SUMMER TRAINING PROJECT REPORT

ON

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 GUPTA
ROLL - 108246
PGDM (2008-2010)

MANAGEMENT EDUCATION & RESEARCH INSTITUTE

 PREFACE

The PGDBM programme is well structured and integrated course of

business studies. The main objective of practical training at PGDBM
level is to develop skill in student by supplement to the theoretical study
of business management in general. Industrial training helps to gain real
life knowledge about the industrial environment and business practices.
The PGDBM programme provides student with a fundamental
knowledge of business and organizational functions and activities, as
well as an exposure to strategic thinking of management.

In every professional course, training is an important factor. Professors

give us theoretical knowledge of various subjects in the college but we
are practically exposed of such subjects when we get the training in the
organization. It is only the training through which I come to know that
what an industry is and how it works. I can learn about various
departmental 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 has
to undergo the training for 2 months in a company and then prepare a
project report on the same after the completion of training.

During this whole training I got a lot of experience and came to

know about the management practices in real that how it differs from
those of theoretical knowledge and the practically in the real life.

In today’s globalize world, where cutthroat competition is prevailing in

the market, theoretical knowledge is not sufficient. Beside this one need
to have practical knowledge, which would help an individual in his/her
carrier activities and it is true that “Experience is best teacher”.

2
 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 project
done by me, during the period May-June 2009 as part of
my PGDM program at Management Education &
Research Institute, New Delhi.

I also declare that this report has not been submitted in

full or part thereof, to any university or institutions for the
award of any degree or diploma.

Place: New Delhi

Date : 1/09/2009

3
 ACKNOWLEDGEMENT

With immense pleasure, I would like to present this project report for
Gujrat Co-operative Milk Marketing federation Ltd. It has been an
enriching experience for me to undergo my summer training at AMUL,
which would not have possible without the goodwill and support of the
people around. As a student of MANAGEMENT EDUCATION &
RESEARCH INSTITUTE I would like to express my sincere thanks too
all those who helped me during my practical training programme.

I would like to give my heartily thanks to all the employees working at

GCMMF DELHI MMO who provide me the knowledge of accounting
process by spending there precious time with me.

However, I accept the sole responsibility for any possible error of

omission and would be extremely grateful to the readers of this project
report if they bring such mistakes to my notice.

4
 CONTENT

S.NO. TITLE PAGE

NO.
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 18
(2008-09)

6) SUMMARY OF BALANCE SHEET OF GCMMF 19

(2005-06)

7) COMPARATIVE INCOME STATEMENT 20

8) CALCULATION OF RATIO 22
9) CONCLUSION 30

5
INDUSTRY PROFILE

The dairy industry is recognized as one of the largest and the most
important of food industries. The dairy industry exists for one purpose—
To provide, at a reasonable cost, milk and milk product that satisfy the
consumer needs and fulfills his nutritional requirements.

The word “dairying” was derived from the Middle English word
“deirie” meaning day or maid servant worked. Dairying now connotes a
wide range of activities starting with the production of milk in the farm to
the 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 and
technology refers to the application of scientific knowledge for practical
purposes. Dairy technology has been defined as that branch of dairy
science, which deals with the processing of milk and the manufacture of
milk 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 of
milk and value-added milk products in the world.

The dairy sector has developed through co-operatives in many parts of

the State. During 1997-98, the State had 60 milk processing plants with
an aggregate processing capacity of 5.8 million litres per day. In addition
to these processing plants, 123 Government and 33 co-operatives milk
chilling centers operate in the State.

Also India today is the lowest cost producer of per litre of milk in
theworld, at 27 cents, compared with the U.S' 63 cents, and Japan’s
$2.8 dollars.

6
Also to take advantage of this lowest cost of milk production and
increasing production in the country multinational companies are
planning to expand their activities here. Some of these milk producers
have already obtained quality standard certificates from the authorities.
This will help them in marketing their products in foreign countries in
processed form.

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

The research and development need to the dairy industry to develop
and survives for long time with better status. The various institute and
milk dairy companies R&D results provide base for today’s industry
growth and
Development. The research and development of products of dairy, like
yogurt and cheese market research and company reports provides
insights into product and market trends, analysis opportunities, sales
and marketing strategies will help local milk unions to develop and
spread world wide through obtaining this knowledge. Specific on market
share, segmentation, size and growth in the US and global markets are
also helps industry to expand its market worldwide even small union
also.

D evelopment of F ood P rocessing I ndustry :

The food processing industry sector in India is one of the largest in

terms of production, consumption, export and growth prospects. The
government of accorded it is a high priority, with a number of fiscal
relieves and incentives, to encourage commercialization and value
addition to agriculture produce, for minimizing harvest wastage,
generating employment and export growth.

7
Food processing industry is providing backbone support to the milk
industry. The development food products by using milk can give good
market 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, Infant
food, condensed milk etc.. some milk products like Casein and Lactose
are also being
manufactured lately. Therefore, there is good scope for manufacturing
these products locally. Liberalization of the economy has led to a flood
of new entrants, including MNCs due to good prospects and abundant
supply.

I nvestme nt P otential in M ilk P roducts :

At the present rate of growth, India is expected to overtake the US in

milk 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 good
scope in the country.

Exports of milk products have been decentralized and export in 2005-

2010 is estimated at 71.875 cr.

8
 COMPANY PROFILE

Amul (Anand Milk Union Limited), formed in 1946, is a dairy

cooperative movement in India. It is a brand name managed by an apex
cooperative organization, Gujarat Co-operative Milk Marketing
Federation Ltd. (GCMMF), which today is jointly owned by some 2.6
million milk producers in Gujarat, India. It is based in Anand town of
Gujarat and has been a sterling example of a co-operative
organization's success in the long term. The Amul Pattern has
established itself as a uniquely appropriate model for rural development.
Amul has spurred the White Revolution of India, which has made India
the largest producer of milk and milk products in the world. It is also the
world's biggest vegetarian cheese brand.

Amul was formally registered on December 14, 1946. The brand name
Amul, sourced from the Sanskrit word Amoolya, means priceless. It was
suggested by a quality control expert in Anand and it was chosen
because it was a perfect acronym for Anand Milk Union Limited.

The Amul revolution was started as awareness among the farmers. It

grew and matured into a protest movement that was channeled towards
economic prosperity.

GCMMF:
9
In 1954, Kaira District Co-operative Milk Producers’ Union built a plant
to convert surplus milk produced in the cold seasons into milk powder
and butter. In 1958, a plant to manufacture cheese and 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 Gujarat Cooperative Milk Marketing
Federation (GCMMF). It was registered as a co-operative society on 9
July 1973.

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's

largest food products marketing organization. It is a state level apex
body of milk cooperatives in Gujarat which aims to provide remunerative
returns 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- 8.4 million litres
09):
Milk Drying Capacity: 626 Mts. per day
Cattlefeed manufacturing Capacity: 3500 Mts per day

10
 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 493
2000-01 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 Butter
Amul Lite Low Fat Breadspread
Amul Cooking Butter

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Cheese Range:

Amul Pasteurized Processed Cheddar Cheese

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

Mithaee Range (Ethnic sweets):

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

Amul Amrakhand
Amul Mithaee Gulabjamuns
Amul Mithaee Gulabjamun Mix
Amul Mithaee Kulfi Mix
Avsar Ladoos

UHT Milk Range:

Amul Shakti 3% fat Milk
Amul Taaza 1.5% fat Milk
Amul Gold 4.5% fat Milk
Amul Lite Slim-n-Trim Milk 0% fat milk
Amul Shakti Toned Milk
Amul Fresh Cream
Amul Snowcap Softy Mix

12
Pure Ghee:

Amul Pure Ghee

Sagar Pure Ghee
Amul 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 Powder

Amulya Dairy Whitener
Sagar Skimmed Milk Powder
Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

Amul Taaza Toned Milk 3% fat

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

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Curd Products:

Yogi Sweetened Flavoured Dahi (Dessert)

Amul Masti Dahi (fresh curd)
Amul Masti Spiced Butter Milk
Amul 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, Fresh
Strawberry, 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 Cafe
Amul Kool Koko
Amul 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 Milk
Brand with an annual turnover of US $1050 million (2006-07). Currently
Amul has 2.6 million producer members with milk collection average of
10.16 million litres per day. Besides India, Amul has entered overseas
markets such as Mauritius, UAE, USA, Bangladesh, Australia, China,
Singapore, Hong Kong and a few South African countries. Its bid to
enter Japanese market in 1994 had not succeeded, but now it has fresh
plans of flooding the Japanese markets .Other potential markets being
considered include Sri Lanka.

Dr Verghese Kurien, former chairman of the GCMMF, is recognised as

the man behind the success of Amul. On 10 Aug 2006 Parthi Bhatol,
chairman of the Banaskantha Union, was elected chairman of GCMMF.

15
Every day Amul collects 10,16,000 litres of milk from 2.6 million farmers
(many illiterate), converts the milk into branded, packaged products, and
delivers goods worth Rs 6 crore (Rs 60 million) to over 500,000 retail
outlets across the country.
Its supply chain is easily one of the most complicated in the world. How
do 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 Mahatma
Gandhi, but you will certainly see one particular photograph. It shows a
long line of Gujarati women waiting patiently for a union truck to come
and 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. The
proof? 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 free

themselves 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 with
other milk cooperatives, and the Gujarat network now covers 2.12

16
million farmers, 10,411 village level milk collection centers and fourteen
district 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 and
transform 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 could
not 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 the
simultaneous development of suppliers and consumers.

Second, that effective management of the network and commercial

viability would require professional managers and technocrats.

To implement their vision while retaining their focus on farmers, a

hierarchical network of cooperatives was developed, which today forms
the robust supply chain behind GCMMF's endeavors. The vast and
complex supply chain stretches from small suppliers to large fragmented
markets.

Management of this network is made more complex by the fact that

GCMMF is directly responsible only for a small part of the chain, with a
number of third party players (distributors, retailers and logistics support
providers) playing large roles.

Managing this supply chain efficiently is critical as GCMMF's competitive

position is driven by low consumer prices supported by a low cost
system.

17
DEVELOPING DEMAND

At the time Amul was formed, consumers had limited purchasing power,
and modest consumption levels of milk and other dairy products. Thus
Amul 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 through
the progressive addition of higher value products while maintaining the
desired growth in existing products.

Despite competition in the high value dairy product segments from firms
such as Hindustan Lever , Nestle and Britannia , GCMMF ensures that
the product mix and the sequence in which Amul introduces its products
is 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 India
through its network of over 3,500 distributors. There are 47 depots with
dry and cold warehouses to buffer inventory of the entire range of
products.

18
 GCMMF transacts on an
advance demand draft basis
from its wholesale dealers
instead of the cheque system
adopted by other major
FMCG companies. This
practice is consistent with

GCMMF's philosophy of
maintaining cash transactions
throughout the supply chain and it also minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of

the 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 dedicated
vehicle operations.

UMBRELLA BRAND

The network follows an umbrella branding strategy. Amul is the common

brand for most product categories produced by various unions: liquid
milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-
cream and condensed milk.

19
Amul's sub-brands include variants such as Amulspray, Amulspree,
Amulya and Nutramul. The edible oil products are grouped around
Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand
while fruit drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided

inter-union conflicts but also created an opportunity for the union
members to cooperate in developing products.

MANAGING THE SUPPLY CHAIN

Even though the cooperative was formed to bring together farmers, it
was recognised that professional managers and technocrats would be
required to manage the network effectively and make it commercially
viable.

COORDINATION
Given the large number of organisations and entities in the supply chain
and decentralised responsibility for various activities, effective
coordination is critical for efficiency and cost control. GCMMF and the
unions play a major role in this process and jointly achieve the desired
degree of control.

Buy-in from the unions is assured as the plans are approved by

GCMMF's board. The board is drawn from the heads of all the unions,
and the boards of the unions comprise of farmers elected through
village societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordination

with retailers and the dealers. The unions coordinate the supply side
activities.

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

MANAGING THIRD PARTY SERVICE PROVIDERS

From the beginning, it was recognised that the unions' core activity lay
in 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. These
include logistics of milk collection, distribution of dairy products, sale of
products through dealers and retail stores, provision of animal feed, and
veterinary services.

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

This is a particularly critical issue in the logistics and transport of a

perishable commodity where there are already weaknesses in the basic
infrastructure.

ESTABLISHING BEST PRACTICES

A key source of competitive advantage has been the enterprise's ability

to continuously implement best practices across all elements of the
network: the federation, the unions, the village societies and the
distribution channel.

21
In developing these practices, the federation and the unions have
adapted successful models from around the world. It could be the
implementation of small group activities or quality circles at the
federation. 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 out
improvement programs across to a large number of members and the
implementation rate is consistently high.

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

Each meeting has its pre-set format in terms of Purpose, Agenda and
Limit (PAL) with a process check at the end to record how the meeting
was 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 Stock
Out through improved availability of products at depots and also the
implementation of Just-in-Time in finance to reduce the float.

Kaizens at the unions have helped improve the quality of milk in terms
of acidity and sour milk. (Undertaken by multi-disciplined teams,
Kaizens are highly focussed projects, reliant on a structured approach
based on data gathering and analysis.) For example, Sabar Union's
records show a reduction from 2.0% to 0.5% in the amount of sour
milk/curd received at the union.

The most impressive aspect of this large-scale roll out is that

improvement processes are turning the village societies into individual
improvement centers.

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TECHNOLOGY AND E- INITIATIVES

GCMMF's technology strategy is characterized by four distinct

components: new products, process technology, and complementary
assets 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 through
subsidies to install chilling units. Automation in processing and
packaging areas is common, as is HACCP certification. Amul actively
pursues developments in embryo transfer and cattle breeding in order to
improve cattle quality and increases in milk yields.

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

Today customers can order a variety of products through the Internet

and be assured of timely delivery with cash payment upon receipt.

Another e-initiative underway is to provide farmers access to information

relating to markets, technology and best practices in the dairy industry
through 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 the
marketing process.

Farmers now have better access to information on the output as well as

support services while providing a better planning tool to marketing
personnel.

23
ACHIEVEMENT:

Amul : Asia’s largest dairy co-operative was created way back in1946 to
make the milk producer self-reliant and conduct milk- business with
pride. Amul has always been the trend setter in bringing and adapting
the most modern technology to door steps to rural farmers.

Amul created history in following areas:

a) First self motivated and autonomous farmers‟

organization comprising of more than 5000000
marginal milk producers of Kaira District.

b) Created Dairy co-operatives at village level

functioning with milk collection
centres owned by them.

c) Computerized milk collection system with electronic

scale and computerized
accounting system.

d) The first and only organization in world to get ISO

9000 standard for its farmers
co-operatives.

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

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

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Amul in abroad:
Amul is going places. Literally. After having established its presence in
China, Mauritius and Hong Kong, Gujarat Cooperative Milk Marketing
Federation (GCMMF), India‟s largest milk cooperative, is waiting to
flood the Japanese market.

Then, GCMMF is also looking at Sri Lanka as one of its next export
destinations. Amul products are already available on shelves across
several countries, including the US, China, Australia, West Asian
countries and Africa.

GCMMF recorded a turnover of Rs 5,254 crore last fiscal. Its products

include pouch milk, ultra heat treated (UHT) milk, ice-cream, butter,
cheese and buttermilk.

25
 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.

26
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 improve
their 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 development
involving 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 AMUL
has shown the way.

CSR-sensitive Organisational Structure

AMUL is a three tier co-operative organisation. The first tier is the co-operative
society 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 milk
products, markets locally and sells surplus to the state co-operative for national
and international marketing. There are 12 district co-operatives each being

27
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 international
marketing of milk and milk products produced and sold to it. The GCMMF is
managed by the board democratically elected by and from amongst the
chairmen 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 network
and 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 are
replicable 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 responsibility
towards the primary milk producers, village and the ecological balance is
fulfilled. 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.

28
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 in
mainstream 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, Amul
Yatra, 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, the
distributors 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 of
poor 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

29
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 during
the 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 interest
of 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 its
financial 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 to
improve 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.

30
DELHI MMO ( MILK MARKETING OPERATION)

Delhi mmo is responsible for sales of milk and dahi in Delhi and Ncr
region. Delhi mmo purchase milk from three member union and send
them to market for the consumption purpose. It control the working of
five plants. The five plants are dudhmanesar in Gurgoan, kwality in
Faridabad, Sabar , Nagar & Goga in UP. All the demand of milk and
dahi goes from the Amul office in delhi. It maintains the record of all the
ADA’s (area delivery agent) and transporter. It collects payment from
ADA’S and distributes to plant which finally reaches to the original
farmer by the way of member union.

Delhi mmo uses oracle based information system EIAS (enterprisewide

integrated application system) which is maintain and control by Head
office in Anand. It helps in integration of head office with all the branch
offices and plants in India. This system help in there day to day
activities once information is put in system it will generate bill and
invoice automatically.

31
( EAIS software installed at every amul office)

32
ACCOUNTS PROCESS OF DELHI MMO

1)Crate Accounting
2)Cheque Preparation
3)Freight Cost
4)Bank Guarantee
5)Collection of Order

33
( Chart showing party wise daily record of crates )

34
(Chart showing party wise total of crates received, issue & short
at the end the of month )

35
( Spreadsheet showing distance of plant from ADA’S )

36
( Sheet used for calculating freight cost )

37
COLLECTION OF ORDER

This process of collecting order start right after the cheque preparation
of previous day sales. Once the final amount is calculated it is entered
into the system for the further use. This process start at 3:00 P.M. by
that time every field representative have to take the order from there
respective ADA. A person setting in the office taking demand has to call
these field representative for entering the demand of his zone.
There is a particular format in which order is taken and sends to
respected plant. Order of each ADA will depend on the bank guarantee
process which is explained earlier. This order generation format in the
EAIS system help us in telling the amount left for purchase by each
ADA’S and also helps in proper utilization of vehicle capacity. It keeps
the record of each vehicle capacity so that no vehicle gets overloaded
and there can be effective utilization of vehicle.
When order from all the zones is collected then finally it is send to
respected plant for the supply. It is send by E-mail on plant email id.
Plants cannot increase the supply of any ADA, but it can reduce if
demand increase supply.

38
( Format of order generation)

39
 FINANCIAL
STATEMENT

Summary of balance sheet of GCMMF (2008-09)

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

40
1) NET WORTH FIXED ASSETS
Paid up capital F.A
Reserve
& surplus
------------------------------- ------------------------------
A E
------------------------------- ------------------------------

2) DEFERRED NON CURRENT

LIAB ASSETS

Loan against Investment other

Fixed assets than govt sec.
Deferred tax liab.
-------------------------------- ------------------------------
B F
-------------------------------- ------------------------------
LONG TERM LONG TERM
OUTLAY ( A+B) -------------------------------- INVST. ------------------------------

3) CURRENT CURRENT
LIAB. ASSETS

CL Inventories
Provision Debtor
Cash
Loan &
Advances
Invst 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) ------------------------------
-------------------------------- ------------------------------

Summary of balance sheet of GCMMF (2007-08)

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

41
1) NET WORTH FIXED ASSETS
Paid up capital F.A
Reserve
& surplus
------------------------------- ------------------------------
A E
------------------------------- ------------------------------

2) DEFERRED NON CURRENT

LIAB ASSETS

Loan against Investment other

Fixed assets than govt sec

Deferred tax liab.

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

3) CURRENT CURRENT
LIAB. ASSETS

CL Inventories
Provision Debtor
Loan &Advances
Invst in govt sec
cash
--------------------------------- ------------------------------
D G
-------------------------------- ------------------------------
TOTAL LIAB. TOTAL
(C+D) ASSETS
-------------------------------- (G+H) ------------------------------
-------------------------------- ------------------------------

Summary of balance sheet of GCMMF(2006-07)

Liabilities As At As At Assets As AT As At
31/3/07 31/3/06 31/3/07 31/3/06
1) NET WORTH FIXED ASSETS
Paid up capital 4,001 4,000 F.A 14,441.60 14,939.91
Reserve

42
& surplus 6,052.29 5,161.98
------------------------------- ------------------------------
A 10,053.29 9,161.98 E 14,441.60 14,939.91
------------------------------- ------------------------------

2) DEFERRED NON CURRENT

LIAB ASSETS

Loan against Investment other

Fixed 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 15,012.73
OUTLAY ( 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 3,076.29

Cash 7,067.94 7,337.96
Loan &
Advances 645.97 985.99
Invst in govt sec 0.09 0.09

--------------------------------
D 36,858.14 34,045.57
--------------------------------
TOTAL LIAB.
(C+D) 48,396.55 44,192.22
--------------------------------
--------------------------------
------------------------------
G 33,881.5 29,179.49
------------------------------
TOTAL
ASSETS 48,396.55 44,192.22
(G+H) ------------------------------
------------------------------

Summary of balance sheet of GCMMF(2005-06)

Liabilities As At As At Assets As At AS At
31/3/06 31/3/05 31/3/06 31/3/05
1

43
 Comparative Income statement

For the year ended 31st march, 2008 and 2009

44
Items 31/03/08 31/03/09 Increase Percentage
Rs. Rs. Decrease Increase
Rs. Decrease

Net sales
Less: cost
Of good sold
-------------------------------------------------------------------------------------
GROSS
PROFIT
Less: operating
Expenses
-------------------------------------------------------------------------------------
Operating
Profit
Add : other
Income
-------------------------------------------------------------------------------------
Earning before

Less: tax
------------------------------------------------------------------------------------
Earning after
tax
--------------------------------------------------------------------------------------------------------------

Comparative Income statement

For the year ended 31st march, 2007 and 2008

Items 31/03/07 31/03/08 Increase Percentage

45
 Rs. Rs. Decrease Increase
Rs. Decrease

Net sales
Less: cost
Of good sold
----------------------------------------------------------------------------------------
GROSS
PROFIT
Less: operating
Expenses
----------------------------------------------------------------------------------------
Operating
Profit
Add : other
Income
----------------------------------------------------------------------------------------
Earning before
Tax

Less: tax
---------------------------------------------------------------------------------------
Earning after
tax
--------------------------------------------------------------------------------------------------------------

Comparative Income statement

For the year ended 31st march, 2006 and 2007

46
Items 31/03/06 31/03/07 Increase Percentage
Rs. Rs. Decrease Increase
Rs. Decrease

Net sales
Less: cost
Of good sold
----------------------------------------------------------------------------------------
GROSS 26,906.4 30,017.21 3,110.81 11.56 %
PROFIT
Less: operating
Expenses
----------------------------------------------------------------------------------------
Operating
Profit 490.6 ( 97.22) (587.82) 119 %
Add : other
Income
----------------------------------------------------------------------------------------
Earning before
Tax 1,785.81 2,157.29 371.48 20.80 %

Less: tax
----------------------------------------------------------------------------------------
Earning after
tax 1,100.81 1,457.29 356.48 32.38 %
-------------------------------------------------------------------------------------------------------------

CALCULATION OF RATIOS

1) CURRENT RATIO = CURRENT ASSETS

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

47
FOR THE YEAR (2008-2009)

FOR THE YEAR (2007-2008)

FOR THE YEAR ( 2006-2007)

FOR THE YEAR ( 2005-2006)

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

= 0.86 : 1
2) QUICK RATIO = LIQUID ASSETS
------------------------------
CURRENT LIABILITY

FOR THE YEAR ( 2008-2009)

48
 = 0.25 : 1

FOR THE YEAR ( 2007-2008)

= 0.28 :1

FOR THE YEAR ( 2006-2007)

= 0.29 : 1

FOR THE YEAR ( 2005-2006)

= 0.33 : 1

3) STOCK TURNOVER RATIO = COST OF GOODS SOLD

-----------------------------------
AVERAGE STOCK

FOR THE YEAR ( 2008-2009)

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

49
FOR THE YEAR ( 2007-2008)

= ----

FOR THE YEAR ( 2006-2007)

FOR THE YEAR ( 2005-2006)

= 18.10 TIMES

4) STOCK CONVERSION PERIOD = 365 DAYS

------------------------------
STOCK TURNOVER RATIO

FOR THE YEAR (2008-2009)

50
FOR THE YEAR (2007-2008)

FOR THE YEAR ( 2006-2007)

FOR THE YEAR ( 2005-2006)

5) GROSS PROFIT RATIO = GROSS PROFIT

----------------------- X 100
NET SALES

FOR THE YEAR ( 2008-2009)

51
FOR THE YEAR ( 2007-2008)

FOR THE YEAR ( 2006-2007)

= 7.09 %

FOR THE YEAR ( 2005-2006)

= 7.20 %

6) NET PROFIT RATIO = NET PROFIT

-------------------- X 100
NET SALES

FOR THE YEAR ( 2008-2009)

52
 FOR THE YEAR ( 2007-2008)

FOR THE YEAR ( 2006-2007)

= 0.34 %

FOR THE YEAR ( 2005-2006)

= 0.29 %

7) OPERATING EXPENSE RATIO

= COST OF GOOD SOLD + OPERATING EXPENSE

-------------------------------------------------------------------- X 100
NET SALES
FOR THE YEAR ( 2008-2009)

FOR THE YEAR ( 2007-2008)

53
FOR THE YEAR ( 2006-2007)

FOR THE YEAR ( 2005-2006)

= 99.87 %

8) NET OPERATING PROFIT RATIO = 100 – OPERATING EXPENSE RATIO

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

54
Current Ratio

Quick Ratio

Stock Turnover
Ratio
Stock
Conversion
Period
Gross Profit
Ratio

Net Profit Ratio

Operating
Expenses Ratio
Net Operating
Profit Ratio

Comparison of Ratios

55
CONCLUSION

56
 THANK YOU
------------------------------------------------------------
---------------------------------------------------

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