AProject ReportOnPotential and Future of Dairy industry

An Insight of Mother Dairy

Submitted to:-INTERNATIONAL INSTITUTE OF BUSINESS STUDIESIn partial fulfilment of the requirement of the awardFor the degree ofMASTER OF BUSINESS ADMINISTRATIONUnder the guidance ofMrs Seema MishraMr Sachin RohtagiAst DeanProfessorIIBS NOIDAIIBS NOIDASubmitted By:-Anand Kumar TiwariBU-S 12Second Semester 2013

CERTIFICATE

I hereby certify that the work which is being presented in the MBA. Project Report entitled An Insight of Mother Dairy, in partial fulfilment of the requirements for the award of the Master of Business Administration and submitted to International Institute of Business Management, Noida is an authentic record of my own work carried out during Second Semester under the supervision of Prof Sachin Rohtagi, Finance Department. The matter presented in this Project Report has not been submitted by me for the award of any other degree elsewhere.

Place:Date:

Authorised Signature

TABLE OF CONTENT1. Preface2. Acknowledgment3. Declaration4. Executive Summary About the industry About the NDDB About Operation flood About the company Process About Functional Department Production Department Finance Department Marketing Department Human Resource Department Purchase and store Department Quality Assurance Department Dispatch And Logistics Department5. Facts And Figures Milk Production in India Milk Production by Mother Dairy Comparison Chart Per Capita Consumption And Expenditure Graphical Representation of NSS Data Milk production across countries Indias contribution to dairy Industry Index no of Whole sale price.6. Mother Dairy Export7. De-Galleria 8. CSR Activity9. SWOT10. Recommendations11. Annexure

PREFACEAs MBA students our aim should not be only to learn theoretical concepts in the classroom, but it becomes more important as how we apply those concepts in practices. In present scenario the world is developing so fast, and thus the technological and application theory is changing at a greater phase. The study inculcates students to think out of the box, rather than emphasising within the box. We are coming across many modern theories and implementation of machineries, to start new business. We must have the knowledge of theories and practical, through it, the student can able know about how to apply their mind in the real business world.This program of industrial visit is to create awareness about the industrial environment amongst the students. Such Industrial visit also plays vital role in MBA programme.The importance of industrial visit and project preparation has been widely accepted in the education institutions. Thus knowing the importance of such practical visit, our college is providing with such a programme to enhance the overall development of the students.MOTHER DAIRY gave me the golden opportunity to carry out my visit in such a great organization. I have prepared the detail report regarding the Potential and future of dairy Industry. I have tried my best to collect all necessary information relating to the project work.

ACKNOWLEDGEMENTThis project is done as a semester project, as a part of course titled MOTHER DAIRY. Im really thankful to my instructor Mr. Sachin Rohtagi, Assistant Professor, for Financial Management, International Institute of Business studies, Noida, for his valuable guidance and assistance, without which the accomplishment of the task would have never been possible. I would also like to thank him for giving this opportunity to explore into the real world and realize the interrelation of Dairy Industry and Economics, without which a society can never progress. In my project I have chosen the topic- Potential and Future of the dairy Industry and as the study of the same, done for Delhi-NCR Region, one of the famous and most populous regions of India. This report contains an over view of Dairy industry of North West Region and the Various Development and planning by co-operative societies and national dairy development board, for a better understanding of the various steps implemented by the government to overcome the growing demand of the dairy requirements of the country. Im also thankful to all those working for Mother Dairy for providing me with relevant information and necessary clarifications.

DECLARATION

I, Anand Kumar, hereby declare that the report on MOTHER DAIRY entitled Future and Potential of Mother Dairy is a result of my own work and my indebtedness to other work publications. Correction if any will be duly acknowledged.

Place: NOIDADate:17th June 2013 Anand Kumar Tiwari

EXECUTIVE SUMMARYThe report consists of the details on Mother Dairy India Ltd. It is one of the most effluent companys of India for processed milk and milk Products. The main aim of it is the welfare of the society by providing quality milk to its consumers at an affordable price. This report also contains the detailed information about the rise in population with respect to rise in dairy industry. The dairy industry has being studied in detail, so that that can be converted into information which can be used by mother dairy for strategising its marketing advertisement areas. It has various functional departments such as the Production, Human Resource, Finance, Marketing, Purchase and Stores, Quality Assurance, Dispatch and Logistics.This report is descriptive in nature but contain vital data of the capacity of Indian dairy industry and competitors to mother dairy. This report will help mother dairy to make strategies for their long term objective. This will enable the company to take appropriate decision as needed to increase as well as to retain its customers in the market. The data has been analyzed by presenting it in the form of graphs and tables and based on it; the interpretations have been made for the same. The results and findings have also been made for the organization to help management in their decisions. Lastly, the recommendations have also been made for the organization.

ABOUT DAIRY INDUSTRY

Introduction:The dairy sector in the India has shown remarkable development in the past decade and India has now become one of the largest producers of milk and value-added milk products in the world. The dairy sector has developed through co-operatives in many parts of the country. During 1997-98, the States (Delhi-Haryana-Uttar Pradesh) had 17574 million tones production capacity, which rose to 29719 million tons by the year 2012. In addition to many processing plants, many government co-operative societies and chilling centers have being made.

About the Indian dairy IndustryIn India, the dairy sector plays an important role in the countrys socio-economic development and constitutes an important segment of the rural economic.Dairy industry provides livelihood to millions of homes in village, assuring supply of quality of milk and milk products to both urban and rural areas. With view to keeping pace with the countrys increasing demand of milk and milk products, the industry has being growing rapidly.According to research report Indian Dairy Industry Analysis India is worlds largest milk producers accounting of around 17% of the global milk production. Besides, India is also one of largest consumers of milk and milk products. Due to rich nutritional qualities, the consumption of dairy product has being growing exponentially in the country, and considering such facts and figures, my study anticipates that the milk production in India will grow at a CAGR of around 4% during 2012 to 2015.With rising use of dairy product, the secondary market of dairy product has been flourishing, my report observed.Covering the necessary aspects of the Indian dairy industry, the study facilitates knowledge about its current market scenario and future growth. Analyzing the past and current state of the industry, the report tries to find out how trends like the entry of international companies and packaging are attracting the consumers and heeding towards further growth in the market. This way, it present a clear picture of the direction, in which the industry is likely to proceed in the coming years. The government is taking several initiatives and running plans and programs like National Diary Plan and Intensive Dairy Development Program to meet the growing demand for milk in the country. Our report talks about such schemes, and government regulations to present an objective and balanced picture of the industry. The study also discusses the opportunities and strengths of the dairy market in a complete SWOT analysis, and provides an insight into the competitive landscape. We hope that our comprehensive research will help clients align their business strategies as per market dynamics, and make sound investment decisions.

ABOUT NDDB

ABOUT NDDBNational Dairy Development Board (NDDB) was founded to replace... Exploitation with empowerment. Tradition with modernity. Stagnation with growth.

An instrument for the development of Indias rural transforming dairying into an instrument for the development of Indias rural people. Prior to NDDB, the milk market was vastly governed by local private dairy and these dairies were neither producing milk nor they were animal breeders and hence law of demand and supply was unheard by those whose intentions were purely to make more money from both the sides that is from producers of milk (farmers) and consumers at large. Establishment of NDDB broke that spell and traders were side lined in due course.The National Dairy Development Board was created in promote, finance and support producer-owned and controlled organizations. NDDBs efforts are co-operative principles and the Anand Pattern of Co-operationPhilosophy of NDDB Co-operation is the preferred form of enterprise, giving people control over the resources, through democratic self governance. All beneficiaries, particularly women and under privileged, must be involved in co-operative management and decision making. Technological and evolution search for better way to achieve the objective in the dynamic market.The NDDB was created in 1965, fulfilling the desire of the Prime Minister of India the late Lal Bahadur Shatri to extend the success of the Kaira Co-operative Milk Producers union (Amul) to other parts of India.That success combined the wisdom and energy of farmers with professional management to successfully capture liquid milk and milk product markets while supporting farmer investment with inputs and services.NDDB began its operations with the mission of making dairying a vehicle to a better future for millions of grassroots milk producers. The mission achieved thrust and direction with the launching of Operation Flood, a programme extending over 26 years and which used World Bank loan to finance Indias emergence as the worlds largest milk producing nation. Operation Floods third phase was completed in 1996 and has to its credit a number of significant achievements.As on March 2001, Indias 96,000 dairy co-operatives integrated through a three tier co-operative structure The Anand Pattern, owned by more than ten million farmers, procure an average of 16.5 million litres of milk every day. The milk is processed and marketed by 170 milk producers co-operative unions which, in turn, own 15 state co-operative milk marketing federations.NDDB also promotes other commodity-based co-operatives, allied industries and veterinary biological on an intensive and nation-wide basis. Dr. (Ms) Amrita Patel serves as the Chairman of NDDB; Dr. Varghese Kurien was the founder Chairman.

ABOUT OPERATION FLOODIntroduction to Operation FloodOperation Flood has been one of the worlds largest rural development programmes. It was started by Indias National Dairy Development Board (NDDB) in 1970. One of the largest of its kind, the programme objective was to create a nationwide milk grid.Operation Flood strategyThe bedrock of Operation Flood has been village milk producers cooperatives, which procure milk and provide inputs and services, making modern management and technology available to members. Operation Floods objectives included: Increase milk production (a flood of milk) Augment rural incomes Reasonable prices for consumers Programme ImplementationImplementation of Operation FloodOperation Flood wasimplemented in three phases.

Phase I Phase I (1970-1980) was financed by the sale of skimmed milk powder and butter oil gifted by the European Union then EEC through the World Food Programme. NDDB planned the programme and negotiated the details of EEC assistance.During its first phase, Operation Flood linked 18 of Indias premier milk sheds with consumers in Indiasfour major metropolitan cities: Delhi, Mumbai, Kolkata and Chennai.Phase II Operation Floods Phase II (1981-85) increased the milk sheds from 18 to136; 290 urban markets expanded the outlets for milk. By the end of 1985, a self-sustaining system of 43,000 village cooperatives covering 4.25 million milk producers had become a reality. Domestic milk powder production increased from 22,000 tons in the pre-project year to 140,000 tons by 1989, all of the increase coming from dairies set up under Operation Flood. In this way EEC gifts and World Bank loan helped to promote self-reliance. Direct marketing of milk by producers cooperatives increased by several million litres a day.Phase III Phase III (1985-1996) enabled dairy cooperatives to expand and strengthen the infrastructure required to procure and market increasing volumes of milk. Veterinary first-aid health care services, feed and artificial insemination services for cooperative members were extended, along with intensified member education.Operation Floods Phase III consolidated Indias dairy cooperative movement, adding 30,000 newdairy cooperatives to the 42,000 existing societies organised during Phase II. Milk sheds peaked to 173 in 1988-89 with the numbers of women members and Womens Dairy Cooperative Societies increasing significantly.Phase III gave increased emphasis to research and development in animal health and animal nutrition. Innovations like vaccine for Theileriosis, bypass protein feed and urea-molasses mineral blocks, all contributed to the enhanced productivity of milch animals.From the outset, Operation Flood was conceived and implemented as much more than a dairy programme. Rather, dairying was seen as an instrument of development, generating employment and regular incomes for millions of rural people.

Achievements of Operation FloodOperation Flood can be viewed as a twenty year experiment confirming the Rural Development Vision (World Bank Report 1997c.)1. It resulted in making India the largest producer of milk and milk products, and hence is also called the White Revolution of India. It also helped reduce malpractices by milk traders and merchants.2. This revolution followed the Indian Green Revolution and helped in accelerating organic, decentralized development across the board, alleviating poverty by offering gainful employment, and also providing access to better nutrition.3. Operation Flood has helped dairy farmers direct their own development, placing control of the resources they create in their own hands.4. A National Milk Grid links milk producers throughout India with consumers in over 700 towns and cities, reducing seasonal and regional price variations while ensuring that the producer gets fair market prices in a transparent manner on a regular basis.

ABOUT THE COMPANY

MOTHER DAIRY"Mother Dairy" is the single largest brand of milk in India as well as in Asia, marketing about 4.45 million litres of milk per day. Mother Dairy commands 62% market share in the organized sector in and around Delhi, primarily because of consistent quality and service whatever be the crisis - floods, transport, strike, curfew etc. Mother Dairy, Patparganj, Delhi, is presently manufacturing & selling around 8.5 lakh litres of toned milk through bulk vending shops.Mother Dairy, Delhi is an IS/ISO - 9001:2000 and Hazard Analysis Critical Control Points (HACCP) and IS-14001:1996 Environment Management System (EMS) Certified organisation.Mother Dairy was the first Dairy in the country to implement ISO-14031 (Environment Performance Evaluation) project. The companys Quality Assurance Laboratory is ISO/IEC- 17025:1999 certified by NABL (National Accreditation Board for Testing and Calibration Laboratory), Department of Science & Technology, India. This provides assurance to consumer in respect of Quality and Safety of products manufactured and marketed by Mother Dairy.The National Dairy Development Board (NDDB) commissioned Mother Dairy in the first phase of Operation Flood in 1974. Considering the success of Dairy industry NDDB established Fruit & Vegetable Project in Delhi in 1988 with "SAFAL" as its umbrella brand.With a view to separating the commercial activities from developmental activities, the NDDB merged Mother Dairy and the Fruit & Vegetable project into a wholly owned company named Mother Dairy Fruit & Vegetable Ltd (MDFVL) in April 2000. This becomes the holding company of Mother Dairy India Ltd (MDIL) a marketing company and Mother Dairy Foods Processing Ltd (MDFPL) a processing company. MDFPL is a multi unit company, with units at various locations in India. Mother Dairy, Delhi is one of the units of MDFPL.The company is a highly trusted house hold name for its wide range of milk products like Milk, Flavoured Milk, Ice-Cream, Dahi, Lassi, Table Butter, Dairy Whitner, Ghee etc. The application for the award is being made for Mother Dairy, Delhi unit.Mother dairy has taken up the concept of Total Productive Maintenance (TPM) wholeheartedly.The number of employees involved in KAIZENS and the no. of KAIZENS per employee are very encouraging. Mother Dairy is a member of CII-TPM Club and the KAIZENS done by Mother Dairy employees have been selected and presented in 2nd, 3rd, 4th and 5th National Kaizen Conferences held from time to time during the last three years. Our TPM efforts have resulted in increase in MTBF and decrease in MTTR, quality improvement, Cost reduction and reduction in accidents.Mother Dairy has received "Best Productivity Performance" award for three consecutive years starting from1987-88 to1989-90 and again from1995-96 to1997-1998 from National productivity Council and a commendation Certificate for Rajiv Gandhi National Quality Award, National Energy Conservation Award - 2004, Oil and Gas Conservation Award - 2004, Indian Innovation Award - 2004 and Safety Initiative Award - 2005.Over the years, Mother Dairy has not only served the daily need of milk of the consumers of Delhi, it has also extended its milk to other States like Haryana, Uttar Pradesh, Maharashtra, Andhra Pradesh & Gujarat and is expanding its wings rapidly to serve the masses.Strategically located Mother Dairy booths across Delhi and NCR make it convenient for you to pick up your daily requirement of Milk, Flavoured milk, Butter, Dahi, Lassi, Cheese, Chaas.mouth watering Ice Creams.The focus is on key markets for each of the categories. In the curd category, they have been in Delhi for a while now and launched in Mumbai just three months back. They hold a 60 per cent market share in Delhi, but it is too soon to gauge where we stand in Mumbai.

Objectives and Business Philosophy of Mother DairyThe main stakeholder of Mother Dairy was the farmer member for whose welfare it existed.Unlike other organizations, their objective is not to maximize the profit. They are more interested in giving the best price for the farmers for their milk than in making a large profit. Thus they look at the price given to their suppliers as not a cost but as an objective.Mother Dairy had, as its main objective, carrying out activities for the economic development of agriculturists by efficiently organizing marketing of milk and dairy produce, agricultural produce in raw and/or processed form and other allied produce.

This was to be done through: Common branding Centralized marketing Centralized quality control Centralized purchases and Pooling of milk efficientlyMother Dairy had declared, as its business philosophy, the following: ensure that milk producers and farmers regularly and continually receive market prices by offering quality milk, milk products and other food products to consumers at competitive prices and; uphold institutional structures that empower milk producers and farmers through processes that are equitable.The biggest strength of Mother Dairy was the trust it had created in the minds of its consumers regarding the quality of its products. NDDB and its brand Mother Dairy stood for guaranteed purity of whatever products it had produced. Adulteration was simply not done in any of its products. In India, where such trust was hard to come by, this could provide a central anchor forMother Dairys future business plans. For more than 40 years' Mother Dairy helping to create a national network has been adapted and extended to other commodities and areas. Their constant effort to learn and to enrich experience is central to their approach and capacities. In times to come, Mother Dairy shall strive to become a leading player in the food industry in India.

PROCESS

The Process Flow of the Mother Dairy

StandardizationClarificationRaw.

HomogenizationPasteurizationProcessed Milk

Dispatch Deep Chilling

Raw Milk Reception:Raw milk received through insulated road/rail tankers at a very low temperature thus retaining the freshness of milk. The milk goes for more than 15 stringent quality tests before it is accepted for the processing of milk.Milk achieved from individual producers is checked for all basic quality parameters meeting the company specification and required norms at respective collection and chilling centres.Milk is then supplied to the dairy units through insulated milk tankers at