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Report on
MINI DAIRY
Milk Pasteurizing Unit
Submitted To
Submitted By
Muhammad Adnan
Faisal Muhammad Ibrahim
Syed Imran Hussain
Anjum Siddiqui
Mirza Ali
Date of Submission
November 20, 2010
ACKNOWLEDGEMENT
Report of this nature requires a great deal of effort. We owe a debt of gratitude to those
people who aided us in the compilation of this report.
Firstly, we thank Almighty Allah for giving us the strength to compile this report. We
specially express our gratitude to our course facilitator Mr. Muhammad Afaq Mazhar for
giving us the opportunity and confidence to prepare such kind of report. Without his
support, valuable information and continuous guidance and direction, compilation of this
report would not have been possible.
The preparation of this report has been most informational and rewarding, it truly helped
us to know and realize the magnitude and importance of operations functions.
Sincerely,
Muhammad Adnan
Faisal Muhammad Ibrahim
Syed Imran Hussain
Anjum Siddiqui
Mirza Ali
INTRODUCTION ……………………………………………………………………………. 5
MISSION STATEMENT……………………………………………………………………... 15
HR STRATEGY ………………………………………………………………….………….. 27
REFERENCES …….…………………………….…………………………………………... 31
Executive Summary
Our group has chosen to work on Mini Dairy Pasteurizing Unit which is most important
category as Milk is the very basic need of daily life. We have studied and plan the entire
business operations and make a comprehensive report on starting a business on Mini
Dairy Pasteurizing Unit.
Pakistan is an agriculture country and our basic source of earning is agriculture food.
Pakistan is the fourth largest producer of milk in the world with an average of 34 billion
litres of milk produced according to various estimates in year 2009 but there still is a large
room for improvement which can be seen by a comparison with the US and other
countries. The livestock and agriculture market is untapped and is expected to grow an
additional 3 billion litres in the next few years at a growth rate faster than most sectors
and 30 percent by 2015.
The company is planned to establish a unit in sub-urban areas of any major city and we
have chosen surrounding areas of Karachi such as Port Qasim / Landhi as it will fulfill our
basic requirement of set up a dairy plant such as Road, Electricity, Water, Gas,
Telephone etc and would be very feasible to collect the Raw Milk in near sub-urban areas
i.e. Bhens Colony and other rural areas through Indus High way.
Milko is the brand name of our product and it will be packed in 250ml, 500ml and 1000ml
as per current need of the customers. It would be packaged Long Shelf Life Milk with the
process of Ultra High Temperature (UHT) which can give expiry life near about six (06)
months.
This project will cost us around 27.5 million and 50% will be Debt from bank. Machinery
will be imported from India as it has the most advanced technology in dairy sector
through their representative office in Karachi – Pakistan. As per our expectation Pay back
period is near about 2.77 years.
1. Introduction
Milk is considered as one of the most nutritionally complete, natural liquid food. It is rich
in high quality protein, essential minerals, and vitamins that are beneficial for human
health. Along with all these essential nutrients, milk also contains a number of micro-
organisms. Most of these bacteria, present in milk are generally harmless. In fact, some
of them are beneficial for us in some way or the other. But several factors such as the
health of the animal, improper handling, pollutants from air and water etc. can
contaminate raw milk and make it potentially dangerous.
Milk is a valuable nutritious food that, if untreated, will spoil within a few days. However,
there are a number of preservation techniques that can be used at a small scale to
extend its shelf life by several days, weeks or months. Some of these processing
methods also produce foods that have different flavors and textures, which can increase
the value of the milk when these products are sold. This Technical Brief gives an
overview of the types of dairy processing that are possible at a small scale of operation
Pakistan is the world’s fourth largest milk producer with an annual milk production of 34
billion liters. The milk economy contributes an estimated 11 percent to Pakistan’s GDP
but most of it, around 97per cent, is informal. There has been a long awaited need for
initiating mega projects to bridge these gaps and to convert the 97% informal economy
into an organized one with a formal workforce.
Following are the figures of Pakistan milk producing capacity & its usage extracted from
the Tetra Pack’s site.
The annual milk production of 33.6 billion liters in Pakistan is shared between a 71%
share for the rural economy and a much smaller urban share of 29%. Only 4% of the total
production of milk is processed and marketed through formal channels. For the other
96%, a multi-layered distribution system of middlemen has evolved to supply milk.
Despite only a small percentage (4%) of milk being processed, the (UHT) market is
growing at a steady rate of 20% a year.
• Only 0.52 Billion liters UHT and 0.05 Billion liters pasteurized milk is available in
the country.
• Cooling fresh milk to extend the shelf life by a day or two, or freezing it (also
making ice cream).
• Heating milk to destroy both contaminating micro-organisms and naturally
occurring enzymes that change the flavour of milk.
• Making the milk acidic to slow down or prevent the growth of spoilage bacteria or
food poisoning bacteria (this also changes the milk to a curd).
• Reducing the amount of water in milk products to slow down or prevent the growth
of bacteria. This may be combined with adding sugar (to make milk confectionery)
or salt (in cheese or butter production), both of which also prevent bacteria from
growing.
1.2.1 Cooling
Cooling does not destroy bacteria or enzymes but it slows down their activity. Cooled raw
milk keeps its quality for a few days before it is processed. Milk products such as yoghurt,
cheese, butter and pasteurized milk are also cooled to ensure they have the required
shelf life for distribution to shops and retail storage. At the smallest (micro-) scale of
operation, a refrigerator set at 4-5oC can be used to cool milk, but most dairy processors
use a milk cooler (Figure 3) or cold store to cool milk in bulk before it is processed.
Finished products should be stored in a separate dispatch store at 4oC +/- 2oC, or for
frozen milk and ice cream, frozen in a freezer operating at below -18oC.
1.2.2 Heating
There are regulations in most countries that specify the time and temperature that milk
should be heated to pasteurize it. Most specify that milk should be heated to 63oC for 30
minutes higher temperatures and shorter times are used in larger commercial operations
but the equipment needed to do this is more expensive.
1.2.3 Acidifying
Acid is produced in milk by the growth of certain types of harmless bacteria called 'lactic
acid bacteria'. They are normally present in milk and are also used as starter cultures in
the production of yoghurt (Technical Brief: Soured milk and yoghurt). Lactic acid bacteria
convert milk sugar (lactose) into lactic acid, which increases the acidity of the milk and
prevents the growth of harmful bacteria. The removal of lactose means that these
products can be eaten by people who suffer from lactose intolerance. The acid also
creates the characteristic curd of yoghurt. The shelf life is extended by several days and
the changes in flavour and texture make this a popular product in most regions.
Separating milk fat from the watery part of milk produces cream. This can be made as a
product for sale, but care is needed because there is a greater risk of cream causing food
poisoning. Production of cream is not recommended except by the most experienced
smallscale dairies. However, cream is also used to make butter and ghee which have
lower moisture contents and are much safer. When butter is prepared and stored
correctly, it can have a shelf life of several months. Clarified butter (ghee) also has a shelf
life of several months. Both are high-value products and have a good market in most
countries. In cheese-making, a curd is produced and the watery part of milk is separated
as ‘whey’. ‘Cottage’ cheese or simple curd cheeses are relatively easy to make at a small
scale, but hard cheeses require greater levels of investment, and more skill and
expertise. It is recommended that market research is undertaken to find which types of
cheese are popular before contemplating production, because in some areas the demand
for hard cheese is small. Training in production should then be obtained from an
experienced cheese-maker. Another process is boiling milk to evaporate water and
produce a brownish gel that is eaten as a snack food or sweet. The product has a shelf
life of a few weeks and may have ingredients such as sugar, colour, spices, fruits or nuts
added to give a variety of products
The majority of Pakistani consumers continue to use loose milk. However, in urban areas
the trend is reversing and processed milk consumption is growing more than 20% per
year. Of the different types of processed liquid milk, UHT milk packs are by far the most
popular products
In 2007, dairy producers in Pakistan realized that consumers were buying small
packages (250ml) of plain white milk for use as creamer in the country’s most popular
beverage: tea. Consumers preferred the richer taste of tea made with UHT milk, and
smaller packages were more affordable. So producers began developing and marketing
special tea creamer recipes in 200ml packages. In addition to improving the taste profile
of tea, the new size also made tea creamer more affordable than plain white milk. Today,
a tea creamer represents more than 25% of the LDP market which will achieve a CAGR
of 28% from 2009 to 2012, according to Tetra Pak.
2. Project Brief
Mini Dairy – Milk Pasteurizing Unit
Mini dairy is a small scale-milk-processing unit where milk is pasteurized and packed into
aseptic carton boxes. Mini dairy is an economically a viable and financially a profitable
project.
2.2 Pasteurization
Pasteurization is the process of heating the milk up to 70ºC for a certain period of time
and then cooling it to 4ºC. The heat treatment must guarantee the destruction of
unwanted pathogenic microorganisms and should not affect the taste & nutritional value
of the milk. The commercial significance of pasteurizing milk is to increase the shelf life of
the milk.
For pasteurized milk, a standard formula of 3.5% fat contents and 9.5% SNF (solids not
fat) have to be maintained according to law. The fresh milk has 4 to 6% fats. The extra fat
contents are removed through cream separator during milk processing. After cream
separation, some milk powder is mixed and homogenized to make standardized milk of
3.5% fat and 9.5% SNF. This extra milk cream is sold to the sweet makers fetching
higher prices.
The first, most common form of milk pasteurization is HTST, which stands for High
Temperature Short Time. This process involves heating milk to 72-75 degrees Celsius
with a holding time of 15-20 seconds before it is cooled. Along with correct cooling,
pasteurisation will supply milk with longer shelf life. With proper chilled distribution,
pasteurised milk has a shelf life of 5-15 days.
The second form of milk pasteurization is UHT, which stands for Ultra High
Temperature.
UHT (ultra-heat treated) is to kill all the microorganism in the milk at a temperature as
high as 135 to 152 centigrade in order to give the milk a longer shelf life.
VISION Statement
customers satisfaction“
MISSION Statement
3. Design of Goods
UHT Pasteurized milk is a marketable product and its demand is increasing with the
increase in awareness among the consumers. Following are the reasons for increasing
the demand of processed milk:
• Mass sale of adulterated milk by Milkmen is letting the urban low-income segment
to shift from home delivered adulterated milk to self-purchased pasteurized milk
from branded companies.
• People are getting more quality and health conscious & they prefer branded food
items for both quality & status reasons
• The way milk is treated at the retail shops, people are attracting towards
processed milk
• Influence of media due to which people are moving towards packaged milk
It is pure in terms of essential ingredients, safe from the harmful bacteria and fresh
because it is a healthy and nutritious drink.
Reason for choosing MILKO as a brand name is that our milk could be use for all
purposes and letter “O” mentioned in the name represent “all purposes”.
Product % of Production
1000 ml 30%
500 ml 30%
250 ml 40%
• 250ml Rs.20/-
• 500ml Rs.37/-
• 1000ml Rs.70/-
4. Managing Quality
As we mentioned in our Vision statement, we serve and meet customer satisfaction
which surely impossible without focusing on Quality that’s why we have highlighted our
Mission statement that our focus in quality and consumer needs. We will briefly describe
how we will ensure the quality in our product.
The room should be hygienically designed and easily cleaned to prevent contamination of
products by insects, birds, rodents or micro-organisms. A panelled ceiling should be fitted
rather than exposed roof beams, which would allow dust to accumulate that might
contaminate products. There should be no holes in the ceiling or roof, and no gaps where
the roof joins the walls, which would allow birds and insects to enter.
4.3 Equipment
All dairy equipment should be designed and constructed so that it can be easily
dismantled for cleaning (e.g. there should be no blank ends to pipework that would
harbour stagnant milk). Mixing bowls, boiling pans etc. should have a smooth internal
surface without corners, and all welds should be ground to a smooth finish. Ideally, all
dairy equipment should be made from stainless steel, but alternatives include polished
aluminium, or food grade plastic for containers and equipment that are not heated. Mild
steel cannot be used because it will rust and contaminate products, and brass, iron or
copper cannot be used because they promote rancidity in milk fats. The layout of
equipment within the room (Figure1) should allow food to move between different stages
in a process without the paths crossing. This reduces the risk of contaminating finished
products with raw milk. There should also be sufficient room behind equipment for
cleaning.
Dairy processing creates large volumes of liquid effluents that contain milk fat, lactose
and protein, and this is highly polluting. Some wastes (e.g. whey from cheese-making)
should be used as animal feed or to make drinks or whey cheese, rather than being
discarded down the drain. Local regulations may require special treatment of dairy
effluents and producers should consult local authorities to plan proper effluent disposal. If
mains drainage is not available, at small scales of production a soak-away should be
constructed in a place that cannot contaminate drinking water supplies or pollute local
streams or lakes.
5. Process Strategy
As we know a process strategy is an organization’s approach to transform resources into
goods and to find out a way to produce goods that meet customer requirement and
product specifications within cost. It also has long term effect on efficiency and production
as well as flexibility, cost and quality of goods produced.
We have decided to adopt Product Focused Strategy in which all operations will be
proceeding one by one. It is also called Line Flow Production or Continuous production.
In this strategy facilities are organized by product which is give smooth operation flow.
5.1 Process
In a Pasteurizing unit we have set of procedures for processing of Milk which will give
desire output.
Milk will be received through any contractor / agent or directly milk form houses will be
immediately forwarded to cold storage house for storing. As per routine procedure
Laboratory technician will test and measure this milk for quality assurance purpose. If it
would be appropriate for human health it will be stored for further process otherwise it will
be rejected and return to form house or destroyed as agreed.
5.1.2 Standardization
In general, the fat content of raw milk is higher than the fat content of the various dairy
products to be manufactured. The standardized fat content of these products usually
ranges between a minimum of 0.5 and a maximum of 3.5 percent.
5.1.3 Homogenization
Since milk is an oil and water combination, it doesn’t stay mixed. Homogenized milk is
run through tiny tubes, sometimes during the pasteurization process to keep fat and liquid
molecules together. Fat molecules are reduced in size and tend to disperse more evenly
throughout the milk so that creaming on the top of milk doesn’t occur. You can also use
the homogenization process to reduce overall milkfat in milk. 2% milk is stripped of some
of the fat molecules to produce lower fat milk.
Pasteurization is used to kill harmful microorganisms by heating the milk for a short time
and then cooling it for storage and transportation. Pasteurized milk still is perishable,
however, and must be stored cold by both suppliers and consumers.
Sterilized / Pasteurized milk will be packed in Tetra Pak packaging which will give
extended shelf life. As per our country’s weather it is recommended to store it in cool
environment. From our cold store it will be distributed to our distributors / wholesalers for
consumers.
Process Flow
For Plant:
16,075,000
6. Location Strategy
Location is the main factor for any industry as it will directly affect on Labor Productivity,
Costs, Market and suppliers.
It is highly recommended to choose any sub-urban area around the major cities should
be selected for Dairy Milk Pasteurizing unit. Following infrastructure requirement should
also be considered as it will improve the value of all over operations:
• Road
• Electricity
• Water
• Diesel Fuel arrangement
• Drainage
• Gas
• Telephone & Fax
We have selected the location, near Port Qasim or Landhi as major Raw Milk producing
area (Bhens Colony) is near around and we are also connected to other rural areas of the
province through Indus High way for our future needs.
7. Layout Strategy
Layout Strategy will always supportive to other strategies such as Product strategy,
Process strategy, HR Strategy, and location strategy.
Proper Layout will enables as to get the higher utilization of space, equipment, and
people. It will improve flow of information, materials and also people. It will also improve
employee moral and safer give safer work conditions.
As a Dairy Milk Pasteurizing Unit, we have selected Product Oriented layout in which we
seeks the best personnel and machine usage as per our plant need.
Delivery
Point
8. HR Strategy
Initially we have planned to hire a limited staff as it will reduce the fixed operating cost
which will surely affect on over all finance.
9. Supply Chain
As dairy plant our raw material is pure natural milk which we will obtain from various milk
farm houses. It can be collected through any Contractor or agent or later on we can get it
directly from good / reputable farm houses.
We will surely have to ensure the quality of raw milk (unprocessed) and have a set of
agreement that we will return (deduct the price of) the rejected milk by our Quality Control
persons and only approved milk will be sent to processing unit.
Processing Unit will precede it according to our requirement as initially we have planned
to produce Packaged Milk as Ultra High Temperature (UHT) for long shelf life. In
Processing we will also separated the additional Creamer which will be sold out to
various Bakers for sweet making etc.
After processing of Milk, it will be packed in Tetra Pak Packaging and forwarded to
warehouse for cold storage purpose for longer shelf life. From Warehouse, it will be
dispatched to Wholesale distributors and then retailers where any customer can buy it
and consume it as required.
Milk Farm
Contractor /
Agent
Processing De-Creamer
Unit
Warehouse Bakers
Wholesale
Distributor
Retail Store
Customer /
Consumer
With the help of Small & Medium Enterprises Development Authority (SMEDA) we have
analyze and calculated the requirement of Land, Building Infrastructure, Plant &
machinery, Furniture / Fixture, Vehicle etc. and as per this calculation we require around
27.4 million for this project to establish.
We have planned to obtain a 50% financing from banks and 50% will be our investment
(13.7 million) as Equity. As per our planning Internal Rate of Return is around 43% and
Pay back period will be 2.77 years (approximately).
11. References
We have found all the materials from authentic websites and resources which are as
under:
http://www.fao.org/DOCREP/003/X6511E/X6511E00.htm#ch0