39th Annual General Body Meeting held on 25th June, 2013

39th Annual General Body Meeting held on 25th June, 2013

Madam and Gentlemen,

While Dr. Verghese Kurien had officially passed on the mantle of Amul cooperative movement to the next generation of leaders seven years ago, his benign presence in Anand till last year was a great source of comfort, guidance, courage and inspiration to all of us. Since 9th September 2012, when the Milkman of India, took the milky way to heaven, his ideals and values continue to guide us. With renewed zeal we commit ourselves to the betterment of Indian farmers and betterment of the most vulnerable sections of Indian society - causes towards which Dr. Kurien devoted his entire life. We will ensure that the world-class institutions that he had built, continue to progress with the same passion and commitment, with same values of integrity, efficiency and honesty which Dr. Kurien had championed throughout his life.

The sheer enormity of his monumental achievements is truly amazing. He is one of the few nation-builders who contributed immensely towards shaping the future of post-independence India. His remarkable life and achievements are an embodiment of his faith in the ability of the common man to exercise control over his destiny. This faith helped him to create world-class Institutions that become shining examples of excellence. He often stated that to him, 'commitment towards farmer's cooperatives' was like a religion and he remained true to this faith, till his last day. Father of 'White Revolution' in India; doyen of dairy cooperative movement; institution-builder par excellence who ushered in a socio-economic revolution in rural India, Dr. Verghese Kurien has been instrumental in transforming the lives of 15 million farmer families across the country. As the chief architect of 'Operation Flood', he was able to leverage an initial investment of Rs. 1300 crores into regular annual income of Rs. 2,00,000 crores for farmers of India.

Almost one year ago, on 13th June 2012, Dr. Kurien had completed 63 years in Anand - a town which he transformed into the milk capital of India. His courage and conviction engulfed the entire nation, galvanizing our farmers into breaking the shackles of oppression and making India, the largest milk producing nation in the world. Dr. Kurien understood that true development is the development of women and men. In fact, this philosophy guided him throughout his life. He believed in placing the tools of development in the hands of farmers themselves, enabling them to decide what they want and to create what they need.

Through the dairy cooperative movement which Dr. Kurien championed throughout his life, he helped our farmers to obtain a steady source of income, enabling them to improve their standard of living. His relentless hard work has helped to generate gainful employment for the most vulnerable section of our population:- small and marginal farmers, landless laborers and rural women. It is largely thanks to the efforts of Dr. Verghese Kurien that women of rural India have some measure of economic independence, through dairying.

A true marketing genius, Dr. Kurien created brand 'Amul' and shaped it into one of India's strongest brands through innovative branding, advertising and marketing initiatives. While he spent his entire life working for the interests of the farmers, he always kept the interests of consumers in mind. He ensured that the core identity of brand Amul was value for money - highest quality at the most reasonable prices.

He used to give high degree of freedom to his team of professionals to take initiatives, respecting their judgment. He always strived for excellence and expected nothing less from his team members. He ensured excellence in every institution that he built and every activity that he undertook. When asked, what were the most important qualities that he looked for in a person, while bringing them into any of the organizations, Dr. Kurien's answer was simple:- 'Integrity, Integrity & Integrity'. He used to say that integrity and character, once lost, could never, ever be regained.

Another admirable quality of Dr. Kurien was courage in face of sheer adversity. He understood that in order to create positive transformational change, he would have to overcome resistance from vested interests, throughout his life. His fearless struggle against powerful vested interests at international and national level is a great source of inspiration to us and gives us tremendous courage in times of adversity.

There is a famous quote from Dr. Verghese Kurien which has inspired generations of leaders associated with the Amul cooperative movement " We have traversed a path that few have dared to. We are continuing on a path that still fewer have the courage to follow. We must pursue a path that even fewer can dream to pursue. Yet, we must, we hold in trust the aims and aspirations of millions of our countrymen."

I now present to you, our Federation's Annual Report and the Audited Accounts for the year 2012-2013.

Review of Operations

MILK PROCUREMENT
Total milk procurement by our member unions during the year 2012-13 averaged 131.03 lakh kilograms (13.10 million kg) per day, representing unprecedented, quantum growth of 20 per cent over 109.25 lakh kilograms ( 10.93 million kg) per day achieved during 2011-12. The highest procurement was recorded during February 2013 at 166.20 lakh kilograms (16.62 million kg) per day.

Within Gujarat, our milk procurement during 2012-13 averaged 116.71 Lakh kilograms per day, registering record increase of 16.36 per cent, over 100.30 Lakh kilograms per day achieved during 2011-12. This enormous growth in milk procurement was a result of high milk procurement price paid to our farmer-members which has increased by 68 per cent during the last 4 years. We also procure milk from six states outside Gujarat and our milk procurement from these states has increased by huge margin of 60 per cent to reach 14.34 Lakh kilograms per day in 2012-13, as compared to 8.95 Lakh kilogram per day achieved during 2011-12. We have also successfully demonstrated our ability to process more than 16.6 million Kg of milk per day.

High remunerative milk procurement price to farmers has helped us to win back farmer's interest in milk production. Better returns from dairying have obviously motivated farmers to enhancement their investments in increasing milk production. We have also leveraged on technology and extension activities to improve productivity per animal and these efforts have also contributed significantly towards enhancing milk procurement. The concept of commercial, scientific, cooperative dairy farming is also helping to attract next generation of dairy farmers to remain in the business.

We will explore possible options of enhancing the involvement of cooperative dairy farmers outside Gujarat, in our cooperative network.

Our dairy cooperative societies will also avail loans and grants from NCDC and other government agencies for further accelerating growth in milk production.

SALES
During the year, sales of our Federation registered an impressive growth of 17.72 per cent to reach Rs.13735.15 crores ( Rs.137.35 billion). Last year, our turnover was Rs. 11668.00 crores (Rs. 116.68 billion). This is an extremely impressive growth, especially since this achievement is over and above consistent 20% cumulative average growth rate over the last 5 years.

I am also pleased to note that our Federation has done remarkably well in most of the value added consumer packs. Amul long-life UHT Milk has shown an impressive value growth of 53%. Our strategy of upgrading our largest long-life milk sub-brand, Amul Taaza, from double-toned milk to toned-milk and enhancing pack graphics, paid off handsomely and was reflected in quantum increase in consumer offtake. As an innovation in our long-life milk range, we launched Amul Moti milk in select markets. This long life milk variant has highly specialized packaging offering ultimate convenience of 90 days shelf-life at ambient temperature and at great value-for-money price points. Sales of Amul Cream in long-life UHT packaging also increased by 57% in value terms.

Our entire value-added milk beverages range registered quantum value growth of 27%. Innovation has always been an integral part of our culture and in line with this approach; we have recently introduced our milk-based beverages in highly convenient PET bottles for on-the-move consumption and also in attractive slim cans. These launches will leap us in our endeavor to redesign the imagery of milk from plain white commodity to a wide range of trendy beverages.

As pioneers and innovators in nation-wide marketing of Amul Paneer, we ensure that we reach our consumers through all the distribution highways that we operate. We were successful in achieving 27% value growth in this product category during 2012-13. In Ghee category, we achieved spectacular value growth of 31% and our efforts to reposition Amul Ghee on health platform struck a chord with consumers and resulted in rich dividends in form of enhanced consumer preference. Our flagship brand, Amul Butter remains an eternal favorite of Indian consumers and continues to grow at a handsome pace, year after year. In 2012-13, we achieved 18% value growth in Amul Butter. Amul Cheese range retained its dominant share of Indian cheese market with impressive and consistent value growth on 19%. In our constant endeavor to offer enhanced value to consumers, we introduced Amul Processed Cheese portions with world-class packaging and highly convenient consumer-friendly features.

Amul Mithai Mate, sweetened condensed milk in consumer packs registered impressive 27% value growth. Amul Masti Dahi continued to show consistent growth year after year, with 17.6% growth in 2012-13. Amulya dairy whitener in consumer packs showed consistent performance, registering 13.6% value growth.

Amul Ice Cream has created one more milestone with growth of 21% over last year. We have once again consolidated our position as No. 1 Ice cream brand in India leaving the nearest competitor far behind. Amul pouch milk is now available in top 30 cities of India, spread across 10 different states. In 2012-13, we launched Amul fresh products including pouch milk, dahi and buttermilk in two new markets - Dehradun and Varanasi. With launch in these new markets, Amul pouch milk registered value growth on 16.4%.

RETAILING
Retailing continues to be an important strategic thrust area for our Federation. GCMMF has developed a very robust Retailing Model which has not only helped our organization to keep pace with continuously evolving consumer preferences but has also become a significant revenue generator. Our retailing initiative helps to enhance our brand visibility at ground level and also brings our brand physically closer to consumers. Our Amul Parlors not only help to showcase our entire range of products, but also serve as launch-pad for new products.

During the year, Our Amul Parlor network expanded at a rate of 3 stores every day taking the total tally of our exclusive stores to 7000. While most of our store addition was in the Amul Preferred Outlet format, we have also made significant strides in our Ice-cream Scooping Parlour format wherein we added 276 stores taking the total tally to 800. Thus, we could continue our market leadership and dominance in the Sit-in Ice-cream parlor category. Our objective is to take our exclusive store count to 10,000 in a next couple of years.

EXPORT
I am happy to inform you that our sales turnover in exports of milk products registered an impressive growth of 45% and touched an all time high of Rs 140 Crores, this year. In the current situation, international trade in dairy products is important to India because of the high milk production in our country. Milk production in India is growing at a faster pace than the world average (3.7% growth in India against 2.3% world average).

With rise in global SMP prices and our ability to maintain our prices due to surplus milk production in the domestic market, the international market looks very attractive in the current situation. We have also focussed our efforts on export of consumer products and aim to generate high equity for brand Amul in major export markets.

DISTRIBUTION NETWORK
GCMMF has a very unique model of distributing its ambient, chilled, frozen and fresh products range through four distribution highways. This unique feature of managing distribution through four highways keeps us ahead of competition in servicing the market.

With the objective of managing the inbuilt complexity of four distribution highways in the same markets we need to be located as close to the market as we possibly can. Working on the same lines we have opened new branches at Jabalpur and Srinagar, this year. With opening of these branches we expect to improve service levels in and around these markets. With quantum increase in milk procurement and consequent increase in production of various products, we will focus on rapidly expanding our distribution network during the next two years. In fact, expansion will be our mantra in 2013-14 and we will be opening several new branch offices and stock-points.

To tap emerging demand from small towns and interior markets, we had adopted Hub N Spoke model of distribution, wherein we had appointed Super-distributors who service smaller markets through their network of Sub-distributors. This model has started yielding results for us with approximately 7% of our turnover coming from such markets through this model. We currently have 225 Super distributors across the country reaching to almost 3500 smaller towns.

CO-OPERATIVE DEVELOPMENT PROGRAMME
GCMMF family has added one more milk union namely Kutch District Cooperative Milk Producers' Union Limited as ordinary member. Now there are 16 ordinary members of GCMMF.

During the year we have continued to support milk producers of Junagadh to organize their cooperative societies at village level. Milk Producers of Junagadh Milk Union have organized 348 Village Dairy Cooperative Societies. GCMMF family continued technical and marketing support to milk producers of Saurashtra and Kutch to organize farmers in cooperatives and increase milk procurement.

During the last thirteen years, our Member Unions have been implementing Internal Consultant Development (ICD) intervention for developing self leadership among member producers and thereby enabling them to manage their dairy business efficiently, leading to their overall development.

During the year, Member Unions continued to implement the module on Vision Mission Strategy (VMS) for primary milk producer members & Village Dairy Cooperatives. Specially trained consultants facilitated around 1661 Village Dairy Cooperative Societies (VDCS) in conducting their Vision Mission Strategy Workshops, preparing their Mission Statements & Business Plans for next five years. Till date, 8037 VDCS have prepared their mission statement and Business plan under the initiative.

To take VMS to next level and extend thrust area implementation up to milk producers level, our Member Unions have initiated Progressive Milk Producer's VMS (PMP-VMS). Under the programme, progressive entrepreneur milk producers will be identified and trained on scientific Animal Husbandry (AH) practices and commercial dairy farming. MUs consultant would facilitate milk producers to identify gap between their existing & desired AH practices and would assist progressive milk producers to fulfill the gap.

In order to strengthen knowledge and skill base of young girls and women of the villages about milk production management, our Federation with technical collaboration and resources of Anand Agriculture University, has initiated "Mahila Pashupalan Talim Karyakram" for women resource persons of the member unions and during the year, 498 women resource person have been trained under this programme.

Clean Milk Production
Under our quality assurance programme for consumers, GCMMF has supported member unions in strengthening Infrastructure for Quality and Clean Milk Production by implementing various Government of India, Government of Gujarat and NCDC programmes. Thanks to 24-hours power availability in Gujarat villages, member unions have already installed 3789 Bulk Milk Coolers and also implemented CMP training programme in these villages.
With a view to make quality milk available, some of our Unions have also set up dairy plants outside Gujarat. Mehsana Union has established two dairy plants; Manesar with capacity of 10 Lakhs litres of milk per day and Dharuheda with capacity of 30 lakh litres of milk per day. Similarly, Kaira Union has set up a new state-of-the-art dairy plant on the outskirts of Mumbai. This modern plant has fully automatic systems.

Fertility Improvement Programme
Considering our long term vision to reduce number of infertile animals; our Board decided to implement Strategic Productivity Enhancement Programme (PEP) & Fertility Improvement Programme (FIP).
To implement FIP, milk unions have deployed 52 FIP teams of veterinary consultants and during the year they have worked in 1197 villages. During the period 2007-2012, they have implemented FIP in 4868 VDCS and registered 3.5 lakhs non-productive cow and buffaloes under FIP and out of this, 2.64 lakhs milch animals have been made productive. FIP is being monitored through a dedicated system on www.amul.org.in.

STRATEGIC PRODUCTIVITY ENHANCEMENT PROGRAMME
Our Board has identified the gaps which are hindering the efforts in improving milk productivity and therefore they have envisioned integrated intervention to achieve objective of higher production and productivity. They have given directions for implementation of integrated Fertility Improvement and Productivity Enhancement Programme at mass scale covering entire lifecycle of milch animal. Pure Breeding, Total Mixed Ration, and Calf Rearing programme has been designed to cover Breeding, Feeding and Management aspect of milch animals to increase overall productivity of milch animals.

Pure breeding has been implemented by our MUs to develop genetically superior animals with high milk productivity. Calf Rearing programme has been implemented by our MUs to create good replacement stock and to inculcate scientific Calf Rearing practices among milk producer members. It has been observed that there are wide fluctuation in feed and fodder prices and its availability throughout the year. To overcome the milk producers' difficulties, our MUs, with objectives of providing scientifically developed balanced mixed ration to animals, have initiated implementation of Total Mixed Ration programme.

Sustainable Ecological Development - 'Green Amul Green India' Campaign
Milk Producer members of Gujarat have been celebrating the nation's Independence Day in a novel manner by planting millions of saplings across Gujarat state of India. During last six years, our members have planted more than 370 lakh trees and demonstrated their commitment towards preserving and contributing to improvement of the environment. For the tree plantation activity we have received six consecutive Good Green Governance award from Srishti during 2007 to 2012. We wish to replicate this campaign in all villages of India, from where we procure milk.

INFORMATION TECHNOLOGY INTEGRATION
We are glad to inform you that your Federation has moved a step further in integrating our SAP ERP System with www.amulwd.com site through which our Wholesale Distributors (WDs) can book their order "Online" and also view their Ledger Balance on real-time basis.

Your Federation has developed SMS facility for sending SMS to various groups viz. Our sales team, our distributors and Amul parlour franchisees with regard to various promotional initiatives, New Product Launches and advertising campaigns. Your Federation has also developed Mobile Application to automate Order Booking by pouch milk distributors. This will help our Milk distributors to collect and send the order directly from the market.

A GOLDEN PERIOD...
Leveraging on the strong foundation built by Dr. Kurien, your Federation is currently the largest food manufacturing and marketing organization in India. The responsibility is now on the current and future leaders as well as professionals to take the Amul cooperative movement forward, while continuing to adhere to values of selfless leadership, professional excellence and commitment to farmers that were so dear to Dr. Kurien.

I strongly believe that if this organization remains true to the values of integrity, efficiency, excellence and passion for the underprivileged which Dr. Kurien championed throughout his life, then one day we definitely will fulfill our destiny of emerging as the largest dairy organization in the entire world.
At the moment, we are definitely going through a golden period, wherein on one hand, our milk procurement has witnessed quantum increase of 20%, and on the other hand, demand for high quality milk and dairy products from reputed brands is also rising sharply. Since milk procurement price has increased by 68% in last four years, farmers have been motivated to invest in enhancing milk production. Our efforts aimed at productivity enhancement measures have also been fruitful.

With rising income levels, we are witnessing increase in per-capita calorie consumption and also growing diversity in diets in Indian population. As income level grows, consumption of fat and protein is definitely increasing in our country. With rapid economic growth, our diet is also converging towards higher share of animal source foods. Due to this reason, there is high growth in demand for dairy products. Apart from total consumption, even per-capita consumption of milk and milk products is growing in India. Food still accounts for highest share of monthly household expenditure in India at 31%. Within food, Milk and Dairy products account for the highest share of expenditure (after cereals) for an average Indian household.

In order to take full advantage of this situation of plenty, we have planned rapid expansion across our entire value-chain. Our Member Unions are already in the expansion mode, enhancing their respective processing & manufacturing capacities.

Simultaneously, we are also expanding our distribution network to ensure that our products reach our loyal consumers in the remotest corners of the country. During the current year, we expect to add another seven branch offices, thereby expanding our branch network to 56. With the additional of 306 distributors, 65 super-stockists and 900 sub-stockists during the year, we have expanded our distribution reach to 1200 new markets in the last 12 months. In 2013-14, we plan to add another 400 distributors, 25 super-stockists and 300 sub-stockists, expanding our footprint to 700 new geographical markets. As part of supply-chain expansion, we are also enhancing our transportation and warehousing infrastructure, wherever required.

We will surely fulfil our destiny of becoming the largest dairy organization in the entire world and centre of gravity for global dairy industry, if our leaders and professionals continue to adhere to the values of integrity, selflessness, excellence, courage and passion for economic betterment of underprivileged which Dr. Verghese Kurien championed throughout his life. We are conscious of the enormous responsibility on our shoulders and the immense faith that our 32 lakh farmer-members have in us. We will also plan to formulate welfare programmes for our farmer-members and their families. Last year, the entire Saurashtra-Kutch regions had faced severe drought. To alleviate their problems and with a view to prevent migration of cattle, we had given subsidized cattle feed.

We also acknowledge and appreciate the tremendous trust that Indian consumers have placed in us, over the last six decades. We are confident that we will succeed in our endeavor, with blessing and support from all quarters.

ACKNOWLEDGEMENTS
IBefore closing, I would like to thank all those who have helped to make our Federation's operations successful.

We are grateful to the Government of India for immense support received from various departments and specifically from the Department of Animal Husbandry and Dairy Development. We convey our special thanks to NCDC for providing valuable support to our village co operative dairy societies. We are also thankful to the Government of Gujarat for all the help and cooperation, extended to our organization.

National Cooperative Dairy Federation of India had been providing us with invaluable support in coordination with other agencies and organizations. National Dairy Development Board had played a role in our growth and development. We are very grateful to them.

Institute of Rural Management, Anand, as always, has contributed to the perspective building and professionalization of the management of cooperative sector. We express deep gratitude for its support.

We are indebted to Vidya Dairy for having organized training programs on dairy technology for our employees. We are also grateful to SMC College of Dairy Science, Anand, for strengthening the dairy cooperative sector, by providing technically skilled manpower. We express our sincere thanks to the College of Veterinary Science and Animal Husbandry, Anand.

Our advertising agencies, bankers, insurers, management consultants, suppliers and transport contractors have been of great help to us in managing our growth and are our partners in success. We acknowledge their contributions and commit ourselves to continue and strengthen this fruitful alliance in all times to come.

The Indian Railways has played a crucial role in the growth of our dairy cooperatives since inception. We thank them for their continuous support.

We depend on the efficiency of our WC&F agents, distributors, retailers and most important of all, the patronage of our consumers, who have come to regard our brands as synonymous with quality and value. While thanking them for their support, we assure them that we shall strive endlessly to delight them.

Our Member Unions are our strength. We thank them for their guidance, support and cooperation without which we would not exist.

Lastly, we thank the officers and staff of our Federation for their continued perseverance, loyalty and unflinching efforts devoted to our cause.

Thank you.
For and on behalf of the Board of Directors

Vipulbhai M. Chaudhary
Chairman


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