Along with the goal of accomplishing a turnover of 50,000 Crore by 2020, the objective of

the company has been identified as making a strategy to change the image of Amul in the
upcoming years and expand its reach from in national markets as well as to international
markets. Following that the recommendations have not been solely focussed on the financial
benefits over the next few years which are short term but also on the non-monetary aspects
like sustainability in long term.
As mentioned, the recommendations have been broadly made as short term long term. The
first recommendation is to increase market share across product categories ensuring
competitive pricing and high quality. Amul already has plans to expand in national markets
by setting up new manufacturing plants. The next recommendation is to explore the
international markets by establishing a production base in potential countries. Also, we
recommend to explore strategic alliances with national players.
On observing the product diversification strategies by some of the competitors and the
potential of the market, it is also suggested that GCMMF should diversify into the food and
vegetables market. Lastly, since the company is looking for a sustainable strategy, we
recommend that proper succession planning and career development plan to be made for long
term with focus on two aspects: increasing the interest among the youth populations and
setting up official committees like Youth Dairy Entrepreneurial Committee (YDEC) to
encourage them.

Industry Analysis (from the point of view of identifying new opportunities for growth and
possible threats; future projections).

The following are usually analyzed under Industry Analysis:

Definition (you have define your industry clearly; as the case notes, Amul operates in
various,8, categories and does not have a single national competitor across all categories)
Size (recommendation: use Indian Rupees, since the supplementary material uses INR;
the case also uses two different conversion rates; for milk, follow lakh litres or kgs
consistently, remember 1 litre of milk weighs 1.03 kg. For non-milk products follow kgs
or similar measures consistently)
Growth
Players in the industry (international and national players)
Suppliers
Product categories
End users
Distribution
Environmental scanning (Economic; Socio-cultural; Technological; Political and
Regulatory/Legal)

Understanding what is happening in the industry through some framework (e.g. Porters 5
Forces)

Overview of the Indian Dairy Market

India is the largest producer of milk with around 133 Million MT of milk production in 2013.
This milk is produced at around 75 million dairy farms with captive holding of two cows per
farm with an average yield of around 1000 liters per day. Out of this almost half of the milk is
consumed at the production level and balance comes to the market for direct sales and
processing. The ratio of unorganized to organized sector in milk procurement and trading is
60:40.

If we compute it on daily basis then around 18 crore liters of milk comes to the market
daily out of which around 11 crore is handled by unorganized and 7 crore liters to the
organized sector. Cooperatives and government dairies process close to 45 % of it and 55 %
is being handled by the private sector as per latest media reports.

The milk coming to organized sector is processed in close to 1400 dairy processing plants
with an installed capacity of close to almost 13.5 crore liters per day. The average capacity
utilization is around 60 % in the organized sectors plant. The processing capacity in India is
growing at a high rate of 20-25 % in last 3-4 years. There have been both inorganic and
organic growths being considered by the investors from India and abroad.

The liberalization of the Dairy Industry is likely to be exploited by multinationals. Increasing

demand for fluid milk as well as value added products. While the milk production is growing
at slightly above 4.5 %, the demand is showing slightly edge over it at around 6 %. Now the
market is becoming conscious about the quality of milk and ready to pay more for better
quality and varieties of packed milk and milk products. The competition is becoming fierce
and gone are the days when the processors were minting high value on basic products like
pasteurized milk in poly-packs. With Food safety laws becoming more stringent and covering
cover cold chain also, the overheads of all the dairies on supply chain from farm to consumer
reach; it is need to enhance the system advance.
Indians usually consume traditional dairy products as compared to the value added western
products. But this pattern has been changing mostly in urban areas where people are trying
out a lot of new products. A study states that the profit on buffalo milk is more than cow milk
because it gets consumed more due to lower fat content.

Challenges
With the rising demand, there is a pressure on production to utilize the available resources
efficiently. But lack of proper care in terms of health care facilities or good quality feed for

the main resource, i.e. the cattle is a major concern. At the production level, there is lack of
quality standards and workers with proper skills and training. The fluctuating supply and
seasonality of production along with the issues of adulteration and safety makes processing
difficult.
There is a lack of proper infrastructure for transportation of milk. There are too many
intermediaries involved which poses a concern for quality of milk supplied. Also, there are
not enough storage facilities which affects the logistics.
Majority of the market is still unorganised (80% of the milk left after self consumption by
farmers was distributed by unorganised milkmen in 2013)

Players in the industry

15 key players in Indian market:

Gujarat Co-operative Milk Marketing Federation Ltd (Amul)

Karnataka Cooperation Milk Federation Limited (KCMFL)
Rajasthan Cooperative Dairy Federation Limited (RCDFL)
Tamil Nadu Cooperative Milk Producers Federation Ltd (TCMPF) AAVIN
Punjab State Cooperative Milk Producers Federation Limited (VERKA)
Orissa State Cooperation Milk Producers Federation Limited (OMFED)
Madhya Pradesh State Cooperative Dairy Federation Limited (MPCDF)
Parag
Hatsun Agro Product Limited
Nestle India Limited, Mother Dairy
Vadilal Industries Ltd
Kwality Ltd.
Milk Food Limited
Heritage Foods.

Foreign Direct Investment (FDI) has been debarred in the Indian Dairy Industry due to
the risks involved. On comparing foreign markets like US or UK with India we observe
that in India producer gets more than 70% share of the customers money spent which is
much higher than around 36-38% in those countries.
Increasing the share of organized sector would directly affect the farmers and any
involvement of foreign players in Indian market will expose Indian market to global
turbulence. According to Indian government, the current situation can be improved by
incorporating technology and innovation and hence FDI is not needed.

[ http://dairynews.in/good-investment-opportunity-in-indian-dairy-market-by-2020-revealsnew-market-research-report-by-novonous/#.Vtm1e_l97IV
http://www.prnewswire.com/news-releases/india-dairy-products-market-to-grow-at-cagr-7techsci-research-report-568833071.html ]

Growth
Indian dairy industry is going to experience high growth rates in the coming years. According
to a TechSci research report, dairy market in India is expected to grow at a CAGR of 7%. The
reason for this high growth rate can be attributed to the increase in consumption, income and
cattle in India. Also, due to the change in consumer habits, value added dairy products are
becoming popular.
Milk which has the largest market share in all the product categories (46% in 2013) is
expected to grow at a CAGR of 15%, as per a report by Novonous. The second in terms of
market share is Ghee and is expected to grow at a CAGR of 17%. Other products like
Yoghurt, Paneer (cottage cheese) and ice cream are expected to grow at a CAGR of 12%,
18% and 26% respectively.
The paramount factors driving the growth in the dairy sector include increasing population,
rising income levels, urbanization, fast changing food habits and rapid adoption of fast food
in India. Also, the fast growth of Indian economy, rise of cooperatives and technical
innovation in milk processing are some of the factors that will affect the growth of Indian
dairy industry in the future.

Environmental scanning
Regulatory Policies
Various regulations by the Government of India on the dairy industry are:
Prevention of Food Adulteration Act, 1954

[ http://www.dsir.gov.in/reports/ittp_tedo/agro/AF_Animals_Milk_Dairy_Intro.pdf ]