Corporate Social Responsibility, The Amul Way

Updated: Aug 7 2004, 05:30am hrs
Corporate social responsibility (CSR) has been defined as the commitment of business to contribute to sustainable economic development working with employees, their families, the local community, and society at large to improve their quality of life, in ways that are both good for business and good for development.

To meet with the CSR it is expected that a business in its entire procurement-production-processing-marketing chain should focus on human development involving the producer, the worker, the supplier, the consumer, the civil society, and the environment.

Indeed, a very tough task. Most businesses would certainly flounder in not being able to achieve at least one or many of those expectations. But AMUL has shown the way.

CSR-sensitive Organisational Structure
AMUL is a three tier co-operative organisation. The first tier is the co-operative society at the village,of which; milk producers are voluntary members, managing the co-operative through a democratically elected 9-member managing committee, and doing business by purchasing milk from members and selling it to the district level co-operative. There are more than 11,000 co-operatives in villages of Gujarat.

The second tier is the district co-operative that processes milk into milk products, markets locally and sells surplus to the state co-operative for national and international marketing. There are 12 district co-operatives each being managed by a 15-member board elected by the college comprising the nominated representatives or chairmen of the village co-operatives.

Third tier is the state level co-operative - the Gujarat Co-operative Milk Marketing Federation (GCMMF) responsible for national and international marketing of milk and milk products produced and sold to it. The GCMMF is managed by the board democratically elected by and from amongst the chairmen of the district co-operatives.

The entire three-tier structure with the GCMMF at its apex, is a unique institution because it encompasses the entire chain from production of raw material to reaching the consumer with the end product. Every function involves human intervention: 23.60 lakh primary milk producers; 35,000 rural workmen in more than 11,400 village societies; 12,000 workers in 15 dairy pla-nts; 750 marketing professionals; 10,500 salesmen in distribution network and 600,000 sal-esmen in retail network. Accu-mulation of human capital is sine qua non for the development and growth of any enterprise or economy. The GCMMF is sensitive towards CSR. It believes that technology and capital are replicable inputs but not the human capital. Since men are the basis for achieving the CSR, the GCMMF lays emp-hasis on their development into competent, courteous, credible, reliable, responsive communicators and performers.

CSR-sensitive Business Philosophy
The first step towards discharging the CSR is the business philosophy of the GCMMF. It is two-fold: one, to serve the interests of milk producers and second, to provide quality products to consumers as value for money. Evolution of an organisational system has ensured that the corporate social responsibility towards the primary milk producers, village and the ecological balance is fulfilled. The milk producers are paid for their milk in accordance with market forces and realisation of value for their produce. Invariably the price paid to the member-producers in Gujarat is higher by 15 per cent than the national average.

CSR-orientation To Distributors & Retailers
The GCMMF has identified the distributors and retailers are its important link in its vendor supply chain. Through surveys the GCMMF found that 90% of the distributors do not get any opportunity of exposure to latest management practices. The GCMMF realised that it was a corporate social responsibility to strengthen the core business processes of its distributors so as to keep them in mainstream business and compete with those with formal training in management. The GCMMF has developed and trained all its distributors through Value-Mission-Strategy Workshops, competence building, Amul Yatra, Amul Quality Circle meetings, computerisation, and electronic commerce activities.

Competency Building Module of the GCMMF is meant to infuse professional selling skills by making the distributors and their salesmen aware of latest sales management tools and techniques; enhance their knowledge of products; positioning and segmentation strategies for various products. Under Amul Yatra the distributors and their salesmen are taken on a visit to Anand. During this visit they are shown dairy plants, their upkeep, international standards of hygiene and quality; the practices adopted for clean milk production, and above all the cooperative philosophy. Through one to one talk with the farmers, the distributors and salesmen realise AMUL is a large business of small farmers. The visit leaves an everlasting impression on their minds that by selling AMUL products, they are discharging a social responsibility towards a large number of poor farmers whose livelihood depends upon their skill and integrity. They feel proud that they are participants in development of rural society and thus in nation building.

Earnings Of GCMMF
Nurturing its primary members - the milk producers - is the first mission of the GCMMF. Discharge of this responsibility is reflected in the manner in which the GCMMF conducts its business and shares its earnings. The milk from the village co-operatives is purchased at an interim price. So as to maximise the earnings of the milk producers the GCMMF changes the product profile during the fiscal and directs its sales and marketing activities towards those products that would bring in maximum returns. True! Every business organisation follows the same principle. But the GCMMF follows it with the central interest of the producers. During the fiscal, as the GCMMF finds that from its earnings it is possible to pay more to the producers for milk, the final price is declared higher than the interim price being paid. Before the GCMMF closes its financial accounts the co-operatives are paid price difference, the amount between the interim price and the final price. Thus profit of the GCMMF is very low. The net profit (PADT) of the GCMMF during 2003-04 was Rs 7.31 crore against a turnover of Rs 2,947 crore, a meagre 0.25%. Further out of the net profit of Rs 7.31 crore, Rs 4 crore was given as share dividend to the co-operatives. To fulfill its corporate social responsibility towards its milk producers and co-operatives the GCMMF works on razor thin profits and retention of funds.

CSR-oriented To Staff
The GCMMF hires and trains people to take advantage over its competitors. It has developed in-house modules for training and competence buil-ding to improve and up grade of their knowledge; communication skills to understand the customer, be responsive to customer requirements, and communicate clearly for trouble shooting of problems. They are expected to be courteous, frie-ndly, respectful, and considerate to the customer. To improve the credibility and trustworthiness of the managers it is important they perform consistently and accurately every time and at all times. The structure of salary and perquisites is altogether different. The first and foremost the staff must get satisfaction from the job they. They are recognised for their contribution (Climate Survey) CSR-AMUL WAY

The writer is an officer on special duty, Gujarat Co-operative Milk Marketing Federation, New Delhi)