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1 | 8 RDM- 38
Mr. Devendra Shah, Chairman & Managing Director,
2 | 8 RDM- 38
PARAG MILK FOODS PVT. LTD., established in 1992, is one of the India’s largest Private
dairy products manufa...
3 | 8 RDM- 38
The advertising objective is to create awareness about our brands while the marketing obj...
4 | 8 RDM- 38
took a gut call. “I realised it was now or never,” he says. He decided that there was an untapped
5 | 8 RDM- 38
PCDF's management is headed by the Board of Directors, members of which are elected from
Milk Union Boards. ...
6 | 8 RDM- 38
To create adequate marketing infrastructure for providing quality milk and milk products
to urban consumers....
7 | 8 RDM- 38
farmer by routing them through the village DCS. Thus it sells cattle feed, organizes
fodder development prog...
8 | 8 RDM- 38
The organization derives its strength from its marketing policy whereby a two dimension...
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A social entreprenership trough parag by mr. devendra shah


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A social entreprenership trough parag by mr. devendra shah

  2. 2. 1 | 8 RDM- 38 ABOUT PRADESHIK COOPERATIVE DAIRY FEDERATION UTTAR-PRADESH Mr. Devendra Shah, Chairman & Managing Director, Parag Milk Foods, India’s largest private dairy and manufacturers of the Gowardhan and Go range of milk and milk products. He also holds reputed positions in various ventures like Director - Bhimashankar Sahakari Sakhar Karkhana, Pargaon, Secretary of National center for Rural Development. He also promotes India’s largest cow farm called Bhagyalaxmi Dairy farm. Mr. Shah was born on September 21, 1964 in Pune. He received a Bachelor of Commerce degree from Pune University. After graduating in commerce, Mr. Shah dabbled in other businesses like clothes retailing but it was not until 1989 that he found his true calling - the dairy business. The big break for Mr. Shah came in 1991 when Finance Minister Dr. Manmohan Singh in his budget speech announced de-licensing that included the dairy sector as well. This paved the way for private players to procure milk from farmers. He launched Parag Milk Foods in 1992, and being a capital-intensive business he invested Rs 10mn. The money was raised from a combination of accruals from Mr. Shah’s earlier ventures and borrowings from a local co-operative bank. He is actively involved in agricultural activities and elevation of farming community. For his good work, Maharashtra Government had honored him with Maharashtra Udyog Bhushan award. PCDF was formed in 1962 with the aim to develop organized dairying in the State on Cooperative lines PCDF's is a cohesive body that successfully does away with the exploitative forces of years to years-the Middlemen. Therefore a direct link is established between the producer and the ultimate consumer. This Apex Milk Cooperative draws its inherent strength from the farmers committed participation, and injects corporate skills and dynamic professionalism into what is fundamentally a traditional institution. FLASHBACK A generation ago, Shah’s family moved to Manchar, a small town 50 km north of Pune. They came from Gujarat as cloth traders and, for two decades, continued with this traditional business. In the 1960s, Shah’s father realized that farmers in the area had very poor yields from potato, their main crop. He began trading in seeds from Shimla, which produced potatoes with less moisture content. Yields went up and Shah’s family was now looked at with respect within the community. By the late 1980s, the family had ventured into cold storages to enable local farmers to get better and steadier prices for their produce. While the Shahs were now established and well known, they spotted another opportunity—in the dairy business. This was a time when milk production in the country had zoomed and the farmers of Manchar had few takers for their milk, with supply in the region outstripping demand.
  3. 3. 2 | 8 RDM- 38 PARAG MILK FOODS PVT. LTD., established in 1992, is one of the India’s largest Private dairy products manufacturers, having own manufacturing facility with cutting age technology. Our plants are strategically located in Manchar, Maharashtra and Palamner, Andhra Pradesh. The company also has its own dairy farm called Bhagyalaxmi, where it hosts 3,000 specially bred Holstein Freisens cows and equipped with one of India’s first Rotary Parlors, which has mechanized the whole milking process and in turn ensured high quality and hygiene. Under the brand “Gowardhan”, it offers traditional products like Ghee, Dahi, Paneer etc. whereas under the brand name “Go” it offers new generation products like Cheese, UHT milk, Yogurt etc. The company believes in quality and values its consumers, and thus its offerings to the consumers are best in quality. In 1992, Parag Milk Foods Pvt. Ltd. was founded by Mr. Devendra Shah at Manchar (in the milk belt of Maharashtra). In earlier co-operative times, there were milk holidays and the farmers had to dump their milk into garbage as co-operatives didn’t take milk from them on holidays. Mr. Shah tapped this opportunity and started processing milk collected from farmers during holidays and thus was born Parag Milk Foods Pvt Ltd. From 1992 to 1998, we were primarily into collection and processing of milk. After that, we started manufacturing dairy products such as Ghee and Milk Powders. Simultaneously, we were exporting these dairy commodities too. In 2008, we established one of India’s largest cheese plants and started manufacturing value added milk products. We also own one of the largest and modern dairy farms in India with rotary milk parlour. Today, we are the youngest, strongest and one of the largest private dairy players in India. Today, everyone is afraid of milk adulteration or the quality of milk. Since we own one of India’s largest and modern dairy farms, we thought of providing consumers a solution to it. The “Pride of Cows” milk is humanly untouched from milking to packaging. The whole idea was to provide premium quality, fresh milk to consumers directly from farm to home. It definitely gives us an edge in the market in terms of brand equity. The product is available in Mumbai and Pune. That the Indian consumers are price conscious is an old story. The price sensitiveness has gradually reduced with increasing health and quality awareness and rise in disposable income. The premium milk brand “Pride of Cows” is priced at Rs. 75, which is definitely a bit higher but milk have received good response and our clientele is increasing day by day. We are making our own path and we are not trying to compete with anyone in the market. We are providing best quality and innovative products to our valuable consumers. Consumers’ response for our products is phenomenal. That is why, being the youngest in the dairy industry, we have gained importance over a span of just four years. Competition is rising, but the market is growing at a much faster rate. So, we are less worried about competition and more focused towards giving quality offering to our consumers.
  4. 4. 3 | 8 RDM- 38 MARKETING STRATEGY The advertising objective is to create awareness about our brands while the marketing objective it to make our products most preferable by consumers. Our strategy is in line to achieve these objectives and we are working on it. As of now we are spending around Rs 450mn annually on advertising and marketing. We hold 1% market share in dairy products but we have a higher market share in value-added milk products. We just came up with the “Pride of Cows” in Pune, Lassi, and two variants in UHT Milk named Go Slim and Go Double Tonned across India. The size of the Indian dairy industry is approximately US$70bn. The Indian Dairy Industry has been growing @ 5% per annum. The average per capita consumption of dairy products in India is around 300 gm compared to the global average of 700 gm per day. INFRASTRUCTURE We have two plants; one in Manchar, Pune (Maharashtra) and another is in Palamner, Chittur (Andra Pradesh). Both of them are fully automated. The capacity of both the plants is 20 lakh litres of milk per day.The Manchar plant is Asia’s largest cheese plant, with the capacity of manufacturing 40 MT per day. We will establish two more plants – one in North and one in East in the coming years. The investment will be around Rs 3bllion. Over the years Pradeshik Cooperative Dairy Federation Uttar- Pradesh has expanded, diversified, channelized into new areas, over new dimensions, onto new challenges. Today it features prominently in the National Milk Grid, supplying Milk to Mother Dairy for sale in Delhi. However, PCDF's achievement cannot be quantified in mere statistics. Its real sense of pride lies in the fact that its farmer members are heading surely and steadily towards a prosperous future and the knowledge that its consumers reaffirm their faith in Parag year after year. It is in this context that PCDF's success is to be measured. OVERVIEW ON PARAG MILK FOODS In early 2008, a few months before the global economy went into a tailspin, Devendra Shah, the pudgy boss of Parag Milk Foods, took his boldest bet ever. In those days, India, which produces 127 million litres of milk a day, converted just 40 tonnes of that yearly flood into cheese, according to industry estimates. Most of this was made by Amul and sold to retail consumers. Shah, who had set up his dairy 16 years ago in 1992 in Manchar, an hour’s drive from Pune, believed that India was on the cusp of a huge jump in cheese consumption. Now, this was before Indians had begun devouring pizzas faster than companies could serve them. Dominos had only 62 stores across India, a fraction of the 576 it has today. Other pizza chains, where they existed, were relatively smaller. But Shah could not have known about the explosion ahead or the risks. If he had gone about analysing this opportunity in a conventional way—looking at the amount that would have to be invested, the return on that investment and so on—he would probably have decided it wasn’t worth the risk. But he did what a classic entrepreneur would—he deleted the Excel sheets and
  5. 5. 4 | 8 RDM- 38 took a gut call. “I realised it was now or never,” he says. He decided that there was an untapped opportunity in processed cheese and that Parag Milk Foods would ride the coming wave. And Shah didn’t want to set up a small plant. He toured Europe for the best technology and by the end of the year he’d signed on for a 40-tonne cheese plant. Overnight, Parag Milk Foods had doubled India’s cheese-making capacity. It’s a decision that has paid off in spades. Cheese consumption has zoomed over the years and Parag has a lock on institutional clients such as Domino’s, Pizza Hut and Papa John’s. The company’s revenues have grown at a fast clip of between 20-30 percent in the last five years. It closed last fiscal with a top line of Rs 950 crore, most of it on the back of value-added products like cheese, ultra high temperature (UHT) milk and ghee. Parag’s success has not gone unnoticed by private equity investors, hungry to be part of a growing, healthy, profitable business opportunity. Since 2008, the company has raised two rounds of capital from Motilal Oswal Private Equity and IDFC Alternatives. In September 2012, Motilal Oswal, which put in Rs 60 crore in 2008, diluted half of its 20 percent stake in favour of IDFC. (IDFC put in Rs 155 crore for a 22 percent stake.) Motilal made a 3x return. The big question: What is Parag doing right that few other dairy entrepreneurs have managed to? Most of the players in the dairy business have remained regional players or have portfolios limited to commodity products like milk and curd. And, more importantly, in India’s Rs 33,200 crore dairy business (as estimated by KPMG), is this dream run sustainable? A Milk Cooperative, perceived as a business organization, is simply a group of people who have willingly pooled in resources and energies to pursue a common goal out of which they derive mutual benefits. Uttar Pradesh is the largest milk producing state of India contributing 17 % of the total milk production of India. In the year 2010-2011, the total milk production in the state was 21033.3 thousand k.g. per day. A milk cooperative society in a village in Allahabad district set up in 1918 marked the beginning of milk cooperatives in Uttar Pradesh. Successful efforts gave way to formation of Luck now Milk Union in 1938-the only Milk Union in the country - giving Uttar Pradesh the credit of being a pioneer state in the country in this segment. PCDF was the chosen agency to implement the World Banks prestigious Operation Flood programme in the state. At present PCDF lends its support and services to 6,00,000 rural milk producers through 59 District Milk Unions and about 13,500 Village Dairy Cooperatives in the State. Parag is the brand name for a range of milk and milk products including- Milk , Skimmed Milk Powder, Whole Milk Powder, Butter , Ghee, and an array of indigenous milk products like Paneer,Curd,Peda,Milk Cake, Khoa, Laddu, Mattha and Chhachh etc. Plants in Meerut and Varanasi are in constant operation to supply balanced diet feed for milch animals owned by farmers of the state. Training centers, situated in Kanpur, Lucknow, Meerut, Varanasi, Agra and Rae Bareilly,impart both skill and awareness based trainings. A Jersey Cattle breeding unit is located in Rae Bareilly, for rearing of Jersey Bulls. At FFHC Unit in Moradabad, Frozen Semen Doses of Good quality breed of milch animals are prepared for Artificial Insemination Services.Fodder Seed Processing Plant located in Aligarh, produces good quality Fodder Seeds for distribution to farmers for cultivation of good quality fodder feed for milch animals. PCDF's Management (Organization Structure) ORGANIZATION STRUCTURE
  6. 6. 5 | 8 RDM- 38 PCDF's management is headed by the Board of Directors, members of which are elected from Milk Union Boards. The Managing Director is the chief executive of the Federation. The Federation has the overall responsibility for the planning policies, mobilization and utilization of financial resources, member and public relations as well as liaison with agencies of the state and central government, financing institutions etc. MISSION AND VISION To bring 21% revenue villages of the state under cooperative fold. To procure 10% of the total marketable surplus milk produced in the state through village dairy cooperatives. To make dairy cooperatives self-sustainable.
  7. 7. 6 | 8 RDM- 38 To create adequate marketing infrastructure for providing quality milk and milk products to urban consumers. Social and economic uplifting of rural women. To provide employment to rural unemployed youth through dairy farming. PCDF'S OBJECTIVES ARE:  Collection of milk directly from producers through Village Dairy Cooperative Societies  Increasing production of milk by providing technical support eg, facilities for breed improvement, providing good quality fodder seeds, training to farmers etc.  Ensuring fair and remunerative prices to producers by the elimination of middleman.  Ensuring good quality milk available to urban consumers at reasonable price. SERVICES Many services are made available to Dairy Farmers through the village level societies also under TIP. These services are vital for his live stocks welfare and include veterinary, feed and fodder and training services. Some of the major training programs covered at our training institutes are as follows: - I. Training of Village Dairy Cooperative Secretary II. Training of Village Dairy Cooperative Milk tester III. Training of Village Dairy Cooperative Managing committee members IV. Training of Village Dairy Cooperative Pourer Member V. Training of field staff of district milk unions VI. Training of Automatic Milk Collection Unit worker VII. Training of Automatic Milk Collection Unit tester VIII. Training on Automatic Milk Collection refresher course etc. IX. Training of Para-vets THREE TIER COOPERATIVE STRUCTURES To achieve its Objectives, PCDF works through a professionally managed Three Tier Cooperative Structure which links the Village level milk producers to the milk consumers in the Cities. THE THREE TIER STRUCTURE CONSISTS OF 1. Village level DAIRY COOPERATIVE SOCIETIES (DCS); The DCS in villages collect the surplus milk from farmer members. Animal Health and other support and Services are routed through the DCS. to the farmers . 2. District level Milk Unions: The Milk Unions collect milk from the entire village DCS of its district, process and market it. The Milk Union provides support and services to the
  8. 8. 7 | 8 RDM- 38 farmer by routing them through the village DCS. Thus it sells cattle feed, organizes fodder development programmes and makes available good quality fodder seeds, provides artificial insemination facilities to improve breeds of mulch animals, etc. 3. State level Federation: The Apex Federation provides Marketing services and other support to the District Milk Unions of the State. It also helps the Milk Unions to market milk outside the State, maintains liaison with the Government, Plans and Coordinates Programmes and ensures mobilization of resources. TECHNICAL INPUT: Milk production performance of dairy mulch animals depends upon animal health management practices viz, balanced diet, breeding, good housing, proper health care & management etc. PCDF provides T.I.P. programme facilities to 13369 village level cooperative societies of 75 districts through 59 Dugdha utpadak sahakari sangh limited in the state. Some of the major TIP programmes are as follows: DEWORMING PROGRAMME: The End parasite grooms in stomach & intestine of mulch animals causes anemia, gastroenteritis, which results reduction in milk yield. Loss of appetite, emaciation & heavy infection and even may cause death. TICK CONTROL: The Ectoparasile which is very common in dairy animals in which ticks stick on the animals skins & sucks blood. It may causes anemia, reduction in milk yield & heavy infection may cause tick fever, tick paralysis & death of animal. MASTITIS CONTROL: Majority of animal suffering from sub clinical mastitis in which mammary glands of animals get infected and udder get inflamed causes poor quality and reduction in milk yield. As this disease is very prevalent due to filthy animal living place, causes heavy national loss in terms of milk production. VACCINATION PROGRAMME: Some diseases are infectious and may cause death of the animals. The timely vaccination of milch animal may save its life. The A.H. department covers the vaccination programme all over the state & dugdha sangh also contributes with its own meager resources. ARTIFICIAL INSEMINATION: A.I. is the only tool for improvement of animal’s breeds and hence increases in milk production. PCDF have one semen production station at dalpathpur Moradabad. 838 artificial insemination centers are working in 59 dugdha sangh and 274367 dairy animals are inseminated in year 2011-12. INFERTILITY CAMP: Huge populations of dairy animals fail to exhibit estrus, ovarian inactivity and causes anestrus. For removal of this problem 70 camps were organized by district level Dugdha utpadak sahakari sangh, Village level societies in the year 2011-12. GREEN FODDER SEED & MINI KIT: Green fodder is succulent, palatable, & easily digestible which dairy animals eat with interest. Leguminous green fodder crop also increases soil fertility. 1063.5 metric tons of green fodder seeds and 26335 nos. of mini kit distributed among milk producers in the year 2011-12.
  9. 9. 8 | 8 RDM- 38 MARKETING ACTIVITIES The organization derives its strength from its marketing policy whereby a two dimensional marketing system is adhered to. Of this, one is centralized activity undertaken by the federation and the other is decentralized activity undertaken directly by the milk unions in their local market. Under the centralized activity, marketing of major milk products is done through the Regional Marketing Offices (RMOs) are located at Meerut, Luck now & Varanasi. A wide sales network is spread throughout the state a large number of retail outlets are being catered every day. The decentralized marketing encompasses mainly milk marketing in local & adjoining towns controlled directly by the milk unions. In addition, sales of indigenous milk products are also ensured by them. Their clientele include several prestigious institutions in Uttar Pradesh & Delhi besides the Indian Army. An extensive & intensive marketing infrastructure provides ample scope for tie-ups in marketing of quality products. The reach & depth of our marketing infrastructure provides the right platform to launch/ distribute products in the state. PRODUCING BRAND Parag butter, parag ghee, parag rice kheer IMPACT & MAJOR ACHIEVEMENTS  Developed Three Types of Testing kits for detection of adulterants in milk.  Developed paper testing strips for detection of adulterants (Soda, urea, Starch) in milk.  Developed rose/ Kesar Flavored Milk powders Cheese and Fit milk.  Cost cutting in milk packing by introducing LLDPE/LDPE blended milk Polyethylene Film.  Conducted more than 100 market surveys/lab studies in the field of marketing, HRD and quality assurance.