toned Milk
• Amul Fresh Cream
• Amul Snowcap Softy Mix
Pure Ghee
• Amul Pure Ghee
• Sagar Pure Ghee
• Amul Cow Ghee
Infant Milk Range
• Amul Infant Milk Formula 1 (0-6 months)
• Amul Infant Milk Formula 2 (6 months above)
 • Amulspray Infant Milk Food
Milk Powders
• Amul Full Cream Milk Powder
• Amulya Dairy Whitener
• Sagar Skimmed Milk Powder
• Sagar Tea and Coffee Whitener
Sweetened Condensed Milk
• Amul Mithaimate Sweetened Condensed Milk
Fresh Milk
• Amul Taaza Toned Milk 3% fat
• Amul Gold Full Cream Milk 6% fat
• Amul Shakti Standardized Milk 4.5% fat
• Amul Slim & Trim Double Toned Milk 1.5% fat
• Amul Saathi Skimmed Milk 0% fat
• Amul Cow Milk
Curd Products
• Yogi Sweetened Flavored Dahi (Dessert)
• Amul Masti Dahi (fresh curd)
• Amul Butter Milk
• Amul Lassee
Amul Ice creams
• Royal Treat Range (Rajbhog, Cappuchino, Chocochips, Butterscotch, Tutti
Frutti)
• Nut-o-Mania Range(Kaju Drakshi, Kesar Pista, Roasted Almond, Kesar
Carnival, Badshahi Badam Kulfi, Shista Pista Kulfi)
• Utsav Range (Anjir, Roasted Almond)
• Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)
• Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry, Black
Currant)
 • Sundae Range (Mango, Black Currant, Chocolate, Strawberry)
• Millennium Ice cream (Cheese with Almonds, Dates with Honey)
• Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi, Shahi
Pista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)
• Cool Candies (Orange, Mango)
• Cassatta
• Tricone Cones (Butterscotch, Chocolate)
• Megabite Almond Cone
• Frostik - 3 layer chocolate Bar
• Fundoo Range - exclusively for kids
• SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)
• Health Isabcool
Chocolate & Confectionery
• Amul Milk Chocolate
• Amul Fruit & Nut Chocolate
Brown Beverage
• Nutramul Malted Milk Food
Milk Drink
• Amul Kool Flavoured Milk
Health Beverage
• Amul Shakti White Milk Food
Ready to Serve Soups
• Masti Tomato Soup
• Masti Hot & Sour Soup
Recently launched
• Amul Ganthiya
 Organisation Structure

Organization Structure is divided into two parts:

• External Organization Structure

• Internal Organization Structure

• External Organization Structure

External Organization Structure is the organization structure that affects the organization
from the out side.

State Level Marketing Federation

District Milk Product Union Ltd.

Village Milk Product Union Ltd.

Villagers

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

operative organization. The villagers of more than 10000 villages of Gujarat are the bases
of this structure. They all make village milk producers union, district level milk producers
union and then a state level marketing federation is established. The structure is line
relationship, which provides easy way to operation. It also provides better
communication between two stages.
 • Internal Organization Structure:

The following is internal organisation chart of Amul:

Organization Structure Chart

Chairman

Managing Director

General Manager

Ass. General Manager

Finance Production Marketing Sales & Purchase Personnel

Dept. Dept. Dept. Dept. Dept.

Senior Senior Senior Senior Senior

Manager Manager Manager Manager Manager

Finance Production Marketing Sales Personnel

Manager Manager Manager Manager Manager
Accountant Officer Marketing Officer P.R.F.
Executive

Officers Supervisor F.S.R. Salesmen Executive

A systematic & well-defined organizational structure plays a vital role & provides
accurate information to the top-level management. An organisation structure defines a
clear-cut line of authorities & responsibilities among the employees of GCMMF. The
Organisation structure of Amul is well-arranged structure. At a glance a person can
completely come to know about the organization structure.

Amul is leaded by the director under him five branches viz. Factory, Marketing,
Accounts, Purchase, Human Resources Department.

Factory department has a separate general manager under him there are six braches viz.
Production, Stores, Distribution, Cold Storage, Quality, and Deep-freezing. This
department takes care of the factory work.

Marketing department has regional senior marketing manager and under him there is a
regional manager. This department takes care of the marketing aspects of Amul.

Accounts department takes care regarding accounts i.e. day-to-day work. Under the
accountant there is one clerk.

Purchase department takes care regarding the purchase of raw materials and many other

things.Chapter 4
Marketing Function
Gujarat Co-operative Milk Marketing Federation (GCMMF)

GCMMF was the first co-operative to be set up under operation flood. GCMMF’S dairy
plant commissioned in 1994 is one of the most modern and largest plants. It can handle
up to 1million litres of milk per day. The plant also has facilities for pasteurizing and
packing. It was funded by NDDB. GCMMF’s milk is sold under its flagship brand Amul.

GCMMF was formed in 1973. As an apex marketing federation of 12 district milk unions
of Gujarat to operate own marketing and distribution network in India and abroad.

GCMMF sales turnover grew by 21% Rs. 15.5 billion to Rs. 18.8 billion including
consignment sales of Rs. 3.7 billion sale of Amul milk in Gujarat and Maharastra
increased by 11% and 16% respectively. Dairy product turnover registered a 19% growth.
Amul butter registered 18% growth. The sale of Amul & Sagar Ghee increased by 47%.
Amul Cheese registered 60% value growth.

GCMMF’s sales to the defense services were Rs.233 million during the year, were mainly
to Burma, Uganda and West Africa. The company plans to expand its export markets in
Saudi Arabia and other Middle East countries.

During 1999, launching it in 8 states and 2 union territories extended the Amul ice-cream
brand franchise. Amul ice creams have become India’s 2nd largest brand. Recently it has
commissioned a dairy at Kolkata.

New products launched during the early 2000 were Amul Pizza, Cheese and Amul slice
cheese, Amul paneer and Amul Mithaee range. Safal mango drink has been launched by
Strategic alliance with Safal (A union of NDDB). The product range to be launched
under the Safal brand will include fruit drinks, squashes, pickles, jams, and ketchup and
mango pulp.
Amul ice-cream brand franchise was extended with launch in 8 states & 2 union
territories. Amul ice cream has become the 2nd largest brand in the country & has
garnered major share in its existing markets in a short time span of 3 years. Amul’s main
ice-cream manufacturing facility is located at Gandhinagar which is Asia’s largest and
most modern integrated ice-cream manufacturing plant and uses world renewed
refrigeration units and an efficient cold chain. GCMMF has become very popular because
of its excellent marketing strategy. GCMMF marketing strategy is to understand the
consumer needs, develop products that provide superior value at fewer prices. GCMMF
has shown a tremendous commitment to the floodwater situations. GCMMF has never
stopped the supply of milk and other milk products. And unlike other competitors, it has
never taken wrong benefits in these kinds of situations. It has developed an excellent
distribution channel to provide its products to the consumers. It has made its products
available in each part of Gujarat & India.

Market Segmentation

Market segment is a very important function for the market department of the GCMMF,
because the market consists of buyers different in many ways. They are different in their
wants resources, locating buying practices. Because buyers have unique needs and wants,
each buyer is potentially separate market.

Geographic segmentation

Under these variables, GCMMF has divided market into different geographic units such
as region, states, cities etc. GCMMF sells its products by geographic segment action like
in the north where production of milk is very high the sale of Amul’s product is not much.
But in the western region it is high. GCMMF identifies this kind of variables and deals
with it.

Demographic Segmentation
 Under this variable GCMMF has divided market into several segments such as age,
gender, family, size, income, occupation etc. For each group GCMMF marketing strategy
is different. In milk Amul targets all the class where as in the other products like butter,
ghee, ice-cream etc. it targets to the middle and higher middle class.

Distribution Network
Most producers work with marketing intermediaries to bring their products to market.
The marketing intermediaries make up a marketing channel also called distribution
cannel. Distribution channels are sets of interdependent organizations involved in the
process of making a product or service available for use or consumption.

The Head Office of GCMMF is located at Anand. The entire market is divided in 5
zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and
Chennai. Moreover there are 49 Depots located across the country and GCMMF caters to
13 Export markets.

A zero level of channel also called a direct marketing channel consists of a manufacturer
selling directly to the final customers. A one level channel; contains one selling
intermediary such as retailer to the final customers. A two level channel two
intermediaries are typically wholesaler and retailer. A three level channel are typically
wholesaler, retailer and jobber in between.

GCMMF has an excellent distribution. It is its distribution channel, which has made it so
popular. GCMMF’s products like milk and milk products are perishable. It becomes that
much important for them to have a good distribution.
 Distribution Chart

We can see from above figure that GCMMF distribution channel is simple and clear. The
products change hands for three times before it reaches to the final consumer. First of all
the products are stored at the Agents end who are mere facilitators in the network. Then
the products are sold to wholesale dealers who then sell to retailers and then the product
finally reaches the consumers.

Amul Parlors
Amul has come out with a unique concept of Amul Parlours. They have classified them
under four types namely:

• Center for excellence

• On the Move

• Amul Parlours
• Amul Preferred Outlets

Center for Excellence: These Amul Parlours are specifically at a place, which has a class
of excellence of its own. We can find such parlors at the Infosys, IIMA, NID Ahmedabad
etc.

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

Amul Parlours: These parlors can be seen at different gardens across different cities.
These are fully owned by Amul.

Amul Preferred Outlets: These are the private shops that keep the entire of product
range of Amul. They also agree not to keep any competitor brands in the outlets. They
can keep other brands that are in the non-competitor category.

Amul has more than 200 such outlets right now. It wants to have 1,00,000 parlors by the
end of the year 2010.

Managing Competition
The Indian market is dominated by a large number of small local and regional players.
There are an estimated 150 manufacturers in the organized segment, which accounts for
30-35% of sales and about 1000 units in the unorganized segments of the market. In the
organized segment the significant brands are Kwality Walls , Vadilal, Amul, Havmor,
Mother dairy and Baskins & Robbins. GCMMF is facing very tough competition from
both in and outside India.

Amul combats competition from its competitors by providing quality products at a price
which its customers value. Along with good quality products and reasonable price the
packaging is also very good. Most of its products are available in many flavors. Excellent
 advertising backs its products and helps GCMMF (AMUL) to leave its competitors a
tough time. Also Amul has come out with Amul Parlours to cater to various segments of
customers. Amul has a very strong Brand Image in the Domestic market. Many products
are exported by GCMMF.

Exports
GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading
House" status. GCMMF has received the APEDA Award from Government of India for
Excellence in Dairy Product Exports for the last 9 years.
The major export products are:
Consumer Packs
• Amul Pure Ghee
• Amul Butter
• Amul Shrikhand
• Amul Mithaee Gulabjamun
• Nutramul Brown Beverage
• Amulspray Infant Milk Food
• Amul Cheese
• Amul Malai Paneer
• Amul UHT Milk (Long Life)
• Amul Fresh Cream
Bulk Packs

• Amul Skimmed Milk Powder

• Amul Full Cream Milk Powder
The products are exported to 18 countries namely, USA, Kuwait, Qatar, UAE, Yemen,
Bahrain, Muscat, Saudi Arabia, Tanzania, Madagascar, Sri Lanka, Singapore, Nepal,
Bangladesh, Nepal Thailand and Australia.
Advertising by Amul
Amul has two agencies that look after its entire range of products namely FCB Ulka and
Da Cunha.

FCB Ulka looks after a broad range of products namely, Amul Lite Breadspread, Amul
Shrikhand, Amul Chocolates, Amul Paneer, Amul SnowCap Softy Mix Ice cream,
Amul/Sagar Ghee, Amul Infant Milk Formula 1 & 2, Sagar Tea and Coffee whitener,
Amul Spray Infant Milk Food, Amul Mithaee, Amul Gulab Jamun, Amulya Dairy
Whitener, Mithaimate Sweetened Condensed Milk, Amul Ice cream, Sagar Skimmed
Milk Powder and Amul Whole milk Powder.

Da Cunha looks after the Amul butter. Da Cunha also prepares the very popular Amul
butter billboard campaigns, which we see at various locations. Over and above the Amul
butter, Da Cunha also looks after the Amul Cheese, Cheese spread, Gouda Cheese,
Emmental Cheese, Masti Dahi and Buttermilk, Amul Slim-n-Trim, Amul Taaza and Amul
Gold (all different brands of milk), Amul Fresh Cream, Amul Chocolate Milk, Amul
Fresh Milk and Nutramul.

FCB Ulka also looks after the corporate campaign.

 Chapter 5
Finance Function
Introduction

Financial management is that managerial activity which is concerned with the planning
and controlling of the firm’s financial resources. Finance is nothing to other but the
money. Money is necessary input for economic activities. In the other wards “Finance is
the common denominator for carrying out vast range of corporate objectives.” This is a
co-operative unit, so the finance is raised from members by a way of share capital. In this
share capital is limited. This unit has invested so many rupees in the structure of
organization. Amul has a long-term finance project.

Financial Details
Name of bankers

• The Kaira District Central Co-op. Bank Ltd.

• State Bank of India

• State Bank of Saurashtra

• UTI Bank Ltd

• Corporation Bank

Name of the Auditor: A.B. Gadhvi

Special Auditor (Milk)
 Milk Audit Office
Anand

Financial Analysis
Analysis of Relevant Ratios
• Debt – Equity v/s Long Term Debt – Equity
The debt – equity ratio shows the percentage of debt and net worth. Long-term debt to
equity ratio shows the percentage of long-term debt to net worth.

It seems that GCMMF has used more of long – term debt as compared to Short – term
debt. As a result it has ended up paying more of interest. But as far as the percentage of
debt to equity is concerned the use of debt has been declining over years. Of the total
capital employed debt is more as compared to equity. Thus, it can be concluded that the
stake of creditors and bankers is more in the total capital employed.

• Interest Coverage Ratio

Interest coverage ratio is used to test the firm’s debt servicing capacity. It shows the
number of times interest charges are covered by funds that are ordinarily available for
payment.
Interpretation
Interest coverage ratio of the firm was 1.84 times in 2001, which has increased to 8.28
times in 2004. This indicates that firm is easily able to pay the interest charges out of its
present earnings.

• Dupont Analysis

Interpretation
The company’s profit before depreciation, interest and tax has remained constant over the
years. In 2003, though the sales/CE has increased the PBDIT/Sales ratio has declined.
This can be attributed increasing level of expenditure of the company. But the ROCE has
increased due to decreasing capital employed in the year 2003. Overall ROCE has
remained around 26%.
• Components of ROE

Interpretation
The trend in CE/Net Worth has remained steady over the years except during 2003 where
the CE/Net Worth ratio has declined. This can be attributed to an increase in Net Worth
and a decrease in the Capital Employed. PAT/PBDIT showing an increasing trend, this
can be attributed to the declining taxes over the years. PBDIT/CE ratio has increased in
2003 because of decrease in capital employed and decreased in 2004 due to increase in
capital employed. ROE has increased due to an increase in PAT.

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