AMUL_SUMIT GUPTA

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SUMMER TRAINING PROJECT REPORTON

STUDY OF ACCOUNTING PROCESS OF AMUL(DELHI MMO)

&ANALYSIS OF BALANCE SHEET/PROFIT & LOSS

ACCOUNT

IN PARTIAL FULFILLMENT OF PGDM(POST GRADUATE DIPLOMA IN MANAGEMENT)

SUBMITTED TO : SUBMITTED BY:SUMIT GUPTAROLL - 108246PGDM (2008-2010)

MANAGEMENT EDUCATION & RESEARCH INSTITUTE


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PREFACE

The PGDBM programme is well structured and integrated course ofbusiness studies. The main objective of practical training at PGDBMlevel is to develop skill in student by supplement to the theoretical studyof business management in general. Industrial training helps to gain reallife knowledge about the industrial environment and business practices.The PGDBM programme provides student with a fundamentalknowledge of business and organizational functions and activities, aswell as an exposure to strategic thinking of management.

In every professional course, training is an important factor. Professorsgive us theoretical knowledge of various subjects in the college but weare practically exposed of such subjects when we get the training in theorganization. It is only the training through which I come to know thatwhat an industry is and how it works. I can learn about variousdepartmental operations being performed in the industry, which would,in return, help me in the future when I will enter the practical field.

Training is an integral part of PGDBM and each and every student hasto undergo the training for 2 months in a company and then prepare aproject report on the same after the completion of training.

During this whole training I got a lot of experience and came toknow about the management practices in real that how it differs fromthose of theoretical knowledge and the practically in the real life.

In todays globalize world, where cutthroat competition is prevailing inthe market, theoretical knowledge is not sufficient. Beside this one needto have practical knowledge, which would help an individual in his/hercarrier activities and it is true that Experience is best teacher.


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DECLARATION

I hereby declare that the report titled A STUDY OF ACCOUNTING PROCESS OF AMUL (DELHI MMO) &ANALYSIS OF BALANCE SHEET & PROFIT AND LOSS

ACCOUNT is a bonafide record of the summer projectdone by me, during the period May-June 2009 as part ofmy PGDM program at Management Education &Research Institute, New Delhi.

I also declare that this report has not been submitted infull or part thereof, to any university or institutions for the

award of any degree or diploma.

Place: New Delhi

Date : 1/09/2009


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ACKNOWLEDGEMENT

With immense pleasure, I would like to present this project report forGujrat Co-operative Milk Marketing federation Ltd. It has been anenriching experience for me to undergo my summer training at AMUL,

which would not have possible without the goodwill and support of thepeople around. As a student of MANAGEMENT EDUCATION &RESEARCH INSTITUTE I would like to express my sincere thanks tooall those who helped me during my practical training programme.

I would like to give my heartily thanks to all theemployees working atGCMMF DELHI MMO who provide me the knowledge of accountingprocess by spending there precious time with me.

However, I accept the sole responsibility for any possible error ofomission and would be extremely grateful to the readers of this projectreport if they bring such mistakes to my notice.


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CONTENT

S.NO.TITLE

PAGENO.1) INDUSTRY PROFILE 4

2) COMPANY PROFILE 7

3) DELHI (MMO) 8

4) ACCOUNTS PROCESS OF DELHI (MMO) 17

5) SUMMARY OF BALANCE SHEET OF GCMMF

(2008-09)18

6) SUMMARY OF BALANCE SHEET OF GCMMF

(2005-06)19

7) COMPARATIVE INCOME STATEMENT20

8) CALCULATION OF RATIO 22

9) CONCLUSION 30


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INDUSTRY PROFILE

The dairy industry is recognized as one of the largest and the mostimportant of food industries. The dairy industry exists for one purposeTo provide, at a reasonable cost, milk and milk product that satisfy theconsumer needs and fulfills his nutritional requirements.

The word dairying was derived from the Middle English worddeirie meaning day or maid servant worked. Dairying now connotes awide range of activities starting with the production of milk in the farm tothe point it reaches the consumer in form of liquid milk or as its product.

Dairy is a place where handling of milk and milk products is done andtechnology refers to the application of scientific knowledge for practicalpurposes. Dairy technology has been defined as that branch of dairyscience, which deals with the processing of milk and the manufacture ofmilk producton an industrial scale.

The dairy sector in the India has shown remarkable development in the

past decade and India has now become one of the largest producers ofmilk and value-added milk products in the world.

The dairy sector has developed through co-operatives in many parts ofthe State. During 1997-98, the State had 60 milk processing plants withan aggregate processing capacity of 5.8 million litres per day. In additionto these processing plants, 123 Government and 33 co-operatives milkchilling centers operate in the State.

Also India today is the lowest cost producer of per litre of milk intheworld, at 27 cents, compared with the U.S' 63 cents, and Japans$2.8 dollars.


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Also to take advantage of this lowest cost of milk production andincreasing production in the country multinational companies areplanning to expand their activities here. Some of these milk producershave already obtained quality standard certificates from the authorities.

This will help them in marketing their products in foreign countries inprocessed form.

R esearch earch and D evelopment in D airy I ndustry :

The research and development need to the dairy industry to developand survives for long time with better status. The various institute andmilk dairy companies R&D results provide base for todays industry

growth andDevelopment. The research and development of products of dairy, likeyogurt and cheese market research and company reports providesinsights into product and market trends, analysis opportunities, salesand marketing strategies will help local milk unions to develop andspread world wide through obtaining this knowledge. Specific on marketshare, segmentation, size and growth in the US and global markets arealso helps industry to expand its market worldwide even small union

also.

D evelopment ofF ood P rocessing I ndustry :

The food processing industry sector in India is one of the largest interms of production, consumption, export and growth prospects. The

government of accorded it is a high priority, with a number of fiscalrelieves and incentives, to encourage commercialization and valueaddition to agriculture produce, for minimizing harvest wastage,generating employment and export growth.


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Food processing industry is providing backbone support to the milkindustry. The development food products by using milk can give goodmarket opportunities to produces milk.

P roducts and I ndustry S tatus:

Among the products manufactured by organized sector are Ghee,Butter, Cheese, Ice-Creames, Milk powders, Melted milk food, Infantfood, condensed milk etc.. some milk products like Casein and Lactoseare also beingmanufactured lately. Therefore, there is good scope for manufacturing

these products locally. Liberalization of the economy has led to a floodof new entrants, including MNCs due to good prospects and abundantsupply.

I nvestme nt P otential in M ilk P roducts :

At the present rate of growth, India is expected to overtake the US inmilk production by the year 2010, when demand is expected to be over

125.69 ml.tn.Being largely imported, manufacture of casein and lactose has goodscope in the country.

Exports of milk products have been decentralized and export in 2005-2010 is estimated at 71.875 cr.


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COMPANY PROFILE

Amul (Anand Milk Union Limited), formed in 1946, is a dairycooperative movement in India. It is a brand name managed by an apexcooperative organization, Gujarat Co-operative Milk MarketingFederation Ltd. (GCMMF), which today is jointly owned by some 2.6million milk producers in Gujarat, India. It is based in Anand town ofGujarat and has been a sterling example of a co-operative

organization's success in the long term. The Amul Pattern hasestablished itself as a uniquely appropriate model for rural development.Amul has spurred the White Revolution of India, which has made Indiathe largest producer of milk and milk products in the world. It is also theworld's biggest vegetarian cheese brand.

Amul was formally registered on December 14, 1946. The brand nameAmul, sourced from the Sanskrit word Amoolya, means priceless. It wassuggested by a quality control expert in Anand and it was chosenbecause it was a perfect acronym forAnand Milk Union Limited.

The Amul revolution was started as awareness among the farmers. Itgrew and matured into a protest movement that was channeled towardseconomic prosperity.


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GCMMF:

In 1954, Kaira District Co-operative Milk Producers Union built a plantto convert surplus milk produced in the cold seasons into milk powderand butter. In 1958, a plant to manufacture cheese and one to producebaby food were added. Subsequent years saw the addition of moreplants to produce different products. In 1973, the milk societies/districtlevel unions decided to set up a marketing agency to market theirproducts. This agency was the Gujarat Cooperative Milk Marketing

Federation (GCMMF). It was registered as a co-operative society on 9July 1973.

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India'slargest food products marketing organization. It is a state level apexbody of milk cooperatives in Gujarat which aims to provide remunerativereturns to the farmers and also serve the interest of consumers by

providing quality products which are good value for money.

Members: 13 district cooperative milk producers' Union

No. of Producer Members: 2.79 million

No. of Village Societies: 13,328

Total Milk handling capacity: 11.22 million litres per day

Milk collection (Total - 2008-09): 3.05 billion litres

Milk collection (Daily Average 2008-09): 8.4 million litres

Milk Drying Capacity: 626 Mts. per day

Cattlefeed manufacturing Capacity: 3500 Mts per day


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Sales Turnover Rs (million) US $ (in million)

1994-95 11140 355

1995-96 13790 400

1996-97 15540 450

1997-98 18840 455

1998-99 22192 493

1999-00 22185 4932000-01 22588 500

2001-02 23365 500

2002-03 27457 575

2003-04 28941 616

2004-05 29225 672

2005-06 37736 850

2006-07 42778 1050

2007-08 52554 1325

2008-09 67113 1504

List of Products Marketed:

Breadspreads:

Amul ButterAmul Lite Low Fat BreadspreadAmul Cooking Butter


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Cheese Range:

Amul Pasteurized Processed Cheddar Cheese

Amul Processed Cheese SpreadAmul Pizza (Mozarella) CheeseAmul Shredded Pizza CheeseAmul Emmental CheeseAmul Gouda CheeseAmul Malai Paneer (cottage cheese)Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)Amul AmrakhandAmul Mithaee GulabjamunsAmul Mithaee Gulabjamun MixAmul Mithaee Kulfi MixAvsar Ladoos

UHT Milk Range:

Amul Shakti 3% fat MilkAmul Taaza 1.5% fat MilkAmul Gold 4.5% fat MilkAmul Lite Slim-n-Trim Milk 0% fat milkAmul Shakti Toned Milk

Amul Fresh CreamAmul Snowcap Softy Mix


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Pure Ghee:

Amul Pure Ghee

Sagar Pure GheeAmul Cow Ghee

Infant Milk Range:

Amul Infant Milk Formula 1 (0-6 months)Amul Infant Milk Formula 2 ( 6 months above)Amulspray Infant Milk Food

Milk Powders:

Amul Full Cream Milk PowderAmulya Dairy WhitenerSagar Skimmed Milk PowderSagar Tea and Coffee Whitener

Sweetened Condensed Milk:

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

Amul Taaza Toned Milk 3% fatAmul Gold Full Cream Milk 6% fatAmul Shakti Standardised Milk 4.5% fatAmul Slim & Trim Double Toned Milk 1.5% fatAmul Saathi Skimmed Milk 0% fatAmul Cow Milk


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Curd Products:

Yogi Sweetened Flavoured Dahi (Dessert)Amul Masti Dahi (fresh curd)Amul Masti Spiced Butter MilkAmul Lassee

Amul Icecreams:

Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi)Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza,Roasted Almond)Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, FreshStrawberry, Black Currant, Santra Mantra, Fresh Pineapple)Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae)Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone,Chococrunch, Megabite, Cassatta)Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake

Magic)

Chocolate & Confectionery:

Amul Milk Chocolate

Amul Fruit & Nut Chocolate

Brown Beverage:

Nutramul Malted Milk Food


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Milk Drink:

Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom,Rose, Chocolate)Amul Kool CafeAmul Kool KokoAmul Kool Millk Shaake (Mango, Strawberry, Badam, Banana)

Health Beverage:

Amul Shakti White Milk Food

Amul is the largest food brand in India and world's Largest Pouched MilkBrand with an annual turnover of US $1050 million (2006-07). Currently

Amul has 2.6 million producer members with milk collection average of10.16 million litres per day. Besides India, Amul has entered overseasmarkets such as Mauritius, UAE, USA, Bangladesh, Australia, China,Singapore, Hong Kong and a few South African countries. Its bid toenter Japanese market in 1994 had not succeeded, but now it has freshplans of flooding the Japanese markets .Other potential markets beingconsidered include Sri Lanka.

Dr Verghese Kurien, former chairman of the GCMMF, is recognised asthe man behind the success of Amul. On 10 Aug 2006 Parthi Bhatol,chairman of the Banaskantha Union, was elected chairman of GCMMF.


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Every day Amul collects 10,16,000 litres of milk from 2.6 million farmers(many illiterate), converts the milk into branded, packaged products, anddelivers goods worth Rs 6 crore (Rs 60 million) to over 500,000 retailoutlets across the country.

Its supply chain is easily one of the most complicated in the world. Howdo managers at Amul prevent the milk from souring?Walk in to any Amul or Gujarat Cooperative Milk Marketing Federation(GCMMF) office, and you may or may not see a photograph of MahatmaGandhi, but you will certainly see one particular photograph. It shows along line of Gujarati women waiting patiently for a union truck to comeand collect the milk they have brought in shining brass matkas.The picture is always prominently displayed. The message is clear:

never forget your primary customer. If you don't, success is certain. Theproof? A unique, Rs 2,200 crore (Rs 22 billion) enterprise.

ORGANISATION STRUCTURE

It all started in December 1946 with a group of farmers keen to freethemselves from intermediaries, gain access to markets and thereby

ensure maximum returns for their efforts.

Based in the village of Anand, the Kaira District Milk Cooperative Union(better known as Amul) expanded exponentially. It joined hands withother milk cooperatives, and the Gujarat network now covers 2.12


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million farmers, 10,411 village level milk collection centers and fourteendistrict level plants (unions) under the overall supervision of GCMMF.

There are similar federations in other states. Right from the beginning,

there was recognition that this initiative would directly benefit andtransform small farmers and contribute to the development of society.

Markets, then and even today, are primitive and poor in infrastructure.Amul and GCMMF acknowledged that development and growth couldnot be left to market forces and that proactive intervention was required.Two key requirements were identified.

The first, that sustained growth for the long term would depend on

matching supply and demand. It would need heavy investment in thesimultaneous development of suppliers and consumers.

Second, that effective management of the network and commercialviability would require professional managers and technocrats.

To implement their vision while retaining their focus on farmers, ahierarchical network of cooperatives was developed, which today formsthe robust supply chain behind GCMMF's endeavors. The vast and

complex supply chain stretches from small suppliers to large fragmentedmarkets.

Management of this network is made more complex by the fact thatGCMMF is directly responsible only for a small part of the chain, with anumber of third party players (distributors, retailers and logistics supportproviders) playing large roles.

Managing this supply chain efficiently is critical as GCMMF's competitiveposition is driven by low consumer prices supported by a low costsystem.


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DEVELOPING DEMAND

At the time Amul was formed, consumers had limited purchasing power,and modest consumption levels of milk and other dairy products. ThusAmul adopted a low-cost price strategy to make its products affordable

and attractive to consumers by guaranteeing them value for money.

INTRODUCING HIGHER VALUE PRODUCTS

Beginning with liquid milk, GCMMF enhanced the product mix throughthe progressive addition of higher value products while maintaining thedesired growth in existing products.

Despite competition in the high value dairy product segments from firmssuch as Hindustan Lever , Nestle and Britannia , GCMMF ensures that

the product mix and the sequence in which Amul introduces its productsis consistent with the core philosophy of providing milk at a basic,affordable price.

THE DISTRIBUTION NETWORK

Amul products are available in over 500,000 retail outlets across Indiathrough its network of over 3,500 distributors. There are 47 depots withdry and cold warehouses to buffer inventory of the entire range ofproducts.


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GCMMF transacts on anadvance demand draft basis

from its wholesale dealersinstead of the cheque systemadopted by other majorFMCG companies. Thispractice is consistent with

GCMMF's philosophy ofmaintaining cash transactions throughout the supply chain and it alsominimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care ofthe transit time from the branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI).All GCMMF branches engage in route scheduling and have dedicatedvehicle operations.

UMBRELLA BRAND

The network follows an umbrella branding strategy. Amul is the commonbrand for most product categories produced by various unions: liquidmilk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream and condensed milk.


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Amul's sub-brands include variants such as Amulspray, Amulspree,Amulya and Nutramul. The edible oil products are grouped aroundDhara and Lokdhara, mineral water is sold under the Jal Dhara brandwhile fruit drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoidedinter-union conflicts but also created an opportunity for the unionmembers to cooperate in developing products.

MANAGING THE SUPPLY CHAIN

Even though the cooperative was formed to bring together farmers, itwas recognised that professional managers and technocrats would berequired to manage the network effectively and make it commerciallyviable.

COORDINATION

Given the large number of organisations and entities in the supply chainand decentralised responsibility for various activities, effectivecoordination is critical for efficiency and cost control. GCMMF and theunions play a major role in this process and jointly achieve the desireddegree of control.

Buy-in from the unions is assured as the plans are approved byGCMMF's board. The board is drawn from the heads of all the unions,

and the boards of the unions comprise of farmers elected throughvillage societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordinationwith retailers and the dealers. The unions coordinate the supply sideactivities.


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These include monitoring milk collection contractors, the supply ofanimal feed and other supplies, provision of veterinary services, andeducational activities.

MANAGING THIRD PARTY SERVICE PROVIDERS

From the beginning, it was recognised that the unions' core activity layin milk processing and the production of dairy products. Accordingly,marketing efforts (including brand development) were assumed by

GCMMF. All other activities were entrusted to third parties. Theseinclude logistics of milk collection, distribution of dairy products, sale ofproducts through dealers and retail stores, provision of animal feed, andveterinary services.

It is worth noting that a number of these third parties are not in theorganized sector, and many are not professionally managed with littleregard for quality and service.

This is a particularly critical issue in the logistics and transport of aperishable commodity where there are already weaknesses in the basicinfrastructure.

ESTABLISHING BEST PRACTICES

A key source of competitive advantage has been the enterprise's abilityto continuously implement best practices across all elements of thenetwork: the federation, the unions, the village societies and thedistribution channel.


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In developing these practices, the federation and the unions haveadapted successful models from around the world. It could be theimplementation of small group activities or quality circles at thefederation. Or a TQM program at the unions. Or housekeeping and

good accounting practices at the village society level.

More important, the network has been able to regularly roll outimprovement programs across to a large number of members and theimplementation rate is consistently high.

For example, every Friday, without fail, between 10.00 a.m. and 11.00a.m., all employees of GCMMF meet at the closest office, be it adepartment or a branch or a depot to discuss their various qualityconcerns.

Each meeting has its pre-set format in terms of Purpose, Agenda andLimit (PAL) with a process check at the end to record how the meetingwas conducted. Similar processes are in place at the village societies,the unions and even at the wholesaler and C&F agent levels as well.

Examples of benefits from recent initiatives include reduction in

transportation time from the depots to the wholesale dealers,improvement in ROI of wholesale dealers, implementation of Zero StockOut through improved availability of products at depots and also theimplementation of Just-in-Time in finance to reduce the float.

Kaizens at the unions have helped improve the quality of milk in termsof acidity and sour milk. (Undertaken bymulti-disciplinedteams,Kaizensare highly focussedprojects,relianton astructuredapproachbasedon datagatheringandanalysis.) For example, Sabar Union's

records show a reduction from 2.0% to 0.5% in the amount of sourmilk/curd received at the union.

The most impressive aspect of this large-scale roll out is thatimprovement processes are turning the village societies into individualimprovement centers.


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TECHNOLOGY AND E- INITIATIVES

GCMMF's technology strategy is characterized by four distinctcomponents: new products, process technology, and complementaryassets to enhance milk production and e-commerce.

Few dairies of the world have the wide variety of products produced by

the GCMMF network. Village societies are encouraged throughsubsidies to install chilling units. Automation in processing andpackaging areas is common, as is HACCP certification. Amul activelypursues developments in embryo transfer and cattle breeding in order toimprove cattle quality and increases in milk yields.

GCMMF was one of the first FMCG (fast-moving consumer goods) firmsin India to employ Internet technologies to implement B2C commerce.

Today customers can order a variety of products through the Internetand be assured of timely delivery with cash payment upon receipt.

Another e-initiative underway is to provide farmers access to informationrelating to markets, technology and best practices in the dairy industrythrough net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System

(GIS) at both ends of the supply chain, i.e. milk collection as well as themarketing process.

Farmers now have better access to information on the output as well assupport services while providing a better planning tool to marketingpersonnel.


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ACHIEVEMENT:

Amul : Asias largest dairy co-operative was created way back in1946 tomake the milk producer self-reliant and conduct milk- business withpride. Amul has always been the trend setter in bringing and adaptingthe most modern technology to door steps to rural farmers.

Amul created history in following areas:

a) First self motivated and autonomous farmersorganization comprising of more than 5000000marginal milk producers of Kaira District.

b) Created Dairy co-operatives at village levelfunctioning with milk collectioncentres owned by them.

c) Computerized milk collection system with electronicscale and computerized

accounting system.

d) The first and only organization in world to get ISO9000 standard for its farmersco-operatives.

e) First to produce milk from powder from surplus milk.

Amul is the live example of how co-operation amongst the poor marginalfarmers can provide means for the socio-economic development of theunder privileged marginal farmers.


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Amul in abroad:

Amul is going places. Literally. After having established its presence inChina, Mauritius and Hong Kong, Gujarat Cooperative Milk MarketingFederation (GCMMF), Indias largest milk cooperative, is waiting toflood the Japanese market.

Then, GCMMF is also looking at Sri Lanka as one of its next exportdestinations. Amul products are already available on shelves across

several countries, including the US, China, Australia, West Asiancountries and Africa.

GCMMF recorded a turnover of Rs 5,254 crore last fiscal. Its productsinclude pouch milk, ultra heat treated (UHT) milk, ice-cream, butter,cheese and buttermilk.


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Amul Hits of 2009 2010

Swine Flu panademic creating fear and panic - Aug '09.

Controversy regarding Shah Rukh Khan being detained at the Newark airport - Aug '09.

Latest Bollywood block-buster Kaminey - Aug '09.


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CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) has been defined as the commitment of

business to contribute to sustainable economic development working with

employees, their families, the local community, and society at large to improvetheir quality of life, in ways that are both good for business and good for

development.

To meet with the CSR it is expected that a business in its entire procurement-

production-processing-marketing chain should focus on human developmentinvolving the producer, the worker, the supplier, the consumer, the civil society,

and the environment.

Indeed, a very tough task. Most businesses would certainly flounder in not

being able to achieve at least one or many of those expectations. But AMULhas shown the way.

CSR-sensitive Organisational Structure

AMUL is a three tier co-operative organisation. The first tier is the co-operativesociety at the village,of which; milk producers are voluntary members,

managing the co-operative through a democratically elected 9-member

managing committee, and doing business by purchasing milk from members

and selling it to the district level co-operative. There are more than 11,000 co-

operatives in villages of Gujarat.

The second tier is the district co-operative that processes milk into milkproducts, markets locally and sells surplus to the state co-operative for national

and international marketing. There are 12 district co-operatives each being


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managed by a 15-member board elected by the college comprising the

nominated representatives or chairmen of the village co-operatives.

Third tier is the state level co-operative - the Gujarat Co-operative Milk

Marketing Federation (GCMMF) responsible for national and internationalmarketing of milk and milk products produced and sold to it. The GCMMF is

managed by the board democratically elected by and from amongst thechairmen of the district co-operatives.

The entire three-tier structure with the GCMMF at its apex, is a unique

institution because it encompasses the entire chain from production of raw

material to reaching the consumer with the end product. Every function

involves human intervention: 23.60 lakh primary milk producers; 35,000 rural

workmen in more than 11,400 village societies; 12,000 workers in 15 dairy

plants; 750 marketing professionals; 10,500 salesmen in distribution networkand 600,000 salesmen in retail network. Accumulation of human capital is sine

qua non for the development and growth of any enterprise or economy. The

GCMMF is sensitive towards CSR. It believes that technology and capital arereplicable inputs but not the human capital. Since men are the basis for

achieving the CSR, the GCMMF lays emphasis on their development into

competent, courteous, credible, reliable, responsive communicators and

performers.

CSR-sensitive Business Philosophy

The first step towards discharging the CSR is the business philosophy of the

GCMMF. It is two-fold: one, to serve the interests of milk producers and

second, to provide quality products to consumers as value for money. Evolution

of an organisational system has ensured that the corporate social responsibilitytowards the primary milk producers, village and the ecological balance isfulfilled. The milk producers are paid for their milk in accordance with market

forces and realisation of value for their produce. Invariably the price paid to the

member-producers in Gujarat is higher by 15 per cent than the national average.


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CSR-orientation To Distributors & Retailers

The GCMMF has identified the distributors and retailers are its important link

in its vendor supply chain. Through surveys the GCMMF found that 90% of the

distributors do not get any opportunity of exposure to latest management

practices. The GCMMF realised that it was a corporate social responsibility to

strengthen the core business processes of its distributors so as to keep them inmainstream business and compete with those with formal training in

management. The GCMMF has developed and trained all its distributors

through Value-Mission-Strategy Workshops, competence building, AmulYatra, Amul Quality Circle meetings, computerisation, and electronic

commerce activities.

Competency Building Module of the GCMMF is meant to infuse professional

selling skills by making the distributors and their salesmen aware of latest sales

management tools and techniques; enhance their knowledge of products;

positioning and segmentation strategies for various products. Under Amul

Yatra the distributors and their salesmen are taken on a visit to Anand. During

this visit they are shown dairy plants, their upkeep, international standards of

hygiene and quality; the practices adopted for clean milk production, and above

all the cooperative philosophy. Through one to one talk with the farmers, thedistributors and salesmen realise AMUL is a large business of small farmers.

The visit leaves an everlasting impression on their minds that by selling AMUL

products, they are discharging a social responsibility towards a large number ofpoor farmers whose livelihood depends upon their skill and integrity. They feel

proud that they are participants in development of rural society and thus in

nation building.

Earnings Of GCMMF

Nurturing its primary members - the milk producers - is the first mission of the

GCMMF. Discharge of this responsibility is reflected in the manner in which

the GCMMF conducts its business and shares its earnings. The milk from the


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village co-operatives is purchased at an interim price. So as to maximize the

earnings of the milk producers the GCMMF changes the product profile duringthe fiscal and directs its sales and marketing activities towards those products

that would bring in maximum returns. True! Every business organization

follows the same principle. But the GCMMF follows it with the central interestof the producers. During the fiscal, as the GCMMF finds that from its earnings

it is possible to pay more to the producers for milk, the final price is declared

higher than the interim price being paid. Before the GCMMF closes itsfinancial accounts the co-operatives are paid price difference, the amount

between the interim price and the final price. Thus profit of the GCMMF is

very low. The net profit (PADT) of the GCMMF during 2003-04 was Rs 7.31

crore against a turnover of Rs 2,947 crore, a meagre 0.25%. Further out of the

net profit of Rs 7.31 crore, Rs 4 crore was given as share dividend to the co-operatives. To fulfill its corporate social responsibility towards its milk

producers and co-operatives the GCMMF works on razor thin profits and

retention of funds.

CSR-oriented To Staff

The GCMMF hires and trains people to take advantage over its competitors. It

has developed in-house modules for training and competence building toimprove and up grade of their knowledge; communication skills to understand

the customer, be responsive to customer requirements, and communicate

clearly for trouble shooting of problems. They are expected to be courteous,friendly, respectful, and considerate to the customer. To improve the credibility

and trustworthiness of the managers it is important they perform consistently

and accurately every time and at all times. The structure of salary and

perquisites is altogether different. The first and foremost the staff must get

satisfaction from the job they. They are recognised for their contribution.


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DELHI MMO ( MILK MARKETING OPERATION)

Delhi mmo is responsible for sales of milk and dahi in Delhi and Ncrregion. Delhi mmo purchase milk from three member union and sendthem to market for the consumption purpose. It control the working offive plants. The five plants are dudhmanesar in Gurgoan, kwality inFaridabad, Sabar , Nagar & Goga in UP. All the demand of milk anddahi goes from the Amul office in delhi. It maintains the record of all the ADAs (area delivery agent) and transporter. It collects payment from ADAS and distributes to plant which finally reaches to the originalfarmer by the way of member union.

Delhi mmo uses oracle based information system EIAS (enterprisewideintegrated application system) which is maintain and control by Headoffice in Anand. It helps in integration of head office with all the branchoffices and plants in India. This system help in there day to dayactivities once information is put in system it will generate bill and

invoice automatically.


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( EAIS software installed at every amul office)


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ACCOUNTS PROCESS OF DELHI MMO

1)Crate Accounting2)Cheque Preparation3)Freight Cost4)Bank Guarantee5)Collection of Order


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( Chart showing party wise daily record of crates )


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(Chart showing party wise total of crates received, issue & short

at the end the of month )


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( Spreadsheet showing distance of plant from ADAS )


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( Sheet used for calculating freight cost )


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COLLECTION OF ORDER

This process of collecting order start right after the cheque preparationof previous day sales. Once the final amount is calculated it is enteredinto the system for the further use. This process start at 3:00 P.M. bythat time every field representative have to take the order from thererespective ADA. A person setting in the office taking demand has to callthese field representative for entering the demand of his zone.There is a particular format in which order is taken and sends torespected plant. Order of each ADA will depend on the bank guaranteeprocess which is explained earlier. This order generation format in theEAIS system help us in telling the amount left for purchase by each

ADAS and also helps in proper utilization of vehicle capacity. It keepsthe record of each vehicle capacity so that no vehicle gets overloadedand there can be effective utilization of vehicle.When order from all the zones is collected then finally it is send torespected plant for the supply. It is send by E-mail on plant email id.


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Plants cannot increase the supply of any ADA, but it can reduce ifdemand increase supply.

( Format of order generation)


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FINANCIAL

STATEMENT


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Summary of balance sheet of GCMMF (2008-09)

Liabilities As At As At Assets As At As At31/3/09 31/3/08 31/3/09 31/3/08

1) NET WORTH FIXED ASSETSPaid up capital F.AReserve& surplus

------------------------------- ------------------------------A E

------------------------------- ------------------------------

2) DEFERRED NON CURRENT

LIAB ASSETS

Loan against Investment otherFixed assets than govt sec.

Deferred tax liab.-------------------------------- ------------------------------

B F-------------------------------- ------------------------------

LONG TERM LONG TERMOUTLAY ( A+B) -------------------------------- INVST. ------------------------------

3) CURRENT CURRENTLIAB. ASSETS

CL InventoriesProvision Debtor

CashLoan &

AdvancesInvst in govt sec

--------------------------------- ------------------------------

D G -------------------------------- ------------------------------TOTAL LIAB. TOTAL(C+D) 60,062.16 60,570.78 ASSETS 60,062.16 60,570.78

-------------------------------- (G+H) -------------------------------------------------------------- ------------------------------


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Summary of balance sheet of GCMMF (2007-08)

Liabilities As At As At Assets As At As At31/3/08 31/3/07 31/3/08 31/3/07

1) NET WORTH FIXED ASSETSPaid up capital F.AReserve& surplus

------------------------------- ------------------------------A E

------------------------------- ------------------------------

2) DEFERRED NON CURRENT

LIAB ASSETS

Loan against Investment otherFixed assets than govt sec

Deferred tax liab.-------------------------------- ------------------------------

B F -------------------------------- ------------------------------LONG TERM LONG TERMOUTLAY ( A+B) -------------------------------- INVST. ------------------------------

3) CURRENT CURRENTLIAB. ASSETS

CL InventoriesProvision Debtor

Loan &AdvancesInvst in govt sec

cash--------------------------------- ------------------------------

D G

-------------------------------- ------------------------------TOTAL LIAB. TOTAL(C+D) ASSETS

-------------------------------- (G+H) -------------------------------------------------------------- ------------------------------


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Summary of balance sheet of GCMMF(2006-07)

Liabilities As At As At Assets As AT As At31/3/07 31/3/06 31/3/07 31/3/06

1) NET WORTH FIXED ASSETSPaid up capital 4,001 4,000 F.A 14,441.60 14,939.91Reserve& surplus 6,052.29 5,161.98

------------------------------- ------------------------------ A 10,053.29 9,161.98 E 14,441.60 14,939.91

------------------------------- ------------------------------

2) DEFERRED NON CURRENTLIAB ASSETS

Loan against Investment otherFixed assets 1,117.45 562 than govt sec. 73.45 72.82

Deferred tax liab. 367.67 422.67-------------------------------- ------------------------------

B 1,485.12 984.67 F 73.45 72.82-------------------------------- ------------------------------

LONG TERM 11,538.41 10,146.65 LONG TERM 14,515.05 15,012.73OUTLAY ( A+B) -------------------------------- INVST. ------------------------------

3) CURRENT CURRENT

LIAB. ASSETS

CL 34,998.24 32,539.01 Inventories 23,100.13 17,779.16

Provision 1,859.90 1,506.56 Debtor 3,067.37 3,076.29Cash 7,067.94 7,337.96Loan &

Advances 645.97 985.99Invst in govt sec 0.09 0.09

-------------------------------- ------------------------------

D 36,858.14 34,045.57 G 33,881.5 29,179.49-------------------------------- ------------------------------

TOTAL LIAB. TOTAL(C+D) 48,396.55 44,192.22 ASSETS 48,396.55 44,192.22

-------------------------------- (G+H) -------------------------------------------------------------- ------------------------------


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Summary of balance sheet of GCMMF(2005-06)

Liabilities As At As At Assets As At AS At31/3/06 31/3/05 31/3/06 31/3/05

1


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Comparative Income statement

For the year ended 31st march, 2008 and 2009

Items 31/03/08 31/03/09 Increase PercentageRs. Rs. Decrease Increase

Rs. Decrease

Net salesLess: costOf good sold

-------------------------------------------------------------------------------------GROSSPROFIT

Less: operatingExpenses

-------------------------------------------------------------------------------------OperatingProfit

Add : otherIncome

-------------------------------------------------------------------------------------Earning before

Less: tax------------------------------------------------------------------------------------

Earning aftertax--------------------------------------------------------------------------------------------------------------


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Rs. Decrease

Net salesLess: cost

Of good sold ----------------------------------------------------------------------------------------GROSSPROFIT


----------------------------------------------------------------------------------------OperatingProfit

Add : other

Income----------------------------------------------------------------------------------------

Earning beforeTax

Less: tax---------------------------------------------------------------------------------------

Earning aftertax

--------------------------------------------------------------------------------------------------------------


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Rs. Decrease

Net salesLess: costOf good sold

----------------------------------------------------------------------------------------GROSS 26,906.4 30,017.21 3,110.81 11.56 %PROFIT


----------------------------------------------------------------------------------------OperatingProfit 490.6 ( 97.22) (587.82) 119 %

Add : otherIncome

----------------------------------------------------------------------------------------Earning beforeTax 1,785.81 2,157.29 371.48 20.80 %

Less: tax----------------------------------------------------------------------------------------

Earning aftertax 1,100.81 1,457.29 356.48 32.38 %-------------------------------------------------------------------------------------------------------------


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CALCULATION OF RATIOS

1) CURRENT RATIO = CURRENT ASSETS

-------------------------------CURRENT LIABILITY

FOR THE YEAR (2008-2009)

=


FOR THE YEAR ( 2006-2007)


= 29,179.49---------------34,045.57

= 0.86 : 1


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2) QUICK RATIO = LIQUID ASSETS------------------------------CURRENT LIABILITY


=

= 0.25 : 1


=

= 0.28 :1


=

= 0.29 : 1


=

= 0.33 : 1


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3) STOCK TURNOVER RATIO = COST OF GOODS SOLD-----------------------------------

AVERAGE STOCK


=----------------


= ----

=



= 18.10 TIMES


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4) STOCK CONVERSION PERIOD = 365 DAYS------------------------------STOCK TURNOVER RATIO






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5) GROSS PROFIT RATIO = GROSS PROFIT----------------------- X 100

NET SALES




= 7.09 %


=

= 7.20 %


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6) NET PROFIT RATIO = NET PROFIT-------------------- X 100NET SALES


=

=



= 0.34 %


= 0.29 %


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7) OPERATING EXPENSE RATIO

= COST OF GOOD SOLD + OPERATING EXPENSE-------------------------------------------------------------------- X 100

NET SALESFOR THE YEAR ( 2008-2009)

=




= 99.87 %


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8) NET OPERATING PROFIT RATIO = 100 OPERATING EXPENSE RATIO

Ratios 2005-06 2006-07 2007-08 2008-09


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Comparison of Ratios

Current Ratio

Quick Ratio

Stock TurnoverRatio

StockConversionPeriod

Gross ProfitRatio

Net Profit Ratio

OperatingExpenses Ratio

Net OperatingProfit Ratio


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CONCLUSION


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THANK YOU

Documents

AMUL_SUMIT GUPTA