KHALSA INSTITUTE OF MANAGEMENT &

TECHNOLOGY FOR WOMEN

LUDHIANA

TABLE OF CONTENTS

Certificate i
Abstract ii
Acknowledgement iii
Abbreviation iv

PART –I
Organizational Profile 1-39
 i

ABSTRACT
In an institute, a student learns about theoretical concepts. But in the present day
scenario, environment surrounding the business is complex and dynamic and the
industries are so much diversified and specialized that it requires managers to be
wholesomely nourished with knowledge and skills in their respective fields of
specialization. Exposure is the key in building good future managers.
For this reason, P.T.U., (Jalandhar) designed a scheme under which the
students of M.B.A. have to go for the Summer Training between second and third
semester. During this period, I have written a Report about knowledge and experience. I
have gained knowledge in course of training. This Report has been written in simple
language specifying the Organizational setup and Management Procedures of “Working
Capital Management at Verka Milk Plant” at Verka Plant Distt- Ludhiana. Any omission
or errors are deeply regretted.
 ii

ACKNOWLEDGEMENT
This is my first experience in the corporate world and it has been a truly learning
experience for me. The project assigns to me had a great learning potential and
tremendous scope of application. There have been many people who have supported me
throughout the project and I take this opportunity to thank them for their time and effort.

I would like to thank Sh. A. K. Gupta, Accounts Manager, of Verka Milk Plant,
Ludhiana for their willing and constant encouragement in exploration of my present
investigation and preparation of project.

I would fail in my duty if I didn’t acknowledge the blessings of Almighty GOD. I would
also like to thank my respected and loving parents, who kept on motivating me in
completing this Report.
I am extremely thankful for the valuable assistance extended to me by the
respondents of Verka Milk Plant for providing me all the information needed for the
project. I express my heartiest gratitude to them for spending their valuable time. In
the end, I can say only this much that all are not be mentioned but none is forgotten.

Signature of the Student

 iii

ABBREVIATIONS

• SKM- Pasteurized Skimmed Milk

• DTM- Pasteurized Double Toned Milk
• SNF- Solid Not Fat
• MIS- Management Information System
• DHCC- Dairy Helpers Cum Cleaners
• OHCC- Office Helpers Cum Cleaners
• DY- Deputy
• H.A.C.C.P-Hygienic Hazard & Critical Parameters
• NDDB- National Dairy Development Board
• PDDB- Punjab Dairy Development Board
 iv

ORGANIZATIONAL PROFILE

INDUSTRY PROFILE

FOOD INDUSTRY

The food industry is the complex, global collective of diverse businesses that together
supply much of the food energy consumed by the world population. Only subsistence
farmers, those who survive on what they grow, can be considered outside of the scope of
the modern food industry.

The food industry includes:

• Regulation: local, regional, national and international rules and regulations for
food production and sale, including food quality and food safety, and industry
lobbying activities.

• Education: academic, vocational, consultancy.

• Research and Development: food technology.

• Financial services: insurance, credit.

• Manufacturing: agrichemicals, seed, farm machinery and supplies, agricultural

construction, etc.

• Agriculture: raising of crops and livestock, seafood.

• Food Processing: preparation of fresh products for market, manufacture of

prepared food products.
 • Marketing: promotion of generic products (e.g. milk board), new products,
public opinion, through advertising, packaging, public relations, etc.

• Wholesale and Distribution: warehousing, transportation, logistics.

• Retail: supermarket chains and independent food stores, direct-to-consumer,

restaurant, food services.

GLOBAL FOOD INDUSTRY

The global processed food industry is estimated to be valued around EUR 2.5 trillion and
accounts for three-fourth of the global food sales. The global food industry is ever
changing and evolving. However, health, convenience and value continue to be the key
value propositions in this industry.

Despite the large size of the industry, only 6 percent of processed foods are traded across
borders compared to 16 percent of major bulk agricultural commodities. The United
States and European Union together account for over 60 percent of total retail processed
food sales in the world.

Rest of the world

9%

US Europe
21% 39%

Asia Pacific
31%

Trade liberalization policies through multi-lateral and regional trade agreements have led
to a rapid growth in food processing. In the Asian region, Japan is the largest food
processing market, but India and China are likely to grow at a faster rate in the next
decade. The processed food industry is strong in Japan and South Korea, as they are the
leading meat importing countries in the world and consumption of meat is high in these
countries. The Australian processed food industry is one of the most technically advanced
in the world and it produces products of international standards at comparatively lower
prices for the world market. The U.S. continues to live up to its reputation as the

“breadbasket to the world”. Countries in the Sub-Sahara African region, Latin America
and parts of Asia continue to be on the lower-end of technology prowess in food items
and are inclined to their staple diets, whereas, those in Europe, North America, and Japan
are on the higher-end of technology, with a sharper shift towards convenience and diet
foods.

Some Features are-

• The global food processing industry is dominated by a cluster of highly powerful

multinational corporations.

• Some big names are ConAgra, Krafts Foods, Cadbury, General Mills, H.J. Heinz,
Nestlé and Unilever.

• The US food industry generated revenue that totaled to $126 billion in 2008.

INDIAN FOOD PROCESSING INDUSTRY

• India is one of the largest food producers in the world.

• India has diverse agro-climatic conditions and has a large and diverse raw
material base suitable for food processing companies.

• Investment requirement of around US$ billion exists in the food processing

sector.

• India is looking for investment in infrastructure, packaging and marketing.

 • India has huge scientific and research talent pool.

• A largely untapped domestic market of 1000 million consumers.

• 300 million upper and middle class consume processed food.

• 200 million more consumers expected to shift to processed food by 2010.

• Well developed infrastructure and distribution network.

• Rapid urbanization, increased literacy, changing life style, increased number of

women in workforce, rising per capita income- leading to rapid growth and new
opportunities in food and beverages sector.

• 50 percent of household expenditure by Indians is on food items.

• Strategic geographic location ( proximity of India to markets in Europe and Far

East, South East and West Asia)

• The industry will generate revenue of around $260 Billion from the current level
of $200 Billion in the next six years (by 2015).

• The Indian food sector possesses strong potential to grow at 30%-40% from the
current rate of 15% in the next 10 years (by 2019). The country is expected to
take its processed foods revenue from Rs 8,200 Billion in 2009-10 to Rs 13,500
Billion by 2014-15.

Under the food industry, Dairy product is very important part of food processing.

Dairy Processing

India ranks first in the world in terms of milk production. Indian production stands at 91
million tones growing at a CAGR of 4 per cent. This is primarily due to the initiatives
taken by the Operation flood programmes in organizing milk producers into cooperatives;
building infrastructure for milk procurement, processing and marketing and providing
financial, technical and management inputs by the Ministry of Agriculture and Ministry
of Food Processing Industries to turn the dairy sector into viable self- sustaining
organized sector. About 35% of milk produced in India is processed. The organized
sector (large scale dairy plants) processes about 13 million tones annually, while the
unorganized sector processes about 22 million tones per annum. In the organized sector,
there are 676 dairy plants in the Cooperative, Private and Government sectors registered

with the Government of India and the state Governments.

India has a unique pattern of production, processing and marketing/ consumption of milk,
which is not comparable with any large milk producing country. Approximately 70
million rural households (primarily, small and marginal farmers and landless labourers)
in the country are engaged in milk production. Over 11 million farmer are organized into
about 0.1 million village Dairy Cooperative Societies (DCS) (about 110 farmers per
DCS). The cumulative milk handled by DCS across the country is about 18 million kg of
milk per day. These cooperatives form part of a national milk grid which links the milk
producers through out India with consumers in more than 700 towns and cities bridging
the gaps on account of seasonal and regional variations in the availability of milk.

The Ministry of Food Processing Industries is promoting organized Dairy Processing

sector to accomplish upcoming demands of processed dairy products and helping to
identify various areas of research for future product development and quality
improvement to revamp the Indian dairy export by way of providing financial assistance
to the dairy processing units. 32 Units have been sanctioned financial assistance (Rs. 591
lakhs) under the plan scheme of the Ministry during the year 2006-07.

Major Indian and Overseas Players in the Food industry

• ITC Limited
 • Amul

• PepsiCo India Holdings

• Nestle

• Britannia

• MTR foods limited

COMPANY DETAILS

MILKFED

The Punjab State Co-operative milk producer’s federation limited popularly known as
MILKFED. Punjab came into existence in 1973. It was backed by twin objective of
providing remunerative milk market to the milk producers of the state on the one hand
and to provide technical inputs to the milk producers for the enhancement of milk
production on the other.

Although the federation was registered much earlier, it took the centre
stage of Punjab dairy scenario in 1983 when all the milk plants of Punjab Dairy
development corporation Ltd were handed over to Co-operative sector and the entire state
was covered under OPERATION FLOOD to give the farmers better value and to
customers the better products. The organizational set up of MILKFED is based on a three
tier system:-

• Milk producers Co-operative societies at village level

• Milk Co-operative Unions at Districts level.

• Co-operative milk marketing federation as an apex body at State level

{MILKFED}.
 MILKFED with its network of over 5000 villages milk producers Co-
operative societies and over 3 lakhs milk producers form a strong network providing
assured market to milk producers.

MILKFED and its units have a workforce about 5000 employees and also
provide regular employment to about 600 transporters.

Milk Procurement Network:

Working on “Anand Pattern” the process of organizing societies at village level started in
Punjab as early as 1978. Presently, there is strong Network of about 6432 (as on

31.3.2009) Milk Producers Cooperative Societies organized at village level. About 3.65
Lakh milk producer members are attached to these societies. Fresh milk is procured from
the milk producers twice a day through village level societies directly without the
assistance of any middleman.

MILKFED has its milk unions in almost all the districts of Punjab. These district units
are:-

1. Amritsar
2. Bathinda
3. Bassi pathana
4. Chandigarh
5. Faridkot
6. Ferozpur
7. Gurdaspur
8. Horshiarpur
9. Jalandhar
10. Ludhiana
11. Patiala
12. Ropar (Mohali)
 13. Sangrur

These plants in all these unions are being run under the brand name
VERKA.

Products:

Milkfed has formulated company specifications for its milk & milk products to provide
standard and quality of products to consumers.
 • Milk
• Ghee & Butter
• Cheese & Paneer
• Drinks
• Ice-cream & Sweets
• Milk Powder
• Fresh Products
• Packing

Achievements-
On the basis of quality with efficient administration, MILKFED has not only established
new mile stone of providing services to Dairy farmers but scaled new heights in
delighting esteemed customers also. This has resulted into tremendous achievements in
all fields.

TURNOVER:

The annual turnover of Milkfed which was Rs.931 crores in the year 2007-08 has hit the
level of Rs.1150 crores in the year 2008-09.

Turnover (Rs. In Crores)

EQUITY PARTICIPATION:
The paid-up equity of Milkfed as on 31.3.2008 was to the tune of Rs.46.86 crores which
comprises of Rs.28.93 crores from the cooperative members and balance Rs.17.93 crores
from State Government.

MILKFED GROWTH AT A GLANCE:

PARTICULARS UNIT 04-05 05-06 06-07 07-08 08-09

FUNCTIONAL
CUMMU.NOS. 6104 6101 5989 6155 6432
SOCIETIES
CUMMU.NOS
MEMBERSHIP 3.56 3.63 3.60 3.62 3.65
IN LACS
AVG. DAILY MILK
LKG SPD 7.81 7.82 7.78 8.21 9.21
PROC

PEAK MILK PROC LKG SPD 11.64 11.37 11.54 12.39 14.13

A.I. CLUSTER
COOMU.NOS. 341 388 433 504 595
SOCS.

FODDER SEED
M.Ts. 400.30 430.00 500.00 572.00 802.00
SUPPLIED
CATTLE FEED
M.Ts. 66970 66750 73577 86174 93751
SOLD
AVG..DAILY CITY
LLPD 5.27 5.67 5.81 6.16 6.58
SUPPLY
LAC
SALE OF SFM 35.85 42.49 41.92 61.11 56.38
PKTS/BTLS
SALE OF LASSI LAC PACKETS 12.20 16.89 19.16 29.51 31.97
SALE OF ICE-
LAC LITRES 10.23 12.18 15.61 17.68 16.06
CREAM
EXPORTS RS.IN LACS 1142.28 713.67 1140.35 1334.90 1500.00

TURNOVER RS.IN CRORES 653.00 675.00 760.00 931.00 1150.00

10

VERKA MILK PLANT

PROFILE
Full Name: The Ludhiana District Cooperative Milk Producers

Union Ltd. Ludhiana

Registered Office: Ferozpur Road, Ldh-141004

Foundation: Hon. S. Prakash Singh Badal in 1970

Capacity: At that time, 1 lakh litre per day. At present 4 lakh litres

per day

Head Office: Punjab State Co-operative Milk Producers Federation

Ltd. S.C.O.153-155, Sec. 34-A, Chd.

Registration Date of Plant: 1974 with Punjab Dairy Development Co-operated

Date of Inauguration: 31st October, 1974

Commencement of Production: Feb, 1979

Quality: Get International Quality Certificate ISO-9002 & IS-

15000 (HACCP)

Products Marketed By: The Punjab State Co-operative Milk Producers

Federation. Ltd. Chd.

Chairman: S. Ajmer Singh Bhagpur

11

No. of Societies: 816

Membership: 78000
Banker: Punjab State Central Co-operative Bank

Brand Name: VERKA

Number of Employees: 494 Permanent 500 Temporary

Chilling Centers: 6

Turnover: 180 crore

Verka milk plant, Ludhiana is known Ludhiana distt. - Co-operative milk produces union.
It is situated on Ferozpur road. It is fully equipped with modern fluid milk plants
facilities.

VMP, Ludhiana is a prestigious milk plant of Punjab State famous all over the country
and abroad for the supply of quality milk products. It has got first position in Northern
Zone. Its functioning stone was laid by S. Prakash Singh Badal, the Chief Minister of the
Punjab on June 22 1970. This plant was inaugurated by our referred Prime Minister Smt.
Indira Gandhi.

Milk plant is a co-operative society and farmers (producers) share all its profit and losses.
Govt does not provide any financial assistance to milk plant Ludhiana. But Govt.
Supervisor and control is there. Law and policy maker is Punjab Govt; here there is no
dishonesty in the milk plant. It is very neat and clean organization. The handling capacity
of the milk plant per day is 4 Lac Litre.

In the year 1983, PDDC merged into milkfed and control of milk plant transferred to
milkfed in year 1983. But the efforts of the Directors and milk producer's control of milk

12
plant transferred to milk union, (union of milk producers).
Milk plant Ludhiana produces variety of milk products like Milk cake, cheese, Butter,
Ghee skimmed milk powder and standardized milk. Milk plant sells better quality of
pasteurized milk to people. Ghee manufactured by this plant is not only sold in country
but also supplied to foreign countries like Nepal, Dubai.

The new achievement of this milk plant is to achieve the International quality certificate
ISO 9002.

Machinery of best technology has been installed in the milk plant. The machinery is
available for the productions of following milk products-
Pasteurized fluid milk
Sterilized flavored milk
Milk-cake
Paneer
Lassi
Ice Cream
Butter
Ghee
Skimmed milk powder
Whole milk powder
Baby food
Infant milk food

13
But according to the demands from the open market the following milk products are
produced:-
Pasteurized/ Sterilized milk
Milk cake
Paneer
Butter
Ghee
Skimmed milk powder
Milk plant Ludhiana is playing a vital role in Socio Economic development of real
merses of Ludhiana Distt. Normally middlemen and traders dominate the market. The
milk plant steadily marched toward fix goal of becoming a strong and viable milk plant
and now is at No. 1 in Northern Zone.

Its entire officers as well as workers are assets to milk plant Ludhiana who are
performing their duties delight and with full zeal and energy. Also the building of milk
plant. Ludhiana is nicely planned and maintained. There is great system of work. We
hope it will maintain its reputation and goodwill.

HISTORY OF VERKA MILK PLANT

Milk Plant, Ludhiana, whose foundation stone was laid by Hon. S. Parkash Singh Ji
Badal in 1970, was commissioned by PDDC in 1974 and was taken over by MILKFED
PUNJAB in 1983 and thereafter by Ludhiana District Cooperative Milk Producers’
Union Limited, Ludhiana in 1988. The capacity of the plant was 1.00 lac litres of milk
per day at the time of commissioning in 1974 and it was increased to 4.00 lac litres per
day in 1992 at the cost of Rs. 18.00 crores. The latest state of art technology in milk
drying is available at this plant. The products manufactured by this Plant, at present are
Ghee, Milk Powder, Butter, Paneer, Liquid Milk and Milk Cake etc. Milk Plant Ludhiana
is the first in Northern India and amongst the first 10 in India in the Cooperative Sector.

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 MILK PLANT’S SALIENT FEATURES

 First Milk Plant in India to get ISO-9002 International Quality Certification Mark.
 Milk Rate paid to the producers among all the Unions highest in the State.
 Milk Procurement highest among all the Unions in the State
 Milk Procurement per society/ day highest among all the Unions in the State.
 100% Milk producers’ cooperative societies are in profit.
 Aggregate profit of the societies in any year is the maximum among all the
Unions in the State. Ever since inception, customer satisfaction and consistency in
quality is the key-thrust area of this organization.
 No. of A.I. Cases maximum among all the Unions in the State.
 Cattle Feed sold to societies maximum among all the Unions in the State.
 No. of Sick animals treated highest among all the Unions in the State.
 F.M.D. Vaccination maximum among all the Unions in the State.
 Milk transportation cost lowest among all the Unions in the State.
 Milk chilling cost lowest among all the Unions in the State.
 Average daily city supply maximum among all the Unions in the State.
 Embryo Transfer Technology introduced in the field for the first time in Northern
India. No. of Milkotesters (new technology for fat testing at village level)
provided to milk societies is the maximum in the State.
 Milk products selling at premium rates and ghee exported to Gulf countries and
Philippines & S.M.P. exported to Bangladesh.
 Capacity utilization is maximum on yearly basis.
 Fuel cost per kg. milk is lowest among all the Unions in the State.
 Leading Union to start Cooperative Development Programme to strengthen the
co-operative base at village level and to introduce progeny testing programme for
improvement of animal breed.
 Annual turn-over more than Rs. 100.00 crores of rupees, highest among all the
Unions in the State.
 15
Embryo Transfer Technology-
Embryo transfer is the technique by which genetic potentials of high pedigree animals are
transferred in the low genetic surrogate mothers to deliver calves of high genetic
potentials. By this technique, we can get large number of calves of high pedigree during
life span of the female animal. The calves born out of this technique will have genetic
makeup of the transferred embryo and not of the mother which gives birth to the calf.

OBJECTIVES
Each organization is formed with some objectives. These aims act as guidelines for
working of concern. Milk Plant was constituted to fulfill following aims:
• To procure milk and execute marketing efforts so that milk producers get good
price of their milk.
• To uplift social and economic status of milk producers.
• To develop dairy as industry allied to agriculture.
• To provide better and remunerative prices for milk.
• To enhance bargaining power for milk producers.
• To provide veterinary aids to animals of milk producers at their doorstep.
• To provide better quality cattle feed at reasonable rates.
• To educate the milk producers about lowering down the cost of milk without
compromising quality.
• To create employment opportunities for rural youth by milk production activities.
• To provide awareness among milk producers for socio-economic change through
co-operative set-up.
• To provide technical inputs like artificial insemination, to improve the breed of
animals, animals health services, preventive disease treatment and awareness
regarding farm management etc.
• To provide ISI marks good quality balanced Cattle feed and fodder seeds to the
farmers.
 16

• To purchase or assist in purchasing raw material, processing material etc.or to

collaborate with any other Cooperative Institution/NDDB if need arises.
• To plan developmental strategies and programme to increase the volume of
procurement and production of the Federation and its members Unions and for its
affective marketing.
• To provide financial assistance/credit facilities to member Unions on such rate of
interest fixed by the Managing Director, Milkfed Punjab, from time to time.

MISSION AND VISION

• Credibility, integrity and honesty

• Commitment to Perfection through Quality and Customer Satisfaction
• Straightforward business dealings
• Work as a worship
• Spirit of Social Service and human respect

QUALITY OF MILK AND MILK PRODUCTS

• To improve the quality of raw milk, Clean Milk Production program started in
650 villages and resultantly the quality of products increased.
• Under ISO Certification and HACCP (IS 15000) Milk Union started export of
Ghee, SMP to Gulf Countries Philippines, Manila, South Africa, Singapore,
Bangladesh etc. The export is more than 5.5 crore during the last year.
• To further improve the quality of Raw Milk, Milk Union started 365 Automatic
Milk collection Stations at village level.
• To meet the Challenges of WTO Milk Union started TIFAC program with the
help of Ministry of information.
 17
ORGANIZATION STRUCTURE
Organization structure is a systematic combination of people, functions and physical
facilities. It consist a formal structure with defined authority and clear responsibility.
Each and every person is given a job and then authority is assigned to him
for the job, he is made responsible for the job. This organization structure aims at saying,
“EACH ONE FOR A JOB AND JOB FOR EACH ONE”
There is no sole proprietor of this milk plant. It is a co-operative organization i.e. it is run
by many members collectively. These members select their Board of Directors. The
Board consists of 12 Directors. They appoint General Manager and Chairman. Then
there are different departmental heads like Production Manager, Purchase Manager, and
Marketing Manager etc. These heads have deputies for their assistance. Each department
has different employees at departmental level.
The top management of milk plant, Ludhiana is selected through
votings by the members of the milk societies. Now the question arise that how that milk
societies are formed. So, firstly the field staff of milk plant visits various villages for
encouraging people to make co-operative department to procure milk from the villagers.
Minimum 35 members are required for making a society. To become the member of the
society a person has to pay Rs.20 as membership fees and then purchases a share of Rs.2.
 18
ORGANIZATION STRUCTURE MILK PLANT LUDHIANA
 Chairman & BOD

General Manager
Manager Manager
Production Engineering
Dy.Mgr.Chilling,
Processing Dy.Mgr. Ghee Making &
Packing Dy. Mgr. General Dy. Mgr.
Dy. Mgr. Pouch Instrumental
Filling Dy. Mgr. Milk Powder Plant
Dy. Mgr. Butter
Making, Packing
Manager Quality
Manager Procurement
Assurance

Dy. Mgr. Dy. Mgr. Bacteriology Dy. Mgr. Procurement Dy. Mgr.
Chemical Lab Chilling
Lab Centre
Dy. Mgr. Field Officers
Manager Finance &
Manager Marketing
Accounting

Dy. Mgr. Dy. Mgr. General Dy. Mgr. Societies

Marketing
Accountants &
Cashiers

Accounts Clerks
DHCC
DHCC

Manager Administration
(Admn.) Manager Purchase
Officers
Dy. Mgr. Admn.
Assistants &
St. Assistant Time Keeper Superintend

Steno & Clerk

OHCC

Head Store Officers Manager MIS

Store Keepers Assistant MIS

Head Security Officers

Security Inspector

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 BOARD OF DIRECTORS

General Manager Sh. H.S.Grewal

Director S. Manjit Singh

S. Avtar Singh

Smt. Surjit Kaur

S. Jagjit Singh

S. Gurbaksh Singh

S. Ajmer Singh

S. Jaspal Singh

S. Kuldeep Singh

S. Karamjeet Singh

S. Paramjeet Singh

S. Dilsher Singh

S. Raghubir Singh

Joint Registrar (Patiala) Capt T.S. Bedi

Deputy Registrar (Ldh) Sh. Amarjeet Singh

Manager Account Sh. A.K. Gupta

Mgr. Production Sh. G.P. Sharma

Manager Marketing Sh. Parminder Kumar

Dy Mgr Quality Control Sh. B.R. Madaan

Manager Engg. Sh. Raj Kumar

Dy Mgr Purchase S. Amarjeet Singh

H.R. Deptt. S. Amarjeet Singh

 20

DEPARTMENTS

MILK PROCUREMENT DEPARTMENT:

HEAD OF THE DEPARTMENT: Dr. Sushil Soni

Milk is collected by milk procurement co-operative societies at the village level and
purchased by milk union which further supplies that milk to Milk Plant after charging
commission from Milk Plant at the rates specified by the Milk Union. The union was
formed with the basic concept of enhancing milk procurement and impairing its quality in
the district so that the producers at the village level gets the remunerative price of its
products at his doorstep and the consumers on the other hand gets the milk of good
quality at reasonable price by eliminating the middleman. Generally milk producers
charge Rs.145 per kg FAT & SNF Rs.106.67 per kg on 8.0%.SNF is 8.80% standard of
one Kg.

This plant was registered in the year 1974 with a primary membership of 45
milk producers’ co-operative societies. At present it has 816 registered co-operative
societies. Procurement Department is headed by the Manager, Milk Procurement, who is
assisted by technical officers and supporting staff in running the activities for attaining
the objectives of the organization. Milk is received at the dairy dock in 40 litres cans
from Milk Co-operative Societies, located near Ludhiana.

OBJECTIVES OF THE UNION-

 To ensure better and remunerative fine milk market to the milk producers around
one year for any quantity of surplus milk available at village level.

 To provide free veterinary aid to milk producers.

 To provide artificial insemination facilities by supplying frozen semen of

improved quality.
  To supply balanced cattle feed at nominal rate.

21

 To supply certified feeder seeds at subsidized rate.

PROCUREMENT CHANNELS FOR PROCUREMENT OF MILK IN

LUDHIANA

Co-op. Milk Plant Pvt. Sector Milk Plant

Milk Producers Milk Producers

Co-op Societies (at Village Level) Collection Centres

Milk Plant Milk Plant

(Milk transported by the Member producer (Company’s truck lift milk from the

to the Milk Plant) collection centre)

PRODUCTION DEPARTMENT

HEAD OF DEPARTMENT- Mr. G.P. Sharma

Production Department is headed by the Manager, Production and he is assisted by

technical officers, operators and dairymen. Production Department is responsible for –

• Proper Milk Reception

• Milk Processing

• Manufacturing of Milk Products- Powder, Butter, Ghee, Paneer, Milk Cake etc.
 • Packing of all above mentioned products.

Production is done as per commitment made by marketing department depending on

22

requirement of products. Milk products are manufactured mostly by automatic machines

with best standards of sanitation. Production Manager is responsible for achieving
production target with minimum wastage and maintaining cordial relationship with the
work force. He also guides workers for better performance. Product Planning is managed
by Production Manager & accordingly the workforce produce. Generally product
produced is as such-

Milk

Fluid Milk Surplus

Surplus Fat
SNF

Packing given White Milk Table

Preference Paneer Ghee
Butter Powder Butter

Lassi
Kheer

Milk Cake
 Production of Milk as per various Ingredients

23

NECESSITY FOR PRODUCTION ENHANCEMENT

• Milk production in the area increased manifold with the result. Resultantly started
receiving daily 2.50 LPD of milk.
• To increase the participation of women 120 exclusively women societies are
organized with 15300 women members. through Punjab Women Dairy Project a
Central Govt. sponsored scheme.
• Milk Production in the area increased manifold with the result. Resultantly started
receiving daily 2.50 Lac LPD of Milk and Peak procurement 4.5 Lac LPD.
• To cater to the increased demand, necessity of expansion of milk plant arose.
• Capacity of Milk Plant enhanced from 1 lac to 4 lac litres with additional powder.
Plant of 30 MTs.
• Plant is having latest State of Art Technology with MVR (Mechanical Vapour
Reprocesses) along with a drier with fluidized bed through which agglomerated
Powder is manufactured.
• This improved the socio- economic conditions of marginal and poor farmers.
• The profitability of the plant and turnover of the plant improved a lot.
• No. of societies increased from 94 to 816 and its membership from 5400 to
78000.
• All the societies are in net profit and distributing bonus to its members.

QUALITY CONTROL DEPARTMENT

HEAD OF DEPARTMENT Mr. B.R. Madaan
Quality control department is headed by the Manager, Quality Control. He is assisted by
technical staff who conducts all types of tests on raw materials and finished products with
the help of sophisticated equipment.
For maintaining high quality of milk and milk products, there is a quality control
laboratory. The quality control department ensures quality through testing of raw material
received through procurement department and chilling centres as well as of finished
products to make them germ free.
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The motto of Verka’s quality policy is customer’s satisfaction. So, they commit
themselves to produce and deliver such milk and milk products as meet the customer’s
quality expectation. Milk plant is due to hard work and by following the motto of quality
policy is able to get ISO-9002 and IS-15000 (HACCP) two international quality standard
certificates.
ISO-9002: Milk Plant Ludhiana is India’s first Milk Plant to get this certificate of
International quality standards. It is provided to a concern, which has established
specialization in quality and prices and able to use its full installation production
capacity.
IS-15000(HACCP): Milk Plant Ludhiana has also get this international quality
certificate, which allows it to sell its products at international levels. It actually called
“International Standard-15000 (Hazard Analysis and Critical Control Point).
The staff also keeps a strict watch on cleanliness of equipment and pipelines etc. with a
view to avoid contamination.

MARKETING DEPARTMENT
HEAD OF DEPARTMENT- Mr. Parminder Kumar
Marketing Department is headed by Manager, Marketing, who is further assisted by Sales
Inspector and other supporting staff. Marketing department is responsible for ensuring
maximum possible returns to the organization.
Sub contractors/ agents are appointed by marketing department for supply
of milk and milk products. At present, city supply is done through almost 300 agents;
surrounding areas are also covered through agents. These areas are divided into 40 groups
(routes). Eight milk bars are being maintained by milk plant for customers. These milk
bars are located at Milk Plant Premises, Bus Stand, Clock Tower, Rose Garden, Gorayan,
Neelon, Bija and Mullanpur. The profit margin of these agents is 8-11%.
Staff structure of Marketing Section:

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PURCHASE DEPARTMENT
HEAD OF DEPARTMENT: Mr. Amarjeet Singh
Purchase Department is headed by purchase officer who is assisted by the supporting
staff in maintaining regular supply of store items. Purchase Department ensures timely
purchase at the lowest cost with the twin objective of ensuring the availability of required
store items and at same time keeping the expenditure as low as possible.
FUNCTIONS OF PURCHASE DEPARTMENT:
• To receive purchase requisition from stores.
• To buy goods or materials wisely at reasonable prices.
• To invite quotation from number suppliers and preparing comparative statement
• to choose a right supplier
• To record particulars of purchase orders.
• To check the supplier’s invoices as regards price, quantity, quality etc.
PURCHASE PROCEDURE FOR PACKING MATERIAL
The following purchase procedure is followed in Verka-
1. Receipt of Purchase Requisition: Purchasing cycle begins with the receipt of the
purchase requisition in the purchasing department. It provides the purchasing
department authorization to initiate action for procuring the required materials,
components and supplies. It contains details as to the materials to be purchased,
quality specifications, quantity and time and place of the delivery.
2. Potential sources of supply: When the purchase requisition is received in the
purchasing department, the purchasing executive looks for the potential sources of
supply. The department maintains the list of approved suppliers for every item
purchased by the company. It is reviewed periodically to add the names of new
suppliers and delete the names of those who have ceased business or whose
suppliers or services have proved to be unsatisfactory.

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3. Issue of letters inviting quotations: The purchasing department issue letters to
approved suppliers requesting them to send their quotations. If the goods are to be
purchased in bulk than Milkfed send annual tenders. In case the goods are
procured locally on plant level then there is no need of quotations for prices upto
1000 .In case the price is between 1000-5000 then sealed quotations are collected
from market. If the cost is upto 100000 than General Manager has competency. If
the price is more than Rs. 100000 than Board of Directors have competency.
4. Receipt and analysis of quotations: Quotations received from potential
suppliers are opened and analyzed to identify the supplier who offers the lowest
price and most favorable terms and conditions.
5. Selection of Vendor: It is always not necessary to select the vendor who offers
the lowest price and most favorable terms and conditions. The purchasing
executive has to consider various other factors before selecting the vendor. These
factors include reliability of the vendor on the basis of past experience, his
capability and resources to supply the required material and his willingness to
accept the rejected materials without arguments, accommodation relating to
cancellation of orders under conditions beyond control and so forth. The objective
in purchasing is not to reduce the initial cost of materials but the total cost of
purchasing.
6. Purchase Order: Once the purchasing executive has decided on the source of
procuring materials, he issues a purchase order to the vendor. It contains details of
the items to be supplied, quantities, quality, price, time and place of delivery.
 7. Follow up and delivery: The purchasers follow up the order to ensure that
deliveries are received according to schedules. The purchase agreements often
contain a penalty clause against late deliveries.
8. Analysis of receiving reports: When materials are received they are inspected by
quality control and verified by the stores department with reference to purchase
order. Shortages and damages if any are reported.
9. Scrutiny and approval of invoices: This is the last step in the purchase
procedure. The invoice received from suppliers is sent to the purchase department
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for verification with reference to purchase order, inspection report and receiving
department’s reports. If it finds that materials have been received in the ordered
quantity and specified quality, it approves the invoices and forwards them to the
accounting department for payment. In case of shortages, damages or sub-
standard quality, it notifies the vendor immediately and asks him to take remedial
action.

PURCHASE PROCEDURE FOR TOOLS & LUBRICANTS

From companies like IOC (Indian Oil Corporation), HP (Hindustan Petroleum) material
is directly purchased against payment.
 PURCHASE

PACKING TOOLS & MISC.

MATERIAL LUBRICANTS PURCHASES

PROCURED PRODUCTS
PRODUCTS
USED IN LOCALLY ON LIKE
LIKE SPARES
BULK PLANT LEVEL LUBRICANTS

PRODUCTS LIKE FURNITURE,

FILM, MONO SPARES,
CARTONS, MECHANICAL
ALUMINUM FOIL PRODUCT ETC.

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STORES DEPARTMENT
There are 3 Stores in Verka Milk Plant which are headed by various persons. These
departments store all the essential equipment and material and stationery required in all
departments. It also keeps the records of good purchase and goods in stock as well as
goods used by particular department. All the material purchase for working of milk plant
is firstly handed over to stores department and all that material systematically packed to
be sold is also kept in stores department.
DIFFERENT STORES DEPARTMENT
1. PROCUREMENT STORE
Head of the Department: Mr.Soni
Keep Cattle Feed, Mineral Mixture, Seeds etc.
2. MAIN STORE
Head of the Department: Mr. Jagdish Kohli
Spare Parts of Plant & Machinery are kept at Main Store. Every item is stored as per its
code. As per the requisition and then sanction authority passed by General Manager
goods are purchased and then stored in Main Store of Verka Milk Plant. Each item is
assigned a specific code so that items can be easily classified and stored.
3.PRODUCT STORE
Head of the Department: Mr. Baljinder Singh
Goods to be supplied in the market are kept at Product Store. Product Store handles
variety of milk & milk products such as ghee, milk powder etc. Goods are supplied as per
Dealer’s demand.

ENGINEERING DEPARTMENT
HEAD OF DEPARTMENT: Mr. Raj Kumar
Engineering Department is headed by the Manager, Engineering who is assisted by
technical officers expert in one branch of engineering or other. Engineering Department
is divided into various sections viz.

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• Refrigeration
• Section
• Boiler Section
• Mechanical Section
• Electrical Section
Manager Engineering is responsible for:
 The effective working of all the departments.
 Identifying all the machines needing maintenance and preparing
maintenance schedule.
  Carrying out the maintenance operation and machine adjustments as per
maintenance schedule.
 Monitoring maintenance of machine, including vehicles and calibrating
equipment.
Thus Engineering Department ensures proper implementation of lubrication and
maintenance schedules of all machines and transport vehicles owned by milk plant and
the milk union. The department makes all out efforts to keep the no. of breakdowns and
production downtime as low as possible.

PERSONNEL AND ADMINISTRATION DEPARTMENT

HEAD OF DEPARTMENT: Mr. Amarjeet Singh
This department is headed by Manager who is assisted by supporting staff to carry out
functions of this department. This department ensures compliance labour laws,
maintenance of proper records and completion of administrative formalities for timely
payment of dues to the employees. This department is also responsible for maintaining
cordial relationship between workers and management. The staff of this section looks
after the process of disciplinary cases.
Objectives:
 To establish fair and equitable remuneration.
 To ensure timely payment to employees.
 To attract competent personnel.
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 To improve union management relations.
 To improve public image of the company.
 To ensure proper compliance of labour laws.

ACCOUNTS DEPARTMENT
HEAD OF DEPARTMENT: Mr. Ashok Gupta
The accounts department is headed by the Accounts Manager, who is assisted by Deputy
Manager, accountants and other supporting staff. This department records all transactions
in proper books to provide necessary information to the authorities whenever required.
Various Auditors are deputed to check the daily transactions. Workouts profit and loss
account on the monthly basis. This department is responsible to ensure timely payment to
all the employees and parties dealing with milk plant.
Functions of This Department:

The functions that are performed by accounting department are:-

• To prepare monthly profit and loss.

• To keep up-to-date accounts.
• To take out the monthly trial balance.
• To prepare daily cash flow.
• To make computer punching of vouchers regularly.
• To prepare the financial follow up report and send it to concerned bank.
• To ensure proper execution of legal notices and its follow up.
• To prepare the business plans and compare it with accruals.

MANAGEMENT INFORMATION SYSTEM

HEAD OF DEPARTMENT Mr. Mukesh Sharma

Up to date information regarding various activities of Milk Plant and Dairy industry are
being kept by MIS Department of the milk plant. M.I.S. is the system wherein

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information about the activities of plant is supplied to management and decision. Here
data are collected from different related department which can be useful to the
management for decision making.
The following aspects are maintained and supplied to the management as and when
required:-

• Progress report of dairy plant (monthly/yearly)

• Progress report of input activities (monthly/ yearly)
• Progress report of procurement activities (monthly/yearly)
• Report on activities of chilling centers (monthly)
• Report on unit costing (monthly)
• Report on product wise costing (monthly)
• Stock statement (monthly)
• Sale and return (monthly)
• Transportation cost of milk collected ( route wise)
• Section wise salary report (monthly)
• Running hours of machine (monthly)
• Financial Position (Yearly)
• Dairy co-operative societies progress (monthly)

SECURITY DEPARTMENT

HEAD OF DEPARTMENT Mr. Prem Chand Bhumla

Security Department is managed by one Senior Security Employee who is assisted by a

team of well trained personnel. This department is for safety and security of all the assets
of milk plant. This department keeps proper watch on men, money and materials entering
in and going out of the plant so that no vehicles or material leave the factory without
authorization. This department ensures cleanliness in the plant premises by making best

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possible use of available man power. This department is responsible for any
pilferage/theft of material from the premises of the unit.

COMPLIANT REDRESSEL COMMITTEE

If we overlooked the grievances, how can we accept the good words about the image.”
Verka milk plant formed a committee to handling the complaint. The committee consists
of managers of different departments like production manager, quality control manager
etc. Any complaint for example, less weight, timely delivery reach at plant on telephone
as well as .written complaint and is attended by member of committee to satisfy the
valuable customers so that they maintain to belief in verka milk plant

HORTICULTURE DEPARTMENT
HEAD OF DEPARTMENT: Mr. Prem Chand Bhumla
In order to ensure the proper landscaping at the plant its milk centers, milk bars and
others premises horticulture has been established.
CANTEEN
INCHARGE: Mr.Ganga Datt
Run on no profit no loss basis.

PRESENT STATUS/ACHIEVEMENTS OF THE PLANT

1. No. of societies increased from 94 to 816 and its membership from 5400 to
78000.
2. Milk Procurement has increased from 10200 LPD to 2, 50,000 LPD.
3. Products being manufactured by Ludhiana Plant are sold at premium rates
through out of the country and in the International Market.
4. City supply has increase from 66000 LPD to 1, 60,000 LPD.
5. Turnover the plant touched to 180 crores Profit of the union has increased
manifold.
6. Capacity utilization of the plant is more than 80%.
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 SWOT ANALYSIS

The SWOT analyses is a systematic identification of internal strength and weaknesses of

the business and environment opportunities and threats being faced by that business and
provide information that is helpful, in matching the firm’s resources and capabilities to
the competitive environment in which it operates. It is necessary for the organization to
analyze its weakness that can be removed by undertaking the project and what
opportunities can be exploited and strengths can be strengthen more. As such, it is
instrumental in strategy formulation and selection. It is dynamic and useful framework
for choosing a staretgy.The following diagram shows how a SWOT analysis fits into an
environmental scan.

SWOT Analysis Framework

Environmental Scan

Internal External
Environment Environment

Internal External
Environment Environment

Strength Weakness Opportunity Threats

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STRENGTH:

• Emotional attachment of people to Verka as they consider it as brand of Punjab.

Such a status is not enjoyed by any of the other brands in the market.
• Verka offers complete range of milk as well as milk product which is presently
not offered by any of the other brands for city market.
• Extensive network of DCS at the procurement side and wide network of
distributors and milk parlors in the city.
• High quality products at an affordable rate to its customers.
• Reputation of being a cooperative organization which provides fair value to
demand as well as supply side.
• Verka is a local player and thus has the ability to make acceptable margins to
retailers and wholesalers, with lower overheads.
• Work culture among officials and employees is very good. Plant is identically
located where all basis requirements are fulfilled.
• Milk Plant is having institutional support from NDDB, PDDB. Its women
societies are sponsored by the central government.

WEAKNESSES

• The plant is having very limited human resources and most of its departments are
falling short of work force putting extra burden on present workforce.
• Political and government interference in the day to day operations which results in
less flexibility towards changing external environment and less flexible policies
for deciding procurement as well as packed milk prices.
• The brands of milk are giving tough competition, as it does not advertise its
products completely.
• Although management is devoted to its work but they are traditionally educated
so they learn by experience.
 • Verka is not able to communicate its quality assurance aspects to its customers
and thus they are having wrong notions about verka milk in their mind.
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• Visibility of advertisement for verka products is very poor.

OPPORTUNITIES:
• Skimmed milk powder (SMP) is cheaply available to milk plant as it is prepared
in house when procurement is more than demand. This allows milk plant to give
competitive prices for procuring milk and attract more and more dairy farmers.
• Although Verka is having a broad range of products but still there are certain
niche products which verka do not manufacture until now. Verka should make
efforts in developing such products like skimmed milk in tetra packs.
• Milk Plant is already exporting ghee to gulf countries. It has received export
orders for skimmed milk powder, ghee & raseela. Thus, it is expected that by
more exports, it will earn more precious exchange for country.
• National Dairy Development Board is also helping milk union to increase milk
procurement.
• Health consciousness among people is increasing day by day and thus there is
huge market for pro-biotic milk and milk products.

THREATS:
• Big multinational companies (MNC) like reliance are foraying into milk business.
There is a possibility of this trend being followed by other MNCs and thus
creating tough competition for Verka
• In the absence of strict quality parameters for private dairies, the entry barrier for
them is very low.
• Each and every person related is afraid of news of milk products exports by other
countries; Denmark & Netherlands which are two main producers of milk. These
companies are able to sell milk at lower rate.
 • The cost for the raw material is continuously rising and this might cause waning
interest of people from dairy farming.
• Many imitation brands -Verva, Volka etc. are in markets which are a major threat.

36

COMPETITOR ANALYSIS

Milk is a commodity which is consumed in almost all the households daily in one
form or another. Thus there is a huge demand for it through out the year and thus it offers
good business opportunity. New player emerges into the market at tremendous speed
with new and improved products. As a result, the information age has also increased the
need for businesses to be thoroughly familiar with their competitors.
In order to compete effectively, organization needs to know the following things:
• Who are competitors?
• What are competitors’ strengths and weaknesses?
• What are competitors planning to do next?
• What are competitors’ spending trends?

COMPETITORS:
Competitors can be classified into two categories:
• Competitors offering similar products
• Competitors offering substitutes for the products supplied by organization
There are a number of players that are presently supplying liquid milk to the market.
Verka enjoys a healthy share of more than 75 percent of the total packed milk market.
But the real competition is not from the organized sector but from the unorganized sector.
There is still a large population which consumes milk supplied by private small dairies
and milkmen. People find dairy farming more profitable than agriculture. The milk
supplied by such milkman is often adulterated with water. Sometimes traces of urea,
pesticides and flour are also detected. In spite of all this, many milk consumers have this
notion in their mind that milk from milkman is more fresh and better than packed milk.
This may be attributed to the traditional buying pattern of consumers in country. As milk
from various sources is not differentiable thus prices for milk plays an important role in
consumer’s decision making process. Packaged full cream milk is present at Rs.27 per
liter while loose milk sold by private vendors ranges from Rs.18 toRs.25 per litre. Apart
from that people also find buying milk from private
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milkman an easier option as almost all of them deliver milk at customer’s door steps. In
today’s fast lifestyle where almost every adult in family is working, home delivery
becomes very important. Consumer’s have an option of buying as much quantity as they
want while in case of packaged milk minimum packing is 500gms. There are many
people who prefer cow’s milk and such demand can only be catered by vendors selling
loose milk as no packed milk brand is selling cow’s milk. Due to these factors
unorganized sector is giving stiff competition to organized sector selling packed milk.

Serial no. Name of Milk Brand Market Share (percentage)

1 Verka 75.48
2 Milk Time 5.28
3 Dairy pure (Reliance) 0.76
4 Dairy home 0.89
5 Vita 11.43
6 Aditya 1.18
7 Super 1.36
8 Uttam Milk 0.30
9 Virat 0.73
10 Royal 0.58

When we talk about competition within packed milk companies, verka almost rule the
city’s market. Whenever people think about packed milk, verka is the first thing that
comes to their mind. This may be attributed to strong distribution network of verka milk
as well as ubiquitous presence of verka booths in city which no other brand is presently
having. Verka is one brand which caters to all their need for milk as well as milk
products. The only brand that comes closest to Verka is ‘Vita’, which is also owned by
cooperative organizations of Haryana state. Now we will have a short discussion on all
the brands that are presently available.

38
• Vita: Vita’s packing is very much similar to verka’s packing and customer is often
not able to differentiate between the two at first glance. It is only after careful
observation that one is able to distinguish one brand from another. Vita offers better
margin to distributors and thus is more preferred by them while customers’ choice is
otherwise.
• Dairy Pure (Reliance): Reliance group is as such not involved into processing and
packing of milk but it is just marketing the milk under its own brand name. It is a
new entrant into the market and response for its milk is not so favorable among
consumers. It has to cover a lot of ground in case it wants to improve upon its market
share. The only advantage that reliance is having is its availability in ‘Reliance Fresh’
stores. These stores have opened in many sectors in Ludhiana but still their number is
much lesser than the number of verka booths presently operating in city. The strength
of Verka can be gauged from the fact that even reliance store are selling verka milk
along with their own brand.
• Amul and Nestle: Both these brands are operating into the niche segment and just
providing homogenized double toned milk in tetra packs. This milk can be store for
nearly 120 days. Younger generation who are health conscious and do not want to
take trouble of buying milk daily are the main consumers of such kind of milk.
Presently Verka is not offering this variant to general public and just supplying it to
Indian Army. It should consider marketing of this variant as market for it is
increasing with time.
• Milk-time, Dairy Fresh, Uttam etc: All these brands are also available in the market
but their sales are negligible when we compare it with that of verka milk. The only
advantage that these brands are offering is better margin to distributors and retailers.