A STUDY ON

DEMAND ESTIMATION ON MOTHER DAIRY

 INTRODUCTION
When running a small business, it is important to have an idea of what you should expect
in the way of sales. To estimate how many sales a company will make, demand estimation is a
process that is commonly used. With demand estimation, a company can gauge how much to
produce and make other important decisions.
Definition
Demand estimation is a process that involves coming up with an estimate of the amount of
demand for a product or service. The estimate of demand is typically confined to a particular
period of time, such as a month, quarter or year. While this is definitely not a way to predict the
future for your business, it can be used to come up with fairly accurate estimates if the
assumptions made are correct.
Pricing
One of the reasons that companies use demand estimation is to assist with pricing. When you
offer a new product or start a new business, you may not have any idea how to price your
product. When you have an idea of what the demand will be for the product, you know
approximately how much you have to price the product. This way, you can avoid overpricing
your product and alienating some customers. You may also be able to avoid leaving money on
the table.
Production
Another reason that demand estimation is commonly used is so that it can help with production.
Before a company puts a large amount of money into producing a product, it can have an
estimate of the demand for that product. If the demand in the area is for 20,000 units, you should
most likely not invest in making 1 million units during that time frame. This way, more of your
capital can stay on hand instead of being invested into inventory.

Considerations
When making business decisions using demand estimation, it is important to remember that these
estimations are only educated guesses as to what the demand for a product or service will be. If
you have a high-quality product that people want, you may not be able to manufacture them fast
enough to meet demand. Always allow some room for error in the estimation of the demand for
your business. Otherwise, you may be in for some surprises as a business owner.
 OBJECTIVES OF THE STUDY

 To estimate the demand of dairy products in HYDERABAD by surveying retailers and

consumers

 To know the problems in the distribution network of MOTHER DAIRY PRODUCTS

 To quantify the losses incurred by the retailers and MOTHER DAIRY due to the
inefficiency of the distribution network

 To identify the industry best practices and competitor’s methods to implement them

 To give recommendations to MOTHER DAIRY in order to implement and thus increase

its market share
 NEED FOR THE STUDY
The need for demand analysis of institutional sales of milk arises to predict the demand for the
milk at present and in future days. Ensuring the demand estimation is vital to our long-term
business survival and profitability.
Demand estimation Surveys are an important tool to help us collect the information we need to
understand and evaluate the market structure. This survey answers tough questions. A well-
designed survey can give answer to the most critical question, Are our products have potential
demand in the market?
Demand estimation surveys give us the insight we need to define what is extremely important
to our customers. Once we came to know what is most important, we use the surveys to compare
our product and its each section’s performance on the customers` wants. Surveys help us to
identify which sections may need to improve so we can provide customers to decide how and
where to allocate our product in different segments of the market. The need for the conducting
this study was to estimate the potential demand of institutional sales for the company and to
know the factors influencing it.
 THE SCOPE OF THE STUDY

The scope of the study is broader than mere gauging the demand estimation of institutional sales.
It makes an effort to build and strengthen relationship with the “DEMAND ESTIMATE OF
MILK FOR INSTITUTIONAL SALES,IN.HYD.
Customers. It makes Competition analysis as well as helps in knowing the expectations of the
customers along with the market structure and its consumption pattern.
The result obtained cannot be generalized to all the markets, as the methods for arriving
at the sample size and selecting the sample were unempirical. . The study will help the
Company to identify the new segments and need to come up with the new marketing
strategies so to achieve the market leadership and earn the revenues start from the
entering stage.
 LIMITATIONS OF THE STUDY

The survey was conducted only in the areas of three distributors leaving the other areas
untouched. The constraints were manpower and time. Only two people were involved in
surveying through schedules and the total retail universe in a metropolitan city like
HYDERABAD is huge and it is practically impossible to cover all the retail outlets in two
months’ time. However, care was taken to cover almost all the beats under one distributor’s area
so that the data collected would represent the population as such.

The responses given by the retailers were jotted down as it was given by the respondents.
There may be high chances of few retailers in enunciating the demand figures. In the same way
the complaints given by them also needs consideration as they few retailers were angry with
MOTHER DAIRY ’s inefficiency to meet the demand. So when they had a chance to pour out
their grievances they might have hyped it.
 RESEARCH DESIGN \ METHODOLOGY

DATA COLLECTION
DATA COLLECTION APPROACH: Survey Research
DATA COLLECTION INSTRUMENTS: Questionnaires, Attitude scale
SAMPLING PLAN
SAMPLE UNIT: Milk consumption institutions
SAMPLE SIZE: 100 Respondents
METHOD OF SAMPLE SIZE DETERMINATION: Unaided judgment
SAMPLING PROCEDURE: Non probability sampling
Babasabpatilfreepptmba.com
“DEMAND ESTIMATE OF MILK FOR INSTITUTIONAL SALES, in
HYDERABAD
SAMPLING FRAME: Institutional Customers
SAMPLING PLAN: Selection of the customers based on
the quantity Purchases
 CHAPTER-2
REVIEW OF LITERATURE
 REVIEW OF LITERATURE

India's high-value, high-volume market for traditional dairy products and delicacies is all
set to boom further under the technology of mass production. This market is the largest in value
after liquid milk and is estimated at US $3 billion in India.

More and more dairy plants in the public, cooperative and private sectors in India are going in
for the manufacture of traditional milk products. This trend will undoubtedly give a further
stimulus to the milk consumption in the country and ensure a better price to primary milk
producers. Simultaneously, it will also help to productively utilize India's growing milk surplus.
Milk production in India increased from 17 million tons in 1950-51 to 89.6 million tons in 2004-
05. India has rapidly positioned itself as the world's largest producer of milk. Producing milk in
rural areas through smallholder producer cooperatives and moving industrially-processed milk
from these smallholder sources to urban demand centers became the cornerstone of government
dairy development policy. This policy initiative
gave a boost to dairy development and initiated the process of establishing the much-needed
linkages between rural producers and urban consumers.

The performance of the Indian dairy sector during the past three decades has been truly
impressive. Milk production grew at an average annual rate of 4.6 percent during the 1970s, 5.7
percent during the 1980s, and 4.2 percent during the 1990s.

Despite its being the largest milk producer in the world, India's per capita availability of milk is
one of the lowest in the world, although it is high by developing country standards. The per
capita availability of milk expanded substantially during the 1980s and 1990s and reached about
226 grams per day in 2003-04 the per capita consumption of milk and milk products in India is
among the highest in Asia, but it is still growing. It is still below the world average of 285 grams
per day, and also the minimum nutritional requirement of 280 grams per day as recommended by
the Indian Council of Medical Research (ICMR).
Several factors have contributed to increased milk production. First, milk and dairy products
have cultural significance in the Indian diet. A large portion of the population is lacto-vegetarian,
so milk and dairy products are an important source of protein in the diet. The demand for milk
and dairy products is income-responsive, and growth in per capita income is expected to increase
demand for milk and milk products.

Despite the fact that dairy production in India is widespread throughout the country and
overwhelmingly carried out by small-scale producers, there are still large interregional and
interstate variations in milk production. Roughly two-thirds of national milk
production comes from the states of Uttar Pradesh, Punjab, Rajasthan, Madhya Pradesh,
Maharashtra, Gujarat, Andhra Pradesh, and Haryana. However, there have been some shifts in
milk production shares of different states. In 2001-02, Uttar Pradesh was the largest milk
producer in the country, with about 16.5 million tons of milk, followed by Punjab (8.4 million
tons), Rajasthan (6.3 million tons), Madhya Pradesh (6.1 million tons), Maharashtra (6 million
tons), and Gujarat (5.6 million tons). The eastern region is lagging behind in terms of dairy
development, and imports milk from surplus areas in the West and North.
— The annual milk production is presently 92 million tonnes, contributing around Rs. 1000
billions to the GDP.

— Provides assured and remunerative employment round-the-year to 60 millions families.

— The dairy animals make a substantial contribution to household food security by providing
income, quality food, energy, fertilizer and assets in over majority of the rural households in
India.

— The Animal Husbandry is the single largest contributor under the agriculture sector which
provides a remunerative employment round the year at a very small investment. The dairy
animals make a substantial contribution to household food security by

providing income, quality food, energy, fertilizer and assets in over majority of the rural
households in India.

These livestock keepers are constrained by poor animal health and veterinary services, lack of
feed and fodder, water, milk handling, chilling, etc. Besides, there has been lack of infrastructure
facilities such as good roads and access to markets, etc. The livestock keepers also lack access to
advanced technologies as well as proper institutional support system. The result is that both the
production and productivity remain well below its potentials. Thus the losses and wastages
continue to remain high. Adapted breeds and local feed resources although available, but need
proven technology supports in its preservation and processing. Such support would substantially
improve production and productivity, which would result in higher income for the livestock
keepers.

One of the problems faced by India is unemployment, despite the rapid growth rate. The problem
is more acute in rural educated and marginally educated youths, who have no alternative but to
migrate to urban areas. Due to automation in various core sectors, the employment opportunities
have dwindled considerably whereas the service sector has its own limitations, especially the
high investment cost per job created. In this context, the dairy industry offers a plausible
opportunity of creation of self-employment with minimum investment. There is a scope for
doubling the present milk production, which can be achieved with marginal investment, such a
step would not only enhance milk production and productivity, but also would create millions of
additional jobs.

Dairying is, in fact, a supplementary activity of the marginal farmers and the landless laborers. It
is therefore suggested that dairy and such other animal farming be included within the legal
framework of ‘agriculture and agriculture products’. This would enable the marginal farmers and
the landless agriculture laborers to benefit from the various government incentives.

Milk is no more a luxury, but essential nutritional requirements of human being. The children
largely depend on milk for nutrition. Higher milk production therefore will also increase the
health status of the farmers and people at large. Due to several inherent reasons, the cost of milk
production is high. One of the important reasons is low animal productivity. Because of high
cost, the milk and milk products are not affordable to poor strata of the society. Milk is a
perishable commodity. Hence, its conversion to products, such as, milk powder, butter and
cheese, etc. is necessary. Considering these factors, it is reasonable that at par with agriculture
produce, the milk products be also exempted from any excise duty, sales tax and such other
taxes. This gesture of the government would go a long way in accelerating the growth of the
Indian dairy industry from present annual rate of around 4.5 % to more than 9%.

The conversion of excess milk to milk-products is a necessity. The basic principle here is
evaporation of water which changes its physical form only, whereas there is no change
whatsoever in its chemical composition. One of the reasons of higher cost of milk and milk
products is the cost of packaging. To safeguard the quality and safety for human consumption,
packaging of milk and milk product is necessary. The milk product manufacturing therefore
should be construed as ‘processing milk for preservation’ and it
should be exempted from all the taxes and duties like excise, central sales tax and octroi etc.

To enhance milk production during the next five years as well as to address the issues referred in
the foregoing sentences, there is an imperative need of policy support from the government on
the following core areas:

- Clean and quality milk production, processing and packaging

- Boost the exports of milk and milk products

- Enhance milk production and milch animal productivity

The retailer is supplied with damaged product for eg: the MOTHER DAIRY ya, Sagar or
100gm Butter cases are slightly torn. In case of the milk powder it happens during handling and
transportation while in butter the case is different.

This problem is prevalent in 100gm Butter packs which comes in carton cases. They are
stored in the cooler room when it is with the distributor. The delivery vans are loaded with these
butter packs at around 10:30 am in the morning and it moves out for delivery. HYDERABAD is
a city well known for its hot and humid climate and the delivery vans have a steel body. The
steel body gets heated up immediately when exposed to sun and it also retains the heat. So the
butter tends to melt soon. As it melts it soaks the cartons and the wet cartons tear off before
delivery. Though the delivery men take care to deliver butter orders as early as possible few of
them gets damaged in the evening at around 5:00 pm. So the retailers who are slightly far away
from the distributors area have more frequency of getting damaged butter packs. They also get
delivery only once a week as they are located at remote places and hence their order would be in
bulk to suffice for the entire weeks demand and this adds up to the frequency of getting damaged
products.

STAGE II:
 Dairy products have a maximum shelf life of only 6 months. MOTHER DAIRY has all its
manufacturing units in North and Central India. It has its stock point at Alappakkam in
HYDERABAD. By the time the products reach the stock point; then the distributor and then the
retailer the stocks become a month or two old. Sometimes certain stocks of MOTHER DAIRY
tend to remain unsold for some days. Customers, as observed during survey, check for the expiry
dates carefully before buying a product, and they tend to reject those products which are above to
expire in a month. So these left over stocks though not expired tends to remain unsold till it
expires. MOTHER DAIRY does not have the practice of taking return of the unsold and expired
products as they insist the retailers to stock exactly to their demand. Ultimately the retailer
suffers the loss and he is compelled to dispose the products. There are instances where the
retailer has thrown out expired milk powder and paneer packs before the municipal authorities
had visited the shop for inspection. This has forced the retailers to stock below their actual
demand levels, to be on safer side. They are not ready to incur huge losses on unsold products
instead they suffice the extra demand by convincing the customers to buy the competitor’s
products. Ultimately MOTHER DAIRY not only loses its market share but also paves way for
the competitor’s brand to eat away its share and hence they gain more.

Rarely do the retailers get expired products on delivery; this is prevalent in products which
has only three months shelf life like buttermilk. The retailers usually do not check the products
for expiry dates when they are delivered as they will be busy attending their customers. But
unfortunately, this has happened to certain retailers in certain products and they have gone to the
extent of not stocking those products like paneer, cheese, dark chocolates and curd.

Loss Due to Delayed Supply:

Various product’s of MOTHER DAIRY has varied amounts of demand during various
seasons in a year. Ghee, milk powder, curd has a constant demand but products like buttermilk
and flavored milk have seasonal demand. The demand for flavored milk shot up during the
period of survey as it was summer in HYDERABAD. Taking the case of flavored milk, it has
various flavours like elaichi, kesar, rose and chocolate and they come either in tetra packs or in
glass bottles. It also has premium variant called MOTHER DAIRY kool café which comes in
cans and it is priced slightly high. So under one PRODUCT of flavored milk the customer has
seven different variants to satisfy his thirst. Now to predict the demand for each and every
variant is more difficult and even the consumer might not be able to predict his flavor of demand
at different points of time.

Ultimately the retailer and hence the distributor runs out of stock of a particular flavor
and even if the retailer places an order he will not be able to get till next week. In this case he
loses his customers or MOTHER DAIRY losses its customer to its competitors either ways it is
loss for MOTHER DAIRY .

Sometimes distributor may be having the required stock but will not be able to deliver it
has he cannot break the cycle of delivery within a week and hence asks the retailer himself to
collect the required stock in person. If the retailer is close by he spends for the transportation and
gets his required stock else he loses his customers.

They are times when the distributor is not able to fulfill the entire demand of a retailer in
certain products as the demand peaks up all of a sudden and it is unforeseen. So in that case the
distributor supplies only fewer stocks to the retailers to make sure that all the retailers in his area
get at least few pieces of the products instead of having none.

GENERAL DISSATISFYING FACTORS

No returns:

In the retail industry it is a general practice to take return of the unsold and damaged
pieces of the product from the retailers. Companies like Nestle, Britannia and Heritage the
competitors of MOTHER DAIRY has the practice of taking returns in order to minimize the loss
incurred by the retailers, and they are the money is refunded. For example Nestle takes return of
the unsold, expired or damaged curd packs and refunds. The retailer buys Nestle curd at 4%
VAT but when he is refunded he is not reimbursed with the VAT amount but the retailer is
satisfied with whatever he has got as refund as his losses are minimized. They employ separate
personnel, who visit the retailers once a month, to take care of returns.
 Distributors carry inventory that is just adequate to take care of the transit time from the
branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return
on investment (ROI). But this is not the case with local retailers. MOTHER DAIRY does not
take returns of the product as it emphasis the retailers to stock only to their anticipated demand
and not in excess. In case the products are unsold the retailer suffers losses. This has pushed
certain retailers to stock below their potential demand and some retailers who are not able to
forecast their demand properly have even stopped stocking certain PRODUCT’s like milk
powder.

Stocks not delivered on credit:

The employee of the distributor who delivers the dairy products to the retailer’s shops
collects the amount to be paid, after producing the bill for the delivered items, immediately after
delivery. Sometimes the store manager or the purchase manager who is responsible for the
payment fails to be present or is unable to pay the deliverer immediately and since the
distributors does not deliver the goods on credit the deliverer waits till he can collect the money
and then leaves the shop. This delays his work and also dissatisfies the retailers.

There are small retailers who pay out of the day’s earnings so in case at the time of
delivery if the retailer has not earned the amount to be paid he is not in a position to pay or
makes the deliverer wait till he arranges for money. The major reason for the retailers to demand
the products on credit is that. Order is taken on a particular day and goods are delivered on the
very next day. So either the retailer forgets to make arrangements for the money or is unable to
pay the distributor the next day. This is not the scenario with Nestle or Britannia. They give
either bill to bill credit or 15 days credit on their product line.

Low Margin:

The margin provided by MOTHER DAIRY is relatively low when compared to that of its
competitors. This is mainly due to the objectives and business philosophy of MOTHER DAIRY .
It believes in quality delivered to its customers and delivers the best value for the money spent.
MOTHER DAIRY PRODUCTS are inexpensive when compared with the quality it delivers and
so it has earned the trust of its customers over the years. This is the central anchor for MOTHER
DAIRY ’s future business plans. So eventually the retailers get a relatively low margin (around
8% - 12%). The competitors have a lesser market share when compared to MOTHER DAIRY
but their market penetrating strategy is to give high profit margin to retailers (around 12% - 15%)
but they compromise on quality. But this is easily perceived by the customers of MOTHER
DAIRY and they stick to MOTHER DAIRY as they are brand loyal.

There are retailers who stock MOTHER DAIRY PRODUCTS just to satisfy their customers
and not make profits. Others try to push competitor’s product in order to gain more profits, in
this process MOTHER DAIRY incurs a loss though the important cog in the wheels of the
distribution network, the retailer gains.

Connect between MOTHER DAIRY and its Retailers:

Throughout the process of survey it was observed that the retailers were dissatisfied with
these above said issues and they were looking forward to put across these issues to the company
in order to seek a solution. But it seems none of the company personnel visits the retailers on a
regular basis. They visit only to promote a newly launched product, which happens once in six
months or so. Unlike, MOTHER DAIRY its competitors like Nestle and Britannia harnesses
those employees who take return to know the grievances of the retailers. If not at least their
distributors visit the retailers. This does not happen in MOTHER DAIRY . So the bond between
the company and the retailers is weakening. MOTHER DAIRY should look into this issue
seriously as the retailers play a major in promoting MOTHER DAIRY PRODUCTS at POS
(point of sale).

Schemes offered:

MOTHER DAIRY offers a lot of schemes time and again for the benefit of retailers and
consumers. These schemes do help to boost the sales and consumers are allured to buy the
products in bigger volumes. But the schemes offered to retailers, at times, do not reach them and
are coveted by the distributors. For example MOTHER DAIRY was giving two curd packs free
for the retailers for one case of curd (24 packs of 200 ml each) they buy. The distributors receive
their stocks only in cases and not as loose packs so they get the offer from the company but when
they distribute them to the retailers some buy as cases and some as individual packs since they
do not require so much. Ultimately the offer packs is retained by the distributor. Few retailers get
to know about the offer so they demand it from the distributors but those who are unaware tend
to lose the offer. Even the APO who gets intimation about the offers from MOTHER DAIRY , at
times, does not get the schemes.

Non-availability of MOTHER DAIRY PRODUCTS:

Unlike other factors stated above this was suggested by the customers. Certain variants or
flavors in a particular product’s are not available in their neighborhood. This is happens in
flavored milk, butter and cheese. There were certain customers who were dissatisfied by the
distance they need to commute to buy MOTHER DAIRY PRODUCTS.

Certain variants of Cheese, flavored milk are available only in supermarkets and these
supermarkets are not placed in neighborhoods and the local retailers are neither aware of their
customers demand nor aware of the entire array of products available.

PHASE I: Implementation

MOTHER DAIRY should select a list of leading distributors out of the 17 distributors who will
implement the software and will be examples to their counterparts. All the distributor has to do is
to buy the hardware, the PC and the modem. Some distributors are already using local software,
which may be tailor made but the company must convince them that in the long run, this ERP
system will be more efficient. MOTHER DAIRY should send a team of technologists (from
MOTHER DAIRY ) and implementers (from Botree). The technologists should explain the
working procedures. Since every distributor has a computer of their own and adept in using them
they need not require separate training to implement this automation procedure.

PHASE II: Backward integration with ERP systems - Total Integration

The second phase involves hooking all these distributors to the company’s SAP system. This is
pretty simple as this has already been done by IBM and SAP just recently.

In future:

The portal can be made wireless and can be accessed through handheld, mobile gadgets.
Now the sales force who takes order can directly punch in the order and this will reach stock
point in no time. This not only astronomically increases the frequency within which stock points
get the information; it also simplifies the sales forces job without much of congested work. This
is currently implemented by Coca-Cola in major cities and Marico Ltd. has plans to implement
this technology, in future.

Advantages:

 Reduction in late deliveries and working capital requirement

 Will enable to capture and analyse secondary sales data in terms of daily sales and stock
availability for every distributor, distributor sales team performance, outlet monitoring,
merchandising monitoring, new product performance monitoring
 Will enable to analyse information related to planned orders, primary sales invoicing,
dispatch details and claims
 Market information on a product comes everyday to factory, SKU-wise defect-wise in a
report called DQR (Daily quality report), which enable to meet customer satisfaction all
the time.

Improving the delivery time:

In the FMCG industry the minimum level of service (time taken by the company to
deliver the product to the customer once the order is placed) should always be the least possible
that is when a customer anticipates buying a product it should be available on the shelf. This
happens with MOTHER DAIRY PRODUCTS due to its efficient distribution network. But the
problem is some distributors of HYDERABAD does not receive fresh stocks and are not able to
deliver fresh stocks for the retailers. This problem has been prevalent for a long time in
HYDERABAD mainly due to the lack of manufacturing facility in South India. Though there are
warehouses close by, even they do not receive fresh stocks. This immediately calls for attention
as, though customers prefer MOTHER DAIRY PRODUCTS over its competitors they are
pushed to buy other products due to stale stocks of MOTHER DAIRY .

This can be done by exploiting the ERP system. The warehouse can be enabled to receive
real-time inventory load of the distributors and it can intimate the manufacturing facilities. This
can help the facilities to reschedule their MPS (Master Production Schedule) in accordance with
the anticipated demand. MOTHER DAIRY , being a market leader in various products it is
important for MOTHER DAIRY to improve logistics to reduce the delivery time and to make
sure that its distributors get fresh stocks. A detailed account on this suggestion is not possible as
manufacturing does not come under the scope of the report.

Delivering on Credit:

Distributors can give bill to bill credit on all the dairy products for the retailers. This
should be done after meticulous evaluation of the retailer’s potential and habit of settling his
dues in the past. The distributors should keep track of the retailer’s practices and should be able
to evaluate them carefully. Based on the order placed by the retailer, every week and based on
his aptness to repay the amount due he can be given on credit.

For example if this is the scenario with a retailer

Order placed per week – Rs.1000

Tenure of business with MOTHER DAIRY – 4 years

Aptness in paying the bills on time – 95%

No. of days taken in meeting the dues – 3 days

The entire stock need not be given on credit instead he can be given a credit of Rs.950 (based on
previous practice of settling dues) for a week and the rest of the amount rs.50 can be collected
during the next delivery on the next week.

Pros:

 This will boost the retailer’s morale (mainly the smaller ones) to stock more of MOTHER
DAIRY PRODUCTS and hence he will promote them to his customers. During survey it
was found that retailers are ready even to double their orders if given on credit.

 So in the above scenario just by delaying the payment of rs.950 by a week MOTHER
DAIRY will be able to generate revenue of rs2000 in the place of rs1000

 He will be aware of his due amount the next week and will be ready with money.

 This will lead to increase in the order placed every week and the credit limit can also be
increased based on his timeliness and consistency to meet his dues.

 This will spread by word of mouth to other retailers on the same street and he will also be
interested in stocking MOTHER DAIRY PRODUCTS.

Cons:

 Some retailers may stock beyond their potential to sell and may end up in losses.

 Few might still try to evade paying the dues.

In case his aptness to pay the bills even after delivering on credit deteriorates then the credit limit
can be minimized accordingly or if his number of days taken in meeting the dues increases his
credit timing can be reduced accordingly. If still his practice deteriorates then he should be
denied delivery on credit and should be delivered products only on clearing his debts.

The above stated initiatives, taken by the distributors, demands MOTHER DAIRY to
deliver stocks on credit to the distributors. They can be given bill to bill credit as they also
receive stocks on a weekly basis. This can be used as tool to increase the sales volume. The
credit limit should depend on the sales volume shown by the distributor.

Small retail packs:

Retail packs of Ghee and cooking butter have a huge demand. During the survey there
were strong suggestions from retailers to launch small retail packs of Ghee (50gm) due to huge
demand in the market. Customers prefer small retail packs of 50gm than 200gm packs (std.
MOTHER DAIRY Ghee packs) as there usage is less and they can open a fresh pack whenever
one gets over. So they tend to stock four 50gm packs rather than a single 200gm pack.

It’s been found that the count of 50gm and 100gm retail packs of ghee selling is twice
that of 200gm packs. The profits earned by selling them are quite high. It is advisable for
MOTHER DAIRY to launch small sachets of 50 gm rather than plastic cases in order to cut
down costs.

Salesperson efficiency improvement:

During the survey it has been observed that the salespersons who take order are unskilled
labors. Some distributors have employees who are old enough and mature enough to understand
the retailers while interacting with them but other employees of some distributors are just school
kids or undergraduates in their freshmen year. They work on an incentive basis, the more order
they procure the more are their incentives. So instead of spending time with each retailer to
explain the array of products available they tend to cover as many retailers as possible in the
shortest span of time. Ultimately, the retailer is unaware of the products available and the
customers of those neighborhoods complain about the non-availability of MOTHER DAIRY
PRODUCTS.

If the salesperson spends more time in explaining about the product width and depth
available; the schemes offered by MOTHER DAIRY he will be able to procure more order.
They can also try and pitch to new retailers. The salesperson can also act as a spokesperson for
their agency, by which they can collect responses and expectations of customers; can make sure
that the schemes offered to the retailers reach the retailers and communicate retailer’s problem to
the distributors and who in turn and can inform MOTHER DAIRY . The issues which come to
the board of MOTHER DAIRY should be considered seriously and resolved if they are feasible
and cost effective. The salesperson should be skilled enough to maintain a good relation with the
retailers as he depicts MOTHER DAIRY and the brand MOTHER DAIRY to the retailer who
is solely responsible for promoting MOTHER DAIRY at the POS (point of sale).

Issues Not to be Resolved:

Other issues of taking returns and increasing the profit margin to the retailers are not
possible as they are least cost effective and will also pay way for disrupting the whole objective
and business philosophy of MOTHER DAIRY .
 CHAPTER-3
COMPANY PROFILE
INDUSTRY PROFILE
 ORGANIIZATION PROFILE

1. Institute Name: - Patil Dairy Product

2. Add: - A/p-Bhilavadi.
Tal –Palus.
Dist Sangli.
Ph.02346-237996.

2. Year of establishment:-19th jun 2017.

4. Registration No :- V.A.T.Tin No.27090309571

C.S.T Tin No-27090309571

5. Registration Date: - V w.e.f 1-4-2017.

V. w.e.f 1-4-2017.

6. Founder Chairman:-Dhanykumar Chougonda Patil

Age: - 40 years.
Education: - B.A.
7. Organization Scale: - medium.

8. Finance Provider:-Bharati Bank Pvt.Ltd. Sangli,

Tal- Palus,
Dist –sangli.

9. Share capital: - 1.5 crore.

BRIEF HISTORY OF ORGANIIZATION

The patil dairy was established on 19 Jun 2017 is the medium scale, which are collection of
milk & they are distributer their city &local places. The collection of milk is one center, but
the current level is available in 28 centers.

Area of Operation
In Maharashtra state various small villages in local area for the Sangli & Palus
district, Bhilavadi, Malwadi, Palus & Tasgaon area collection from the milk. The
collection of milk in cow & Buffalo.

The patil Dairy producing various milk products, the dairy producing is very good
Quality processing milk & milk product like.
1. Srikhand.
2. Amrakhand.
3. Basundi.
4. Chaka.
5. Pannner .
6. Dahi.
7. Lassi.
8. Ghee.
MILK COLLECTION

The Patil Dairy Milk collection in per rural area, milk collection morning & prime time
shifts 28 ruts. The transport ruts collected milk quickly milk collection, low time milk
collection.
Ending Year Milk Collection Information

Sr.No. Particulars 2015-16 2017-07 2017-18

1 Buffalo Milk 15,30,000 19,30,000 23,70,000
2 Cow Milk 8,00000 12,77,000 14,60,000
3 Total Milk 23,30,000 32,07,000 38,30,000
4 Day Milk 6,400 8,400 10,500
5 Buffalo 4,200 5,300 6,500
Milk/Day
6 Cow milk/Day 2,200 3,500 4,000
MILK DISTRIBUTION

M
ilk
an
d
mi
lk
pr
od
uc
t
sa
les in the market and day to day highly competitors in the market. Dudh Dairy in the
under milk product, quality standardized, Elasticity in mostly centralized information
staffing and new Technology adopted in the market Patil Dairy milk & milk product to
sales in the market. Patil dairy milk & milk product only market accepted in the Pune,
Mumbai, Sangli, & local area milk & milk product to sales in the market.
MILK SALES

Sr.No MILK Liters

A Polypack Under Milk Sales
1 Buffalo Milk 10,04,565
2 Cow Milk 30,651
3 Fresher Milk 67,914
Total Milk 2,09,130
B Milk sales
1 Buffalo Milk 3,59,580
Cow Milk 65,720
Total Milk 4,25,300
Packing +Milk = 6, 34,430.
Sales
 OVERVIEW OF THE COMPANY

Mother Dairy – Delhi was set up in 1974 under the Operation Flood Programme, a wholly owned subsidy
of the National Dairy Development Board (NDDB), whose current chairman is Dr. Amrita Patel. The
company markets more then 2.2 million litres of milk daily in Delhi and surrounding areas of Western
U.P. and Haryana, Mumbai and Hyderabad. Mother Dairy Mill has a market share of 66% in the branded
sector in Delhi where it sells 2 million litres of milk daily and undertakes its marketing operations through
more then 10,000 retail outlets. The atmosphere of the industry is very calm and health and is rich in
various varieties of flora. Mother Dairy is one of the largest liquid milk plants in Asia. Mother Dairy
sources its requirement of liquid milk from dairy co-operatives and producer institutions.

Mother Dairy’s objective 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. To ensure this
Mother Dairy operates such that the farmer gets 85% of the total cost of sales.

(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.

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. Mother Dairy is an IS/ISO 9002, IS 15000
HACCP and IS 14001 EMS certified organization. Moreover, its Quality Assurance Laboratory is
certified by National Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of
Science and Technology, Government of India.

Management System Policy Of The Company

Their commitment is to excellence. The evolving needs of their customers drive them to continual
improvement in their processes and systems. They are committed to:

 Apply state of the art technology and processes to enhance productivity that ensures quality at a
competitive price.
 Apply processes to clean production, pollution prevention and optimize resources utilization in all
operations.
 Follow food safety management system and apply HACCP (Hazard Analysis Critical Control
Points) principles to provide safe products to customers.
 Develop and empower own people for maintaining a vibrant working environment, which
encourages excellence.
 Company with appreciable regulations and legislations.

They pledge themselves towards providing quality and safe products under clean and hygienic
environment.
 PRODUCT RANGE

BRAND NAME TYPE OF PRODUCT ITEMS

MOTHER DAIRY Milk and its product Packaged Milk (Full Cream,
Standardized, Toned, Double
Toned Skimmed and Probiotic),
Butter, Dahi, Ghee, Cheese, Ice-
Creams, UHT Milk, Lassi &
Flavoured Milk.

SAFAL Fresh and frozen fruit and Fruits, vegetables, rice processed
item (jams, juices, ketchup, pulp,
vegetable products
etc.)

DHARA Edible oil Refined Vegetable Oil, Refined

Soybean Oil, Refined Sunflower
Oil, Refined Rice Bran Oil, Kachi
Ghani Mustard Oil and Filtered
Groundnut Oil.

Mother Dairy's range of products include the brands Mother Dairy (milk, milk
products, curd, ice cream, butter, dairy whitener etc), Dhara (range of edible oils)
and Safal (range of fresh fruits and vegetables, frozen vegetables, fruit juices).

Mother Dairy Foods Processing Ltd offers the following products: Mother Dairy
markets dairy products like Liquid Milk, Ice Creams, Flavoured Milk, Dahi, Lassi,
Mishti Doi, Ghee, White Butter, Table Butter, Cheese, SMP, Dairy Whitener, UHT
Milk, Dhara range of edible oils and the Safal range of fresh Fruits & Vegetables,
Frozen Vegetables and Fruit Juices at a national level, through its sales and distribution networks, for
marketing food items. Mother Dairy milk (Bulk Vended Milk) is fortified with vitamin A @2000 IU per
litre of milk as a part of social accountability. This program was started with the Mother Dairy, Delhi,
since February 1980and there after Mother Dairy is continuing this program on their own as a social
responsibility without having any financial assistance from the Government as well as since it is felt that
BVM is generally consumed by the middle / lower middle / poor strata of the society. It is also found that
the dietary practices adopted by these classes are deficient in Vitamin A. Mother Dairy sources significant
part of its requirement of liquid milk from dairy cooperatives. Similarly, Mother Dairy sources fruits and
vegetables from farmers / growers associations. Mother Dairy also contributes to the cause of oilseeds
grower cooperatives that manufacture/ pack the Dhara range of edible oils by undertaking to nationally
market all Dhara products.

AVAILABILTY OF PRODUCTS IN MARKET

Packaged MILK is available in 5 different varieties

1. Full Cream milk - milk fat 6%, SNF 9%

2. Standardised milk - milk fat 4.5%, SNF 8.5%
3. Toned milk - milk fat 3%, SNF 8.5%
4. Double toned milk - milk fat 1.5%, SNF 9%
5. Skimmed milk - milk fat 0.5%, SNF 8.7%
Other than packaged milk, Bulk Vended Token Milk is also available which is distributed through
vending machines installed in different regions of the city.

The high quality variant of milk is also available under the brand name ok ‘MILK’. It is thick &
completely natural, containing no preservations. It is referred with name of UHT (Ultra Heat Treatment)
Milk.
Mother Dairy also manufactures flavoured milk under the brand name of ‘CHILLZ’. It is available in
three flavours namely Kesar, Elaichi, Vanilla and Chocolate flavour.

Various MILK products offered by Mother Dairy

Various milk products of Mother Dairy are:

1. Mother Dairy Ghee

2. Mother Dairy Butter
3. Mother Dairy Cheese
4. Mother Dairy Dahi (Curd)
5. Mother Dairy Lassi
Except all these milk products Mother dairy also manufactures Ice Cream under two categories
namely CHILLZ and Mother Dairy Ice Cream.

PROBIOTIC

It is the latest product range launched by Mother Dairy. It mainly contains BB-12 friendly Bacteria which
results in better digestion and absorption of nutrients. It also contains probiotic fibre which also results in
better digestion. The various products in this category are:

1. b-Activ Probiotic Dahi

2. b-Activ Probiotic Lassi
3. b-Activ Curd
4. Nutrifit (Strawberry & Mango)
SAFAL

Range of fresh foods & vegetables, frozen vegetables, fruit pulps and fruit juices etc.

DHARA

It has a popular range of edible oils in different types as refined soya bean oil, refined sunflower oil and
filtered ground nut oil etc.
MILK PROCESSING PROCESS

Milk brought from regional collection centres

through insulated milk vans/trucks.

Milk is then tested on 15 quality standards

and is then stored in refrigerated silos
(vertical containers).

Milk is then heated and is then ‘Clarified.’

The Clarifier spins out (centrifugal force)
the physical impurities present in the
milk.

As the milk originates from different

animals it is ‘Standardized’ i.e. the total
fat and SNF percentages are brought to
desired levels as per the prescribed
norms.

Milk is then ‘Homogenized.’ In this process

the large fat globules are broken into tiny
fat molecules thus, giving milk a uniform
consistency and making it whiter in
appearance.
 Milk is then subjected to the process
of ‘Pasteurization.’ The milk is first
heated to 75°C for 15 seconds and
then is rapidly cooled to 4°C thus
killing all the pathogens in the milk,
without disrupting the taste and
nutritive content.
MILK PROCUREMENT

Milk is received through insulated road/rail tankers at a very low temperature thus retaining its freshness.
The milk then undergoes more than 15 stringent quality tests before it is stored in silo’s (vertical milk
storage tanks) for further processing. Mother Dairy sources its requirement of liquid milk from dairy co-
Milk is The
operatives and producer institutions. thenOperation
fortifiedFlood
with programme
various helps both farmers as well as the
Vitamins and Minerals depending on
city consumers. The programme ensures that the farmers get a fair price for their cow & buffalo milk and
the type of milk. It is then sent back
the consumers get best quality milksilos
to the at reasonable
or packaged.prices. Milk is received from farmer cooperatives
through insulated road/rail tankers at very low temperature in order to retain its freshness.

Milk Distribution

79 tankers in the morning and 75 tankers in the evening bring in milk from the regional collection centres.
After collection the same tankers are utilized for the delivery of the processed milk to the vendors and
outlets. Mother Dairy has over 820 Milk Distribution Outlets in the

National Capital Region. Each of these outlets place their demand by raising an invoice one day in
advance. The demand is also calculated using the ‘Calendar’ Scheme, in this depending on the pre-
calculated seasonal demands the outlets place their orders accordingly. In order to satisfy immediate
demand, 20 to 25 tankers are provided with a buffer stock of 500 litres each day so that they can be
mobilized to cater the demand in an area. To coordinate its operations all the tankers are equipped with
HAM radios.

Distribution Channels:
a) Token Distribution: Also, termed as “Lohe ki bhains” (metal buffalo), is an automated milk
vending machine.

b) COW: Container on Wheels or COW is a manual milk distribution program in which cycle-
rickshaws are employed for milk distribution.

c) Retailers: The packaged milk is distributed via the retailer network throughout the city.

Processing Of Milk

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. Mother Dairy is an IS/ ISO-9002,
IS-15000 HACCP and IS-14001 EMS certified organization. Moreover, its Quality Assurance Laboratory
is certified by National Accreditation Board for Testing and Calibration Laboratory (NABL)-Department
of Science and Technology, Government of India. Also here, the processing of milk is done through state-
of-the-art microprocessor technology which integrates and completely automates all functions of milk
processing and ensures high product quality, reliability and safety. The various stages of milk processing
are given below :

Clarification

The chilled milk from the silos goes to the clarifier after pre-heating. The clarifier spins the milk at a very
high speed, removing all dust particles that are invisible to the naked eye.

Standardization

Milk from different breeds of cows and buffaloes varies in its composition, it is standardized by raising or
lowering its fat and SNF percentage to a desired level, so as to deliver the milk to consumers as per
prescribed PFA norms.

Homogenization

In the process, the milk is subjected to a very high pressure due to which the large fat globules present in
the milk are broken into tiny droplets. The milk fat gets evenly distributed and milk appears whiter and
thicker. Milk is homogenized for consumers who do not like creamy layer on the top. Homogenization
improves palatability of milk.

Pasteurization

In this process, the milk is heated at 72 degrees for 15 seconds and then is rapidly cooled down to 4
degrees. This process kills all the pathogenic bacteria present in the milk making milk safe for
consumption. Pasteurization unlike boiling does not effect affect the nutritive value of the milk.

Pasteurization, named after French Scientist Louis Pasteur who invented the process was first applied to
milk by Dr. Soxhlet of Germany.

Fortification With Vitamin ‘A’

Homogenized Toned Milk during processing is fortified with vitamin ‘A’. The deficiency 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.

Ensuring Quality

After processing, milk is dispatched in hygienic and sterile milk tankers or packed in high grade material
and transported under cold chain to your nearest milk booth. Everyday, as part of quality assurance
process, milk samples are collected from milk shops randomly and are tested.
The above processes helps in maintaining stringent quality standards in order to ensure that the milk you
get is fresh, pure and healthy. Mother Dairy is an IS/ ISO 9002, IS 15000 HACCP and IS 14001 EMS
certified organization.

Mother Dairy, Delhi has been awarded ISO 9001:2000 (Quality Management Systems), HACCP, 2002
RvA (Food Safety Management Systems) and ISO 14001:2004 (Environmental Management Systems)
Certifications. Moreover, National Accreditation Board accredits its Quality Assurance Laboratory as per
ISO/IEC 17025:1999 for Testing and Calibration Laboratories, Department of Science and Technology,
Government of India.

Quality Control

Stringent quality control methodologies are employed in Mother Dairy.

a) The milk is tested for adulterations and quality at the time of collection from the farmers.
b) The Milk that comes from the collection points to the Mother Dairy plant is ensured to have a
temperature of not more than 7°C and is subjected to 15 product and quality checks.
c) The Milk quality is checked repeatedly after each processing phase and the temperature is
judiciously maintained less than 5°C always.
d) Before the milk leaves the plant for the delivery/distribution outlets the milk is tested again.
e) The temperature of milk in the delivery trucks is always maintained less than 7°C.
f) All the trucks that deliver milk have specified guidelines to bring back 100 litres of milk after
distribution. This is done in order to test the delivered milk and to ensure that the tankers are not
adulterated during distribution.
g) Since all the employed processing procedures are automated, no contamination by human hands
takes place.
h) To ensure milk freshness the collection and distribution points are always chosen such that the
travel time between them is always less than 36 hours.
Distribution Of Mother Dairy Products :

Mother Dairy markets approximately 2.8 million liters of milk daily in the markets of Delhi, Mumbai,
Saurashtra and Hyderabad. Mother Dairy Milk has a market share of 66% in the branded sector in Delhi
where it sells 2.3 million liters of milk daily and undertakes its marketing operations through around
14,000 retail outlets and 845 exclusive outlets of Mother Dairy.
The company’s derives significant competitive advantage from its unique distribution network of bulk
vending booths, retail outlets and mobile units. Mother Dairy ice creams launched in the year 1995 have
shown continuous growth over the years and today boasts of approximately 62% market share in Delhi
and NCR. Mother Dairy also manufactures and markets a wide range of dairy products that include
Butter, Dahi, Ghee, Cheese, UHT Milk, Lassi & Flavored Milk and most of these products are available
across the country.

The company markets an array of fresh and frozen fruit and vegetable products under the brand name
SAFAL through a chain of 400+ own Fruit and Vegetable shops and more than 20,000 retail outlets in
various parts of the country. Fresh produce from the producers is handled at the Company’s modern
distribution facility in Delhi with an annual capacity of 200,000 MT. An IQF facility with capacity of
around 75 MT per day is also operational in Delhi. A state-of-the-art fruit processing plant of fruit
handling capacity of 120 MT per day, a 100 percent EOU, setup in 1996 at Mumbai supplies quality
products in the international market. With increasing demand another state-of-the-art fruit processing
plant has been set up at Bangalore with fruit handling capacity of around 250 MT per day.

Management System Policy

1. Apply state of the art technology and processes to enhance productivity that ensures quality at
competitive price.
2. Apply processes for clean production, pollution prevention and optimize resource utilization in all
operations
3. Follow food safety management system and apply HACCP (Hazard Analysis Critical
Control Points) principles to provide safe products to customers
4. Comply with applicable regulations and legislations.
5. Mother Dairy pledge to provide quality and safe products under clean and hygienic
environment.

The following steps are taken and ongoing efforts are continuously made as per "Management
Systems Policy"-

 Minimize Waste generation

 Conservation of resources
  Use of renewable energy
 Recycling & re-use

As far as the environment management is concerned it has the following arrangements-

Solar Panels

In an effort to conserve fuel, Mother Dairy utilizes the solar energy to preheat the water going
into the boilers. This also minimizes the pollution caused by burning of fuels like coal.oil etc.

Rainwater Harvesting

For maintaining groundwater level it has installed the plant in the premises.

Effluent Treatment Plant

The water used for cleaning the equipment and tankers is treated at the effluent plant in the dairy
before being discharged into the sewage system.

Energy Management Policy

Mother Dairy Food Processing Ltd. commit themselves for optimum utilization of energy in all
manufacturing activities as well as in office by:

 Monitoring closely and controlling the consumption of various forms of energy through
an effective Energy Management System.
 All round participation of all employees and educating them about energy conservation.
 Maximum utilization of renewable energy sources.
 Upgradation of processes, technology and use of energy efficient equipments.
 Optimum utilization of plant capacity.
 As a part of energy conservation and environment protection commitments, reduce the
specific energy consumption.

As part of their energy conservation policy they saved Rs. 55 lakh of energy as per the current
data with the help of 1oo% participation from the employees.
They also have a Total Productive Maintenance (TPM) for distribution which says “to
eliminate accidents and breakdowns and increase the overall economic effect of all the resources
by developing a system to enhance the knowledge and skill of employees, thereby increasing
productivity and reducing costs.”The main policy which focuses the customer is the Service
along with Quality policy which states that the customer should be served in the best possible
manner and should also get the quality up to the mark.

Enhance 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.

PROCESS DESIGN AND PLANT LAYOUT

Regional milk procurement centers

Milk procurement and testing lab

Refrigerated storage silos

Clarification unit

Standardisation unit

Homogenization unit

Pasteurization unit

Milk fortification unit

Packaging unit

Refrigerated storage silos

Ice cream manufacturing unit

Dairy product manufacturing

Sent to various distribution network

The various departments in Mother Dairy Patparganj milk plant were:

1. Manufacturing Department
2. Production Department
3. MIS Department
4. Utility Department
5. Safety, Health & Environment Department
6. Thermal Department
7. Electrical Department
8. Automation Department
9. Procurement Department
10. Consumer Information Department
OBSERVATION DURING THE VISIT

The most important observation during the visit was the hygiene factor present there. The
premises and the plant area was clean, the employees have the orders not to touch milk with bare
hands and they get their machines and silos cleaned every weekend to ensure that the milk
produced is safe for the customers.

Moreover, they have a specific TPM (Total Productive Maintenance) policy for everything like
for distribution, energy conservation, environment etc. and KAIZEN policy for all the employees
which they have to follow.

They have these policies as strict code of conduct as they are manufacturing milk which requires
purity and hygiene and to give the best to the customers the company needs to do this. That is
why their policies can be seen at most of the places in the premises.

My Learning From The Visit

It was a very Fruitful trip not only from the industry point of view but also from the educational
point of view. We met an employee of the company who was working for the past 31 years of his
life and he seemed to be quiet happy by his commitment. Some of the questions that he answered
were an eye opener to us, like:

 How should milk be consumed?

 When should milk be consumed?
 Why milk is important to us?
 Why is it important to clear customer doubts?

Apart from these doubts that we all had in our mind he gave a Piece Of Mind regarding
Management and shared some of his learning from past 31 yrs of his life which in itself was a
great experience. He showed us a small presentation on How Mother Dairy has contributed
towards Operation Flood. All in all it was a wonderful experience to visit and observe a
corporate scenario for the very first time.
 INDIAN DAIRY INDUSTRY

Today, India is 'The Oyster' of the global dairy industry. It offers opportunities galore to

entrepreneurs worldwide, who wish to capitalize on one of the world's largest and fastest

growing markets for milk and milk products. A bagful of 'pearls' awaits the international

dairy processor in India. The Indian dairy industry is rapidly growing, trying to keep pace

with the galloping progress around the world. As he expands his overseas operations to India

many profitable options await him. He may transfer technology, sign joint ventures or use

India as a sourcing center for regional exports. The liberalization of the Indian economy

beckons to MNC's and foreign investors alike.

India’s dairy sector is expected to triple its production in the next 10 years in view of

expanding potential for export to Europe and the West. Moreover with WTO regulations

expected to come into force in coming years all the developed countries which are among big

exporters today would have to withdraw the support and subsidy to their domestic milk

products sector. Also India today is the lowest cost producer of per litre of milk in the world,

at 27 cents, compared with the U.S' 63 cents, and Japan’s $2.8 dollars. Also to take

advantage of this lowest cost of milk production and increasing production in the country

multinational companies are planning to expand their activities here. Some of these milk

producers have already obtained quality standard certificates from the authorities. This will

help them in marketing their products in foreign countries in processed form.

The urban market for milk products is expected to grow at an accelerated pace of around

33% per annum to around Rs.43,500 crores by year 2015-16. This growth is going to come

from the greater emphasis on the processed foods sector and also by increase in the

conversion of milk into milk products. By 2015-16, the value of Indian dairy produce is

expected to be Rs 10,00,000 million. Presently the market is valued at around

Rs7,00,000mnBackground

India with 134mn cows and 125mn buffaloes, has the largest population of cattle in the

world. Total cattle population in the country as on October'00 stood at 313mn. More than

fifty percent of the buffaloes and twenty percent of the cattle in the world are found in India

and most of these are milch cows and milch buffaloes.Indian dairy sector contributes the

large share in agricultural gross domestic products. Presently there are around 70,000 village

dairy cooperatives across the country. The co-operative societies are federated into 170

district milk producers unions, which is turn has 22-state cooperative dairy federation. Milk

production gives employment to more than 72mn dairy farmers. In terms of total production,

India is the leading producer of milk in the world followed by USA. The milk production in

1999-00 is estimated at 78mn MT as compared to 74.5mn MT in the previous year. This

production is expected to increase to 81mn MT by 2000-01. Of this total produce of 78mn

cows' milk constitute 36mn MT while rest is from other cattle.

While world milk production declined by 2 per cent in the last three years, according to FAO

estimates, Indian production has increased by 4 per cent. The milk production in India

accounts for more than 13% of the total world output and 57% of total Asia's production. The

top five milk producing nations in the world are India ,USA, Russia, Germany and France.
Although milk production has grown at a fast pace during the last three decades (courtesy:

Operation Flood), milk yield per animal is very low. The main reasons for the low yield are

Lack of use of scientific practices in milching. Inadequate availability of fodder in all

seasons. Unavailability of veterinary health services.

 CHAPTER-4
DATA ANALYSIS
 DEMAND ANALYSIS
Total HYDERABAD Population 75, 45,000

Total Population who consume dairy 5658750

products regularly

High Income Population (Annual Income > Rs. 10, 00,000) 707340

Mid - income Population (Rs.1, 50,000 < Annual Income < Rs.10, 00,000) 2724520

Low income Population (Annual Income < Rs. 1, 50,000) 2226890

During the survey it was found that:

 Milk, Curd, Milk Powder, Ghee and Butter Milk were consumed by all class of
consumers

 Paneer, Condensed Milk, Flavored Milk and Butter were majorly consumed by middle
and high income groups

 Cheese and Milk sweets were majorly consumed by high income group though there was
a substantial amount of middle income group consumers too.

 The demand has been estimated with the above findings

 The deviation in values between retailers and consumers demand may be due to the fact
that people from other income groups may also buy those products.
 The total demand estimated for various MOTHER DAIRY PRODUCTS are as follows:

particulars Liquid Curd Paneer Milk Ghee Cheese Condensed Milk Flavored Butter Butter
Milk powder Milk Sweet Milk Milk

Through 3216.9 1552.4 274.0 762.2 1927.9 303.8 227.8 94.7 364.0 247.6 553.4
Retailer’s
Survey
(Rs.lakhs)

Through 6673.7 1307.2 391.9 829.4 2085.3 287.24 260.6 99.2 496.1 292.7 726.2
Consumer’s
Survey
(Rs.lakhs)

The total losses incurred in a week’s time in the three distributor’s area are as follows:

Products Butter Cheese Flavored Milk Curd Butter Total

Milk Powder Milk

Losses Rs.49056 Rs.26271 Rs.25118 Rs.117442 Rs.25956 Rs.6632 Rs.250475

Incurred

General dissatisfying factors for the retailers and consumers of MOTHER DAIRY have
been stated and recommendations and their ways of implementation have been given. They can
be implemented and many of the issues can be resolved. It will be helpful in strengthening the
bond with retailers and increase the brand equity of MOTHER DAIRY .
 SCOPE FOR FUTURE IMPROVEMENTS

MOTHER DAIRY believes in low inventory and JIT delivery system for various
reasons. As of now the replenishment time for retailers in HYDERABAD is one week and for
certain retailers who are close to the distributors it is 3-4 days. MOTHER DAIRY can work on
reducing the replenishment time to 2-3 days for all the retailers. This will address various issues
and result in better profitability.

FINDINGS

FIGURE I: DEMAND OF VARIOUS PRODUCTS IN TERMS OF WEIGHT

LIQUID MILK
CURD/DAHI
PANEER
MILK POWDER
GHEE
CHEESE
CONDENSED MILK
FLAVOURED MILK
BUTTERMILK
BUTTER

FIGURE II: POTENTIAL SALES REVENUE FROM VARIOUS PRODUCTS IN TERMS OF

RS.LAKHS
 LIQUID MILK
CURD/DAHI
PANEER
MILK POWDER
GHEE
CHEESE
CONDENSED MILK
FLAVOURED MILK
BUTTERMILK
BUTTER

FIGURE III: NUMBER OF RETAILERS STOCKING VARIOUS PRODUCTS

LIQUID MILK
CURD/DAHI
PANEER
MILK POWDER
GHEE
CHEESE
CONDENSED MILK
FLAVOURED MILK
BUTTERMILK
BUTTER
ANALYZING FIGURE I, II, III:

 From fig. I it is evident that Liquid milk has the highest demand in terms of volume of
sale (70%) followed by curd (12%) and Ghee (5%). The least ones are milk powder (2%)
and butter (1%).

 From fig. II it is seen that in terms of potential sales revenue Liquid milk has the larger
part of the pie (34%), followed by Ghee (20%) and curd (16%). The least ones in terms
of volume follow the lead, whereby milk powder can contribute (8%) and butter (6%) of
the potential sales.

 This discrepancy between the volume of demand and potential revenue is due to price of
the products. For eg:1 liter of liquid milk is just rs.26 but one liter of ghee is around
rs.200

 From fig. III we get the preference of the retailers to stock various products. Here Milk
Powder has the highest preference (14%), followed by Ghee (13%) and Butter (12%).
Curd (10%) and Liquid Milk (8%) trails behind them

From the above points it can be suggested that Ghee needs more attention as it is the cash
cow product for MOTHER DAIRY in HYDERABAD. Its demand in terms of volume is less
but its potential sales revenue is high and is preferred by most of the retailers as MOTHER
DAIRY Ghee is priced relatively low and is preferred by the customers for the quality it
delivers. MOTHER DAIRY ya and Sagar are the most preferred brands of Milk Powder by
retailers compared to other products of MOTHER DAIRY and it enjoys a better market share
than its competitors like Everyday by Nestle etc. MOTHER DAIRY has already utilized this
opportunity and is tapping the potential market for more revenues. Like Ghee the small retail
packs of MOTHER DAIRY ya has a huge demand. Customers from lower social strata prefer the
small retail packs of milk powder than liquid milk, which needs to be treated to keep it fresh.
 Followed by these two products it is preferable for MOTHER DAIRY to concentrate on
curd which is also a potential revenue generator and preferred by retailers. Major competitor in
this market is Nestle and Britannia. Customers of MOTHER DAIRY curd are from the middle
class and upper middle class. The lower class people do not prefer branded curd packs since they
are relatively expensive. So the target customer for MOTHER DAIRY , Nestle and Britannia are
the same class of people. The only glitch MOTHER DAIRY faces in this market is delivery of
fresh stocks. The consumer tends to pick up Nestle curd after comparing MOTHER DAIRY
curd’s date of manufacturing.

POTENTIAL LOSSES INCURRED

Losses incurred in the following PRODUCT’s are quantified: Butter, Cheese, Flavored Milk,
Milk Powder, Curd and Buttermilk/ Lassie – in the Microsoft Excel Sheet MOTHER DAIRY
Losses Quantified.

MOTHER DAIRY incurs loss in potential business majorly due to three reasons:

 Delay in supply and fulfilling the entire order

 Damaged and expired products

 Inability to meet unplanned demands of the retailers

The salesperson of the distributors works in a one week cycle i.e. order is taken from the
retailer on the first day and goods are delivered on the second day. The salesperson covers all the
shops under his area within a week’s time and the cycle continues. Some retailers face problems
like delay in supply; supply of damaged or expired products and the inability to meet unplanned
demands at least once a month due to which they place lesser orders which is much below their
potential to sell within a week. To be on safer side, retailers appreciate this practice in order to
minimize their losses.
 When the order placed is less they are able to get their entire order, the number of
damaged or expired product which they tend to receive is minimal and they do not mind their
inability to meet unplanned demands which occurs during festival seasons as they suffice the
demand with competitor’s products.
 Potential loss for MOTHER DAIRY in sale of MOTHER DAIRY
PRODUCTS**
(Loss in one week in the area of three distributors)

Order Loss due to* Loss due to* Loss due to* Total sales* Total amount lost
met* Delayed Damaged / Unplanned lost (a+b+c) in a week by 3
properly supply (a) Expired (b) demand (c) distributors (Rs.)

Butter 82.22% 1.44% 16.33% 0% 17.78% 49056

Cheese 66.75% 5.79% 24.67% 2.78% 33.24% 26271

Flavored Milk 54.61% 2.00% 42.90% 0.47% 45.38% 25118

Milk Powder 68.88% 5.82% 22.44% 2.84% 31.11% 117442

Curd 52.44% 2.08% 45.48% 0% 47.56% 25956

Butter Milk 57.88% 2.53% 39.58% 0% 42.11% 6632

TOTAL Rs. 250475

*As a percentage of sales potential.

**Monetary loss is given in the Microsoft Excel sheet – MOTHER DAIRY Losses Quantified.

FIGURE IV: COMPARISON OF POTENTIAL LOSSES IN VARIOUS PRODUCTs

 Butter
Cheese
Flavored Milk
Milk Powder
Curd
Butter Milk

Loss Due to Damaged / Expired Products:

In the losses thus quantified it is obvious that the loss due to damaged / expired products is
huge. This happens in two stages:

STAGE I:
 APPENDICIES
(The questionnaires were provided by MOTHER DAIRY )

APPENDIX - 1

SURVEY FOR MOTHER DAIRY PRODUCTS QUESTIONNAIRE FOR RETAILERS

1. What kind of milk & milk products do you sell?

product Avg. sale per Whether If Packaged Rate (Rs./pack)

week Packaged or specify Brand & Margin (%)
Loose

Liquid Milk

Curd/Dahi

Paneer

Milk Powder

Ghee

Cheese

Condensed
Milk

Milk Sweets

Flavored Milk

Butter Milk

Ice- cream

Butter

Other
 2. Are these products delivered at your doorstep?

 Yes

 No

If yes, who delivers the Products?

 Company directly

 Distributor

 Whole-seller

 Buying on own from market

 Any other (please specify) ____________

3. Are you satisfied with the way these products are delivered to you?

 Yes

 No

If no, how would you like it to be delivered?

4. Are you satisfied with the quality of products you are selling currently?

 Yes

 No

5. Are you satisfied with the quality of service provided by company/ distributor?

 Yes

 No

If no, what are the problems with quality of service?

6. What are the schemes/ promotion support provided by the company?

 7. Any suggestions for improvements in ‘MOTHER DAIRY ’ products?

Retailer Information

Name of the Establishment:

Type of Establishment:

Contact Person:

Address & Phone No.:

APPENDIX - 2

SURVEY FOR MOTHER DAIRY PRODUCTS QUESTIONNAIRE FOR CONSUMERS

1. What kind of milk do you consume:

 Pouch

 Loose

If Pouch

1. Brand name

2. Variant (Full-Cream, Std., Toned DTM, Skimmed, Cow Milk)

3. Quantity per day

4. Rate of milk (Rs./Lit.)

If loose,

 Quantity per Day

 Rate (Rs./ Lit.)

 2. What is the mode of purchasing of milk?

 Home delivery

 Retailer

 Others (Please Specify)

3. What is the Consumption of other Milk Products?

Product Consumption Whether made If brought Rate(Rs./pack)

per day/per at home or from the
week brought from market, specify
the market the brand

Curd/Dahi

Paneer

Milk Powder

Ghee

Condensed Milk

Milk Sweets

Flavored Milk

Buttermilk/Lassi

Ice cream

Butter

Other(Pl.
specify

4. Are you satisfied with the availability of above products in your neighbourhood?

 Yes

 No
If no, how would you like product to be available?

5. Are you satisfied with the Quality of product you are using currently?

 Yes

 No

If not, what are the problems with its quality?

6. Are you satisfied with the Price of product you are using?

 Yes

 No

If no what must be the price?

7. Any suggestions for improvements in ‘MOTHER DAIRY ’ products?

Respondent Information

Name:

Age:

Educational Qualification:

Occupation:

Total members in family:

Average Income of the Family:

Complete Address:
 SUGGESTIONS

Harnessing the ERP system of MOTHER DAIRY :

MOTHER DAIRY is utilising IT to optimise efficiency and production at each point in

its supply chain through a customised ERP package called Enterprise-wide Integrated
Application System (EIAS) which has been designed in such a way that it can be plugged into
various points of the supply chain for seamless information exchange. Through this, the
federation has also connected zonal offices, its Guwahati regional office, as well as major
member dairies/milk unions and its own unit—Mother Dairy through VSAT. All sales offices
and wholesale distributors of the organisation have also been connected through TCP/IP internet
mail accounts for timely exchange of information.

MOTHER DAIRY gets the secondary sales data from the distributors on a 7-day
frequency as the distributor places his order to the stock point. But in the FMCG industry,
distribution is the key to success and MOTHER DAIRY cannot afford to lose its business due to
delay in supply and not able to meet the exact demand. The constant challenge is to track the
movement of products at the distributor and retail levels and ensure that retail store shelves are
refilled as quickly as possible. So there is need for the secondary sales data to reach MOTHER
DAIRY at a higher frequency. In short, the company needs a software package to capture
secondary sales data or distributor sales data and feed it into its ERP system. The aim is to
enhance the responsiveness of the company’s distribution network. IBM along with SAP has
implemented a state-of the-art ERP system for MOTHER DAIRY ltd. just recently. MOTHER
DAIRY can leverage the internet to find a solution and minimize its losses. Apart from using the
TCP/IP mail accounts for timely exchange of information it needs to connect all the
HYDERABAD distributors with the stock point in HYDERABAD and with the manufacturing
unit which supplies HYDERABAD’s stock point for exchange of inventory level information.
This will help the stock points to anticipate the demand of the distributors beforehand. For which
it requires an automation system which is already available in the ERP system developed by
IBM and SAP. This can be taken to internet so that it can be a multi-user and multi-company
product, in case the finished goods are received from different plants of MOTHER DAIRY .
Wipro Ltd. can develop a single virtual office on the internet that could be accessed by
MOTHER DAIRY distributors, the stock point and the manufacturing units. To make the entire
system work like a virtual office, it is required to integrate SAP system compatible with multiple
platforms and operating systems, such as Microsoft windows or Unix, APO module (Advanced
planner and optimizer, a software) and BW(Business information warehouse). Preferred
architecture is to have the intermediate BW system that functions as a data repository for the
APO-BW system. The intermediate system does provide some real advantages, in that it is easier
to migrate historical data from the BW to APO-BW system as the host and target are more
similar.

The newest version of the suite is MySAP 2007 or SAP ECC 7.0.It is advisable for
MOTHER DAIRY to go for the latest version i.e SAP ECC 7.0. This ensures that there is a
constant flow of data between these systems. SAP allows the IT supported processing of a
multitude of tasks, accruing in a typical company
By this way the HYDERABAD distributors, the stock point in HYDERABAD and the
manufacturing unit which supplies HYDERABAD’s stock point will be connected. The
distributors need to log on to the website once daily and upload their sales data for that day.
The system can be customized to automatically replenish stocks, which is a big step
towards precise streamlined inventory management. Stock norms for every distributor can be fed
into the ERP system. Comparing the sales on a day with the norm, the program generates a
dispatch order for the quantity needed to maintain the required levels of inventory, thereby
eliminating the opportunity for dumping to a large extent.
 \BIBLIOGRAPHY

Kothari, C. R. (2004), Research Methodology, 2nd edition, New Age International Ltd.

Arnold Tony .J.R, Chapman .N Stephen & Ramakrishnan .R.V, Introduction to Materials
Management, 5th edition, Pearson Education

Pingali, Venugopal, Sales and Distribution Management an Indian Perspective, 1st edition, 2008,
Sage Publications India Pvt.Ltd.

Goldratt.M Eliyahu, Eshkoli Ilan & Brown .L Joe, Isn’t It Obvious?, 2010, Productivity &
Quality Publishing Pvt.Ltd

Asian Case Research Journal, Vol.6, Issue 2, 205-239 (2002)

“Demography (PDF) Second Master Plan –II” by HYDERABAD Metropolitan Authority

www.supplychain.org

www.managementparadise.com