Amul Cost Sheet

1. HISTORY Amul ("priceless" in Sanskrit. The brand name "Amul," from the Sanskrit " Amoolya ," (meaning Precious) formed in 1946, is a dairy cooperative in India. It is a brand name managed by an apex cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF ) The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest food products marketing organisation of India.

2. In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata and Delhi in 2002. The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/catering packs. It achieved the No 1 position in the country. This position was achieved in 2001 and it has continued to remain at the top.

3. Today the market share of Amul ice cream is 38% share against the 9% market share of HLL ( Kwality Walls), thus making it 4 times larger than its closest competitor. Not only has it grown at a phenomenal rate but has added a vast variety of flavours to its ever growing range. In January 2007, Amul introduced SUGAR FREE & ProLife Probiotic Wellness Ice Cream, which was a first in India.

4. Amul’s entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time – due to price differential, quality of products and of course the brand name.

5. FACTS The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/catering packs . In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata and Delhi in 2002. Nationally it was rolled out across the country in 1999.

6. Has combated competition like Walls, Mother Dairy and achieved the No 1 position in the country. Today the market share of Amul ice cream is 38 % . Amul’s entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time .

7. Ice Cream Industry in India Industry Snapshot:- Market Size - 1200 Crores Ice Cream market is growing at 26%   Major players:- Amul - Market Leader with share of 36% HLL - Kwality Walls - 2nd biggest player Mother Diary Arun - Chennai Based Hatsun Agro Product   Few Brands/ Target Consumers 1. Youth Centric - Chillz 2. Kids - Moo 3. Teenagers - Cornetto 4. Health Conscious - Amul Sugarfree & Pro-Life

8. 1000000 300000 250000 300000 350000 200000 250000 150000 100000 50000 100000 150000 3200000 184500 3384500 10 3 2.5 3 3.5 2 2.5 1.5 1 0.5 1 1.5 8 1.845 33.845 Particulars CPU Amount COST SHEET Opening Stock Raw Materials Dry Fruits Milk Flavours Other Ingredients Sugar Cup Cutlery Seasonal Fruits Waffle Cocoa   Carriage Inward RAW MATERIAL CONSUMED

9. Direct Expenses Direct Labour PRIME COST  Factory Overheads: Fixed: Depreciation Rent Power Insurance Supervisor’s Salary Variable: Electricity Running exp of machine WORKS COST 2.2 5.3 40.045       2.5 1 1.75 1.5 0.6   0.7 1 9.05 50.395 220000 530000 4134500       250000 100000 175000 150000 60000   70000 100000 905000 5039500 Particulars CPU Amount

10. Office Overheads Employee Cost Other Expenditure: Computer Telephone Taxes Carriage Outward COST OF PRODUCTION   Opening Stock -Closing Stock COST OF GOODS SOLD 10 1.2 0.1 0.4 0.2 62.295   2   64.295 1000000   120000 10000 40000 20000 6229500   200000   6429500 Particulars CPU Amount

11. Particulars CPU Amount Selling&Dist Exps : Advertisement Delivery Vehicles Petrol Packaging Rates COST OF SALES   PROFIT   SALES 4 3.5 1.75 0.505 74.05 18.5 92.5625 400000 350000 175000 50500 7405000   1851250   9256250

12. MARGINAL COST SHEET 9256250   3200000 3384500 2671750   905000 1000000 100000 190000 476750 SALES Variable Cost: Purchases RM Consumed CONTRIBUTION - Fixed Cost Factory Expenses Employee Cost Depreciation Other Expenditure PROFIT

13. COST SHEET ANALYSIS The company is producing 100000 units of ice cream at Rs. 74.05 for which the total cost incurred is Rs. 7405000 and the total sales is Rs. 9256250 which implies that that the profit being made is Rs. 1851250. The company is producing a single cup of ice cream at Rs. 92.5625 which includes the cost of a cup ice cream at Rs. 74.05 which again implies that the profit of Rs. 18.5125 is earned on a single unit of Amul ice cream.

14. Since the company is earning some percentage of profit above the cost, it means a slight increase in the cost will not have too much of an effect on the profit since there is a large margin of safety. Since the company is earning some amount of profit, the business is capable to expand and diversify over a period of time.

15. PVR = C/S = 2671750/9256250 = 28.86% BEP (in Rs.) = FC/PVR = 2195000/28.86 = Rs.760568.26 BEP (in units) = FC/C = 2195000/2.67175 = 821558.9 = 821559 MOS = Profit/PVR = 476750/28.86 = 16519.404

16. Determination of SP Amul Ice Cream has marked the selling price of their product roughly 20% above the cost price. This implies that they are making a profit on each unit of output that is sold. These profits can be ploughed into the business again to create more output.

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