Hatsun Agro

Balamurugan A
093/48
Submitted to
Prof. Nimruji Prasad
ASSIGNMENT 2
Hatsun Agro Product Limited
Why Hatsun?
It is more challenging to analyze the CSR activities of a privately owned organization over a co-operative or a NGO as, that’s why Hatsun is chosen over Amul or Aavin. A diary based company is chosen because of its effective impact on society and the raw material procured is based on rural part. Any CSR activity will have a significant impact empowering the overall country from the bottom. Moreover, analyzing a relatively less known company is always an interesting challenge, hence Hatsun over Amul.
Value Chain Analysis:
1. Inbound Logistics
Raw material Procurement - Overall Process:
Being an Agro product based company with milk as its main raw material; Hatsun collects the fresh milk directly from the farmers through their milk banks-‘Hatsun Milk Bank’ (HMBs). Milk is collected from the farmers in these HMBs twice a day (morning and evening) and transported through their cold storage vehicles/trucks to the Chilling centers and from there to the dairy plant.
Process:
Milk Proc. (Farmers) HMB (Testing- Data entry)  Transp.CC(Quality confirmation)->Dairy farm.
Activities involved:
i.) Quality test 1: Hatsun has around 4,500 'Hatsun Milk Banks ' (HMBs) covering over 8,000 villages. Everyday 3 lakh plus farmers pour their milk at these HMBs. At the HMBs every farmer 's milk is tested for its quality. Based on the quality, per liter price of milk is determined with the help of a two way price chart. The two parameters tested for determining quality are Fat and SNF. Based on the quality and the number of liters poured by the farmer, his or her total amount is calculated. This process is done for each and every farmer who pours milk at the HMB. ii.) Database management: Once all the tests are done, each farmer 's data (quantity, Fat & SNF% along with the farmer 's unique number) is entered in a scan-able data sheet. This sheet is sent to the Hatsun 's computer center where it is scanned and based on the same the farmer is paid every week on a fixed day of the week. The entire farmer 's data base is managed through a state-of-the-art computer software system. iii.) Transportation: Hatsun operates more than 800 rural milk procurement routes. These routes have a regular route plan with the timing to pick up milk cans for each HMB/village in the morning and evening. All the farmers have to pour the milk before the milk truck reaches their HMB. Once all the farmers have poured their milk, the milk is collected in cans and loaded on to the trucks on the precise time fixed for picking the cans at the HMB. iv.) Chilling Center (CC)- Quality Confirmation:
After collecting milk from all the allotted HMBs the milk procurement vehicle arrives at the Hatsun Milk Chilling Center (CC). The vehicle has to arrive at the milk chilling center at the fixed arrival time for the vehicle at the CC. At the CC the milk is tested again for more parameters than at the HMB. Once the milk is tested organoleptic ally it is weighed, a sample is taken for more detailed tests and pumped to the chilling unit. The samples are taken for detailed testing. Once all the vehicles arrive and all the milk transferred for chilling the samples are taken for testing. Once the tests are completed and the suitability of the entire CCs milk is confirmed to meet Hatsun 's strict quality norms, the milk is loaded into a road milk tanker and sent to the dairy.
v.) Dairy farm: At the dairy the milk is put through more tests before taking it up further processing.
2. Operations - The dairy farms make use of the latest technology and the practices are of international standards with care to its employee. The quality and hygiene is highly stressed in every step of the process as it is directly related to the products life.
3. Outbound Logistics - Like any diary company, Hatsun follows a typical Distribution channel in milk and related products.
Production plant -> CnF agent (Carrying and Forwarding agent) -> Retail stockiest ->
-> i.) Retail Outlet ii.) Morning/Evening Vendor (not for related products) iii.) Exclusive booth
Since the product is perishable, it is a short cycle product hence delivered every day.
For its brand “Arun” ice-cream, it follows only the exclusive outlet channel in every corners of Tamil Nadu, which has led to its great success.
Possible improvement: Although they give employment for people in these exclusive stores, they can also start an initiative where these people working in franchises get trained about diary practices and give/assist in getting loans for buying milch animal so that it increases their income.
4. Marketing and Sales - Its promotional activity revolves around educating its customer (mother) about the significance of milk and its essentiality for their children. It also stresses and links the product with rural parts, cattle care. Hatsun also involves in advertisements empowering its employee and its vision statement clearly signifies that it not only cares for its customer but also for the diary farmers and its employee.
5. Service – Each and every step of the entire process is done with utmost care so that the product reaches in its best form. Also the packaging of the product is so good that there have been very few instances of spoilage or leakage. The storage during transportation is a key concern which Hatsun addresses and genuine damages incurred are replenished with fresh stocks.
Secondary Activities:
 Procurement: 2 million litres of liquid milk per day
 Human Resource management:
1. Field staffs: Over 350 field staffs are employed to ensure timely collection, testing of milk at the collection spot, weekly payment, and offer animal husbandry assistance
2. Farmers: 3 lakh milk producers
 Technological Development: Latest technologies in the industry with international quality certifications (ISO 9000 & ISO14000)
 Infrastructure:
1. HMBs: 4,500 milk bank
2. Milk sheds spread: 8000+ villages in 10 district (Tamil Nadu) & 3 district (Karnataka)
3. Transport trucks: 1348 contract vehicle/truck
4. Chilling centers: 75 location
5. Diary: 7 processing dairy
CSR activities:
All their activities are highly aligned with their business model either helping the dairy farmers or their employee or stake holders. It also results in woman empowerment in rural areas as they are involved with it.
i.) For Diary Farmers:
Hatsun has been paying the farmers on time every week without any exception for the last two decades and the entire dairy farming community in the milk shed where Hatsun operates is aware of this unique track record. Hatsun also educates them on animal husbandry, dates and venues of various camps, availability of new fodder varieties, etc. A special column honors farmers with highest productivity.
The company requires huge supply of quality milk from the farmers. In order to sustain this procurement channel, the welfare of the supplying farmers is of utmost importance. Hatsun undertakes a series of measures to help the farmers such as:
 Animal Health Care:
 The health of the milch animals are taken care by a team of 50 qualified Veterinary Doctors from Hatsun
 Visits the villages regularly on a fixed time where the farmers bring their animal requiring treatment
 Charged a nominal amount for the services and also conducting free veterinary camps
 Recording number of artificial inseminations and births, and problems such as infertility
 Insurance tagging animals on purchase
 Helps the farmer by means of accessible health services
 Checking and treating animals regularly for anorexia, bloating, calf scour, mastitis, milk fever, horn injury, wounds and other illness
 Helps Hatsun in getting a sustainable supply and a check on any cattle disease proactively.
 Artificial Insemination:
 Ensures the farmer 's milch animal produce a calf every year; approx. 50,000 inseminations/month
 200 Trained Inseminators visit the farmers daily
 The farmers bring their milch animals which require insemination based on the symptoms shown
 Helps the farmer expand his scale of operation
 Increased supply of milk which will help to meet the increasing demand for Hatsun
 Fodder:
 Encourages the farmers to cultivate their own fodder
 Agricultural graduates of Hatsun visit the farmers ' field test the soil conditions and asses the water quality and quantity
 On the basis of result, they advise on what variety of fodder to grow and also the package of practices to be adopted
 Helps the farmer to meet his inbound requirements for raising the cattle and empowering him to become independent
 Hatsun strengthen its supply from the farmers by meeting up his requirement
 Balanced Cattle feed/ Feed Management:
 Manufactures cattle feed as per its own formulation based on the farmers need
 Performing blood tests to detect trace minerals, and then feeding mineral mixture to maintain immunity and production
 Sold to the farmers on credit through the HMBs and the amount is deducted from the farmer 's weekly milk bill
 Ensures cattle feed supply to the farmer; market 's best quality for price, cattle feed which is formulated to maximize the milk yield of cow as well as maintaining body condition
 Ensures the payment and at the same time, providing services strengthening quality supply
 Diary Management Consulting/advisory
i.) for large farmers:
 Avg. milch animal holding in shed: 2 animal/farmer
 Labour shortage – Major constraint for animal holding
 Hatsun sources appropriate technology/equipment’s to help the farmer automate his farm to an optimum level
 Example: Milking machines, brush cutters, chaff cutters etc.,
 White Gold Project:
i.) Five acres of land for a farm fodder production ii.) A minimum of 25 animals, optimal is 30-40 animals iii.) Agronomy and veterinary assistance from first planning, to shed modeling, to animal selection, to feeding program. Free advice and direction every step of the way iv.) 24 hours green fodder and water
v.) Partial mechanization of the farm
 Mini-White Gold Project:
1. Two acres of land for on farm fodder production
2. An optimal of 10 animals ii) for all farmers:
 Selection and purchase of animals from reliable farms/farmers, instead of rural market
 Suggest genetically high yield cross breeds and other details about the choice of cattle to be purchased
 Assured Income:
 Offering 100% buy-back of the milk produced at assured fixed price and establishing direct relationship with the farmer by avoiding middle men
 Farmer Education:
 Conducting mass contact programs, awareness night meetings, and other training classes to improve Productivity & Profitability to farmers
 Providing timely doorstep assistance for farmers during animal emergencies ii.) For Environment:
Recently they are trying to enter into Wind power generation to meet their captive needs. Also the suggested automations in White Gold Project and other equipment’s for dairy farmers, their own industrial practices strive to conserve water and energy. The focus on “Green Fodder” is stressing on eco-friendly method to solve the fodder shortage problem. iii.) For Employee:
 Every employee is trained w.r.t quality control such that each one acts as a quality supervisor
 Hatsun World serves as a company-wide forum to appreciate achievers, felicitate employees on special occasions, share recent events, announce launch of new products, etc
Critical Thinking:
The most appropriate area for CSR intervention is in its core members, which is the dairy farmers. The entire business model just revolves around them and the company has rightly identified and aligned appropriate actions to it. It empowers the dairy farmers, assists them and educates them. This is the most logical step as it not only contributes to the society but also helps in building a sustainable supply of its raw material. They can build a platform for the rural woman to build smaller self-owned co-operatives on their own like “Amul”
The other equally potential area is “Energy Conservation” which Hatsun has rightly identified. But this wind energy generation should not only be followed in “Arun” brand but across all brands of Hatsun. Similarly, they can work on alternative renewable source of energy. This not only answers to the acute power shortage faced in Tamil Nadu but on a longer term, will be the right decision to go forward.
Similarly the Workshops must not only be held for its dairy farmers alone but for the other people as well so that the entire area evolves resulting in their growth as well.
The other things are like empowering the employee, which it effectively does with its newsletter “Hatsun World” and also the workshops on Quality control. Similarly one possible improvement is to upgrade their existing database software to the comprehensive one used by Amul where every farmers past history, their current cattle and milk quality information, the breeds bred etc which will help in tracking significant information for future.
Unlike national competitors like Amul, they are not co-operatives. Hatsun acquires raw material from the rural farmers and pays them for it. One cannot blame as it is their business model and neither can one propose them to follow the path of Amul in becoming a co-operative society.
From the above analysis, it is clearly visible that the given firm is transforming from a integrated stage to transforming stage of Corporate citizenship.
Dimension
Stage
Score (Out of 5)
Citizenship Concept
Triple Bottom Line
4
Strategic Intent
Value Proposition-> Social change
4.5
Leadership
Champion -> Visionary
4.5
Structure
Mainstream: Business Driven
4
Issues Management
Pro-active -> Defining
4.5
Stakeholder Relationships
Partnership
4
Transparency
Full Disclosure
5
Note: issues management: there is a lack of any major instance but with the other given factors, it seems to be a minimum of proactive management if not defining. Transparency: Very much stressed in each video footage.
References:
 http://www.ifm.eng.cam.ac.uk/dstools/paradigm/valuch.html
 Stages of Corporate Citizenship by Philip Mirvis, Bradley Googins
 http://www.hatsun.com
 http://articles.economictimes.indiatimes.com/2012-05-11/news/31669364_1_wind-power-hatsun-agro-product-arun-ice-cream
 http://www.amul.com/
 http://www.moneycontrol.com/company-article/hatsunagroproducts
 Excerpt from The Business Roundtable’s statement on Corporate Responsibility (1981)
 http://www.slideshare.net/lucky7shimla/amul-logistics

References:  http://www.ifm.eng.cam.ac.uk/dstools/paradigm/valuch.html  Stages of Corporate Citizenship by Philip Mirvis, Bradley Googins  http://www.hatsun.com  http://articles.economictimes.indiatimes.com/2012-05-11/news/31669364_1_wind-power-hatsun-agro-product-arun-ice-cream  http://www.amul.com/  http://www.moneycontrol.com/company-article/hatsunagroproducts  Excerpt from The Business Roundtable’s statement on Corporate Responsibility (1981)  http://www.slideshare.net/lucky7shimla/amul-logistics