At a dairy farm in Manchar on the outskirts of Pune, a fourhour drive from

Mumbai, about 200 cows await their turn to be milked. They wait like
shoppers in the billing queue of a supermarket, quiet and orderly. One by one,
the cows step onto a 20-feet rotating circular platform and rubber hoses are
attached to their udders. Once milked, the cows themselves kick away the
hoses. "Minimal human effort, maximum milk produce," gushes Devendra
Shah, Chairman, Parag Milk Foods, which started its operations in Manchar in
1993.

The company has spent over Rs 4 crore on its rotary milking parlour, the first
in India. The 3,000-plus Holstein cows, purchased at Rs 40,000 apiece, are
treated to a special diet of calcium-rich feed and mellifluous bhajans in their
sheds. "The music increases their milk produce," claims Shah, citing that each
cow produces 25 litres of milk a day. "It's total cow comfort technology. These
are the standards we need to adopt if we need to compete with international
players in products like cheese," he adds. And cheese is where Shah's
immediate ambitions lie.

With a turnover of about Rs 550 crore, Parag Milk Foods has been selling milk
and ghee in Pune and Mumbai since the mid-90s. But in the last one year, the
company's focus has shifted to products like cheese and flavoured yogurt. It
has invested Rs 110 crore to build what it claims is Asia's largest cheese plant
(with a capacity to process 40 tonnes of raw cheddar daily). "Cheese from this
plant is right now being sold in South Korea. Within a few months of our
launch, we have cornered a 30 per cent market share of cheese sales at modern
retail outlets in Mumbai. Our competitors are the Krafts and Laughing Cows of
the world. With our superior product quality, we are not even competing with
the Indian dairy players," says Shah.

Some 450 km away, lounging in his spartan office in Anand in Gujarat, the
mecca of the Indian cooperative movement, B.M. Vyas would be tempted to
disagree with Shah's claims. After all, as MD of India's largest and only billion-
dollar cooperative dairy player, the Gujarat Cooperative Milk Marketing
Federation (GCMMF), Vyas has seen competitors make more audacious
claims in his 16-year tenure as MD. GCMMF sounds like a mouthful, but the
brand name under which the cooperative sells its products, Amul, is, perhaps,
the most recognised and revered dairy brand across the country.

This despite the fact that, unlike Parag Milk Foods' state-of-the-art dairy farm,
Amul's milk is collected by dairy farmers every morning largely by hand. "The
fact that 2.7 million farmers wake up early each morning to milk their cows
and then give it to us is our biggest strength," says Vyas. He is no stranger to
pretenders challenging Amul's dominance. "Amul has seen competition in the
past. It really does not worry us," he says matter-of-factly.

A mildmannered, portly man of 59 years, Vyas has managed the cooperative

since 1994. When he took over Amul, GCMMF's turnover was a little over Rs
1,000 crore. Today, that has increased over six times to Rs 6,700 crore. Back
then, Amul was viewed as a brand that would not survive the pressures of
competition in the post-liberalisation era. Vyas and Amul have not just
survived the onslaught of competition, but have often taken the fight to their
territory (as it did in ice creams a decade ago, when it dethroned Hindustan
Unilever Ltd (HUL)—then Hindustan Lever Ltd—from pole position).

Taking on competitors in a category or two at the same time is something

Amul has done before. But the threat today is different, and huge. That's
because never before has Amul been buffeted by as much competition as it is
today, across every category it operates in—right from pouched milk and
butter to cheese and ice creams. Other than HUL and Nestle, multinational
giants like Kraft (which recently acquired Cadbury globally, thereby getting a
passage into India) and Groupe Danone are beginning to flex their muscle.
"We hope to bring some of our big brands like Kraft Cheese and Oreo cookies
to India. With Cadbury's distribution strengths, we can push some of these
brands in India," Sanjay Khosla, President (Developing Markets), Kraft,
recently told BT. Groupe Danone is looking at tapping into the small, but fast-
growing flavoured milk market. It's currently testing a chocolate-flavoured
fortified milk in Hyderabad.

Regional players, too, are upping the tempo. Other than Parag, there's Amrit
Group in Kolkata, which plans to launch valueadded milk products. Says
Harish Bagla, MD, Amrit Group: "We are coming up with various value-added
products like flavoured milk, dahi, lassi, cheese, butter, paneer and ice cream."
Bagla's also exploring tie-ups with international companies. Finally, don't
forget Johnnies-come-lately like Zydus Wellness—which has carved a niche for
itself in butter alternatives—that are opening up new markets.

The biggest threat to Amul, though, could well come from its one-time friend
but now a bitter rival, Mother Dairy, a subsidiary of the National Dairy
Development Board (NDDB). In mid-February, Amul made a bold claim when
it declared itself as the #1 player in the branded packaged milk segment, with
sales of 1.45 million litres daily, in the Delhi market, a traditional stronghold
of Mother Dairy. Within a day, the New Delhi-headquartered Mother Dairy
shot back. "Mother Dairy sells approximately 29 lakh litres of milk per day in
Delhi NCR, which is about twice as much as that of the nearest competitor,"
says Paul Thachil, CEO (Dairy & Foods), Mother Dairy Fruit & Vegetable.

Amul's counter: "We do not operate in the loose milk segment and our figures
are only for the pouched milk category," says R.S. Sodhi, Chief General
Manager (Marketing), Amul. Mother Dairy is the leader in the loose milk
segment. "These little things happen in marketing," chuckles Sodhi about the
game of oneupmanship. Incidentally, Mother Dairy was set up by Dr Verghese
Kurien, the man who transformed GCMMF from a struggling dairy in Anand
into India's largest foods producer. "We will grow the market when we
compete," says Vyas.

"Amul and Mother Dairy are both different sides of the same coin," he adds
rather diplomatically. Quiz him about why then did Amul choose to drop the
"milk drop" symbol (which is owned by NDDB but which both cooperatives
willingly shared for years) from all its pouched milk packets and the answer is
a wry: "Amul is Amul. We were born before every other droplet." Incidentally,
both NDDB and GCMMF have been battling each other for milk procurement
in the Saurashtra-Kutch region after GCMMF started procuring milk there
earlier this year. The dairy farmers in the region are not complaining as milk
prices have gone up.