“MARKETING ANALYSIS”

“MARKETING ANALYSIS”

ON

MOTHER DIARY

Submitted in partial fulfillment of the requirement for the award of

Bachelors of Business Administrative

(BBA)

Made By: Under Guidance

Mr. TARUN CHADHA Ms Himani Grover

Bharati Vidhyapeeth University

School of Distance Education

Academic Study Centre- BVIMR, New Delhi

2009-2012

STUDENT DECLARATION

I, TARUN CHADHA (BBA) student, BVU, SDE, academic study centre: BVUIMR, New

Delhi hereby declare and undertake that the project on industrial exposure submitted by

me tilling “MOTHER DIARY” in partial fulfillment for the award of the B.B.A

TARUN CHADHA

ACKNOWLEGEMENT

Project work is never the work of an individual. It is more a combination of ideas,

suggestions, and contribution and work involving many jobs. One of the most important

parts of writing a report is the opportunity to thank all those who have contributed to it.

The list of expression of thanks, no matter how extensive, is always incomplete and

inadequate. This acknowledgement is no exception.

I want to express my sincere gratitude towards Ms HIMANI GROVER who provided me

with her expert guidance and invaluable suggestion.

I would like to thank my classmates and all those who directly or indirectly helped me in

one or the other way in the successful completion of the project.

TARUN CHADHA

TO WHOM SO EVER IT MAY CONCERN

This is to certify that the Industrial Report entitled “MOTHER DIARY” is an original

piece of work done by TARUN CHADHA in the partial fulfillment of the requirement for

the award of degree of “BBA”, SDE Academic study centre, BVUIMR, New Delhi”. To the

best of my knowledge data and information presented by him/her in the project has not

been submitted earlier.

Ms. HIMANI GROVER

(Internal Guide)

MOTHER DIARY

Chapter 1 Introduction to company

1 Nature of Business

2 Type & Ownership pattern

3 Organizational Structure

4 Production Lay Out

5 Organizational Policies

1. NATURE OF BUISNESS

"Mother Dairy" is the single largest brand of milk in India as well as in Asia, marketing about

2.2 million liters of milk per day. Mother Dairy commands 40% market share in the organized

sector in and around Delhi, primarily because of consistent quality and service -whatever be the

crisis floods, transport strike, curfew etc. Mother Dairy, Patparganj, Delhi, is presently

manufacturing & selling around 8.5 lakh liters of tonned milk through bulk vending shops.

Mother Dairy, Delhi is an IS/ISO-9001:2000 and Hazard Analysis Critical Control Points

(HACCP) and IS-14001:1996 Environment Management System (EMS) Certified organization.

Mother Dairy was the first Dairy in the country to implement ISO-14031(Environment

Performance Evaluation) project. The company's Quality Assurance Laboratory is ISO/IEC-

17025:1999 certified by NABL (National Accreditation Board for Testing and Calibration

Laboratory), Department of Science & Technology, India. This provides assurance to the

consumer in respect of Quality and Safety of products manufactured and marketed by Mother

Dairy.

The National Dairy Development Board (NDDB) commissioned Mother Dairy in the first phase

of Operation Flood in 1974. Considering the success of Dairy industry NDDB established Fruit

& Vegetable Project in Delhi in 1988 with "SAFAL" as its umbrella brand.

With a view to separating the commercial activities from developmental activities, the NDDB

merged Mother Dairy and the Fruit & Vegetable project into a wholly owned company named

Mother Dairy Fruit & Vegetable Ltd (MDFVL) in April 2000. This becomes the holding

company of Mother Dairy India Ltd (MDIL) - a marketing company and Mother Dairy Foods

Processing Ltd (MDFPL)- a processing company. MDFPL is a multi unit company, with units at

various locations in India. Mother Dairy, Delhi is one of the units of MDFPL.

The company is a highly trusted household name for its wide range of milk products like Milk,

Flavored Milk, Ice-Cream, Dahi, Lassi, Table Butter, Dairy Whitener, Ghee etc.

The application for the award is being made for Mother Dairy, Delhi unit.

Mother dairy has taken up the concept of Total Productive Maintenance (TPM) whole heartedly.

The number of employees involved in KAIZENS and the no. of KAIZENS per employee are

very encouraging. Mother Dairy is a member of CII-TPM Club and the KAIZENS done by

Mother Dairy employees have been selected and presented in 2nd, 3rd, 4th and 5th National

Kaizen Conferences held from time to time during the last three years. Our TPM efforts have

resulted in increase in MTBF and decrease in MTTR, quality improvement, Cost reduction and

reduction in accidents.

Mother Dairy has received "Best Productivity Performance" award for three consecutive years

starting from 1987-88 to 1989-90 and again from 1995-96 to 1997-1998 from National

productivity Council and a commendation Certificate for Rajiv Gandhi National Quality Award,

National Energy Conservation Award - 2004, Oil and Gas Conservation Award - 2004, Indian

Innovation Award - 2004 and Safety Initiative Award - 2005.

2. TYPES & OWNERSHIP PATTERN

Mother Dairy, set up in 1974, is a wholly owned subsidiary of National Dairy Development

Board (NDDB) of India. The National Dairy Development Board is an institution of national

importance setup by an Act of Parliament of India. The main office is located

in Anand, Gujarat with regional offices throughout the country. NDDB's subsidiaries

include Mother Dairy, Delhi. The main stakeholder of Mother Dairy was the farmer member for

whose welfare it existed.

3. ORGANIZATION STRUCTURE

Organization structure in mother dairy manufacturing plant can be shown as below:-

Source: - nddb.org

4. PRODUCTION LAYOUT

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.

However production layout can be shown as follows

Regional milk procurement Refrigerator

storage silosClarification unitStandardization

unitHomogenization unit

Pasteurization unitMilk fortification

unitPackaging unit

GENERAL MANAGER

SR. MANAGER (MFG.)DEPUTY

MANAGER (PRODUCTION &

MIS)

DEPUTY MANAGER (UTILITIES)

ASSTT. MGR. (HEALTH, SAFETY &

ENVIRONMENT)SR. OFFICER (THERMAL)

SR. OFFICER (THERMAL)

SR. OFFICER (AUTOMATION)

PRODUCT UNIT CO-ORDINATOR

SHOP FLOOR ENGINEERS AND WORKMEN

5. ORGANIZATION POLICIES

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

encourage excellence.

Refrigerator storage silos Ice cream

manufacturing unit

Dairy product manufacturingSent to various

distribution

Company with appreciable regulations and legislations.

They pledge themselves towards providing quality and safe products under clean and hygienic

environment.

Chapter 2 Industrial Analysis

1 Industry Overview2 Current Issues3 Key Competitors4 Environmental Scanning ---- Political environment Economic environment, Socio-

Cultural environment ,Technological environment ,Environment issues (Green environment ) and Legal environment

5 Porters five forces model of competition-Michael Porter

1 INDUSTRY OVERVIEW

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 liter of milk in the world, at 27 cents, compared

with the U.S' 63 cent. 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.83,500 crores by year 2010. 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 2010, the value of Indian dairy produce is expected to be Rs 10,00,000

million. Presently the market is valued at around Rs7,00,000mn.

2 CURRENT ISSUES

Dairying is a state subject in India and considerable diversity exists within the country. It is

therefore extremely difficult to draw a uniform pattern for the country as a whole. Incentives,

taxes and subsidies, to a great extent vary from state to state. Another important aspect is that,

GOI is now giving more focus on decentralized planning involving democratic institutions at

village level called ‘Panchayat’ and they are going to play increasing roles in dairy

development. There are other issues which are plaguing this industry and can be stated as

follows:

The dairy sector in India is predominantly smallholder and unorganized in nature. The

unorganized sector accounts for >50% of total production and handles >77% of the milk

marketed (2005 - 06). ( Total house hold in Prod->67 m out of this 11 m can be

characterized as cattle farmers with av.2-3 animals )

Issue: Enabling the unorganized sector to conform to the food laws, streamlining and

capacity

building of the unorganized sector.

17% of small or marginal farmers and landless laborers are grouped into cooperatives

(~110000 in numbers) which handles around 15% of the surplus. (About 20.33 million

producer households forming about 30% of the total are covered by the organized sector

milk marketing)

Issue: Ways to strengthen the dairy Cooperatives.

Encouraging post liberalization growth of organized private sector which handles ~ 14%

of the surplus1. There is presence of multinationals with promising investment plan. E.g.

Nestle (Swiss), Fonterra (New Zealand), Bongrain (France Brand –Debon)

Issue: Investment promotion, better price spread, Process innovation (including in the areas

of procurement & Processing) & Product development for niche segments.

The sector is closely linked / complementary to agriculture providing income,

employment and nutrition to a society with high prevalence of vegetarianism.

Issue: Alignment of dairy development policy with the Agriculture policy & Livelihood

security

USDA Oct’07 report forecasted milk production in MY 2008/09 in India to increase by

3% to 102 million tons.

Mother Dairy, a wholly owned subsidiary of National Dairy Development Board (NDDB) of

India, has plans to invest Rs 100 crore in the current year to enhance its capacity.

1

The company is eyeing a turnover worth Rs 4,000 crore in the current fiscal. Last year, the

company had clocked turnover worth Rs 3,200 crore.

It should be noted that over the last few years, the company has maintained an annual growth of

around 20-22 per cent, which it expects to continue in the current fiscal too.

The company intends to increase its capacity, both in terms of manufacturing as well as sales and

distribution network.

Latest reports suggest that, the company will add another 4,000 point of sales across the major

cities and increase its total number of push carts selling Mother Dairy ice creams to 4,500 from

present number of 2,100.

Mother Dairy markets & sells dairy products under the Mother Dairy brand (like Liquid Milk,

Dahi, Ice creams, Cheese and Butter), 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.

read and competitiveness

3 KEY COMPETITORS

There are virtually 15 major Dairy Cooperative Federations in India, namely:

· Andhra Pradesh Dairy Development Cooperative Federation Ltd (APDDCF)

· Bihar State Cooperative Milk Producers' Federation Ltd (COMPFED)

Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)

· Haryana Dairy Development Cooperative Federation Ltd. (HDDCF)

· Himachal Pradesh State Cooperative Milk Producers' Federation Ltd (HPSCMPF)

· Karnataka Cooperative Milk Producers' Federation Ltd (KMF)

· Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF)

· Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF)

· Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (Mahasangh)

· Orissa State Cooperative Milk Producers' Federation Ltd (OMFED)

Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF)

· Punjab State Cooperative Milk Producers' Federation Ltd (MILKFED)

· Rajasthan Cooperative Dairy Federation Ltd (RCDF)

· Tamilnadu Cooperative Milk Producers' Federation Ltd (TCMPF)

West Bengal Cooperative Milk Producers' Federation Ltd. (WBCMPF)

Amul :

Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual

turnover of US $1700 million (2009–10).[5] Currently Unions making up GCMMF have

2.9 million producer members with milk collection average of 9.10 million litres per day.

Besides India, Amul has entered overseas markets such

as Mauritius, UAE, USA, Bangladesh, Australia, China,Singapore, Hong Kong and a few

South African countries. Its bid to enter Japanese market in 1994 did not succeed, but now it has

fresh plans entering the Japanese markets.[6] Other potential markets being considered include Sri

Lanka.

Delhi Milk Scheme ( DMS )

Delhi Milk Scheme was commissioned on Nov 01, 1959 by the then Hon’ble President of India,

Dr.Rajendra Prasad with the primary objectives of supplying wholesome milk to the citizen of

Delhi at reasonable price as well as to provide remunerative prices to the milk producers.

Manufacturing and sale of milk products like Ghee, Table Butter, Yoghurt, Paneer, Chhachh and

Flavored Milk is also taken as an allied activity.

4 ENVIRONMENTAL SCANNING

A) POLITICAL ENVIRONMENT: Agriculture, including animal husbandry is a state subject

under the Indian Constitution, and the responsibility for development of the sector lies with the

State Governments, with the exception of specific tasks assigned to the Central Government.

Despite this, following the success of the dairy farming policy, reflected in Operation Flood and

to have a focused approach, the Government has set up a dairy processing policy to meet the

following objectives of the dairy sector:

To assure a remunerative price to the milk producers;

To ensure the availability and supply of clean processed milk as per the consumers need;

To provide necessary milk products with the requisite quality to the consumer at

a competitive price.

This was reflected in the setting up of the National Dairy Development Board. In

addition, The Government uses a variety of import restrictions to protect the domestic

dairy market.

As we have already told the success story of NDDB, point of discussion is to explain the

operation flood which has paved the way for the success of Indian dairy sector.

Operation Flood: The Government of India launched a massive dairy development program

popularly known as Operation Flood from 1971 to 1996. It had a dual purpose. One was to

enhance the role of the

formal dairy sector by organizing the small individual farmers into cooperatives and the other

was to provide the cooperatives with a steady year-round market, a remunerative price, inputs for

milk production enhancement such as veterinary first aid, vaccination against prevailing

animal diseases, better feed and fodder, breed improvement through artificial insemination

with the semen of proven bulls and crossbreeding the indigenous cattle with high-yielding

breeds. The program was started with the help of the World Food Program under the aegis of the

National Dairy Development Board it continued with assistance from the European Economic

Community and with soft loans from the World Bank. Small farmers were organized into

cooperatives. Aid received in the form of dairy products under the World Food Programme and

from the European Community was, instead of being freely distributed, sold to city dairies for

recombination into milk and the funds thus generated were reinvested into milk production

enhancement activities. The overall impact of this coordinated and innovative effort led to the

“White Revolution”, making India the world's largest milk producer.

Govt. removes import duty on dairy products

Concerned over the rising prices of milk, the government has removed the duty on skimmed milk

powder (SMP) and other dairy products. In a notification issued by the revenue department, the

dairy industry can import up to 30,000 tonne SMP at zero duty in a financial year. Earlier, the

industry was allowed to import only up to 10,000 tonne SMP at 5 per cent duty under TRQ

(tariff rate quota). Similarly, the government has allowed duty-free import of other milk products

including white butter, butter oil and anhydrous milk fat up to 15,000 tonne in a fiscal.

According to whole-sale price based inflation, milk prices have shot up by 14.73 per cent in the

last one year. Reacting to the decision, Indian Diary Association President N R Bhasin said "the

decision to reduce duty on SMP will only have psychological impact". He further said it would

be difficult to import SMP as there is hardly any price difference between the domestic and

landed cost of imported products. Minister of state for agriculture KV Thomas had recently told

the Rajya Sabha that "the sale price of milk has been increased by Rs 1-7 per litre in the country

from January 2009". Milk production has gone up to 108.5 million tonne in 2008-09 against 80.6

million tonne in 2000-01. The demand for milk has been projected at 166 million tonne by 2020.

B) ECONOMIC ENVIRONMENT: Poor investments in the Dairy Industry in India are

resulting in deceleration in growth of the sector. The sector had a growth rate of 4.25 per cent in

the 8th Plan, 4.07 per cent in the 9th and 3.19 per cent only in the 10th Plan. In the 11th Plan,

there is likely to be further deceleration.

A recent survey carried out by 64th round of NSS has shown that an Indian family allocates on

an average 17 per cent of the expenditure incurred on food products on milk and milk products;

with rural families allocating 15 per cent while families in the urban area allocating over 18 per

cent. With increasing income the demand for milk is going to rise faster now than seen in the

previous decade. Moreover, the overall demand is galloping rapidly compared to milk

production. The higher GDP growth rate, enhanced income of rural households through

programmes such as NREGA and the farm debt waiver are influencing the demand for milk both

in the rural and urban areas.

Apart from the rapidly increasing demand for milk and dairy products, increased cattle feed cost

and low availability of farm labour in the rural areas have resulted in increase in the cost of

production. The Wholesale Price Index (WPI) for milk has shown a rise of over 22 per cent per

annum during the week ending April 3, 2010. These factors have resulted in dairy farming

becoming no longer a viable proposition in the rural areas. Indian Dairy Association (IDA) is

concerned and feels that if the situation is not immediately handled with adequate seriousness,

the growth of dairy sector would further decelerate and there would be a gap of close to 3 per

cent per annum in the production and requirement of milk. In such a case, India would be left

with no other option but to import large volumes of milk and milk products.

Foreseeing shortage in milk supplies to cities ahead of summer season, the Government of India

has permitted duty-free import of up to 30,000 tonnes of milk powder and 15,000 tonnes of

butter oil. The imports are, however, subject to tariff rate quota (TRQ) arrangements allowing

only certain designated agencies to bring in these goods at nil duty. Milk powder import

ordinarily attracts 60 per cent basic customs duty, while the duty for butter oil is 30 per cent. Till

now, the TRQ regime permitted milk powder imports of up to 10,000 tonnes at a

concessional five per cent duty during any financial year. But through the recent tariff

notification CBEC has liberalized the in-quota quantity by trebling it to 30,000 tonnes and also

slashing the duty on such imports from five to zero per cent. So far butter oil was not covered

under TRQ, with all imports uniformly accessible at 30 per cent. But now even this community

(which includes white butter and anhydrous milk fat) has been brought under free import regime

subject to quantity of 15,000 tonnes. The CBEC notification of March 12, has however clarified

that the duty-free import in both cases are subject to “condition No. 1”, that restricts the import

to those holding TRQ allocation certificates issued by the DGFT. In case of milk powder, the

only entities eligible for allocation by the DGFT are the NDDB and parastatals including STC,

MMTC, and Nafed. The DGFT has not yet specified the eligible agency for butter oil, but

indications are that here too, only NDDB and the State owned enterprises would be granted TRQ

allocations.

Imported skim milk powder is currently available at about $2,800 a tonne, which is on par with

domestic prices of Rs. 130-plus a kg and butteroil at $4,000 a tonne, which works out at around

Rs. 210 a kg compared to Rs. 250-275 per kg of ghee.

Traditionally India has not been permitting free import of dairy products. However, India is

facing strong pressure to open up its market to cheese and other dairy products from Europe,

even though the Government of India has expressed fears about how small farmers could be

adversely affected due to import liberalization. Because the dairy sector employs 90 million

people, India has advocated that milk and cheese be excluded from the scope of free trade

agreement under negotiations with the European Union. EU officials nevertheless have stepped

up their efforts to have India’s agricultural market liberalized during the last round of talks which

took place in the last week of April. Anti-poverty activists complained, however, that EU has

displayed scant concern for the plight of India’s rural poor until now. We feel that scrapping

such tariff would leave India’s farmers unable to withstand competition from European imports.

Often these imports have been highly subsidized and can be sold at lower prices than

domestically produced goods.

Trade analysts say that EU officials have stepped up their efforts to include dairy within the

scope of an agreement with India because of the crisis facing European milk farmers which have

been badly hurt by a decrease in the price they are being paid in the past few years. These prices

prompted the EU to resume paying subsidies to exporters of butter, cheese, and skimmed milk

powder in January 2009. Such subsidies – widely considered as harmful to farmers in poorer

countries where markets have been flooded by European produce – had been earlier suspended in

2007. The quantum of subsidies are euro 170 per mt for SMP, euro 260 per mt for Whole Milk

Powder (WMP), euro 450 per mt for butter, and euro 545 per mt for butter oil. Paul Goodison

from the European Research Office, a watchdog on trade relations, noted that the EU has

provided 1.6 billion Euros (2 billion dollars) in assistance to dairy exporters over the past 10

months. The sum is in addition to the 5 billion euro per year already earmarked to dairy sector

under the Union’s common agricultural policy. In a bid to compensate for the troubles facing

European milk farmers at home EU is very keen to get any market opening. This is blatantly

unfair competition and it is a warning to any developing country. The EU makes its own rules

when it is making trade agreements. Needless to say that the Indian dairy sector cannot be

opened up without adequate protection to face EU’s highly subsidized and protected dairy sector.

This would be a highly uneven competition on unequal terms, disrupting the lives and

livelihoods of small and marginal Indian farmers.

Besides facing strong pressure to open up its market to EU, India’s greatest danger is from the

proposed free trade agreement with Australia and New Zealand. The agreement would

jeopardize India’s problem-ridden domestic milk and its products sector.

India had entered into a Free Trade Agreement with South Korea and ten other countries last

year. Now the proposal is to add New Zealand and Australia to this list. According to the

agreement both countries will reduce their tariff rate to encourage trade. It is feared that entering

into a free trade agreement with Australia and New Zealand would not be in the interest of dairy

sector in India. The cost of milk production in Australia and New Zealand is far lower than in

India because of their pastural system of production where the animals are reared on grazing

lands. In India dairy animals are raised by feeding them concentrate feed and fodder, and

therefore, the cost of production is much higher. IDA has advised Government of India to

exclude dairy products from the purview of the FTA with Australia and New Zealand.

The collapse of Doha round has provided a major setback to developing countries. However, an

important decision which affects Indian dairy industry taken in Hong Kong was concerning

“special” and “sensitive” products. The right of a country in respect of assessment of

creditability of self-selection of special and sensitive products was agreed. The criteria of

selection of special and sensitive products is generally based on its impact on livelihood and

rural development. This decision is important in India’s context since dairying not only affects

the rural development but is a source of livelihood to millions of people in the rural areas.

Unfortunately, the Government of India has not so far declared dairy products as “special” and

“sensitive” products. The Central Government should immediately act on these provisions

without further loss of time. Once declared special and sensitive product, India can impose a

heavy import duty and safeguard Indian dairy industry.

C) SOCIO-CULTURAL ENVIRONMENT: Some of social factors related to the industry are

as follows: -

Indian dairy emerging as sunrise industry and contributes significantly in

generating small and farmers of rural India, besides providing food security

India is blessed with huge bovine population of 196 million cattle and 80

million buffaloes accounting 51% if Asia and 19% of world bovine

population-the largest in the world.

India’s dairy industry generates an annual business of nearly of Rs. 88,000

crore to India.

Dairy sectors provides regular employment to 9.8 million people principle

status and 8.6 million people in subsidiary status, which together constitute

5% of total workforce.

Operation flood brought milk revolution in the country by transforming dairy

into a core economic activity. The main challenge before Indian dairy sector

improving quality, developing international accepted products stepping up

global marketing strategy.

Indian dairy is energy efficient labor incentive and ecological sound.

Indian dairy sector commit themselves for optimum utilization of energy in all

manufacturing activities as well as in the office.

All round participation of all employees and educating them about energy

conservation.

D) TECHNOLOGICAL ENVIRONMENT: 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 and US $1 billion in North America alone. 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.

Interest has been growing among connoisseurs and entrepreneurs in the Indian milk products.

One impediment, however, in transforming this interest into profitable business is the absence of

an up-to-date technical reference handbook on the Indian milk products. To bridge this gap, the

publishers of DAIRY INDIA requested leading authorities on the subject to help in its

compilation. The main objective of this sector in technology regard is to thrive hard on

innovations made in modernization of traditional product processing, equipment and packaging.

5 FIVE FORCES OF MICHAEL PORTERS

In order to identify and assess the strength of external competitive forces on Indian dairy sector, I

utilized a common analytical tool, Porter’s Five Forces Model. Porter’s five forces industry

analysis can be used to get a general over view of the threats to the profitability of the dairy

business. Through the model does not help in analyzing firm specific demand; it gives some

information of its business environment.

Buyer Power

Buyer power is

determined by various factors such as switching costs, the relative volume of purchases,

the standardization of the product, elasticity of demand, brand identity, quality of the

products.

Potential Entrants(Threat

of Mobility

)Suppliers

(Supplier Power)

Buyers(Buyer Power)

Substitutes

(Threat of

Substitutes)

Industry Rivalry

On one end are the large instrumental buyer’s i.e. big hotels and restaurants which ask for

discounts, extended credit periods and the other end are small retail outlets like general

stores which have no power to negotiate with the firms.

The power of buyers is relatively high when buyers are large, consisting of individual

customers, grocery stores, convenience stores, and restaurants nationwide. Since retailers

purchase ice cream products in large quantities, this gives buyers substantial leverage

over price.

Customers are able to substitute one brand to any point in time. There are many brands to

choose from, so the buyer’s cost of switching to competing brand is already low.

Mother dairy’s strategy must include strong product differentiation so that buyers are less

able to switch over without incurring large costs. Mother Dairy upholds a strong Brand

identity in Delhi/NCR market. It is perceived as having a higher quality. Thus, it is a

strong point of differentiation.

Supplier Power

The suppliers to dairy industry include dairy farmers, paper container manufactures, and

suppliers of various products. The principal inputs are commodities available in

competitive markets.

Factors affecting the bargaining power of suppliers include the threat of forward

integration and the concentration of suppliers. There exist numerous potential suppliers

of ingredients. The ingredients provided by each supplier are not unique or greatly

differentiated. Furthermore, ice cream manufactures are able to switch between suppliers

quickly and cheaply.

Also, many suppliers viability is tied to the well-being of large, established companies.

Therefore, the bargaining power of suppliers of ingredients is rather low.

However, Mother dairy being milk co-operative has to empower the milk producers and

farmers so that they get a remunerative return. Therefore, a certain power is vested in the

hands of the farmer societies.

Threat of Substitutes

There is no perfect substitute to ice creams because of its very nature. However,

many substitute products are available within the dessert and frozen food industry

which are basically food items consumed at leisure. Since substitute products are

readily available and attractively priced, the competitive pressures posed by

substitute products can be considered moderate.

Potential Entrants

The barriers to entry in the industry are moderate due to the brand preference and

customer loyalty towards the larger and more established companies.

Other obstacles to new entrants include the requirement for large sources of capital,

specialized mixing facilities and manufacturing plants.

In addition, the accessibility of distribution channels can be difficult for an unknown firm

with little or no brand recognition.

Industry Rivalry

The principal competitors are large, diversified companies with significantly greater resources

such as Amul, Vadilal, Gopal Jee Paras, besides a lower threat from local manufacturers.

Rivalry can be characterized as intense, given that numerous competitors exist, the cost of

switching to rival brands is low, and the sales-increasing tactics employed by other rivals

threatens to boosts rivals unit volume of production.

Also, recently there has been a surge in the number of products that are growing with the

competitors. The growing popularity of other brands providing specialty in products will also

tend to affect the business of existing companies.

Chapter 3 Marketing Strategics

1 Products of company

2 4 ps

3 STP

4 Distribution Channels

5 Promotion Strategies

1PRODUCTS OF COMPANY

NDDB merged Mother Dairy and the Fruit & Vegetable project into a wholly owned company

named Mother Dairy Fruit & Vegetable Ltd (MDFVL) in April 2000. This becomes the holding

company of Mother Dairy India Ltd (MDIL) – a marketing company and Mother Dairy Foods

Processing Ltd (MDFPL) – a processing company. MDFPL is a multi unit company, with units

at various locations in India. Mother Dairy, Delhi is one of the units of MDFPL.

The company is a highly trusted house hold name for its wide range of milk products like Milk,

Flavored Milk, Ice-Cream, Dahi, Lassi, Table Butter, Dairy Whitener, Ghee etc. The

application for the award is being made for Mother Dairy, Delhi unit.

Mother Dairy Product Profile

S. No. Product Name Brand Name Items

1. Milk and its Products Mother Dairy Packaged milk (Full

Cream, Standardized,

Toned, Double toned,

Skimmed and Pro-

biotic), Butter, Dahi,

Ghee, Cheese, Ice-

creams, UHT Milk,

Lassi and Flavored

Milk.

2. Edible Oils Dhara Refined Vegetable oil,

Refined Soybean oil,

Refined sunflower oil,

Refined rice oil,

Kachi Ghani mustard

oil and filtered

groundnut oil

3. Fresh and frozen fruit

and vegetable

products

Safal Fruits, vegetables,

rice, processed

items(jams, juices,

ketchup, pulp etc)

2 4 P’s

Marketing Mix

Products.

Milk:-

-Full Cream Milk

-Toned Milk

-Double Toned Milk

-Skimmed Milk

Ghee:-

Mother Dairy Ghee is pure ghee made from buffalo milk and has every quality that you would

look for while purchasing ghee - just the right off-white colour and the typical daana-daana feel.

The formulation developed delivers superior flavour and aroma to the food you prepare making

it the best choice in Ghee.

Mother Dairy Ghee is available in one litre and half litre cartons (known as Ceka and having a

special type of lining) and also in one litre tins. All the packs are carefully packed to ensure that

the rich flavour and aroma of Mother Dairy Ghee gets sealed in and remains intact for you to

savour and enjoy.

Butter:-

It’s delicious. It’s creamy. And it’s so easy to spread. Available in 100 and 500 gram packs,

Mother Dairy Butter is produced under totally hygienic conditions using Mother Dairy’s

wholesome milk.

Dahi:-

Absolutely delicious, with a rich and creamy texture, Mother Dairy Dahi is uniformly thick,

consistent and natural, without the use of any preservatives. Mother Dairy Dahi is made from

pasteurised standardized milk which contains 4.5 % milk fat and 10 % milk SNF. Not only does

it taste great, it also aids digestion by maintaining balanced microflora in the intestine and

suppressing the growth of undesirable pathogenic bacteria.

Every 100 grams of Mother Dairy Dahi contains:

Energy value 79.00 K cal

Fat 4.50 gms.

Proteins 4.00 gms.

Carbohydrates 5.80 gms.

Calcium 150.00 mg.

Available in 100 grams, 200 grams, and 400 grams.

Lassi:-

Mother Dairy Lassi is a tasty and refreshing drink made from pure, nutritious milk. Drink it

either as an anytime snack or as a tasty accompaniment to your food. Either way it's a great

tasting drink.

You can choose from two variants - Sweet Lassi (300 ml) and Salted Lassi (200 ml), to suit your

taste.

Ice Creams:-

A mouth watering range of delicious ice cream bars available in a wide variety of flavors...from

the ever popular Chocolate and Mango Bar to the more exciting and unique Hawaiian Break,

Frozen Flames, Chocolate Affair and Choco Orange Bar.

Also available, the special 100 ml. Mega Bar to satisfy those sudden hunger pangs any time, any

place. 

The range also includes the Chocolate Treat Bar which is undoubtedly the ultimate treat for all

the chocolate ice cream lovers out there - with a rich chocolate core covered with sumptuous

chocolate ice cream coated with smooth chocolate coating with a sprinkling of crispies.

Flavoured Milk.:-

Mother Dairy Flavoured Milk captures all the goodness of Mother Dairy's pure and fresh milk

combined with the magic of special flavours. Made from Double Toned Milk, and available in

Kesar Elaichi, Chocolate and Vanilla flavours - these drinks are light and refreshing and capture

the great taste of these unique flavours without being heavy or too filling. These tasty drinks,

available in 300 ml and 500 ml, are perfect for any occasion - either to savour when you are

alone, or to enjoy with family and friends.

Price:-

Milk..

full cream milk - Rs 30

Toned Milk - Rs 23

D. Toned Milk - Rs 21

Ghee..:-

GHEE (980 ml.) - Rs 280

BUTTER:-

Butter (100 gms) - Rs 20

Butter (500 gms) - Rs 94

DAHI:-

Dahi (Biotic Fibre Rich, 200 gms) - Rs 15

Dahi (400 gms) - Rs 25

Dahi (200 gms) - Rs 13

LASSI:-

Lassi - Rs 20

Place

However, as far as other dairy products are concerned, Mother Dairy plans to expand across the

board. Other than milk, for most state federations, dairy products are still a small part of their

operations. So they are taking their products to regions across India, where they see enough

market potential.

In ice creams, it was only two years ago that Mother Dairy entered its first market outside Delhi -

UP and Punjab. Today, it's extended its operation to Haryana, Jaipur, Mumbai and Kolkata as

well. Next year, it plans to go south to Hyderabad and Bangalore.

In the case of butter and cheese, it's present across north India, Mumbai and Kolkata, and has

plans to enter Bangalore by year-end. In UTH milk, it has entered Mumbai and the milk-short

areas of West Bengal and north-east. For ghee, although the current focus is the northern region,

it has plans for a nationwide presence.

As far as Mother Dairy's non-dairy products are concerned, edible-oil brand Dhara has already

has nationwide presence.

Promotion:-

On the marketing front, Mother Dairy says it's trying to take its product campaigns and

communications to a higher platform. For instance, in the case of milk, the campaigns do not talk

about the obvious benefits - milk is good for health, it has calcium and so on - but rather it

targets children and are created around ideas such as "The country needs you, grow faster".

As far as products such as butter, cheese and ice creams go, the campaigns have been created

around "taste". For butter again, the focus is on children. "Amul butter may be selling the most,

but the advertising and promotions are almost always targeted at adults," points out an analyst

citing Amul's popular Utterly-Butterly campaigns.

Here, Mother Dairy has dared to go different. Since 60 per cent butter is consumed by kids, the

company wants them to sit up and take notice of its butter. Makkhan Singh, a sturdy jovial cow

(a cartoon character) has been made its brand ambassador.

While Mother Dairy has been carrying out school programmes - games and activities – involving

Makkhan Singh in Delhi, it has plans to take such activities to Mumbai and Kolkata as well. It

also runs a gaming website on the character to attract children. Equity and empathy are being

built for the brand, the values for which it stands, and the various other Mother Dairy products,

which draw their core values from Mother Dairy milk.

It's cheese for children again. A couple of months ago, Mother Dairy carried out a retail activity:

"Cheese khao superhero ban jao", where kids buying cheese at a retail outlet were invited for a

photo op - dressed as superheros - through Polaroid cameras; and the framed photograph was

presented to them. The activity was carried out in about 150 outlets in Delhi and Mumbai, with

about 20,000-25,000 snaps being taken.

It claims that the exercise resulted in better ties with retailers. A positive response made Mother

Dairy to repeat it in Kolkota as well. Clearly, Mother Dairy has aggressive plans. But, strong

regional brands and other co-operatives will continue to give it tough competition. It will not be

a cakewalk anymore.

3. SEGMENTATION, TARGETING & POSITION

As far as segmentation, targeting customer and positioning themselves they are by far ahead of

their competitors However, as far as other dairy products are concerned, Mother Dairy plans to

expand cross the board. Other than milk, for most state federations, dairy products are still a

small part of their operations. So they are taking their products to regions across India, where

they see enough market potential.

In ice creams, it was only two years ago that Mother Dairy entered its first market outside Delhi -

UP and Punjab. Today, it's extended its operation to Haryana, Jaipur, Mumbai and Kolkata as

well. Next year, it plans to go south to Hyderabad and Bangalore.

In the case of butter and cheese, it's present across north India, Mumbai and Kolkata, and has

plans to enter Bangalore by year-end. In UTH milk, it has entered Mumbai and the milk-short

areas of West Bengal and north-east. For ghee, although the current focus is the northern region,

it has plans for a nationwide presence. As far as Mother Dairy's non-dairy products are

concerned, edible-oil brand Dhara has already has nationwide presence.

While, the product portfolio has been growing, Mother Dairy has plans for reach out to newer

markets - but the strategy here is more product-specific. In liquid milk, it will initially

concentrate only on four markets - Delhi, its home ground; the Junagarh region and Ahmedabad

in Gujarat; Mumbai, which it entered a year ago; and Hyderabad, where it moved in a little more

than a year ago. They have no plans to go everywhere with liquid milk. What's the need to get

into those markets that already have strong co-operative brands? Their objective of getting into

newer locations is not to make Mother Dairy larger, but to ensure that there is a large viable

distribution network and consumer brand to take care of surplus milk.

In Mumbai, where the liquid milk market is close to 40 to 42 lakh (4 to 4.2 million) litres a day,

only about 20-22 lakh (2-2.2 million) litres a day is in the organized market - and that too is

highly fragmented with a number of smaller players with shares of about 10,000-20,000 litres a

day. Mother Dairy claims a share of 170,000 litres a day, with the biggest player, Mahananda,

selling about 800,000 litres a day and Aarey and Amul about 250,000-300,000 litres a day each.

In Hyderabad, Mother Dairy claims it has a 15 per cent market share of the approximate 9-10

lakh (900,000 to 1 million) litres a day of the organized market. These are still early days in the

two markets, but we are looking at 10-12 per cent growth in the overall fresh milk segment.

4 DISTRIBUTION CHANNELS

Mother dairy is the market leader in the distribution channel. Currently it has five channels of

distribution which are:-

Milk Shops: - Milk booths are the most important channels of Mother Dairy, their

products are available in over 5000 outlets out of which about 680 are exclusive

Mother Dairy booths. They are strategically located all across Delhi and NCR,

making it convenient to pick up the daily requirement of Milk, Flavored milk,

Butter, Dahi, Lassi and Ice Creams. The lifeline of Delhi, Mother Dairy booths all

across the city provide milk early in the morning and at evenings

The supply of milk and other milk products to these booths are made directly from

the Mother dairy plant. Each booth in NCR region is identified with its booth ID

number. The booth owners are currently given a margin of 5% on the sale of

Mother dairy products.

Retail: - The retail channel includes small and big shops which sell Mother Dairy

products with a margin of 15%. Mother Dairy caters to the ice cream demands of

this segment that includes provision stores, bakeries, confectioneries, restaurants

etc.

Vending: - It is the prime channel of sales of Mother dairy products. These vending

carts are placed strategically in high footfall areas for example outside school,

college, parks, colonies, bus shops, cinema halls etc.

Modern Retail Formats: - This is relatively newer channel which includes all the

major retail outlets like Spencer’s daily, Big Bazar, More, Easy Day, Reliance Fresh

etc. Through this Mother dairy taps the overwhelmingly successful organized retail

format.

Mother dairy Food Services: - These channels cater to hotel, banquet halls, the

railways as well as airways. All these come under the MPS. It is one window stop to

provide all the mother dairy products to such customers. The margin given to them

varies, as it is a tender based process. The purpose of this channel is to maintain a

strong presence of Mother dairy in these areas and in the process gain profit.

5 PROMOTIONAL STRATEGIES

On the marketing front, Mother Dairy says it's trying to take its product campaigns and

communications to a higher platform. For instance, in the case of milk, the campaigns do not talk

about the obvious benefits - milk is good for health, it has calcium and so on - but rather it

targets children and are created around ideas such as "The country needs you, grow faster". As

far as products such as butter, cheese and ice creams go, the campaigns have been created around

"taste". For butter again, the focus is on children. "Amul butter may be selling the most, but the

advertising and promotions are almost always targeted at adults," points out an analyst citing

Amul's popular Utterly-Butterly campaigns.

Here, Mother Dairy has dared to go different. Since 60 per cent butter is consumed by kids, the

company wants them to sit up and take notice of its butter. Makkhan Singh, a sturdy jovial cow

(a cartoon character) has been made its brand ambassador.

While Mother Dairy has been carrying out school programmes - games and activities – involving

Makkhan Singh in Delhi, it has plans to take such activities to Mumbai and Kolkata as well. It

also runs a gaming website on the character to attract children. Equity and empathy are being

built for the brand, the values for which it stands, and the various other Mother Dairy products,

which draw their core values from Mother Dairy milk.

It's cheese for children again. A couple of months ago, Mother Dairy carried out a retail activity:

"Cheese khao superhero ban jao", where kids buying cheese at a retail outlet were invited for a

photo op - dressed as superheroes - through Polaroid cameras; and the framed photograph was

presented to them. The activity was carried out in about 150 outlets in Delhi and Mumbai, with

about 20,000-25,000 snaps being taken.

It claims that the exercise resulted in better ties with retailers. A positive response made Mother

Dairy to repeat it in Kolkota as well. Clearly, Mother Dairy has aggressive plans. But, strong

regional brands and other co-operatives will continue to give it tough competition. It will not be

a cakewalk anymore.

Chapter 4 Financial Analysis

1 Sources of Finance

2 Ratio Analysis -Any 5

3 Net Profit/Balance sheet –Analyze

1 SOURCE OF FINANCE

Mother dairy has a turnover of about $500 million, and it has been growing at the rate of 20%

(CAGR) over the last 3 years and has crossed the Rs. 2700 crores mark in the fiscal 2007-2008.

Mother dairy plans to achieve a turnover of $1billion US D beyond of 2009.

In order to do so they are now engaging bank with themselves in operations like PNB-Mother

dairy i.e. bringing the Bank to Milk Procedures.

Punjab National Bank has entered into an agreement with Mother Dairy, a wholly owned

subsidiary of National Dairy Development Board (NDDB) to benefit milk producers in Uttar

Pradesh. As a part of a nationwide dairy development programme, NDDB promoted dairy

cooperative enterprises in Northern India with an objective of providing round the year stable

and competitive price to rural milk producers through a three-tier structure of State federations,

milkshed-based unions and their member village dairy cooperative societies.

PNB’s mission of inclusive development and commitment to financial inclusion of rural people

in a big way is also desirous to contribute towards the prosperity and overall development of the

rural poor in general and milk producers and farmers in particular by bringing them into the

banking fold and to devise an efficient, quick and simple milk price payment delivery system as

well as advance small loans to farmers/milk producers for their credit needs and to return the

advances taken from private money lenders under its ‘Debt Swap Scheme”; and provide any

other banking services as required by the villagers.

Mother Dairy Foods Processing Ltd, also known as Mother Dairy Fruit & Vegetable Private

Limited, Patparganj, Delhi, has a turnover of about $500 million. Mother Dairy’s turnover has

been growing at the rate of 20% (CAGR) over the last 3 years and has crossed the Rs.2700

crores mark in the fiscal 2007-08. Mother Dairy plans to achieve a turnover of $1 billion USD by

end of 2009.

From a total of 72 schools surveyed and approached, 51 schools showed a keen interest in

starting the services in the current academic year. 21 schools were either rejected (on account of

low purchasing power/low student strength/ low sales opportunity) or operation delayed for the

current academic year or showed no interest in this.

For the 51 schools, the total student strength is approximately 116000 students.

Now we make an approximation that not more than 10% of the students of any given school will

purchase ice cream on any given day within the school premises. Thus our potential number of

customers for each day is -

= 10% of total student strength = 0.1 * total student strength = 11600

The revenue per person per day has been found out to be about Rs. 8 to Rs. 12. This is because

school students mostly consume the impulse segment of our ice cream variants.

Thus total revenue in a day = 11600 * Rs. 10 = Rs. 116000

So, revenue for a month = 116000 * 25 days = Rs. 29,00,000

Thus Mother Dairy can get an additional sales figure of around Rs. 29,00,000 per month, if this

channel is functional.

This figure is limited to the sample of 51 schools. There are about 1000 schools in Delhi that fall

under the Band B and Band C. Extension of this project to these schools and an aggressive

strategy to pursue them will result in a very strong thrust to Mother Dairy‟s revenues and another

leap over its major competitors in the market.

Dairy products contributes 58% to the total revenue of Mother Dairy.

Year 31st march 2007 2008

Working Results

Gross Sales 2178 2723

Total Income 2193 2776

PBILTD (8) 45

Interest 14 40

PBT (34) 7

PAT (33) 6

YEAR REVENUE

2005-06 1800 cr.

2006-07 2000 cr.

2007-08 2193 cr.

2010-11 2776 cr.

2 RATIO ANALYSIS:

Inventory /stock turnover ratio

measures the relationship between cost of goods sold and the inventory level. There

are two approaches for calculating this ratio, namely:

Inventory turnover ratio = cost of goods sold /Average stock.

Inventory/stock

Turnover ratio

Cost of goods

Sold /

Average Stock

2004

0

2005

0

2006

561.29

ASSETS TURNOVER RATIO:

Depending on the different concepts of assets employed, there

Are many variants of this ratio. These ratios measure the efficiency

of a firm in managing and utilising its assets.

Total Assets turnover ratio = sales/cost of goods sold / avg. total assets.

Assets Turnover

Ratio

Cost of goods

sold /

Avg. total assets

2004

0

2005

49.92

2006

44.09

RETURN ON CAPITAL EMPLOYED:

This ratio measures the relationship between net profit and capital employed. It indicates how

efficiently the long-term funds of owners and creditors are being used.

Return on capital employed = Net profit after taxes and interest / Capital employed.

Return on

capital

employed

Net profit after

taxes and

interest /

Capital

employed

2004

0

2005

0

2006

561.29

3 FINANCIALS

From FY07, MDFVL commenced its integrated commercial operations comprising procurement,

processing, manufacturing, marketing of milk, dairy products and other products resulting in

enhanced scale of operations and addition of value-added products in its product line.

Total income of the company increased to Rs.2, 776 cr. and the company recorded cash profit of

around Rs.30 cr during FY08 resulting from improved sales realizations for its products on

account of strong domestic demand. MDFVL earned a non-operating income of around Rs.11.42

cr and Rs. 25.88 cr in FY07 and FY08, respectively, comprising interest income, revenue grants

received from NDDB and rent received etc.

Increase in equity capital as on March 31, 2008 was on account of amalgamation of Dhara

Vegetable Oil and Foods Company Ltd (DOFCO) with MDFVL. The high overall gearing as at

the end of FY07 and FY08 was on account of high utilization of short-term/working capital loan

on account of commencement of integrated commercial operations of MDFVL.

4 FINACIAL RESULTS AND RATIO ANALYSIS

Liquidity position as indicated by current ratio was comfortable at 1.48 times as on March 31,

2008. The sales are mostly on cash basis thus debtor days are low. Also, because of the seasonal

nature of requirement for working capital during the winter months (October- February), the

utilization of short-term loan/cash-credit remains very high as at the end of each financial year.

Chapter 5 Key Learning’s from the Company and Recommendations

1 Performance Analysis of the Company

2 Reasons for the expansion /contraction/diversification of Company

3 Comment on Organizational Leadership

4 Market share/growth rate of Company

5 SWOT Analysis of the Company

1 SWOT Analysis

Strength

Wide range of products

Affordable price

Effective ad campaign

Distribution network

Diversification

Brand image

Weakness

Need to focus on other product as well in which their competitors are leading

Improve on road transport infrastructure

Opportunity

Export segment good market entry in retailing

Packaged seeds market

Sports drink market

E-competency for supply chain management

Threats

Increasing population

Increasing requirement

Adulteration

Difficult to expand

Population of milk animal

2 MARKET SHARE & GROWTH RATE

Mother dairy commands 60% market share in the organized sector in and around Delhi,

primarily because of consistent quality and service, whatever be the crises, floods, transport

strike, curfew etc. Mother Dairy in Delhi is presently manufacturing & selling around 12 lakh

litres of tonned milk through bulk vending shop.

Home grown dairy major, Mother Dairy is targeting revenue of Rs. 4,000 crore in the current

financial year, which would be 22% higher than what it clocked last year. The higher sales would

be driven by enhanced product portfolio in the ice cream segment and strengthening its presence

in push cart segment by 35% and in retail segment by 30%. Impulse segment in ice cream is

growing faster than the take home segment. "Our impulse segment is growing at a rate of 25%,

while the take home segment is at 20%. The ice cream segment to grow by 30% this year as

against last year's growth of 18% to 20%.

In the impulse category, the company is planning to grow by 30% this year. Impulse segment

contributes around 39% to the company's revenues out of which push carts contribute around

40%. Push carts are a key driver of growth as it contributes around 17% to the total revenues.

Like most other ice cream companies Mother Dairy sells 40% of this category during the

summer months of April, May and June. The size of the organized ice-cream market is

around Rs. 950 crore.

Mother Dairy commands a 15% market share in the ice cream category. It has a strong presence

in north India - Punjab, Haryana, UP, Rajasthan apart from Mumbai, Pune and Kolkata. n the

curd category, the company is hoping to grow by 35% while in the probiotic variety of the same

it is planning to grow by 15% in the current year.

3 REASON FOR EXPANSION & CONTRACTION

Mother dairy is all geared up for the expansion and for that they are eyeing a Rs 4,000 crore

turnover in the current fiscal, the National Dairy Development Board subsidiary, Mother Dairy

will invest Rs 100 crore in augmenting its capacity in this year.

"Mother Dairy (MD) has clocked Rs 3,200 crore turnover in the last fiscal and we are aiming at

Rs 4,000 crore total revenue in this fiscal year," Mother Dairy CEO Paul Thachil said.

Over the last few years, Mother Dairy has maintained an annual growth of around 20-22 per cent

and it expects the momentum to continue in the current fiscal, Thachil said.

The company plans to invest Rs 100 crore in the current year to enhance capacity.

"We have taken steps to increase our capacity both in terms of manufacturing as well as sales

and distribution network. The total investments in these activities would be around Rs 100

crore," he added.

It is also working towards increasing its footprint across the country and has added, Pune to the

list of cities in which it supplies fresh milk.

Mother dairy also planning to roll out a chain of exclusive retail outlets, named ‘Gaurav Stores’,

to market the entire range of its products across India.

According to company sources, it has planned to launch 350 exclusive stores in New Delhi and

200 retail outlets in Mumbai in the first phase, to be expanded later in all major cities.

The company owns a network of booths in Delhi to market the dairy products. The new concept

has been introduced to create a better brand and street visibility, to consolidate its position in the

wake of growing competition.

As far as contraction is concerned I have already discussed it in issues related to mother dairy

above. Stated issues are acting as a stumbling block for the mother dairy to expand at its fullest

but despite of these issues they are taking each and everything into consideration whether it is

promotion, distribution etc. It is pointless to discuss those issues again as mother dairy expansion

is taking place well in advance taking all those hurdles into consideration.

4 DIVERSIFICATION OF COMPANY

After becoming a pan-India player recently, dairy chain Mother Dairy, a subsidiary of the

National Diary Development Board, is now eyeing a turnover of one billion dollar in the next

two years.

Following expansion of their business in other cities and with the launch of new products, they

are expecting to cross one billion dollar turnover by the end of FY 2009. The dairy chain's top

line has been growing at a rate of 22-25 per cent per annum and is expecting a turnover of Rs

2,700 crore this fiscal. Mother Dairy will be the second dairy chain in the country after Amul to

cross the one billion turnover milestone, if it achieves the target.

For over three decades, Mother Dairy restricted its presence mainly in the National Capital

Region in the fresh milk and other milk products segment. This year it went for a market

expansion across the country. They have a plan to capture all the top six markets in the milk and

milk products segment in the country.

It has recently entered the fresh milk market in Hyderabad and simultaneously made foray into

curd, ice-cream and lassi segments in Mumbai market. Mother Dairy markets dairy products

such as fresh liquid milk, ice-creams, and other milk products. It also markets Dhara range of

edible oils and the Safal range of fresh fruits and vegetables and fruit juices.

Mother Dairy is present by and large in most of the big categories; now it is more about foraying

into niches and value-added versions in the same categories. For instance, they have been in the

curd and ‘lassi’ categories for around five-six years, but they have now forayed into probiotic

curd and ‘lassi’.

5 ORGANIZATION LEADERSHIP

Leadership in the organization is by far the best to the workers, like any other private sector

entity, it enjoys better talent management, Innovative recruitment strategy, learning and Talent

Initiative Excellence. They have a diverse and welcoming workplace wherein values of trust,

transparency, unquestionable commitment to quality, single-minded focus on excellence and

respect for the individual are simply a way of life. It is forging ahead in the market to tap the

limitless potential in the organization. To achieve the vision, they are always looking out for

dynamic talented professionals who have:-

The ability to take initiatives and drive things.

Are ambitious and self starters

Love challenges and have a passion to excel

The capability to initiate, lead and manage change in a highly diverse and challenging

environment.

6 PERFORMANCE ANALYSIS

Mother Dairy looked at all its operations, strengths and weaknesses as well as opportunities

available, and came to the conclusion that it had to become more customer centered (rather than

merely being farmer or supplier centered). This required paying close attention to the customer

needs and quality. Mother Dairy realized that it was not enough that Mother Dairy itself was

wedded to these ideas; the entire supply chain had to conform. Hence it launched a “Total

Quality Management” or TQM to ensure the high quality of the products from the starting point

(the village farmer who supplied milk) right through the value chain until it reached the

consumer. This meant the need for the involvement of farmers, transporters, factory personnel,

wholesalers and retailers, each of whom had a role to play.

What began as a TQM movement gradually became a movement for management of change in

the entire value chain. Mother Dairy’s Management of Change (MOC) initiative was launched in

six areas: cleanliness of the dairy co-operative societies, planning and budgeting of the dairy

cooperative society, artificial insemination service, quality testing and milk measurement by the

dairy co-operatives, animal feeding and management practices and self leadership development.

Mother Dairy is expanding its edible oil portfolio by venturing into olive and rice bran oil

segment. The dairy major is already selling vegetable and mustard oils under Dhara brand. In

line with the changing needs of consumers, they are venturing into the olive oil segment with a

new brand - Daroliva.

The company aims to achieve 10-15 per cent market share in the olive oil segment within a year

of the launch. In the total market of olive oil in the country is around 2,000 tonnes per annum.

Daroliva - extra virgin olive oil- is imported from Spain and the packaging of the product is done

at Dhara Vegetable Oil & Foods Company facility in Gujarat. The company has priced the oil at

Rs 165 for the 200 ml pack and it would be available in four different sizes. Initially, they would

be selling olive oil in top 25 markets of the country and gradually, they will move to smaller

towns and remote markets.

About marketing strategy, the launch of Daroliva would be supported by print campaign in

addition to attractive point-of-purchase material and the company also plans to hold sampling

sessions at various retail outlets and malls.

The firm is also venturing into the rice bran oil with it new brand 'Dhara Rice Bran Oil' in Tamil

Nadu and Andhra Pradesh market. With opportunities galore Mother Dairy is looking to capture

those pportunities through their innovative strategies and plans. In times to come the great

challenge for Mother Dairy will be to be the best and capture the maximum Indian market.

Chapter 6 Findings

FINDINGS,

In institutional users like sweet shops, restaurants, hotels, canteens, offices, hospital etc –

The awareness level of Mother dairy milk to bulk users is around 90% but only 30% are

using Mother dairy milk.

The preference of purchasing milk by the bulk users is majorly quality, price and timely

availability.

The reasons for not using milk by the users are:-

Higher prices that are not meeting the competitor rate as bulk users are very price

sensitive; other milk dairies are providing bigger margins.

In sweet marts mawa generation is less and there is a complaint about cuddling of milk.

In case of canteens contract some of them prefer credit purchasing which is against

company’s norms and policies.

Milk market is totally unpredictable market and the organization should be over-cautious of any

complaints that come into the milk as it includes the sentiments of mother for her kid and she

would not prefer to give anything to her kid for which she is not 100% satisfied. So the company

should take every step possible to contain these problems which in some way or the other affects

the sale of Mother Dairy and its retailers.

- School plays a vital role in promoting healthy snacks in the school canteen. Permission from

the school authorities was necessary for selling any items of food in the school canteen.

- Generally, schools had no standard canteen norms or formal structure of carrying out this

process. Everything was done on an ad hoc basis. In case of a few schools, the canteen contractor

was directly approached and enquired. He was the sole authority involved in carrying out the

deal and finally setting up the channel.

- There were certain schools where there was no canteen. They were strictly against the

introduction of any food items within the school. The schools declined the offer to setup any ice

cream supply straight away.

- Although schools are against junk food, no written nutrition policy exists. There is no formal

structure that decides health promoting policies in school. Common inhibitions still prevail

among the people that Ice cream is a junk food and is fattening. Also most assumed assume that

ice creams lead to sore throats, cold and phlegm.

- Certain schools already had annual contracts with other ice cream manufacturers (mostly

Kwality and Vadilal), which generally cease and get renewed at around the start of the summer

season. These schools showed eagerness to work with Mother Dairy (primarily due to Brand

image), but were obligated under their current contract. Follow up calling to these schools needs

to be done.

- Some canteen contractors have bargaining power for placing a mother diary deep freezer, due

to the reason that they have been selling other brands of ice creams and are getting higher margin

as well as incentives therefore they demand more in terms of margin and other benefits.

- No care was taken for the functioning and maintenance of the Deep Freezer by the Canteen

Owners. Inefficient and slow handling of cases of rectification of malfunctioned Deep Freezers.

Chapter 7 Conclusions and Suggestions

Conclusion:-

Working for an organization like Mother Dairy in the Delhi region is a pride for me and gave me

a chance to learn the skills and helped me to understand the real environment of business and

Delhi market potential for Ice creams.

In posh areas like South Delhi and east Delhi need a lot of planning before making any offer to

the customer. As far as ice cream is concerned the competition is tough with reputed brands

which fighting for their share in the market

But owing to its brand image, quality, price and taste Mother Dairy is undisputed leader in retails

with an evenly distributed retail outlet in Delhi, which results for higher sales for Mother Dairy

ice cream. As far as other revenues for sales from other channel like retail,booths,modern retail

Mother Dairy is doin a good business and needs to implement the same strategy in the school

channel as well.

The research also helped in identifying various issues in the schools related to the canteen

owners and plan out a methodology to rectify the problem.

At last it was a great experience to me working with Mother Dairy, a reputed brand in FMCG

sector because many of the management guru‟s said if you work successfully in FMCG

sector than you can survive easily in any sector.

7 REFERENCES

1. http://www.thehindubusinessline.com/2004/12/31/07hdline.htm

2. http://www.rediff.com/money/2006/jul/04spec1.htm

3. www.nddb.org

4. www.motherdairy.com

5. http://www.fnbnews.com/article/ articled=19121

6.http://www.icmrindia.org/casestudies/catalogue/Business%20strategy2/National%20Dairy

%20Develo

pment%20Board-Dairy%20Cooperative%20Movement.htm

7. Empowerment Case Studies: National Dairy Development Board

8. www.indiadairy.com

9. Opportunities and Challenges in the Indian Dairy Industry – Dr. K. G.

Karmakar and Dr. G. D. Banerjee