Project 1

Part A

Organization: Amul – The Taste of India

All other companies are mainly primary companies having an objective which is
right away from its inception to increase its profit at maximization. We are not
saying that the companies needn’t make profits but the point we are trying to
highlight is that Amul started as a cooperative which took on the responsibility of
rural development through providing a source of income to millions of farmers. It is
one of the companies which has strongly infused the message of corporate social
responsibility right through it started functioning. It had spurred the white
revolution in the whole country. It has made an honor to India by making it one of
the world’s leading producers of milk.

Many companies grow from the ground level to the top level but there are very few
of them who adopt a social responsibility in their functioning. Amul is indeed
different from all the other companies because it started its operations at the grass
root level that is farmers. This is the noblest cause for this company to adopt.
Taking this into consideration we decided that we will take Amul as our subject of
study.

What is Amul all about?

Business needs ideas, not merely money. Ventures run on just money, but starved
of ideas, would eventually fall prey to competition and perish. And, if ideas are
available in abundance, business can overcome other handicaps, including its
relative weaker money power, compared to that of its rivals. The success story of
the Gujarat Cooperative Milk Marketing Federation (GCMMF) proves this point.
Amul follows a unique business model, which aims at providing 'value for money'
products to its consumers, while protecting the interests of the milk-producing
farmers who are its suppliers as well as its owners. Despite being a farmers' co-
operative, Amul has given multinationals a run for their money.

• The Amul Pattern has established itself as a unique appropriate model for the
rural development. Amul has spurred the White Revolution of India, which has
made India the largest producer of milk and milk products in the world. It is also the
world's biggest vegetarian cheese brand.

• Amul is India’s largest diary producing company with over half the market leading
other national companies such as Mother Diary and multinational food product
companies such as Nestle India and Hindustan Lever Ltd.

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• Amul demonstrates how careful and consistent product stewardship combined
with a deep and intimate understanding of the market leads to consistent growth
and success. The company can process nearly 10 million litres of milk each day.

• The company started as the Gujarat Cooperative Milk Federation in 1946,

collecting just 250 litres of milk a day. The company was formed to give farmers
their due and protect them from unscrupulous middlemen. Since then the company
has come a long way. But one thing is still remains the same that is it was by and
for the farmers and today also it’s the same.

• In the mid 1950’s Amul looked for ways to utilize the surplus milk by
manufacturing Butter, Milk, Cheese and other milk derived products.

• It is integrated into the fabric of Indian society, from its roots in representing
small farmers and struggler or the poor and impoverished in difficult
circumstances.

• The brand name Amul, sourced from the Sanskrit word Amoolya, means priceless.
It was suggested by a quality control expert in Anand. Some cite the origin as an
acronym to Anand Milk Union Limited.

• Amul, a brand owned by the 26 Lakh milk producers of Gujarat and has once
again demonstrated that when farmers are given the instruments of development
in their hands, they can work wonders. The billion dollar Gujarat Co-operative Milk
Marketing Federation, the apex body of 13 district milk producers’ unions has been
instrumental in making Amul a brand to reckon with.

Amul’s Journey towards Excellence

Amul’s journey towards excellence is marked by some critical understanding of the
business environment in large emerging economies like India where markets have
to be developed by combining efficiency related initiatives with increasing the base
of marginal suppliers and consumers. The essence of Amul’s efforts was as follows:

• It combined market and social development in an emerging economy. It

recognized the inter-linkages between various environments that governed the
lives of marginal milk farmers and the unmet needs of consumers.

• It also changed the supply chain paradigm in order to reduce the cost to the
consumer while increasing the return to the supplier.

• It realized that in order to achieve their objectives, it had to benefit a large

number of people that is both suppliers as well as consumers. While large scale had
the danger of failure due to poor control and required more resources, it also had

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the advantage of creating a momentum that would be necessary to bring more
people into the fold and thereby help more suppliers and consumers.

• It also realized that its goal could only be achieved in the long run and this
required developing values in people and processes that were robust, replicable
and transparent.

• It also realized that the cooperative would not be independent and viable in the
face of competition if it were not financially sound. This implied that AMUL had to
develop distinct capabilities that would deliver competitive advantage to its
operations.
Thus this is a brief overview of Amul – The taste of India.

Organization Culture
AMUL is organized as a cooperative of cooperatives i.e., each village society, a
cooperative in itself, is a member of the AMUL cooperative thereby depriving the
advantage of scale and uniformity in decision making. The founders of Kaira Union
realized that to fulfill their objectives, a large number of marginal farmers had to
benefit from the cooperative – a network of stakeholders had to be built. And once
built, it had to grow so as to draw more rural poor to undertake dairy farming as a
means of livelihood. The network had to have several layers – the organizational
network where the voice of the owners governed all decisions, a physical network
of support services and product delivery process and a network of small farmers
that could deliver the benefit of a large corporation in the market place. More
importantly, a process had to be put in place to build these networks.

So it decided to build an organizational network that would represent the farmers

and the customers were the most complicated task. A loose confederation was
developed with GCMMF representing the voice of the customers, the Unions
representing the milk processors and the village societies representing the farmers.
Competition in the markets ensured that the entire network was responding to the
requirements of the customers at prices that were very competitive. The task of
ensuring that returns to the farmers was commensurate with the objectives with
which the cooperatives were setup was achieved through representation of farmers
at different levels of decision making throughout the network – the board of
directors of societies, Unions and the Federation comprised farmers themselves. In
order to ensure that most returns from sales went to the producers, the
intermediaries had to operate very effectively and on razor thin margins. This
turned out to be a blessing in disguise – the operations remained very “lean” and
started to provide cost based advantage to the entire network.

AMUL established a group to standardize the process of organizing farmers into

village societies. In addition to establishing the criteria for selecting members, the
group had to train the VS to run the cooperative democratically, profitably and with
concern for its members. This included establishing procedures for milk collection,
testing, payment for milk purchased from member farmers and its subsequent sale
to the union, accounting, ensuring timely collection and dispatch of milk on milk
routes established by the union, etc. The Village Societies Division at AMUL acts as

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the internal representative of village societies in their dealings with the Union.
Cooperative development programmes at the village level for educating & training
its members have become an important part of the strategy to build this extensive
network.

Milk procurement activity at AMUL comprises development and servicing of village

societies, increasing milk collection, procurement of milk from societies & its
transport to the chilling locations, and resolving problems of farmers and village
societies. Their stated objective is to ensure that producers get maximum benefits.
The Village Societies Division coordinates these activities. Milk collection takes
place over a large number of pre-defined routes according to a precise timetable.
The field staff of this division also helps village societies interface with the Union on
various issues ranging from improvement of collection, resolving disputes, repair of
equipments to obtaining financing for purchase of equipment etc. In addition, they
are also responsible for the formation of new societies, which is an important
activity at AMUL.
In essence, the organization structure of AMUL allows effective utilization of
resources without losing the democratic aspiration of individual members. It is
obvious that such a system needs charismatic leadership to achieve consensus
across issues – a process that has long-term benefits for any organization.

Inter -relationships between the Different processes and

functions of the organization.

Administration Department:-

The main work of administration department in any company is to appoint right

people at right time and then supervise them. In AMUL, there is a combined
administration and human resources development department. The administration
department also performs all activities related to human resources development.

Purchase Department:-

There is a centralized purchase system. Purchasing of all the Raw Materials except
the cattle feed is done through this department. Main type of materials are
Engineering materials, packaging stationary, veterinary medicine, chemicals, raw
material for production etc. After getting indent from the stores department the
purchase order is placed to different purchasing systems for obtaining different
materials. For packaging material and veterinary medicine, an RAL (Rate Approval
Letter) is provided by GCMMF in which rate party; quantity, quality etc. are
predefined by GCMMF.

Commercial Department:-

All activities related to sales and marketing are carried out by the commercial
department. Most of the Amul’s products are sold through GCMMF. GCMMF works
as a media for selling Amul’s product. Commercial department is a link between
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Amul and GCMMF. GCMMF is also the largest buyer of Amul products. The second
largest buyer of Amul’s products is the Indian Army. There is no intervention of
federation while dealing with the Army. Main products that are sold to the Indian
Army are Ghee, White Milk Powder, Butter, Cheese, and Nutramul. The byproducts
are sold to Vadilal Ice-Cream. Amul also markets some products at small level by
itself. Amul sells milk and buttermilk on its own.

Accounts Department:-

This is the main accounts department. The activities performed by this department
are cash and bank related activities, societies’ accounts, taxes related accounting,
investment receipts and payments, milk cycle related activities and data entry.
Different types of vouchers are processed here. All final accounting is done in this
department.

Salary Account:-

This is a sub section of accounts department. All accounting related to salaries and
wages, provident funds, pension insurance, gratuity etc. is done in this department.

Purchase Bill Processing:-

This is again a sub-division of the accounts department. All accounting related to

purchase and billing is done here. Vouchers for purchase are prepared in this
department and then sent to the accounts department for further clarification and
final dispatch.

Societies Division:-

Societies’ division is a link between milk producers and Amul. Milk producers first
contact the societies’ division for any queries. All the day today transactions with
the milk producers are done through this department.

Audit Department:-

There are two audit departments at Amul. One is the internal audit department and
the other is the statutory audit department. As the name suggests statutory
auditing is done by a Co. operative auditors. Internal audit work is given to an
outside accountancy firm. Pre-auditing and Post auditing of different vouchers has
done in this department.

MIS Department:-

It is a sub-section of the Accounts department. It is called MIS - Management

Information System. All the information systems that are required in different
departments are first developed in this department.
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Stores Department:-

All the raw materials are stored in the store department. When requirement for any
material arises, the store department gives the necessary indent to the purchase
department. This is done on a proactive basis so that no stock out situation arises.
All the incoming materials are received by this department and the quality check is
done in the laboratories. Goods receipt notes are prepared through this
department. The stores department has divided into three main categories, which
are (a).General (b).Engineering (c).Miscellaneous.

Time Keeping Office:-

Amul produces a large volume of different varieties of products and the

manufacturing process for the products continues for 24 hours, 7 days a week and
365 days a year. In Amul, the time keeping department has its own importance.
This department handles the work of keeping attendance and on basis of this
record the monthly or yearly salaries and compensation wages, which are to be
paid to the employees, is decided.

Operations & Supply Chain Management

Every day Amul collects 447,000 litres of milk from 2.12 million farmers converts
the milk into branded, packaged products, and delivers goods worth Rs 6 crore i.e.
Rs 60 million to over 500,000 retail outlets across the country. Its supply chain is
easily one of the most complicated in the world. As mentioned earlier, the strategy,
design and practices in AMUL’s network are strongly driven by the objective of
establishing and operating an efficient supply chain from milk production and
procurement to product delivery to customers.

Management of this network is built around two key elements – (a) coordination of
the diverse elements of the network and (b) use of appropriate technology that
includes product, process and information technology and managerial practices
and systems. In what follows, we describe various features of these elements that
have contributed to the evolution of an efficient supply chain.

Output of the Process:-

Coordination for Competitiveness

Robust coordination is one of the key reasons for the success of operations
involving such an extensive network of producers and distributors at GCMMF. Some
interesting mechanisms exist for coordinating the supply chain at GCMMF. These

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range from ensuring fair share allocation of benefits to various stakeholders in the
chain to coordinated planning of production and distribution. More importantly, the
reason for setting up of this cooperative is not amiss to anyone in this large
network organization. Employees, third part service providers, and distributors are
constantly reminded that they work for the farmers and the entire network strives
to provide the best returns to the farmers, the real owners of the cooperative. It
may be remembered that coordination mechanisms have to link the lives and
activities of 2.12 million small suppliers and 0.5 million retailers!

There appear to be two critical mechanisms of coordination that ensure that

decision making is coherent and that the farmers gain the most from this effort.
These mechanisms are:

• Inter-locking Control

• Coordination Agency: Unique Role of Federation

Inter-locking Control

Each Village Society elects a chairperson and a secretary from amongst its member
farmers of good standing to manage the administration of the VS. Nine of these
chairpersons (from amongst those VS affiliated to a Union) are elected to form the
Board of Directors of the Union. The Chairperson of the Union Board is elected from
amongst these members. The managing director of the Union, who is a professional
manager, reports to the chairperson and the board. All chairpersons of all the
Unions form the Board of Directors of GCMMF. The managing director of GCMMF
reports to its Board of Directors. Each individual organization, the Union or GCMMF,
is run by professional managers and highly trained staff. It must be pointed that all
members of all the boards in the chain are farmers who pour milk each day in their
respective Village Societies.

A key reason for developing such an inter-locking control mechanism is to ensure

that the interest of the farmer is always kept at the top of the agenda through its
representatives who constitute the Boards of different entities that comprise the
supply chain. This form of direct representation also ensures that professional
managers and farmers work together as a team to strengthen the cooperative25.
This helps in coordinating decisions across different entities as well as speeding
both the flow of information to the respective constituents and decisions.

Coordination Agency: Unique Role of the Federation

In addition to being the marketing and distribution arm of the Unions, GCMMF plays
the role of a coordinator to the entire network within the State – coordinating
procurement requirements with other Federations, determining the best production
allocation for its product mix from amongst its Unions, managing inter-dairy
movements, etc. It works with two very clear objectives: to ensure that all milk that
the farmers produce gets sold in the market either as milk or as value added
products and to ensure that milk is made available to an increasingly large section
of the society at affordable prices. In addition, it has to plan its production at
different Unions in such a way that market requirement matches with unique
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strengths of each Union and that each of them also gets a fair return on its
capacity. In this regard, GCMMF follows an interesting strategy.

GCMMF, in consultation with all the Unions, decides on the product mix at each
Union location. Some considerations that govern this choice are the strengths of
each Union, the demand for various products in its region as well as the country,
long term strategy of each Union, procurement volumes at different Unions,
distribution costs from various locations etc. Demand for daily products and supply
of milk vary with the season. Further, demand and supply seasons run counter to
each other making the planning problem more complex. In making allocations to
Unions, GCMMF is guided by two main objectives – (i) maximizing the network
surplus, and (ii) maintaining equity among unions for the surplus realized. In this
regard, very often GCMMF is willing to sacrifice realizable surplus and allocate
products to “less efficient” Unions in order to achieve better balance in surpluses
accruing to the Unions.

Technology for Effectiveness

Service to customers required the following: better and newer “products”,

“processes” that would deliver the low cost advantage to the network and
“practices” that would ensure high productivity and delivery of the right product at
the right time. Thus technology or knowledge that was embodied in products,
processes, and practices became an important factor in delivering effectiveness to
the network of cooperatives. One distinguishing feature of AMUL in comparison
with other similar cooperatives globally is the large variety in their product mix.
Producing them not only requires diverse skills but also knowledge of different
types of processes. AMUL dairy led the way in developing many of these products
and establishing the processes for other member Unions.

Equally impressive are the achievements on process technology. While several

continuous innovations to equipment and processes have been done at AMUL, the
most significant one has been the development of processes for using buffalo milk
to produce a variety of end products. Gujarat (and most of India) is a buffalo
predominant area. As more farmers joined the cooperatives, the need to develop a
mechanism for storage of increasing quantities of milk became intense. Moreover,
the cooperative was established on the promise that it would buy any quantity of
milk that a member farmer wanted to sell.

The need to store milk in powder form increases as excess milk quantities in winter
seasons could then be used in lean summer seasons. Moreover, demand for liquid
milk was not growing along with growth in milk production. No technology,
however, existed worldwide to produce powder from buffalo milk. Engineers at
AMUL successfully developed a commercially viable process for the same – first
time in the history of global diary industry. Subsequently, it also developed a
process for making baby food out of this milk powder. It has also developed a
unique process for making good quality cheese out of buffalo milk thereby
converting a perceived liability into a source of comparative advantage – the task
was done through process technology research.

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Most of its plants are state of art and automated. Similar efforts in the area of
“embryo transfer technology” have helped create a high yield breed of cattle in the
country. AMUL’s innovations in the areas of energy conservation and recovery have
also contributed to reduction in cost of its operations. AMUL also indigenously
developed a low cost process for providing long shelf life to many of its perishable
products.

TQM at the grassroots has been a strong movement to develop leadership,

operational and strategic capabilities in the entire network – farmers, village
cooperatives, dairy plants, distributors and wholesalers and retailers. Key elements
of this TQM movement have been:

• Friday Departmental Meetings: Each Friday, at a prescribed time, everyone in the

network i.e. from the farmers to the carry & forwarding agents joins their
respective departmental meeting to discuss quality initiatives and share policy
related information.

• Training for Transformational Leadership so that individuals are able to control

their thoughts, feelings and behavior and take more responsibility in one’s life and
surrounding environment.

• Application of Hoshin Kanri principles to bring about a bottom-up setting of

objectives – aligning policies for effective management of Unions & village societies
on hand with those of channel member on the other hand. ISO/HACCP certification
was obtained for all the Unions and each village society is in the process of
obtaining the same.

• Training for farmers and their families emphasizing the need for good health care
for not only cattle during its pregnancy and feeding but also for expecting and
feeding mothers and the whole family. This effort has brought about a significant
social change towards such issues in villages that have cooperative milk societies.

• Retail Census: GCMMF undertakes a census of all retail outlets (over 500,000) to
evaluate customer perceptions and distribution efficacy of their network.
Interestingly, this is being done by wholesalers in their respective territories at their
own cost. This information is used for policy deployment exercise.

Part B
Areas and Responsibility of the main Department by
promoting Goals and Objectives
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Material Handling & Inventory Management

Amul follows the below explained procedure for indenting the goods required up till
payment is made to the vendors.

A] Indenting
B] Purchasing
C] Materials receipt, store’s inventory management
D] Bill Processing and Payment

These steps can be briefly explained as under:

Indenting

A requisition or indent has to be made by any department or section that requires

any material. The Purchase Department shall not initiate its activities unless and
until it has received the indent from the respective department or section. If
requisition for the same product has been requested by more than two
departments at once, the purchase department shall combine the quantities of all
such indents and then initiate the procedure for purchase. All the indents for
Capital items will have to be submitted in the form of a ‘Proposal for Capital Items
Purchase’. Only after the proposal has been approved by the Board of Directors, it
shall be initiated by the Purchase dept. to start the procedure for purchase. The
AGM (Accts.) shall verify the budgetary aspect for such capital expenditure.

GCMMF, the marketing wing of Amul, gives an indent for each product in the first
week of every month. Productions heads at Amul make this indent their production
plan (they adjust their production in this manner). Hence all packaging items are
ordered monthly. GCMMF also issues a RAL (Rate Approval Letter) annually, which
contains the list of vendors from whom the Purchase Officer at Amul has to select
to whom to order. Also the rate at which Amul has to buy the goods is also
specified in the RAL.

Indent for engineering items and spare parts shall be made as and when they are
required at the plant.
In case of Cattle Feed Purchase, no such indents are sent by the GCMMF, here the
C.F.Purhcase Head has to have a close look at the production activity and
undertake purchase of various raw materials. In this case the GCMMF does not
interfere in the matter of rates and the list of vendors. Brokers are given annual
contract for purchase of agricultural products. Since all the raw materials for cattle
feed is agricultural in nature, brokers are required in between. A Special facility of
ICPO (INDENT CUM PURCHASE ORDER), is given to each production department
head so as to not to run out of stock. They can make purchase right at their
department if they are in urgent need for goods.

Purchasing
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On receipt of a duly approved indent, purchase dept. shall initiate enquiries for
various items covered in an indent. The purchase dept. shall endeavor to float such
enquiries to maximum number of suppliers, vendors in order to get most
competitive rates for each item. Since GCMMF issues RAL annually, the Purchase
Dept. has to select from the list of vendors mentioned in that. On receipt of
quotations from the various suppliers, the dept. prepares a comparative statement
of these vendors and gets it approved from the person in authority. The Purchase
dept. then negotiates with the vendors in terms of rates and arrives at lowest
possible rates. Order will be placed to the vendor with minimum rate.

For items, which are regularly consumed like Bearings, V-Belts, O Rings, GI and MS
Fittings etc. purchase department finalizes “Annul Rate Contracts” (ARCs) for such
items to save the time consumed in floating enquiries, receiving quotations,
preparation of comparative statements, taking approvals etc. However, ARC rates
are first approved by an appropriate authority. It is necessary that a proper
purchase order is issued for rate-contracted items also in unions’ pre-printed
stationary giving description of items as per rate contract, quantity, rates,
discounts, taxes, delivery terms etc. However, no purchase order can be issued on
a date expired ARC. It is the sole responsibility of the purchase department to
follow-up with the suppliers for timely delivery of goods and as per the store’s
specifications. The indenting department will have to follow up with the purchase
department, if the goods are not received within the stipulated time. No other
department needs to follow up with the suppliers.

Material Receipt, Storage and Issue of goods

Store shall receive copies of all the purchase orders placed on the suppliers for
which the goods are to be received at the stores. For all the goods received at the
factory premises, an entry will be made at the Main Gate of the factory. This will
help in getting basic information about the goods entering the factory premises. On
receipt of the goods at the Stores, the stores shall thoroughly verify the documents
and shall ensure that the goods have been received against a valid P.O. (Purchase
Order). Under normal circumstances, excess quantity up to 10 % is allowed in the
stores.

If the goods are found to be as per store’s purchase order, stores department
arranges for taking delivery of goods and stores it at appropriate place. The stores
department needs to prepare a “Goods Receipt Cum Test Report” (GR/TR). This can
be either prepared manually or generated through the system, if a computerized
inventory management programme is in existence. The copies of this (GR/TR)
should be distributed as under:

(a). User/Indenting department: for their information about the arrival of goods.
(b). QA/Engineering department: Where goods are to be tested/inspected before
being used.
(c). Purchase department: For their information to track the delivery of goods in
case of partial delivery.
(d). Stores department: For their records.
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Whenever any material which has been once rejected but later on accepted on
rechecking/retesting or because of exigencies of production, QA/ Engineering
department/indenter submits a fresh report of acceptance, giving references of
earlier GR/TR duly approved by the departmental head. The stores carry out the
necessary corrections in their records. Gate Pass: No material can be taken out of
the factory premises without a properly authorized gate pass. Stores/ concerned
department issues a gate pass.

Bill Processing and Payment

All the invoices from the suppliers are received in the Purchase bill section. The
Purchase bill section enters all the invoices as and when received in a
computerized bill tracking system. The invoices, which are received in the Stores,
KSD Khatraj, FCM Mogar, Pune, Kolkatta, Mumbai and CFF Kanjari along with
consignments, are also redirected to the Bill passing section.The Purchase
department can advise all the suppliers to mention purchase order nos. and date in
their delivery documents, invoices against which the goods are being supplied. This
helps in easy tracking of invoices vis-à-vis purchase orders and GR etc.
The Stores sends “Goods Receipt Cum Test Reports” (GR/TR) to the Purchase billing
section once the Testing/ Inspection formalities are complete.

The Purchase billing section verifies the invoices with the corresponding Purchase
orders, Goods Receipt Cum Test Reports and processes the supplier’s invoices for
payment. It is the responsibility of the Purchase billing section to ensure that only
correct payments are made to the suppliers. The advance payment if any is also
recovered/ adjusted fully so that no excess payment is ever madder to any party.
The Purchase billing section also ensures that timely payment is made to all the
suppliers as per PO Terms and no payments are delayed for reasons of delay in
processing of payment documents etc.

Strategic Plans
The Three-tier "Amul Model"

The Amul Model is a three-tier cooperative structure. This structure consists of a

Dairy Cooperative Society at the village level affiliated to a Milk Union at the
District level which in turn is further federated into a Milk Federation at the State
level. The above three-tier structure was set-up in order to delegate the various
functions; milk collection is done at the Village Dairy Society, Milk Procurement &
Processing at the District Milk Union and Milk & Milk Products Marketing at the
State Milk Federation.

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This helps in eliminating not only internal competition but also ensuring that
economies of scale are achieved. As the above structure was first evolved at Amul
in Gujarat and thereafter replicated all over the country under the Operation Flood
Programme, it is known as the ‘Amul Model’ or ‘Anand Pattern’ of Dairy
Cooperatives. It is responsible for Marketing of Milk & Milk Products Responsible for
Procurement & Processing of Milk Responsible for Collection of Milk Responsible for
Milk Production.

Village Dairy Cooperative Society (VDCS)

The milk producers of a village, having surplus milk after own consumption, come
together and form a Village Dairy Cooperative Society (VDCS). The Village Dairy
Cooperative is the primary society under the three-tier structure. It has
membership of milk producers of the village and is governed by an elected
Management Committee consisting of 9 to 12 elected representatives of the milk
producers based on the principle of one member, one vote.

The village society further appoints a Secretary a paid employee and member
secretary of the Management
Committee for management involved in day to day functions. It also employs
various people for assisting the Secretary in accomplishing his / her daily duties.
The main functions of the VDCS are as follows:

• Collection of surplus milk from the milk producers of the village & payment based
on quality & quantity

• Providing support services to the members like Veterinary First Aid, Artificial
Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder
seed sales, conducting training on Animal Husbandry & Dairying, etc.

• Selling liquid milk for local consumers of the village

• Supplying milk to the District Milk Union

Thus, the VDCS in an independent entity managed locally by the milk producers
and assisted by the District Milk Union.

District Cooperative Milk Producers’ Union (Milk Union)

The Village Societies of a District (ranging from 75 to 1653 per Milk Union in
Gujarat) having surplus milk after local sales come together and form a District Milk
Union. The Milk Union is the second tier under the three-tier structure. It has
membership of Village Dairy Societies of the District and is governed by a Board of
Directors consisting of 9 to 18 elected representatives of the Village Societies. The
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Milk Union further appoints a professional Managing Director (paid employee and
member secretary of the Board) for management of the day-to-day functions.

It also employs various people for assisting the Managing Director in accomplishing
his / her daily duties. The main functions of the Milk Union are as follows:

• Procurement of milk from the Village Dairy Societies of the District.

• Arranging transportation of raw milk from the VDCS to the Milk Union.

• Providing input services to the producers like Veterinary Care, Artificial

Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder
seed sales, etc.

• Conducting training on Cooperative Development, Animal Husbandry & Dairying

for milk producers and conducting specialized skill development & Leadership
Development training for VDCS staff & Management Committee members.

• Providing management support to the VDCS along with regular supervision of its
activities.

• Establish Chilling Centers & Dairy Plants for processing the milk received from the
villages.

• Selling liquid milk & milk products within the District

• Process milk into various milk & milk products as per the requirement of State
Marketing Federation.

• Decide on the prices of milk to be paid to milk producers as well on the prices of
support services provided to members.

State Cooperative Milk Federation (Federation)

The Milk Unions of a State are federated into a State Cooperative Milk Federation.
The Federation is the apex tier under the three-tier structure. It has membership of
all the cooperative Milk Unions of the State and is governed by a Board of Directors
consisting of one elected representative of each Milk Union. The State Federation
further appoints a Managing Director (paid employee and member secretary of the
Board) for management of the day-to-day functions. It also employs various people
for assisting the Managing Director in accomplishing his daily duties. The main
functions of the Federation are as follows:

• Marketing of milk & milk products processed / manufactured by Milk Unions.

• Establish distribution network for marketing of milk & milk products.
• Arranging transportation of milk & milk products from the Milk Unions to the
market.

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• Creating & maintaining a brand for marketing of milk & milk products (brand
building).
• Providing support services to the Milk Unions & members like Technical Inputs,
management support & advisory services.
• Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions.
• Establish feeder-balancing Dairy Plants for processing the surplus milk of the Milk
Unions.
• Arranging for common purchase of raw materials used in manufacture /
packaging of milk products.
• Decide on the prices of milk & milk products to be paid to Milk Unions.
• Decide on the products to be manufactured at various Milk Unions (product-mix)
and capacity required for the same.
• Conduct long-term Milk Production, Procurement & Processing as well as
Marketing Planning.
• Arranging Finance for the Milk Unions and providing them technical know-how.
• Designing & providing training on Cooperative Development, Technical &
Marketing functions.
• Conflict Resolution & keeping the entire structure intact.

In the year 2008, the dairy industry in India and particularly in the State of Gujarat
looks very different.
India for one has emerged as the largest milk producing country in the World.
Gujarat has emerged as the most successful State in terms of milk and milk
product production through its cooperative dairy movement.

The Kaira District Cooperative Milk Producers’ Union Limited, Anand has become
the focal point of dairy development in the entire region and AMUL has emerged as
one of the most recognized brands in India, ahead of many international brands.
Today, Amul have around 176 cooperative dairy Unions formed by 1,25,000 dairy
cooperative societies having a total membership of around 13 million farmers on
the same pattern, who are processing and marketing milk and milk products
profitably, be it Amul in Gujarat or Verka in Punjab, Vijaya in Andhra Pradesh or a
Nandini in Karnataka. This entire process has created more than 190 dairy
processing plants spread all over India with large investments by these farmers’
institutions. These cooperatives today collect approximately 23 million kgs. of milk
per day and pay an aggregate amount of more than Rs.125 billion to the milk
producers in a year.

References

1) http://www.amul.com.

2) Amul - The Taste of India.. "Welcome to Amul - The Taste of India"

(http:/ /www. amul. Com/products. html)

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3) The Amul Story - General Management Review (http:/ / www. etgmr. com/
GMRjan-mar04/ art7. html)

4) Alexander Fraser Laidlaw. Cooperatives and the Poor. A development study

prepared for the International Cooperative Alliance and the Canadian International
Development Agency, 1977.

5) Economic Times (http://economictimes.indiatimes.com/articleshow/1288929.

cms)

6) Amul's sales turnover (http://www.amul.com/organisation.html)