INTRODUCTION

Amuls goals for 2020 have been broadly laid down by its Chairman at the 41 st Annual
General Body Meeting on May 14, 2015. It is imperative to understand these goals clearly in
order to not only determine Amuls future strategy but also to assess the usefulness of its current
initiatives in the fulfilment of these goals.
The Chairmans speech clearly emphasizes the growth objective for Amul-2020. Its primary
objective is to achieve a turnover of over Rs. 50,000 crores by 2020, implying a CAGR of 20%
over the next 5 years. Considering this ambitious objective, the two complementary aspects of
supply and demand need to be taken into account. While there is a strong demand in India for
traditional products like milk and butter, future growth in the dairy industry is expected to be led
by value-added products like ice cream and low-fat milk (India Dairy Products Market Outlook
to 2019 Domination of Branded Players and Rise in Milk Availability to Foster Growth, 2015) .
It is, therefore, necessary for Amul to innovate and expand its product portfolio, as was done in
2014 when 26 new products were launched. Also, considering that the Chairman emphasized the
same in his speech, it can be said that portfolio expansion should be a key goal for Amul going
forward.
Expanding Amuls market geographically is another dimension of demand growth
highlighted by the Chairman. While Amul is the market leader nationally in almost all of its
product categories, there are still quite a few untapped markets in India. For e.g. Amul made its
entry in South India in the Fresh Milk category only in 2014, with the launch of Amul Milk in
Hyderabad. Entering such untapped Indian markets and making Amul a truly national brand can
be said to be GCMMFs mission for 2020.
In addition to tapping the Indian market, there is a vision laid down by the Chairman to
make Amul a global brand. There are aspirations to make Amul the dairy to the world in the
next few decades. Setting up of the dairy processing facility in New York is a step towards this
mission. Stronger strategic steps will be required to enter the global markets, especially Europe
and Australia, where Amul has not been able to enter till now.
On the supply side, there is a clear need expressed by the Board to increase Amuls
production capacity. Specifically, to meet the goal of Rs 50,000 crore turnover by 2020, Amuls
procurement aim should be to reach 270 lakh litres per day by 2020 from 156.17 lakh litres per
day today, implying a CAGR of 21%.There is also a need to increase Amuls milk processing

capacity. In addition to supplementing the capacity, there is also room for improvement in the
efficiency of milk production and distribution. For e.g. Indias milk per animal per day is
considerably lower than that in developed countries. Also, GCMMF needs to leverage
technology to better utilize its large distribution network. While steps have been taken to reduce
such gaps like selection of elite breeding animals under the Strategic Productivity
Enhancement programme and integrating the value chain under the Common AMCS
Application programme, these efforts are still in the early stages and successfully completing
these is one of the secondary goals of GCMMF.
While all the above targets are definitely pertinent from a commercial point of view, it is
important to realize that Amul is not in the dairy business merely for profits, and it serves bigger
interests of rural India and especially of Indias small farmers. Hence, development of the
cooperative structure through programmes like Internal Consultant Development (ICD) and
Vision Mission Strategy (VMS) might be said to be the real success factors as seen by
GCMMFs Board. Attracting the youth to farming, developing entrepreneurship among the dairy
farmers and achieving farmer welfare in general is a stronger mission for GCMMF.
To summarize, GCMMF envisages extremely rapid growth over the next 4 years to
almost triple its turnover by 2020. In order to achieve this vision, there are goals pertaining to
demand and supply that need to be achieved as enumerated above. Primarily, there is the overarching vision of farmer welfare that is at the heart of Amuls existence. The report analyzes
these factors in detail in the following sections.
SITUATION ANALYSIS
Industry Analysis
The dairy industry in India has evolved from being net importer of milk till the 70s to being
self-sufficient in milk production to being the largest producer of milk by 99 and it has become
a reality due to the White Revolution or Operation Flood. By 2014, Indias milk production
constituted 16% (Milk production, n.d.) Of the total global production.
Dairy industry in India majorly constitutes of retail products like milk (both powdered
and concentrated), cheese, ice-creams, yogurt and creams. Out of all the products, ice-creams
have a distinct market segment consisting of milk and non-milk ice-creams.

Of the total milk produced, 46% (Intodia, 2015) is consumed as fluid milk, followed by ghee
(26.7%), butter (6.7%), and curd (7%). Consumption of yogurt, ice-cream and cheese constitutes
a miniscule proportion of the total consumption in India as opposed to the global market where
consumption of cheese is 27% (Global Dairy, 2014) of the total production followed by yogurt
(15.4%) and spreadable fats (11%). This highlights the difference in the consumption patterns of
milk products in India and the world. This insight would be useful for Amul in case its strategy is
to look for global expansion.
Total revenue generated by the dairy industry in India has been growing at the rate of 8.8%
(Dairy in India, 2015) per annum as opposed to the milk production rate of 4.2% (Dairy in India,
2015). This has resulted in a steep increase in the prices YOY. The rate of increase in demand is
8%, which is twice the rate of production. This creates a gap between demand and supply, which
might be another reason for a steep growth in the price realization from the dairy industry.
Out of the total production of milk, only 20% (Maheshwari, 2014) is handled by the organized
sector. In the organized dairy industry, the co-operatives handle 60% volume share and the
remaining is handled by the private players. Unorganized sector mostly consists of small farmers
distributing milk to villages and urban households. Buffalo milk constitutes of 56% (Bhadawari,
n.d.) of the total milk production and is preferred by the Indian customers for daily consumption
due to its high fat content. Unlike India, world milk production is primarily cow milk.
Organized players derive 80% of their revenue from pasteurized milk and the remaining 20% (It
will be a Cream Run for dairy industry for next 3 years: Crisil, 2015) from value added products.
Amul is the largest player in organized sector, commanding a 35.8% (Dairy in India, 2015).
market share. Other competitors include global giants like Danone, Nestle, Mondelez and Indian
players Parag, Britannia etc. All these players are confined to processed milk products segment
which is expected to grow to 30% (It will be a Cream Run for dairy industry for next 3 years:
Crisil, 2015) of the total value of organized sector by 2020.
Despite being the largest milk producer in the world, Indian dairy exports are 5% of the
total production as of 2015. Skimmed milk products, ghee and butter are the major dairy exports
from India to destinations like UAE, Bangladesh, US and Philippines. Majority of the demand of
butter and ghee comes from the NRIs living abroad.

The strengths and weaknesses of the dairy industry will highlight the internal aspects
while threats and opportunities will expose the externalities and future prospects. The SWOT
analysis evaluates these in detail.
1. Strengths:
a) Stringent food safety laws and monitoring institutes like FSSAI have decreased the
incidences of adulteration. This has resulted in an increase in the demand for quality milk,
which is strength of the organized sector.
b) Strong successful co-operative movement in dairy industry is the pillar to its success. It has
created the opportunity for economies of scale in milk procurement and distribution,
helping the producers to get more value for their produce. The consumers also get the
advantage of quality, availability and fair price.
c) Strong support from government institutions in setting up co-operatives similar to the
Anand model across all states, supporting the rural households by providing them with
cattle and supporting them with veterinary care is quintessentially important in increasing
the productivity of dairy industry in India.
2. Weaknesses:
a) India relies primarily on local breeds of cattle for milk. The productivity is 8-9 times lower
than that in other dairy producing nations. It has resulted in an increase in the procurement
cost of milk, giving advantage to the global players.
b) Milk production is a secondary activity of more than 75 million Indian farmers with an
average holding of 1-3 animals each. They practice traditional farming and do not have
enough training in modern dairy techniques, aggravating the problem of productivity.
c) Lack of efficient cold storage facilities has increased the incidence of perishability, thereby
increasing supply chain losses.
d) Lack of proper planning by government in recording feed demand, animal health, milk
production and productivity related data has affected the policies in India.
e) All the registered milk co-operatives are not able to sustain themselves due to insufficient
infrastructure, low participation from local farmers and indulgence of political parties and
bureaucracy.
3. Opportunities:
a) Indian dairy market is poised to increase at the rate of 8% YOY in revenue due to rapidly
increasing demand and it creates more opportunity for milk production.
b) The budget expenditure on dairy products has increased between 12% to 42% (Kumar,
2011) across middle income and low income people. Also, for predominant vegetarian
population of India, milk is the main source of protein supply. With increasing disposable

income and rising awareness of health benefits on consumption of milk is presenting an

opportunity for phenomenal growth.
c) Currently, 80% of the production is handled by the unorganized sector i.e. milk is directly
being sourced to the local consumer. There is a large scope for organized sector to cater to
the rapidly increasing demand for quality and processed milk.
d) Value added products account for only 20% of the milk consumption of the organized
sector i.e. just 4% of the entire production. This is poised to increase due to untapped
potential of indigenous milk products like chaanch, lassi and dahi. There is enormous
scope of innovation and technology development to tap into this market.
4. Threats:
a) Indian dairy industry is not open to imports in certain types of milk products. Push for free
trade under WTO norms would affect the restrictions and Indian market may see imports
from countries that are efficient in production at cheaper prices than domestic produce,
cutting profits of the players and reducing the attractiveness of industry as a whole.
b) Major milk producing states of Rajasthan, Gujarat and Andhra Pradesh see a lot of
fluctuation in rainfall, which is necessary to produce fodder for the cattle. This adversely
affects milk production for longer periods.
Understanding drivers of dairy industry from present and future will help us identify the
opportunities

in

technological

development,

investment

opportunities,

infrastructure

development which lead to overall development of dairy industry. Weve carried out the analysis
using STEEP method (Exhibit 3).
Now that weve understood the industry as a whole, lets see the industry attractiveness using the
five forces.
Porters Five Forces
1) Threat of new entrants:
Co-operatives have economies of scale both from the suppliers side and the buyers side. The
brand AMUL has a good reputation among buyers. Its technological innovations, like milk
powder from buffalo milk, have made it competitive among world players. The capital
requirement to setup plant is also high and geographical spread of India takes long time to
establish. The government policies also support co-operative milk unions restricting the entry

of private players into the industry. The barriers of entry are high as the procurement is hard
due to high switching costs of working in co-operatives.
2) Power of suppliers:
As the suppliers are the owners of the co-operatives, they command greater power on the
procurement and distribution of milk across India. Also, Government has regulations against
exploitation of co-operatives, increasing the power of suppliers from medium to high.
3) Power of buyers:
There are large numbers of buyers spending considerable amount of budget on dairy products.
The spread of buyers is also evenly distributed. Thus, currently they have low bargaining
power.
4) Threat of substitutes:
46% (Intodia, 2015) of the value of organized Indian dairy industry is fluid milk, which is
undifferentiated and where there is no threat of substitutes in the mass market. Differentiation
only exists in high end market with different composition of fat and protein. The threat of
substitutes is high in value added products. But the brand image of Amul is high among the
organized players, downplaying the threat of substitutes to a large extent.
5) Rivalry among existing competitors:
Rivalry in the fresh milk segment is mainly between the state co-operatives of Gujarat,
Karnataka, Tamil Nadu, and Andhra Pradesh through their brands Amul, Nandini, and Vijaya.
GCMMF faces stiff competition from players like Britannia, Nestle, Danone, Kwality, and
Parag in product categories of milk shakes, butter, cheese, yogurt, milk creams and ice-cream
segments. Exit barriers in the industry are high as there are large fixed cost investments in
procurement, processing and supply chain establishment for dairy industry. As the
differentiation is low, there is fierce competition in establishing brand image to create
differentiation in image in terms of quality and variety.
Company Analysis
The Gujarat Cooperative Milk Marketing Federation (GCMMF), commonly known as
Amul, is built on the dual philosophy of value for many and value for money. The company is
committed not only to get the best prices for the farmers but also ensure the best quality of
products for its customers. But it does not act as a simple reseller. Instead, it plays the role of a
multi-sided platform that for the farmers and the customers. Amul qualifies as a multi-sided
platform (MSP) because it exhibits cross-side network effects an increase in the number of

farmers joining Amul would ensure a better quality of products for its customers while an
increase in the number of customers would result in a higher remuneration for the farmers. MSPs
have the potential to create high barriers to entry but only if the cross-side network effects are
coupled with high switching costs. Currently, the switching cost for the farmers is high Amul
pays the highest remuneration to the farmers (28 and 40 rupees per liter for cow and buffalo
milk) (VORA, 2015) but that for the customers is low. Thus, a customer is easily able to change
to a new product, if it becomes available. Amul has to guard itself against this possibility. Also,
the governance of an MSP needs to be robust. Thus, Amul has to ensure that only the right
people are allowed on its platform, and external forces like political interferences do not
jeopardise its operations.
GCMMF is a cooperative organization with a three-tier structure. The bottom tier is a
village level dairy cooperative society, middle tier is a district union and at the top is the
GCMMF. The residents of a village purchase at least one share of the dairy cooperative to
become the shareholders of the organization. The dairy cooperatives, in turn, buy shares of the
district union. The district union collects milk from all the societies, processes it and packages it
into value-added products. District unions also transport the finished goods for sale within the
district. The GMCCF acts as a governing body that looks after the operations and provides a
unified brand name to the district unions. Thus, Amul is structured such that it is dependent on
the vagaries of the daily lives of the region. The caste structure of Gujarat plays an important role
in this regard. Traditionally, the Patidars have held influence in the state of Gujarat despite
comprising of just 15% of the population because they enjoyed a higher position in the ritual
hierarchy of caste (Atwood, 1991). They have ensured continuation of this position of power
because not only are they good farmers but also well educated, shrewd businessmen. Similar is
the influence of the Marathas in Maharashtra, where sugar cooperatives have held sway. Thus,
the caste structure and the leadership provided by the dominant castes contribute a great deal to
the success of the cooperatives. Amul needs to ensure that this factor is considered before
planning its expansion in different regions.
There are many factors that contribute to the success of Amul and add to its economic
viability. Marketing is one of the major ones. The polka-dot frock-wearing cute baby girl has
become a feature in every Indian household since her debut in 1966. Sylvester DaCunha, her
creator, shrewdly engrained the trending topics of the day in the ads and added a chunk of humor

to them. The ads became a runaway hit, and the girl became a darling of the country. 50 years on,
the polka-dot girl still rules the roost and tickles the funny bone of her audiences (Exhibit 1).
This marketing campaign is brilliant because not only did it manage to get the attention of the
country but also it is a complete strategic fit. The companys tagline is The Taste of India and
the ads literally give a Taste of India through their focus on the current issues of the day.
While marketing entices the customers to try the products for the first time, repeat
purchases would entirely depend on the quality of products. The quality of the end products
depends entirely on the quality of the raw material i.e. milk obtained from the farmers. The
relationship Amul maintains with the farmers enables it to procure extremely good quality of
milk, and it is this relationship that acts as a point of differentiation for Amul. Dr. Kurien realized
the power of the people early which resulted in Amul being formed as a cooperative. And this
core strategic strength has been carried forward Amul tries to enrich its relations with the
farmers by providing other services like veterinary support, education about the latest trends in
farming, etc. Adding to this, Amul also gives back about 80% of the revenue to the farmers. It is
this monetary and non-monetary benefits strategy which makes the farmers the backbone of
Amul and also its greatest asset.
While it is true that a large number of the farmers in the Amul cooperative are marginal
farmers, big farmers are required in the cooperative to enable Amul to invest in the latest
technology. The best technologies ensure that minimum possible production costs are incurred.
Similarly, the big farmers would never be able to achieve the scale achieved by Amul through the
efforts of the masses of marginalized farmers. Thus, there is a rudimentary dependency of each
group on the other and their efforts have combined to ensure success for the cooperative.
Dedicated and competent leaders have played their part in the success story of Amul.
Amul has been able to produce these leaders at the district union and village cooperative level
year after year. Quite often, political leaders end up heading a cooperative in the district or
village. But there has not been misuse of power or corruption within the cooperative. This is
because the leadership positions in the cooperatives are associated with prestige, patronage and
power. Any candidate would have to enjoy the majority support to become the leader. Thus, there
is plenty of competition for the leadership position to gain the acknowledgements. This ensures
that the leaders are always on their toes and work in the best interests of the cooperative.

Other factors that add to the success of Amul are: Amuls distribution network, its
presence across various milk products and its scalability. A good quality product will only be
bought by the customers if it is delivered to them before expiry. Hence, Amuls distribution
network plays a critical role in ensuring that the product reaches its consumers as quickly as
possible. This also results in a high turnover of the inventories, which results in higher profits.
The huge repertoire of products that Amul produces has ensured its presence across most of the
milk products, which results in an increase in the brand visibility. Another factor that contributes
to the brand visibility is the national presence of Amul. Brand visibility is important because
ideally it is desirable that as soon as any customer thinks about milk products, he thinks of Amul.
All of the factors mentioned above fit together and create economic value for Amul (Exhibit 2).
RECOMMENDATIONS
Amul witnessed a CAGR of 21% over the last 7 years to achieve a turnover of Rs. 20,000
crore five years ahead of schedule. Continuing at this rate, Amul should be able to achieve its
target of Rs. 50,000 turnover by 2020 easily. However, one cannot expect this situation to
continue in future as global milk prices have dropped drastically in 2016 [Exhibit 4] due to
excess production in countries like New Zealand and removal of milk quotas in European
countries. Hence, if Amul is to reach its target of Rs. 50,000 crore, it needs to increase its sales
volume at a rate higher than 21%. Keeping this in mind, we recommend the following options.
1) Expand through retail chains or partner with retail/ foreign players
a) Amul should expand through exclusive franchised retail channels across India along with
expansion in conventional channels of organized and unorganized retail.
b) By setting up exclusive stores, we can push the sales of umbrella brands like milk shakes,
sweets, and bakery items, thereby selling more products of high contributing margin.
c) This will also help create awareness among the consumers about the products available
under Amul brand which will help us move high value items.
d) The mix and availability of products can be exclusively maintained as per local
preferences and differentiation in products can be achieved at the same time.
e) This will help capture the 80% unorganized market by providing exclusive products with
easy access for the customers.
f) This would also increase entry barriers for new entrants in the market by creating network
of supply chain which is hard to replicate.

g) A typical Amul store earns an average of 40 lacs revenue per annum (Exhibit 5) and since
it follows a franchise model, it does not incur any operational cost. It is recommended
that in order to overcome the effects of decrease in global milk prices, Amul open 1000
such stores annually over the next 5 years. So the approximate incremental revenues with
this strategy is Rs 400 crore per year (40 lacs x 1000 stores = Rs 400 crore). With the
already established 7000 stores, annual turnover due to parlors is approximately 4800
crores (12000 stores x 40 lacs/store = Rs 4800 crores).
2) Procurement through organizations other than co-operatives
Major reasons for the success of milk co-operatives in Gujarat are the states unique caste
composition, economic situation and political structure. This cannot be replicated across other
states. This is evident from the failed intervention of National Dairy board in setting up cooperative models similar to Anand across all states in India. There are also high fixed costs
associated with setting up and maintaining a co-operative. Procurement of milk from private
entities will make Amul independent of the state co-operatives law. Switching costs of private
farmers can be increased by paying high price for quality produce. This will enable Amul to
increase the availability of milk in case of any shortages or surge demands.
3) International Expansion
Amuls revenue from exports is Rs 240 crore in 2014-15 and Rs 540 crore in 2013-14
(KAMATH, 2015). Thus, even when global milk prices were high, Amuls exports contributed
only about 2% to its turnover. It may be said that due to import duties on Amuls exports and its
lack of brand value abroad are big hindrances in its international expansion. Secondly, Amul can
be said to be neither a cost leader nor a technology leader in comparison to global dairy brands.
To add to this, global milk prices are expected to be low over the next few years due to excess
production capacity. Thus, Amul should not be looking aggressively for international expansion.
Instead it should focus on regions having sizeable NRI population where there is high demand
for Indian dairy products.
4) Women Empowerment

Small and marginal farmers have been central to the success of Amul. However, with the
increasing lure of city jobs, the number of young farmers is steadily declining. This has resulted
in a decrease in the number of young farmers joining the co-operative. We recommend Amul to
continue sourcing its milk from the small and marginal farmers because the co-operative
structure is something which makes Amul work. Amul would be deviating from its core
competency if it were to procure milk from large technologically oriented farms. To encourage
marginal farmers to continue supplying milk to the co-operatives, Amul could look into
promoting women empowerment. The milking of cattle is not a labor intensive job and women
can carry it out as efficiently as men do. Thus, the men of the household would be free to pursue
any job of their choice and the women could continue with the supply of the milk to the cooperatives. This would not only ensure Amuls preservation of its core competency but also put
in more money in the particular household. Plus, it would generate a positive market vibe for
Amul as it is promoting women empowerment.
ACTION PLAN
Marketing
1) Given the dropping milk prices, it is important for Amuls marketing campaign to focus on
value-added products like cheese and ghee. Thus, along with the umbrella campaigns, it is
necessary to promote these high-margin products. We suggest that Amul come up with a new
tag line to highlight its emphasis on such products. Its current tag line Utterly Butterly
Delicious has a high recall value and hence should not be done away with. It can be used in
its umbrella campaigns. However, with that tag line people associate Amul primarily with
butter, which is not a high-margin commodity. Amul needs to push its high margin products
given the economic condition and this is possible only when Amul proactively emphasizes
these products.
2) Amuls main growth driver in the next 5 years is predicted to be its parlor stores. These stores
would be opened in Tier 1 as well as Tier 2 cities. It is necessary to make people aware of
these stores and the products available in these stores. Hence, these stores should feature
prominently in Amuls marketing campaigns and the campaign should also highlight that a
wide range of dairy products are available at these stores. Secondly, Amul should continue

with its policy of situating these stores at busy locations like bus stops, train stations and
junctions.
3) Lastly, there are reservations about Amuls brand image among the youth of India as it is not
considered contemporary. While some steps need to be taken to appeal to the youth, Amul
should not try to have a brand makeover for this purpose. Instead, what could be done is that
campaigns for a few products like ice-creams may focus on a youthful image of Amul. But
any umbrella campaign should clearly emphasize Amuls heritage of reliability and trust
among Indians.
Personnel Planning
While Amul has traditionally restricted its procurement from Gujarat farmers, with the entry of
heavy competition and geographic expansion of Amuls markets, it has become necessary to
procure from outside Gujarat. Amul started such procurement in 2010 (KAMATH, 2015) and
there is a need to expand such procurement.
However, Amul should not try to develop new cooperatives in other states. It can procure milk
from local cooperatives of those states. This approach is important in terms of two aspects:
Operational and Political. The large cooperative network in Gujarat was developed over a long
time and these operational conditions may not be replicable in other states. From a political
viewpoint, if Amul tries to intervene in the administration of other states, it may not go down
well with those states. This may lead to political tensions and the smooth functioning of Amul
requires that it be free from political pressures (India Dairy Products Market Outlook to 2019
Domination of Branded Players and Rise in Milk Availability to Foster Growth, 2015).
1) Amul should pass on the message of women empowerment to its shareholders and highlight
the benefits that each household stands to gain from such a move. Training programs for
women can also be run at each village co-operative.
Operations Planning
1) As was stated earlier, to achieve CAGR of 21%, Amul needs to have a much higher volume
CAGR. Such a huge increase in volume needs to be accommodated at all levels of the supply
chain: Procurement, Processing, Distribution and Retail.
2) Amul is a cooperative of small farmers who do not have access to infrastructure or know how
required to extract maximum out of the resources available to them. Hence, it is the

responsibility of the GCMMF to provide these facilities to its farmers if it is to achieve its
huge volume targets. The main procurement shortfall for GCMMF is due to the poor quality
of milch animals in India. In order to overcome this problem, GCMMF needs to provide
training to farmers on best animal feeding practices. It also needs to invest in technological
inputs like silage feed and urea treatment as explained by the Chairman in his AGM speech.
GCMMF should also undertake best breeding practices of milch animals to improve milk
production in India.
Assuming that GCMMF is currently operating its processing plants at nearly full capacity; a
large volume growth in its products requires investment in processing capabilities. Accordingly,
GCMMF needs to establish more processing plants. Specifically speaking, with its 51 processing
plants currently, GCMMF is able to process 185 lakh kg of milk per day (chairmans Speech,
2015)
3) . In order to grow at more than 21% CAGR for 5 years, GCMMF needs to increase its
processing capability 2.5 times (1.215 ~ 2.5) i.e. establish approximately 75 processing plants
over the next 5 years (2.5 x 51 51 ~ 75 plants). This translates to about 15 plants per year or
if investments are done in better plants, GCMMF should establish at least 10 plants per year.
As each plant requires an investment of Rs. 250-500 crore, GCMMF needs to raise funds to
the tune of Rs. 2500-5000 crore annually. It can do this through long term bank loans as
GCMMF enjoys low interest rates due to its strong financial credibility.
4) GCMMF also needs to invest in expanding its distribution networks. Specifically, since
GCMMF will be procuring from more and more geographically diverse regions, it needs to
form new distribution networks. As of now, Amul products completely occupy the distribution
highway. So, with the anticipated volume growth, it will need to widen this highway by
investing in distribution networks, extending its rural reach and employing higher number of
stockists in order to ensure that Amul is as close to the markets as possible. A strong
distribution network has always been Amuls strength and has acted as a barrier against
competition that does not have sufficient traffic to use the highway. As Amul aspires to grow
at around 21% annually, it will need such measures to protect against growing domestic and
international competition.
REFERENCES

(India Dairy Products Market Outlook to 2019 Domination of Branded Players and Rise in
Milk Availability to Foster Growth, 2015)
(KAMATH, 2015)
(chairmans Speech, 2015)
(Milk production, n.d.)
(Intodia, 2015)
(Global Dairy, 2014)
(Dairy in India, 2015)
(Maheshwari, 2014)
(Bhadawari, n.d.)
(It will be a Cream Run for dairy industry for next 3 years: Crisil, 2015)
(Kumar, 2011)
(VORA, 2015)
(Atwood, 1991)
Exhibit 1 The marketing campaigns of Amul giving a Taste of India.'

Exhibit 2 Strategy diamond for Amul

Exhibit 3 STEEP analysis

Drivers
Sociological

Technological

Economical

In the year 2020

Food safety and hygiene
Changing consumption pattern (seeking more variety)
Favorable demographic change
Convenience and health consciousness
Availability and exchange of information
Consumer autonomy
Consumer service & satisfaction
Integrated cold chain solutions
Mechanized large dairy farms
High yielding breeds to increase productivity
Fodder and feed technology
Packaging technologies
Probiotic dairy products / product innovations
FDI/private investments in dairy sector
Increase in export revenue
Economies of scale due to large scale operations/ large farm size

Environmental

Political

Low cost of skilled human resource

Enhancement of retail channels
Free trade agreement
Competition among domestic and foreign players
Organic milk and milk products
Reducing carbon footprint from diary
Renewable energy from dairy wastes
Interference of cooperatives / political parties
Prominence of diary in food security policies of government
Efficiency of National Dairy Development Board

Exhibit 4 Market prices of Milk

Source: http://www.nasdaq.com/markets/milk.aspx?timeframe=5y
Exhibit 5 Typical investments in a Amul parlor
Format

Investment in one parlor Business

(Rs)
Amul Preferred Outlets
1.25 lacs
Amul ice-cream parlors
2.5 lacs
Amul Railway parlors
2.00 lacs
Amul Kiosks
1.25 lacs
Source: http://amul.com/m/amul-parlour

Potential

(Turnover) in Rs per annum

40 to 50 lacs
40 to 50 lacs
30 to 40 lacs
30 to 40 lacs

Exhibit 6

2013-2014

Sales

Milk and Milk

Products
Others
Less: Excise
Duty
Other
Operating
Income
Export
Incentives
Scrap Sales

201
5201
6
20733 250
46.03 874
9

1814
346.
7
17956
67.23

2406
.59
1527.2
1
879.38

15.98
2642.2

201
7201
8
367
305
9

201
8201
9
444
440
1

201
9202
0
537
772
6

1697.
51

205
3.98
7

248
5.32
4

300
7.24
3

363
8.76
3

440
2.90
4

4060.
16

491
2.79
4

594
4.48

719
2.82
1

870
3.31
4

105
31.0
1

805.
77
891.
74
3878
.46

52.42

201
6201
7
303
558
6

2053
213.
67
2317
6.45
3044
.09

21480.
52
2801.0
5

Other Income

Fees and
Commission
Dividend on
Investments
Interest on
Deposit and
Others
Less: Interest
on Security
Deposit and

2014-2015

57.5
3
14.6
1
2814
.16
401.
71

Others
Exchange Rate
Difference
(Net)
Unspent/Unclai
med/Deposits
Written Back
Miscellanous
Income
Total Income

132.28

131.
05

603.9

1009
.12

431.68

435.
4

Expenses
Purchase of
Traded Goods
Cost of
Materials
Consumed
Raw Materials:
Opening Stock

Add: Purchase

1820
631.
75

20791
03.7

251
571
5

304
401
6

368
325
9

445
674
3

539
266
0

1381
654.
65
3057
18.4
4

16457
20.89

195
088
8

236
057
4

285
629
5

345
611
7

418
190
1

189
0.81
4
411
570

276
8.34

203
8.98
7

228
7.88
5
497
999.
8
246
7.17
4

334
9.69
2
729
121.
4
361
2.19

405
3.12
7
882
236.
9
437
0.75

730.
415
291
45.5
2
108
4.94
5
172
17.4
4

730.
415
352
66.0
8
108
4.94
5
208
33.1
1

730.
415
426
71.9
5
108
4.94
5
252
08.0
6

730.
415
516
33.0
6
108
4.94
5
305
01.7
5

730.
415
624
76.0
1
108
4.94
5
369
07.1
2

37805
7.8

1271.6

1672
.19

28603
2.04

3534
17.7
4
1459
.33

Less: Closing
Stock

1672.1
9

Packing
Materials:
Opening Stock

437.15

Add: Purchase

20673.
52

1023
.68
2454
9.73

Less: Closing
Stock

1023.6
8

1146
.21

Manufacturing
Expenses
Stores, Spares
and
Consumables
Power and Fuel

1309
4.54

13494
.79

884.42

976.
47

8320.2
6

8513
.73

602
579.
7
298
5.28
1

Repairs and
maintenance
Expenses
Other
Manufacturing
Expenses
Finished Good
Inventory
Changes
Opening Stock

2276.1
8

2062
.82

1613.6
8

1941
.77

Finished Goods

84006.
21
500.24

Work-inProgress
Scrap
Closing Stock
Finished Goods
Work-inProgress
Scrap
Marketing,
Administrative
and Other
Expenses
Marketing and
Distribution
Expenses
Krishi Mandi
Tax and Octroi
Reimbursemen
t
Rent and
Electricity
Charges
ERP Expenses
Rates, Taxes
and Insurance
Postage,
Telephone,
Printing and
Stationery
Travelling and
Conveyance

4382
3.64

40131.
25
573.11

5194
5.41

45123.
95

5142
3.56

1229.2

1574
.11

215.22

231.
7

713.4

773.
83
125.
69
404.
51

721.04

131
7.13

131
7.13

131
7.13

131
7.13

61032
.69

564
89.0
5

564
89.0
5

564
89.0
5

564
89.0
5

564
89.0
5

8278
5.3
4375
.77
7.02

5.83

387.64

131
7.13

4013
1.25
573.
11
5.83

27.38

138.74

46457
.9

834.
38

Expenses
Legal and
Professional
Charges
Repairs and
maintenance
Expenses
General
Expenses
Audit Fees and
Expenses
Co-operative
and Breed
Development
Expenses
Loss on Sales
of Assets
Prior Period
Expenses
Provision for
Contigencies
Employee
Benefit
Expenses
Depreciation
and
Amortization
Epenses
Finance Costs

398.49

688.
19

237.17

322.
93

780.76

1453.1
8

796.
56
339.
68
3447
.88

3.53

7.8

5.64

0.42

238.83

61.4
5

298.62

1123
0.23

12063
.38

6589
.21

7994.
52

824.
39

862.2
1
20727
68.38

Profit Before
Tax

1814
880.
51
5751
.24

Tax Expenses

1970

2180.
44

Total Expenses

Current Tax

Deferred Tax

Profit for the

6335.
32

2000

2553
.11

-30

372.
67
3781

4154.

150
62.5
2
939
2.22
8

182
25.6
5
113
64.6

220
53.0
4
137
51.1
6

266
84.1
8
166
38.9
1

322
87.8
6
201
33.0
8

109
1.59
1
249
528
4
204
31.3
5
268
1.15
4
292
7.36

132
0.82
5
300
732
6
366
89.2
6
324
4.19
6
354
2.10
6

159
8.19
8
362
689
8
563
61.3
4
392
5.47
7
428
5.94
8

193
3.82
437
657
9
801
64.5
5
474
9.82
7
518
5.99
7

233
9.92
2
528
369
3
108
966.
4
574
7.29
1
627
5.05
6

148

299

481

702

969

year

.24

88

22.8
4

02.9
6

49.9
1

28.7
2

44.0
9