Gujarat

Cooperative
Milk Marketing
Federation
Ltd.
Vision 2017

By Group C12

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of presentation
Drive IndustryFlow
Growth;
Mobile TV Added Channel

Recent performance

Slide 3

Corporate overview

Slide 5

Our values

Slide 6

Global presence

Slide 9

Vision 2017

Dairy products

Food processing industry

Edible oil

Financial projection

Slide 11
Slide 24
Slide 30
Slide 33

High growth & bright prospects

Annual Turnover Of Rs 4300 Crore (2006-07)
Rs 10,000-crore mark over the next four years.

Annual Turnover

45000

40000

40000
35000
30000
INR Crores
25000
20000
15000
10000
5000
0

CAGR: 23%

10000
2000
1946

4300
1999

2007

2011
Time Frame

2013

2015

2017

We are the market leader

Largest milk brand in Asia marketing more than 30 different brands
of dairy products like cheese, ice-cream, condensed milk, ready-to-eat pizza,
beverages etc.
Wide range of product categories caters to consumers across all market
segments. Its supply chain is one of the most complicated in the world.
Amul is the market leader in ghee and butter
Amul Kool and Kool Caf are doing well
Expansion to foreign shores
Signed an agreement with Wal-Mart to stock its shelves with products under
its Amul brand name. Amul processed cheese, pure ghee, Shrikhand,
Nutramul, Amul's Mithaee Gulab Jamuns are few of the products marketed in
the US markets

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Co-operative
Overview
Drive Industry
Growth;
Mobile TV Added Channel
Formed in 1946, is a dairy cooperative movement in India.
A brand name managed by Gujarat Co-operative Milk Marketing Federation
Ltd. (GCMMF)
Spurred the White Revolution of India, which has made India the largest
producer of milk and milk products in the world.
Overseas markets - Mauritius, UAE, USA, Bangladesh, Australia, China,
Singapore, Hong Kong, Japan, Sri Lanka and a few South African countries
Dr Verghese Kurien, former chairman of the GCMMF -the man behind the
success of Amul.
On 10 Aug 2006 Parthi Bhatol was elected chairman of GCMMF
The white revolution has finally created a billion-dollar brand.

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Our
valuesMobile TV Added Channel
Drive Industry
Growth;
Benefiting Farmers
Improving socio-economic condition by providing long-term, sustainable
growth to its member farmers.
Quality products at modest prices
Value proposition to a large customer base by providing milk and other dairy
products a low price

Benefiting Farmers
Every day Amul collects 9.3 million litres of milk from 3
million farmers (many illiterate), converts the milk into
branded, packaged products, and delivers goods to over
500,000 retail outlets across the country.

Number of Village societies

Avg procurement price paid (Rs/ Kg Fat)

Quality products at modest prices

Developing demand
- A low-cost price strategy products
The distribution network
- Dry and cold warehouses
- Cash transactions throughout the supply chain helping farmers
Umbrella brand
- Common brand for most product categories
Third party service providers
- Core is milk processing , production of dairy products
- Logistics of milk collection, distribution of dairy products, sale of
products through dealers and retail stores
Supporting Organizational Arrangements

Global presence

Vision 2017

Dairy Products
Dairy Products

Condensed

By
2014

Expansion plans

By
2014

Industry Analysis
List of competitors in each of the product segment
Company

Brands

Major Products

Nestle India

Milkmaid, Cerelac,
Lactogen, Milo,
Everyday

Sweetened condensed milk, malted foods,

milk powder and Dairy whitener

Milkfood

Milkfood

Butter, Ghee, milk powder, ice cream, and

other milk products

GlaxoSmithKline
Consumer Healthcare

Horlicks, Boost,
Maltova, Viva

Malted Milkfood, ghee, butter, powdered

milk, milk fluid and other milk based baby
foods

Kwality Dairy (India)

Indana, Kream
Kountry

Skimmed milk powder, whole milk powder,

dairy milk whitener, Ghee

H.J. Heinz

Farex, Complan,
Glactose, Bonniemix,
Vitamilk

Infant Milkfood, malted Milkfood

Heritage Foods

Heritage

Milk, Curd, Ghee, Butter Milk

Britannia

Milkman

Flavoured milk, cheese, Milk Powder, Ghee

Kraft

Bournvita, Cadbury

Malted food, chocolates

Mother Dairy

Mother Dairy

Milk, Ice Cream, milk products

Industry Analysis
Low initial capital requirement
Optimal scale

Increasing cost of raw material

Limited supply
Unstable supply during festive
days

Low margins
Import competition
Demand cyclicality
High Initial
investment
Exit barriers
Import from other countries
Non milk beverages

Distributed buyers
Essential food commodity
forming small fraction of buyer
cost
Not much differentiation
required in terms of buyers'
requirement

Industry Analysis
Competitors
Large players with established
distribution network
Aggressive in pricing and
promotion

Customers
Extremely satisfied
Trend towards packaged milk
Improved Socio- economic
conditions

Customers - GCMMF
Largest milk brand in Asia
More than 30 dairy brands
Market leader in ghee & butter
Very strong supply chain
Enjoys Fine reputation
Quality with Affordability

Amul Milk
Growth Strategy
Expanding in Delhi and Mumbai zones* in next two years and
then expanding in Kolkata zone* for next 3 years
Rationale: Already good brand recognition through ice cream and
beverages products. Distribution network is established.
Why? Missing growth opportunities that is relatively easy to target and can build
brand recognition for Amul beverages.

Reduce the contribution of milk to 25% in overall turnover by focusing

on value added products. However growing at 9% CAGR in absolute
terms.

*Refer slide 9 for zones definition

Amul Milk - Implementation plan

Removing Supply side constraints
Doubling the villages covered under artificial insemination in next two
years to 20,000
Knowledge workshops for farmers to highlight benefits

Tie with cooperatives in North and western zone to obtain milk for
further processing. Try to enter into long term contracts.
Already procuring from dairy cooperatives in Maharastra, West Bengal and Bihar

Pricing the supplies so that farmers are adequately compensated for

increase in fodder prices
Contract with farmers: Offering 5% premium to farmers that
undertake to supply minimum quantity of milk throughout the year
Engaging with government to remove the additional state taxes and
provide subsidies for helping farmers
Expect to triple the procurement to 270 lac litres/day by 2017

Strategy for main dairy products

Amul cheese and butter
Defend its position from the various attacks of its close
competitor in Amul cheese and butter
Ice creams
24.75 per cent share, Mother Dairy share of 8.66% & the
market leader HUL- kwality walls with 28.22%. Target
becoming market leader by increasing sales outside Gujarat
Focus on aggressive promotion and introduce new variants
based on consumer needs (such as suger free ice creams)
Chocolates
Growth area currently only 10 per cent compared with 70 per
cent share of the market leader, Cadbury
Concentrate on the niche segment for example milk chocolates
or dry fruit chocolates & introduce new variants in the same
Concentrate of aggressive promotion

Focus areas - Diary products

Focus

Focus areas - Diary products

Mithai
Undertake consumer survey and improve product range
Focus on festive packages
Improve product availability in convenience stores
Advertisement campaign using Amul Butter Girl focusing on
tier 1 cities
Nutramul
Energy Milk introduced in 2006. Low consumer awareness
Sales promotion to increase trial

New products Packaged chocolate cakes

High growth prospects
Related expertise in
Chocolates
Can leverage existing
distribution channel
Cadbury, the major
player is present in
premium segment. Can
differentiate based on
price
In India, the current volume sales of
Expected to be
Packaged Cakes is 55300 Tonnes, and is
launched by 2014
expected to grow by ~48% over the next
five years

Positioning - Chocolate cakes

New products Amul Morning

Product
Mix of coffee, milk powder and flavor
Trends
Instant coffee mix market growing at 40% per year
Coffee has changed from being a traditional beverage consumed mainly
in South India, to a youthful and trendy beverage with a national
presence, consumed in several forms and retail formats
Global players foraying into the Indian market. Investments made by PE
players indicates industry potential
Competition
Indian coffee retail market is dominated by global players, specially in the
organized coffee retail segment
Three major players dominating the market are Nescafe, Tata & HUL
(Bru)
Differentiation
Different flavors and competitive pricing

New products Amul Morning

Distribution
Existing distribution channels in convenience stores and Amul outlets
Focus should be western and northern India where brand recognition of
Amul is high
Promotion
Posters in the Amul outlets
Free trial back for the first month with Amul milk
Sourcing
Increasing the network of existing suppliers of coffee through alliances
Evaluating cooperative model for coffee procurement
Plan of Implementation
2014
Consumer survey
and product R&D to
test feasibility of
product

If financially
feasible

2015- 2016
Launching product
in north and west
India.

2017- 2020
Increasing market
share to other
regions in India and
exporting overseas

New Brand Swasth,

Food Processing Industry

Industry Analysis
Industry trends High demand expected
Changing consumption patterns, both in tier 1 and tier 2 cities
Rising income levels among the middle-class and changing
lifestyles,
Food Processing Industry

101.43

111.57

122.73

2008

2009

2010

135.00

2011

Industry Structure
Highly unorganized with
75% of the output coming
from unorganized and
small scale industries

148.50

2012

163.35

2013

179.69

2014

197.65

2015

217.42

2016

239.16

2017

Structure of Indian Food Proce ssing

Industry
Organized
25

33

Unorganized
Small Scale

42

Industry Analysis
Companies need well
developed end-end supply
chain to succeed
Involves high fixed costs
upfront
Demand is more than supply
Presence of middle men in
supply chain
High number of buyers

Intense competition
from MNCs
Major output from
unorganized and small
scale industries
No exit barriers
Food items like raw fruits,
vegetables, rice
Low due to increase demand
for value added goods

Quality conscious
High number of companies
increases buyer power

Competitor analysis
Category
Fruits and
vegetables
Packaged foods

Competitors
Dabur, Mother Dairy, Temptation foods,
Godrej F&B
HUL, ITC, MTR, Haldirams, Priya foods
Modern foods, ITC, Parle, Britannia

Bakery and
confectionary

Implementation Plan
Year

Products Category

2012

Fruits and vegetables

2013

Packaged foods
Bakery and
confectionary

2014

Products
Raw fruits and vegetables, pulps,
canned fruits ,juices
Ketchup, Jam, Soups
Biscuits, bread,Non-alcoholic
beverages

Distribution channel and staging based on geographies

Year
Zones or Geographies
2012
Western Zone ( Gujarat, Maharashtra, Rajasthan)
2013
Western + Northern (NCR+UP+ other states)
2014
Western + Northern (NCR+UP+ other states)
2015
Western+Northen+Southern
2016
Western+Northen+Southern
2017
India

Implementation Plan
Distribution Channel

New Outlets : Zones where we had Amul

parlours
Super Markets
Hyper Markets
Groceries
Advertisements
Brand name : Swasth
Value proposition : Naturally processed food at
best prices
The advertising strategy would be Umbrella
Branding done through ads in television,
outlets and newspaper

Edible Oil Industry

Edible Oil Industry Analysis

Existing Players:
Industry is highly fragmented into organized and unorganized
Hence heavy competition and very thin margins
Supplier Power:
Domestic suppliers cater to only 50-60% of requirement
Rest of the demand met through imports
Hence domestic prices dependent on international prices
Buyer Power:
Buyer is highly price sensitive
Hence demand is more for cheap edible oil like palm oil, Soyabean
New Entrants:
Demand potential is high
Entry barriers in terms of refining capability, supply of oil, high import

duty
Substitute Products:
No substitute threat

Factors affecting GCMMF

Favourable factors:

High demand potential CAGR of 5%

Domestic market continues to be underpenetrated

Subsidies provided by government

Unfavourable factors:

Market highly volatile in past 2-3 years

Domestic prices dependent on international prices

Low margins
Government decreasing import duty further increasing the competition

Decision: Wait and watch policy till international edible oil supply situation
becomes stable

Financial projection

Projected Income Statement

Year

2011 2012

2013

2014

2015

2016

2017Comments

Sales from Raw milk

4,398

4,808

5,255

5,744

6,278

6,862

7,500CAGR of 9%

Sales from other dairy products

Sales of Food Processing
Industry
Total Sales
Procurement and manufacturing
expenses
Selling and distribution
expenses
Marketing expenses
Provision for taxes
Total Expenses
Profit after tax

5,376

6,468

7,781

9,362 11,263 13,551

16,303CAGR of 20%

0 2,807 3,242 9,064 9,971 10,968

9,774 14,082 16,278 24,169 27,512 31,380

16,197CAGR of 40%
40,000

8,797 12,674 14,650 21,753 24,760 28,242

36,000

Investment in welfare activities

Retained profit after welfare

activities

293
422
488
725
825
941
489
704
814 1,208 1,376 1,569
147
211
244
363
413
471
9,725 14,011 16,196 24,049 27,374 31,223
49
70
81
121
138
157
8

29

40

80

97

116

41

41

41

41

41

41

Based on
expense ratio of
1,200
income
2,000 statement of
600
FY2009
39,800
200
159

Keeping
retained earning
as constant and
investing in
welfare
41
activities