Study of Mother

Dairy’s WT-5

Probing the reason(s) for low sales & suggesting remedial

measures thereof.

By:

Kalyan Sundar Banerjee

Krishna Tomar

Priya Madan
Sudip Verma

Sushant Chowdhary

2
 INDEX:
Acknowledgement

Project Details

Analysis of Milk Industry

Indian Dairy Industry – Facts & Figures

Analyzing the product – Milk

Operation Flood

Cooperative Unions

National Dairy Development Board

About Mother Dairy

Other Major Players

Delhi’s (NCR) Milk Market

Objectives of Research

Findings of the Research

SWOT Analysis of Mother Dairy & Others

Recommendations

Annexure

3
Acknowledgement

4
At the very outset we would like to express our heartfelt
gratitude to ‘Mother Dairy India Ltd.’ for allowing us to
contribute, though modestly, in the functioning of WT-5, which
has the unique distinction of being the most competitive milk
market of Asia by way of our research project which we all
found very interesting & challenging.

Our thanks are due to Mr.K.P.S. Chauhan who was very kind
in explaining to us the challenge that lay ahead of us & also for
allowing us to make liberal use of his knowledge, resource &
patience.

We feel grateful to Mr. Venkatramani, for allowing &

encouraging us to pursue our research with utmost objectivity,
fairness & flexibility.

We feel indebted to Mr. Kumar & Mr. Anil Grover for

explaining to us the intricacies & peculiarities of milk business
which came handy on various occasions & allowed us to retain
our focus & finish our research with the satisfaction of a job
well done.

We would also like to thank all those people at ‘Mother Dairy

India Ltd.’ who though being total strangers to us lifted our
spirit with their cheerful smiles & gave us the courage &
inspiration to work zealously on the project assigned to us &
do justice to it.

I am extremely thankful to my Faculty Guide Dr. Anurika vaish

at Indian Institute of Information Technology for her invaluable
Guidance and Suggestions during my Training.

We all would also like to express our gratitude towards our

parents from whom we have inherited all the desired virtues &
to whom we look up to as living inspirations.

Last, but by no means the least, we would like to pay

obeisance to the Almighty God for bestowing on us his
blessings & also for being on our side when the challenge

5
seemed insurmountable & the going was tough. Our
unshakeable faith in Him allowed us to take this research to its
logical conclusion.

6
Project Details

7
Name of the company: “Mother Dairy India Ltd.”

Title of the project: Probing the reason(s) for low

sales & suggesting remedial
measures thereof.

Type of project: Research based marketing

project.

Duration of project: 6 weeks (from May 1 to June

15, 2005)

Number of team members: 5

Area under research: WT-5 (West Delhi)

8
Analysis of Milk Industry

9
Traditionally, in India dairying has been a rural cottage industry.
Semi-commercial dairying started with the establishment of military
dairy farms and co-operative milk unions throughout the country
towards the end of the nineteenth century.

In earlier years, many households owned their own ‘family cow’ or

secured milk from a neighbour who had one. With the increase in
urban population fewer households could afford to keep a cow for
private use & moreover there were other problems also like the
high cost of milk production, problems of sanitation etc. restricted
the practice; and gradually the family cow in the city was eliminated
and city cattle were all sent back to the rural areas.

Gradually farmers living near the cities took advantage of their

proximity to the cities & began supplying milk to the urban
population; this gave rise to the fluid milk-sheds we see today in
every city of our country.

Prior to the 1850s most milk was necessarily produced within a

short distance of the place of consumption because of lack of
suitable means of transportation and refrigeration.

The Indian Dairy Industry has made rapid progress since

Independence. A large number of modern milk plants and product
factories have since been established. These organised dairies have
been successfully engaged in the routine commercial production of
pasteurized bottled milk and various Western and Indian dairy
products. With modern knowledge of the protection of milk during
transportation, it became possible to locate dairies where land was
less expensive and crops could be grown more economically.

In India, the market milk technology may be considered to have

commenced in 1950, with the functioning of the Central Dairy of
Aarey Milk Colony, and milk product technology in 1956 with the
establishment of AMUL Dairy, Anand.

Indian dairy sector is still mainly an unorganised sector as barely

10% of our total milk production undergoes organised handling.

10
Indian Dairy Industry –
Facts & Figures

11
Beginning in organized milk handling was made in India with
the establishment of Military Dairy Farms.

Handling of milk in Co-operative Milk Unions established all

over the country on a small scale in the early stages.

Long distance refrigerated rail-transport of milk from Anand to

Bombay since 1945

Pasteurization and bottling of milk on a large scale for

organized distribution was started at Aarey (1950), Calcutta
(Haringhata, 1959), Delhi (1959), Worli (1961), Madras (1963)
etc.

Establishment of Milk Plants under the Five-Year Plans for

Dairy Development all over India. These were taken up with
the dual object of increasing the national level of milk
consumption and ensuing better returns to the primary milk
producer. Their main aim was to produce more, better and
cheaper milk.

Milk Production

• India's milk production increased from 21.2 million MT in

1968 to 88.1 million MT in 2003-04.
• India is the largest producer of Milk in the World
(replacing USA)
• Per capita availability of milk presently is 231 grams per
day, up from 112 grams per day in 1968-69.
• India's 3.8 percent annual growth of milk production
surpasses the 2 per cent growth in population; the net
increase in availability is around 2 per cent per year.

Marketing

• In 2004-05, average daily cooperative milk marketing

stood at 155 lakh litres, registering a growth of 4.2
percent over 148.75 lakh litres in 2003-04.

12
 • Dairy Cooperatives now market milk in about 200 class
cities including metros and some 550 smaller towns.
• During the last decade, the daily milk supply to each
1,000 urban consumers has increased from 17.5 to 52.0
litres.

Innovation

• Bulk-vending - saving money and the environment.

• Milk travels as far as 2,200 kilometers to deficit areas,
carried by innovative rail and road milk tankers.
• Ninety-five percent of dairy equipment is produced in
India, saving valuable foreign exchange.

Macro Impact

• The annual value of India's milk production amounts to

about Rs. 880 billion.
• Dairy cooperatives generate employment opportunities
for some 12 million farm families.
• Dairy Farming is the single largest contributor to the
economy(5% of GDP &13% of employment)
• Dairy industry represents a huge opportunity being the largest
single FMCG Market: Urban Mkt size Rs 33000 Crores and
organized sector Rs 11000 Crores representing a huge
opportunity for conversion and growth.

Key challenges before Indian Dairy Industry are as

follows:

• Ensuring Quality

• Procurement and efficiencies in supply chain

• Product differentiation and value addition

13
Per Capita Monthly Consumption Expenditure on Broad Groups of Items
(in Rs.)
Milk and Meat, Total Average
Total Total
NSS Round Milk Egg, Non- Size of
Food Exp.
Products Fish Food Household
25th (1970 - 1971)
Rural 3.03 1.02 25.98 9.33 35.31
Urban 5.01 1.9 34.04 18.81 52.85
27th (1972 - 1973)
Rural 3.22 1.09 32.16 12.01 44.17 5.22
Urban 5.91 2.07 40.84 22.49 63.33 4.72
32nd (1977 - 1978)
Rural 5.29 1.84 44.33 24.56 68.89 5.22
Urban 9.16 3.33 57.67 38.48 96.15 4.89
38th (1982)
Rural 8.45 3.40 73.73 38.71 112.45 5.20
Urban 15.15 5.92 96.97 67.06 164.03 4.85
42nd(1986 - 1987)
Rural 13.48 5.25 92.55 48.38 140.93 5.26
Urban 23.32 9.25 128.99 93.66 222.65 4.79
43rd(1987 - 1988)
Rural 13.63 5.11 100.82 57.28 158.10 5.08
Urban 23.83 8.85 139.75 110.18 249.93 4.71
44th(1988 - 1989)
Rural 15.65 6.12 111.80 63.30 175.10 5.17
Urban 26.74 10.59 152.49 114.36 266.85 4.87
45th(1989 - 1990)

14
Rural 18.35 6.84 121.78 67.68 189.46 4.96
Urban 29.53 11.42 165.46 132.54 298 4.66
46th (1990 - 1991)
Rural 19.04 7.08 133.34 68.78 202.12 4.81
Urban 32.37 12.27 185.77 140.00 326.75 4.55
47th (July - Dec. 1991)
Rural 21.90 8.20 153.59 89.91 243.50 5.00
Urban 37.21 13.49 207.77 162.57 370.34 4.73
48th (Jan. - Dec. 1992)
Rural 23.00 8.00 161.00 87.00 247.00 5.20
Urban 42.00 14.00 224.00 175.00 399.00 4.80
49th(Jan. - June 1993)
Rural 23.00 9.00 159.00 85.00 244.00 5.10
Urban 41.00 14.00 221.00 162.00 382.00 4.60
50th(July 1993 - June 1994)
Rural 27.00 9.40 178.00 104.00 281.00 4.90
Urban 45.00 15.50 250.00 208.00 458.00 4.50
51st (July 1994 ? June 1995)
Rural 27.00 10.00 189.00 121.00 309.00 4.90
Urban 49.00 17.00 271.00 237.00 508.00 4.60
52nd (July 1995 ? June 1996)
Rural 32.38 10.94 207.75 136.53 344.29 5.00
Urban 56.45 19.11 299.98 299.28 599.26 4.60
53rd (Jan-Dec 1997)
Rural 39.31 11.79 231.99 163.02 395.01 5.00
Urban 62.75 19.58 320.26 325.19 645.44 4.60
54th (Jan-? June 1998)
Rural 36.54 12.65 232.40 149.67 382.07 5.00

15
Urban 64.63 21.94 339.71 344.57 684.27 4.70
55th (July 1999 ? June 2000)
Rural 42.56 16.14 288.80 197.28 486.07 5.00
Urban 74.18 26.77 410.10 444.10 854.96 5.00
Source : Basic Animal Husbandry Statistics,2004, GOI.

Share of Agriculture and Livestock Sector in GDP

(At current prices in Rs. Billion)
Year GDP GDP (Agriculture) GDP (Livestock Sector)
(Total)
% %
Rs. Rs.
Share Share
1980-81 1,224 425 34.72 59 4.82
1985-86 2,338 700 29.94 139 5.95
1986-87 2,600 744 28.62 156 6.00
1987-88 2,949 835 28.31 183 6.21
1988-89 3,527 1,041 29.52 217 6.15
1989-90 4,087 1,154 28.24 275 6.73
1990-91 4,778 1,352 28.30 308 6.45

16
1991-92 5,528 1,593 28.82 375 6.78
1992-93 6,307 1,779 28.21 432 6.85
1993-94 7,813 2,218 28.39 507 6.49
1994-95 9,170 2,552 27.83 577 6.29
1995-96 10,733 2,778 25.88 650 6.06
1996-97 12,435 3,340 26.86 747 6.01
1997-98 13,901 3,535 25.43 819 5.89
1998-99 15,981 4,064 25.43 911 5.70
1999-00 17,618 4,224 23.98 992 5.63
2000-01 19,030 4,235 22.25 1093 5.74
2001-02 20,910 4,730 22.62 1187 5.68
2002-03 22,495 4,560 20.27 1209 5.37

* Provisional; ** Quick Estimate; Source : Central Statistical Organisation, Dept.

of Statistics, GOI

Dairy Cooperatives- Progress on Key Parameters during 2003-04 *

States/UT DCS # Farmer Women Procurement Marketing
Members Members
(Nos) ('000) ('000) (TKGPD) $ (TLPD) $
Andhra
5072 756 143 950 898
Pradesh
Assam 65 3 0 4 8
Bihar 4657 240 36 396 288
Chhattisgarh 424 19 4 18 28
DELHI 1937
Goa 169 19 3 43 89
Gujarat 11400 2360 540 5102 2101
Haryana 4219 230 30 331 153
Himachal
283 21 6 25 15
Pradesh
Jammu & ** ** ** **

17
Kashmir
Jharkhand 80 2 0 6 163
Karnataka 9293 1737 444 2243 1518
Kerala 3208 706 125 614 738
Madhya
4699 231 33 294 296
Pradesh
Maharashtra 18349 1582 366 2680 2629
Nagaland 76 3 0 2 4
Orissa 1654 122 54 127 132
Pondicherry 96 32 14 54 53
Punjab 6892 402 42 745 496
Rajasthan 9643 534 111 1036 855
Sikkim 189 7 0 9 7
Tamil Nadu 7631 1988 717 1664 1206
Tripura 84 4 1 2 9
Uttar Pradesh 18104 824 237 814 436
West Bengal 2287 172 59 324 816
All - India Total 108574 11994 2963 17483 14875

@ Organised ( cumulative )
*Provisional, includes conventional societies and Taluka unions formed earlier
** Not reported
Chhattisgarh & Jharkhand reported separately from 2003-04

18
Milk Production

NUMERO UNO

19
The Upside
Increasing awareness:

As India enters an era of economic reforms, agriculture,

particularly the livestock sector, is positioned to be a major
growth area. The fact that dairying could play a more
constructive role in promoting rural welfare and reducing
poverty is increasingly being recognized. For example, milk
production alone involves more than 70 million producers,
each raising one or two cows/buffaloes. Cow dung is an
important input as organic fertilizer for crop production and is
also widely used as fuel in rural areas. Cattle also serve as an
insurance cover for the poor households, being sold during
times of distress.

Supply matches demand:

Efforts to increase milk production by dairy farmers are

strongly influenced by the degree to which demand signals are
transmitted through the marketing system. Cooperatives have
played an important role in transmitting the message of urban
market demand to them. Since the demand in the urban
scenario is rapidly increasing so is the supply generated by the
farmers.

Surplus capacity:

Further, the new dairy plant capacity approved under the Milk
& Milk Products Order (MMPO) has exceeded 100 million lpd.
The new capacity would surpass the projected rural
marketable surplus of milk by about 40 per cent by 2005 AD.

The Downside
Technological gaps:

Several areas of the dairy industry can be strengthened by the

induction of state-of-the-art technologies from overseas. Those

20
who bring in new technologies or sign joint ventures with
foreign companies stand to benefit the most. To make the best
out of the present situation, the following areas require
immediate remedial action on the part of dairy entrepreneurs:

Raw milk handling needs to be upgraded in terms of

physiochemical and microbiological attributes of the milk
collected. The use of clarification and bactofugation in raw milk
processing can help improve quality of the milk products.

Better operational efficiencies are needed to improve yields,

reduce waste, minimize fat/protein losses during processing,
control production costs, save energy and extend shelf-life.
The adoption of Good Manufacturing Practices (GMP) and
HACCP would help manufacture milk products conforming to
international standards and thus make their exports
competitive.

Latest packaging technology can help retain nutritive value of

packaged products and extend their shelf-life. For proper
storage and transportation, cold chain needs to be
strengthened.

21
Analyzing the product -
Milk

22
Milk- An almost complete food

Milk is not only an excellent source of Calcium, which is vital

for strong bones and teeth; it also contains many other vital
nutrients like:

Protein: For growth and repair of body tissues.

Carbohydrates: In the form of lactose.

Fat: For energy.

It also contains Vitamins needed for good health; Vitamin A,

B1, B2, B3, B12, FOLIC ACID and Vitamin D are all found in
significant quantities in milk.

A glass of milk provides 50% of the daily intake of calcium

required by teenagers.

23
 Demand & Supply Equations:

Supply:

Supply of milk is affected by the seasonal influences, in

summers the milk supplies dip & in winters it soars. Therefore,
dairies generally make use of the surplus milk available with
them during winters for manufacturing milk powder so that
they can meet the increased demand during summers.

Demand:

Demand for milk is not very stable either, during festivals its
demand increases exponentially .In 2003,for example, the
demand during festivals surpassed even Mother Dairy’s
projections & its booth had to encounter a rare problem of
being out of stock, a blot indeed on an otherwise impeccable
distribution system of Mother Dairy. Since then, to its credit
Mother Dairy brought efficiency in the system & reevaluated its
strategy to encounter this problem & to be fair to them they
have lived to the expectations of its consumers by making milk
easily available.

24
Operation Flood

25
Launched in 1970, Operation Flood has helped dairy farmers
direct their own development, placing control of the resources
they create in their own hands. 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 a major share of the
consumers' rupee.

The 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 Flood's objectives
included:

• Increase milk production ("a flood of milk")

• Augment rural incomes
• Fair prices for consumers

26
 Programme implementation:

Operation Flood was implemented in three phases.

Phase Phase I (1970-1980) was financed by the sale of

I 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

India's premier milk sheds with consumers in
India's four major metropolitan cities: Delhi, Mumbai,
Calcutta and Chennai.

Phase Operation Flood's Phase II (1981-85) increased the milk

II sheds from 18 to 136; 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 Phase III (1985-1996) enabled dairy cooperatives to

III 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.

27
Operation Flood's Phase III consolidated India's dairy
cooperative movement, adding 30,000 new dairy cooperatives
to the 42,000 existing societies organized during Phase II.
Milk sheds peaked to 173 in 1988-89 with the numbers of
women members and Woman’s 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 milk 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. "Operation Flood can be viewed as a
twenty year experiment confirming the Rural
Development Vision" (World Bank Report 1997c.)

28
Cooperative Unions

29
Over almost half a century ago, the life of a farmer in Kaira
District was very much like that of his counterpart anywhere
else in India. His income was derived almost entirely from
seasonal crops. The income from selling milk was
undependable. The marketing and distribution system for the
milk was controlled by private traders and middlemen. As milk
is perishable, farmers were compelled to sell it for whatever
they were offered. Often, they had to sell cream and ghee at
throwaway prices. In this situation, the one who gained was
the private trader. Gradually, the realization dawned on the
farmers that the exploitation by the trader could be checked
only if they market their milk themselves. In order to do that
they needed to form some sort of an organization. This
realization is what led to the establishment of the Kaira District
Cooperative Milk Producers' Union Limited (popularly known as
Amul) which was formally registered on December 14, 1946.

Backward integration of the process led the cooperatives to

advances in animal husbandry and veterinary practice.

• More than 900 village cooperatives have created jobs for

people in their own villages and that too without
disturbing the socio-agro-system and thereby the exodus
from the rural areas has been arrested to a great extent.
• The yearly elections of the management committee and
its chairman, by the members, are making the
participants aware of their rights and educating them
about the democratic process.
• Perpetuating the voluntary mix of the various ethnic and
social groups twice-a-day for common causes and mutual
betterment has resulted in eroding many social
inequalities. The rich and the poor, the elite and the
ordinary come together to cooperate for a common
cause.
• Live exposure to various modern technologies and their
application in day-to-day life has not only made them
aware of these developments but also made it easier for
them to adopt these very processes for their own

30
 betterment. One might wonder whether the farmer who
knows almost everything about impregnating a cow or
buffalo, is also equally aware of the process in the
humans and works towards planning it.
• The income from milk has contributed to their household
economy. Besides, women, who are the major
participants, now have a say in the home economy.

This income is helping these people not only to liberate

themselves from the stronghold of poverty but also to elevate
their social status.

The system succeeded mainly because it provides an assured

market at remunerative prices for producers' milk besides
acting as a channel to market the production enhancement
package. What's more, it does not disturb the agro-system of
the farmers. It also enables the consumer an access to high
quality milk and milk products. Contrary to the traditional
system, when the profit of the business was cornered by the
middlemen, the system ensured that the profit goes to the
participants for their socio-economic upliftment and common
good.

• Produce an appropriate blend of the policy makers

farmers board of management and the professionals:
each group appreciating its roles and limitations.
• Bring at the command of the rural milk producers the
best of the technology and harness its fruit for
betterment.
• Provide a support system to the milk producers without
disturbing their agro-economic systems.

• Plough back the profits, by prudent use of men, material

and machines, in the rural sector for the common good
and betterment of the member producers.
• Even though, growing with time and on scale, it has
remained with the smallest producer members. In that

31
 sense, Cooperative Movement is an example par
excellence, of an intervention for rural change.

Recently the Indian cooperative movement got a much needed

facelift. With competition snapping at its heels, the sector
which has been governed by arcane laws until the recent past
will see a special provision inserted in the Companies Act,
1956. All the cooperative unions will be re-christened
cooperative companies; they will come under the purview of
the registrar of companies, instead of the registrar of
cooperatives.

While they will have to adhere by the audit procedures like any
corporate, they will differ from ordinary companies in many
ways. Not everyone can join a cooperative. Only users can
enroll as members at a fixed membership fee. Quantum of
business and not equity capital will see an election to the
board. And there will be flexibility to raise capital from
members and outside.

Dairy Cooperatives account for the major share of processed

liquid milk marketed in the country. Milk is processed and
marketed by 170 Milk Producers' Cooperative Unions, which
federate into 15 State Cooperative Milk Marketing Federations.

The Dairy Board's programmes and activities seek to

strengthen the functioning of Dairy Cooperatives, as producer-
owned and controlled organizations. NDDB supports the
development of dairy cooperatives by providing them financial
assistance and technical expertise, ensuring a better future for
India's farmers.

Over the years, brands created by cooperatives have become

synonymous with quality and value. Brands like Amul
(GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan).
Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are
among those that have earned customer confidence.

Some of the major Dairy Cooperative Federations include:

32
 Andhra Pradesh Dairy Development Cooperative Federation Ltd
(APDDCF)
Bihar State Cooperative Milk Producers Federation Ltd
(COMPFED)
Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)
Haryana Dairy Development Cooperative Federation Ltd.
(HDDCF)
Himachal Pradesh State Cooperative Milk Producers Federation
Ltd (HPSCMPF)
Karnataka Cooperative Milk Producers Federation Ltd (KMF)
Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF)
Madhya Pradesh State Cooperative Dairy Federation Ltd
(MPCDF)
Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh
(Mahasangh)
Orissa State Cooperative Milk Producers Federation Ltd (OMFED)
Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF)
Punjab State Cooperative Milk Producers Federation Ltd
(MILKFED)
Rajasthan Cooperative Dairy Federation Ltd (RCDF)
Tamilnadu Cooperative Milk Producers Federation Ltd (TCMPF)
West Bengal Cooperative Milk Producers Federation Ltd.
(WBCMPF)

The Dairy Cooperative Network:

• includes 170 milk unions

• operates in over 338 districts
• covers nearly 1,08574 village level societies
• is owned by nearly 12 million farmer members.

33
Apart from making India self sufficient in milk, these dairy co-
operatives have established our country as the largest milk-
producing nation in the world!

34
 National Dairy
Development Board

35
The National Dairy Development Board was created to
promote, finance and support producer-owned and controlled
organizations. NDDB's programmes and activities seek to
strengthen farmer cooperatives and support national policies
that are favourable to the growth of such institutions.
Fundamental to NDDB's efforts are cooperative principles and
the Anand Pattern of Cooperation.

A commitment to help rural producers help themselves has

guided the Dairy Board's work for more than 30 years. This
commitment has been rewarded with achievements made by
cooperative dairies in milk production, employment generation,
per capita availability of milk, foreign exchange savings and
increased farmer incomes.

The National Dairy Development Board (NDDB) has

replaced exploitation with empowerment, convention with
modernity, stagnation with growth and transformed dairying
into an instrument for the development of Indian farmers.

The National Dairy Development Board was created in 1964 in

response to the Prime Minister Lal Bahadur Shastri's call to
"transplant the spirit of Anand in many other places". He
wanted the Anand model of dairy development - with
institutions owned by rural producers, which were sensitive to
their needs and responsive to their demands - replicated in
other parts of the country.

The Board's creation was routed in the conviction that our

nation's socio-economic progress lies largely on the
development of rural India.

Thus NDDB's mandate is to promote, finance and support

producer-owned and controlled organizations. NDDB's
programmes and activities seek to strengthen farmer
cooperatives and support national policies that are favourable
to the growth of such institutions.

36
NDDB believes that the Rs 7,000-crore (Rs 70-billion) milk
cooperative market is getting much more competitive and
wants to strengthen the position of cooperatives through a
multi-pronged action plan with an outlay of Rs 800 crore (Rs
8-billion). This includes using MDFL to enter into 51:49 joint
venture companies with state cooperative federations to assist
them with marketing value added products and to help them in
other ways to become self-reliant enterprises.

37
Mother Dairy India
Limited

38
‘Mother Dairy’ is the largest liquid milk brand in Asia. It
started its operations in 1974 under the Operation Flood
programme of the National Dairy Development Board.
Operation Flood is one of the largest dairy development
projects in the world. Mother Diary, Delhi is IS/ISO- 9002 &
IS-15000 (HACCP) certified organisation.

‘Mother Dairy’ is the single largest brand of milk in Delhi,

India as well as in Asia, marketing about 1.9 million liters of
milk per day. Mother Dairy commands 40% market share in
the organized sector in and around Delhi, primarily because of
consistent quality and service reliability.

‘Mother Dairy’, which markets over 15 lakh LPD of milk

procured from various State federations in Delhi, has now
entered the Mumbai market.

In addition to toned milk through Bulk vending, Mother Dairy

also markets Full cream milk, standardised milk, toned milk,
double toned milk and Skimmed milk (lite) in polypacks.

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 industry in country to implement

ISO-14031(Environment Performance Evaluation) project.

39
This provides assurance to the 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.
The company is a highly trusted household name for its wide
range of milk products like Milk, Flavoured Milk, Ice-Cream,
Dahi, Lassi, Table Butter, Dairy Whitner, Ghee etc.

Mother Dairy sources its entire requirement of liquid milk from

dairy cooperatives.

The objective of Mother Dairy is to:

(a) 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;

(b) Uphold institutional structures that empower milk

producers and farmers through processes that are
equitable.

At Mother Dairy, processing of milk is controlled by process

automation whereby state-of-the-art microprocessor
technology is adopted to integrate and completely
automate all functions of the milk processing areas to
ensure high product quality/ reliability and safety.

40
In addition to its market leadership in India, Mother Dairy is
also active in the global arena, exporting its range of dairy
products to various international markets.

41
Process of Procurement & Distribution of Milk:

Farmers and the Milk Co-operative Society

The Operation Flood programme helps both farmers as well as

the city consumers. The programme ensures that the farmers
get a fair price for their cow & buffalo milk and the consumers
get best quality milk at reasonable prices.

In order to maintain freshness, this milk is chilled and then

transported to Mother Diary in insulated milk tankers by road
and by rail.

Checking the quality of milk

At the Dairy stringent hygienic standards are maintained. The

milk in the tankers is first checked for quality and freshness
and then unloaded into huge insulated stainless steel storage
tanks. These tanks have a capacity of 1 lakh liters each. The
presence of adulterants (impurities) like urea, neutralisers,
preservatives and germs like bacteria are checked. All these
tests ensure that only good quality milk is accepted. Once
empty, the tankers are thoroughly cleaned and sanitized using
acid and alkali. The tankers are then finally rinsed with water.

Processing of milk

Unprocessed milk may contain small dirt particles invisible to

the naked eye. In order to remove these particles the milk has
to be processed.

To process milk at Mother Dairy, the milk is first clarified. This

is done in a clarifier which spins the milk at a very high speed,

42
as a result of which the dirt particles are thrown out and
drained.

The milk is then pasteurized to make it safe for human

consumption. This process destroys any disease causing
bacteria and also increases the shelf life of the milk. During
pasteurization the milk is heated to 72 degree Celsius for 15
seconds and then rapidly cooled down to 7 degree celsius. This
process, unlike boiling, does not affect the nutritional value of
the milk. Pasteurized milk is safe to drink without boiling as
long as it is kept cool at all times.

Fortification with Vitamin A

Toned milk during processing is fortified with Vitamin A. The

deficiency of Vitamin A can lead to night blindness and skin
horning.

Homogenisation

At Mother Dairy the milk is also homogenised. This ensures

that the customers get uniform amount of cream in their milk.

In this process the milk is pumped at a very high pressure

turning the cream into tiny droplets thus distributing the fat
through out the milk. These droplets do not float to the surface
to form a creamy layer. That is why no creamy layer appears
when Mother Dairy milk is boiled at home.

Mother Dairy shops sell homogenised toned milk which

contains minimum 3% fat even though you cannot notice it.

Dispatching of milk

After processing, the milk is chilled and stored in silos and

further chilled to about 2 C. by the glycol chilling system, and

43
then dispatched to the Milk Shops in insulated road milk
tankers. Prior to the milk being dispatched in tankers, it is
tested for quality to make sure that it meets the quality
standards. When the tanker arrives at the shop the milk is
transferred into a large refrigerated tank.

Making the milk available

The control room is very vital to the efficient distribution of

milk to the 900 shops across the city. It organizes the tanker
routes and its staff is responsible for ensuring that shops do
not run out of milk. Each milk tanker is fitted with a wireless
set. As soon as the incharge at the control room learns that a
particular shop is running out of milk, he contacts the tanker
nearest to the shop on the wireless which then delivers the
extra milk to it.

Quality control all the way

A final quality check of the mill is also made at the shop itself.
This ensures that milk reaching the customers is of same
quality as dispatched from the Dairy.

Consumer Information

To raise the consumers awareness regarding Adulteration of

milk, Mother Dairy has thrown open its testing facilities. In its
laboratories consumers can see for themselves how impurities
and adulterants are easily detected. Mother Dairy also has two
"mobile labs" that can test milk in the residential colonies. All
this is part of a commitment to provide the consumers with the
purest milk nature has to offer.

Keeping milk cool

44
Mother Dairy takes care to keep milk cool at every stage-it is
chilled before transporting in insulated tankers, it is stored in
insulated silos and kept in refrigerated tanks at the shops.

Keeping milk cool slows down the rate at which bacteria

multiply. This also increases its shelf life.

Caring for the environment

Solar Panels: In an effort to conserve fuel, Mother Dairy

utilises the abundant solar energy to preheat the water going
into the boilers. This also minimizes the pollution caused by
burning of fuels like coal, oil etc.

Effluent treatment plant:

The water used for cleaning equipment and tankers is treated

at the effluent treatment plant in the Dairy before being
discharged into the sewege system.

45
Other Major Players

46
AMUL
Amul is the latest entrant in the highly competitive milk
market of NCR where Mother Dairy had an almost monopoly.

Amul is the brand owned by GCMMF is handling almost 80 lakh

litres of milk daily.

PARAS Dairy
It sells 3 lakh LPD

DMS

GOPALJEE

PARAM

COMPARITIVE ANALYSIS OF MAJOR MILK BRANDS

MILK Mother Amul Delhi Milk Gopaljee Paras

BRANDS Dairy Scheme
Full 19 19 19 19 19
Cream
Toned 15 15 15 15 15

Double 13 NA NA NA NA
Toned
Standard 17 NA NA NA NA

Skimmed 11 NA NA NA NA

47
Delhi’s (NCR) Milk
Market

48
Delhi National Capital Region (NCR), among the biggest milk
markets in the country, is dominated by Mother Dairy
currently.

The Delhi market comprises 40 lakh litres currently and is

dominated by NDDB owned Mother Dairy, which sells 10 lakh
LPD. The other organized sector players are Paras Dairy, which
sells 3 lakh LPD, state-owned Delhi Milk Scheme (2.5 lakh
LPD), Gopaljee (1-1.5 lakh LPD) and Britannia 30-40,000 LPD.

Amul and NDDB's non-compete agreement has prevented the

former from launching its liquid milk in the Delhi market till
2003.With the non-compete agreement having run out, Amul
launched its fresh milk in Delhi in two variants — full cream
and toned — priced at par with that of Mother Dairy .Amul, to
its delight, has seen the demand for its milk going up by leaps
and bounds in the city and is now planning to enter into
alliances with dairies located around Delhi such as Indian
Potash and Modern Dairy to cater to the demand.

Amul already has a lease agreement with Kwality Dairy's unit

in Faridabad where it is planning to increase capacity and has
also decided to set up a new 5-lakh litre per day dairy plant at
an investment of Rs 40 crore in Haryana to cater to the
northern market.

GCMMF officials say the company's milk capacity has already

touched 80,000 litres per day (LPD) and have plans to take it
to 3 LPD. Amul is now selling through 2,500 retail outlets and
will increase this to 7,500 apart from covering outlets which
are selling Amul butter.

Another player gearing up to unseat Mother Dairy from the

leadership throne is the Rs 400-crore Paras group. The
company has hit upon an innovative strategy of introducing
milk vending machines which dispense token milk at Rs 13 per
litre. Paras says this strategy targets the unbranded milk

49
segment which accounts for 45 per cent of the total milk
consumed in Delhi NCR.

The company plans to put up Paras Milk Point (PMP) machines

at various fast-moving consumer goods outlets all over the
capital. Over 50 machines — each costing over Rs 2 lakh —
will be installed in phases over the next four months to cater
to toned milk users.

The PMP machines carry about 250 litres of milk and have an
in-built refrigerator. Paras brand currently reaches 9,000
outlets in and around Delhi, and the group is looking at
penetrating fresh markets in the northern region. Paras' total
processing capacity of its three units, one at Haryana and two
at Sahibabad in Uttar Pradesh, is 14 lakh LPD.

50
Objectives of Research

51
1) Assessing the population of WT-5.

2) Assessing the milk market of WT-5.

3) Assessing Mother Dairy’s position in the territory

vis-à-vis other brands.

4) Assessing the reasons of low sales volume of Mother

Dairy’s milk in WT-5.

5) Suggesting remedial course of action for Mother

Dairy India Ltd.

52
Findings of the
Research

53
 HOUSEHOLDS

Analysis: MONTHLY INCOME

Graph showing Relationship between MONTHLY INCOME and
use of Mother Dairy Milk.

100% 0
48 156
monthly household
80% income above 25000
56 220
60% monthly household
4
income 15000 to 25000
40% 64 263
monthly household
20% income 10000 to 15000
38 150
0% 0 monthly household
yes no rarely income upto 10000

use MD milk

Findings:
It shows that people falling in income group of 10000 to 15000
and 15000 to 25000 are maximum in number who do not
consume MD milk and also major number of people fall under
this category. So this group can be the target for action.

54
Analysis: QUALITY
Graph showing QUALITY as an important parameter.

100% 0
6 11
40 0
quality as a
80%
paramtr not at all
60% imp
200 738 4
quality as a
40%
paramtr somewhat
20% imp
quality as a
0% paramtr most imp
yes no rarely

use MD milk

Findings:
It shows that Quality is the most important parameter that
effects the buying decision of consumers. Out of 1000
households surveyed 738 were not consuming MD milk since
they are not satisfied with the quality of MD milk.

These were the findings in the area of Narayana and Patel

nagar.

55
Analysis: TASTE
Graph showing TASTE as an important parameter.

100% 75 0
21
23 38
80%
taste as a paramtr
60%
4 not at all imp
162 676
40% taste as a paramtr
somewhat imp
20%
taste as a paramtr
0% most imp
yes no rarely

use MD milk

Findings:
It shows that taste being the second most important
parameter effects the buying decision of consumers. Out of
1000 households surveyed 676 people do not use MD milk
since they do not find taste appropriate. The reason for not
liking the taste was that they had become habitual of
consuming either the other brands or the loose milk available
from local dairies.

These findings were common in all the areas i.e. it was the
problem in almost every area surveyed.

56
Analysis: AVAILABILITY
Graph showing ease of AVAILABILITY as an important
parameter.

100% 11 32 0
20 167
80%
ease of availability
60% not at all imp
4
175 ease of availability
40% 590
somewhat imp
20% ease of availability
most imp
0% 0
yes no rarely
use MD milk

Findings:
It shows that ease of availability is also an important
parameter that plays a role in effecting consumers buying
decision. Out of 1000 sample size 590 do not consume MD
milk who prefer ease of availability as the most important
parameter. Either they were getting the milk they were
consuming on their doorsteps or it was available near to
their house.

These were the findings in the area of Anand Parvat, which

was a hilly area and there was no MD booth there.

57
Analysis: PRICE
Graph showing PRICE as an important parameter.

100%

80%
129
582 price as a paramtr
60% not at all imp
4
40% price as a paramtr
26 somewhat imp
75
20% 51 price as a paramtr
132
0 most imp
0%
yes no rarely
use MD milk

Findings:
It shows that price being one the parameter that effects the
buying decision of consumers is least effective in major
areas. Out of 1000 sample size those who are not
consuming MD milk i.e. 582, consider Price as not at all
important.

But there are areas where Price is still the most important
parameter. These areas are the areas of Karol Bagh,
Regarpura. In these areas price is still the most important
factor and hence its importance cannot be ignored in these
areas.

58
Analysis: REASONS FOR DISCONTINUATION
The following Pie chart shows the major reasons of
discontinuing MD milk by a sample that was earlier
consuming MD milk.

1% quality
2%
taste
3%
7% availability
14%
price
52%
21% still consuming
md
never tried

others

Findings:
The major of discontinuing the use of MD milk is Quality.
Majority of people discontinued MD milk due to quality
problems followed by taste, then availability and last price.

59
Analysis:
The graph shows the combined effect of Price and
availability as important parameters

Findings:
There is an inverse relationship between PRICE and
AVAILABILITY parameters. People who consider price as
most important parameter do not consider availability as
important at all and vice versa.

60
 RETAILERS

Analysis: NUMBER OF RETAILERS

The graph shows the NUMBER OF RETAILERS that stock
Mother Dairy milk and those who do not stock Mother Dairy
milk.

Findings:
Out of 100 samples of Retailers surveyed 56 were stocking
MD milk and 44 were not stocking MD milk.

61
Analysis: SATISFACTORY LEVEL
The graph shows the SATISFACTORY LEVEL of Retailers.

50 44
40
40
30
20 16 stock MD milk yes
stock MD milk no
10
0
0
yes no
fully satisfied

Findings:
Out of the total retailers surveyed 56% of Retailers were
stocking MD milk but out of these 56 only 16 Retailers were
fully satisfied with the services of the company and the sales
they were getting. 40 were still having some or the other
problems.

44% of Retailers who were not stocking MD milk were not at

all satisfied with the company, which is why they were not
stocking MD milk.

62
Analysis: PROBLEMS
The Pie shows the PROBLEMS faced by Retailers.

Problems faced by Retailers

8 2 12
40
3

4
5 20 6

supply back date

low margin no return
no Interaction with Co. staff misbehavior
promotion problem near by booth
less demand

Findings:
Major problem being faced by Retailers was due to SUPPLY
PROBLEM. The distribution channel is not at all satisfying.

63
 INTITUTIONAL

Analysis:
The graph shows the only important parameter i.e. TASTE
for the institutional consumers.

100%
12 4
80%
60%
type of milk used
40% 23 11
packed
20% type of milk used
0% loose
most imp somewhat
imp
taste as imp paramtr

Findings:
According to the institutional consumers, who consume milk
as an Input for their production of sweets (like sweet shops,
restaurants etc) consider TASTE as the only and the most
important parameter that effects their buying decision. Out
of total sample size of 50 only 16 consume packed milk rest
34 consume loose milk as they perceive it to be fresh and of
better taste.

64
 MD RETAILERS

Analysis:

The graph shows whom do MD Retailers consider their major

competitors as they are facing competition from them.

Findings:

According to the total sample of 30 MD Retailers maximum

Retailers considered Local dairy owners as their competitors
and then the second major was Amul.

These are the competitors according to the MD Retailers

surveyed as they were having them as their neighbors and
facing competition from them.

65
SWOT Analysis of
Mother Dairy

66
 STRENGTHS WEAKNESS
• The major strength of the • Scarce Mother Dairy
Mother Dairy is the different Outlets.
variety of Milks and a • Less Margin given to the
recognized BRAND name. Outlet owners to match the
• The increasing demand for existing competitors.
these products presents a
great opportunity for the
Mother Diary to increase and
scale up the production.

OPPORTUNITIES THREATS
• There is a scope of business • Increasing competition from
as there is a demand for the other brands.
dairy products. • Strong supply chain
• Mother Dairy should open management by the
more outlets to get the competitors.
maximum advantage of the • Strong marketing strategy
demand. by competitors by offering
• Need to put more stress in the discount coupons to
the face-to-face direct consumers and providing
marketing to reach to the healthy commissions to the
customers. retailers.
• The increasing demand for
these products presents a
great opportunity for the
Mother Diary to increase and
scale up the production.

67
Recommendations

68
HOUSEHOLDS:

Areas of Narayana Vihar and Patel Nagar

People have a high consideration for QUALITY and they think

MD Milk is low in quality and is also yellowish in colour.

Recommendation:
Company should try to conduct camps and awareness
programmes in these areas to overcome this thinking of
people.

Areas of Karol Bagh and Regar Pura

People in these areas have PRICE as the most important factor

which effects their decision to consume.

Recommendation:
If the company can achieve its target in this area by keeping
low margin and by reducing the price then the sales in this
area can improve drastically because in this area the income
level of households is not very high.

Areas of Anand Parvat and Baljit Nagar

This area being a HILLY Area is the most challenging job for
any company to serve. People want MD Milk here but there are
no booths in this area.

Recommendation:
If the company can open its Booth in this area it can be the
leader as no other company has its booth in this area except
GOPALJEE. The sales can improve to a very big extent from
this area alone since there is demand but no availability.

• MOTHER DAIRY should also launch certain schemes for

Households. It has schemes for Retailers but not for
households. This section being the major user of milk and

69
 in order to enter into a new area such starting schemes
can be very helpful.
• Demand and Visibility go hand in hand. If MD can do
certain promotions as its competitor AMUL does, then it
can attract sales. Promotion with the help of boards,
hoardings etc.
• Lastly incase of Households the company should maintain
a proper communication with the Localities or Areas
facing problem.

RETAILERS AND MD RETAILERS:

• The major problem faced by Retailers and MD Retailers

is the SUPPLY problem i.e. problem with the
distribution. The company should aim at improving its
SUPPY CHAIN MANAGEMENT.
• The company should increase incentives that can
increase Retailers Nominal Income. This can be done
through certain Schemes that increase the overall
sales.
• The company should lay emphasis on proper
PROMOTION of the brand at the Retail Outlet.
• The company should get a proper FEEDBACK from
Retailers time to time. Incase they are facing any
problem it can be solved timely, without delays.
• There is a problem of DATE also being faced by
Retailers. The date printed is one day previous. If
retailers get the same day’s milk in the evening (which
is not so), the Retailers can sell some of the same
day’s milk in the evening itself and the remaining
would be happily acceptable by people in the Morning,
next day.

70
Annexure

71
RETAILER
1. M/S __________________________________________________________

2. Location\Address:- ______________________________________________

3. Avg. Daily Sales: ________lts

4. Which brand of milk do you sell? (In order of volume of sales)

i) __________________________
ii) __________________________
iii) __________________________
iv) __________________________
v) __________________________
vi) __________________________

5. Which type of milk sells the most?

Toned ___ Double toned ___ Standard ___ Skimmed ___ Full Cream __

6. Do you stock Mother Dairy’s milk?

Yes ____ No ____

7. If yes, what’s the customers’ response to it?

______________________________________________________________

8. If no, please specify the reason(s).

______________________________________________________________

9. Any suggestions would you like to give?

______________________________________________________________

72
HOUSEHOLDS

1) Name: ______________________________________________________

2) Address/Phone no: ____________________________________________

3) No. of family members: ____ A: ___ C: ___

4) Avg household consumption of milk/day: ______lts.

5) Type of milk you consume

• Loose

Cow ____ Buffalo _____

• Packed

Brand ______________________________

Type:

Toned ___ Double toned ___ Standard ___ Skimmed ___

Full Cream ___

• Both

Qty of packed Milk _____lts Qty of Loose Milk _____lts.

6) Rank the top 3 most important parameters which affect your purchase.

• Price
• Taste
• Quality
• Ease of Availability
• Advertising/promotion

73
7) Have you ever tried Mother Dairy’s Milk? (To be asked only if the brand
mentioned in 5 is other than Mother Dairy)

Yes ____ No ____

8) If yes, why have you discontinued using it?

• Price
• Taste
• Quality
• Availability
• Others _________________________________________________

9) If no, please specify the reason.

___________________________________________________________
_

10) What suggestions would you like to give to Mother Dairy?

___________________________________________________________
_

11) What is your monthly household income:

• Up to Rs.10000
• Rs.10000 to 15000
• Rs.15000 to 25000
• Above Rs.25000

74
INSTITUTIONAL CONSUMERS

1. M/S: ____________________________________________________________

2. Address/Phone no: _________________________________________________

3. Avg consumption of milk/day: ____lts

4. Type of milk you consume

• Loose

Cow ____ Buffalo _____

• Packed

Brand ______________________________

Type:

Toned ___ Double toned ___ Standard ___ Skimmed ___

Full Cream ___

• Both

Qty of packed Milk _____lts Qty of Loose Milk _____lts.

5. Rank the top 3 most important parameters which affect your purchase.

• Price
• Taste
• Quality
• Ease of Availability
• Advertising/promotion

75
6. Have you ever tried Mother Dairy’s Milk? (To be asked only if the brand
mentioned in 5 is other than Mother Dairy)

Yes ____ No ____

7. If yes, why have you discontinued using it?

• Price
• Taste
• Quality
• Availability
• Others _________________________________________________

8. If no, please specify the reason.

___________________________________________________________
_

9. What suggestions would you like to give to Mother Dairy?

____________________________________________________________

76
 MOTHER DAIRY RETAILER
1. Booth No:- _____ Vendor Name:- ___________________________

2. Location/Address:- __________________________________________________

3. Avg. Daily Sales: ____lts.

a) Packed: _____ b) Vending Machine: _____

4. How would you rate your present sales?

a) Satisfactory: ______ b) Average: ______ c) Unsatisfactory: ______

5. If the answer to the above is other than 4a then please choose the reasons from
below:

a) Competition from other brands

b) Competition from local dairy owners
c) Others ____________________________________________________________

6. Whom do you consider your major competitor?

___________________________________________________________________

7. Which type of milk sells the most?

Toned ___ Double toned ___ Standard ___ Skimmed ___ Full Cream __

8. Package of what size moves faster?

500 ml _____ 1lt _____

9. Which situation you encounter at your booth more?

Over stocking ________ Shortage ________

77
10. What according to you has been general consumers’ experience?
__________________________________________________________________
_

11. Any suggestions would you like to give to the company?

__________________________________________________________________
_

78