By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 1

“The backward sections of society in India have been exploited and ill-treated for many years. Therefore, there is a need to make up for it (the ill-treatment)”

– Dr. Varghese Kurien, Chairman, GCMMF

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 2

COMPANY’S BACKGROUND

Amul (Anand Milk Union Limited), formed in 1946, is a dairy co-operative in Western India. It is managed by Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF). It is a sterling example of a co-operative organization's success and has been primarily responsible for India to become world’s largest milk producer. It has established itself as a uniquely appropriate model for rural development and spurred the White Revolution of India.

The company is owned by 3.1 million proud Indian farmers and caters to almost 2.1 billion consumers. Few companies have gone the distance in connecting the farmer with the consumer in a seamless chain as Amul did. Their basic philosophy has been ensuring maximum returns to the milk producer and makes “Value for money” milk products for its consumers.

Vision: Liberate the farmers from economic oppression and lead them to prosperity.

To implement this vision, a hierarchal network of co-operatives was developed which forms the backbone of the strong Amul’s Supply chain and stretches from small farmers to most fragmented markets. Amul developed distinct capabilities that would deliver competitive advantage to its operations and leveraging on scarce resources.

But the fact is that GCMMF is directly responsible only for a small part of the supply chain and a number of third party players are involved, such as milk collection, distribution of dairy products, logistics etc. Managing this supply chain is critical for Amul’s competitive position considering the low margin business.

Product Portfolio:

Amul has got a diverse portfolio and thus follows umbrella branding strategy through this vast network. The range of products is similar in production by the various unions it handles. Thus with umbrella branding, Amul avoided inter-union conflicts and increased co-operation in developing products.

Following are the varieties of products offered by AMUL:

1) Fresh Milk - This is the most basic product by Amul. There are around 9 further sub-products available in various flavors.

2) Milk Products - This segment is the largest and most selling product for Amul. The company has added further variety by providing them in various flavors and packaging.

3) Powder Milk -This includes varieties like Tea/Coffee whitener and milk for infants. There are around 5 sub-brands including Amul Spray, Amul Full Cream Milk and Amulya.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 3

4) Cheese - It has various sub-products and caters mostly to Tier-I cities.

5) Bread Spreads - Amul butter is the most famous sub-brand in this category and has almost 85% market share.

Below listed is the complete portfolio across various categories along with year of inception.

The existing supply network of AMUL

The distribution network

Amul products are available in over 500,000 retail outlets across India through its network of 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products.

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other 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 dealer’s ROI. All the branches of GCMMF are engaged in route scheduling and have dedicated vehicle operations.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 4

Largest Cold Chain:

AMUL has the largest cold chain network in India (18000 refrigerators) as compared to any other company. The chemical components of milk are water, SNF and solids. It is a perishable product so it has to be consumed within 24 hours. In order to avoid wastage AMUL converts the milk into SNF (Solids not fats) and milk solids by evaporating the water, which comprises of 60-70% of the milk contents.

Customers:

India is still in the evolutionary stage with tremendous potential for high value products such as variants of milk. The distribution network is quite reasonable with access to metros as well as rural areas.

Suppliers:

A majority of suppliers are small or marginal farmers who are illiterate, poor and with liquidity problems.

Third party logistics service:

There are ample deficiencies in the current infrastructure and the outbound logistics is taken care by GCMMF coordinating with distributors. It also connects with unions for product mix, product allocations and in developing production plans.

The key lies in matching supply and demand as the demand outstrips supply by a big margin.

Interlocking control:

The objective of interlocking mechanism is to ensure that the interest of the farmer is always kept at the top of the agenda through representatives who constitute the Boards of different entities that compromise the supply chain. Professional managers and farmers work together as a team to strengthen the cooperative.

Coordination agency:

Objective of such an agency is to ensure the milk produced by the farmer is sold in the market either as milk or as value added product.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 5

. The existing supply chain of Amul -

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 6

The procurement channel

THE GCMMFL VALUE CHAIN

The network

Milk is procured from the villages and collected at Village Cooperative Societies (VCS); from there the milk is taken to manufacturing units where the milk is processed into various products. The products are then transporters to the company Depots located in various parts of the country. The products are then sent to Wholesale Distributors (WD) and from there to the retailers.

The detailed information:

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 7

Milk is procured twice a day from 2 million from Gujarat alone The payment is made under twelve hours of procurement There are 10000 village cooperative societies There are 3600 wholesale distributors in the country 45 depots The C&F agents are not fixed and are decided by the local company offices There are approximately 4,50,000 retailers spread all over India Total house hold consumers covered are 100,000 The milk procured per day is 5 million liters Where the total capacity of operation is 7 million liters per day The peak processing till date has been 6 million liters per day These co operative societies are bound to supply there produce only to GCMMF.

SCM and Market Logistics

Enterprise resource planning:

The company at has implemented an ERP program as low as Rs. 3 crores in collaboration with TCS ltd. The company uses it; the data right from the procurement from the farmers till the delivery of goods to the retailers is fed into the system. The software enabling the channel members to use for the synchronized working and best possible utilization of the available resources maintains details regarding the inventory management.

Market logistics deals with the implementation of the SCM of the company.

Upstream Channel in which milk is procured from the farmers to the manufacturing units.

1. In the first step, the milk is taken to the VCS by the farmers on foot or bicycles in small quantities

2. The second step involves the transportation of milk from the co-operatives to the manufacturing units this is done in special trucks which are equipped with tankers to carry milk.

Downstream Channel

It is the distribution part of the supply chain. From the manufacturing units to the retailer, the first leg of transport is from the manufacturing unit to the company depots. This is done using 9 and 18 MT trucks any lesser quantity will be uneconomical to the company there fore is some time the quantity ordered is lesser then club loading is done which means that the product ordered is supplied with some other products.

Frozen food the temperature of these trucks is kept below -18˚C Dairy wet the temperature of these trucks is kept between 0-4˚C Second leg is from the depot to the WD’s, this transport is carried out in insulated 3 and 5 MT TATA 407’s here a permanent dispatch plan (PDP) is prepared where the distributor plans out the quantity of various products to be ordered on a particular date.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 8

Third leg this is the flow of good from WD’s to retailers, a beat plan is prepared and transportation is done on auto-rickshaws, rickshaws and bicycles.

E-initiative:

The GCMMF – Amul has taken the initiative of installing the AMCUS – Automatic Milk

Collection Unit Systems at village societies to enhance the transparency of transaction between the farmer and the Co-Operative Society. These systems not only ensured the transparency but also gave Co-Operative societies a unique advantage by reducing the processing time to 10 percent of what it used to be prior to this.

The success of AMCUS prompted the GCMMF to aggressively go on using Information Technology to capture the end-to-end data. GCMMF planned to cover all aspects of the value chain. The Dairy Information and Services Kiosk (DISK) is another initiative that is started with the help of IIM (A) by GCMMFL.

Various things like Enterprise wide Integrated Application Systems (EIAS) to integrate the Distribution side of the Supply chain, DISK – to upgrade the application at the Milk Collection Centers and to connect them to the Internet to access a specialized dairy portal with content delivered in the local language have already started giving the fruits to the rural poor, which has persuaded the rural folks to actively participate in IT Revolution of the dairy industry.

CHANNEL MEMBERS

Selection procedure /locating /Appointment of channel members/

The company takes into consideration a host of factors while selecting the channel members. This is because GCMMF believes that selection of channel members is a long run decision & the rest of the decision regarding the supply chain depends upon the efficiency & coverage by the channel members. The following are the host of factors considered by the company in selecting the channel members:

o Authentication is required by the regarding the identity of the channel members, which includes the name & address, photograph of the location. o Proof of solvency which requires name & address of the channel member’s bankers.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 9

o Safety of the inventory, which means that the distributor/ dealer should get the stock of the company insured. o Inventory or the perishable goods kept by the distributor/ dealer should be in good condition which means a detail of storage space & Refrigeration facility is to be provided. Refrigeration system should have deep freezers, cold room & walk in coolers. o Details of the delivery vehicle, which includes Light Commercial Vehicles, Matador, 3 Wheeler Van, Tricycle Van & Hand/Push cart. The number & model of each of the vehicle needs to be furnished to the company. o GCMMF acknowledges the fact that it needs to be sensitive to the market demands. For this it requires that a number of salesmen needs to be present on the field. The salesmen too are divided into various categories like the Field salesmen & Counter salesmen. Also the details of Clerical Staff & Mazdoors are to be provided. The technical competence of the salesmen needs to be mentioned o Details of the product kept of other companies have to be provided. The annual sales of these products too have to be mentioned. Also details of complementary products & product lines need to be mentioned. o Dealers of the company must carry a good reputation. This is due to the fact that the company believes reputation of the dealer affects the clientele. o Market coverage by the distributors needs to be defined which includes details of Geographic coverage & Outlets per market area. o The Company also requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.

When companies appoint C & F agents at Mother Depot?

The C&f are engaged in the manufacturing of milk products, marketing, sale & distribution of MILK and other milk products, including those manufactured / sold by other manufacturers / companies (hereinafter collectively referred to as “The Products”).

The following analysis has been done typically after looking at the past data of AMUL /GMCCF and their compulsory requirement of C&F

TO FOCUS ON CORE –COMPETENCY / MITIGATION OF RISK

The C & F Agent has the necessary infrastructure / facilities and is capable / competent as Carrying and Forwarding Agent for and on behalf of the Company in a specialized manner as they excel in the following work category in connection to receive the products sent by the Company, to store the products under its control and to deliver and / or forward them to such person(s) in such lots and on such directions as may be instructed by the Company from time to time and requested the Company.

SPECIALISED SERVICES AND INVESTMENT IN INFRASTRUCTURE WHICH WILL BEAR AN ADDITIONAL COST TO THE COMPANY –

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 10

If the company does not appoint the same in that case they have to make a huge investment in the trucks for transportation, warehouses, specialized instruments etc. This will bear an additional cost to the company.

REDUCTION IN COST AND LESS FOCUS –

Outsourcing of the c & f functions helps company to reduce its manpower that would otherwise be engaged in carrying and forwarding and company will not able to focus on its core competencies ie.Production of Milk.

The C & F Agent is wholly and solely responsible for its employees activities and in no circumstances the Company directly or indirectly be liable for any claims / demands made by the employees of the C & F Agent, including the liability, if any, under the Employees Provident Fund, Gratuity, ESI and such other enactments of Central Government, State Government and Local Authorities concerned. Such employees are not be considered as employees of the Company and for whose act, default and omission, the C & F Agent is responsible and keep the Company indemnified at all times.

The liability for complying with all labour enactments, legal and other formalities and making all payments due under any law or contract pertaining to the persons employed in or in connection with the operations as per the terms and conditions of this Agreement lies wholly and exclusively on the C & F Agent. The liability for all such compliances and payments are of the C & F Agent.

TEDIOUS TASK OF FOLLOWING UP IS DONE BY C &F

The C & F Agent takes care of delivery of the Products from the transporter / carrier immediately on their arrival at the destination. If the consignment sent by the Company does not reach the destination within specified time of dispatch, the C & F Agent shall gives written notice of the same to the transporter with a copy marked to the Company. This process looks very simple but if we go through the data and look for the products distribution throughout India. 50% of the commitments are done through follow ups which in turn would have been a tedious task if company does not appoint an C & F

CHECKING AND INSPECTION –

The stocks on reaching the premises of the C & F Agent / Transporter’s godown shall be checked and counted by the C & F Agent. In the event of loss, damage, shortage or spoilage, the C & F Agent shall procure necessary certificate of loss damage, shortage or spoilage from the transporter and where necessary, shall also arrange for insurance surveys as laid down under insurance Company’s Rules. In the event of failure to comply with this condition, the liability of financial loss, if any, will entirely rest on the C & F Agent. The Company will provide the C & F Agent with full details of insurance requirements.

STORAGE FACILITY PROVIDED BY C & F

The C & F Agent arranges for proper storage of the Products in a separate godown of first class construction with adequate capacity, ideally admeasuring a minimum of 1500-2500 sq.ft. Initially which is to be enhanced eventually, as per requirements and the products shall not be mixed up with the products of any other products. The C & F Agent is responsible to the Company for all damages / losses due to improper storage and / or bad handling of the Products or shortage or theft of the Products from their godown and indemnifies and keep indemnified the Company for all such losses and damages. The C & F

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 11

Agent further agrees and authorizes the Company hereby to adjust such losses / damages from any sums that may be payable to the C & F Agent under this agreement or otherwise by the Company.

The C & F Agent keeps and stores the stocks of the said Products in a safe and secure condition to avoids contamination from any source and to prevent damage or loss from theft, fire, flood and other dangers. The C & F Agent also keep the products in clean and hygienic premises and surroundings in compliance with the rules prescribed by any Authorities. The C & F Agent also complies in all respects with the requirements of insurance companies engaged or caused to be engaged by the Company to insure various risks to the products.

LICENCES BY GOVT. AUTHORITY -

The C & F Agent arranges to procure and maintain current licenses and permissions prescribed by law or by competent authority for storage and sale of the Products. The licenses wherever applicable are in the name of the Company. The responsibilities to comply with the terms and conditions of the licenses and permits are that of the C & F Agent and no liability whatsoever will be attached to the Company from the consequences of penalties, forfeiture and seizure occasioned by failure of compliance with and / or breach of laws, rules and statutes relating to the said licenses and permits relating to the Products.

In the event the Company is compelled to make any payments and / or fulfill any other requirements of the Authorities in this connection, the C & F Agent is liable to reimburse to the Company all such payments made and all expenses incurred in such connection without prejudice to the rights of the Company to claim damages or to pursue legal remedies against the C & F Agent for such lapse.

TAKE CARES OF DELIVERY OF GOODS -

The C & F Agent dispatch / deliver / sell the Products in such quantities and to such destinations / parties within such territory or any other suitable location duly approved by the Company from the respective godown after receipt of confirmation from the Company.

In the event of any loss or damage to the stocks in any manner whatsoever during transshipment, the C & F Agent is wholly responsible for recovering the value of such loss from the carriers within 15 days of lodging the claim with the carriers. In case the value is not recovered within this time, the Company is entitled to deduct the same from the next payment receivable by the C & F Agent.

MANTAINS DAY TODAY STOCK REGISTER / OTHER NECCESARY DOCS

The C & F Agents maintains day to day stock records as advised by the Company and sends all such periodic statements of accounts as are relevant to its operations, duly countersigned by the Company’s authorized representative. The C & F Agent makes all records available for inspection / verification at all time to the accredited representative(s) / auditors of the Company / its Principals.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 12

MANTAINS NECESSARY INFRA - FACILITIES

The C & F Agent installs sufficient telephones and fax machines to enable smooth and efficient performance. The C & F Agent also installs / operates computers / software for computerization of documentation, accounts, data processing and other operations. The C & F Agent prepares / furnishes the documents / data / information at such intervals and in such manner as set out by the Company.

The C & F Agent at all times is bound to specific instructions given by the Company at the expenses of the Company, to return to the Company or to consign to any place or places or to any consignee as required by the Company the products which for the time being be in the custody or under the control of the C & F Agent.

It is also agreed that local transportation expenses for receipt and delivery of goods shall is borne by C & F Agent and out station transportation expenses for receipt and delivery of goods shall be reimbursed by the Company.

The C & F Agent also ensures compliance of all applicable statutory obligations under the Central / Local Sales Tax in pursuance of the various obligations under this Agreement and keeps the Company indemnified from all the consequences of any such non-compliance.

ACTS AS A POC BETWEEN TRANSPORTER AND COMPANY

The C & F Agent on receipt of freight bills from the transporters forwards the same to the Company’s office at the place specified in the schedule hereunder written after proper checking for certification and payments. The Company settles the freight bills at head office. If the transporters insist on payment at any other place, the Company specifically authorizes the C & F Agent in writing to pay the bills from their end and to include the said amount in their monthly bill to the Company for reimbursement, along with transporter’s official money receipt.

The C & F Agent shall conduct sales and distribution of the products on such terms and conditions at such rates / prices intimated by the Company. In case the Company announces schemes / gifts / discounts etc. the C & F Agent shall make available to customers / stockists such offer as per the terms of the Company. The C & F Agent shall maintain such records in respect of schemes / gifts / discounts, as prescribed by the Company.

What documents does the company raise?

AGREEMENT: An agreement is a negotiated and legal enforceable understanding between the two or more legal competent parties. The company enters into a contract with the transportation companies who intent to take up the work of transporting the milk and other related products from the company‘s plant, to warehouses, to the wholesalers and finally to the retails there by to the end users.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 13

Attached at the end of the sheet is a typical agreement between the GMCCF and the transport companies and the point of sale or retail vendors for the year 2014-2015

POS agreement copy - Annex 1, Annex 2, Annex 3, Annex 4 attached...

ISO – certification copy attached

LETTER OF INDENT – Letter of indent is an interim agreement that summarizes the main points of a proposed deal, or confirms that a certain course of action is going to be taken. Normally, it does not constitute a definitive contract but signifies a genuine interest in reaching the final agreement subject to due diligence, additional information, or fulfillment of certain conditions. The language used in writing a letter of intent is of vital importance, and determines whether it is only an expression of intent or an enforceable undertaking.

The GMCCF enters into an LOC agreement with the transport companies and other units such as plant, or retail, point of sale regarding the payment

It is mutually agreed that the rates in mentioned in LOI (Letter of Intent) are to remain in force for the period specified therein, and in case of any changes that may be agreed to from time to time the same is given effect by amending the LOI in the manner prescribed therein.

INVOICE AND DISPATCH INVOICING – An invoice is a non -negotiable commercial instrument issued by a seller to a buyer. It identifies both the trading parties and lists, describes, and quantifies the items sold, shows the date of shipment and mode of transport, prices and discounts (if any), and delivery and payment terms.

In certain cases (especially when it is signed by the seller or seller's agent), an invoice serves as a demand for payment and becomes a document of title when paid in full. Types of invoice include commercial invoice, consular invoice, customs invoice, and pro forma invoice, also called a bill of sale or contract of sale.

In case of GMCCF

Invoices are prepared in the name of Gujarat Cooperative Milk Marketing Federation Ltd., Anand. Invoices carry the purchase order numbers compulsorily and separate delivery

Challans also accompany after makeover duly certified by the branch along with invoice. Without the photograph of the outlet the company does not release the payment. It’s also ensured that invoices are prepared as per approved price of excise and sales tax whenever applicable.

What documents does transport produce?

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 14

TRANSIT INSURANCE – Transit insurance refers to the insurance of the moving stock or the products that are carried / loaded in the vehicle.

The Transport Carrier complies with all the requirements that are requested by the Consignee such as shortage/damage certificates and also complies with other formalities as required for filing claims for transit damages on Insurance Company under transit insurance policy, such as acknowledgment of claims notices providing FIR, photographs, police reports etc.

A claim / damage notice covering the entire quantity and value of damages would then is served in duplicate on local/designated office of the carrier firm. The carrier firms is required to return copies of such claim/ damage notices duly signed and rubber stamped by the authorized representative of the carrier firm in acknowledgment of damages, within 10 days from the date of serving such notice to the Transport Carrier. This is an essential requirement for filing claims for transit Damages on insurance company under our transit insurance policy. The carrier firms would be required to acknowledge full quantity and value of damages. However, their liability is limited, only to the extent of claims lodged but not settled by the Insurance Company. In case of all Survey Claims, transport carrier will be required to issue a separate shortage/ damage certificate on their letter-head covering the entire quantity of damages as reported in the corresponding claim/damage notice served on them as referred above.

FREIGHT BILLS – Freight bill acts as the contract of carriage between the consignor and consignee. The Transport Carrier fortnightly /monthly submits freight bills in duplicate to the consignee, on 1st and 16th of every month for the consignments delivered at the destinations as per the rates approved by Federation along with a summary of CN cum DMR and a copy of Consignment Note under which the subject consignment has been transported.

STOCK TRANSTER NOTES OR SALE INVOICE - Stock transfer note refers to the document which is checked and prescribed quantity and details of loading are updated on the document. It’s very similar to the sale invoice which refers to the bill that is provided by the seller to the purchaser of product mentioning the details such a quantity amount quality and date of purchase along with the TIN NO. Etc.

The Transport Carrier’s employees or agents are responsible for verifying the quantity received by them at the place of loading and tallying them with the quantity as per documents (stock transfer note or sale invoice as the case may be) and irrespective of whether the refrigerated van is sealed or not, they will be responsible for any shortages found at the destination. They will therefore have to verify the count taken at the time of unloading the refrigerated van at the destination and ensure that the count tallies with the quantity stated in the documents, which they have already verified at the time of loading of the refrigerated van.

CONSIGNMENT NOTE –

It’s a document prepared by a consignor and countersigned by the carrier as a proof of receipt of consignment for delivery at the destination. Used as an alternative to bill of lading (especially in inland transport ), it is generally neither a contract of carriage nor a negotiable instrument.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 15

BANK GUARANTEE - A type of guarantee in which a bank or other lending organization promises to repay the liabilities of a debtor in the event that the debtor is unable to pay off.

DELIVERY EXAMINATION REPORT

In cases of shortages, breakages, damages or goods having been delivered in unsound conditions, Transport Carrier’s representatives present at the time of delivery of consignment, has to first acknowledge such shortages and damages by signing the Delivery Examination Report prepared at the time of taking delivery of the consignment.

The following documents related to ROAD transport must be carried by the transport lorries or trucks

ROAD PERMIT - permit is a mandatory requirement to be paid to regional transport office by commercial vehicle registered, as set forth in Sec. 341 (41) (7) of Motor vehicles Act 1988.

What documents do the intermediaries produce?

INTIMATION LETTER IN CASE OF BREAKDOWN – Intimation letter refers to the intimation in written by the transport company to the GMCCF in case of breakdown of the vehicle in transit when it’s loaded with the milk or other milk related products

DAILY MOVEMENT REPORT CUM CONSIGNMENT NOTE - A consignment note is agreement between the consignor of a shipment and the carrier of the shipment, which records the receipt of goods for shipment to a specified destination. The consignment note also specifies the consignee of the shipment and the fee for shipment, but unlike a bill of lading, is not a document of title. It’s also called a waybill.

ARRIVAL REPORT – report provided regarding the arrival of the products containing the details of the product which has been received by the retailers.

ACKNOWLEDGEMENT INVOICE - acknowledgment invoice refers to the documents which confirm the receipt of the product satisfactorily by the consignee. DAILY MOVEMENT REPORT refers to the document which confirms the product that has been loaded and is transported to the different locations by Transport companies.

The Transport Carrier shall furnish Daily Movement Report cum Consignment Note which is printed by Transport Carrier on their letterhead in the format given by Federation. (Format Attached) The Transport Carrier has to provide a summary of the Daily Movement Report cum consignment Note for the period of bills presented along with the presentation of the bills ( As per Annexure-F)

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 16

Q4>what is the relevance of invoice/challans, road permit, consignment note exercise documents or any other relevant documents?? RELEVANCE OF INVOICE Invoice is a document to raise demand on a customer (usually in case of credit sales), for the goods supplied to the customer. Based on a copy of the invoice, the concerned customer account will be debited for the sales made. It is also called Credit Bill, taking it as a document representing a demand for a credit sale. Some people call it a Debit Bill, taking it as a document, based on which a debit is made in a customer account. Since it is a credit sale, a demand should be raised on the customer, by preparing an Invoice/Debit Bill/Note, irrespective of whether the customer wants it or not. Based on this only, a sale is recognized (even though money is not received) and the customer account is debited in the ledger. In the current scenario where the maximum business is done on credit basis the importance of Challans has increased as it’s a formal document of transaction between the two parties of the credit transaction. DELIVERY CHALLAN - A document bearing description, condition & quantity of goods for the purpose of locations of movement of the specified goods Usage: Apart from sales invoice, it is advisable to have separate delivery challans in duplicate for obtaining endorsement of the receiver as a proof of actual delivery of the goods. Delivery note (or challans) relevant as it is a document accompanying a shipment of goods that lists the description, grade and quantity of the goods delivered. A copy of the delivery note, signed by the buyer, is returned to the seller as a proof of delivery. This will help the business to estimate the expenses within the next few years. ROAD PERMIT – Road permit is a mandatory requirement to be paid to regional transport office by commercial vehicle registered, as set forth in Sec. 341 (41) (7) of Motor vehicles Act 1988. In Jharkhand the government has launched its portal on e –road permit. Road permit gives an authority to the consignor and consignee to move the good through the roads. CONSIGNMENT NOTE – is a delivery proving document prepared by a consignor and countersigned by the carrier as a proof of receipt of consignment for delivery at the destination. Used as an alternative to bill of lading (especially in inland transport), it is generally neither a contract of carriage nor a negotiable instrument. EXCISE DUTY / TAX A percentage levied on manufacture, sale, or use of locally produced goods (such as alcoholic drinks or tobacco products). A percentage tax levied on a company's revenue, instead of (like income tax) on the company's income. A fixed tax levied on an activity or occupation, such as the license fee charged from attorneys, doctors, and other professionals. Also called excise tax.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 17

In addition to the above the following are the necessary documents that need to be carried along while the Vehicle / trucks are in transit from the companies godown to either C & F, distributer or retailer.

PERMIT:

It is mandatory for owner of a transport vehicle to obtain permit and use permit in accordance with the conditions of the permit granted or countersigned by the Regional or State Transport Authority.

Rationing and quota in permits have been done away with. An application for permanent may be made at any time. Granting of permit is decided by the S.T.A. / R.T.A. Board as the case may be, keeping in view the overall public interest and advantages to the public, of the services likely to be provided, subject to compliance of the requisite condition and formalities.

Applications for permits are available in the office of the secretary S.T.A. and secretary R.T.A. < The applicant must first apply for allotment. After which the applicant can register the vehicle as a transport vehicle in the RTA/STA. Then only can permit be made.There are different categories of permit :

Permit Issued by STA (State Transport Authority)

Renewal: There is no fees for Renewal. But a fine is realised in permit is not renewed before the end of validity. The penalty is paid in the form of Treasury Challan.

Sl. No.

Type of Permit

Permit Category Vehicle type Passenger/Goods Application Fee Details

Routes/Areas of operation

Payment mode

1 National Permit

Goods Vehicle Goods Rs. 16,000/- All India Challan

2

Goods Carriage Permit

Private Carrier Inter State Permit

Goods Vehicles Goods No Fee Routes as required.

3 Private Carrier State Permit

Goods Vehicles Goods No Fee Routes within the state as required.

4 Public Carrier Inter State Permit

Goods Vehicles Goods No Fee Routes as required.

5 Public Carrier State Permit

Goods Vehicles Goods No Fee Routes within the state as required.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 18

Duplicate: In case of loss of Permit , a customer can ask for printing of a duplicate permit, provided he/she brings the required documents and required fees. Fees of Rs. 50 is charged for the Duplicate permit. Terminate Permit:

The permit has to surrendered. There is no fees for surrendering the permit, but a penalty is imposed if permit is not valid. After surrendering the permit a NOC will be issued. Replacement: Replacement is done when the permit issued to one vehicle needs to be replaced by another vehicle of the same owner. The permit has to surrendered. There is no fees for surrendering the permit, but a penalty is imposed if permit is not valid. Fees of Rs. 50/- is realised for Replacement. After paying the fees a Replacement Order &' Time to place' ( A time period during which the vehicle has to be replaced) is issued. The new vehicle number along with proof has to be provided to the RTA/STA. If the replacement is done after the 'time to place' is over,a penalty is imposed. Transfer of ownership of Vehicle: In STA, permit belonging to an individual cannot be transferred to a vehicle belonging to another person. If such a case arise the old permit is terminated. The new vehicle owner will have to apply for fresh permit. But in RTA, transfer of permit from one individual to another is allowed. A fees of Rs. 50/- is realised. Conversion from Passenger to Private: In cases where the permit issued to a vehilce is converted to private. The permit has to be terminated. A copy of the new RC should be submitted then only can the permit be terminated. Permits can be renewed on application made subject to compliance of the requirements. The Regional Transport Authorities can also issue / extend the operation of permits in other regions subject to countersignature by the R.T.A. of the regions concerned. Practically there are no restrictions for grant of permits to goods carriage vehicles, for transportation of public goods on hire. National road permit and all India tourist permits for buses and taxies are granted liberally by S.T.A. on consideration of increasing trend of economic activities. Being a hilly state, road transport is the only means of communication. Keeping in view the ever-increasing mobility of the public and movement of goods, permit facilities are expanded. To support self-employment, road permits are also granted to auto-rickshaw to ply in a rural area and Shilong town. To sum up, transport authorities having regard to overall public interest and economic growth, grant road permits. PERIODIC AND TEMPORARY

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 19

A permit other than a temporary permit shall remain effective for a period of 5 (five) years.

Special permit: In special occasion and circumstances, special road permits are granted for a very short duration on application made.

It is important to note that permits issued / granted are valid (subject to validity of the documents of the vehicles and compliance of all the conditions attached to permits). Using and permitting use of a transport vehicle in violation and contravention of the provision of the M.V. act and rules will attract penalty.

HEAVY VEICHLE USE TAX:

Use this form to figure and pay the tax due on highway motor vehicles used during the period with a taxable gross weight of 55,000 pounds or more; Figure and pay the tax due on a vehicle for which you completed the suspension statement on another Form 2290 if that vehicle later exceeded the mileage use limit during the period; Figure and pay the tax due if, during the period, the taxable gross weight of a vehicle increases and the vehicle falls into a new category; Claim suspension from the tax when a vehicle is expected to be used 5,000 miles or less (7,500 miles or less for agricultural vehicles) during the period; Claim a credit for tax paid on vehicles that were destroyed, stolen, sold, or used 5,000 miles or less (7,500 miles or less for agricultural vehicles); Report acquisition of a used taxable vehicle for which the tax has been suspended; Figure and pay the tax due on a used taxable vehicle acquired and used during the period.

VEICHLE REGISTRATION:

All motorized road vehicles in India are tagged with a registration or licence number. The licence plate (commonly known as number plate) number is issued by the district-level Regional Transport Office(RTO) of respective states — the main authority on road matters. The licence plates are placed in the front and back of the vehicle. By law, all plates are required to be in modern Hindu-Arabic numerals with Latin letters. Other guidelines include having the plate lit up at night and the restriction of the fonts that could be used. In some states such as Sikkim, cars bearing outside plates are barred from entering restricted areas.

Vehicle insurance:

Also known as auto insurance, GAP insurance, car insurance, or motor insurance is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from. The specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions.

Driving licenses in India

DL are issued by individual states via their "Regional Transport Authorities/Offices" (RTA/RTO). The common "All India Permit" allows the licensee to drive throughout the country. For obtaining a licence to drive motorcycles with an engine capacity of 55 cc or

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 20

less, the minimum age is 16. One must be 18 years or older to drive any other type of vehicle. For driving transport vehicles, one should obtain endorsement in the driving licence to that effect.

When do companies resort to inter-state sale and stock transfer?

INTER STATE SALE – Inter-state sale refers to buying and selling of products across state borders. The company usually resorts to inter-state sale of products due to following reasons –

1) Excess of supply within state /saturated market within state 2) High demand of companies product in other states 3) To Boost sales 4) Tax benefits in other states 5) High profitability 6) Increase market share STOCK TRANSFERS –

This is an important factor in the flow of trade and commerce. There are instances where there are states where there are products supplied in access and due to certain reasons the demand of the product increases as a result there falls a shortage of product which results in increase of prices of the product and a disequilibrium is created. To control this disequilibrium the company resorts to stock transfers

CONCLUSION AND RECOMMENDATION

1) Stock outs and huge gap in Supply- Demand of pouched milk:

As we have seen over the past decade that the demand for FDI certified pouched milk has increased significantly in India due to adulteration and mixing of harmful agents in locally supplied open milk, there is an increasing gap between the supply and demand of milk in bigger cities of India. People tend to buy more pouched milk in large cities due to time constraints, convenience and lack of local dairy operators. AMUL has been unable to achieve a zero stock out strategy for its pouched milk retailers. One of the reasons for this is its high brand equity as it is the topmost brand on consumers mind when you talk about Quality and healthy milk. For example, in National capital region people buy AMUL and other pouched milk like Mother dairy from retail stores. Mother Dairy has captured major share in NCR’s market due to large number of franchised retail outlets as compared to AMUL which helps them project the demand and improvise on their supply accordingly. Also this has to do with the ease of local procurement of Mother dairy over AMUL. The consequence is that customers who are willing to buy AMUL milk are unable to make the purchase since it goes out of stock by 7:00 pm in the evening. While Mother dairy retailers keep the adequate stock to be last till late in night.

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 21

2) Forward integration by twin model approach for increasing distribution:

We recommend that AMUL should aggressively open more retail stores inside big residential societies and also more outlets per locality/area to cater to increasing demand. Also, they need to understand the importance of markets that have the largest consumer of pouched milk in India due to its population strength. AMUL also needs to tie up with other retail stores, multi stores and superstores like Big Bazaar, Easy day, etc. to improve demand projection and volume selling.

3) Increasing the production and local procurement of milk to provide an adequate

supply: The above issue of a significant gap between supply and demand is very much related to the limitations AMUL faces in terms of procuring milk from other areas due to which it has to depend heavily on supply from Gujarat milk unions of GCMMF. This comes with huge transportation costs and wastage of milk due to reduced shelf life. We recommend AMUL to work on the backward integration for this problem. Initially we thought to recommend AMUL to tie up with local suppliers/farmers and implement a similar model as GCMMF in other capital region. The issue with this approach is that it defeats the purpose of local cooperatives of Gujarat and they have to start sharing their profit with other unions too for which the stakeholder’s approval is hard to achieve. Also, Mother dairy has already developed strong ties with the local milk producers and farmers in capital regions; and AMUL has to offer an incentive premium for acquiring these producer’s milk. This will result in significant increase in prices of AMUL milk. Looking at a different perspective we would recommend AMUL to set up its self funded (owned by GCMMF) dairy in state capitals to boost the supply in the high demand region and target achieving a zero stock out supply. Some of the issues with this approach are vested interest of Gujarat farmers who are heavily dependent on daily income and would not encourage and agree to the returns to come after sales of dairy products and thus it would be very hard for GCMMF to cohesively coordinate the sentiments of its various incorporated unions. Looking at the positive side of this move, AMUL will be able to cater to 60 % more demand and also reduce wastage due to souring of milk as a result of longer transportation route from Gujarat

4) Investing in high yield cows/buffalos for existing farmers using a Micro finance

model: Another issue which AMUL has faced over decades and which is also inherent in dairy farming in India is the yield per cow. The yield per buffalo for Indian cows is almost 1/3 times lower than that of any Hybrid or American cows like Jersey. Focusing on another backward integration technique, we will suggest improving the quality of buffalos by either introducing hybrid or pure breed, specialized technological equipment. Factors such as fodder, environment, space available/head of cattle etc. you need to mention that too as it may be less expensive for the farmers or for the AMUL owned dairy to keep. We suggest use of another option too by the farmers who cannot afford to go commercial dairy farming instead of the present village dairy farming for milking higher yields. Since a majority of sourcing is done by marginal farmers who lack the capital for acquiring the costlier Hybrid breeds, AMUL could look at provision of micro-financing to these farmers. We keep in mind that the farmers will resist to any such move and think that as a cannibalization effort of their current supply and burden on themselves, but with AMUL’s highly competent training centers and Anand Institute

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 22

of Management set up by AMUL, educating these farmers and unions would not be a difficult task. 5) Improve Logistics in Transportation through Integration with the Railway System

Aside from having its own dedicated fleet of trucks in transporting milk, Amul has already considered integrating their transport system with railway cooling units to improve transport cost and its supply . One of the good examples is: AMUL has tied up with Adani Logistics to have a dedicated train to transport milk daily from Dudhsagar Dairy of Mehsana to the Delhi. The annual transport cost of Mehsana Dairy is Rs. 40 crore via road tankers for 120,000 liters of milk daily from Dudhmansagar plant in Manesarto Delhi. According to article of Mehsana Dairy's chairman Vipul Chaudhary, with the milk train transport system which would use 50 wagons with a capacity of 24,000 liters each to cater to the same volume, 50% would be saved on transport cost.1Computing for the cost savings would give us Rs. 0.46 per liter.

Liters of milk per day (Manesar to Delhi)

1,200,000

Number of Delivery per year

365

Annual Transport cost via Road (Rs.)

400,000,000

Transport Cost via Road (Rs.) per liter

0.91

Savings via Railway 50% Cost Savings (Rs.) per liter

0.46

Similar process can be followed for other states capital to reduce the cost and increase the profit margin.

************************************* thank you****************************************

By. Ajay Ekka, Sonal Tirkey, Shruti Gloria, Arvind Das | Xavier Institute of Social Service, Dr. Camil Bulke Path, Purlia Road, Ranchi -834001 23

REFERENCE LIST

en.wikipedia.org/wiki/Amul http://www.amul.com/( OFFICIAL WEBSITE) MOTOR VEHICLES ACT 1988 COPY OF AGREEMENTS http://jharkhandcomtax.gov.in/commercialtax/node/2044 http://lawmin.nic.in/ncrwc/finalreport/v2b3-5.htm http://jharkhandcomtax.gov.in/commercialtax/sites/default/files/service_

support_attachment/user_manual_road_permit.pdf http://jharkhandcomtax.gov.in/commercialtax/sites/default/files/news_a

ttachemt/JVAT_504G.pdf http://www.fsg.org/Portals/0/Uploads/Documents/PDF/India_CSV_Appe

ndices.pdf?cpgn=WP %20D L%20-%20India%20CSV%20Appendices http://www.youtube.com/watch?v=N_950sc6oZk&feature=relmfu http://www.financialexpress.com/news/amul-claims-to-be-no-1-in-delhi-

mother-dairy-refutes-it/580518/1