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 Co-
operative 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 Co-
operatives Society.

 District / Regional co-operative milk producers union.

 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
 KSHEERA

PRIVATE SECTOR

 A1 MILK AND PRODUCTS

 ROYAL MILK AND PRODUCTS
 CAVIN’S MILK AND PRODUCTS
 SAKTHI MILK AND PRODUCTS
CORPORATE SECTOR

 NESTLE
 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.

 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.

 Low price of the product
  Improved purchasing power of the consumer
 There is a good communication flow in Milco.
 Increasing customer demand for Milco products in rural areas

WEAKNESS

 Large number of competitors.

 Non availability of software for preparing needed dairy projects.
 Quality of incoming raw materials(Milk)
 Affordability and storage limitations.
 Milco require more advertisement in the competitive environment.

OPPORTUNITY

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

 Unusual interference from the part of government.
 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 Marketing Finanace Research &

HR Manager
Manager Manager Manager Development

Plant Marketing Clerk Chief

Clerk
operator Executives (2) Chemist

Sales men
Dispatch Lab Assistant
(12)

Electrician

Boiler
operator