Chapter Ii.docx

CHAPTER II INDUSTRY AND COMPANY PROFILE

2.1 INDUSTRY PROFILE ORIGIN OF THE INDUSTRY Indian dairy sector has comes from past independence era acute milk shortage and dependent in foreign aid in the form of milk powder to meet the growing milk demand. India’s milk production in 1950-1951 was a low as a million tonnes. Today the country has emerged the second largest milk producer in the world. Currently there are over 1200 dairy plants and 83 milk product factories in the co-operative public and private sector. GROWTH AND DEVELOPMENT OF THE INDUSTRY After the five year plan there saw a considerable growth in the field of dairy industry providing proper infrastructure facilities can increase the livestock population. This development accelerated the growth of the dairy industry. The tremendous potential of the dairy industry was given a major fill up with former prime minister Dr Manmohan Singh move to deliquesce the milk industry in 1992. The deliquesce enabled a massive flow of private investment. Organised handling of milk in these sectors would also lead to proper procurement measured which would in turn to the farmer and one of these market forces are allowed to operate the consumer would also benefit in terms of quality and price. THE ANAND PATTERN The milk cooperative under operation flood follow the Anand pattern which was pioneeredby Dr Kurien, when he was general manager of Kaira district cooperative milk producers union Ltd Anand. The success of the operation demonstrated that democratic institution in the village with in a specific economic sector could help an entire village community todevelop themselves. Dr Kurian nurtured the union from a dairy collection of 500 litres a day in 1948 to one million litres a day in early 1990. He helped to setup similar district cooperative union in another district of Gujarath which eventually federated to an apex body the Gujarath Cooperative Milk Marketing Federation Limited. An establishment which Dr Kurian now held’s as chairman. The federation covers more than 1.5 million producers family. The Anand model is essentially an economic organisational pattern to benefit small producers who joints hands farming an integrated approach in order to handle their producers. The system enables them to obtain the efficiency and the economy of large scale business. The whole operation is professionally managed, so that the individual producers have the freedom to decide their

own policies. The adoption of modern production and marketing techniques helps in providing those service that small producers individually can neither afford nor managed. The Anand model has successes largely because it involves people in their own development and because their interest are safe in their own hand. Under operation flood the entire institutional infrastructure set up at the village level. The district level and state level owned and operated by the farmers themselves. The Anand model co-operative have progressively eliminated middleman, bringing the procedure in direct contact with consumer in spite of opposition to these project by middle and other powerful vested interest, Dr Kurian has been able to make major breakthrough in the dairy and oilseeds sectors supported by the highest level in the government of India. This resulted in the formation of Amul (Anand Milk Union Ltd.,). This is success story in the dairy sector in the India. Over the years, thus evolved itself on a model based on self rule by farmers ensuring maximum return to them. This model come to known as “ANAND PATTERN”. 

Village level primary co-operative societies called (APCOS) Anand Pattern Cooperatives Society.

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District / Regional co-operative milk producers union.

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State level milk marketing federation.

NATIONAL DAIRY DEVELOPMENT BOARD AND ITS ROLE The efficiency of “Anand Pattern” leads to the launching of dairy programme called “Operation Flood” in 1970 under the NDDB. Credit for most of the work done in the field of milk supply by co-operative that goes to the National Dairy Development Board. The board was setup by the government to replicate the Anand experiment in the rest of the country. The operation flood phrase – 1. Introduced in(1970-1981). This was followed by operation flood phrase – 2. (1981-1987) following by operation flood phrase – 3. (1988) outwards. GLOBAL SCENARIO Dairy farmers were set by the British in 1886 and a livestock census was taken in 1919.The co-operative movement has its genesis in 1946 when the farmers of Kaira District (Gujarat) realized that they had to end their exploration by the middleman working for

Polson’s of Bombay. The farmers went on strike and refused to supply milk in order to press for their demands. The highest milk powder in the entire globe-Indian boasts of that status. India is otherwise known as the ‘OYSTER’ of the globe diary industry, with opportunities Galore to the entrepreneurs globally. Anyone might want to capitalize on the largest and fastest growing milk and milk products market. The diary industry in India has been rapidly growing, trying to keep pace with the galloping progress around the world. The liberalized economy provides more opportunities for MNCs and foreign investors to release the full potential of this industry. The main aim of the Indian diary industry is only to better manage the national resources to enhance milk production and upgrade milk processing using innovative technologies. India’s diary sector is expected to triple its production in the next 10 years in view of expanding potential for export to Europe and the west. Moreover with WTO regulations expected to come into force in coming years all developed countries which are among big exporters today will have to withdraw the support and subsidy to their domestic milk products sector. Also today India is the lowest cost producer of per litres of milk in the world, at 27 cents, compared with US 63 cents, Japan 2.8 dollars. Also to take advantage of this lowest cost of milk production and increasing production in the country multinational companies are planning to expand their activities here. Some of these milk products have already obtained quality standard certificates from the authorities. This will help them in marketing their products in foreign countries in processed form. The urban market for milk products is expected to grow at an accelerated pace of around 33 percentage per annum to around Rs.43, 500 crores by year 2015. This growth is going to come from the greater emphasis on the processed foods sector also by increase in the conversion of milk into milk products. More than 50 percentage of the buffaloes and 20 percentage of the cattle in the world are found in India and most of these are mulch cows and mulch buffaloes. Indian diary industry contributes the large share in agricultural gross domestic products. In term of total production India is the leading producer of milk in the world followed by USA. While worldwide production declined by 20 percentage in the last 3 years, according to FAO estimates, Indian production has increased by 4 percentage. The milk production in

Indian accounts for more than 13 percentage of the total world output and 57 percentage of Asia’s production. NATIONAL SCENARIO India is the world’s largest producer of dairy products by volume, accounting for more than 13 percentage of the world’s total milk production, and it also has the world’s largest dairy herd. As the company consumers almost all of its own milk production, India was neither an active importer nor an exporter of dairy products prior to year 2000. However, since the implementation of operation flood programme, situation changed significantly and imports of dairy products reduced to very small quantises. From 2001, India has become a net exporter of dairy products and after 2003 India’s dairy import has dipped while exports have increased at a fast rate. Yet the country here in global dairy trade still remains at minor levels of 0.3 and 0.4 percent for exports and imports respectively. This is due to the direct consumption of liquid milk by the producer households as well as the demand for proceed dairy product that has increase with the growth of income levels, which have left little dairy product such as case in for food processing of pharmaceuticals. The Indian dairy sector is also different from other dairy producing countries as India places its emphasis on both cattle and buffalo milk. In 2010, the government and the National Dairy Development Board have drawn up a National Diary Plan (NDP) that proposes to nearly double India’s milk productivity, improves access to the organized market. These goals will be achieved through activities that focus on increasing co-operative membership and growing the network of milk collection facilities throughout India. Despite its huge production volume, India never worthless faces a milk supply gap due to increasing demand from middle class separate. Estimation suggests that Indian dairy production is growing at a rate of about 45 per year, yet consume demand is growing at approximately double the rate. Apart from the rapidly increasing demand for milk and dairy products, other reason such as the increased cattle feeds cost and low availability of dairy firm labour in the rural areas have also resulted in increasing in the cost of production. On the other hand, thus strong pressure from Europe to open up its market as well as the proposed free trade agreement with Australia and New Zealand may also put India’s dairy sector in the risk of being jeopardized. In order to maintain the development its dairy industry, focus needs to be place on several areas. First, cost of production has to be reduced through increasing productivity of animals improve animal health care and breeding facilities and management

of dairy production, processing and marketing infrastructure, which is capable of meeting international quality requirements. Third, India can focus on buffalo milk based specialist products such as mozzarella cheese, in order to meet the needs of target consumers. STATE SCENARIO Since 1971, the dairy co-operatives have played a prominent role and made a notable contribution in the overall development of the dairy industry in the country. More than 83 percentage of the milk is being collected through co-operative in India. There are managerial and operational defects in the working of milk. However, these drawbacks can be removed if we follow proper methods in milk collection. The dairy co-operatives should provide the required help to producers by providing high yielding mulch animals, fodder, veterinary aid etc. By removing these constraints the co-operative as well as the dairy industry is sure to succeed. The federation board of co-operative is made up elected chairman of the union and the government representatives with special interest. This policy makers under Anand type co-operative system are drawn from primary co-operative level and can get elected to the managing committee, to the union board and finally to the federation level. The district union and the federation have over the years worked to develop the co-operative societies to a state level federation has been evolutionary process in the history in the co-operatives movement in the dairy sector and is now being extended to the other parts of India. CURRENT SCENARIO India is the world’s largest producer and consumer of dairy. The dairy industry in India was worth INR 5000 billion in 2016. India is also gloabally the largest milk producing country since 1997. In India, the cooperatives and private dairies have access to only 20 percent of the milk produced. India is well known as the “Oyster” of the global dairy industry, with opportunities galore for the entrepreneurs globally. It might be dream for any nation in the world to capitalise on the largest and fastest growing milk and milk products market. The dairy industry in India has been witnessing rapid growth with liberalisation. The main objective of the Indian Dairy Industry is to manage the national resources in a manner to enhance milk production and upgrade milk processing using innovative technologies. The favourable price environment for milk producers for the Dairy Industry in India however appeared to have weakened during the 90’s, a decline in the real price of milk being noticed after the year 1992. And then slowly regained its glory after 1992 to till now.

The country’s milk supply comes from millions of small producers, who are dispersed throughout the rural areas. All these farmers maintained an average herd of one or two milch animals, comprising cows and / or buffaloes. India had tremendous milk production in 40 years and has become the world’s largest milk producing nation with a gross output of 84.6 million tones on 2001. The Indian Dairy Industry has achieved this strength of a producer- owned and professionally managed cooperative system, despite the facts that a majority of dairy farmers are illiterate and run small , marginal operations and for many farmers, selling milk is their sole source of income. More than 10 million dairy farmers belong to 96,000 local dairy cooperatives, who sell their products to one of 170 milk producers cooperative unions who in turn are supported by 15 state coopeartive milk marketing federations The growth of Indian Dairy Industry during the last three decades has been impressive, at more than 5percent per annum and in the 90’s the country has emered as the largest producer of milk. The existence of restrictive trade policy milk in the Diary Industry and the emergence of Amul type cooperatives have changed the diary farming practices in the country. The Operation Flood which is the successful Indian dairy development programmed has analysed that how food aid can be utilized as an investment in building the type of institutional infrastructure that can bring about national dairy development. India in the early 1950’s was commercially importing around 55,000 tones of milk powder annually to meet the urban milk demand. Most of the significant developments in dairying have taken place in India in this century only. The Indian Dairy Industry engages in the production and processing of milk and cream. This industry is involved in the manufacture of various dairy products like cheese, curd, yoghurt etc. The Indian Dairy Industry specialises in the procurement, production, processing, storage and distributor of dairy products. India as nation stands first in its share of dairy production in the international scenario. The industry contributes about rs 1,15,970 to the national economy. The Indian Dairy Industry which is in the developing stage provides gainful employment to a vaste majority of the rural households. It employs about 8.47 million people on yearly basis out of which 71 percent are women

COMPANY PROFILE Milco is a co-operative government undertaking, manufacturing milk and milk products. It is one of the leading milk dairy in Kerala. It started its commercial production in 27th of February 2005. Within a short period, milco achieved an important place in dairy products marketing. Melkadakkavur Ksheera Vyavasaya Sahakarna Sangam Ltd. T-17(D) is a milk co-operative society registered and functioning under Kerala state dairy development departments with the main object of socio-economic development of the people as well as the area especially the dairy farmers. The society is now handling about 4000 litres of milk per day paying reasonable price to the farmers. It is anticipated that milk procurement of the society will increase about 30 percentage by the end of this year. It is essential that the price of the milk offered the farmers should be continued at the same level or a little better. With the infrastructure available at the society, it is not easy to handle excess milk which is anticipated in the future year. The society will acute problem on marketing unless the society establishes a unit for processing of milk. The society proposed to setup a dairy unit kollampuzha which is only two kilometres from Attingal town. The site proposed is having all services facilities like water, 3-phase power connection, assess road communication facilities and is away from industrial waste. Urban and semi-urban areas demand for milk is very high. Although there are various agencies and including cycle vendors, supplying milk most of them have not been able to win the confidence of the customers because of their unrealizable quantity. Milk being perishable product, it will get spoiled within a few hours unless it is processed. Shelf like milk can be increased pasteurization to ensure the quality. Also, it is advisable to fill the milk in pouches for easy handling. Though there is much man for milk from semi-urban areas, being of perishable nature, the society will not be able to meet their demand. The main constraint is lack of processing. For marketing the entire quantity of milk which is produced by the society, it is essential to establish a processing unit of 10000 litres per day capacity to avoid huge loss due to the spoilage of milk during transportation and marketing.

Melkadakkavur Ksheera Sahakarana Sangam Ltd. is registered as a milk co-operative society in 1972 under the Kerala co-operative societies act, 1969 with five panchayath wards of Chirayinkeezh Taluk as its area of operation. The operation of the society is at present spread over all the panchayath of Chirayinkeezh block. The society has its roll about 760 members on 31/03/2004. The head quarter of the society is located at Melkadakkavur. The society proposed to setup a mini dairy unit at Kollapuzha which is only 2 km from Attingal Town. The site proposed is having all services facilities like water, 3-phase power connection, assess road communication facilities and is away from industrial waste. More over the location of the proposed site is in the midst of the milk collection and consumption centres. Thus it is possible for the plant to collect the entire production of milk from the dairy farmers and market them as products. The society owns one acre of land along with building valued at Rs.1 crore at current market price. The society has steady and consistent history or growth over a long period. The society proposes to establish a mini dairy plant of 1000 litres per capacity for processing of milk and for production of other milk products. The proposed project is intended to build processing and marketing infrastructure under the society to help both producers as well as consumers. This help to create a direct and indirect employment opportunities for about 750 peoples. Hence the proposed project is development projects aimed at the upliftment of dairy farmers and create employment opportunities. COMPETITORS PUBLIC SECTOR 

MILMA

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KSHEERA

PRIVATE SECTOR 

A1 MILK AND PRODUCTS

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ROYAL MILK AND PRODUCTS

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CAVIN’S MILK AND PRODUCTS

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SAKTHI MILK AND PRODUCTS

CORPORATE SECTOR 

NESTLE

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AMUL

MISSION To represent and support member farmers, providing high value for their produce by value addition and make available quality products and services to customers at reasonable rate.

VISION OF THE COMPANY To make Milco one of the most respected brands in dairy/ food products category in Kerala by the year 2025. OBJECTIVES 

To develop self-reliance, thrift habits and entrepreneurial ability among the members, assistance to own milk animals, provide all types of input services to them.

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To undertake the activity of milk procurement, processing and its marketing, open and operate milk selling units, milk depots etc, establish and maintain machines and tools for milk storage and handling milk and milk products

SWOT ANALYSIS

SWOT analysis is a framework used to evaluate a company's competitive position by identifying its strengths, weaknesses, opportunities and threats.

STRENGTH 

Availability of resource is high.

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Low price of the product

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Improved purchasing power of the consumer

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There is a good communication flow in Milco.

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Increasing customer demand for Milco products in rural areas

WEAKNESS 

Large number of competitors.

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Non availability of software for preparing needed dairy projects.

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Quality of incoming raw materials(Milk)

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Affordability and storage limitations.

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Milco require more advertisement in the competitive environment.

OPPORTUNITY 

The Milco dairy has to expand by finding new markets in urban areas.

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Wide knowledge of people about getting healthy foods was increased and they used to add natural, neutrinos products to heir meals which is well packed nd can be used instantly. Also milk is fulfilling the above consumer demand by providing protection to the human body against different diseases.

THREAT 

Strong competitors in the market such as Amul and Milma

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Unusual interference from the part of government.

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Potential health issues.

PRODUCT PROFILE The main products of milco dairy are: 1. Toned milk 2. Bright milk 3. Double toned milk 4. Curd 5. Ghee 6. Butter milk 7. Milk-sip-up 8. Milk halva

9. Milk cake 10. Ice-cream 11. Cow dung powder DEPARTMENT PROFILE MILCO consist of various department such as  Production / Operation Department  Marketing Department  Finance Department  Human Resource Department PRODUCTION / OPERATION DEPARTMENT Production is only deals with conversion of raw materials into finished goods. But operations management is the area concerned with efficiency and effectiveness of the operation in support and development of the firm strategic goals. Other area of concern to operations management includes the design and operations of system to provide goods and services. To put it succinctly, operation management is the planning, scheduling and controlling activities that transform inputs into outputs. A set of recognized and well developed concepts, tools and techniques belongs with the frame work considered operations management. While the term operations management conjures up views of manufacturing environment, many of these concepts have been applied in service with some of them actually developed specifically for service organization. FINANCE DEPARTMENT Finance is the crucial part in any organization. Finance is required in each and every stages of business. Business is nothing but a process of making money through money. The finance department of a business takes responsibility for organizing the financial and accounting affairs including the preparation and presentation of appropriate accounts, and the provision of financial information for managers. HUMAN RESOURCE MANAGEMENT Men, material and money are regarded as the 3 important factors of production. Human beings constitute the organization at all levels and are regarded as the only dynamic

factor of production. A business unit comes into existence with certain well defined objectives. An effort is made by the management to co-ordinate human and material resources in such a way that the objectives of the business are achieved. MARKETING DEPARTMENT Marketing department is a discipline covering business activities. That is directing the movement of goods and services to the ultimate consumers or users. It is the process of transferring the goods from the point of production to the point of consumption. In the words of PHILIP KOTLER marketing is and managerial

process by which

individuals and groups obtain what they need and through creating and exchanging products and value with others.

ORGANISATIONAL CHART

Board of Directors (9)

Managing Director Production Manager Plant operator Dispatch

Electrician

Boiler operator

Marketing Manager Marketing Executives Sales men (12)

Finanace Manager Clerk (2)

HR Manager

Clerk

Research & Development Chief Chemist Lab Assistant