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Anand Milk Union Limited - Indian Cooperative success
Amul, a dairy cooperative based in Gujarat, India, was established in 1946. Amul is a brand managed by the Gujarat Cooperative Milk Marketing Federation.
15 million milk producers pour their milk in 1,44,246 dairy cooperative societies across the country. Their milk is processed in 177 District Co-operative Unions and marketed by 22 State Marketing Federations, ensuring a better life for millions.
Amul, derived from the Sanskrit word Amulya, means invaluable and for decades, it has lived up to its name. It is also known as “Anand Milk Union Limited”.
Dr Verghese Kurien, founder-chairman of the GCMMF ( Gujarat Co-operative Milk Marketing Federation Ltd. ) for more than 30 years (1973–2006), is credited with the success of Amul.
Amul was responsible for the White Revolution in India and it has become the world’s largest producer of dairy products. So, what is Amul’s secret to success?
Amul is one of the very few organisations in India that has eliminated middlemen from its corporate structure. In fact, Amul was created to free farmers from the clutches of middlemen. This way, hard-earned profits could be shared among farmers.
When Amul was formed, thousands of jobs were created in rural areas, where the dairy sector was the only source of regular income. In fact, the success of Amul can be largely attributed to the hard work and dedication of farmers in India.
Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti Dahi, Yoghurt, Buttermilk, chocolate, ice cream,cream, shrikhand, paneer, gulab jamuns, flavoured milk, basundi, Amul Pro brand and others.
From the beginning, Amul adopted low cost price strategy to make its products affordable to consumers. This is one way Amul sees itself apart from other competitors. Also, it has maintained superior quality of products. Since its distribution network is wide and far reaching, with more than 5 lakh retail outlets and over 3,000 distributors.
Amul is able to reach out to consumers in every corner of India and beyond. In addition, Amul gets demand drafts from wholesale dealers in advance, enabling the organization to maintain continuous cash transactions.
The Amul Model is essentially a three-tier cooperative structure, where a Dairy Cooperative Society at the village level is affiliated to the Milk Union at the district level, which in turn is affiliated to a Milk Federation at the state level.
Farmers send milk to the nearest Dairy Cooperative Society, which is then sent for processing and distribution at the Milk Union and Milk Federation. This way, economies of scale are achieved and internal competition is eliminated.
Since there is a Dairy Cooperative Society close to every village, farmers need not travel long distances to deposit their milk. This saves the farmers’ time and money, and the milk does not turn sour.
Since there are so many suppliers of milk nationwide, Amul is able to meet the demand for milk even if hundreds of suppliers are unable to supply milk on a certain day.
In the Amul Model, a famer gets 50 percent more compensation than any other farmer in India. This is the reason why Amul enjoys employee loyalty.
The Amul Model not only ensures that its employees, including the farmers, get the optimal benefits but it also maintains customer satisfaction.
And since Amul has created a repeat-customer base for its business, it saves money on advertisements. In fact, Amul only spends 1 percent of its annual turnover on advertising.
The adverting of AMUL is so popular that it earned a Guinness world record for the longest running ad campaign in the world
Although the Amul brand seems like a monopoly in the market, there is no exploitation of pricing power. Amul conducts a thorough check on the quality of milk before it is processed and distributed. This way, consumers get to enjoy good quality milk and milk based products at a far lower price than other brands.
Amul is a brand which is loved by millions in the country and beyond. And given its strong business model, it is no surprise that Amul is the leading producer of milk today.
The sales turnover of Amul for 2012 -13 was Rs.137350 million.
In June 2013, Amul Dairy has signed a tripartite agreement to start a dairy plant in Waterloo village in upstate New York. The plant will initially manufacture paneer and ghee.
Amul will utilize an existing dairy plant owned by New Jersey-based NRI for manufacturing. The plant is strategically located, as it close to supply centres from where raw material is procured, and is also near New Jersey, which has a large Indian population.
Amul will be able to produce and supply Amul products in the US as well as Canada, and export it to Europe, under the arrangement.