dairy project

Thu, November 26, 2009 4:18:25 PM

From: N.VIJAY KUMAR N.V.KUMAR <vijjimba0055@gmail.com>
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INDUSTRIAL
ANALYSIS

CONTENTS
Certificate
Declaration
Acknowledgement
Chapter - I
• Introduction

• Industrial profile

a. History

b. Present senrio

c. Major players

d. Market shares

e. Problems & Prospects

f. Market segmentation

Chapter – II

• Objective of study

• Methodology

• Limitations

Chapter – III

• Trend /financial analysis

Chapter – IV

• Finding and suggestions

• Bibliography
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 State. During 1997-98, the State had 60 milk processing plants with an
aggregate processing capacity of 5.8 million litres per day. In addition to these
processing plants, 123 Government and 33 co-operatives milk chilling centers operate in
the State.

Industry profile
Dairy is a place where handling of milk and milk products is done and technology refers
to the application of scientific knowledge for practical purposes.

Dairy Industry in India

More than 2,445 million people economically active in agriculture in the world, probably
2/3 or even more ¾ of them are wholly or partly dependent on livestock farming. India is
endowed with rich flora & Fauna & continues to be vital avenue for employment and
income generation, especially in rural areas. India, which has 66% of economically active
population, engaged in agriculture, derives 31% of Gross Domestic Product GDP from
agriculture. The share of livestock product is estimated at 21% of total agricultural sector.

Milk Industry is about the production, processing and retailing of milk in all its many
aspects. An editorial mix of news, articles, interviews, business advice and technical
reports provides a source of information relevant to anyone who is involved in milk
production and in the processing and retailing of dairy products.
Each month the editorial in Milk Industry relates to, and reports on what is happening in
the wider milk industry. Regular coverage includes: a news and business news round-up,
news of events and people in the trade, interviews with key industry figures, product
launches, company profiles, marketing & promotional news, dairy management and
European legislation.
 History
The term pasteurization has been coined after the name of Louis Pasteur of France, who
in 1860-64 demonstrated that heating wine at a temperature between 122 to 1400F
killed the spoilage organisms and help in its preservation. The application of this
process gives rise to the new term pasteurization.
The term pasteurization, as a applied to market milk today, refers to the process of
heating every particle of milk to at least 630C for 30min, or 720C for 15sec (or to any
temperature-time combination which is equally efficient), in approved and properly
operated equipment. After pasteurization, the milk is immediately cooled to 50C or
below

Circulation
Milk Industry is read throughout the world with regular subscribers in
33 countries.
Live stock populations:
Number of animals (in thousand)
(Source: production yearbook 2005 /FAO statistics division)
Sheeps Goats Pigs Chickens Cattle
45000 11924211780 435 194655
Buffaloes Horses Mules Camels
79500 990 1742 1520
(Source Indian Dairy man, 2005)

Cattle BuffaloTotal (2005)

(millions)
196 80 276
0.68% / year 0.75% / year

World (2005)
1320 151 1471
0.64% / year0.87% / year

In India In World
28 breeds of cattle 1997 520.6 mt 5.5-0.75%
7 breeds of buffalo .2020.620 to 650 mt.

Milk Production
2000 – 71 million tonnes
2003 – 79.8 million tonnes
2006 – 83.3 Mt
2008-87 Mt
Expected to reach- 220 to 250 mT – 2020
India contributes to world milk production rise from 12-15 % & it will increase upto 30-
35% (year 2020)
950 132 gm
1997214 gm
2020290 gm
India contributes 35% of total Asian milk
Dairy Industry profile 2005
Human Population 953 million (70 million dairy farmers)
Milk production 74.3 million tonnes (203.5 million 1 pd)
Average annual growth rate (1996-2000) 5.6%
Per capita milk availability 214 gm/day or 78 kg/year
 Milch animals 57 million cows;
39 million buffaloes

Milk yield per breedable bovine in milk 1,250kg

Cattle feed production (organized sector) 1.5 million tonnes
Turnover of veterinary pharmaceuticals Rs 550 crores
Dairy plants throughout 20 mlpd
Throughout as percentage of total milk output 10
Value of output of milk group (1994-95) (Based on producers price) Rs 50,051 crores
Value of output of dairy industry (Based on retail price) Rs 105,000 crores

Projected milk production at different rates of annual growth 2000 to

2005
Year @5% @5.5% @6%
2000 66.3 66.3 66.3
2001 69.3 70.0 70.2
2002 73.1 74.0 74.4

2003 76.7 78.0 78.8

2004 80.6 82.3 83.5
2005 84.6 86.8 88.5

Milk Composition

Sr. Constituents Buffalo Cow Goat Liquid skimmed milk

no
1 Moisture (gm) 81.00 87.50 86.80 92.10
2 Protein (gm) 4.30 3.20 3.30 2.50
3 Fat (gm) 6.50 4.10 4.50 0.10
4 Minerals (gm) 0.80 0.80 0.80 0.70
5 Carbohydrates (gm) 5.00 4.40 4.60 4.60
6 Energy calories (kcal) 117.00 67.00 72.00 29.00
7 Calcium (mg) 210.00 120.00170.00 120.00
8 Phosphorus (mg) 130.00 90.00 120.00 90.00
9 Iron (mg) 0.20 0.20 0.30 0.20
 Indian Buffaloes:
(Dairy business Directory 2005)

Buffaloes are classified into two categories;

1) Reverine (depending upon variation in their habitat & genome)

2) Swamp
Swamp buffaloes: - 48 chromosomes
South East Asian countries
Stocky animals, marshy land habitat
River Buffaloes: - 50 chromosomes
Massive in size and curled horns
Prefer to enter clear water
 World’s Buffalo
population:
147 million
About 142 millions in Asia & Pacific

India:
Leading most buffalo populated country
78 millions most of reverine
Milk production: About 95% of world buffalo milk (45.3 million tonnes)
is produced in Asia &Pacific, while 64.4% is produced in India
(FAO.2003)
From 2000 to 2003 milk production in the world increased by 4.26%

The % of total bovines slaughtered;

Total bovine slaughtered (%)

World 17.1 to 17.4% or - 1.6% per annum

India 15% per annum

Asia 6.6%

Increasing trend of buffalo population in most of the

Asian countries in Brazil and Italy
 BREEDS

Classified on phenotypic & geographic locations;

Cockril (1982) = Buffalo river type; two sub groups;
1. Horns are closed and set close to head & are down swept ;eg. Murrah,
Ravi, Mehasana, Jaffarabadi, Sambalpur
2. Horns are sickle shaped and unswept: e.g. Bhadawari, Kalahandi,
Kanara, Manda, Nagpuri, Pandharpuri, Surti, Tarai & Toda
Breeds of Buffaloes of Indian Origin and Breeding Tracts:
Group Breed Breeding tract
Murrah Murrah Rohtak, Jind,Hisar, Bhiwari, Sonepat
type Nili Ravi (Hariyam)
Ferozepur (Punjab)
Gujarat Surti Kaira and Baroda
Jaffarabadi Kutch, Jungarh & Jamnagar dist
Mehsana Mehsana, sabarkantha, Banaskantha Dist.
Uttar Bhadawari Bhadawari estate, Beh Tehsil in Agra, Gwalior & Etawah
pradesh Tarai dist. Tarai region of U.P.
Central Nagpuri Nagpur, Akola, Amravati dist. South maharashtra, west A.P.,
India Pandharpuri north Karnataka Hilly region of Andra Pradesh and Orissa
Kalahandi Bilaspur dist.
Sambalpur
South Toda Nilgiri Hills
India South Kanara West coast in Kerela

Buffaloes found in the north –eastern states and the eastern coastal region of India & in
China South east Asian countries e.g. Philippines, Thailand, Malaysia, Vietnam, Srilanka,
Burma, Laos, Kampuchea, Bangladesh etc. have been classified as swamp buffaloes on
the basis of their genetic constitution (2n=48) & natural habitat.The breeds includes in
these groups are Manda & Palakhemundi.
Objectives of study
1. To maintain milk at a low temperature so as to prevent any deterioration
in quality prior to processing/product manufacture;
2. To facilitate bulking of the raw milk supply, which will ensure uniform
composition;
3. To allow for uninterrupted operation during processing and bottling;
4. To facilitate standardization of the milk.
5. to know the strength and weakness of milk industry
6. to know the process of the milk industry

Types of Storage
Insulated or Refrigerated
In the former, there are 5 to 7.5 cm. of insulating material between the inner and outer
linings; in the latter, the space between the two linings is used for circulation of the
cooling medium. Another variation of the refrigerated type is the cold-wall tank.
Horizontal or Vertical
While the former requires more floor space and less headspace, the latter
requires less floor space and more headspace. Modern circulation cleaning
methods have made very large vertical storage tanks practical.
Rectangular, Cylindrical or Oval
Of these, the first suffers from the disadvantage of having dead corners
during agitation, while the other two do not.
Built for gravity flow, air-pressure or vacuum operation
The first is the most common. However, air pressure is sometimes used to evacuate the
product. This requires special construction of the storage tank for greater strength than
necessary for normally operations under gravity flow.
Location
In one system, the storage tanks are located on an upper floor. The milk is pumped
from the receiving room to the floor above. It then flows by gravity to the pre-heater,
filter or clarifier, pasteurizer, cooler and bottling machine. In another system, the milk
is pumped from the storage tanks through a pre heater and filter into the pasteurizer.
Hence it may flow by gravity to the cooler, or it may be pumped to the cooler while
hot.

Current Scenario
Johne’s disease is an infectious disease of cattle caused by Mycobacterium avium
subspecies paratuberculosis (MAP). Crohn’s disease (CD) is a human disease of
unknown etiology that is characterized by chronic bowel inflammation. No causal link
has been scientifically established between MAP and CD, but it is important to
understand possible impacts on society should such a causal link be established. The
goal of this paper is to analyze the implications and the possible economic impacts that
finding such a link would have on milk demand in the dairy industry and to provide a
framework for further discussion among stakeholders. Three scenarios were developed
based on the effectiveness of possible risk-mitigation strategies. In the first scenario, it
was assumed that an effective strategy exists; therefore, a negligible demand decrease in
the consumption of dairy products was expected. In the second scenario, it was assumed
that new risk mitigation would need to be implemented to minimize the health hazard
for humans. In this case, a small milk demand decrease was expected, but larger
demand decreases were also possible.
The third scenario assumed that no fully effective risk mitigation was available, and this
resulted in a considerable demand decrease and a potential reduction in milk supply as a
result of regulatory measures. A milk demand reduction of 1 or 5% resulted in a
reduction in consumer surplus of $600 million and $2.9 billion, and a reduction in dairy
farm income of $270 million and $1.3 billion, respectively. A decrease in milk supply
would cause a slight increase in total losses, but would cause the greatest losses to test-
positive dairy farms. Given the current scientific knowledge about MAP and CD, we
conclude that if a link were established, it is most likely that the first or second scenario
would occur. Thus, consumer response and economic consequences to the discovery of
such a link are expected to be limited, but could be large if the consumer’s perception of
risk is large or if risk-mitigation strategies were ineffective.

MAJOR PLAYERS
 1) Balaji diary

2) vijya diary

3) dodla diary

4) heritage diary

5) sangam diary

6) sivasakthi diary

1.Heritage diary:
It was established by sri N.chandrababau naidu
in the year of 1992.At present it is operating in
five statesAndhra
Pradesh,tamilnadu,Karnataka,kerala and
maharastra.The annual turnover in 2006 was
347cr value of food milk products.the retal stores
are in chittor,Chennai,banglore and Hyderabad.

Analysis
FINACIAL
2006-07 2005-06 2004-05 2003-04
YEAR
TURNOVER 346.33 29.07 266.13 192.83
OTHER
1.22 1.27 0.78 0.86
INCOME
TOTAL
347.56 293.34 266.91 235.84
INCOME
EPS 11.73 13.65 10.17 17.63

CEPS 8.51 18.46 14.19 12.59

 2. BALAJI DIARY
It was established in the year of 1989.At present it is operating in 3 states Andhra
Pradesh, tamilnadu and Karnataka. The annual turnover in 2006 was 437cr value
of food milk products. The retail stores are in chittor, Chennai, banglore and
Hyderabad.

Analysis

FINACIAL
2006-07 2005-06 2004-05 2003-04
YEAR
TURNOVER 437.03 411.04 366.03 350.04
OTHER
1.22 1.72 0.87 0.86
INCOME
TOTAL
438.25 411.76 366.91 350.90
INCOME
EPS 17.63 14.97 12.57 15.63

CEPS 9.51 18.64 11.19 9.59

3. Vijiya diary
It was established in the year of 1995.At present it is operating in Andhra Pradesh.
The products are sweets, ghee, butter, and curd and milk products. At present
Vijay diary is selling one liter milk at the price of 22rs.The retail stores are in
chittor, vizag and Hyderabad.

Market segmentation
The ready-to-eat cereal industry is characterized by high concentration, high price-cost
margins, large advertising-to-sales ratios, and numerous introductions of new products.
Previous researchers have concluded that the ready-to-eat cereal industry is a classic
example of an industry with nearly collusive pricing behavior and intense nonprice
competition. This paper empirically examines this conclusion. In particular, I estimate
price-cost margins, but more importantly I am able empirically to separate these
margins into three sources: (i) that which is due to product differentiation; (ii) that
which is due to multi-product firm pricing; and (iii) that due to potential price collusion.
The results suggest that given the demand for different brands of cereal, the first two
effects explain most of the observed price-cost margins. I conclude that prices in the
industry are consistent with noncollusive pricing behavior, despite the high price-cost
margins. Leading firms are able to maintain a portfolio of differentiated products and
influence the perceived product quality. It is these two factors that lead to high price-
cost margins.

Problems and prospects

1. Complete drainage is not possible;
2. Great accumulation of milk-stone in the heating section.
3. Pasteurization efficiency of high-thermoduric count raw milk is not as great as it is
when the holder system is used.

Features
Milk, that all-American food, is taking on some all-American names--like "fat free,"
"reduced fat" and "light." Starting Jan. 1, 1998, the labeling of fat-reduced milk
products will have to follow the same requirements the Food and Drug Administration
established almost five years ago for the labeling of just about every other food reduced
in fat. From now on:

2 percent milk will become known, for example, as "reduced fat" or "less
fat" instead of "low fat"
1 percent milk will remain "low fat" or become, for example, "little fat"
Skim will retain its name or be called, for example, fat-free, zero-fat, or
no-fat milk.

Market Shares
NDDB creates brand identity for milk
The National Dairy Development Board has created a distinct brand identity for liquid
milk marketed by the dairy cooperatives. “This is intended to create product
differentiation in the minds of consumers, based on superior quality and uniform
package design,” it says. Only those cooperatives which agree to meet the quality
parameters and guidelines laid down by NDDB would be allowed to use the symbol.
This is stated in the dairy's Annual Report 2001-02 released today. The package design
has been standardized for consumers to identify the type of milk: blue for toned, green
for standardized, orange for full-cream, yellow for double-toned and purple for
skimmed milk packet. These colours would remain common for all cooperatives. The
launch of the ‘milk drop’ symbol during the year was a major success. On the one hand,
the NDDB provides technical and financial assistance for upgrading processes, systems
and cold chain infrastructure to improve milk quality; on the other, it has, through its
newly created subsidiary, Mother dairy Foods Limited, offered its services to state-level
cooperatives to improve their marketing efforts by forming joint venture marketing
companies.

Objectives of study
 • To improve the keeping quality of milk by destroying
almost all spoilage organisms and to render milk safe for human
consumption.

• To study the performance of milk industry.

• To study strengths and weakness of milk industry

• To study opportunities and threats of milk industry.

Methodology
Data can be collected by 2 ways.

Primary data: it is the first hand information.it can be collected

directly by the firm or a company.

secondary data: it is second hand information which can be

collected through by net,newspapers,records,magazines books etc. they
are two types of question namely openended questions and closended
questions.
.

Limitations
• Costs higher per unit milk distributed.
• Product not visible.
• Difficult to remove cream.
• Inspection of milk (for sediment) not possible.
• Regular supply of special paper/film essential.
• Not so easy to open.

Suggestions and conclusion

• Pasteurization encourages slackening of efforts for sanitary milk
production;
• It may be used to mask low-quality milk;
• It reduces the "Cream line" or "Cream volume";
• It diminishes significantly the nutritive value of milk;
• Pasteurized milk will not clot with rennet;
• Pasteurization may be carelessly done; it gives a false sense of
security;
• It fails to destroy bacterial toxins in milk;
• In India this is not necessary as milk is invariably boiled.

Conclusion
This model gives a fair idea about the industry in which a company
operates and the various external forces that influence it.

However, it must be noted that any industry is not static in nature. It's
dynamic and over a period of time the model, which have used to analyse
the milk industry may itself evolve.
Going forward, we foresee increasing competition in the industry but the
form of competition will be different. It will be between large players
(with economies of scale) and it may be possible that some kind of
oligopoly or cartels come into play.

This is owing to the fact that the industry will move towards consolidation. The larger
players in the industry will survive with their proprietary products and strong
franchisee.

The barriers to entry will increase going forward. The change in the patent regime, will
see new proprietary products coming up, making imitation difficult. The players with
huge capacity will be able to influence substantial power on the fringe players by their
aggressive pricing which will create hindrance for the smaller players.

Economies of scale will play an important part too. Last but not the least, in a vast
country of India's size, government too will have bigger role to play.

A successful distribution programme requires;

• A product of high quality.

• An attractive package.

• Neat and courteous route salesmen.

• Delivery equipment of pleasing appearance.

• Efficient use of men and equipment.

• Effective advertising.

Quality Control

It is well established that milk can be a potential carrier of disease producing

organisms. Milk-borne epidemics have occurred in the past throughout the world.
Unless proper precautions are taken, such outbreaks of milk-borne diseases can occur
anywhere, any time, especially if raw milk is consumed.

Modes of milk transportation in India

Mode Optimum Optimum Remarks

load (kg) distance (km)
Head-load 15-25 3–8 Generally employed for small loads and
distances. Important in hilly areas.
Shoulder- Up to 40 3–6 Meant for heavier loads but for shorter
sling distances than head-load.
Pack-animal Up to 80 6 - 10 Ponies, horses and donkeys usually employed.
Bullock-cart 300-400 10 –12 Rather slow.
Tonga 250-300 12 or more Larger quantities transported; faster than head-
load, shoulder-sling and pack animal.
Bicycle 40 or more 15 or more Quick and handy; easily accessible to milk
producer’s home.
Cycle- 150-200 10 or more More carrying capacity than bicycle.
rickshaw
Boat 40-200 2–8 Only means of transport when rivers, etc.,
have to be crossed.
Auto- 250-500 15 or more Greater carrying capacity and faster than
rickshaw cycle-rickshaw.
Motor truck ½ to 3 tonnes 15 or more Increasingly in use with more road building
and improvement programmes.
Railway 11 tonnes or 80 or more Great scope in future.
wagon more
Tankers 5 tonnes or 80 or more Great scope in future.
(road or more
rail)
Indian Dairy Products
The term Indian Dairy Products refers to those milk products, which
originated in undivided India.
FLOW CHART OF CONVERSION OF MILK INTO TRADITIONAL
INDIAN DAIRY PRODUCTS

Cultured Condensed Acid Precipitation

1.Shrikhand 1.Mishti dol 1.Paneer

2.Ghee 2.Rabri 2.Sandesh
3.Lassi 3.Kheer 3.Chhana
4.Kadbi 4.Khoa 4.Rasgoola

5.Pantoda
Burfi Pedha Kalakand Gulabjamun 6.Rasmalai

Milk
 Key Success Factors
Dramatic changes are occurring in production agriculture, particularly in livestock
production. In this rapidly changing and increasingly competitive environment,
successful production units utilize and embrace modern manufacturing concepts and
principles to improve their competitive position and increase their efficiency and
productivity. These concepts have not replaced the well-recognized concepts of
commodity production that were used in the past, such as an emphasis on cost control
through a combination of increased size, improved efficiency, and adoption of the
latest technology in all phases of the production process. However, the traditional
techniques of obtaining efficiency, reducing cost, and increasing margins are no
longer sufficient to ensure successful agricultural production. The manufacturing
concepts discussed in this paper suggest additional strategies that are necessary for
success in modern agricultural production.
( Key words: industrialization, manufacturing, integrated systems, success
factors

Milk: Through Porter's eyes

August 27, 2004

Today's business environment is extremely competitive and in economics parlance

where perfect competition exists, the profits of the firms operating in that industry will
become zero.

However, this is not possible because, firstly no company is a price taker

(i.e. no company will operate where profits are zero).

Secondly, they strive to create a competitive advantage to thrive in the competitive

scenario. Michael Porter, considered to be one of the foremost gurus' of management,
developed the famous five-force model, which influences an industry.

Government policy
The World Bank has committed itself to becoming a "global knowledge bank", using
knowledge to improve the development effectiveness of its work. Two of the analytical
and advisory ways the Bank provides knowledge to its client countries are economic
and sector work (ESW) and nonlending technical assistance (TA). ESW and TA are an
essential part of the Bank's engagement with its clients—it spent $910 million (26% of
its spending on country services) on these products during fiscal 2000-06.

This evaluation assesses the extent to which the stated objectives of ESW and TA have
been met. It also assesses whether the way ESW and TA are originated, partnership
with clients in production, technical quality, and dissemination of these products
influence the extent to which the stated objectives are met.

International Scenario
Dairy Industry In India: An Overview
The dairy industry in India engages in the production and processing of milk and
cream. It is also involved in the manufacture of other dairy products like cheese, curd,
yoghurt and many more. The dairy industry specializes in the procurement, production,
processing, storage and distribution of dairy products.

India stands the first place in its share of dairy production in the international scenario.
It contributes about Rs 1,15,970 in the national economy. This ever-expanding industry
provides gainful employment to a vast majority of the rural households. It employs
about 8.47 million people on yearly basis out of which 71% are women.

Jobs In Dairy Industry In India

Jobs in dairy industry are concentrated in the fields of production and processing of
dairy products.
Dairy Scientists: The responsibility of the dairy scientists is to deal with collection of
milk and taking care of the high yielding variety of animals. Scientific tests are
conducted to analyze the effects of different kinds of food intakes and environment on
the quality as well as the quantity of milk produced. Research is also undertaken to
further improve the breeding of cattle and quality of milk produced.
Dairy Technologists: Dairy technology requires procurement officers who take the
responsibility of collecting milk from farmers, milk booths ad cattle-rearers. The
procurement officer should be well-acquainted wit the latest technology that is
applicable in maintaining the quality of milk in the process of transporting it to the
desired location. The processing of milk undergoes numerous steps and different levels
of specialization are required for each step to be completed successfully. Various
quality control measures are applied at each step of processing. Preservation of dairy
products is very important since dairy products are highly perishable. The dairy
technologists devise appropriate methods to properly store and preserve the dairy
products.
Dairy Engineers: The Jobs in Dairy Industry of dairy engineers is to set
up and maintain dairy plants.
Marketing Personnel: The marketing personnel deals with the sale and marketing of
milk together with milk products.

Eligibility Criteria To Be in the Dairy Industry

An individual has to secure a minimum of 60% marks to gain admission to a bachelor's
degree course in the dairy technology. For getting into the graduation course one has to
qualify the All India Entrance Test that is affiliated to the Indian Council of
Agricultural Research. After that he or she may continue with his masters in dairy
technology.
 BIBILOGRAPHY
WWW.WIKIPEDIA.COM
WWW.MILKINDUSTRY.COM.