Presented By: Gunjan Dugar Manish Madhukar Mohit Almal Vineet Sekhani

Background
• AMUL – formally registered on December 14, 1946 • During 1940’s the milk procurement was done by a private company, Polson’s Dairy in Anand • In 1946, under the leadership of Sardar Vallabhbhai Patel, Mr. Tribhuvandas Patel, a local farmer organized farmers into a Cooperative • In 1949, Dr. Verghese Kurien joined dairy Institute Research at Anand

Background
• Membership – Committing to supply a certain quantity of milk for a certain number of days in a year – Would continue to be a member only if he kept up this commitment

• Cooperative, not only collected milk but also provided support services
– – – – veterinary care for their cattle Supply of cattle feed of good quality Education on better feeding of cattle Facilities for artificial insemination of their cattle

ANAND PATTERN

THE VILLAGE SOCIETY

THE DISTRICT UNION

THE STATE FEDERATION

ANAND PATTERN
• Village Society
– Called as Village Dairy Cooperative Society (DCS) – Formed by Milk Producers – Has milk collection centres where milk is collected daily – Each member's milk is tested for quality with payments based on the percentage of fat and SNF – At the end of each year • A portion of the DCS profits is used to pay each member a patronage bonus based on the quantity of milk poured.

ANAND PATTERN
• The District Union
– Called as District Cooperative Societies – Buys all the societies' milk, then processes and markets fluid milk and products. – Also provides a range of inputs and services to DCSs and their members
• • • • veterinary care for their cattle Supply of cattle feed of good quality Education on better feeding of cattle Facilities for artificial insemination of their cattle

– Trains and provides consulting services to support DCS leaders and staff

ANAND PATTERN
• The State Federation
– Responsible for marketing the fluid milk and products of member unions. – Some federations also manufacture feed and support other union activities

Organisational Structure
Managing Director

General Manager (Marketing)

General Manager (HRD)

General Manager (Quality assurance)

Assistant general Manager (Marketing – Dairy Products)

Manager (commercial)

Manager (Exports)

Manager (Liquid Milk)

Manager (Ice Cream)

Organisational Structure
48
• Sales offices • Headed by a Sales manager • Assisted by Sales Officers and Field Salespersons

3600

• Dealer Network

400000

• Retailers

Product Portfolio
Category Liquid Milk Full fat milk Semi Toned Milk Fully Toned Milk Butter Amul Butter Amul Lite Amul Ghee Sagar Ghee Milk Powder Amul Spray 65 1 85 80 8 10 1 1 2 1 Market Share NA Market Position 1

Amul Milk Powder
Sagar, Skimmed Milk Powder Amulya, dairy whitener

80
40 60

1
1 1

Product Portfolio
Category Cheese Amul pasteurized Cheddar Cheese Amul Cheese Spreads Amul mozzarella cheese Amul Emmental Cheese Amul Paneer Amul Cheese Powder 50 90 100 1 1 1 Market Share Market Position

Ice Creams
Amul Ice Creams Sweets Amul Shrikhand 50 1 30 2

Amul Mithai Gulab Jamun
Amul Mithai Mate

1

Product Portfolio
Category Chocolates Amul Chocolates Chocolate Drinks Nutramul Edible Oils Dhara Edible Oil Dhara Health Fruit & Vegetable based Products Safal Fruit Drinks N.A. 15 12 4 10 3 Market Share Market Position

Safal Tomato Ketchup
Safal Mixed Fruit Jam

Success Story
Technology and einitiatives

Robust supply chain

Low cost strategy

Success

Strong distribution network

Diverse product mix

Amul – Quality, Value for money, Availability, Service

AMUL – Business Model
Raw Milk

Pasteurization

Condensed
Butter Ghee cream

Packaged Milk Ice cream Beverages

Dried Skimmed Milk Powder

GCMMF’s Business Strategy
Developing demand
Limited purchasing power

A low cost price strategy product

The Distribution Network
Dry and cold warehouses
Cash transactions throughout the supply chain JIT improves dealers’ ROI

Umbrella Brand
Common brand for most product categories Amul’s sub-brands like Dhara, Safal etc.

Third party service providers
Core is milk processing
Logistics of milk collection, distribution of products and sale through retail outlets and dealers

Porter’s 5 Forces: An Industry Analysis
Threat of new entrant is high as entry barriers are low

Bargaining power of suppliers is low because they are rural milk producers

Competitive rivalry high due to other brands and local players

Bargaining power of customers is high because of high competition

Threat of substitute is high because of other products

3 C’s Model
Defending against Mahananda, Vijaya and other co-operative socieities Aggressive moves by Britannia, Nestle, Kwality Customers extremely satisfied Moved from loose to packaged milk Ready to try more products Improved socio economic conditions

Competition

Customer

Company

Largest milk brand in Asia Market leader in ghee and butter Very strong supply chain Good reputation Value for money

SWOT Analysis
Strength
High Quality, low price Introduced TQM Highly diversified product mix Robust distribution network Brand strength

Weakness
Strong dependence on weak infrastructure and dependence on villages for raw material Short shelf life of product Alliance with third parties

Opportunities
Penetrate international markets Diversify product portfolio by adding products like processed food, chocolates Use of internet to sell products Increasing customer contact points

Threats
International competitors Growing price of milk Yield of indian cattle low as comapred to other countries Saturation of markets

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Data
Sales Data
50000 40000 30000 20000 10000 0 93-94 94-95 95-96 96-97 97-98 98-99 22192.31 18835.97 15333.83 13792.89 11140.42 9888.92 Total Turnover Sales of Dhara Sales 600 500 400 300 200 100 0 93-94 94-95 95-96 96-97 97-98 98-99 439.82 360.56 492.47

Marketing Expenses

265.41

301.03 244.77

Net profit carried down
140 120 100 80 60 40 20 0 7.89 93-94 13.44 94-95 95-96 96-97 97-98 98-99 81.79 77.85 84.8 130.12

Profitability Ratios
Net profit margin
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 93-94 94-95 95-96 96-97 97-98 98-99 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 94-95 95-96 96-97 97-98 98-99 9.89%

ROA
11.29% 9.67% 8.55%

10.93%

ROE
20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%
18.63% 13.73% 13.72% 18.76%

2.25% 1994

3.20%

1995

1996

1997

1998

1999

Ratio’s
Marketing Expense/Total Turnover
3.00% 2.68% 2.50% 2.20% 2.00% 2.35% 2.18% 2.34% 2.22% 15.00% 20.00% 18.48%

Dhara Sales/ Total Turnover
25.00% 22.81% 19.40% 19.63% 18.29% 18.38%

1.50%
10.00% 1.00% 5.00% 0.50% 0.00% 93-94 94-95 95-96 96-97 97-98 98-99 0.00% 93-94 94-95 95-96 96-97 97-98 98-99

Amul Competition

Product Strategy of Amul
• • • • Product Positioning Strategy Product Design Strategy Diversification Strategy Value Marketing Strategy

Product Positioning
• To place the product in that part of the market where it will get favourable reception • Positioning of Amul is “Taste of India” as it has created value in the whole chain from customers to farmers • USP – Quality with affordability

Product Design Strategy
“Whether to offer standardised or customized products” Uses of Utterly – Butterly Girl: Using since 1967 One of the longest serving ad campaigns

Product Diversification
• Seeking unfamiliar markets or products in the pursuit of growth • Amul’s Philosphy: - Progressive addition of higher value products while maintaining the desired growth in existing products Core philosphy: - Providing milk at basic and affordable price

Value Marketing Strategy
• Providing a product that works as claimed, is accompanied by decent service and delivered on time • Commitment to quality • Value for money • Creating awareness • Fostering loyalty

Dairy Cooperative Network-Current Scenario
The Dairy Cooperative Network
Milk Production

• Includes 177 milk unions • Operates in over 346 districts • Covers around 1,28,799 village level societies • Is owned by around 13.4 million farmer members of which 3.7 million are women

• India's milk production increased from 21.2 million MT in 1968-69 to 100.9 million MT in 2006-07 and to 102 million MT in 2007-08 • Per capita availability of milk was 246 grams per day in 2006-07 increased from 241grams per day in 200506, up from 112 grams per day in 1968-69

Dairy Cooperative Network-Current Scenario
Marketing • In 2007-08, average daily cooperative milk marketing stood at 189.21 lakh litres; annual growth has averaged about 6.6 per cent compounded over the last five years • During 1991-2007 the daily milk supply by Cooperatives to each 1000 urban consumers has increased from 37.3 to 66.3 litre

Innovation • Bulk-vending - saving money and the environment. • Milk travels as far as 2,200 kms to deficit areas, carried by innovative rail and road milk tankers. • Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at grass root level – preserve quality and reduce post-procurement losses

Mission 2020
• “Mission 2020,” as the GCMMF calls it, focuses on cattle feed manufacturing capacity • The GCMMF, at current price, will require an investment of Rs 2,600 crore to ready the infrastructure required for such a facility • “We want to expand the manufacturing capacity of the cattle feed more than four times to 12,000 MTs per day by 2020,” said Parthi Bhatol, chairman, GCMMF

Sales Growth-By Value

Amul-Retailing
• The network of more than 4000 parlors in almost all major towns of the country bears testimony to the fact that the model is hugely scalable and inherently sustainable

• The retailing business alone fetched sales turnover of more than Rs.200 Crores during the current year • Channel Partner- Indian Railways, 300 New Outlets

Problem Statement

SWOT ANALYSIS
• Strengths:
– Existing Distribution Channel – Current Positioning – PURITY!! – Better knowledge about Indian Tastes & Preferences than the MNCs – Strong Morals – Excellence in forming Cooperatives – Sound Financials

SWOT ANALYSIS
• Weaknesses:
– Unable to recruit professionals – Do not enjoy a level playing field as compared to Companies – Need to do away with the Lean organisation format, hence affecting the profitability

SWOT ANALYSIS
• Opportunities
– Premium Food consumption to increase by more than 150% – Prevailing conditions comprises loopholes like
• Wasteful production • Poor prices paid to farmers

– Growing Health Concern

SWOT ANALYSIS
• Threats
– Competition from MNC’s like HLL and Nestle – Mark up at each stage is high – Cattle productivity is low – Lags behind in expertise when compared to MNC’s – Production of Fruits and Vegetables highly dispersed – Subsistence farming