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COMFED: FROM GRASS-TO-GLASS


__________________________________________________
Prof. Sanjay Dhir and Prof. Swati Dhir wrote this case study solely to provide material for class discussion. The authors do
not intend to illustrate either effective or ineffective handling of managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
The publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means
without the permission of authors. To order copies or request permission to reproduce materials, contact authors.

Mrs. Harjot Kaur was the Managing Director of Bihar State Co-operative Milk Federation
(COMFED). COMFED was a rural organization involving six lakh farmers. Starting with just
1030 cooperatives in 1983, the number of cooperatives had risen to 11,400 in 2012. The milk
production was 11 lakh litres per day, and the annual turnover in 2011-12 was Rs 1503.00
crore, 11% more than that of previous year.
Ms. Kaur was committed to serve COMFED customers and realize the dream of having at
least one dish of Bihar in the plate of every Indian.
Mrs. Kaur envisaged COMFED to produce 44 lakh litres milk per day from the existing 11
lakh litres per day, covering around 60% villages of the state against the existing 33% in
2013. COMFED was also trying to capture new markets. At present COMFED sent bulk milk
to Delhi, Manesar and Kolkata, where it was sold by various dairy cooperatives like Amul
and Mother Dairy under their own brand names. Mrs. Kaur aspired to market COMFED milk
under the 'Sudha' brand all over India. Moreover, Mrs. Kaur was also looking to export to
other countries like Bangladesh and Bhutan.
As Mrs. Kaurs was crafting the future path for COMFED, she also realized that above and
all the external challenges that exist, an internal vice complacency was the biggest hurdle
for which she had to guard her company against.

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DAIRY INDUSTRY OVERVIEW: INDIA


In India, the dairy sector played an important role in the countrys socio-economic
development, and constituted an important segment of rural economy, by providing
employment to 18 million people, 70% of which were women in 2004. As the worlds largest
milk producer with a total milk production of 127.9 million tonnes in year 2011-12, India was
well positioned to be the global market leader for dairy products. According to NDDB
demand for milk was growing at approximately twice the growth rate of production. Indian
consumption of milk in year 2014 was forecasted at 425,000 metric tons while in 2013
consumption estimates were at 420,000 metric tons. The estimated demand for milk in year
2021-22 was about 120 million tonnes, this meant that milk production would continue to
grow at 4% per annum i.e. with an incremental addition of about 5 million tonnes per year.
The total amount of milk produced had more than tripled from 23 million tonnes back in
1973 to 74.70 million tonnes 26 years later in 1998.
The tremendous rise in milk production was primarily the fallout of the dairy farming policy
reflected in Operation Flood. The per capita availability of 291 Gms/ day had increased to
176 gms/ day in 2012-13. The total milk marketing comprised of 22944 thousand litres per
day in year 2011-12. In terms of trade, the value of output from livestock at about Rs. 1,733
billion in 2004-05 of which milk accounted for 68%. During 2011-12, the cooperative milk
unions together procured 28.7 million kg of milk per day compared to 26.2 million kg per day
in the previous year, registering an annual growth of around 9.5 per cent. Contribution of
dairy industry to the GDP of India in 2011-12 was 6%.
Department of Animal husbandry-Dairy farming of Government of India was providing
financial assistance to dairy farming through National Bank of Rural and Agricultural
Development. It gave both short term and long term loans to the farmers. The government
initiated several plans like National Dairy Plan-1 with a motive to provide rural milk
producers with greater access to the organized milk processing sector and implemented four
schemes in FY 2012-12 namely:
a. Intensive Dairy Development Program: This was implemented in state federation/
district milk unions to develop milk cattle, increase milk productivity by providing
technical input services and procurement, processing and marketing of milk in cost
effective manner.
b. Strengthening infrastructure for quality and clean milk production: This program
was implemented through state government by district co-operative milk

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unions/state level milk federation so as to ensure build infrastructure and ensure


milk quality from producer to consumer.
c. Assistance to Co-operatives: The GOI aimed to revitalize underperforming dairy
cooperative unions at the district level and cooperative federations at the State
level. The program was being implemented by the concerned district cooperative
milk unions/state dairy federations.
d. Dairy entrepreneurship development scheme: This program was being
implemented through the National Bank for Agriculture and Rural Development
(NABARD), for creation of modern dairy farms for the production of clean milk
and to create structural changes in unorganised sector to promote initial milk
processing at village level.
The Indian milk economy was estimated at

1300 billion in 2013. Dairy sector in India was

divided into two groups- Organised sector and Unorganised sector.


Organised sector referred to dairy units registered under Milk and Milk Products Orders
1992, the dairies having a capacity of handling 10,000 milk per day and above are registered
as Co-operatives, private or others (like government dairies). The countrys organised sector
was about USD 10 billion in 2012-13. About 15% of the total milk output in India was
estimated to be processed in the organized dairy. Milk was processed and marketed by 170
Milk Producers Cooperative Unions, which included federate in 15 State Cooperative Milk
Marketing Federations. Over the years, several brands had been created by cooperatives like
Amul (GCMMF), Vijaya (Andhra Pradesh), Verka (Punjab), Saras (Rajasthan). Nandini
(Karnataka), Milma (Kerala) and Gokul (Kolhapur) Suddha (Bihar).
Unorganised sector comprised of small and/or seasonal milk producer/traders that were not
registered under Milk and Milk Producer Order. They handled less than 10,000 litres of milk
per day. This sector still dominated the Indian milk market. The Indian dairy industry was
pegged at USD 70 billion, both organised and unorganised sector, which was expected to be
doubled by 2020. On the back of this rise was the increase in the disposable income and
strong demand for dairy products in India. While the Dairy sector was growing at
compounded annual growth rate of 15-17%, the value added products were growing at
CAGR 24% in 2012-13.

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DAIRY INDUSTRY OVERVIEW: BIHAR


The NSSO household consumer expenditure survey, 1999-2000 revealed that Bihar had 44%
rural people living below the poverty line against the national average of 26%. Hence, they
were dependent on livestock enterprise for their livelihood. Dairy sector in Bihar was
characterised by very large number of animals with low productivity. Average animal
productivity of cross bred, indigenous and buffalo had been recorded as 4.9, 1.6 and 3.4 kg
per day, respectively during 1998-99 according to World Bank, 2007. As 1997 livestock
census the state possess over 12.36% and 6.54% of Indias total cattle and buffalo population,
respectively.
The per capita milk availability remained almost static over last decade in Bihar i.e. 102g/
day in 1992 and 100g/day in 2003-04 and 184 gms/day in 2010-11. In Bihar the estimated
milk production in 2001-02 was 4.068 lakh tonnes while it was 3.25 lakh tonnes in 1994-95
which had increased to 66.43 lakh tonnes in 2011-12. The total milk procurement in 2011-12
in Bihar was 1061 thousand kiloliters per day which was 1091 thousand kilolitres per day in
2010-11. The total milk marketing in 2010-11 was 454 thousand litres/ day which increased
to 521 thousand litres/ day in 2011-12.
DAIRY INDUSTRY OVERVIEW: NATIONAL CAPITAL REGION
The National Capital Region (NCR) the countrys biggest milk market was growing at a
rapid speed. Estimated milk production was 50 lakh litres per day (LLPD); the organised
milk market in NCR was growing at 6-8 per cent. In 2012, Mother Dairy, the National Dairy
Development Boards brand, dominated the market. The rising income levels and the shift in
preference of consumers to packaged milk were driving sales.
Mother Dairy, which commands half of the total market, was the largest seller of liquid milk
sold through machines in Delhi and closely follows Amul, the market leader in pouched milk
sales. Mother Dairy and Amul accounted for over 95 per cent of Delhis organised milk
market, while others, Delhi Milk Scheme and smaller private players such as Paras, Gopaljee
and Kwality, accounted for the rest.

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COMFED: OVERVIEW
COMFED was established on 18th April1983 as the implementing agency of operational
flood program of dairy development on Anand Pattern1 in Bihar. Bihar government signed
Operation Flood with NDDB in 1984. The products offered by COMFED could broadly be
divided into three categories viz- milk, milk products and ice-creams. Looking at the present
health conscious consumers, the milk segment had been diversified by introducing different
sub-brands like: cow milk, Sudha Shakti, Sudha gold, Sudha healthy. This sub-branding was
done on the basis of fat and SNF content of milk. Milk products include yogurt, Indian sweets
(peda, gulabjamun, and rossogulla), flavoured milk etc. Ice-cream was offered in various
flavours in order to diversify its product portfolio (exhibit 5 and 6). Sudha offered the product
in different weights, so that it was easily affordable to one and all. In 2011-12 the total
number of co-operatives in Bihar was 11131 with producer members of 614000.
Products and Markets
Since, its establishment on 18th April 1983, the repair and modernisation of its old machinery
were continued till 1984. In the initial phases of its establishment the growth was slow and in
1985-86, there were a total of 1030 co-operatives which were collecting 23.62 thousand
kilolitres of milk per day. In 1987-88, the four milk unions were established and they were
Vaishal Patliputra Milk Union operating in the districts of Patna, Vaishali, Saran, Nalanda
and Sheikhpura. Apart from milk unions and milk project COMFED had expanded its
operations through Milk Units. In 2012, nine out of ten dairy plants were ISO:9001:2000 and
HACCP:IS:15000:1998 certified. The number of dairy co-operative societies in year 2006-07
was 5819, which has increased to 13681 in 2012-13 and the number of members has risen to
7.85 lakh from 2.84 lakh during the same period. There were a total of 9500 retail outlets of

1. Anand pattern:

Bihar State Milk Co-operative Federation is based on Anand Pattern. This pattern was first adopted by AMUL (GCMMF). This Anand
pattern of co-operative structure was build on vertically integrated co-operatives linking rural producers with urban consumers. It is a three
tier structure. The three tiers are:

Primary Dairy Co-operative Society at the village level is the first tier that consists of members who own milch animals within
the village jurisdiction and supply milk to co-operative society on regular basis.

District Co-operative Milk Producers Union at the district level is the second tier in which all the primary societies are members.
It is managed by board of directors the majority of which are elected by the presidents of primary dairy cooperative societies.
The District Union is responsible for procurement, processing and marketing of milk and also to provide technical inputs.

Co-operative federation is at state level is the third tier to which all district unions in a state are federated. The federation board
consist of elected chairman of the district unions and representative of state government. Its primary purpose is to maximize
returns to milk producer members through centralized marketing, purchase and quality

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Sudha in Bihar in 2012-13. These were the main point from where Sudha was marketing its
products. Whereas, in Ranchi (Now in Jharkhand State) there were 700 Sudha Diary outlets.
Sudha was eying a quick number three slot in the NCR with initial volumes of around 2
LLPD in about six months or even earlier, while targeting 5 LLPD in about a years time. For
this they had hired the private milk plant at Gaziabad so as to ensure proper milk supply in
NCR region. Sudha was targeting the captive residents of Bihar in the NCR, which exceeded
40 lakh.In NCR regions Sudha offered three varieties of Milk plus sweets at its outlets. There
would be about 350 Sudha outlets in NCR region. But, its not the first time Sudha was
selling milk to NCR region; it had been supplying 2 lakh litres of milk per day to Amul and
Mother Dairy since last few years. Sudha had targeted NCR region because it was a pollution
free environment, green fodder in Gangetic belt, availability of pure water for miltch animals
and immediate chilling centres and processing of milk units. COMFED had not only met the
domestic needs of Bihar state instead it had supplied 1.16 lakh litre on an average to the states
of Delhi, West Bengal, Odhisa, Assam etc.
Technology
Raw field milk was the basic raw material for the dairy processing industry. India's dairy
processing industry had developed rapidly since after 1950. This growth and development
was expected to continue as rapidly as the supply of milk increased. Milk was often made to
undergo one or more processes which were applied to it before it was sold. In rural areas,
milk was processed fresh or sour. The choice depended on available equipment, product
demand and on the quantities of milk available for processing.
As far as technology of COMFED was concern, it totally followed the pattern of a traditional
milk processing plant. All of its plants were manual except one that of Biharsharif, which was
automated. But the company was moving towards Automation. Under its expansion policy,
14 new plants were coming up by 2018, and all of them to be automated and funded by
NCDC.
Manual Plant
The manual plant basically included the technologies related to reception, process, packaging
(toned & standard milk), product, CIP and allied works with utilities including process/
services piping systems, power / control cable network, earthing network, safety devices,

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instruments etc. as per requirement for the dairy plant for smooth operation & maintenance of
the system.
Milk received in tankers was weighed in the electronic weighbridge and the operators were
manually entering relevant tanker details in the weighbridge PC and the weighment were
taken automatically. Milk sample were taken manually from the tanker and the details of the
sample were fed to testing system for measurement of necessary parameters of Fat, SNF, pH
and temperature. Based on the acceptable parameters and actual results the consignment were
accepted or rejected. The reception rate through tanker were assumed to be 20000 LPH
average and 30000 LPH maximum. To enable SNF addition for manufacturing of different
varieties of milk (viz. Standard/ toned/double toned), a reconstitution system comprising of
funnel & venture unit, tanks (un-insulated)
Pump, duplex filter, chillers etc. were provided. This high SNF pasteurizer. Skim Milk
powder bags were manually cut opened and dumped in the hopper of funnel & venture. The
boilers in use in these plants were LDO type which was cost efficient. The manual plants
digh human resource wastage when compared to automated plants.
Automated Plant
Microprocessor based Distributed Control System (DCS) were used for centralized operation
of the plant. The integrated control system proposed for the new dairy plant was fully
automatic, which had better features of both PLC and DCS system. All the operations from
weighment, milk reception, milk processing and storage, cream processing and cream
storage, cream transfer to butter section, rinse milk recovery system and CIP operations were
automated and were controlled from control system. The automatic control included starting
operation, operation during process, shut down and CIP. All the data referring to raw
materials, products and utilities were made available for transfer to the main MIS server. The
automation system was also capable of interfacing with Powder plant, milk packaging only
the Utility sections like Refrigeration, Boiler etc.
Comprehensive self-diagnostic features were provided to facilitate easy fault location and
detection of failure without individually checking each module. On-line testing facility of
control system while the unit was in operation, were provided with suitable indication for
easy identification of faulty module.
The process / final control element interface section comprises of various signal interface
cards suitable for digital communication with intelligent / smart field devices, distributed I/O

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stations, local control panel, intelligent actuator/ sensor, frequency drives and standard Motor
Control System. Failure of sensor/ transmitter did not lead to malfunction of the
corresponding control system. These plants were much efficient and wastage was very less in
comparison to manual plants.
Operations
The operation part of COMFED was one of the areas of concern, because of wastage of
energy, steam and required chemicals. The increasing cost of material and increasing wastage
was adding to the total cost of milk and milk products. The operation started with the
procurement of milk from co-operative and ended with distribution to the retailers. In
between the milk was processed using different technologies to give a wide range of products
to the customer. The operation consisted of
a. Procurement-Collection of raw milk from dairy co-operatives at village level
b. Processing- Applying different dairy technologies to the raw milk, so as to pasteurize it
and make different milk products
c. Packaging- Packing milk and milk products using polyfilms and paper cartoons
d. Selling and Distribution- Distributing the packed milk and milk products to the retailers at
the specified time
Financial Overview
The financial policy of Comfed involved payment to the co-operatives after ten days of milk
procurement and received advances from the retailers. This helped COMFED to lower down
its working capital requirement. The total business of COMFED in year 2011-12 was
Rs.1564 Cr. which had increased by 31% to Rs.2058 Cr. in 2012-13. The P/L A/c showed an
increasing trend of net profit from 12.80 crore in 2010-11 to 16.04 crore in 2011-12 and
24.60 crore in 2012-13.
COMFED IN 2015
In 2015, Ms. Kaurs challenges for COMFED were many folds. Primary challenges was the
lack of sense of urgency among the employees because Sudha was enjoying monopoly in
Bihar market. Comfeds decision to enter into the NCR region came too late as mother dairy
and AMUL have acquired a major part of market share and customers were not ready to taste
a new brand. The organisational structure of COMFED was highly centralised one, which
created a lot of problem in proper functioning at milk union level as they had to wait for the

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orders from the head office. COMFED had a large operating cycle, which locked the capital
in cycle for a longer period. There was lack of cash management, huge current asset in the
balance sheet, high raw material holding period and no expenses in research and
development. The huge losses of steam, fuel, ammonia gas, electricity and chemicals were
continuously adding to the manufacturing cost of COMFED.
Secondary set of challenges which Ms. Kaur was facing included improper maintenance of
machines. Absence of proper routing of procurement vehicles led to unutilised capacity of
vehicles, again leading to wastage of resource. This problem added to another major problem
that was unutilised capacity of plant, in which huge amount of capital was invested. There
was also the system of large buffer inventories, which sometimes led to wastage of the
product. There was no inventory strategy like EOQ, fixed order system and material
requirement planning. There was lack of written trade-credit policy document, due to which
there was problem of book-keeping. The milk unions and units had large portion of account
receivable as there was not any certain policy about the funding of these unions and units.
COMFED was not providing proper training to its employees so that their productivity can be
increased. Motivational factors such as recognition, reward, incentives, hikes, promotion
were absent.
COMFED was a growing organisation and had huge potential, resources and capacity in
dairy industry. Ms. Kaur realized that the overall business of the company was growing and
the finance were showing an increasing trend regarding its net profit, however, the company
was following a traditional pattern which needed to be changed. Adapting to new
technologies were really good decision but the biggest challenge for Ms. Kaur was to expand
COMFED beyond the boundaries of Bihar and NCR.

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Exhibit-1: Bihar State Milk Co-operative Federation Ltd., Patna, Profit and Loss Account
for the year ended 31st March, 2012
Particulars
To opening stock
To material cost
To procurement
cost
To processing cost
To wages
To packing cost
To selling cost
To gross profit
Total
To salaries and
wages
To other admin
expenses
To running repairs
and maint exp
To training
expenses
To audit fees
To interest
To depriciation
To profit before tax
total

2010-11
2011-12
Particulars
2010-11
2011-12
123228649.86
71621532.98 By sales
3375126124.83 4327487151.49
By stock
2954989420.74 4023436946.64 Transfer(outward)
231343375.95 274043569.38
122486355.55
67301119.80
16596924.80
75901282.91
25912187.12
291675092.98

By closing stock






3678091033.76 4884913153.44 Total
149234800.17

158669751.05
88963823.98
21114226.41
84478333.31
24708246.05
411920293.02

283382432.57




3678091033.76 4884913153.44
291675092.98

411920293.02

72313849.64

174712424.27 By gross profit b/d


By training
136982713.29 fee/income

8776131.00

8459974.00

5289372.95

5051835.85 By misc receipt

155719598.07

179964681.33

7874671.25
546667.00
41894317.86
11991517.00
167025626.18
456170822.05

9523599.45
657206.00
44175904.96
15517494.40
213723770.13
600344948.35






Total
By net profit
53242773.00 before tax b/d

To provision for tax


38968290.00
To net profit after
tax c/d
128057336.18 160480997.13

sub-total
167025626.18 213723770.13
Appropriation of
profit


To reserve fund
To dairy co-
operative fund
To reserve for
unseen losses
To general fund
To provison for
dividend

To net profit
Total

71621532.98

42696878.00






456170822.05

600344948.35

167025626.18

213723770.13

Sub-total
By net profit after
tax(prev.yr)
By net profit after
32014334.00 tax(current yr)


167025626.18

213723770.13

170787511.59

128057336.18

128057336.18

160480997.13

1707875.00

1280573.00

17078751.00
96479727.59

12805734.00
69132415.18

12824280.00
170787511.59
128057336.18
298844847.77

12824280.00
128057336.18
160480997.13
288538333.31




Total

298844847.77

288538333.31

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I I F T

Exhibit-2 Cost Sheet of COMFED

2011-12

2012-13


PARTICULARS

AMOUNT COST/

O.P.

AMOUNT

COST/

O.P.

RATIO

UNIT

RATIO

Qty Sold

UNIT
1552.75

2089.09

Sale Value\op income

46015.25

29.63

100.00

73719.04

35.29

100.00

(1)Total Materilal Cost

38069.55

24.52

82.73246

64334.96

30.80

87.27

1586.68

1.02

3.448161

1712.07

0.82

2.32

(3)Total Processing cost

889.63

0.57

1.933337

1372.49

0.66

1.86

(4) Total Packing Cost

844.76

0.54

1.835826

1006.84

0.48

1.37

(5) Wages

211.14

0.14

0.458848

315.76

0.15

0.43

(6) Product mat Cons.

47.19

0.03

0.102553

73.27

0.04

0.10

(7) Selling & Distt Exps

247.06

0.16

0.536909

480.35

0.23

0.65

41896.01

26.98

91.0481

69295.74

33.17

94.00

Contribution

4119.24

2.65

8.951902

4423.30

2.12

6.00

(8) Administrative Cost

3269.30

2.11

7.104819

3028.54

1.45

4.11

849.94

0.55

1.847083

1394.76

0.67

1.89

1884.23

1.21

4.094795

1027.83

0.49

1.39

Depreciation

155.17

0.10

0.337214

79.80

0.04

0.11

Interest

441.77

0.28

0.960051

111.49

0.05

0.15

3866.24

2.49

8.402084

3219.83

1.54

4.37

Total cost

45762.25

29.47

99.45018

72515.57

34.71

98.37

Profit |loss

2137.23

1.38

4.644612

2231.30

1.07

3.03

(2)Total Procurement cost

Total Variable Cost

Operating Profit
Non operating Income

Total Fixed Cost

Source: Comfed Accounts

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I I F T

Exhibit- 3: Balance Sheet of COMFED

2010-11

2011-12

CAPITAL AND LIABILITY

SHARE CAPITAL

Authorised capital 150000shares@Rs.1000 each

150000000.00

150000000.00

Paid up capital114750(prev.year-106869) shares of


Rs.1000 each alloted

106869000.00

114750000.00

share deposit pending for alotment


RESERVE AND SURPLUS

5135754.40

3997430.40

Grants from NDDB

28461585.34

28461585.34

Grants from Govt. of Bihar

78801403.86

78797334.90

303682.62

303682.62

4954262.00

4954262.00

40908.54

40908.54

141802119.16

173816453.16

Grants from PAD/FFHC


Technology mission
Micronutrient
Reserve fund
Capital reserve
Depreciation reserve
Statutory Reserve
Co-operative Education fund
Equity Redemption fund
Reserve for Unforeseen losses
Bad & Doubtful debt fund
profit and Loss account
General fund

2826.17

2826.17

224626432.70

239954841.10

32881.00

32881.00

11312691.91

12593264.91

6431560.00

6431560.00

48811314.07

61617048.07

4553309.02

4553309.02

128057336.18

160480997.13

248737088.41

SECURED LOAN

Banks (against hypothecation of stock or fixed deposit)


UNSECURED LOAN
ADVANCES
CURRENT LIABILITY AND PROVISIONS
Total
ASSETS & PROPERTIES

95165061.23

216927980.67

17701715

18321715

1779261070.93

1757904786.09

627098529.74

859032934.71

3558160532.76

4060845304.90

FIXED ASSETS
WORK IN PROGRESS
INVESTMENT

317869503.59


310905100.74

334683972.72

273855.00

3836596.00

1528597160.49

1493062679.83

CURRENT ASSETS AND LOANS & ADVANCES


A.Current assets

stock

71621532.98

283382432.57

sundry stores

50238611.55

84530335.04

607986.59

414312.09

loose tools and spare parts


books
sundry debtors
Balance with unions

84459.71

84459.71

20265337.97

21415656.54

130377464.68

169813871.68

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I I F T


interest receivable
cash and bank balance
B.Loans & advances

58503574.73

69947313.41

395022729.92

182914412.35

Advances
others
Total

Source:Comfed account


972789679.29

1391423820.93

18873039.11

25335332.03

3558160532.76

4060845194.90

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Exhibit-4: COMFED Units


COMFED (State Level)

Milk union
VPMU
(Patna)

DRMU

MMU

Other Units
TIMUL

SMU

(Barauni) (Samastipur) (Muzaffarpur) (Ara)

Jamshedpur

Nalanda Dairy PMC

Now in Jharkhand
Source: Comfed annual report

Patna

Ranchi
Jharkhand

VIMUL
(Bhagalpur)

Bokaro
Jharkhand

Purnia

Gaya

15 | P a g e

I I F T

Exhibit-5: Graph showing the yearly business of Comfed


2500
2000
1500
1000
500
0
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Source: Comfed annual report

16 | P a g e

I I F T

Exhibit-6: Geographical area of operation of COMFED


Milk unions/Projects/Units

Districts

Vaishal Patliputra Milk


Union(VPMU),Patna
Tirhut Milk Union(TIMUL),
Muzaffarpur.

Patna,Vaishali,Nalanda,Saran and Sheikhpura

Mithila Milk
Union(MMU),Samastipur

Samastipur,Darbhanga and Madhubani.

Shahabad Milk Union(SMU),


Ara

Bhojpur,Buxar,Kaimur and Rohtas

Vikramshila Milk Union(VMU),


Bhagalpur

Bhagalpur,Munger,Banka,Jamui and parts


of Khagaria District.

Magadh Dairy Project(MDP),


Gaya

Gaya, Aurangabad, Jehanabad, Arwal and Nawada.

Kosi Dairy Project(KDP),Purnia

Purnia,Katihar,Araria,Kishanganj,Saharsa,
Supaul and Madhepura

Jamshedpur Dairy

Saraikela Kharsawan, East Singhbum and West Singhbum

Ranchi Dairy

Ranchi, Ramgrah, Hazaribagh, Simdega,


Gumla, Khunti, Chatra, Palamu, Koderma, ll
Lohardaga,Latehar and part of Gridih.

Bokaro Dairy

Bokaro,Dhanbad

Source: Comfed Annual Report

Muzaffarpur, Sitamarhi, Sheohar,East Champaran,West


Champaran,Siwan and Gopalganj.

17 | P a g e

I I F T

Exhibit-7: Capacity Utilisation of milk unions and units under COMFED


Milk Unions
Vaishal

daily capacity
Patliputra

150000

utilised capacity

% utilised

204540.7

136.3604667

257275.2

85.7584

Milk Union
Mithila Milk Union

300000

Tirhut Milk Union

250000

121539.6

48.61584

Shahabad Milk Union

250000

160323.8

64.12952

Baruni Milk Union

300000

44034.9

73.3915

312876.2

104.2920667

Vikramshila

Milk 60000

Union
Units of COMED

Daily capacity

Utilised Capacity

% utilised

magadh dairy project

60000

11993.8

19.98966667

kosi dairy project

20000

14150.5

70.7525

jamshedpur dairy

200000

122890

61.445

ranchi dairy

200000

57694

28.847

bokaro dairy

150000

63360

42.24

Source: Comfed Annual Report

18 | P a g e

I I F T

Exhibit-8: Product offered by COMFED


Milk Products
Ghee
Table Butter
Paneer
Lassi
Mango Lassi
Peda
Rasogulla
Balusahi
Kalakand
Soanpapdi

Matha
Misthi Dahi
Mango Dahi
Plain Dahi
Flavoured Milk
Khoa Mithai
Gulab Jamun
Milk Cake
Sugar Free Kalakand
Sugar Free Peda
Milk

Serial No.

Milk

Milk Type

Fat

SNF

1.

Sudha Gold

Full Cream Milk

6.0%

9.0%

2.

Sudha Gold

Sudha Shakti

4.5%

8.5%

3.

Sudha Gold

Cow Milk

3.5%

8.5%

4.

Sudha Healthy

Tonned Milk

3.0%

8.5%

5.

Sudha Smart

Double Toned Milk

1.5%

9.0%

Source: Company

19 | P a g e

I I F T

Exhibit-9 Milk procurement of COMFED


Milk Union /Unit

1987-88

1997-98

2003-04

2006-07

2010-11

2011-12

2012-13

Barauni

20.57

65.93

135.00

173.69

333.08

314.12

343.82

Muzaffarpur

10.77

24.43

52.84

87.13

118.13

115.12

133.56

Samastipur

7.44

32.00

69.86

129.85

248.13

250.15

282.72

Patna

30.18

56.18

102.66

157.33

221.23

210.15

224.77

8.77

26.99

45.41

123.75

129.44

176.18

Vikramshila

1.41

2.81

3.27

7.78

35.05

35.73

48.39

Gaya

.68

0.15

3.55

2.42

10.76

7.50

13.18

Kosi

6.29

7.13

15.55

Ranchi

5.35

6.06

4.78

4.95

4.74

6.34

213.19

403.00

608.38

1101.38

1074.92

1244.51

Shahabad

Total

71.05

Source: Company

20 | P a g e

I I F T

Exhibit-10: COMFED - Profit Before Interest and Depreciation


60
50
40
30
20
10
0

Source: Authors

21 | P a g e

I I F T

Exhibit-11: COMFED - Cost distribution


procurement
cost
material cost
selling and
distribuaon cost
salary
administraave
cost
processing cost

Source: Authors

22 | P a g e

I I F T

Exhibit-12: National milk production

Year

Production in India
Production (Million Tonnes)

Per Capita Availability


(gms/day)
178
182

1991-92
1992-93

55.7
58.0

1993-94
1994-95
1995-96
1996-97
1997-98

60.6
63.8
66.2
69.1
72.1

187
194
197
202
207

1998-99
1999-2000
2000-01
2001-02
2002-03

75.4
78.3
80.6
84.4
86.2

213
217
220
225
230

2003-04
2004-05*
2005-06
2006-07
2007-08

88.1
90.7
94.6
100.9
107.9

231
229
220
246
260

2008-09
112.2
266
2009-10
116.4
273
2010-11
121.8
281
2011-12
127.9
Source: State/UT Animal Husbandry Departments, 2004
*Source: Production Estimate of MILK, EGG, MEAT and WOOL of the year 2004-2005

23 | P a g e

I I F T

Exhibit-13: COMFED - Operations


OPERATION
Procurement

Processing

PARTICULARS
The total milk procured during year 2012-13 was 17.88 lakh kiloliters a day and
shown an increase of 15.8%. The procurement is done through vehicles like
Trucks, pickups vans and milk tankers. These vans and vehicles carry the milk
in steel cans from co-operatives to the milk unions and units, where it is
processed to pasteurised milk and different milk products.
a. Receiving the milk- irrespective of product, the plant has a section where milk
is delivered and stored.
b. Sampling of milk- Milk samples are drawn for organoleptic and other
platform test for determination of fat, solid-not-fat as well as its keeping quality.
c. Unloading of milk:
the milk is unloaded from the cans/tankers and taken into the dump tanks.
d. Milk processing:

COST
The procurement cost has shown
an increment of Rs.0.07 to 0.08
due to increase in the petroleum
prices.
The processing cost of milk
unions and units of COMFED
has increased by Rs.0.47 in
comparison of last year. This
increment is due to hike in the
prices of electricity, coal and
diesel.

Raw milk duly chilled will be passed through the milk plate pasteuriser, which
is a self contained unit for heating and cooling of milk. The milk is heated from
4 degree Celsius to 45 degree Celsius and is diverted to a cream separator,
which separates out the cream from the milk whereas the skimmed milk returns
back to the pasteuriser where it is further heated to 80 degree Celsius so as to
make it safer for human consumption and then chilled to 4 degree Celsius to
further enhance its keeping quality on storage
e. Separation of milk fat:
Milk from milk pasteurizer is taken to the cream separator where the fat is
separated from the milk in form of cream containing 40 to 50% fat and the
skimmed milk from the cream separator is diverted back to the pasteurizer.
f. Pasteurisation of cream:
Cream from cream separator is pumped through the cream pasteuriser, which is
identical in construction to milk pasteuriser where cream is heated to 80 degree
Celsius by means of hot water and is cooled to 8 degree Celsius by means of
chilled water to enhance its keeping quality. The pasteurized cream is stored in
double jacked cream storage tank for further conservation into butter and ghee.
g. Manufacture of butter:
Cream from cream storage is tank is pumped into the continuous butter making
machines / butter churn. The cream is churned into the machine in order to get
butter granules (this is known as churning of cream).
h. Ghee- Butter from melting vat is pumped to ghee boiler where it is heated to
about 107 degree Celsius gently so as to evaporate water from the molten butter
i. Skimmed milk powder:


Packaging

Selling and
distribution

Skimmed milk/ whole milk from the milk silos is pumped through multi effect
falling film evaporator where it is pasteurised and condensed under vacuums to
desired concentration continuously.
The material used in packaging are polyfilms, paper cartoons, tin cans, plastic
containers etc, and recently they are moving to tetra packs. There are certain
specifications regarding packaging material which are set by National Dairy
Development Board and are necessary to be followed by all milk co-operative
federation. The width of polyflim should be 50-55 micron. It is important to
note at this point that cost of polyfilm is paid on the basis of its thickness. The
total number of packets of half litre from one kilogram of polyflim should be
around 410 and that of one litre packets should be around 250. Note that
anything less than this is considered to be wastage of resources.
These activities are handed over to agencies which are selected on the basis
BID. The agency with the lowest bid price is selected by COMFED for its
promotional and distribution activities.

Source: Comfed personnel

The taotal cost of packaging has


decreased from 0.54 to 0.48/
litre.

The administrative cost of milk


unions of COMFED has shown
an increment of Rs.0.35 per
litre. The administrative cost of
units of COMFED has
decreased from Rs.2.11 per litre
to Rs.1.24 per litre.

24 | P a g e

I I F T

Exhibit-14: COMFED - Units Performance


Turnover
2012-13

2011-12

Amount

Amount

14168.34

12624.03

Ranchi Dairy

11922.38

Bokaro Dairy

Operating Profit
2012-13

2011-12

Amount

Amount

% Change

12.23

583.12

438.55

32.97

9643.16

23.64

588.78

268.40

119.37

7470.16

6270.55

19.13

274.38

96.99

182.90

Gaya Dairy

4174.77

3204.89

30.26

62.56

63.51

-1.50

Koshi Dairy

3642.13

2625.70

38.71

36.46

73.22

-50.20

Nalanda Dairy

14217.54

1458.17

875.03

220.67

-50.39

537.92

CFP, Ranchi

3324.66

3257.25

2.07

-14.91

576.97

-102.58

Head Office

14799.07

6931.50

113.50

-356.29

-617.31

42.28


Total
73719.05 46015.25
Source: Comfed Accounts

60.21

1394.77

849.94

64.10

Name of the
Units
Jamshedpur
Dairy

%
Change

25 | P a g e

I I F T

Exihibit-15: COMFED- Unions Performance


Turnover

2012-13

2011-12

Amount

%
Change

Amount

Amount

%
Change

24417.81

15625.05

56.27

46.37

312.20

-85.15

25313.99

18346.65

37.98

622.85

222.78

179.59

24656.51

17990.61

37.05

352.47

120.80

191.79

14835.15

7666.23

93.51

-216.90

15.29

-1518.21

4135.42

2435.79

69.78

-75.20

7.23

-1140.03

13135.24

7722.26

70.10

353.85

145.14

143.79

Total
106494.12 69786.58
Source: Comfed Accounts

52.60

1083.43

823.44

31.57

SI.No
1
2
3
4
5
6

Name of
the Unions
VPMU,
Patna
DRMU,
Barauni
MMU,
Samastipur
SMU, Ara
VIMUL,
Bhagalpur
TIMUL,
Muzaffarpur

2012-13

2011-12

Amount

Operating Profit

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