project report on analysis of Post marketing research of ATL activity at Delhi by Amul Milk

During the year, sales of our Federation registered a growth of 13.4 per cent to reach Rs. 4,277.84 crores (Rs. 42.77 billion). This is an extremely impressive growth, when viewed from the perspective of 29 per cent growth that we had achieved last year. In global terms, we have now become a billion dollar organization.

I am also pleased to note that our Federation has done remarkably well in most of the value-added consumer packs. Sales of Amul Milk in pouches have grown by 40% in value terms. Similarly, sales of Ghee in Amul and Sagar brands have also grown by 28%. UHT Milk has also shown an impressive value growth of 25%. With the highly successful launch of Amul Kool Café, our sales value in the Flavored Milk segment has seen an exponential increase of 55%. We reaffirmed our status as the undisputed leader in Ice-cream segment, by registering impressive growth in sales. In line with our policy of continuous innovation, we have launched Probiotic and Sugar-free Ice-cream to cater to the growing health conscious segment.

 

Our sales in Amul Processed Cheese have shown consistent and very impressive growth, year after year. In 2006-2007, we recorded 20% growth in value sales for Cheese, yet again. We managed to register double-digit value growth in Butter and Milk Powders, despite intense competition in these categories. We have introduced an entirely new range of chocolates in world-class packaging, under the brand name Amul Chocozoo. In the health-spread category, Amul Lite and Delicious Margarine have performed extremely well, with a combined growth of 58% in sales value.

Ø RETAILING

The advent of modern format retailing has led to a sea change in purchasing behavior of consumers. While large retail chains do provide some convenience to consumers, historically they have rarely had any beneficial impact on farmers who supply agricultural produce to them. Across the world, it is observed that the farmer’s share in the consumer’s rupee, keeps on declining due to the rising bargaining power of supermarket chains. This phenomenon will definitely take place in India, as well, within the next few years. To counter this, we have decided to set up our own Amul Preferred Outlets (APOs), all across the country.

GCMMF ventured into organized retailing in 2002 with a view of getting closer to the consumer and provide her the complete brand experience. We have made our presence felt by creating several strategically located parlors, in a short period of time. The entire expansion drive is based on the franchisee route adopted by GCMMF, which means an employment opportunity for thousands of enterprising Indians. The Retailing operations would not only help farmers and small time entrepreneurs to counter the onslaught of Modern Format stores but would also help consumers to relish complete Amul brand experience.

 

Ø EXPORT

 

As you are aware, the Government of India has recently banned export of milk powders till 30th Sept 2007 and also does not allow exports based on the Letter of Credit received by us prior to the ban. In today’s global economy, ban on exports would definitely be considered a retrograde step.

 

As you are aware, the milk producers of Gujarat and neighboring states of Maharashtra, Madhya Pradesh and Rajasthan have suffered immensely due to heavy rains and floods in June – August period last year. This had not only reduced their income levels but had also made them suffer losses due to death of cattle and damage to farms and property.

 

Despite these hardships, our milk producer members have continued to make their efforts in maintaining milk supply which has helped to tide over the crisis period. The only ray of hope has been the hope of realization of better prices for their milk since international market prices have increased due to removal of subsidy in Europe and drought in Australia in the last few months. Since the ban in February this year, the international SMP prices have increased from US$ 3000 per MT to US$ 5000 per MT. Our milk producers are obviously sustaining an opportunity loss of US$ 2000 per MT in terms of additional realization that we could have obtained.

 

Further, the Ministry of Agriculture and Ministry of Commerce have been fighting very hard since last more than 10 years at WTO to ensure that Europe removes agricultural subsidy, which results into better prices and market access to our Indian farmers. The Indian farmers have barely started to realize the fruits of removal of subsidy on SMP by EU as they have seen rise in milk procurement prices and increase in India’s presence in global dairy market.

The move to ban exports of milk powder is hurting us since India shall not be able to export part of surpluses at the prevailing international prices that are marginally better than the current domestic prices.

 

The notification is also not allowing exports under para 1.5 of Foreign Trade Policy and hence the buyers, who have made 100 % advance payment or have established Letter of Credit before the date of ban, are also not able to import milk powders, which has tarnished India’s image as reliable supplier.

 

Many of our dairies have invested in better plant and machinery by importing Capital goods under EPCG licenses and thereby entering into export obligations. With force of ban on milk powder, the plants will not be able to fulfill their export obligations.

Since the existing system in place for milk production encourages income generation for millions of milk producers, it is important that the Union Government should have policies that facilitate dairy development consistent with this profile. Equally important, the Union Government must take necessary measures to ensure that the Indian milk producer gets a fair chance to sell his produce in global market, which has historically been having a lot of subsidy in milk products, and he does not face threat or erode India’s comparative advantage in dairying as well as its competitive strengths in the sector.

We have met the Hon. Prime Minister of India, Hon. Commerce Minister and Hon. Agriculture Minister and have urged the Union Government to withdraw the ban on exports of milk powders, in the interests of not just India’s farmers and milk producers but also in the national interest.

 

During the year, our export turnover has decreased from Rs 134 crores in 2005-06 to Rs 60 crores this year. This is due to the export ban in the last couple of months. However, I am pleased to inform that the consumer pack exports has increased by 32% over the previous year. Our Kool Café and Buttermilk have got excellent response in UAE, Singapore and Australian markets. We have also started exports of Amul Ice-cream to Dubai this year. We expect our consumer pack business to help in further improve our brand presence in our target export markets and reinforce our position as ‘Asia’s largest milk brand’.

 

·        DISTRIBUTION NETWORK

Overall economic growth, higher disposable incomes, changing attitude of consumers towards spending, various alternative consumption forms, and emergence of Organized Retail throws up challenges and also opportunities to the Distribution function of Federation. To keep pace with the changing market scenario, in the previous years, we have increased our distribution network in small towns. During this year Amul have divided markets into 14 segments to ensure improved availability of our products. Improved distribution focus on newly launched products was on top of Amul`s agenda. Amul product lines were divided into Main Line and New Line. Separate distributors were appointed during the year exclusively for New Line. For specific product categories also exclusive distributors have been appointed. Separate manpower has been earmarked for each line.

To impart concepts of modern marketing amongst our distributors an initiative of Marketing and Sales Management Program of our distributors have been taken. In collaboration with a premier business school, a 2 days workshop has been designed. All distributors of Federation will undergo this Training Program.

Amul Yatra Program has been continuing to bring our channel partners to Amul to give them an exposure to our cooperative institutions. This year our emphasis was upon our newly appointed distributors and channel partners from various business segments like Organized Retail, Caterers etc.

 

 

·        COOPERATIVE DEVELOPMENT PROGRAMME

During the last seven years, Amul`s Member Unions are implementing Internal Consultant Development (ICD) intervention for developing self leadership among member producers and thereby enabling them to manage their dairy business efficiently leading to their overall development.

 

During the year, Member Unions continued to implement the module on Vision Mission Strategy (VMS) for primary milk producer members & Village Dairy Cooperatives. Facilitated by specially trained consultants, 901 Village Dairy Cooperative Societies (VDCS) have already conducted their Vision Mission Strategy Workshops, prepared their Mission Statements & Business Plans for next five years. Till today, a total of 4,428 VDCS have prepared their mission statement and business plan. Member Unions are reviewing this business plan every year under VMS annual revisit program and facilitate VDCS to prepare action plan for next year to propel the momentum gained through VMS.

The VMS module has prompted milk producers to initiate activities at villages such as Water management, Planned Animal Breeding, Animal Feed management, Improved member services management, Information Technology Integration and Networking, which has very far reaching and long-term effects on the milk business. This planned management of milk production and VDCS will not only help producer members to increase economic returns from their milk business but also help VDCS management to face the fierce competition ahead. Continuing the Cleanliness drive at village level, till March 2007, Member Unions have identified & imparted training to 8,774 Core groups formed of milk producers and Management of the VDCS. To enhance the level of Cleanliness this year 7,313 VDCS celebrated Red Tag Day on “Gandhi Jayanti” - 2nd October and the Unions also awarded best performing VDCS.

As a part of the Breeding Services Improvement Program, during the year, Member Unions have continued implementation of the module of Improvement in Artificial Insemination Services and imparted training to 212 Core groups at village level and have decided to cover all the VDCS under Breeding Services with this module over the next year. To boost this movement, Member Unions are also conducting Mass De-worming campaign. Further, Member Unions implemented the AI Audit Competition during the year and in the process, identified & awarded the best performing VDCS & AI Workers of these Societies in order to motivate them to further improve their work.

In order to increase awareness about dairy industry scenario and impart leadership skills to the Chairmen & Secretaries of the Village Dairy Cooperatives, Member Unions in collaboration with Federation, are conducting Chairmen & Secretaries’ Orientation Program at Mother Dairy, Gandhinagar. During the year 1,114 Village Dairy Cooperative Societies have been covered under this program involving 2,150 Chairmen & Secretaries of the Village Dairy Cooperatives.

During the year, our Member Unions continued to encourage increased participation of women milk producers in the Dairy Cooperative Societies. To develop their skills and enhance leadership qualities, Member Unions organised Self Managing Leadership (SML) Program at Prajapita Brahmakumaris, Mount Abu for 1,660 women resource persons along with Chairmen and Secretaries of 282 VDCS.

In order to strengthen knowledge and skill base of young girls and women of the villages about milk production management and to motivate them to implement scientific milch animal breeding, feeding and management methods for their animals, Federation, with technical collaboration and resources of Anand Agriculture University, has initiated “Mahila Pashupalan Talim Karyakram” for women resource persons of the Member Unions. It is envisaged that women resource persons trained through this program would lead the torch light in villages to facilitate women milk producer members to increase productivity per milch animal and in turn improve the livelihood of their fellow milk producers household. During the year, 99 women resource persons have been trained under this program.

To meet the differential nutritional requirement of animals, we have started marketing of cattlefeed in four different variants under Amul Super dan, Amul Power dan, Amul Josh dan and Amul Purak dan brand names. During the year, total sale of cattlefeed under these brands is 50,060 MT which is 22% higher compared to previous year.

On the basis of results of Animal Survey carried out by MUs, it is observed that there are large number of NPG - NECO (Non Pregnant Not Even Calved Once) animals in milkshed area of MUs. Therefore with an objective to reduce NPG – NECO animal population and to improve productivity of milch animals it is envisaged to initiate Fertility Improvement Program (FIP) and Productivity Enhancement Program (PEP) in village dairy cooperative societies affiliated to member unions in coming years.

 

In our sustained effort to professionalize the dairy cooperative sector and create a pool of talented manpower to serve the rural producer, we continue to support the Institute of Rural Management, Anand in several ways. We provide financial assistance to 15 deserving students in form of Amul scholarship, with a financial outlay of Rs. 15 Lakhs per annum. We have already decided to continue this support for another five years.

·        INFORMATION TECHNOLOGY INTEGRATION

GCMMF has further advanced its Information Technology solutions by enhancing its customized ERP System (EIAS & Web EIAS) to improve its operational efficiencies.

“Communication” is the key word to achieve highest level of performance in today’s competitive business environment. To strengthen the Business Linkages with the business partners of GCMMF, we have deployed “Amul e-Groupware System”. The said system facilitates two-way Online communication with the business partners and helps in improving the performance.

It has also successfully deployed Customer Relationship Management (CRM) solution with a personalized mailing list manager. The said system helps us in informing a large number of customers about our product launch, consumer schemes, recipes etc. instantly and get their feedback.

Your Federation has also further advanced its Geographical Information Systems by implementing the same at all Milk Marketing Offices to smoothen its supply chain management and to improve operational efficiencies.