This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain

Univeristy till 13th February ,2018. It shall not be reproduced or

distributed without express written permission from Indian Institute of Management, Ahmedabad.

Indian Institute of Management

Ahmedabad IIMA/BP0255
IIMA/
IIMA/BP
BP
Revised 2001

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Gujarat Co-Operative
Operative Milk Marketing
Federation Limited
imited (GCMMF)

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We have traversed a path few have dared to. We are continuing on a path still fewer
pursue.
have the courage to follow. We must pursue a path that even fewer can dream to pursu
Yet, we must; because we hold in trust the aims and aspirations of millions of our
countrymen. I am confident – as I know you are – that with the nation’s dairy farmers
by our side we cannot fail! Let us, therefore, resolve that however fulfilling our first
f
twenty five years have been, in the next twenty five years we will transform the lives of
millions more, opening for them the door to an India that is the land of our dreams.

Dr. Verghese Kurien

N
Chairperson,, Gujarat Co-operative Milk Marketing Federation

Across India, every morning, millions wake up to the taste of Amul, the flagship brand
name for a variety of dairy products marketed by the Gujarat Co-operative
Co
Federa

Milk Marketing
1
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Federation (GCMMF). One may start the day by boiling (as is the traditional
tradition Indian practice)
one of the different varieties of liquid milk supplied in pouches and making one’s morning
tea or coffee. If one prefers to use creamer, one could reach for the Amulya creamer on the
kitchen shelf. For breakfast, butter the toasts with Amul regular butter or, if you are calorie
conscious, with Amul Lite butter. Drink a cup of Amul chocolate milk. Make sandwiches
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with one of the different varieties of Amul cheese and take them to the office; add Amul
ghee (clarified butter) to the lunch d dishes;
ishes;; cook up a dish with Amul paneer or cottage
dishes
cheese and indulge your sweet tooth with Amul gulab jamun mix. If it is a hot day, have an
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Amul ice cream; and when you return home after the office, relax with tea or coffee,
whitened with Amulya creamer or or Amul milk. If you are a pizza fan, bake a pizza and top it
with Amul mozzarella cheese, and finally retire for the day with a glass of warm Amul milk.

1 Chairperson’s
’s speech.
speech. An
Annual
nual Report of GCMMF, 1998
1998-99, pp.14.
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Case prepared
pared by Professor S. Manikutty, Indian Institute of Management, Ahmedabad.
The case writer wishes thank the Research and Publications Committee of the Indian Institute of
Management, Ahmedabad for funding the writing of this case and to the executives of GCMMF,
especially Dr. V. Kurien, Mr. B. M. Vyas and Mr. K. M. Jhala. The case is also available in multimedia
format on a CD, with an oral presentation by the case writer.
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Cases of the Indian Instit

Institute of Management, Ahmedabad, are prepared as a basis for class
discussion. Cases are not designed to present illustrations of correct or incorrect handling of
administrative problems.
© 2000 by the Indian Institute of Management, Ahmedabad.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

2 of 29 IIMA/BP0255

In India, Amul was not merely the most well-known brand, way ahead of Coca Cola or
Pepsi, and even ahead of age-old
old brands such as Dalda, Lifebuoy and Lux, but a lifestyle
range of products, consumed in some form or other by a large number of Indians of different
income and social strata.

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GCMMF was the sole marketing agency for the products produced by the different milk co co-
operative member societies in Gujarat (see Exhibit 1 for a brief note on Gujarat and Exhibit 2
for a map of India showing Gujarat) and for those of other states
tates marketing their products
under the Amul brand name.

Historical Background of GCMMF

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In the 1940s, in the district of Kaira in the state
tate of Gujarat, India, a unique experiment was
conducted that became one of the most celebrated success stories of India. At that time in
Gujarat milk was procured from farmers by private milk contractorscontractors and by a private
company, Polson’s Dairy in Anand, the headquarters of the district. The company had a
virtual stranglehold on the farmers, deciding the prices of both the procured as well as the
sold milk. The company arranged to collect milk, chill it and supply it to the Bombay Milk
Scheme, which supplied milk to the metropolis of Bombay, and to cities in Gujarat. Polson’s
N
also extracted dairy products such as cheese and butter. Polson’s used its monopoly to the
maximum and the farmers were forced to accept very low prices for their products. products The
decisions of the company regarding the quality and even the quantity of milk supplied by
the farmers were final.
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In 1946, under inspiration from a leading freedom fighter, Mr. Vallabhbhai Patel (who
belonged ed to Gujarat and who later became the Home Minister of the Central Government),
Mr. Tribhuvandas Patel, a local farmer, freedom fighter and social worker, organized the
farmers into co-operatives
operatives that would procure milk from the farmers, process the milk and
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sell it in Bombay, including to the Bombay Milk Scheme. In 1949, purely by chance, a dairy
engineer named Dr. Verghese Kurien, who had just completed his studies in dairy
India to a job
engineering in the U.S.A., came to India and was posted by the Government of Indi
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at the Dairy Research Institute at Anand. Settling down in Anand formed no part of his
career plans. But a meeting with Tribhuvandas Patel changed his life and changed India’s
dairy industry.

What Mr. Patel requested to Dr. Kurien was hardly to bring about such a revolution. All he
wanted was help in fixing some problems with commissioning some of the equipment just
co-operative,
co
purchased by his co--operative,
operative, especially the chilling and pasteurizing equipment. These
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items of equipment malfunctioned, leading to the rejection of large quantities of milk by the
Bombay Milk Scheme.

Dr. Kurien’s involvement with the Kaira District Co Co-operative Milk Producers’ Union
(KDCMPUL)
KDCMPUL (that was the name of the co-operative registered) grew very rapidly
Limited ((KDCMPUL
from merely providing technical assistance in repairing, maintaining and ordering new
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equipment to the larger sociological issues involved in organizing the farmers into co co-
operatives and running these co co-operatives efficiently. He observed the exploitation of
farmers by the private milk contractors and Polson’s and how the co co-operatives could
transform the lives of the members. The most important feature of these coco-operatives was
that they were run purely as farmers’ cooperatives, with all the major decisions being ttaken
by the farmers themselves. The co-operatives were not “run” by a separate bureaucracy with
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

3 of 29 IIMA/BP0255

its own vested interests; the farmers were truly in charge of their own decisions. Any farmer
could become a member by committing to supply a certain quantity of milk for a certain
number of days in a year and would continue to be a member only if he kept this
commitment. Each day, the farmers (or, actually, in most cases, their wives and daughters)

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would bring their milk to the village collection centres where thehe milk would be checked for
the quantity in full view of all, and the quality (the fat content) would be checked through a
simple hydrometer, again in full view of everyone present.. The farmers would be paid in the
evening for the milk supplied by them in the morning, and in the morning for the evening
milk. This prompt settlement in cash was a great attraction to the farmers who were usually
cash starved. Thanks to this mechanism, there were no disputes regarding the quantity or
quality of milk supplied by each farmer.

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It was soon clear that it was not enough to merely act as collection and selling agents for the
farmers. A variety of support services were required to enable the farmers to continue
selling their milk of the desired quality and to avoid disasterssasters such as death of their cattle.
cattle
For
or a family owning just one or two cattle and depending on its milk for their income, the
death of cattle could spell disaster). The farmers were progressively given new services such
as veterinary care, supply of quality cattle feed, education on better feeding of cattle and
facilities for artificial insemination of their cattle 2. All these were strictly on payment basis:
none of the services were free.

This experiment of organizing farmers into co-operatives

co-operatives
co- operatives was one
N
on of the most successful
interventions in India. A very loyal clientele was built up who experienced prosperity on a
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scale they had not dreamt of ten years earlier.
earlier. With
With good prices being paid for their milk,
raising milch cattle could become a good source of supplementary income for many
households. The co-operatives
operatives were expanded to cover more and more areas of Gujarat and
co-operatives
in each area, a network of local village level co-operatives
co- operatives and district level co-operatives
co
were formed on a pattern similar to that at Anand (the so-called Anand pattern). KDCMPUL
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became better known by the brand name of its products (Amul) than by the name of the co-
operative itself. Amul meant priceless in Sanskrit. It was a word easily
eas pronounceable and
remembered and carried a positive
positive connotation. This became the flagship brand for all the
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the union.
dairy products made by the union.

In 1954, KDCMPUL built a plant to convert surplus milk produced in the cold seasons into
milk powder and butter 3. In 1958, a plant to manufacture cheese and on one to produce baby
food were added. Subsequent years saw the addition of more plants to produce different
products. In 1973, the milk societies/district level unions decided to set up a marketing
agency to market their products. This agency was the GCMMF. It was registered as a co- co
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operative society on 9 July 1973 . It had, as its members (ordinary share holders), the district
4

level milk unions. No individual could become a shareholder in GCMMF. Starting from a
daily procurement of 250 litres per day in 1946, had become a milk giant with the milk

2 For a detailed account of the formation of the co

co-operatives and their early years, the reader is referred to:
Heredia, Ruth (1977). The Amul India Story. Delhi: Tata McGraw Hill Publishing Company Limited. About the
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details of the nationwide programme for increasing th the availability of milk and forming farmers’ co-operatives
for milk production in other States of India as a part of a coordinated programme, see: Paul, Samual (1982).
Management Development Programmes: The Lessons of Success. Boulder, Colorado: Westview Pr Press.
3 This was a feature of India’s dairy industry. The milk output of cows varied heavily during the seasons, with

heavy over
over-supply of milk during the winter. This naturally led to depressed prices, unless the milk was
converted into other products that could be stored for a long time.
4 An organization registered as a co-operative society had certain restrictions on its operations. These will be

presented in this case in due course.

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distributed without express written permission from Indian Institute of Management, Ahmedabad.

4 of 29 IIMA/BP0255

procurement at about 4 million litres per day by 1999 with 12 dairy plants all over the State
of Gujarat.
The Structure of the Anand Pattern

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The co-operative system formed under the Anand pattern had a three-tiered tiered structure
structure
(Exhibit 3). At the base was the village-level dairy co-operative
operative society. This was composed
of the milk producers, mostly residents of the same area, who had joined the co-operative
co-operative
society. A typical membership figure would be about 200. A managing ing committee of about
eight-nine members was elected, one of whom was elected as the chairperson.
chairperson. Care was
taken to ensure that these meetings were held, and seen to be held, in an open and
transparent manner. Next was the district level. This co-operativee (called unions) had as its

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members, the village dairy co-operative
operative societies within the district, represented by the
chairpersons of the village level societies. For this co-operative,
operative, a Board of Directors
consisting of 12 persons was elected from among the members (that is, the chairpersons of
(that is,
the village level co-operatives),
operatives), with its own Chief Executive, called the Managing Director
(MD). The third level was at the state level, where the co-operative
-operative (GCMMF in Gujarat) was
formed with district-level milk
lk unions (and certain other milk unions from other states) as
members. The state-level
level organization was called a federation.
federation. The Board of Directors of the
federation comprised the chairpersons co-operatives and the following ex
hairpersons of the district level co-operatives
officio members:

1. The registrar of co-operatives of the state

tate concerned.
2. A representative from the National Dairy Development Board (NDDB), which was a
N
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body created by the Government of India to replicate the Anand pattern in other states
of India.
3. One nominated technical expert.
4. The MD (CEO) of the state-level
level federation.
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GCMMF was the state

tate level federation in Gujarat.

Broadly, the village-level

level cooperatives did the procurement,
procurement the district level did the
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processing,, and the federation

transportation and processing federation marketed the product. The federation also
handled strategic planning and investment 5.

Each of the levels had a substantial amount of autonomy. For example, the village village-level
societies decided entirely on their own who should be admitted as a member, and wha what
Thus the prices paid to farmers by different
price the farmers should be paid for their milk. Thus,
village societies in the state
state could be, and in fact were,
were different. The district-level unions
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village-level societies and decided what price they would pay for
purchased milk from the village
the milk supplied by the village level societies. They, in turn, supplied milk to the state-level
nion, which decided what price it would pay the district unions. The price paid to all the
union,
district unions was the same.

In this system, GCMMF planned the type and quantity of products it would manufacture
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and sell each year. Milk products were produced in the state by different factories owned by
the district unions. There were, for example, six butter factories and seven milk powd
powder
factories in Gujarat. GCMMF did not have its own factories as such until recently, when it

5 Gandhi, Vasant (n.d.). Agro-Industry for Rural and Small Farmer Development: Issues and Lessons from India,
International Food and Agribusiness Management Review, 2(3/4), 331-344.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

5 of 29 IIMA/BP0255

set up a dairy at Gandhinagar near Ahmedabad. There was a committee, called the
Programming Committee, which consisted of (i) the MD of GCMMF, (ii) MDs of the DisDistrict
Unions, (iii) their Head, Quality Control, GCMMF, and (iv) Head, Finance, GCMMF. This
committee decided the product mix for the coming year based on the plans made by

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GCMMF, and translated the plans into monthly allocations to each union for the quantity
quantity of
milk to be supplied.

operatives in Gujarat under the GCMMF

As on April 2000, there were 10,800 village level co-operatives
state, there were district
umbrella with 2.1 million milk producers. Out of 25 districts in the state, district-
level unions in 12 districts 6.

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A pattern similar to the Anand pattern had also been built in other Indian states. This was
done under the “Operation Flood” programme launched by the Government of India. The
NDDB was set to coordinate the project.. Dr. Kurien was the chairperson
chairperson of NDDB and the
main moving force behind this programme. As on April 2000, there were 22 state federations
in India, with 170 district-level unions, 72,774 village-level
level societies and 9.31 million milk
producer members in the different states.

erations marketed their own brands. Amul was the brand

Each of the state-level federations
marketed by GCMMF. Vijaya was marketed by the federation in Andhra Pradesh.
level federations could market their own products under their own
Interestingly, the state-level
brands anywhere in India, thus competing
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peting against their sister federations. Thus,
could market its Amul butter in Andhra Pradesh to compete
Thus GCMMF
compet with Vijaya butter. It was
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believed by NDDB officials that such competition was healthy and would curb monopolistic
tendencies.

Objectives and Business Philosophy of GCMMF

The main stakeholder of GCMMF was the farmer member for whose welfare, the GCMMF
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executives held,, it existed. Thus,

Thus, in an interesting reply, the MD
M of GCMMF, Mr. B. M. Vyas,
told the case writer:
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Unlike other organizations, our

our objective is not to maximize our profit. After all,
the farmers themselves are the owners of the federation. We are restricted by our
laws, to giving a maximum of 12 percent on the paid share capital as the
bye-laws,
dividend. So we are more interested in givigiving the best price to the farmers for
their milk than in making a large profit. Thus
Thus, we look at the price given to our
suppliers as not a cost but as an objective.
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GCMMF had, as its main objective, “carrying out activities for the economic development of
agriculturists by efficiently organizing marketing of milk and dairy produce, veterinary
medicines, vaccines and other animal health products, agricultural produce in raw and/or
processed form and other allied produce
produce.” 7 This was to be done through:

• Common
Common branding,
branding
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• Centralized marketing,
• Centralized quality control,

6 Some of the districts that had no district

district-level unions were those formed through re-organization of existing
districts at different points of time.
7 Bye-law no. 5.1 of GCMMF.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

6 of 29 IIMA/BP0255

• Centralized purchases, and,

• Pooling of milk efficiently
GCMMF had declared as its business philosophy the following:

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• To serve the interests of milk producers
• To provide quality products that offer the best value to consumers for money spent 8

The biggest strength of GCMMF was the trust it had created in the minds of its consumers
regarding the quality of its products. GCMMF and its brand Amul, explained Mr. Vyas,
stood for guaranteed purity of all its products. Adulteration was simply not an option
option. In
India, where such trust was hard to come by, this was a central anchor for GCMMF’s future

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business plans, said Mr. Vyas.

Organization Structure of GCMMF (See Exhibit 4)

GCMMF was a lean organization,

ation, which their executives believed led to a cost advantage. At
its headquarters in the town of Anand, three general
eneral managers (GMs) and five assistant
general managers (AGMs) assisted the MD, or the CEO. CEO.. The three GMs looked after
CEO
marketing, HRD and quality assurance.
ssurance. The GM (marketing)
(marketing)
(m arketing) was in charge of the entire
marketing operations for the dairy products, liquid milk and ice cream. This GM was
assisted by one AGM (marketing, dairy products), managers
managers (commercial,
(
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exports, liquid
milk, and ice cream). The GM (HRD) also looked after edible oils, administration, legal
matters and new opportunities. The whole country was divided into five zones, each headed
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by a zonal manager
anager responsible for the sales of all the products in that zone. They reported
to the MD, but functionally each also reported to the various AGMs/GM at the
headquarters. Under the zonal managers were the branch managers. Generally there were
three product managers in each branch reporting to the branch manger: one each for edible
oil, dairy products and ice cream. They were assisted by sales officers and field salespersons.
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There were 48 sales offices spread over the country (of which only two were in Gujarat). The
entire country was represented in this structure. GCMMF had one overseas office at Dubai.
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GCMMF had links with the Institute of Rural Management, Anand (IRMA), a premier
management institute set up to train MBAs who would work in rural areas. It was set up
under the NDDB umbrella. In the early years, IRMA charged no tuition fee at all to its
students, who, in return had to furnish a bond to serve in rural areas for a specified length of
time. This system did not seem to work, since many students jumped the bond and many
higher-paid jobs in the private sector once their bond term
more quit later on and took up higher
was over. Hence,
Hence, IRMA had given up this scheme, and the students were now charged the
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full fees. But a strong value orientation was given to the students of IRMA to motivate them
to work in rural areas and for the poor. GCMMF drew a number of its managers from IRMA
and other business schools in India, although not from the premier management schools.
The salaries offered by GCMMF were decent, though nowhere close to those offered by the
private sector, especially MNCs. The gap between the salaries offered by organizations such
as GCMMF and the salaries expected by B-school
B graduates was gradually increasing. Some
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observers of the management job scene in India opined that even well-established
well and
relatively well-paying
well organizations such as the Tatas will soon find it difficult to attract
talent. For organizations like GCMMF, this could be an even more difficult situation.

8 As provided to the case writer by GCMMF.

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distributed without express written permission from Indian Institute of Management, Ahmedabad.

7 of 29 IIMA/BP0255

Countering this perception, GCMMF executives, in interviews with the case writer, said that
GCMMF had never relied on top B-school talent, since they would not fit into the culture
and value systems in the company. Mr. Vyas was of the view that GCMMF offered excellent
prospects for growth and job satisfaction, and it would not find it difficult to attract suitable
suitable

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talent.

Two major strengths of GCMMF were its extensive sales and distribution system and its
cold chain network starting from the milk producer till the eventual consumer. It had a
dealer network of 3,600
600 dealers and 400,000 retailers, one of the largest
largest such networks in
India. A cold chain had been established that linked all these dealers and retailers. It
consisted of:

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• A set of chillers near each village that could ensure chilling of milk;
• Quick transportation to the district union nion facilities where the milk could be further
chilled and dispatched to the consumers or to the processing units for conversion into
milk products;
• Refrigerated trucks to transport the milk products such as butter and cheese from the
factories;
• Local chilling of milk to ensurere its quick distribution to the customers through a network

• Deep freezers and refrigeration equipment on

cold and prevent their deterioration; and
N
of trucks in many cities so that most consumers could have their milk sachets by 6 am, if
not earlier;
on the dealers’ premises to keep the products
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• Facilities in super markets and even larger retail stores to keep the products fresh.

This cold chain was considered by the executives of GCMMF as a major strength of
GCMMF.
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what were called super markets in India (actually

GCMMF had excellent relationships with what
these were just large departmental stores) which stocked their products, especially cheese,
butter, milk powder, sweets and, in some cases, milk.
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A remarkable innovation introduced by GCMMF in the 1970s was the movement of chilled
milk from Anand all the way to Delhi and Calcutta in specially insulated railway wagons.
These wagons reached their destinations overnight in the case of Delhi and the second day
their arrival. The experiment was so successful
in the case of Calcutta, and were still fresh on thei
that it hass continued the practice ever since.
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Diversification Moves by GCMMF

Even at the time of its formation, GCMMF had three major products in its portfolio: liquid
milk, butter and milk powder. Gradually, many new products were added to its range,
full-cream milk, semi-toned milk, and fully-
largely milk derivatives. In milk alone, it sold full
toned milk, all with different names and in readily identifiable pouches. By reducing the fat,
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the fat derivatives such as cream and butter, but also make the resultant
it could not only sell th
milk available at cheaper prices, so that poorer people could also afford it. In the 1970s,
GCMMF introduced its cheddar cheese and in 1983, a cheese spread. In the same year, it
entered
enter ed the milk-based sweet market through the introduction of Amul Shrikhand, a
sweetish sour item produced by milk and curd (a form of yogurt). Amulya dairy whitener
was introduced and was priced below the prevailing brands. It soon became the market
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

8 of 29 IIMA/BP0255

leader. In the 1990s GCMMF introduced a lot of new products: a condensed milk called
Amul Mithaimate; Amul Lite, a low fat, low cholesterol butter spread,, and Amul ice cream.
(mozzarella)
After 1996, it went on to introduce a still greater variety of products: pizza (mozzarella)
cheese, cheese slice, cheese powder, malai paneer (a form of cottage cheese), gulab jamun

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mix (a sweet primer to be processed by deep frying to make a sweet called gulab jamun),
buttermilk, a chocolate-based beverage called Nutramul and chocolates.

In 1996, GCMMF launched its Amul brand of ice cream. India’s ice cream market was
estimated to be around Rs. 8 billion in the year 2000. GCMMF launched its ice creams in
fourteen flavours in the city of Mumbai and the state
tate of Gujarat. It was priced at about 30
percent less than the prevailing prices, and it also emphasized that it did not contain any

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gelatin. In less than a year, Amul ice cream commanded a share of about 55 percent in
Gujarat and 30 percent in Mumbai 9; by the year 2000, its share in India as a whole had
reached 30 percent. In 1997, GCMMF also scored a major achievement when it managed to
get some of the co-operatives
operatives in the other States of the country, trying to launch their own
ice cream brands, to sell all their ice creams under the Amul brand name. This enabled
GCMMF to leverage the capacity of more than 180 co-operatives
operatives in the country, with a milk
procurement of more than 11 million litres per day, and located close to the markets 10.

In addition, it also diversified into non-milk

N
products. The most important of this
milk products.
diversification was into edible oils in 1988. At that time, the prices of edible oils were being
manipulated by oil traders with the result that the prices were shooting up to unacceptable
levels. Even though oil seed growers’ co-operatives
operatives existed, most of them were run badly
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and losing money. Edible oils have always been a very sensitive subject in India, leading to
even fall of governments. Hence, the government persuaded NDDB to arrange for
procurement of clean, unadulterated groundnut oil and sell it through its own outlets. Thus,
Thus
it was essentially a market intervention operation. Besides, this provided NDDB to re- re
organize the groundnut farmers’ co-operatives
co-operatives
co- operatives much as it had done with milk-producer
milk
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farmers four decades earlier. Gujarat was the right state for this experiment, since more than
60 percent of the country’s groundnut oil production was accounted for by Gujarat. GCMMF
marketed this oil on behalf of NDDB. GCMMF launched a new brand name Dhara (literally
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meaning flow), ), not wanting to carry over the Amul brand name which was deeply
associated in the public mind with milk derivatives. It sold its oil on a platform of absolute
purity, a claim it could justifiably make and since much of the edible oil in India was (and
ntinues to be) adulterated, purity could be a differentiating factor. It also coined the
continues
Dhara, literally meaning, flow, pure flow. The launch was supported by
slogan, Dhara, Shudh Dhara,
an advertising campaign with a catchy jingle. Later, mustard and certain other
ot oils were also
marketed under the Dhara brand name. Even though the oil traders fought back bitterly and
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often violently, and used their political connections to the full, Dhara was able to hold its
own and became the leading brand of packaged edible oils. o However, it must be said that
dealing in edible oils was found to be a far more difficult task as compared to dealing in
milk.

In the late 1990s, GCMMF undertook distribution of fruit-based

fruit products on behalf of
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NDDB. This was done under yet another brand name introduced by GCMMF: Safal (literally
meaning fruitful, having achieved). Under this name were launched a mango drink sold in

9 Amul and India’s National Dairy Development Board (1998). Case no. N9
N9-599-060, Harvard Business School,
p.8.
10 Ibid., p.8.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

9 of 29 IIMA/BP0255

tetrapacks (also in small 100 ml sizes to be served in aircrafts), tomato ketchup, and a mixed
fruit jam. In fact, the launches of all these products were completed in a single year, 1998-99.

By the year 2000, the range of products marketed by GCMMF was truly wide: three varieties

PY
of milk, flavoured
red milk, buttermilk, four varieties of milk powder, two varieties of butter,
five varieties of cheese, two varieties of ghee clarified butter, chocolates, chocolate drink,
sweets, ice creams, edible oils and fruit and vegetable-based
based products. Exhibit 5 gives the
product portfolio of GCMMF as in the year 2000. At the time of writing this case, GCMMF
was launching milk in tetrapacks in the Mumbai market.

Except in ice creams, chocolates and chocolate-based

based beverages, Amul brand was the market

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leader in each and every one of its products. Exhibit 5 also shows the market shares of the
th
various products of GCMMF. Its main sources of competitive advantage were seen by its
executives as: (i) low costs due to the elimination of middlemen, a lean organization and
relatively lower pay scales as compared to MNCs (ii) its scale and scope of operations and
(iii) its strong brand name which stood for purity and quality.

Out of the total procurement of 4.6 million litres of milk per day, about 2.2 million litres
were sold as liquid milk and the rest as milk products. The present milk consumption in
India at about 225 gms per day was still way below that in developed countries and even
Thus, there was a need and scope for increasing
less than that in many developing countries. Thus,
spe
the consumption of milk in its liquid form, although for every rupee spent,
N
the nutrition
value of milk was way below other high protein and fat items, both vegetarian and non- non
IO
vegetarian.

Out of the total income of Rs. 18 billion, approximately Rs. 2.75 billion was accounted for by
sale of liquid milk; about Rs. 3 billion by edible oils; Rs. 4 billion by butter; about Rs. 2.4
break
billion by ice creams; and the rest by the other products. The exact break-up of these
products was not available. The share of processed fruits and vegetable items was still quite
T

small.

The growth ratess in different segments were quite different. The following table gives the
EC

approximate growth rates in these segments:

Table: Growth Rates in GCMMF’s Businesses

(Per cent)
1996-97 1997-98 1998-99
Liquid milk procurement 24.6 3.8 3.6
SP

Liquid milk N.A. 14 10

Butter 27 8 13
Cheese N.A. 37 39
Ghee 41 31 N.A.
Milk powder 0 0 18
Ice cream N.A. 100 100
Edible oils 13 20 18
IN

Source: GCMMF Annual reports

The profit margin in milk was generally low. NDDB and GCMMF had as one of their
important objectives, promotion of milk consumption, especially by the poorer people.
people To
achieve its objective, GCMMF endeavoured to keep the price of liquid milk as low as it
could. Edible oils were also low margin items, their sales prices being controlled rigidly by
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

10 of 29 IIMA/BP0255

the government and input prices being essentially set by the oil traders. In the words of Mr.
Kurien, they were in this business due to larger societal considerations than for the sake of
profits.
Competition in the Different Products

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The nature of competition n varied among the different products. In the case of liquid milk,
competition was from private dairies and contractors. There was also competition from
newly emerging private dairies that had started supplying milk to the consumers as well as
sweet makers.. There was intense competition for the supply of milk, which was much
sought after, especially in the festival seasons, by the sweet makers who derived large
profits from the sale of their sweets. Consumers were generally not very particular about the

CO
brand
nd of liquid milk, so that the sales depended to a large extent on dealer push. However,
there was scope to establish differentiation by appraising the customers of the quality not
only of the initial milk itself, but also the quality of the supply chain, which ensured the
stability of milk.

New entrants were making their mark in butter and cheese. Britannia, a firm engaged in
manufacture and sale of biscuits, had entered into the foods business, and more particularly
particularly,
in milk and milk-related
related products such as butter. Britannia had introduced new forms of
N
cheese such as cheddar cheese slices, and supported its products with extensive advertising
campaigns. It was believed that advertisements played a powerful role in the demand for
particular brands of butter and cheese.
IO
The sweet market was highly fragmented, with numerous small small-time local operators
producing their own brands and unbranded forms of sweets. The sales of sweets soared in
Other food companies
the festival seasons, drawing milk supply by offering higher prices. O
such as Hindustan Lever Limitedd (HLL), a subsidiary of Levers, and Nestle had also entered
into the business of readymade or near-ready
near-ready
near- ready sweets (such as gulab jamun)
jamun which just
T

needed to be deep-fried to have it ready). Branded ready or near-ready sweets were

advertised and heavily promoted through campaigns such as through mail orders to
housewives.
EC

Ice cream was an emerging market in India, witnessing the entry of numerous players. The
national scene was dominated by HLL with its Kwality and Walls brands, accounting for
about 45 percent of the market. GCMMF was the other national player, with about 30
percent of the market. There were, in addition, very powerful regional players such as
Vadilal Ice Creams in western
western India,
India which commanded a substantial share (in excess of 30
percent) of the regional market. Ice creams were largely promoted through local promotions,
SP

hoardings (billboards) and advertisements. About ice creams, Mr. Vyas said in an interview
with the case writer:

In ice creams,
creams, positioning and promotions are not the only things. The Indian
ice cream market is likely to expand very rapidly. The Indian consumer is
changing. They will not just stick to milk. Ice creams will no longer be made
IN

at home. A large number of consumers with disposable incomes will seek

value-added
value-added products, including ice cream. We shall target these consumers.
Our strategy will be to manufacture and market them locally through our
network. Our emphasis will be on quality. Our devotion to quality will be
total and constant.
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11 of 29 IIMA/BP0255

Edible oils were of two types: loose and branded. Loose oil constituted the bulk (perhaps
about 70 percent) of the total market. Among the branded oils, there were many which were
just local names with little brand recall. The main branded
anded players were Dhara and ITC’s oil
division, with many brands. It was believed that with increasing disposable
posable income, the

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tastes of consumers would swing more to the branded end of the market. Most of the
advertisements were either on the purity platform orm or on the health platform (zero
cholesterol or low cholesterol).

In the processed fruits and vegetable foods business, there were numerous players, many
regional. The largest player was HLL, which was moving away from its soaps and
detergents business to the foods business. HLL was the largest fast moving consumer goods

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(FMCG) company in India, with a turnover of Rs. 101 billion and profit of Rs. 1 billion in the
year 1998-99 11. In the last two years, it had undertaken massive expansion through
acquisitions, ready-to-cook
ions, the most notable of them being in the tea, ready-to-
ready -to-cook
cook flour, bread and ice
cream businesses. HLL was considered to be a well-run well-run
well- run company, with aggressive
marketing styles and a highly result-oriented
oriented culture. It was one of the largest ad spenders
in India. It had recently announced its Millennium Plan, which envisioned a growth rate of
100 percent every four years, most of it coming from its food business. HLL owned many
powerful brands such as Kissan an in the ketchups and jams segment.
segment Even though it was

potential for growth. Since the percentage of food that was processed was
N
extremely difficult to estimate the actual size of India’s processed foods market due to the
proliferation of numerous local companies, it was considered a huge market with high
wa still quite small, it
was expected that this sector will provide high opportunities for growth. But precisely for
IO
this reason, many MNCs were jumping into the fray, among them being, besides HLL,
Nestle and Pepsi. Thus, this emerging market was expected to be fiercely competitive.

Advertisement and Promotion by GCMMF

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GCMMF had shown itself to be remarkably savvy in its advertisement and promotion
campaigns. It had coined truly memorable slogans such as the one for butter: “Utterly
Butterly Delicious”; for or edible oils: “Dhara, Shudh Dhara”, emphasizing its purity; a
EC

campaign titled “The Taste of India” for all its products, featuring Indian recipes and
lifestyle; a campaign to promote drinking of milk, purely based on the nutritional value and
taste. It was the first Indian company to put up advertisement hoardings (billboards) based
on a topical and current news item that almost brought traffic to a stop. The hoardings,
started in 1967, and handled by the advertising agency, DaCunha Associates, were changed
weekly and every week it had a current and a new theme. ThisTh has continued till this day.
Exhibit 6 gives some of the memorable advertisements. For example, during the emergency
SP

in 1976-77,
77, when forced sterilizations were done under government compulsion, the Amul
hoarding read: “We have always practised compulsory sterilization”. When UK was reeling
under the Mad Cow Disease, GCMMF came out with an ad titled “Union Jacked by Mad
Cows”.
ows”. These ads, topical, witty and humorous, served the purpose of high recall,
r powerful
appeal and sustained awareness of the products.
IN

In ice creams, GCMMF emphasized in its advertisements that its product was entirely
vegetarian, made of pure milk and that it did not have any gelatin content,
content unlike that made
by many of its competitors (Indian ice creams usually contained vegetable oils and gelatin in
addition to milk, so that in a sense, they were frozen desserts rather than ice creams).

11 Annual Report of HLL, 1998-99.

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distributed without express written permission from Indian Institute of Management, Ahmedabad.

12 of 29 IIMA/BP0255

According to Mr. Vyas, the MD, the aim of the ads was not merely to stimulate interest, but
also to expand the markets so that ice creams would not be seen as merely a food for the
rich.
GCMMF sponsored television programmes as well. It was the sponsor, from the very

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beginning, of one of India’s most widely watched and appreciated programmes,
programmes, Surabhi, o on
n
India’s national television network, Doordarshan. Doordarshan had a reach of more than 85
percent of India’s population, and its programmes commanded viewerships exceeding 60
percent, far more than any of the cable networks, which had limited reach in cities and
towns. Surabhi was of one hour’s duration telecast at 9 pm on Sundays and featured India’s
culture and traditions. The programme had started the concept of posing questions at the
end of each episode and inviting readers to send their replies, with handsome prizes for

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correct replies. The innovation was such a success that many viewers watched the
programme for this feature, and their replies were so much in number that it almost choked
the postal system (a typical programme drew about 50,000 to 100,000 replies!). GCMMF also
sponsored a popular show, called Amul India Show on Star TV, telecast at 10 am on
Sundays.

GCMMF had sponsored two well-receivedreceived feature films. The first film was Manthan and
featured the exploitation of village farmers
mers and the formation of co-operatives.
co It was, in a
sense, the story of GCMMF itself. The second film, titled Sardar,
N
Sardar featured the life of Sardar
Vallabhbhai Patel, the first Home Minister of the country. Known as the Iron Man of India,
he brought about the unification of the different princely states of India.
IO
In addition, GCMMF had produced a number of TV campaigns of 30 to 60 seconds’
duration, for many of its products.

GCMMF and Its Programme for Management of Change

T

The Government of India liberalized its dairy sector in 1991, making it possible for private
players to enter the industry (it was hitherto reserved for the co-operative
co sector). Based on
this stimulus, GCMMF looked at all its operations, strengths strengths, weaknesses and the
EC

opportunities available,
ilable, and assessed that it had to become more customer-centred
customer (rather
than merely being farmer or supplier centred, as was the case earlier). It concluded that its
strength lay in playing the volume game and hence an expansion in the customer base as
wellll as product portfolio was essential. This required paying close attention to customer
needs and quality. It realized
realized
reali zed that merely being mouthing these ideas was not enough; the
entire supply chain had to function accordingly.
accordingly Hence, it launched a Total Quality
Management (TQM)(TQM)) programme to ensure the high quality of products, right from the
(TQM
SP

starting point (the village farmer who supplied milk), milk) through the value chain, until it
reached the consumer. This meant the need for the involvement of farmers, transporters,
trans
factory personnel, wholesalers and retailers, each of whom had a role to play. For example,
if the retailer did not take care of the refrigeration, the product could deteriorate, leading to
a bad name for GCMMF and its brand, brand Amul.
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What began as a TQM movement gradually became a movement for management of change
(MOC) in the entire value chain. GCMMF’s MOC was launched in six areas: cleanliness of
the dairy co-operative
co societies, planning and budgeting of the dairy co-operative society,
artificial
artificial insemination service, quality testing and milk measurement by the dairy co- co
operatives, animal feeding and management practices,
practices and self leadership development.
Much emphasis was placed on the village-level quality control, since this was a sine quo non
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

13 of 29 IIMA/BP0255

for subsequent consistency in quality. MOC in the factories meant close control over the
operations, including cleanliness. MOC at the wholesaler level meant that their
were
transportation and storage practices were to be closely controlled. Quality circles were
formed among the wholesalers, working in tandem with the sales force. The idea was to

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make everyone aware of the importance of quality and the systems needed to support high
quality on a continuing basis.

Growth and Financials of GCMMF

In the recent years,

ars, GCMMF had been registering an annual growth of nearly 20 percent.
Exhibit 7 shows the growth rate from 1984-85 till 1998-99.
99. Exhibit 8 gives the b alance sheets
balance

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and Exhibit 9 the income statements of GCMMF for the years 1993-94
1993-94 to
to 1998-99.

The sales off the milk and milk related products depended on the procurement of milk that
could be done. Exhibit 10 shows the growth in milk procurement from 1983 1983-84 till 1998-99.
The rate of growth in milk procurement was in the region of five percent per year.

The total milk production in India was in the region of 86 million tonnes per year (see
Exhibit 11 for the growth in the total milk procurement in India). It was believed that less
N
agency, the rest
than half (about 46 percent) of this would be procured by any organized agency
being retained by farmers for their own consumption at home). With per capita availability
of milk still in the region of about 225 grammes per day, there was considerable scope for
further increase in production of milk in the country.
IO
GCMMF in the Year 2000

The new millennium

illennium presented GCMMF with new opportunities as well as uncertainties.
The milk market appeared to be getting saturated from the supply side. The rate of growth
T

of milk production was around 6 percent per annum. The demand, however, could be
expected to grow at 8 to 10 percent per annum, according to industry experts. The per capita
milk consumption in India still being around 225 grams per day, as compared to more than
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increasing the consumption of milk

600 gms in many other countries, there was scope for incre
still further. But the problems on the supply side were formidable. The yield of Indian cattle,
at about 1000 kg per lactation per animal, was much lower than in other dairy countries such
as New Zealand and Holland (about two tonnes). An increase was possible, but presented a
challenge. But at least in the medium run, the supply side would pose constraints in the
development of the milk market. Dr. Kurien said in an interview with the case writer, “In
the case of milk and milk products, the limiting factor is not so much marketing, but
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supplies [of milk].”

of milk].
milk].”
”

Opportunities abounded in the market, both domestic as well export. GCMMF had been
making major efforts to make its brand known in many countries, including U.S.A., where it
had entered into an alliance with Kanan Dairy Products. Illinois to market its products. It
had established offices and agencies in New Zealand, Gulf, Sri Lanka and Australia. It had
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available for ordering

entered into E commerce in a fairly big way, with all its products avail
through the net in India as well as abroad. Through its TV programmes in the Star TV, it
hoped to increase the brand awareness in the SAARC countries.

But opportunities abounded in the other sectors as well, especially in the processed ffood
sector. With an arable area of land 40 percent larger than that of China, India’s food
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14 of 29 IIMA/BP0255

production (of about 600 million tonnes) was about 30 percent less than that of China. This
situation was considered to be due to low farm productivity, lack of technology
nology inputs and
absence of land reforms. The land holdings were small and in the hands of small families
which essentially did subsistence farming. Most of these subsistence farmers cultivated basic

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food such as cereals, pulses and some vegetable. But fruits and vegetables for processing did
not figure among their priorities. Large farmers cultivated fruits, vegetables and cash crops.

However, with improved per capita income and living standards, there was a general shift
in the eating habits of Indians towards premium food. It was estimated that while
subsistence foods would grow by 14 percent in the decade ending in the year 2005, premium
food consumption would increase by 150 percent 12.

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Another feature of India’s food sector was a highly inefficient food logistics and distribution
system. At the points of production, storage and handling facilities were poor, so that
ripening of fruit was not controlled. There were six-seven
seven intermediaries as compared to an
average of two in the USA, and these intermediaries
iaries performed the functions of transport,
storage and eventual movement to the markets. The transport was extremely inefficient,
packaging was poor, and temperature control was non- non-existent.
non -existent.
existent. Due to these inefficiencies,
it was estimated that about 35 percent of fruit and vegetable production (estimated at about

In addition, the mark-up

N
33 million tonnes of fruits and 72 million tonnes of vegetables, of total value Rs. 230 billion)
was wasted.

up at each stage was very high, the commission at each stage being
bei
IO
about 25 to 30 percent. Thus, the price at the consumer end was anything between three to
six times the price paid to the farmer. The high levels of commission charges were also
related to wastage in logistics, since at each stage the intermediary had to
t throw away about
20 percent of the receipts due to the products having become unfit for consumption.
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The Indian food chain was also poor with respect to the processing it went through. Only
about 1.3 percent of India’s total fruit and vegetable production
producti was processed commercially
as compared to 70 percent in the USA,
USA,, Philippines and Brazil, 80 percent in Malaysia and 30
USA
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percent in Thailand. The value addition in India was only about seven percent as compared
with 23 percent in China, 45 percent in Philippines and 188 percent in the UK.

This was a situation GCMMF was familiar with: a wasteful production system and poor
prices paid to farmers. If the farmers could be organized into co-operatives,
co as it had done
with milk, GCMMF might be able to become a truly major player in India’s processed food
market. This market was currently estimated to be around Rs. 20 billion with a total
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production of around 0.94 million tonnes 13. But it was also the case that particular fruits and
vegetables, especially the former,
form were grown in particular parts of the country. For
example, mangos were grown in Maharashtra, Andhra Pradesh and UP, besides in Gujarat
itself. Organizing farmers in theses states could be a difficult job.

The opportunities provided by this new market were, thus, quite exciting. But the
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magnitude of the problems in these new areas was also not to be underestimated.
Competitors
C ompetitors such as HLL and Nestle were formidable, although Mr. Vyas was confident
that he and his team would be able to meet the competit
competition. They believed that with the

12 Based on the findings of a study by McKinsey & Co for the Council of Indian Industries (CII).
13 Web site http://www.nic.in/mofpi/food-sectors/secfvp.html of the Department of Food Processing
Industries, Ministry of Agriculture, Government of India.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

15 of 29 IIMA/BP0255

Amul, Dhara and Safal names, customer-centred product offerings, good product quality
and a dedicated team, meeting these challenges would be within their capability. However,
not all the competition played a fair game. As Dr. Kurien lamented in one of his speeches at
the annual meeting of the shareholders:

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Most of our competitors are registered under the Companies Act, a law that in
spirit and practice respects the rights of owners and observed due process. By
contrast, our co-operatives co-operative
operatives operate under archaic, colonial co-operative
legislation, in which the rights of owners are observed in the breach and in which
due process finds scant place. For example, your federation and all the member
unions are a part of the same three tier co-operative
operative structure, yet you have to

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pay four percent Central sales tax when your products are transferred from your
member unions to any of the branches of your federation
ederation that lie outside Gujarat.
You then again pay local sales tax, when the product is sold within that state. On
the other hand, if a private company transfers its product from its plant to any of
its branches outside the state,
tate, it does not have to pay Central Sales Tax. ... As
long as co-operatives
operatives remain in their present legal aand nd regulatory shackles,
competition can neither be free nor fair ... 14

During his speech to the shareholders, Dr. Kurien said:

co-operatives
I find it sad that I must once again mention that co-operatives
co-
N
operatives do not enjoy a
level playing field in dairying, despite what the MNCs and business houses
IO
might say. Unlike private firms, co- co
co-operatives
-operatives
operatives invest heavily in helping the
farmers to increase their productivity. They provide breeding services, veterinary
care, extension advice and inputs – often at cost or less. These are ffunctions that,
operatives, would need to be played by the state. Co-
in the absence of co-operatives,
operatives are committed to quality and will not compromise for the sake of easy
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money. Co-operatives
operatives pay their taxes and the full cost of their utilities 15. Most
important,
tant, they operate under Co-operative
Co-operative
Co- operative Acts, which, in most states, invest
operatives with the power to intervene and overturn business
the registrar of co-operatives
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decisions. Can you imagine the registrar of companies acting in the same
fashion? At the same time, in in many states private firms are eligible for tax
holidays, exemption from sales tax, subsidized utilities and the like 16.

Many GCMMF officials felt that the problem was even more serious than what appeared
from the above statements. Many of the private sector companies did not pay taxes, at least
not fully, bribed factory and other inspectors to by-pass
by legislation and lower costs, and
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many did not even pay for electricity;

electricity with the connivance of officials of electricity boards,
they simply stole electricit
electricity. Thus, GCMMF officials felt that the playing field was anything
but level.

But Dr. Kurien was not daunted by these problems. He said to the case writer: “GCMMF’s
strength is in its integrity. It is the honest man you cannot break.”
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However, it could be safely assumed that, whatever the path GCMMF took, it was not going
to be a smooth one.

14 Chairperson’s
person speech. 26th annual report, 1996-97, p. 13.
15 It is a fact that in India, many private companies do not pay their taxes which they avoid by bribing officials.
16 Chairperson’s speech. Annual report, 1997-98, p.10-11.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

16 of 29 IIMA/BP0255

Exhibit 1: Gujarat State - A Profile

Gujarat is one of the states of India, located on the western

estern side of the country. It lies to the north of

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Maharashtra, whose capital is Bombay (now Mumbai). It has an area of 196,000 sq. km. (India’s total
area is 3,287,590 sq. km) and a population of 41 million (India’s population is 1 billion). Its capital is
Gandhinagar. Gujarat is among the most industrially advanced states of India and is also one of the
most prosperous. India’s per capita income in 1989-99 was $1,360, 360, while Gujarat’s wa was $1,430
$1
s $1,,430
430 (at
17
PPP rates ). Gujarat’s literacy rate in 1998-9999 was 73 percent for males and 49 percent for females,
with an average of around 61 1 percent, much higher than India’s average of 52 percent.

Gujarat had a history of political non-violence

violence (Mahatma Gandhi came from this state) as well as

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cooperation among its people. This made it easier to start a cooperative movement there. Even today,
today
Gujarat is considered to be one of the best states in the country to live in.

The climate of Gujarat varies a lot. On the western side is a rain-starved

starved region, including a desert.
North
orth Gujarat has much more rains, but many regions are semi semi-arid.
semi--arid.
arid. South Gujarat is fertile and
receives about 700 mm of rains per year. Fodder for cattle is naturally linked with availability of rain,
and many families have milch cattle in their houses, generally as a second source of income. There
are a number of people with cattle who are nomadic and migrate in search of food and fodder.

N
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17 In rupee terms, India’s GDP in 1998-99 was Rs.19,924 while that of Gujarat was Rs.18,858. In the year 2001, $1
was equivalent to around Rs. 48.
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

17 of 29 IIMA/BP0255

Exhibit 2: Map of India Showing Gujarat

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IN
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distributed without express written permission from Indian Institute of Management, Ahmedabad.

18 of 29 IIMA/BP0255

Exhibit 3: The Anand Pattern

State Marketing Federation

All dairies in a state (GCMMF in Gujarat)

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22 state federations in India

District Milk Processing Unions

Every district in the state

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12 district unions in Gujarat
170 unions all over India

Village Cooperative Societies

All villages in a district
72,774 villages in India

Milk Producers
N
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All milk producers in a village
2.1 million in Gujarat
9.31 million in India
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EC
SP
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Ahmedabad.

19 of 29 IIMA/BP0255

Exhibit 4

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Organization Structure of GCMMF

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Managing Director

AGM (Finance) AGM (HRD) GM (Mktg) AGM (Tecnical Products) AGM (Quality)

ON
Mgr (Commercial) Mgr (Exports) Mgr (Liquid Milk) Mgr (Dairy Products) Mgr (Dhara) Mgr (Ice Cream)

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SP
IN
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

20 of 29 IIMA/BP0255

Exhibit 5: GCMMF: Product Portfolio

Category Market Market

Share Position

PY
Liquid Milk N.A. 1
Full-fat milk
Semi-toned milk
Fully-toned milk

Butter
Amul Butter 85 1

CO
Amul Lite, a low fat butter spread 80 1
Amul Ghee and 8 2
Sagar Ghee (two different brands), 10 1
a highly aromatic clarified butter

Milk Powder
Amul Spray, infant milk food 65 1
Amul milk powder, instant full cream milk powder 80 1
Sagar, skimmed milk powder 40 1
Amulya, dairy whitener 60 1

Cheese
Amul pasteurized processed cheddar cheese
Amul cheese spreads in three flavours
Amul Mozzarella Cheese, pizza cheese
N 50
90
100
1
1
IO
Amul Emmental Cheese, a form of cheese similar to Swiss cheese
Amul Paneer, cottage cheese used in Indian curries
Amul cheese powder

Ice Creams
Amul Ice Creams 30 2
T

Sweets
Amul Shrikhand 50 1
EC

Amul Mithai Gulab Jamun

Amul Mithai Mate, condensed milk

Chocolates
Amul Chocolates in a wide variety of flavours
flavo 10 3

Chocolate Drinks
Nutramul 15 4
SP

Edible Oils 12
Dhara edible
dible oils,
oils, groundnut, vegetable (mustard)
Dhara Health, low-cholesterol
low-cholesterol
low- cholesterol oil

Fruit and Vegetable based Products N.A.

Safal fruit drinks
Safal tomato ketchup
IN

Safal mixed fruit jam

Source:
Source: Data supplied by GCMMF.
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

21 of 29 IIMA/BP0255

Exhibit 6: Some Interesting Amul Advertisements

1976-77

PY
CO
Mrs.
Mr
On compulsory sterilization introduced during Mrss.. Indira Gandhi’s regime

N
T IO
EC
SP

When helmets were made compulsory in Bombay

IN
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

22 of 29 IIMA/BP0255

Exhibit 6 (Contd.): Some Interesting Amul Advertisements

1996-97

PY
CO
On the mad cow disease

N
T IO
EC

On the infighting within the Congress Government during the general election
SP
IN

On the unruly behavior of the Calcutta crowds during the 1996 World Cup Cricket
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

23 of 29 IIMA/BP0255

Exhibit 6 (Contd.): Some Interesting Amul Advertisements

1999-2000

PY
CO
No need for explanation

N
T IO
EC

On the situation in Bihar when Mr. Laloo Prasad Yadav installed his own wife as the Chief Minister
when he was disqualified to hold the position
SP
IN

On a bus strike in Bombay

This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

24 of 29 IIMA/BP0255

Exhibit 7: Growth Rates from 1984-85 till 1998-99

GCMMF: Sales Turnover

PY
25

20
Rs. billion

15

10

CO
5

0
83- 84- 85- 86- 87- 89- 90- 91- 92- 93- 94- 95- 96- 97- 98-
84 85 86 87 89 90 91 92 93 94 95 96 97 98 99
Year

N
T IO
EC
SP
IN
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

25 of 29 IIMA/BP0255

Exhibit 8: GCMMF: Balance Sheets, 1994-99

Rs. million
31.3.199 31.3.199 31.3.199 31.3.199 31.3.199 31.3.1999
4 5 6 7 8

PY
LIABILITIES
Authorized Share
Capital
200,000 200.00 200.00 200.00 200.00 500.00 500.00
[email protected]
Paid up Share
Capital
80,000 shares 69.20 80.00 80.10 130.00 200.00 200.00

CO
@Rs.1000
Reserves and Other
Funds
Reserve fund 16.65 18.62 21.98 42.43 83.09 115.62
General fund 19.96 20.18 20.90 72.37 157.75 225.04
Grant from NDDB 1.04 1.04 1.04 1.04 0.01 2.04
under Operation
Flood
Grant from NDDB for 243.52 300.76 314.86 321.08 177.03 150.92
Gandhinagar dairy
Project
Export turnover
Allowance reserve
0.04

281.20
0.04

340.64
N 0.04

358.82
0.00

436.92
0.00

417.88
0.00

493.62
IO
Loans and
Advances
Cash credit 9.41 36.46 52.45
From NDDB under 3.75 3.75
3.75 3.73 3.70 3.51 0.00
Operation Flood
T

From NDDB for 610.77 817.31 546.42 579.63 547.33 555.06

Gandhinagar dairy
Project
614.53 821.06 559.56 583.33 587.30 607.51
EC

Current Liabilities
and Provisions
Sundry creditors 574.99 310.83 212.62 271.82
Outstanding against 728.37 496.80 1185.78 1365.78
purchases 1290.81 1025.89
Outstanding against 81.53 65.42 106.20 116.15
expenses
Deposits 7.59 9.84 11.90 50.25 70.70 108.71
SP

Provision for iincome

ncome 32.38 32.38 32.38 51.58
tax
Provision for dividend 5.54 9.06 9.61 14.10 21.90 30.00
For education ffund
und 0.16 0.30 0.30 0.30 0.30 0.30
Carried to g
general
eneral 2.19 4.08 71.88 63.44
and reserve
reserve ffunds
unds
1432.90 929.02 1630.67 1933.42 1383.71 1164.90
IN

Total 2,397.67 2,170.41 2629.15 3083.68 2588.89 2466.03

This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

26 of 29 IIMA/BP0255

Exhibit 8 (Contd.): GCMMF: Balance Sheets, 1994-99

Rs. million
31.3.199 31.3.199 31.3.199 31.3.199 31.3.199 31.3.199
4 5 6 7 8 9

PY
Fixed Assets
Land 12.33 14.08 14.38 14.27 14.27 14.27
Buildings 16.17 100.71 155.53 177.74 204.39 213.41
Plant and machinery --- 526.99 896.33 914.07 1112.92 1245.18
Other items 28.28 57.99 78.32 158.19 107.03 133.69
56.78 699.77 1144.56 1264.27 1438.61 1606.55
Less: Depreciation 24.22 95.50 202.70 306.95 568.16 733.90

CO
32.56 604.27 941.86 957.32 870.45 872.64
Work in progress 867.26 409.08 26.02 55.50 31.45 3.22
899.82 1013.36 967.88 1012.82 901.90 875.86
Investments in 3.28 3.28 3.28 3.28 3.30 3.30
Shares
Inventories
Stores, spares, 31.86 38.14 37.35
packing materials
etc.
R.M.S. 13.57 16.48 10.89
Stock in process
FIG
Scraps
735.91 665.64
N 762.01
7.59
1141.66
--
1194.67
11.96
983.77
0.06
1050.41
6.98
781.79
0.02
837.03
IO
Advances &
Debtors
Sundry debtors 63.44 98.02 283.47 137.25 95.87 82.87
Advances 425.53 62.50 20.90 43.17 41.37 66.73
Advance payment of 44.49 42.18 30.80 60.70 20.96 22.36
income tax less
T

provisions
Security deposits 2.89 3.22 3.55 8.01 3.77 4.63
Balance with 3.19 2.11
Government
EC

536.35 205.92 338.72 249.13 165.16 178.70

Deferred revenue -- 9.12 6.84 4.56 2.28 0.00
Expenditure
Cash & Bank
Balance
Cash on hand incl. 33.48 44.06 291.48 171.59 99.47 170.53
Cheques
SP

Balances with banks 166.93 172.48 236.34 420.06 314.53 357.81

Remittances in 21.91 56.56 22.58 27.57 51.83 42.80
transit
222.32 273.11 550.41 619.22 465.83 571.14
2397.67 2170.41 2629.15 3083.68 2588.89 2466.02

Source: Annual Reports of GCMMF.

IN
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

27 of 29 IIMA/BP0255

Exhibit 9: GCMMF: Profit and Loss Accounts, 1993-94 To 1998-99

Rs. million
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99
1998
1998--99
99
By Sales (net of 7633.62 9081.92 11116.89 12529.53 15137.57 18113.01

PY
excise duty)*
Sales of Dhara 2255.30 2058.50 2676.00 2804.30 3698.40 4079.30
Total Turnover 9888.92 11140.42 13792.89 15333.83 18835.97 22192.31
Service charges and 38.96 34.85 45.74 50.31 57.59
7.59 68.46
commission
Income from 0.71 0.75
investments

CO
Interest on loans, 5.22 8.72
deposits etc.
Exchange rate 3.54 2.86
differences (net)
Export incentives 1.82 1.80
Unspent liabilities and 1.41 18.59
provisions no longer
required to be written
back**
Miscellaneous 1.84 3.86 13.09 34.12 5.02 14.76
income@
Prior period
adjustments
40.80 38.71
N 58.83
1.74

86.17 75.31 115.93

IO
Closing Stock
Finished goods 983.77 781.79
Scrap stock 0.06 0.02
Stock in progress 11.96 6.98
735.88 635.40 735.25 1149.25 995.79 788.78
TOTAL 10665.6 11814.53 14586.97 16569.25 19907.06 23097.02
T

• Excludes sales of Dhara oil done on behalf of NDDB and treated as consignment sales. This is shown in the
next row.
** Includes Rs. 12.37 million in 1998-
1998 -99
99 towards turnover tax written back consequent to a High Court
1998-99
EC

judgement.
@ Includes income from sale of scrap of Rs. 2.96 million in 1997-98;
1997 Rs.2. 53 million in 1998-99.
SP
IN
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

28 of 29 IIMA/BP0255

Exhibit 9 (Contd.): GCMMF: Profit and Loss Accounts, 1993-94 to 1998-99

Rs. million
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99
1998
1998--99
99
To Opening Stock

PY
Finished goods 1141.66 983.77
Scrap stock 0.00 0.06
Stock in progress 7.59 11.96
655.01 735.88 635.40 735.25 1149.25 995.79
Expenses
Purchases of finished 10708.28 12090.38 14532.98
goods

CO
Raw materials, stores, 7349.45 8496.70 10493.62 1409.51 1963.11 2323.30
spares and packing
materials consumed
Purchases of Dhara 2255.30 2058.50 2676.00 2804.30 3698.40 4079.30
from NDDB
Manufacturing -- 18.50 96.95 122.28 71.20 83.60
expenses
Marketing expenses 265.41 244.77 301.03 360.56 439.82 492.47
Salaries and other 41.26 47.66 56.78 69.76 92.90 113.23
benefits
Interest and bank
commission
Co-operative
development
45.95

5.44
83.25

3.33
N 70.82

8.20
66.19

9.27
57.10

8.41
67.98

14.05
IO
expenses
Charity and donations 2.90 0.00 5.00 0.00 0.63 5.00
Miscellaneous 32.35 38.00 51.79 78.91 94.11 102.44
expenses
Depreciation 4.64 72.22 107.32 105.61 125.99 138.80
Deferred revenue exp. 0.00 2.28 2.28 2.28 2.28 2.28
T

Written off
Prior period adj. (Net) 0.98 0.68
Provision for doubtful 2.52 0.00
debts and advances
EC

Provision for income 0.00 0.00 0.00 19.20 25.20 15.00

tax
Total Expenses 10002.70 11065.21 13869.79 15756.15 18673.03 21971.11
Net profit carried 7.89 13.44 81.79 77.85 84.80 130.12
down
TOTAL 10665.60 11814.53 14586.98 16569.25 19907.08 23097.02

Source: Annual Reports of GCMMF.

SP
IN
This document is authorized for personal use only by Arun Bhattacharyya, of Kautilya Entrepreneurship and Management Institute, Jain Univeristy till 13th February ,2018. It shall not be reproduced or
distributed without express written permission from Indian Institute of Management, Ahmedabad.

29 of 29 IIMA/BP0255

Exhibit 10: GCMMF Milk Procurement

GCMMF: Milk Procurement

PY
4.5
4
million litres per day

3.5
3

CO
2.5
2
1.5
1
0.5
0
83- 84- 85- 86- 87- 89- 90- 91- 92- 93- 94- 95- 96- 97- 98-
84 85 86 87 89 90 91 92 93 94 95 96 97 98 99
N
IO
Exhibit 11: Milk Production in India

Milk Production in India

T

100
EC
Million tonnes

80
60
40
20
SP

0
50

60

68

73

80

90

95

96

97

00
19

19

19

19

19

19

19

19

19

20

Year
IN