A social entreprenership trough parag by mr. devendra shah
ASSIGNMENTON SOCIAL ENTREPRENEURSHIP
[NATIONAL INSTITUTE OF RURAL DEVELOPMENT & PANCHAYTI RAJ]
RAJENDRA NAGAR HYDERABAD 500030
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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.
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
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.
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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
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.
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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.
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
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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
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)
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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
To make dairy cooperatives self-sustainable.
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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.
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
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
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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
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.
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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
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.
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
Conducted more than 100 market surveys/lab studies in the field of marketing, HRD and