Academic Year: 2022-2023
Subject: FINANCIAL ACCOUNTING
Topic: AMUL
Submitted To: Prof. Santoshi Nagrani
Class: FYMMS
Div.: A
Roll no:18
Submitted By: Omkar Sanjay Holkar
1
INDEX
Sr.No. CONTENTS Page No.
1 Introduction 3-5
2 History 6-10
3 Mission, Vision and Values 11
4 Objectives 12
5 Board of Directors 13-16
6 Union Members 17
7 Sales Turnover 18
8 Financial Analysis- Data interpretation and 19-25
analysis
9 Conclusion 26
10 References 27
2
Introduction
Anand Milk Union Limited (AMUL) is an Indian dairy state government
cooperative society, based in Anand, Gujarat. Formed in 1946, it is a cooperative
brand managed by Gujarat Cooperative Milk Marketing Federation Ltd.
(GCMMF), which today is controlled jointly by 3.6 million milk producers in
Gujarat and the apex body of 13 district milk unions, spread across 13,500+
villages of Gujarat. Amul spurred India's White Revolution, which made the
country the world's largest producer of milk and milk products.
3
Type: State Government Cooperative Society Industry
Founded: 14 December 1946; 76 years ago
Founder: Tribhuvandas Patel
Headquarters: Anand, Gujarat, Indi
Area served: Worldwide
Key people: Jayenbhai Mehta (Managing Director)
Products: Dairy
Revenue: Increase ₹52,000 crore (US$6.5 billion) (2022)
Owner: Gujarat Cooperative Milk Marketing Federation
Number of employees: 1,000 (Marketing Arm) 3.6 million (Milk producing
members)
Divisions: Banas Dairy, Dudhsagar Dairy
Website: https://amul.com/
4
Tribhuvandas Kishibhai Patel under the guidance of Sardar Vallabhbhai Patel
became the founding chairman of the organization and led it until his retirement in
the 70s. He hired Verghese Kurien in 1949 and convinced him to stay and help
with the mission. Under the chairmanship of Tribhuvandas, Kurien was initially
the general manager and helped guide the technical and marketing efforts of Amul.
Kurien was the chairman of Amul briefly after Tribhuvandas Kishibhai Patel died
in 1994. Kurien, founder-chairman of the GCMMF for more than 30 years (1973–
2006), is credited with the success of Amul’s marketing.
Amul has ventured into overseas markets.
The Amul model has helped India to emerge as the largest milk producer in the
world. More than 15 million milk producers contribute their milk in 144,500 dairy
cooperative societies across the country. Their milk is processed in 184 district co-
operative unions and marketed by 22 state Marketing Federations, ensuring a better
life for millions.
The Amul Saga: A Cooperative Movement Leads the Way
2014 Wins AIMA High Performance Brand Award 2013 for brand Amul
2013 GCMMF wins the SAP Award for Customer Excellence (SAPACE) 2013
under the category of ‘Best Run Award in Finance’
2012 Receives Green Globe Foundation Award
2010 Receives International Dairy Federation Award
2007 Amul Pro-Biotic Ice-cream Gets No. 1 Award At World Dairy Summit
5
History:
The Amul trinity: Varghese Kurien, Shri Tribhuvandas Kishibhai Patel, and Hari
Chand Megha Dalya.
6
Prince Charles, Prince of Wales, visits India and Amul with Hari Chand Megha
Dalya in December 1980.
7
Prime Minister Narendra Modi inaugurating Amul's chocolate plant at Anand in
September 2018.
8
Amul cooperative was registered on 19 December 1946, as a response to the
exploitation of marginal milk producers by traders and agents in small cities. The
prices of milk were arbitrarily determined at the time. The government had given
Polson an effective monopoly in milk collection from Kaira and its subsequent
supply to Mumbai.
Angered by the unfair trade practices, the farmers of Kaira approached Sardar
Vallabhbhai Patel under the leadership of local farmer leader Tribhuvandas K.
Patel. He advised them to form a cooperative (Kaira District Co-operative Milk
Producers' Union) and supply milk directly to the Bombay Milk Scheme instead of
Polson (who did the same but gave them low prices). He sent Morarji Desai to
organize the farmers. In 1946, the milk farmers of the area went on a strike which
led to the setting up of a cooperative to collect and process milk. Milk collection
was decentralized, as most producers were marginal farmers who could deliver, at
most, 1–2 litres of milk per day. Cooperatives were formed for each village, too.
By June 1948, the KDCMPUL had started pasteurizing milk for the Bombay Milk
Scheme. Then Prime Minister Lal Bahadur Shastri visited Anand to inaugurate
Amul's cattle feed factory. On 31 October 1964, and organization in the village and
spoke to farmers about their cooperative after returning to Delhi, he set in motion
the creation of an organization, the National Dairy Development Board (NDDB),
to replicate the Kaira cooperative in other parts of India. Under the leadership of
Tribhuvandas Patel, in 1973, Amul celebrated its 25th Anniversary with Morarji
Desai, Maniben Patel, and Varghese Kurien.
Under the leadership of Tribhuvandas Patel, the cooperative was further developed
through the efforts of Varghese Kurien and H. M. Dalaya. Dalaya's innovation of
making skim milk powder from buffalo milk was a technological breakthrough that
revolutionized India's organized dairy industry.
With Kurien's help, the process was expanded on a commercial scale which led to
the first modern dairy cooperative at Anand. This cooperative would go on to
compete against established players in the market.
9
The success of the trio T. K. Patel, Kurien, and Dalaya's at the cooperative's dairy
soon spread to Anand's neighbourhood in Gujarat. Within a short span, five unions
in other districts – Mehsana, Banas kantha, Baroda, Saba kantha, and Surat – were
set up, following the approach sometimes described as the Anand pattern.
In 1970, it spearheaded the "White Revolution" of India. To combine forces and
expand the market while saving on advertising and avoiding competing against
each other, the Gujarat Co-operative Milk Marketing Federation Ltd., an apex
marketing body of these district cooperatives, was set up in 1973. The Kaira
Union, which had the brand name Amul with it since 1955, transferred it to
GCMMF. Technological developments at Amul have subsequently spread to other
parts of India. [citation needed]
In 1999, it was awarded the "Best of all" Rajiv Gandhi National Quality Award.
The GCMMF is the largest food products marketing organization in India. It is the
apex organization of the dairy cooperatives of Gujarat. It is the exclusive
marketing organization for products under the brand name Amul and Sagar. Over
the last five and a half decades, dairy cooperatives in Gujarat have created an
economic network that links more than 3.1 million (3.1 million) village milk
products with crores of consumers in India. In 2007, Gujarat Cooperative Milk
Marketing Federation Ltd crossed US$1 billion in its sales turnover and entered the
elite club of food companies having this distinction from India. In one more major
achievement, the dairy cooperatives of Gujarat under the GCMMF fold crossed
milk procurement of 10 million kgs. per day mark on 27 December 2007, which is
the highest ever milk procurement achieved by any dairy network in India, be it
private or cooperative. The entire quantity of milk received was accepted without
any milk holidays and was processed successfully into milk and other milk
products.
10
On 30 September 2018, Prime Minister Narendra Modi inaugurated Amul's
chocolate plant in Mogar, Anand near their headquarters. The new plant has been
built with an increased capacity of 1,000 tonnes per month against the earlier 250
tonnes a month capacity. GCMMF has invested around ₹3 billion in this project. It
is a fully automated production factory with minimal human intervention.
Mission:
GCMMF endeavour to satisfy the taste and nutrition requirements of the
customers, of the world through excellence in marketing by their committed
team. Through co-operative networking, they are committed to offer quality
products that provide best value for money.
Vision:
“Amul’s vision is to provide more and more satisfaction to the farmers, their
customers, employees and distributors.
Values:
Amul believes and thinks that good ethics and good business go together naturally to
produce the best long-term results for all the investors and stakeholders. Amul gives
the credit to the values which are based upon performance, quality, respect, integrity
and responsibility, honesty, openness and courtesy.
11
Objectives:
The objective of Amul, the dairy cooperative in India, is to spur the White
Revolution in the country and make India the largest producer of milk and milk
products in the world. The cooperative is shared between over 2.8 million dairy
producers and the three-tier Amul Model has increased India's milk production on an
incredible scale.
· The White Revolution. The Amul Model was the main contributor to the beginning
of the White Revolution. The revolution led to India becoming the country with the
most milk production in the world. It also helped reduce malpractices carried out by
merchants and milk traders. The White Revolution was a huge contribution to the
alleviation of poverty and famine levels from levels that were dangerously low.
· The Three-Tier Amul Model. The cooperative structure of the Amul Model is
three-tier. The Village Dairy Cooperative Society is affiliated with the District
Cooperative Milk Producers' Union that, in turn, is linked with the State Cooperative
Milk Federation. This structure allows various functions to be delegated across the
three tiers. For example, milk collection is carried out at the Village Dairy Society
level, milk procurement and processing takes place at the District Milk Producers'
Union level and milk and milk products marketing occurs at the State Milk
Federation tier. Designating the functions in such a way avoids the problems of
internal competition and ensures that the economies of scale are achieved·
Impacts of the Amul Model. This three-tier model has led to India increasing its
production of milk by 40 million metric tonnes. The model has been instrumental in
improving the economy of India. However, it has also introduced on a much bigger
scale, an ingredient that has helped improve the health and nutrition of many within
the country.
The Amul model has been very successful in meeting its aim to increase India's
production of milk and milk products. The cooperative has had a huge impact on the
country's economy and spurred the White Revolution.
12
Board Of Directors:
Shri Shamal Bhai B Patel.
Chairman Gujarat Co-operative Milk Marketing Federation Limited Chairman.
Sabarkantha District Co-operative Milk Producers. Union Limited, Himatnagar.
Shri Valamijbhai R Humbal.
Vice Chairman Gujarat Co-operative Milk Marketing Federation Limited Chairman.
Kutch District Co-operative Milk Producers Union Limited, Bhuj.
Jayen Mehta.
In-Charge Managing Director Gujarat Co-operative Milk Marketing Federation
Limited.
13
Shri Shamal Bhai B Patel.
Shamal Bhai B Patel is the Chairman of Sabarkantha District Cooperative Milk
Producers Union Ltd., Sabar dairy, and associated with dairy cooperatives of
Gujarat for the last 33 years.
14
Shri Valamijbhai R Humbal.
Shri Valamjibhai Humbal is the Chairman of Kutch District Cooperative Milk
Producers Union Ltd., Sarhad Dairy since last 14 years. Kutch milk union
annual sales turnover exceeding Rs. 870 crores and farmer membership of One lac
milk producer.
15
Jayen Mehta.
Jayenbhai Mehta, the man who has been picked to be RS Sodhi's successor as Amul
MD for an interim period, is the chief operating officer (COO) at Amul. He became
part of Amul in 1991 and has served as the company's brand manager, group product
manager and general manager in marketing function.
16
17
18
Takeaways from GCMMF’s (Amul) FY22 annual report
INDIA
After a year of subdued demand due to covid led restrictions in FY21, Amul
reported
strong revenue growth of 18.6% in FY22 YoY. Most consumer products’ revenue
grew in double digits, and our analysis of market and growth rates of Amul indicates
the company has likely gained market share in most segments. The company
continues to strengthen its business moats: (1) Amul brand and sub brands like
EPIC, Kool, Amulya, and true, (2) distribution network of 1mn outlets, (3) strong
connect with 3.64mn farmers and (4) 94 milk processing units pan-India.
Management expects Amul to grow its revenue to Rs18,000bn in next 25 years, to
become the biggest food company in the world. Top picks in dairy sector: Heritage
Foods (Buy) and Dodla Dairy (Buy).
Strong revenue growth in FY22: Amul reported revenue growth of 18.6% in
FY22,
after muted growth of just 1.9% in FY21. Inflation in milk prices and strong volume
growth across segments drove revenue growth for the company. Gross and EBITDA
margins stood at 4.5% and 0.4%, respectively, in FY22. Profitability was stable
YoY.
Amul continued introducing new products across categories in FY22.
Consumer products growing well: Most value-added products of Amul have done
well in FY22. Revenue growth rates of key products were as follows: Milk-based
beverages (36%), ice cream (50%), ghee (24%), butter (17%), dahi (18%) and cream
(44%). We believe Amul has gained market share in most consumer product
segments. Exports were up 145% YoY.
19
Efforts to strengthen distribution channel: Amul has a pan-India network of
10,000
distributors with 1mn retail outlets serviced through its 76 sales offices. We note the
company is aggressively expanding (1) its sales offices (added 6 branches in FY22)
and (2) distribution reach to towns with population of 10,000+. It has established
direct
distribution in 3,600 such towns.
Investments in strengthening other moats: Amul has increased milk procurement
outside Gujarat to 16.2% in FY22 from 12.4% in FY21. For dairy companies, such
moves could potentially reduce dependence on one state and enable the sale of more
fresh products in other states. The company has also increased milk processing units
to 94.
Stock calls: We maintain Heritage Foods and Dodla Dairy as our top picks in
dairy
sector with BUY rating. While we remain structurally positive on Hatsun, we need
more
comfort on valuations to turn bullish. Hence, we rate HOLD on Hatsun. We also
maintain HOLD rating on Parag. Key risks: Higher-than-expected inflation in milk
prices, irrational competition or delay in price hikes.
20
Takeaways – FY22 annual report of GCMMF (Amul)
Our analysis of FY22 annual report of GCMMF (Amul) reveals interesting facts
regarding (1) product-wise revenue growth rates, (2) efforts to strengthen
competitive
advantages, and (3) management’s vision of long-term growth.
Revenue growth improves sharply in FY22 on favourable base of FY21
Amul reported strong revenue growth of 18.6% in FY22. Key reasons: (1) 5-6%
milk
inflation, (2) strong volume growth across product segments, (3) new product
launches
and (4) revival in HoReCa segment.
We note the company continues to invest in improving customer reach to drive
volume
growth. Notably, it has opened 27 new sales branches in the past 8 years.
21
Product-wise revenue growth rates: We note most value-added products of Amul are
doing well. Growth rates of dairy products were as follows: Milk-based beverages
(36%),
ice cream (50%), ghee (24%), butter (17%), dahi (18%) and cream (44%). Revenue
growth for fresh milk was 12% YoY. Based on our analysis of the market as well as
Amul’s growth rates, we believe the company has likely gained market share in
most
segments. Exports were up 145% YoY in FY22.
22
Key Financial Ratio:
23
Profit and Loss Statement:
Balance Sheet:
Cashflow Statement:
Ratio Analysis:
24
CONCLUSION
Three key practices are there behind the success of AMUL. The
first, that Amul has developed a strong brand and implemented
its marketing strategy towards strengthening it constantly. The
second that AMUL presented traditionally accepted milk
products with a brand value as well as targeted sustained growth
for the long-term depending upon matching supply and demand.
Third, that Amul never compromised on professional grounds
and separated decision making and management into two folds.
Member Farmers were always involved in decision making and
controlling the giant and on the other hand, professional
managers and technocrats were appointed to run the
management.
25
REFERENCES
https://en.wikipedia.org/wiki/Amul
https://startuptalky.com/amul-case-study/
https://economictimes.indiatimes.com/company/amul-industries-
private-limited/U14101GJ1995PTC026118
26
