MIRA INFORM REPORT

Report Date :

28.11.2006

IDENTIFICATION DETAILS

Name :	KAIRA DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LIMITED
Registered Office :	Amul Dairy Complex, Anand – 388 001, Gujarat
Country :	India
Financials (as on) :	31.03.2004
Date of Incorporation :	1946
TAN No.: [Tax Deduction & Collection Account No.]	BRDK00963E
PAN No.: [Permanent Account No.]	AAACK9062D
Legal Form :	Subject is a Co-operative Society registered under Co-operative Societies Act.
Line of Business :	Manufacturer, trader, exporter and distributor of ‘Amul’ brand milk and milk products such as Milk, Milk Powder, Butter Milk, Cheese, Curd, Butter, Ghee, Amul Lite, Nutramal, Chocolate, Pizza etc. Animal Feeds – ‘Amul Dan’.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 3250000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a world-renowned successful venture in Co-operative sector. Amul brand effectively compete MNC brands. It can be regarded as a promising business partner with a large credit line.

LOCATIONS

Registered Office/ Factory :	Amul Dairy Mogar Complex, National Highway No. 3, Village Mogar, Anand – 388 001, Gujarat
Tel. No.:	91-2692-256124/256224/251423
Mobile No.:	91-9824061905 (Mr. Rahul Kumar – Managing Director)
Fax No.:	91-2692-240225
E-Mail :	amulkai@guj.nic.in
Website :	http://www.amul.com
Location :	Owned

DIRECTORS

Name :	Mr. Ramsinh P. Parmar
Designation :	Chairman
Name :	Mr. Gordhan A. Patel
Designation :	Vice Chairman
Name :	Mr. Shivabhai M. Parmar
Designation :	Director
Name :	Mr. Maganbhai G. Zala
Designation :	Director
Name :	Mr. Navinbhai R. Patel
Designation :	Director
Name :	Mr. Pravinbhai M. Patel
Designation :	Director
Name :	Mr. Pravinsinh F. Solanki
Designation :	Director
Name :	Mr. Bhaijibhai A. Zalal
Designation :	Director
Name :	Mr. Raijibhai D. Patel
Designation :	Director
Name :	Ms. Madhuben D. Parmar
Designation :	Director
Name :	Ms. Saryuben B. Patel
Designation :	Director
Name :	Mr. Ranjitbhai K. Patel
Designation :	Director
Name :	Mr. C. B. Kotecha
Designation :	Director
Name :	Mr. B. M. Vyas
Designation :	Director
Name :	Mr. Rahul Kumar
Designation :	Director

MAJOR SHAREHOLDERS

Kaira District Cooperative Milk Producers’ Union Limited; Anand has 1059 member societies. Total members of the societies are 598707 as on 31.03.2004.

BUSINESS DETAILS

Line of Business :	Manufacturer, trader, exporter and distributor of ‘Amul’ brand milk and milk products such as Milk, Milk Powder, Butter Milk, Cheese, Curd, Butter, Ghee, Amul Lite, Nutramal, Chocolate, Pizza etc. Animal Feeds – ‘Amul Dan’.
Exports to :	Nepal, Abu Dhabi, Singapore, Kuwait and U.S.A. [12 MTs of Ghee, 37 MTs of Cheese, 197 MTs. Of Butter, 7 MTs. Of Amul Spray, 0.23 MTs. Of Amul Lite]
Terms :
Selling :	Cash or Credit
Purchasing :	Cash

PRODUCTION STATUS

Particulars	Unit	Actual Production
Milk Procurement – Cow Milk and Buffalo	million Kg.	253.900
Milk Powder	MTs	445
Amul Spray Powder	MTs	9,042
Amulya Powder Milk	MTs	1,248
Skimmed Milk Powder	MTs	4,815
Instant Milk Powder	MTs	964
Butter	MTs	9,298
Cheese	MTs	3,221
Ghee	MTs	1,174
Chocolate	MTs	1,077
Nutramul	MTs	2,693
Coco Powder	MTs	130
Amul Life Butter	MTs	92

GENERAL INFORMATION

Customers :	Wholesalers, Retailers, End Users and Others
No. of Employees :	1000
Bankers :	State Bank of India, Anand Branch Credit Limit: Overdraft against Fixed Deposit UTI Bank Liimited, Anand Branch Credit Limit: Overdraft against Fixed Deposit Bank of Baroda, Anand Branch Credit Limit: Overdraft against Fixed Deposit Corporation Bank, Anand Branch Credit Limit: Overdraft against Fixed Deposit

Banking Relations :	Satisfactory
Auditors :	Special Auditor (Milk) Chartered Accountants, Milk Audit Office, Anand
Associates :	Gujarat State Co-operative Milk Marketing Federation Limited Amul Dairy, Anand – 388001 Line of Business: Marketing of Milk and Milk Products.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
2000000	Equity Shares	Rs. 10/- each	Rs. 200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
1213040	Equity Shares	Rs. 10/- each	Rs. 121.304 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2004	31.03.2003
SHAREHOLDERS FUNDS
1] Share Capital		121.304	103.418
2] Share Application Money		0.000	0.000
3] Reserves & Surplus		723.443	726.049
4] (Accumulated Losses)		0.000	0.000
NETWORTH		844.747	829.467
LOAN FUNDS
1] Secured Loans		715.000	858.000
2] Unsecured Loans		118.768	460.637
TOTAL BORROWING		833.768	1318.637
DEFERRED TAX LIABILITIES		0.000	0.000
TOTAL		1678.515	2148.104
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		958.825	1049.960
Capital work-in-progress		0.032	0.000
INVESTMENT		63.131	99.299
DEFERREX TAX ASSETS		0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	458.881	745.232
	Sundry Debtors	508.706	767.967
	Cash & Bank Balances	570.804	196.730
	Other Current Assets	27.900	33.458
	Loans & Advances	44.329	31.009
Total Current Assets		1610.620	1774.396
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	446.601	357.407
	Provisions	507.492	418.144
Total Current Liabilities		954.093	775.551
Net Current Assets		656.527	998.845
MISCELLANEOUS EXPENSES		0.000	0.000
TOTAL		1678.515	2148.104

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2004	31.03.2003
Sales Turnover [including other income]	5459.458	4933.486
Profit/(Loss) Before Tax	25.246	19.621
Provision for Taxation	0.000	0.000
Profit/(Loss) After Tax	25.246	19.621
Total Expenditure	5434.212	4913.865

KEY RATIOS

PARTICULARS		31.03.2004	31.03.2003
PAT / Total Income	(%)	0.46	0.39
Net Profit Margin (PBT/Sales)	(%)	0.46	0.39
Return on Total Assets (PBT/Total Assets}	(%)	0.98	0.69
Return on Investment (ROI) (PBT/Networth)		0.02	0.02
Debt Equity Ratio (Total Liability/Networth)		2.11	2.52
Current Ratio (Current Asset/Current Liability)		1.68	2.28

LOCAL AGENCY FURTHER INFORMATION

History :

The story of AMUL which inspired the 'Operation Flood' and heralded the White Revolution in this land. It began with two village co-operatives and 250 litres of milk per day -- anything but a trickle compared to the flood it has become today. Today AMUL collects, processes and distributes over 0.900 million litres of milk per day during the peak on behalf of 962 village co-operatives owned by 0.542 million farmer members. Further, AMUL has become the sign and symbol of the aspirations of millions of farmers, and the pattern of liberation and self-reliance for every farmer.

Over four decades ago, the life of a farmer in Kheda District was very much like that of his counterpart anywhere else in India. His income was derived almost entirely from seasonal crops. The income from milch buffaloes was not dependable. The milk marketing system was controlled by private traders and middlemen. As milk is perishable, farmers were compelled to sell milk for whatever they were offered.

Often, they had to sell cream and ghee at throwaway prices. In this situation, the one who gained was the private trader. Gradually, the realization dawned on the farmers that the exploitation by the trader could be checked only if they marketed their milk through their own organization. This realization is what led to the establishment of the Kheda District Co-operative Milk Producers' Union Limited (popularly known as AMUL) which was formally registered on December 14, 1946.

The Kheda Union began pasteurizing milk for the Bombay Milk Scheme in June 1948. An assured market proved a great incentive to the milk producers of the district. By the end of 1948, more than 400 farmers joined in more village societies, and the quantity of milk handled by the Union increased from 250 to 5000 liters a day. In the early years, AMUL had to face a number of problems. The response to these provided stimulus for further growth. For example, as the movement spread in the district, it was found that the Bombay Milk Scheme could not absorb the extra milk collected by the Kheda Union in winter, when the production on an average was 2.5 times more than in the summer. Thus, even by 1953, the farmer-members had no assured market for the extra milk produced in winter. They were again forced to sell a large surplus at low rates to the middlemen.

The remedy was to set up a plant to process milk into products like butter and milk powder. A Rs. 5 million plant to manufacture milk powder and butter was completed in 1955. In 1958, the factory was expanded to manufacture sweetened condensed milk. Two years later, a new wing was added for the manufacture of 2500 tons of roller-dried baby food and 600 tons of cheese per year, the former based on a formula developed with the assistance of Central Food Technological Research Institute (CFTRI), Mysore.

It was the first time anywhere in the world that cheese or baby food was made from buffalo milk on a large, commercial scale. Another milestone was the completion of a project to manufacture balanced cattle feed. The plant was donated by OXFAM under the Freedom From Hunger Campaign of the FAO. To meet the requirement of milk powder for the Defence, the Kheda Union was asked by the Government of India in 1963 to set-up additional milk drying capacity.

A new dairy capable of producing 40 tons of milk powder and 20 tons of butter a day was speedily completed. It was declared open in 1965. The Mogar Complex where high protein weaning food, chocolate and malted food are being made was another initiative by AMUL to ensure that while it fulfilled the social responsibility to meet the demand for liquid milk, its members were not deprived of the benefits to be had from the sale of high value-added products. The Mogar complex also started manufacturing Amullite a substitute for butter in 1994. Amul has also set up a new Dairy Plant to handle 0.650 million liters per day with facilities to produce 60 tonnes of powder and 70 tonnes of butter in a highly automated plant. It has recently set up a 20 MT Cheese plant at Khatraj near Memdabad.

Impressive though its growth, the unique feature of the AMUL sagas did not lie in the extensive use of modern technology, nor the range of its products, nor even the rapid inroads it made into the market for dairy products. The essence of the AMUL story lies in the breakthrough it achieved in modernizing the subsistence economy of a sector by organizing the rural producers in the area.

True, traditionally dairying was a subsidiary occupation of the farmers of Kheda. However, the contribution to the farmer's income was not as prominent as his attachment to dairying as a tradition handed down from one generation to the next. Low milk yield of animals maintained on the by-products of the farm, together with lack of facilities to market even the little produced, turned the decision to invest in scientific practice of animal husbandry and nutrition, decidedly irrational; the return on the investment as well as the prospects of being able to market the product looked very bleak indeed.

Since its inception, the Kheda Union also believed that the responsibility to collect the marketable surplus of milk should be coupled with the provision of making the production enhancement inputs reach the members. The Kheda Union has thus a full-fledged machinery to provide animal health care and breeding facilities. As early as late fifties, the Union started making high quality buffalo semen and the artificial insemination service available to the rural animal population through the village society workers. The Union started its mobile veterinary services to render animal health care at the door steps of the farmers. Probably for the first time in the country, the veterinary first aid service was made available in the villages through trained village-society workers.

The Union's 16 mobile veterinary dispensaries have fully qualified staff. All the villages are visited bi-monthly on a pre-determined day, to provide animal health care. A 24-hour Emergency Service is also available at a fee (Rs. 35 for members and Rs. 100 for non-members). All the mobile veterinary vans are equipped with Radio Telephones.

The Union runs a semen production centre where it maintains high pedigreed Surti buffalo bulls, Holstein Fresian bulls, Jersey bulls and 50 per cent cross-bred bulls to cater to the need of semen for artificial breeding of buffaloes and cows belonging to the farmer members of the district. Artificial insemination service has become very popular and effective because it regulates the frequency of calving in cows and buffaloes and thus reduces their dry period. A balanced feed concentrate is manufactured in the Union's Cattle Feed Plant and sold to the members through the societies at cost price.

The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk, besides acting as a channel to market the production enhancement package; and does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic upliftment and common good. The Union looks after policy formulation, processing and marketing of milk and provision of technical inputs to enhance milk yield of animals: artificial insemination service, veterinary care, better feeds and the like, all through the village societies.

The village society also facilitates the implementation of various production enhancement, and member education programmes undertaken by the Union. The staff of the village societies have been trained to undertake the veterinary first-aid and the artificial insemination activities on their own.

The significance of the Kheda experiment A system which involves participation of people on such a large magnitude does not confine itself to an isolated sector. The ripples of its turbulence effect other areas of the society as well. So is true with this co-operative. It has not confined itself to milk alone. The co-operatives in the villages of Kheda are contributing to various desirable social changes such as:

· The yearly elections to the management committee and its chairman by the members is making the participants aware of their rights and the process to elect right men for right jobs.

· Perpetuating the voluntary mix of the various ethnic and social groups twice-a-day for common cause and mutual betterment has resulted in eroding many social inequilibria: high-low, rich-poor, the elites-marginalized all seem to co-operate for a common cause.

· Live exposure to various modern technologies and their application in day-to-day life has not only made them aware of these developments but also made it easier for them to adopt them for their betterment. One might wonder whether the population that knows almost everything about impregnating a cow or buffalo, through their knowledge of artificial insemination, is also equally aware of the similar process in the humans and work towards planning it.

• More than 900 village co-operatives have created jobs for nearly 5000 people in their own villages -- without disturbing the socio-agro system -- and thereby the exodus from the rural areas has been arrested to a greater extent.

• The income from milk has contributed to their household economy. Besides, women, who are the major participants, now have a say in the home economy.

Independent studies by various individuals and institutions have shown that as high as 48 per cent of the income of the rural household in Kheda District is being derived from dairying. Since dairying is a subsidiary occupation for the majority of the rural population, such incomes are helping these people not only to liberate themselves from the strangleholds of poverty but also to elevate their social status.

AMUL's success led to the creation of similar structures of milk producers in other districts of Gujarat. They drew on Amul's experience in project planning and execution. Thus the 'Anand Pattern' was not created in Kheda district but in Mehsana, Sabarkantha, Banaskantha, Baroda and Surat districts, where even before the Dairy Board of India was born, farmers and their leaders carried out empirical tests of the hypotheses that explained AMUL's success. In these districts, milk producers and their leaders experienced significant commonalties and found easy and effort-less ways to replicate AMUL's success in their respective areas. This led to the creation of the National Dairy Development Board with the clear mandate of replicating the 'Anand pattern' in other parts of the country, initially in the dairy sector but at a later stage in oilseeds, fruit and vegetables, salt, and tree sectors.

Looking back on the path traversed by AMUL, the following features make it a pattern and model for emulation elsewhere. AMUL has been able to:

• Produce an appropriate blend of the policy makers farmers board of management and the professionals: each group appreciating its roles and limitations; bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment; provide a support system to the milk producers without disturbing their agro-economic systems; plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers; and even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, AMUL is an example par excellence, of an intervention for rural change.

Currently Amul has 2.28 million producer members with milk collection average of 5.08 million litres/day. Amul's sales turnover in 2002-03 was 575 million US $.

Kaira District Co-operative Milk Producers' Union (Amul)

The Kheda (Kaira) district which is located in the state of Gujarat had a traditional relationship between milk producers and traders. This became more noticeable with the Bombay Milk Scheme in 1945 when milk had to be transported from the small town called Anand in Kaira District of Gujarat to Bombay, a distance of more than 400 kms. This could only be done if milk was pasteurised. After preliminary trials, the Government entered into an arrangement with a privately owned dairy, to supply milk on a regular basis from Anand to Bombay. The arrangements were highly satisfactory for all concerned except the farmers who were not guaranteed a price for their milk. They had to sell milk at the price fixed by traders. Farmer discontent grew. Thus, under the Bombay Milk Scheme promoted by the then Colonial government, the farmers of Kaira district were no better off than before. A deputation of these farmers approached Sardar Valllabhbhai Patel, a great Indian leader, who advised farmers to market their milk through a co-operative of their own, with its own processing plant. His advice was that the farmers should seek permission to set up such a co-operative and if this was rejected they should refuse to sell milk to the middlemen. Sardar, however, pointed out that while taking such a stand there would be losses to the farmers as they would not be able to sell milk for some time. Nevertheless if they were prepared to bear the losses, he was ready to lead them. The farmers deputation accepted Sardar's proposal willingly. Farmers decided to form a dairy co-operative society in every village of Kaira district and to form a union of the village dairy co-operatives called the Kaira District Co-operative Milk Producers Union Ltd. It was decided that the union would buy milk from the village dairy co-operatives and send processed milk to the Bombay Milk Scheme. However, the Government turned down the terms of the co-operative to which farmers responded with a milk strike which lasted for fifteen days. The Milk Commissioner of Bombay relented and the union was formally registered on December 14, 1946.

The Kaira Union began its operations with just a handful of farmers from two village dairy co-operatives supplying about 250 litres of milk every day. An assured market proved a great incentive to the milk producers leading to exposure of the concept. The Union soon realised the need for professional management and assistance, and was able to have a team of dedicated managers to steer its growth. Keeping pace with the increasing milk collection it created necessary processing capacities, initiated a set of milk production enhancement measures including services such as animal health care, breeding facilities, fodder seeds supply, and balanced cattle feed aimed at increasing milk production. The Kaira Union, under the brand AMUL, manufactured milk powder and baby food from buffalo milk for the first time in the world.

The success achieved by combining the farmers' power with the management by professionals in an integrated co-operative structure assured incentive to increase milk production, and exposed farmers to the process of development by placing the required tools in their own hands. The Union now handles on an average about 736000 litres of milk per day, has nearly 553000 milk producer members belonging to 970 village dairy co-operatives in the district. It owns modern processing facilities with a capacity to handle up to 1.5 million litres of liquid milk per day. It possesses large scale manufacturing facilities for products such as butter, milk powder and baby food and cheese. The Union provides round the clock veterinary services and balanced dairy cow rations. It also provides artificial insemination services through village dairy co-operatives by establishing its own network of bull station, frozen semen production and delivery system.

Anand Pattern Co-operatives

In just one decade of existence the AMUL had shown that dairy development through co-operatives is a viable option. It attracted interest from planners, policy makers and leaders. Soon farmers from districts neighbouring Kaira sought help of AMUL for organising dairy co-operatives. With AMUL's assistance a few more milk unions in Gujarat came into being. The pattern of dairying established with Anand as the base in Kaira district and subsequently in other districts of Gujarat, became popularly known as `Anand Pattern'.

The basic unit of Anand Pattern is the village dairy co-operative - a voluntary association of milk producers in a village who wish to market their milk collectively. Any milk producer can become a member of the co-operative society on the condition that they own a cow or buffalo and are willing to supply any surplus milk to the co-operative. At the annual general meeting of members they elect representatives (normally nine persons) to form a management committee responsible for governance in accordance with the bylaws of the co-operative. The managing committee frames the plans and policies that govern day-to-day affairs of the society. Village milk collection, testing for quality, sale of cattle feed, payment to producers every day, accounting and all such tasks are handled by paid employees from the same village. The paid staff are appointed by the management committee and their remuneration is based on the earnings of the co-operative. The co-operative also provides services such as artificial insemination (AI) and veterinary first-aid (VFA). Therefore, these primary societies also generate local employment in the rural community. Each producer's milk is tested and paid for on the basis of quality. The co-operative collects milk every day in the morning as well as evening at specified times fixed by the milk union. Usually, the morning milk is paid for in the evening and the evening milk is paid for next morning and in certain cases the payment of milk price is linked to the weekly market days. Most societies accept as little as half a litre of milk from individual milk producers. If one visits a village dairy co-operative it is possible to see as many as 100 to 150 milk producers queuing every morning and evening to sell their milk to the co-operative.

Village dairy co-operatives are affiliated to the district milk union which generally owns and operates milk processing plants and other facilities required for assisting the milk producers enhance production. Thus the union is a co-operative jointly owned by the village dairy co-operatives of the district and performs functions which the village co-operatives themselves cannot individually perform. From the chairpersons of the village co-operatives, the Board of Directors of the union is elected. It has the responsibility for ensuring appropriate policies and management of functions and activities such as collection and transportation of milk from the village dairy co-operatives, arranging regular and timely payment for the co-operatives, processing and marketing of milk and milk products and providing technical input services to farmers. That Board is also responsible for long-range and strategic planning; for framing operational policies; representing the union on legislative and regulatory bodies; communicating with members, and the overall control of affairs. The union is a professionally managed co-operative enterprise. It has a Managing Director reporting to the Board of the union and a team of professionals and staff. Normally the Union provides services such as emergency veterinary care for the animals owned by the farmers, supply of balanced cattle feed and breeding services aimed at improving the genetic quality of the dairy animals, supply of improved varieties of fodder seeds to promote cultivation of green fodder by farmers and extension services. The union also undertakes training and education programs for producer members, management committee members and, staff of the Village Dairy Co-operative Societies.

profile

Anand Milk Producers India Limited is a popular name of Kaira District Co-operative Milk Producers Union Limited. Amul was formally registered on 14-12-1946 under Cooperative Societies Act.

Dr. Verghese Kurien is mentor of Amul, who began the Amul Story. It has very humble beginning and Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June, 1948. By the end of 1948, more than 400 farmers joined in more village society.

During 2003-2004, the union has 1059 member societies comprising of 5,98,707 members and procuring 253.856 millions Kilos. The union has 150 Refrigeration Plant and has 906 pucca RCC Building. Besides Milk and Milk products, the union is actively involved in educating farmers in improving the quality of milk and medical care of animals and their feeds etc.

GENERAL OBSERVATIONS

The Anand Pattern

The Anand Pattern which is the most successful formula was first adopted by the Kaira District Coop. Milk Producers’ Union Limited (AMUL).

This is to collectively procure, process and market their surplus milk. This is a Three Tier System the Village Society, (Concerned mainly with the primary producers and collection of milk), the  District Milk Union, (looking after milk procurement, chilling and supply of technical inputs like Artificial Insemination, Animal Health Care, Supply of Balanced Cattle Feed & Fodder, Training/Extension etc.) and the Milk Federation, looks after processing and marketing of Milk & Milk Products, Central Technical Input activities etc. for milk yield enhancement of the animals of the milk Producers. In the earlier traditional system, the processing and marketing facilities were not owned by the farmers. Middlemen could dictate the term of the trade against the primary producers, by offering a lower price for their milk and against the consumer by offering lower quality. Middlemen interest in providing technical inputs to enhance milk production was missing. Anand Pattern is a system that is collectively Owned, Operated and Controlled by the farmers. It ensures a fair price to the farmer and high quality milk and milk products to the consumers. In short, the Anand Pattern means the utilization of resources in the most profitable manner at grass-root level. The maximization of profit and production through cooperative effort is the hallmark of the Anand Pattern.

Structure of Anand Pattern

The basic unit under the Anand Pattern is a village cooperative society of milk producers. It is a voluntary association of rural milk producers wishing to market their milk collectively. A village coop. Society of primary producers is formed under the guidance of a Supervisor of the milk union. A milk producer becomes a member by paying an entrance fee of Rs.1 and buying a share of Rs.10. He/she must undertake to sell surplus milk only to the Society after meeting his family's demand. The members elect the Managing Committee of 9 members and the committee elects a Chairman out of themselves.

Managing Committee Members are honorary. They employ a Secretary, Milk Tester, A. I. Worker, Head Loader and so on to run the day-to-day business of the society. Milk producers bring milk to the society every morning and evening. The quantity of milk is measured. A small sample of milk is taken from the milk for testing its quality. Payment for milk is made on the basis of its quality and quantity. The Milk Union carries this collected milk from the society by their hired transport vehicles to their milk chilling/processing plants. This comes from the profit of the society. The society makes profit by selling the milk to the milk union and get bonus/price difference. The milk union gets profit by selling to the federation and also gets price difference out of the federations’ profit.

Anand Pattern Co-operatives

In just one decade of existence the AMUL had shown that dairy development through co-operatives is a viable option. It attracted interest from planners, policy makers and leaders. Soon farmers from districts neighbouring Kaira sought help of AMUL for organising dairy co-operatives. With AMUL's assistance a few more milk unions in Gujarat came into being. The pattern of dairying established with Anand as the base in Kaira district and subsequently in other districts of Gujarat, became popularly known as `Anand Pattern'.

The basic unit of Anand Pattern is the village dairy co-operative - a voluntary association of milk producers in a village who wish to market their milk collectively. Any milk producer can become a member of the co-operative society on the condition that they own a cow or buffalo and are willing to supply any surplus milk to the co-operative. At the annual general meeting of members they elect representatives (normally nine persons) to form a management committee responsible for governance in accordance with the bylaws of the co-operative. The managing committee frames the plans and policies that govern day-to-day affairs of the society. Village milk collection, testing for quality, sale of cattle feed, payment to producers every day, accounting and all such tasks are handled by paid employees from the same village. The paid staff are appointed by the management committee and their remuneration is based on the earnings of the co-operative. The co-operative also provides services such as artificial insemination (AI) and veterinary first-aid (VFA). Therefore, these primary societies also generate local employment in the rural community. Each producer's milk is tested and paid for on the basis of quality. The co-operative collects milk every day in the morning as well as evening at specified times fixed by the milk union. Usually, the morning milk is paid for in the evening and the evening milk is paid for next morning and in certain cases the payment of milk price is linked to the weekly market days. Most societies accept as little as half a litre of milk from individual milk producers. If one visits a village dairy co-operative it is possible to see as many as 100 to 150 milk producers queuing every morning and evening to sell their milk to the co-operative.

Village dairy co-operatives are affiliated to the district milk union which generally owns and operates milk processing plants and other facilities required for assisting the milk producers enhance production. Thus the union is a co-operative jointly owned by the village dairy co-operatives of the district and performs functions which the village co-operatives themselves cannot individually perform. From the chairpersons of the village co-operatives, the Board of Directors of the union is elected. It has the responsibility for ensuring appropriate policies and management of functions and activities such as collection and transportation of milk from the village dairy co-operatives, arranging regular and timely payment for the co-operatives, processing and marketing of milk and milk products and providing technical input services to farmers. That Board is also responsible for long-range and strategic planning; for framing operational policies; representing the union on legislative and regulatory bodies; communicating with members, and the overall control of affairs. The union is a professionally managed co-operative enterprise. It has a Managing Director reporting to the Board of the union and a team of professionals and staff. Normally the Union provides services such as emergency veterinary care for the animals owned by the farmers, supply of balanced cattle feed and breeding services aimed at improving the genetic quality of the dairy animals, supply of improved varieties of fodder seeds to promote cultivation of green fodder by farmers and extension services. The union also undertakes training and education programs for producer members, management committee members and, staff of the Village Dairy Co-operative Societies.

National Dairy Development Board (NDDB)

The success achieved by the Kaira Milk Union (Amul) prompted the Government of India to set up a body called the, National Dairy Development Board (NDDB) which aimed to replicate the socio economic changes brought about by the Kaira milk union and the village dairy co-operatives. With this mandate, the NDDB tried to convince each of the State Governments to make some funds available for dairy development based on the Anand Pattern, albeit with limited success.

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.65
UK Pound	1	Rs.87.23
Euro	1	Rs.58.96

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions