Chairman's Speech: 35th Annual General Body Meeting held on 5th

June, 2009

Madam and Gentlemen,

Every nation aspires for happiness, peace and harmony for all its citizens. Economic prosperity with equitable
distribution of growth is the key to achieving these desirable objectives. The current global economic meltdown has
quite understandably led to disquiet, unrest & suffering, across the world. It is ironical that global over-exuberance of
2007, transformed into a world-wide depression by 2008 and this scenario has every chance of stretching right
through 2009. Only a year back, soaring commodity prices riding on the back of raging energy-led inflation was
threatening global food security. Lop-sided priorities of developed countries in diverting agricultural output from food
to fuel had destabilized supply-demand balance, sending prices of all commodities on an upward spiral. Since then,
the transformation in global sentiments has been quite dramatic, as exuberance transformed into despair. Another
demonstration of policy mismanagement from these very same developed countries triggered an unprecedented
financial crisis, leading to the current world-wide economic recession.

The crisis in US and other western countries is a natural consequence of improper regulation of financial markets,
which in turn led to speculative subprime lending. Large scale debt defaults and subsequent credit-crunch sparked off
decline in demand. Globalization did the rest as the crisis spilled over to other parts of the world, through integrated
international trade and financial systems. Panic buttons were finally pressed after the high profile collapse of major
Wall Street icons. Even developing countries were not spared, as the crisis spread through key transmission channels
such as massive reversal of private capital flows and significant decline in trade volumes. A potent lesson for
emerging economies is that some degree of caution must be exercised while embracing globalization and
liberalization. The extent of impact on developing countries had a direct correlation with degree of integration with
global markets, dependency on export demand and dependency on remittances from abroad.

This world-wide economic turmoil is creating a human crisis of epic proportions. As always, it is the poorest and the
most vulnerable, who are the hardest hit. Dwindling incomes and loss of employment is expected to push an addition
40 million people into poverty, this year. While the developed countries are intent on protecting the economic
interests of their own wealthy elite, their very last concern is for the billion people around the world who do not have
enough to eat each day. Ultimately, the real burden of this economic crisis will end up being offloaded onto the backs
of the world’s poor.

$ 1.2 trillion Indian economy, which is largely structured around its huge domestic market, is also experiencing a
relative slowdown. GDP growth of 7% in the last financial year is the slowest pace of growth that our economy has
witnessed since 2003. Limited dependency on export demand has cushioned India from the deep recession being
experienced elsewhere around the globe. Maximum impact of the economic meltdown has been on sectors with high
degree of exposure to global economies; such as information technology, financial services, private sector banks,
stock markets, airlines and hotel industry. Export-oriented sectors have suffered a major setback with the diamonds,
textiles, leather, gems & jewelry, as well as marine products among the worst hit industries. Weakening export
demand has led to production decline and large-scale job losses in export manufacturing sectors. Impact on small
and medium enterprises has been particularly severe as demand slump has been accompanied by liquidity and credit
crunch, due to low confidence-level in the banking sector.

Overheated sectors such as real estate, stock markets and consumption credit, which were riding a wave of
speculation, greed and unwarranted exuberance, were the first to collapse. As their bubble burst leading to erosion of
wealth and consumer confidence, collateral damage also spilled over into other economic arenas. Massive fund
withdrawal by FIIs from Indian financial markets has pushed Indian retail investors into depths of despair. IT and
financial services industry, facing substantial loss of revenue, is not only downsizing but is also trimming income
levels of its workforce. The underlying lesson for all of us is that speculative growth, which is not based on solid
foundation of ground reality, will definitely undergo sharp corrections, sooner or later.

While some parts of urban India are definitely whining in the current scenario, it would be a revelation to our
policymakers that rural India still continues to shine brightly. In fact, in these times of crises, our rural economy may
well turn out to be the ultimate savior of urban economy; rescuing our nation from the clutches of this economic
slump. As job opportunities in urban manufacturing sector evaporate, the process of reverse migration from cities to
villages has already begun. Back in the village, best employment option for these displaced diamond or textile
workers would be to buy one or more cattle and sell milk to the local cooperative society, thereby generating regular
income for themselves and their families. Dairy cooperatives will therefore play a major role in alleviating the adverse
impact of economic slowdown in India. Dairy cooperatives have already generated employment for 13.4 million
households in rural India, across 1.3 lakh villages. They have further potential of generating employment for millions
of additional rural families, provided they continue to receive favorable support from our policy-makers. Drastic job
cuts have already taken place in sectors like textiles, gems, jewelry and leather, which employ millions of women
workers. On the other hand, dairying presents the most attractive alternate employment opportunity for these
women, in case; circumstances force them to migrate back to the villages, along with their families. Dairy
cooperative movement has always helped to provide a safety net to the most vulnerable and marginalized sections of
our population, which otherwise suffers the worst consequences of any economic crises.

If rural India finds itself comfortably insulated from the global turbulence, it is because sectors like dairying have
appropriately diversified the rural economy, building strong safety mechanisms into it. Unlike bubble economies such
as real-estate and stock markets, dairy cooperative sector has always had its feet firmly planted on the ground. Right
since our inception, we have had a very clear focus on fulfilling the huge demand within domestic Indian market. This
focus has clearly paid rich dividends as our own cooperative organization registered a business growth of 28%,
against the backdrop of global recession. While safeguarding food security of our nation, in terms of milk and dairy
products, we have also contributed significantly towards shielding our rural economy from the adverse impact of this
economic slowdown. By effectively linking rural producers to large urban markets, cooperatives have ensured a safe
future for the dairy farmers of India. Since milk and milk products are basic staples for every Indian household, their
demand is not likely to be affected by transient economic slumps. Our dairy cooperatives ensure that Indian farmers
get the maximum share of consumer’s rupee, unlike in the western world, where farmers receive only 30% of the
consumer’s dollar. If the central and state governments continue to provide encouragement, support and a favorable
policy environment to dairy cooperatives, this sector can play a pivotal role in our national strategy to combat the
current economic turmoil.

Revenue inflow from dairying has contributed towards strengthening rural purchasing power, thereby giving growth
impetus to rural markets. Urban business organizations of all size and dimensions are now turning their attention
towards rural consumers, in an effort to beat the economic slowdown. Higher disposable income among consumers in
rural areas is leading to smart buying at value-for-money prices. In recent times, rural consumption has witnessed
20% growth in FMCG products, 15% in durables, 30% in telecom, in addition to high growth in insurance and
housing. In a classical case of ‘rebalancing’, growth in own rural economy has the potential of offsetting any
slowdown in the urban economy. In the current scenario, rural India is contributing most to the country’s health in
terms of employment, wealth and prosperity. By empowering rural India, the urban community can live comfortably
and peacefully. If our policy makers continue their sustained support to rural organizations such as dairy
cooperatives, not only will India emerge triumphant from the current crises, but will also create an effective safety
shield against future economic turbulence.

Global dairy industry has not escaped the adverse consequences of this pandemic economic turmoil. Dairy trade has
entered a slump phase amidst weakening market conditions. On account of world-wide recession and decrease in
global demand, as well as enhanced production, international prices of all dairy commodities have declined
drastically. From a peak of US$ 5500 / MTs in 2007, prices of Skimmed Milk Powder have crashed to US$ 1800 /
MTs. Similarly international price of Butter-oil (Ghee) has crashed from a peak of US$ 6000 / MTs to US$ 1800 / MTs.
Dairy nations with high dependence on export market have been hit the hardest. EU has already re-introduced export
subsidies and production incentives in form of price support to dairy farmers. US government has also reactivated
price support to dairy industry. Accumulation of surplus inventory in US & EU is a strong indicator that dairy prices
may undergo further correction.

With their sharp focus on domestic Indian market, dairy cooperatives have successfully insulated Indian farmers from
all the turbulence in global dairy trade. In a systematic manner, we have built supply chain for liquid milk and milk
products, connecting farmers in 1.3 lakh villages to consumers in urban towns. While ensuring that our country
becomes self-sufficient in milk production, we have also unleashed a socio-economic revolution in rural India.
Dairying can be a critical component of any national effort to re-vitalize Indian economy. However, this premise can
be jeopardized as Indian farmers now face a real threat of subsidized imports flooding our dairy markets. If this
threat materializes, a vital pillar supporting our rural economy may collapse, triggering further misery for our national
economy. When international prices of Skimmed Milk Powder surged upwards in 2007 to US$ 5500 / MTs, our
government moved swiftly to ban exports of milk powder for six months, in an effort to curb inflation. At that point in
time, our farmers were unable to reap any benefits from high global prices. Now that the international market has
crashed, our farmers expect the government to act even more swiftly to prevent subsidized dairy imports from
ruining our vital dairy economy.

Our dairy farmers are already reeling under impact of sharp escalation in cattle feed costs, which has eroded the
viability of dairying as an economic activity. Export of oil cakes to Europe for biofuel use has risen dramatically in last
one year, driving domestic prices as high as 100%. Oil cakes and molasses are two vital ingredient used in the
manufacture of cattle feed. Our central government must put in place a quota system to regulate export of oil cakes.
This measure will go a long way towards ensuring sustainability of our dairy sector. With favorable support and
encouragement from our policy-makers, dairy cooperatives will certainly play a pivotal role in the national effort to
overcome the current economic crises.

I now present to you, our Federation’s Annual Report and the Audited Accounts for the year 2008-2009.

REVIEW OF OPERATIONS

MILK PROCUREMENT

Total milk procurement by our member unions during the year 2008-09 averaged 87.19 lakh kilograms ( 8.7 million
kg) per day, representing a quantum growth of 14.87 per cent over 75.90 lakh kilograms ( 7.6 million kg) per day
achieved during 2007-08. This high growth of 14.87 per cent in milk procurement has been achieved, after an
impressive growth of 12.9 per cent, last year. The highest procurement as usual, was recorded during January 2009
at 114.24 lakh kilograms (11.14 million kg) per day. We have also successfully demonstrated our ability to process
almost 11 million litres of milk per day.

SALES

During the year, sales of our Federation registered a quantum growth of 27.7 per cent to reach Rs.6711.31 crores
( Rs.67.11 billion). Last year, our turnover was Rs. 5255.41 crores (Rs. 52.55 billion). This is an extremely
impressive growth, when viewed from the perspective of 22.9 per cent growth that we had achieved in 2007-08.
I am also pleased to note that our Federation has done remarkably well in most of the value added consumer packs.
Sales of Amul Milk in pouches have grown by 44% in value terms. UHT milk has also shown an impressive growth of
26%. Our sales in Amul Processed Cheese have shown consistent and very impressive growth of 25%. Amul Ice-
cream has shown an impressive growth of 16 per cent in value terms over the last year. At the same time we have
remained No. 1 Ice-cream brand in India leaving a wide gap with the nearest competitor. In the Infant Milk Food
category, our brand Amulspray registered a growth of 20%. In the dairy whitener segment, Amulya recorded a
growth of almost 12%. We managed to achieve 17 per cent value growth in Butter, despite intense competition in
this category. In our effort to ensure that all sections of our society are able to afford Amul Butter, we have given
special emphasis to low unit value packs.

RETAILING

The concept of Amul parlors initiated in 2002 has come a long way and has today, evolved into the most visible face
of brand Amul. The network of more than 4000 parlors in almost all major towns of the country bears testimony to
the fact that the model is hugely scalable and inherently sustainable. This retailing initiative has not only enabled us
to interface directly with consumer, it has also helped us in our endeavor to reduce middle-men from the supply
chain.

The addition of more than 2000 parlors during the current year is largely attributed to our channel partners i.e. our
wholesale distributors who have embraced the concept by starting their own parlors and also motivated franchises to
create parlors for meaningful employment.

The relentless focus on expansion of Amul parlors is now paying us rich dividends. The retailing business alone
fetched us a sales turnover of more than Rs.200 Crores during the current year. Moreover, these parlors also provide
us with an effective platform to introduce all the innovative products that we launch, every year.

We have also made giant strides forward in reaching out to millions of railway commuters by setting up more than 50
Amul stalls across major railway stations of the country. The Indian Railways have also recognized our efforts and
with active support from IRCTC, we plan to set up another 300 railway parlors during the coming year.

Ice-cream scooping parlors, the latest addition to the retailing revolution are yet another blockbuster from the house
of Amul. We expect to add 200 more parlors in the coming year.

Taking cue from the success of our parlors, commitment from our sales team and all our channel partners dealing in
milk, ice-cream and dairy products; we plan to take the total tally of Amul parlors to 10000 by adding 6000 parlors
during the coming financial year.

EXPORT

Despite unfavorable conditions in international dairy market, our export business reached Rs.133 crores against
Rs.125 crore last year. We have further consolidated our growth in consumer products including Paneer, Butter,
Cheese, UHT Milk etc. This is extremely encouraging and indicates the high trust that our customers place in Amul
Brand. We have not been able to export Milk Powder in bulk packing in larger quantity due to fall of world market
prices by nearly 50% as compared to previous year.

DISTRIBUTION NETWORK

Over a period of time we have built unique capabilities of distributing Ambient, Chilled, Frozen and Fresh products
simultaneously through our versatile distribution highways. Today, 3500 Distributors for Value added milk products,
1800 Distributors for Fresh Milk, ensure that Amul Products are available to all segments of consumers in India
through more than 2 Million outlets.

To enhance further efficiency in distribution, two key initiatives have been taken during the year. Firstly, we
expanded competency based distribution by inducting about 300 Distributors having expertise in servicing specific
market segments and secondly, we are poised to divide the value added product lines amongst three sets of
Distributors to cater to the same market. This is going to give us more and more competitive advantage.

In Federation, our distributor is considered to be the real Marketing Manager. To update them with modern
marketing concept a workshop on Marketing and Sales Management is being conducted in collaboration with a
premier business school. So far, 1100 Distributors have been benefited from this workshop.

SLDP (Self Leadership Development Programme) for Distributor is another major initiative taken during the year
primarily with objective of training them to implement TQM at their and at the retailer level. This will ultimately serve
to bring all Stake holders under common platform in Strategic Planning Process of the Organization and to develop
Self Leadership amongst each individual Distributor.

Our Amul Yatra Programmes ensure that our every new distributor and other business partners visit Anand to get an
exposure to our co-operative structure, our culture as well as our operational systems and processes. The initiative
continued this year as well and so far, about 7400 Distributors and other business associates have visited Anand on
Amul Yatra.
CO-OPERATIVE DEVELOPMENT PROGRAMME

During the last Nine years, our Member Unions are implementing Internal Consultant Development (ICD) intervention
for developing self leadership among member producers and there by enabling them to manage their dairy business
efficiently leading to their overall development.

During the year, Member Unions continued to implement the module on Vision Mission Strategy (VMS) for primary
milk producer members & Village Dairy Cooperatives. Facilitated by specially trained consultants, 736 Village Dairy
Cooperative Societies (VDCS) have conducted their Vision Mission Strategy Workshops, prepared their Mission
Statements & Business Plans for next five years. Till today total 6012 VDCS have prepared their mission statement
and Business plan. Member unions are reviewing this business plan every year under VMS annual revisit programme
and facilitate VDCS to prepare action plan for next year to propel the momentum gained through VMS.

In order to strengthen knowledge and skill base of young girls and women of the villages about milk production
management; Federation, with technical collaboration and resources of Anand Agriculture University, has initiated
“Mahila Pashupalan Talim Karyakram” for women resource persons of the member unions and during the year, 486
women resource person have been trained under this programme.

• Clean Milk Production

For strengthening infrastructure for quality and clean milk production and to install Bulk Milk Coolers at VDCS, our
member unions have submitted project proposals to Department of Animal Husbandry, Dairying & Fisheries, (DP
Section), Ministry of Agriculture, Government of India. Under the project, Government of India has already
sanctioned financial assistance of more than Rs. 28 crore and our member unions have already received financial
assistance of more than Rs. 11.36 crore.

Continuing the cleanliness drive at village level, till March 2009, our Member Unions have identified & imparted
training to 9479 core groups formed of milk producers and Management of the VDCS. To enhance the level of
Cleanliness this year, 7956 VDCS celebrated Red Tag Day on “Gandhi Jayanti” - 2nd October and the Unions also
awarded best performing VDCS.

• Fertility Improvement Program

The Board of Directors of Federation, considering a long term vision for reducing infertile animal from their milkshed,
decided to implement Fertility Improvement Programme (FIP) from year 2007-08. The FIP concept has an integrated
design to overcome animal nutritional, gynecological, and animal health related problems.

To implement FIP, milk unions have deployed 44 FIP teams of veterinary consultants and they are working in 1960
villages. In the first year they have registered 72904 and in second year they have registered 70435 “Non Pregnant
Not Calved Even Once” and “Non-pregnant Dry” milch cattles and buffaloes under FIP, out of which 52272 milch
animals has become pregnant. FIP is being monitored through www.amul.org.in. FIP has helped milk producers to
convert their unproductive milch animals to productive one and also by adopting scientific animal husbandry practices
they are earning more at less cost.

• Sustainable ecological development

With a target of planting three trees per member, our member unions celebrated 61st year of Independence, 15th
August 2008 in a unique way and our members have planted 52.74 lakh sapling across 21 districts of Gujarat. During
last two years, our members have planted more than 71.65 lakh trees and demonstrated their commitment towards
preserving and contributing to improvement of the environment. For this activity, we have received “Good
Governance award” from “Srishti” during year 2007 as well as 2008.

INFORMATION TECHNOLOGY INTEGRATION

GCMMF has further advanced its Information Technology solutions by linking all the Milk Plants of the member unions
with its customized ERP System (EIAS & Web EIAS) to improve the liquid milk marketing operations. The Federation
has also enhanced the Financial Control System in EIAS. It has also developed Sales Performance Monitoring System
across various levels.

Further to smoothen business operations across the supply chain and strengthen the linkages between GCMMF and
its Member Unions, your Federation has decided to implement common ERP system for entire enterprise.

Your Federation has also developed “Online Cattle Feed Raw Material Pricing/Contract Information Sharing System”
to enable smooth collaboration between member unions for purchase of Cattle Feed raw material.

GCMMF has further advanced the use of Geographical Information systems by enhancing the GIS application and
implementing GIS based Sales Analytics solution across various offices. It has also developed a GIS based Decision
Support System (DSS) for the top management for effective & geographically monitoring of the sales performance of
WDs, ADAs, Retailers, and Products etc.
MISSION 2020

Six decades ago, Sardar Patel had envisioned that dairy cooperative movement could liberate our farmers from
economic oppression and lead them to prosperity. His dream was carried forward by far-sighted and visionary leaders
like Shri Tribhuvandas Patel and Shri Motibhai Chaudhary, who selflessly dedicated their entire lives to this noble
cause. Through his professional acumen and meticulous planning, as well as leadership skills; Dr. Verghese Kurien
successfully translated this dream into reality. In early 1950’s, when our cooperative movement was still in its
infancy, Dr. Kurien created the grand design for an apex marketing federation for dairy cooperatives of Gujarat. After
20 years of persistent efforts, this organization took concrete shape in 1973 and has today transformed into a US$
1.4 billion dairy giant.

Since the foundations of our organization are rooted in the process of systematic long-term planning, we have also
attempted to emulate the same, in an effort to design our future architecture. As we take confident strides towards a
grand tomorrow, we need a vision which will force us to challenge ourselves and stretch our imagination. In order to
achieve quantum and exponential growth, this vision must be backed up by a concrete action plan, which is grounded
in reality. In view of growth in business volumes and related complexities, it is pertinent that we have a clear vision
for the next 10 years. This will enable all relevant stakeholders to align themselves to a common growth platform. In
line with objective, we have prepared a comprehensive roadmap to guide dairy cooperatives of Gujarat to a glorious
future, in the year 2020.

This plan, appropriately titled “Mission 2020”, envisages that the dairy cooperatives of Gujarat will have a group
turnover of Rs. 27000 crores by the year 2020. This will be a three-fold increase over our current group turnover of
approx. Rs. 9600 crores. With further expansion of cooperative network, increase in number and productivity of milch
animals; Milk production in our milk shed area will increase to 231 lakh kg per day (23.1 million kg per day), at an
annual growth rate of 4%. We will be strengthening our milk procurement infrastructure by installing Bulk Milk
Chillers and Automatic Milk Collection Systems in all our village cooperative societies. This will enhance our milk
procurement capacity in such a way, that we easily collect as much as 195 lakh kg per day (19.5 million kg per day)
of milk in the peak flush season.

Through expansion of distribution network, creative marketing, consumer education and product innovation, we will
leverage effectively on rising income levels and growing affluence among Indian consumers. While expanding
markets for our existing products, we will create fresh avenues for growth by tapping the rising demand for new
value-added products. Special emphasis will be given to strengthening our presence in the large market for liquid
milk, in metropolitan cities. Satellite dairies with combined processing and liquid milk packaging capacity of 50 LKPD
will be established in major metro markets. Our objective is to ensure that the maximum share of the consumer’s
rupee goes back to the milk producers.

In view of the high demand and procurement projections, we plan to double to processing capacity of our dairy
plants to 20.7 million kg per day, by 2020. This would include multi-fold capacity expansion for major product
categories including milk powders, Ice-cream, paneer, cheese, ethnic sweets, curd, ghee and other dairy products.
Milk drying capacity will also be enhanced by 200 MTs per day, to process additional milk in the peak season. For
increasing milk production, it is vital to provide nutritious feed to milch animals. For this reason, we plan to expand
our cattlefeed manufacturing capacity, more than four times to 12000 MTs per day, by 2020. At current prices, total
investments envisaged for creating all the required infrastructure would be Rs. 2600 crores (Rs. 26 billion) till the
year 2020. I am glad to inform you that the plan 2020 has been shared with all the member unions. It has also been
discussed in the respective boards and necessary resolutions for investments have also been taken. This detailed
plan will serve as our comprehensive roadmap for the next ten years and will ensure a glorious future for our dairy
cooperatives.

We are well poised to lead the Indian dairy cooperative sector to a position of eminence in our national economy. Our
efforts will ultimately serve to bolster the rural economy, which can then create an effective shield to protect our
nation from any future economic crises. We will succeed in our endeavor with positive and continued support and
encouragement from all the government quarters, as has happened in the past. The very foundation of any
cooperative organization is a transparent and fair democratic electoral process taking place at the scheduled intervals
for the cooperative structures to survive and faith of its member remain intact, it is imperative that elections to
various tiers of the cooperatives take place on schedule.

ACKNOWLEDGEMENTS

Before closing, I would like to thank all those who have helped to make our Federation’s operations successful.

We are grateful to the Government of India for the immense support received on numerous occasions. We are also
thankful to the Government of Gujarat for all the help and cooperation, extended to our organization.

The National Cooperative Dairy Federation of India had been providing us with invaluable support in coordination with
other agencies and organizations. The National Dairy Development Board had played a role in our growth and
development. I am very grateful to them.

The Institute of Rural Management, Anand, as always, has contributed to the perspective building and
professionalization of the management of the cooperative sector. We express deep gratitude for its support.
We are indebted to Vidya Dairy for having organized training programs on dairy technology for our employees. We
are also grateful to SMC College of Dairy Science, Anand, for strengthening the dairy cooperative sector, by providing
technically skilled manpower. We express our sincere thanks to the College of Veterinary Science and Animal
Husbandry, Anand, for creating a talent pool of veterinary doctors to serve our milk producers.

Our advertising agencies, bankers, insurers, management consultants, suppliers and transport contractors have been
of great help to us in managing our growth and our partners in our success. We acknowledge their contributions and
commit ourselves to continue and strengthen this fruitful alliance in all times to come. We depend on the efficiency of
our distributors, retailers and most important of all, the patronage of our consumers, who have come to regard our
brands as synonymous with quality and value.

While thanking them for their support, we assure them that we shall strive endlessly to delight them.

Our Member Unions are our strength. We thank them for their guidance, support and cooperation without which we
would not exist.

Lastly, we thank the officers and staff of our Federation for their continued perseverance, loyalty and unflinching
efforts devoted to our cause.

Thank you.

For and on behalf of the Board of Directors

P G Bhatol
Chairman

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