analysis of refrigerators marketing

8/11/2019 Analysis of Refrigerators Marketing

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Food Processing Industry

Amuls Analysis

Researchers:Prateek Rastogi FT 153063Riya Jain FT 153018Debanjan Paul FT 153104Aditya Singhal FT153043

Swati Malik FT 153033Ashwin Jayaraman FT 153086(Group 12, Section 3)

Recipient:Dr. Tapan K Panda

Date of Submission:1stJune, 2014


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TABLE OF CONTENTS1.

OVERVIEW OF COMPANY

2. INDUSTRY ANALYSIS

3.

MARKETING AUDIT

4. MARKETING STRATEGY ANALYSIS

5.

MARKETING MIX

6. FINANCIAL ANALYSIS

7. CONCLUSION

8. BIBLIOGRAPHY


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1.

Overview of the Company

HistoryThe AMUL Story

Amul (Anand Milk Union Limited) was formally registered in 1946. The brand name

Amul, was derived from the sanskrit word Amoolya, which means priceless. It is being

managed by an apex cooperative organization, Gujarat Co-operative Milk Marketing

Federation L td. (GC MMF).

Operation Flood

This was the anti-dairy development cycle that Operation Flood sought to reverse by

the use of a glut of donated milk products from abroad. These surpluses were used in

two ways to speed up Indian dairy development. First, the donated milk products were

used to reconstitute milk, and therefore provide the major cities' liquid milk schemes

with enough milk to obtain a commanding share of their markets. Secondly, the funds

realized from reconstitution and sale of donated products were used to resettle city-

kept milch animals and permit their progeny to multiply, to increase organized milk

production, procurement and processing, and to stabilize the major liquid milkschemes' position in their markets. The objectives of Operation Flood can be

summarized as f ollows:

1. To enable each city's liquid milk scheme to restructure and capture a

commanding s hare of its market

2. To identify and satisfy the needs of milk consumers and producers, so that

consumers' preferences can be fulfilled economically and producers can obtain

a larger s hare of the rupees paid by consumers for their milk

3. To facilitate long-term productive investment in dairying and cattle

development and

4.

To ensure a s uffici ent supply of personnel to handle each fa cet of the project.

Current Position

Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an

annual turnover of US $3.2 billion (2013-14). Besides India, Amul has entered overseas

markets such as Mauritius, Australia, China, UAE, Singapore, USA, Bangladesh, Hong

Kong and a few South African countries. It follows 3 different distribution network to

sel l i ts product in the market.

1. CompanyDistributorRetailerconsumer

2. Company- Di stributorWholesal erRetai ler- Consumer3. CompanyDi stributor- Modern format Store- Cons umer

AMUL PRODUCTS

All Amul products are classified as dry, wet (4 deg C) or frozen (-24 deg C) products.

The range of products marketed by Amul includes milk powders, milk, curd, butter,

chocolate, ice cream, ghee, cheese, cream, shrikhand, gulab jamuns, basundi, paneer,


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Nutramul brand, Flavoured milks, Cold coffee Butter milk and others. Amul brags

about 56 brands of around 123 products under the following categories :

Amul Ice-creams Health Beverage Amul Snowcap Softy Mix Infant Milk Range

Bread Spreads Milk Drink Brown Beverage Milk Powders Cheese Range

Mithaee Range (Ethnic sweets) Chocolate & Confectionery Pure Ghee Curd

Products UHT Milk Range Fresh Milk

GCMMF TODAY

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. GCMMF markets and manages the Amul brand. From

mid-1990's Amul has entered areas not related directly to its core business. Its entry

into ice cream was regarded as successful due to the large market share it was able to

capture within a short period of time - primarily due to the price differential and the

brand name.

The Amul Model

The Amul Model of dairy development is a three-tiered structure with the dairy

cooperative societies at the village level federated under a milk union at the district

level a nd a federation of member unions at the s tate level.

The Amul model has helped India to emerge as the largest milk producer in the world. More

than 15 million milk producers pour their milk in 1,44,500 dairy cooperative societies across the

country. Their milk is processed in 184 District Co-operative Unions and marketed by 22 State

Marketing Federations, ensuring a better life for millions.


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Establishment of a direct linkage

between milk producers and

consumers by eliminating middlemen

Milk Producers (farmers) control

procurement, processing and

marketing

Professional management


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1. Industry Analysis

Food Processing Industry Analysis

The Food Processing Industry in India is a sector that has gained significance and relevance

over the years. Due to the increased purchasing power ability of the consumers and due to

availability of raw materials, the growth of the industry has taken place rapidly. This sector

serves as a middleware between agriculture and industrial segments of the economy.

Due to the increase in share of FDI in Indian economy, more players are investing in huge

amount in the Indian Food Processing Industry. With the availability of such internationally

big market players, the domestic companies are also investing heavily in the Food market.

Also the factors related to health, hygiene and consumer preference for choice of products

is being taken as an important factor in building up of the industry.

To ensure that the sector gets a stimulus, the Ministry of Food Processing Industries is

taking a number of initiative schemes such as in Infrastructure development, technology

up-gradation & modernization, human resources development and R&D in the Food

Processing Sector.

Food Production Industry-Gross Domestic Product contribution due to Production

The factories listed below contribute to the Food Industry.

The contribution of each group to GDP is given in the following table:


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The Gross Domestic Product (GDP) prices in India from 2004-05 has gone up from

35,64,364 cr. in 2006-2007 to 52,43,582 cr. in 2011-2012, with Compounded Annual

Growth Rate (CAGR) of 8.0%. Contribution of FPI sector has increased to 78,094 cr. in

2011-12 from 52,161 cr. in 2006-07 with CAGR of 8.4%. CAGR for total agriculture and

manufacturing Sector during the same period has been growing at 7.6% and 3.8%

respectively.

Competitors Analysis

Amul being the biggest name in the Indian Milk and Milk products industry and also as thelargest Corporation led business firm in Asia has a lot at stake and to make it worse, it isflooded with competition both locally and also at national level every now and then.

Amul, the home-grown dairy brand from Gujarat, is fighting battles on all fronts as smallerplayers are picking on it category by category. Be it pouched milk, ice cream, ghee orflavoured milk, small brands are upping the ante against the FMCG giant that closed 2012-13 fiscal at $3.2 billion.

Whereas Amuls typical customers are between the age of 7 -50 years, which shows thatthese include children, youngsters and also aged people and from the upper class or middle

class families, who can afford these prices and looking at these target customers the

company has designed its outlet to look young and trendy with vibrant colours such a s

brownie, black currant (purple) and Butter Scotch predominating the outlets.

Competitor Rivalry:

Competitor rivalry is high due to other brands and local players:

1. Threat of newer brands coming into the market with newer ideas always looms

large as there are no market barriers to entry into this business.2. Bargaining power of suppliers is low as the suppliers are rural milk producers.

3. Threat of substitutes is high because of availability of other products.

4. Bargaining power of customers is high because of various competitors.


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Product/s Brands Competitors

Butter Britannia and Nestle

Cheese Britannia

Baby Food Nestle, Heinz

Dairy Whitener Segment Britannia, Nestle

Ice Creams Hindustan Uniliver Limited

Chocolates and

ConfectionariesCadbury, Nestle

PizzaPizza Hut, Dominos, Nirulas

Pizza

Curd Nestle, Mother Dairy

Ultra High Treated Milk Britannia, Nestle

Sweet Condensed Milk Nestle

Cottage Cheese Britannia

Milk Additives Cadbury, Smithkline Beecham

Flavored Milk Britannia, Nestle

The above table shows the biggest threats to Amul in the respective markets.

There are basically 2 types of Competitors:

Direct Competitor and Indirect Competitor - The difference between indirect and direct

competition include the company goal and strategy, plan, and promotional tactics. It is in

how companies compete. Direct competition is someone competing against you openly

with the same product. Indirect competition is someone competing by selling a substitute

product.

Regional brand Havmor has built up a very strong case for itself in Amul's home turf bycapturing 35% of state's 600 cr. ice cream market shares. Cheese manufacturer ParagMilk Foods Pvt Ltd with its GO brandhas already captured near 45 per cent of the 100cr. cheese market of the state.

Vadilal brand which launched flavoured milk 'Power Sip' under Vadilal's Quick Treat brandis directly pitted against Amul's Kool. Likewise, Flourish Pure Foods foray the market withpouched milk which has been Amul's strength since decades.

Now, Pune-based Vaishno Devi Dairy has recently entered theGujarat market with cow

ghee. GCMMF MDRS Sodhi says these smaller brands are no competition to the might ofAmul.

In dairy industry, competition has to be measured with regard to milk processed.Amul handles 150 lakh litres of milk per day and none of the other players concerned,handles even 1% of that. You cannot survive by offering just one category and must use allingredients of milk. Competition is welcomed only if one has lots of categories to offer.
http://economictimes.indiatimes.com/topic/GO%20brandhttp://economictimes.indiatimes.com/topic/GO%20brandhttp://economictimes.indiatimes.com/topic/Vadilalhttp://economictimes.indiatimes.com/topic/Gujarathttp://economictimes.indiatimes.com/topic/RS%20Sodhihttp://economictimes.indiatimes.com/topic/Amulhttp://economictimes.indiatimes.com/topic/Amulhttp://economictimes.indiatimes.com/topic/RS%20Sodhihttp://economictimes.indiatimes.com/topic/Gujarathttp://economictimes.indiatimes.com/topic/Vadilalhttp://economictimes.indiatimes.com/topic/GO%20brand


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A dent in its share notwithstanding, Amul has market observers still pitching for it. "Amulis the hallmark of quality and trust. It is a brand of a rural cooperative movement and is no tjust chasing huge profits. Amul does not face any threat, at least in the near future," secondsMahesh Manjawala of Triton Communications.

Amul leads in the region with good products and through operational excellence.Over the years, it has developed a very strong transportation and logistics network that hasenabled it to have a cost-effective model, adds PwC India's Rachna Nath, leader - retail andconsumer."While the other dairy players are making a dent in its market share, the consumption baseis also rising. Despite competition there is a market for all the players since the market willcontinue to grow," she notes.

Smaller brands nevertheless, are aggressively doing their bit category by category. Gujaratconsumes about 20 per cent of the total ice cream in the country with Ahmedabad havingthe highest per capita consumption in the entire country. "Innovative 100 per cent milk-

based ice creams available at some of the best retail locations have helped us grow," saysAnkit Chona, MD of Havmor.

Steps taken by Amul to avert the competitors:

Step 1: By 2018, increase daily production of milk processing by 11-12% to meet the

market demand. For this Amul is building 9 Greenfield Plants across the country and is

expanding its capacity at 245 plants with investment of 3000 crore in the process.

Step 2: Innovation of New Products, Better Packaging and Cost effective Solutions. For

instance, Amul's flavoured milk, milkshakes and yoghurt drinks will now roll out in 200 ml

pet bottles costing 2 less than the glass bottle. With 600,000 bottles a day, Amul wants to

double revenues from a category that's growing 30% annually.Step 3: Better reach to markets - Adding 8 Stock Points to its existing 46 stock points /

depots, adding 1000 new distributors including 200 new super distributors to service

2,000 new small towns and cities.

Amul Product Portfolio

Category Market Share Market Position

Butter 85% 1

Milk Powder 40% 1

Cheese 50% 1Ice Cream 25% 2

Sweets 50% 1

Chocolate Drink 90% 3

Chocolate 10% 3


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*The figures shown here is the percentage-count of the total market share for thatparticular consumable.

3. Marketing Audit

SWOT Analysis

Strengths Weaknesses

Competitively low priced.

Strong supplier network.

High brand equity.

World's largest manufacturer of

pouched milk.

Responsible for white revolution in

India.

AMUL girl as famous mascot for the

brand.

Need for a strong distribution

network.

Rigid Policies on credit and

replacement.

Fewer margins are provided for

retailers.

Low and limited market share in

chocolate and ice-cream segment.

Opportunities Threats

Processed-Food market is growing

market.

Rise in purchasing power of people. Rural/Semi-Urban areas are potential

markets.

Economic slowdown and inflation.

Retailers are more incentivized by

private manufacturers. International competitors like Maza,

Tropicana, Frooti.

85%

40%

50%

25%

50%

90%

10%

Amul Product Portfolio Market

Share

Butter

Milk Powder

Cheese

Ice Cream

Sweets

Chocolate Drink

Chocolate


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Strengths

Amul has very famous brand image & recall and sells readily in the market.

A popular mascot in the Amul girlacts as a good consumer pull model.

Amul products are competitively priced in the market.

Amul is Indias largest processed-food brand and is trusted for its quality.

Amul has 123 brands listed under its name, which has helped in acquiring large market

share.

Amul was the first brand to introduce flavored milks in the market hence it has a first

mover competitive advantage.

Amul has a strong network of suppliers in the form of 3.23 million producers as its

partner.

Weakness

Amul fails to provide good trade promotions in the distribution chain unlike the private

players.

Amul-retailer transactions are cash-only, while the other players give a credit period

ranging from 1030 days.

Amul being rigid does not provide any replacement of stock which is an important factor

for stocking of goods in the retailersstore.

Since, availability plays an important role in the sales; Amul needs to build a stronger

distribution network inside the city. Amul products are generally available at only multi-

brand stores in the cities. Margins provided by amul is very less compared to competitor brands, hence retailers

as well as whole-sellers tend to move competitor brands over Amul products.

Whole Seller Margins

Retailers

Margins

Amul 3-5% 8-12%

Competitors 7-10% 10-15%


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Competitor brands specially hire salesperson to the promotion of the brand and also

interact with retailers to study about the market status and their brand presence.

Opportunities

Processed-Food market is fast growing market and amul with a strong brand image

plays an important role in consumer pull model hence can easily capture the marketshare.

Since purchasing power of people is increasing hence is beneficial for Amul.

It can tap the untapped market and increase its potential area to rural and semi urban

areas.

Threats

Brands like Britannia, Tropicana, Frooti, Cadbury etc are a major threat to amul as it is

gradually capturing the market and are the bestsellers in the market.

Private manufacturers are more retailer friendly and are aggressively launching many

new products in the market.

Many new players like MTR, Nestle are becoming new competitors for Amul.

4. Marketing Strategy Analysis

Varied Products

Milk Bread Spreads Cheese

Amul Gold

Amul Taza

Amul Calci

Amul Lite

Amul Butter

Amul Lite

Amul Cooking Butter

Delicious Table

Margarine

Amul Processed Cheese

Amul Emmental Cheese

Amul Gouda

Amul Cheese spreads

Pizza Mozzarella

Beverage Ice Creams/Mithai Paneer/ Dahi/Fresh Cream

Amul Kool

Flavoured Milk

Amul Kool Caf

Amul Kool KoKo

Amul Kool Milk

Shaake

Amul Stamina Can Nutramul Energy Drink

Amul Spiced butter

milk

Amul Lassi

Amul Ice-Creams

Amul Flaavyo Frozen

Yoghurt

Amul Shrikhand

Amul Gulab Jamoon

Amul Basundi

Amul Avsar Ladoo

Amul Mithai Mate

Amul Malai Paneer

Amul Fresh Paneer

Amul Masti Dahi

Amul Probiotic Dahi

Amul Flaavyo

Amul Fresh Cream

Milk Powder Ghee Chocolate


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Amul Spray

Sagar Tea Coffee

Whitener Sagar Skimmed Milk

Powder

Amulya

Amul Ghee Sagar Ghee

Amul Yellow (Cow)

Ghee

Amul Fruit 'n' Nut

Chocolate

Amul Chocolate

Amul Chocozoo

Chocolate Syrup

Amul Wafer Chocolates Amul Rejoice Assorted

Chocolate

Amul Cooking Chocolate

The range of products marketed by Amul incl udes milk powders, milk, curd, butter,

chocolate, i ce cream, ghee, cheese, cream, shrikhand, g ulab jamuns, basundi, paneer,

Nutramul brand, Flavoured milks, Cold coffee Butter milk and others. Amul brags

about 56 brands of around 123 products under the foll owing categories:

Amul Ice-c reams Health Beverage Amul Snowcap Softy Mix Infant Milk Ra nge

Bread Spreads Milk Drink Brown Beverage Milk Powders C heese Range

Mithaee Range ( Ethnic sweets) Chocolate & Confec tionery Pure Ghee CurdProducts UHT Milk Range Fresh Milk

The STP Process

Segmentation

Philip Kotler defines Marketing segmentation is a process of identifying groups of buyers with

different desires or requirements.

The primary objective of segmentation is to identify and target prime customer groups (eg the

25% that account for 75% of your sales) in order to achieve maximum return from a

constrained marketing budget.


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Industry Based Market Segmentation

Differentiated Marketing StrategyMany markets chose to target several segments or

niches with a differentiated marketing offer to suit each market segment. The main

objective of this is to cater to different segments and get higher sales with a dominant

position in each of the segments.

Ice Cream

Manufacturers

Temples Restaurant /

Food Chains

Milk

Coffee Shop

Chains


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Customer Based Market Segmentation

Demographic market Segmentation based on AGE

Butter / Ghee/ Cheese

Bakery &

ConfectionariesPizza Retailers Snacks Retailers


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Psychographic market Segmentation based on LIFESTYLE

Targeting

After the effective segmentation, company should not directly start targeting these segments.

The attractiveness of these segments depends on other factors as well. There are four subactivities which are the bases of targeting the segments.

a) Defining the products abilities and resources required to enter a market

b) Analyzing resources and skills of competitors

c) Comparing the companys abilities with those of the competitors

d) Deciding on the actual markets to target.


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Amul has targeted their products to various segments of the market. Products like Amul Ice

Creams, Amul Flaavyo Frozen Yoghurt, Nutramul Energy Drink, Amul Kool Chocolate Milk are

targeted for the school going kids aged 4 -16. Products such as Amul Kool Caf, Kool Koko, Amul

Kool Milk Shake, Amul Emmental Cheese, Amul Cheese Spreads are mainly targeted for college

going people. Products like Amul Masti Spiced Buttermilk, Amul Kool Thandai, Amul Lasee aretargeted in specific seasons.

Positioning

It refers the position a business has chosen to carry out their marketing and business

objectives. Positioning relates to strategy, in the specific or tactical development phases of

carrying out an objective to achieve a business' or organization's goals, such as increasing sales

volume, brand recognition, or reach in advertising.

Amul has positioned itself as a low price and superior quality brand. Amul Milk has positioneditself as a perfect healthy substitute for the Carbonated Drinks. Amul Ghee has introduced

varieties considering health position of consumers. They have positioned themselves in the

beverages market by introducing milk shakes like Amul Kool Caf. They bring happiness and

goodness of Coca all the year round with help of their Chocolates and Coffee. Amul Ice-creams

have been positioned as a nutritious dessert for consumers of all age groups. They have also


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positioned themselves in confectionaries with their different types of cheese and bread

spreads.

Strategic Management

BCG Matrix The Boston Consulting Groups GrowthShare Matrix involves strategic

business units (SBUs) being positioned in a matrix on the basis of market growth rate

and their market share, relative to that of the largest competitor.

STARS (High Growth, High market Share) They are the leaders in the business but still

need heavy investment to maintain its large market share. It generates large amount of

cash and invites competitors to attack on it. Emphasis should be to hold the marketshare and on long term return otherwise the STAR will become a CASH COW.

CASH COWS (Low Growth, High market Share)They are the base of the company and

more often the stars of the yesterday. They generate considerable sums of cash and

extract the profits by investing as little as possible. They are positioned in a mature

industry.


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DOGS (Low Growth, Low market Share) They generate low profits or losses. They do

not have potential to bring in lot of cash and consume more management time. So, dogs

in the company should be minimized.

QUESTION MARK (High Growth, Low market Share) These products are new products

in the market which buyers are yet to discover. They have low returns and highdemands because of low market share. They require lot of cash for fast growth. The best

way to handle them is to either invest heavily in these products to gain market share or

sell them.

5. Marketing Mix

A typical marketing mix is a combination of Inter related, yet independent set of marketing

decisions, which helps a marketing manager to break down the decision making into number of

identifiable and actionable set of activities. The concept of 4 Ps (Product, Price, Place andPromotion) is driven by manufacturing based marketing decis ions.

Price

Amul has adopted the following strategies to determine the price of its products:

i. Cost of Milk

ii.

Labour Cost

iii. Processing Cost

iv.

Advertising Cost

v. Transportation Cost

vi.

Sales Promotion Cost

vii.

Taxes etc.For Example - Comparing Prices of AMUL and CADBURY:

PRODUCT AMUL (Rs.) CADBURY (Rs.)

Dry Fruit Choco Crunch(Pack of 20

pieces) 80 100


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By comparing the prices of the products of Amul and Cadbury, we can see that the process

offered by Cadbury is on higher side as compared to Amul.

Product

One of the best known examples of policy success in India has been the successful

implementation of white revolution and equally celebrated is the role of the brand in

making this event a big success.

From two diary cooperatives and 250 litres of milk per day to a network of 31 lakh dairy

farmers, who are members of more than 15,000 village co-operatives.

Milk producers sell their produce to village co-operatives, which is affiliated to district

milk co-operative union and then in turn to the state level milk marketing federation. A

network of 8000 distributers makes Amul products available at over 4 lakh retail outlets in

India.

GCMMF is expanding its production capacity by 25% to meet the growing consumerdemands and plans to invest in INR 3000 crores in 9 new milk plants in India in next 4-5

years.

Place

Amul has a very strong marketing channel.

GCMMF has a network of more than 3500 distributers and more than 5 lac retail outlets.

They have around 2.8 million farmers in 12 operational districts.

Amul has 47 depots which deals with these 3500 distributers and their product are

available in more than 5 lac retail outlets.


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Promotion

The Amul Girl and its new Witty avatars were the brain child of Sylvester da Cunha, the

managing director of the advertising agency AS. The ads were designed as a series of

hoardings depicting day-to-day issues and social concerns.

Amul Dairy Cooperatives, on the occasion of completing its 50 years of advertising,

launched a book called Amul India.

Following the idea of thought full advertising, 35 years ago the brand created magic with

its Mero gaam Katha parey the title song of national award winning film Manthan,

which told the story of Amul model of co-operatives.

The Manthan music video has an unique emotional appeal. To recreate the magic, in 2012

brand came up with a fresh commercial with the lines like khush rahe tera beta beti in

the new music video. It shows how the effort of a rural milk producer takes care of

nutritional requirements of a child of an urban mother.


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6. Financial Analysis:

Financial Performance Analysis can be carried out by using various analytical tools like trend

analysis, horizontal analysis , cash flow statement analysis , & various important ratios. Ratioshave evolved substantially over a period of time. We have studied the effect of different

variables of liquidity & profitability of AMUL for 10 years from 2001-02 to 2010-11 by using

Pearsons correlation for analysis. The result shows that there is moderate negative correlation

between liquidity & profitability. The idea of this project is to know the short term as well as

long term financial position of AMUL.

Introduction:

AMUL is Asias largest and worlds second largest co-operative dairy. It has a huge market and

dairy network in every state of India and across many Asian countries like Bangladesh, Thailand,

Indonesia, Malaysia, Singapore, etc. It started with 250 litres of milk and 2 societies and

currently it produces 10 lakhs litters milk per day and has 1113 societies and with more than 6

lakes farmer members. It produces milk and milk products. The main motto of AMUL is to help

farmers. The system works only for farmers and for consumers, not for profit. The main aim of

AMUL is to provide quality products to the consumers at minimum cost. The goal of AMUL is to

provide maximum profit in terms of money to the farmers. Vision of AMUL is to eliminate the


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problems of farmers (milk producers). AMUL was to run the organization with the co-operation

of four main parties, the farmers, the representatives, the marketers, and the consumers.

Bankers of Amul:

1) Kaira district Central Co-operative Bank Limited 2) State Bank Of India 3) Bank of

Baroda 4) Bank of Maharashtra 5) HDFC Bank Limited 6) Corporation Bank 7)

Axis Bank

Year Milk procured (in kg.) Sales turnover (. in lakhs)

2000-01 277840861 50919

2001-02 258692443 46878

2002-03 257957726 48834

2003-04 255856435 54593

2004-05 276150374 60047

2005-06 297436246 709222006-07 324410536 81632

2007-08 401718616 107712

2008-09 468587136 137807

2009-10 498033310 169989

2010-11 515900000 211140

As of 2012-13, Operating Ratio = Operating Expense / Net Sales

= 1366103651 / 13809181687

=0.098927198

As the ratio is very small, greater is the organization's ability to generate profit if revenues

decrease. When using this ratio, however, investors should be aware that it doesn't take debt

repayment or expansion into account.


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Objective of the study:

0

200000000

400000000

600000000

Milk Procured (in kgs)

Milk Procured (in kgs)

0

50000

100000

150000

200000

250000

Sales turnover (Rs. in lakhs)

Sales turnover (Rs. in lakhs)


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The objective of financial statement is to know information about the financial position,

performance & cash flows of an enterprise with the help of analytical tools.

To know the Market Position AMUL by taking Market Value Ratios

To know the trade-off between Liquidity & Profitability.

Development of hypothesis:

H0: There is no positive relationship between the Liquidity & Profitability of AMUL.

H1: There is positive relationship between the Liquidity & Profitability of AMUL.

Step 1:

Financial Performance on the basis of Profitability & Liquidity Analysis

Relationship Between Current Ratio & Operating Profit

RatioRelationship Between Current Ratio & Net Profit Ratio

Years CR NPR Years CR NPR Years CR NPR Years CR NPR2001-

022.702 88.38 2006-07 1.738 90.957 2001-02 2.702 0.314

2006-

071.738 0.504

2002-

033.24 89.342 2007-08 2.136 92.178 2002-03 3.24 0.405

2007-

082.136 0.421

2003-

042.376 90.46 2008-09 1.652 91.873 2003-04 2.376 0.467

2008-

091.652 0.419

2004-

052.344 90.199 2009-10 1.394 92.58 2004-05 2.344 0.523

2009-

101.394 0.436

2005-

062.136 91.035 2010-11 1.431 947.906 2005-06 2.136 0.461

2010-

111.431 0.44

R -0.415 r -0.323

As the correlation coefficient is moderately negative coefficient, it means there i s a strong

relationship between Current Ratio and Net Profit Ratio.

Here as Current Ratio is gradually decreasing it means that liability and amount of creditors are

increasing.

As Net Profit Ratio (Net Profit After Tax/Net Sales) is increasing at times it indicates the

efficiency of the management in the affairs of business.

Step 2: Five different correlations interpretation

1) Strong Negative Correlation (r=-0.933)

2)

Moderate Negative Correlation (r=-0.674)3) Moderate Positive Correlation (r=0.514)

4)

Strong Positive Correlation (r=0.909)

5)

Virtually No Correlation (r=-0.004)

Step 3: Interpretation of the above results

1) Correlation Result between the Operating Profit & Current Ratio shows a Moderate

Negative Correlation between them, & that if the current ratio increases it will have a


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negative impact on profitability & it will decreases because there is a correlation r=-

0.41472. Here AMULs current ratio is more than standard of 2:1, this indicate negative

reflection towards current assets.

2)

Correlation Result between the Net Profit & Current Ratio shows a Moderate Negative

Correlation between them, & that if the current ratio increases it will have a negative

impact on profitability & it will decreases because there is a correlation r=-0.32255. Thisindicates that if CR is increased by 1 on liquidity basis, it reduces NPR by 0.32255 paisa

on profitability.

3) Correlation result between Liquidity & Profitability has Moderate Negative Correlation

which shows that they are related to one another however moderately.

Analysis & Discussion:

Financial analysis is the starting point for the making plans, before using any sophisticated

forecasting & planning procedures. A number of tools are available in the tool kit of the analyst

for the purpose certain tools are Trend analysis , Horizontal analysis , Cash flow statement

analysis and Ratio analysis.

A.

Trend Analysis:

The above graph shows the Relation between the PBDT (Profit Before depreciation andTax), PBT (Profit before Tax), PAT (Profit after Tax) and Sales & Other Income.

It shows that the Sales and Income for the company increases gradually for each year.Similarly, PBDT increases gradually however there is a similarity between PBT and PATwhich rose very high for 2006-2007 but gradually decreased and led to the growth of thecompany in the later years.


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The above graph shows the relation between the Production and Sales. Sales andProduction go hand in hand for all the years which shows that Production leads to moresales which further leads to increase in Productivity and Profitability.

The above graph shows the relation between the Gross Block , Net block, Net CurrentSales, Net Worth and Share Capital.

Slowly and steadily Gross Block, Net Worth and Share Capital rises every year. Howeverthe Net Current Sales has increased rapidly till 2009-2010 and then faltered a bit in 2010-

2011.But the Net Block continued to rise. The Net Block has shown a steep rise from2008-2009 to 2009-2010.

1. Consistent rise in sales that shows overall growth in sales of their products in dairy

consumption.2. Consistent rise in production throughout the year. Consistent rise in sales throughout

the year, but production is more than the sales.3. Growth in gross block & sales neck to neck that shows high fixed assets efficiency &

its utilization of uses are more. Growth in net worth is neck to neck that shows highleverage & high dividend distribution around 75% to their consistent farmers.

B. Horizontal Analysis:

1. Although profit is at every stage that is at PBDIT, PBIT, PBT is higher in absolute

terms, it has not been able to maintain growth equal to sales. PBT has grown by just17.10%

2. Tax is lower by 16.56% thus improving PAT growth to 29.01% as against PBTgrowth. In comparison to sale growth however PAT growth in very positive due to

maintaining material cost, manufacturing cost. It shows increment in net profit.


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3. Net worth is up by 18.59% as against lower growth in loan funds by 11.07%. it showsvery strong financial position. Net fixed assets higher by only 8.72% where as netsales grew by 24.69% This shows very efficient fixed assets utilization.

4. Investment grew by 101.92%. Investment in absolute terms very high. It is muchmore than net worth (18.59%). So it shows a very unique feature.

C. Dupont Analysis:

OR

DU PONT ANALYSIS

RATIONET

PROFIT

MARGIN

*NET

WORTH

TURNOVER

= RONW

FORMULAEPAT/Net

Sales*100*

Net

Sales/Net

Worth

=PAT/Net

Worth*100

2001-02 0.31 * 37.09 = 11.65

2002-03 0.41 * 30.13 = 12.2

2003-04 0.47 * 16.89 = 7.89

2004-05 0.52 * 17.22 = 9.01

2005-06 0.46 * 19.06 = 8.79

2006-07 0.5 * 19.72 = 9.94


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2007-08 0.42 * 23.89 = 10.06

2008-09 0.42 * 29.67 = 12.43

2009-10 0.44 * 34.48 = 15.03

2010-11 0.44 * 36.49 = 16.06

Interpretation:a. Increase in ROA contributed by improvement in both the net profit margin as well as net

assets turnover.

b.

This finding indicates that an ideal situation for the AMUL.

Overall Conclusion:

Financial statement summarizes an AMULs financial position at a given moment in time as well

as over longer period. They should reflect any variance between the actual operating result &

the budgeted goals that were previously approved by the company. The company has a good

financial position as of current status.

Amul has crossed the $2.5-billion mark with Indias biggest dairy brand reporting a turnove r of11,668 cr. in 2011-12, ended March 31, 2012, out of which 9,901 cr. were paid back to 32

lakh farmer members of milk unions.

Announcing the annual results after the 38th annual general body meeting of Gujarat

Cooperative Milk Marketing Federation Ltd, which markets the Amul brand, said that the

turnover of FY12 was 20 per cent higher than that in 2010-11, 9,775 cr.

In 2012-12, GCMMF plans to achieve a turnover of 14,400 cr.

At a time when farmers in other States were struggling to make their milk business viable in the

absence of good returns, their counterparts in Gujarat are rejoicing over a 58 per cent increase

in their milk prices over the last three years, he said in a statement. Member farmers of

GCMMF received a price of 468 per kg of fat for their milk production this year, the highest

price being paid to farmers in the country.

Apart from the 750 distributors added in dairy and fresh products segment, GCMMF also added

150 super distributors through the implementation of its new hub & spoke model, to reach

the smaller markets.

In 2011-12, 965 new Amul Parlours have been added, taking the total strength to 6,315. Apart

from the 170 parlours at railway stations and 303 operating at various centres of excellence,Amul has 600 air-conditioned ice-cream scooping parlours, making it the largest single brand

retail in the country.

GCMMF will be investing 3,000 cr. to set up nine processing units in the next four years. This

would enhance our milk handling capacity from the existing 145 lakh litres per day to 180 lakh

litres per day.


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Currently, dairying contributes 26 per cent in agricultural output but still receives only 12 per

cent of the public expenditure on agriculture. Exempt income-tax on dairying, as in case of

agriculture, and reduced VAT rates on consumer products at 12.5 per cent.

With 20 per cent growth in milk procurement, Amul entered its golden phase in 2012-13, said

the Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets the Amul brandof milk and milk products.

The federation said group turnover reached 19,100 cr. or $3.2 billion.

GCMMF, the apex body of milk and dairying co-operatives in Gujarat, said it is passing through

an era of simultaneous acceleration in demand and supply.

The federation procured and handled 16.6 million kg of milk during the winter months in 2012-

13.

Leveraging several marketing and technological innovations as well as its enhanced distribution

reach, GCMMF closed the year with a turnover of 13,735 cr., 18 per cent more than the

turnover of 11,668 cr. in 2011-12.

The Group turnover of the federation and its constituent member unions, representing

unduplicated turnover of all products sold under the Amul brand in 2012-13, was 19,100 cr.

or $3.2 billion.

Analysis of Relevant Ratios:

1.

The Debt-Equity v/s Long Term Debt-Equity ratio shows the percentage of deb and networth. Long term debt to equity ratio shows the percentage of long term debt net worth.

It seems that GCMMF has used more of long term debt as compared to Short term debt.

As a result it has ended up more in paying interest. But as far as the percentage of debt

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

2001 2002 2003 2004

Debt Equity Ratio

Long Term Debt Equity Ratio


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to equity is concerned the use of debt has been declining over years. Of the total capital

employed debt is more as compared to equity. Thus it can be concluded that the stake of

creditors and bankers is more in the total capital employed.

2. Interest Coverage Ratio is used to test the firms debt servicing capacity. It shows the

number of times interest charges are covered by funds that are ordinarily available forpayment.

Interest Coverage Ratio was of the firm was 1.84 times in 2001,which has increased to 8.28

times in 2004.This indicates that the firm is easily able to pay the interest charges out of its

present earnings.

A. Dupont Analysis :

Ratio

Components of ROCE

The companys before depreciation, interest and tax has remained constant over the years.

In 2003, though the sales/CE has increased the PBDIT/Sales ratio has declined. This can be

0

2

4

6

8

10

2001 2002 2003 2004

Interest Coverage Ratio

Interest Coverage

Ratio

0

5

10

15

20

25

30

35

2001 2002 2003 2004

PBDIT/Sales

Sales/CE

ROCE


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attributed to the increasing level of expenditure by the company. But the ROCE has

increased due to decreasing capital employed in the year 2003.Overall the ROCE has

increased by 26%.

B.

Components of ROE:

The trend in CE/Net Worth has remained steady over the years except during 2003 where

CE/Net Worth has declined. This can be attributed to the increase in Net Worth and a

decrease in the Capital employed. PAT/PBDIT showing an increasing trend, this can be

attributed to the declining taxes over the years. PBDIT/CE ratio has increased in 2003

because of decrease in capital employed and decreased in 2004 due to increase in capital

employed. ROE has increased due to an increase in PAT.

C. ROCE vs ROE :

ROCE and ROE has shown an increasing trend up to 2002, but after that in year 2003, it

is showing the opposite trend. This is due to an increase in Net Worth and decrease in

capital employed. Again in 2004, there is an opposite trend in both ROCE and ROE

because of increase in capital employed.

Rapid Expansion

0

5

10

15

20

25

30

35

2001 2002 2003 2004

PBDIT/CE

PAT/PBDIT

CE/Net Worth

ROE

0

5

10

15

20

25

30

35

2001 2002 2003 2004

ROCE

ROE


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Amuls long-life UHT milk has shown value growth of 53 per cent and sales of Amul

cream also increased by 57 per cent in value terms.

Amuls innovative milk beverages range showed quantum value growth of 27 per cent.

In ghee, the two mega-brands, Amul and Sagar, together achieved growth of 31 per

cent.

Sales of Amul butter and cheese grew 18 per cent and 19 per cent, respectively, whileice-cream sales grew 21 per cent.

The 63 per cent growth in milk production in the last four years was the result of the

high procurement price paid to farmers.

Better returns from dairying have motivated farmers to enhance their investments in

increasing milk production.

Distribution

In 2012-13, Amul expanded its distribution footprint to reach new geographical markets. It

added 306 distributors, 65 super-stockists and 900 sub-stockists.The plan for 2013-14 includes expanding the distribution reach to 700 new markets by adding

more distributors and super-stockists. It plans to add seven new branch offices within the next

few months.

Amul further consolidated its status as the largest single -brand retailer in the country by adding

at least three exclusive parlours every day in 2012-13, taking the total tally of its exclusive

stores to 7,000.

The federation plans to increase the parlour network to 10,000 within the next two years.

GCMMFs sales to the defence services were . 233 million during the year 1994, were mainly

to Burma, Uganda and West Africa. The company plans to expand its export markets in Saudi

Arabia and other Middle East countries.

Balance Sheet of 2012-2013:

Balance Sheet as at 31st March, 2013 Amount in Rs.

Particulars NoteAs at 31st Mar

2013 As at 31st Mar 2012

I. FUNDS AND LIABILITIES

(1) Funds

(a) Reserves and surplus 2 12,56,68,884 10,06,35,674

12,56,68,884 10,06,35,674

(2) Non - Current Liabilities

(a) Long-term provisions 3 17,33,012 13,53,973

17,33,012 13,53,973

(3) Current Liabilities


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(a) Short-term borrowings 4 43,41,572 80,43,119

(b) Trade payables 5 2,51,14,508 1,36,35,844

(c) Other current liabilities 6 1,39,10,892 1,11,37,472

(d) Short-term provisions 7 53,805 75,818

4,34,20,777 3,28,92,253

TOTAL 17,08,22,673 13,48,81,900

II. ASSETS

(1) Non-Current Assets

(a) Fixed assets 8

(i) Tangible assets 9,81,62,163 7,58,54,420

(ii) Intangible assets 0 14,864

(iii) Capital work-in-progress 23,27,377 51,27,654

10,04,89,540 8,09,96,938

(b) Long-term loans and advances 9 1,93,98,792 83,35,902

11,98,88,332 8,93,32,840

(2) Current Assets

(a) Inventories 10 3,22,70,558 2,37,21,311

(b) Trade receivables 11 46,58,078 18,72,649

(c) Cash and bank balance 12 1,08,95,501 60,55,480

(d) Short-term loans and advances 13 21,60,892 1,35,44,998

(e) Other current assets 14 9,49,312 3,54,622

5,09,34,341 4,55,49,060

TOTAL 17,08,22,673 13,48,81,900

Statement of Income And Expenditure:

Statement of Income And Expenditure for the year ended31st March, 2013 Amount in Rs. Amount in Rs.

Particulars Note Year ended on

Note

Year ended on

31st Mar 2013

Year ended on

31st Mar 2012

I. Income from operations (Gross) 15 1,38,26,85,411 1,24,36,88,432

Less : Excise duty 27,34,536 12,83,437

Income from operations (Net) 1,37,99,50,875 1,24,24,04,995

II. Other income 16 10,30,812 9,51,385

III. Total income (I + II) 1,38,09,81,687 1,24,33,56,380


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IV. Expenditure:

a. Cost of Raw materials consumed 17 1,12,66,74,677 1,03,20,67,299

b. Purchases of milk and milk products 8,80,61,239 5,95,34,690

c. Change in inventories of finished goods, stock in process

and stock in trade 18 19,20,797 7,40,497d. Manufacturing expenses 19 9,99,78,201 8,66,40,220

e. Employee benefits expenses 20 2,20,13,793 1,90,02,920

f. Finance charges 21 6,00,246 7,33,976

g. Depreciation and amortisation 8 78,92,707 76,38,466

Less : Adjusted against grant received 5,43,198 14,64,546

Net depreciation & amortisation 73,49,509 61,73,920

h. Other expenses 22 2,33,46,783 1,93,79,858

Total expenses 1,36,61,03,651 1,22,27,92,386

V. Surplus before tax (III-IV) 1,48,78,036 2,05,63,994

VI. Tax expense:

Provision for taxation

VII. Prior period adjustment

Prior period depreciation on Grant 26 7,65,297

VIII. Surplus for the year (V-VI+VII) 1,56,43,333 2,05,63,994

Cash Flow Statement:

Cash flow statement for the yearended 31st March, 2013

Particulars Year ended 31st March 2013 Year ended 31st March 2012

A Cash flows From Operating Activities:-

Surplus before tax 1,48,78,036 2,05,63,994

Adjustments for :-Depreciation and amortisation expenses 73,49,509 61,73,920

(Profit ) / Loss on sale of assets [ net ] 5,35,239 (1,29,977)

(Interest income ) (6,83,575) (5,28,795)

Interest expenses 4,44,518 4,69,477

Total 76,45,691 59,84,625

Operating profit before working capital

changes 2,25,23,727 2,65,48,619


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Adjustments for :-

(Increase ) / Decrease in trade andother receivables 75,04,737 (2,56,130)

(Increase ) / Decrease inventories (85,49,247) (10,15,805)

Increase / ( Decrease ) in trade payables

& other liabilities 1,46,09,110 (42,44,098)

Total 1,35,64,600 (55,16,033)

Cash generated from operations 3,60,88,327 2,10,32,586

(Direct taxes paid ) [ Net of refunds ] (1,45,505) (1,89,027)

Total (1,45,505) (1,89,027)

Net cash from operating activities 3,59,42,822 2,08,43,559

B Cash flows From Investing Activities :-

Interest received 6,83,575 5,28,795

Purchase of fixed assets(2,80,33,379)

(2,37,10,496)

Capital advances

(1,04,18,135

) (17,32,458)Proceeds from sale of fixed assets 1,07,203 1,52,935

Net cash from investing activities

(3,76,60,736

)

(2,47,61,224

)

C Cash flows From Financing Activities

:-

Grant received 1,07,04,000

Increase / ( Decrease ) in short term

borrowings (37,01,547) 32,49,287

Interest paid (4,44,518) (4,69,477)

Net cash used in financing activities 65,57,935 27,79,810

Net Increase / (Decrease) in cash and

bank balances 48,40,021 (11,37,855)

Cash and bank balances at the beginningof the year 60,55,480 71,93,335

Cash and Bank Balance 60,55,480 71,93,335

Cash and bank balances at the end of the

year 1,08,95,501 60,55,480

Cash and Bank Balance 1,08,95,501 60,55,480

7. CONCLUSIONWe started the project by giving an overview of the AMUL company. Then we discussed

the Industry analysis.We compared the Food Processing Industry as a whole and how the

improvement in this sector is causing the domestic players to take the challenges of the

market. We also compared the various competitors of Amul for its different products.


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We have also done the Marketing Strategy analysis of Amul highlighting the facts of how

Amul is able to meet the demands of the market and is able to strategize its policies in

order to ward off the threats of its competitors.

We have also done the Key Financial analysis for Amul . It is to be noted that all the data is

pertaining to the Balance Sheet of the company and the sales, revenue and profit that thecompany has earned over the years. We have not got any help from Stock Market(such as

Marketwatch.com OR moneycontrol.com) because Amul is neither listed in BSE or NSE.

We have come to the conclusion that brand Amul is successful in the Indian market because

of the following:

Able to improvise the products according to the needs of the consumers.

Its successful advertisement campaign in the rural areas.

Having grabbed a large part of the market share due to its high Liquidity and

Working Capital. Due to its strong supply chain.

Due to its ability to venture in vegetables and fruits.

Its strength to ward off the threats posed by its competitors.

Amul is the largest food products company in India. It has a good network of wholesellers,distributors, suppliers and consumers.It has been continuously launching new products inthe market in the food category according to the needs and demands of the consumers.

Recommendations :

Amul needs to improve on its trader relationships by providing good tradepromotions.

Amul can have special tie ups with different Modern format stores give exclusive offers to these store as they promote the brand through distributing

leaflets.

Amul can give special offers to stores located in central locations.

8. Bibliography:

1. http://www.thehindubusinessline.com/

2.

http://www.amul.com/3. http://economictimes.indiatimes.com/

4. http://www.firstpost.com/election/farmer-empowerment-is-amul-model-better-

than-retail-fdi-551382.html

5. http://www.wikipedia.com/

6. www.ilri.cgiar.org

7. Marketing Management by Tapan K Panda


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analysis of refrigerators marketing

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