Amul

Amul ("priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya,"
(meaning Precious) formed in 1946, is a dairy cooperative in India. It is a brand name
managed by an apex cooperative organisation, Gujarat Co-operative Milk Marketing
Federation Ltd. (GCMMF)
The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest
food products marketing organisation of India.
 In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata
and Delhi in 2002.
 The portfolio consisted of impulse products like sticks, cones, cups as well as take
home packs and institutional/catering packs.
 It achieved the No 1 position in the country. This position was achieved in 2001 and it
has continued to remain at the top.
 Today the market share of Amul ice cream is 38% share against the 9% market share
of HLL (Kwality Walls), thus making it 4 times larger than its closest competitor.
 Not only has it grown at a phenomenal rate but has added a vast variety of flavours to
its ever growing range.
 In January 2007, Amul introduced SUGAR FREE & ProLife Probiotic Wellness Ice
Cream, which was a first in India.
 Amul’s entry into ice creams is regarded as successful due to the large market share it
was able to capture within a short period of time – due to price differential, quality of
products and of course the brand name.

FACTS
 The portfolio consisted of impulse products like sticks, cones, cups as well as take
home packs and institutional/catering packs.
 In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata
and Delhi in 2002. Nationally it was rolled out across the country in 1999.
 Has combated competition like Walls, Mother Dairy and achieved the No 1 position
in the country.
 Today the market share of Amul ice cream is 38%.
 Amul’s entry into ice creams is regarded as successful due to the large market share it
was able to capture within a short period of time.
Ice Cream Industry in India:
 Industry Snapshot:-
 Market Size - 1200 Crores
 Ice Cream market is growing at 26%
 
 Major players:-
 Amul - Market Leader with share of 36%
 HLL - Kwality Walls - 2nd biggest player
 Mother Diary
 Arun - Chennai Based Hatsun Agro Product
Particulars Cost per unit Amount
Opening stock 10 1000000
Raw materials 3 300000
Dry fruits 2.5 250000
Milk 3.0 300000
Flavors 3.5 350000
Other ingridents 2.0 200000
Sugar 2.5 250000
Cup 1.5 150000
Cutlery 1.0 100000
Seasonal fruit 0.5 50000
Waffle 1.0 100000
Cocoa 1.5 150000
Carriage inward 1.845 184500
Raw material consumed 33.845 3384500
Direct expense 2.2 220000
Direct labour 5.3 530000
Prime cost 40.045 4134500
Factory overheads
Fixed
Depreciation 2.5 250000
Rent 1.0 100000
Power 1.75 175000
Insurance 1.5 150000
Supervisor’s salary 0.7 70000
Variable
Electricity 1.0 100000
Running expense of machine 9.05 905000
Work cost 50.395 5039500
Office overhead
Employee cost 10.00 1000000
Other expenditure
Computer 1.2 120000
Telephone 0.1 10000
Taxes 0.4 40000
Carriage outward 0.2 20000
Cost of production 62.295 6229500
Opening stock 2.0 200000
(Closing stock) - -
Cost of goods sold 64.295 6429500
Selling and distribution
Advertisement 4.0 400000
Delivery vehicles 3.5 350000
Petrol 1.75 175000
Packaging rate 0.505 50500
Cost of sales 74.05 7405000
Profit 18.5 1851250
Sales 92.5625 9256250
 Marginal cost sheet
Sales 9256250
Variable cost
Purchase 3200000
Raw material consumed 3384500
contribution 2671750
Fixed cost
Factory expense 905000
employee cost 1000000
Depreciation 100000
Other expenditure 190000
Profit 476750
 Cost sheet analysis

The company is producing 100000 units of ice cream at Rs. 74.05 for which the total cost
incurred is Rs. 7405000 and the total sales is Rs. 9256250 which implies that that the
profit being made is Rs. 1851250.
The company is producing a single cup of ice cream at Rs. 92.5625 which includes the cost
of a cup ice cream at Rs. 74.05 which again implies that the profit of Rs. 18.5125 is earned on
a single unit of Amul ice cream.
Since the company is earning some percentage of profit above the cost, it means a slight
increase in the cost will not have too much of an effect on the profit since there is a large
margin of safety.
Since the company is earning some amount of profit, the business is capable to expand and
diversify over a period of time.

 PVR = C/S = 2671750/9256250 = 28.86%

 BEP (in Rs.) = FC/PVR = 2195000/28.86 = Rs.760568.26
 BEP (in units) = FC/C = 2195000/2.67175 = 821558.9 = 821559
 MOS = Profit/PVR = 476750/28.86 = 16519.404
 Determination of selling price
 Amul Ice Cream has marked the selling price of their product roughly 20% above the
cost price.
 This implies that they are making a profit on each unit of output that is sold.
 These profits can be ploughed into the business again to create more output.