17122316 sam-kmf-report-for-mku

Dharwad Milk Union Ltd. KMF
IBMR - Hubli MBA- Programme. 1
PROJECT REPORT
AT
KARNATAKA MILK FEDARATION, DHARWAD.
A Project Report submitted in partial fulfillment of the
Requirements for the award of the degree of
MASTER OF BUSINESS
ADMINISTRATION
(Industry Integrated)
TO
MADURAI KAMRAJ UINIVERSITY, MADURAI
BY
SAMARTHA.D.K
Reg. No. A8755209
Under the guidance of
FACULTY GUIDE
Dr. Rajendra Prasad
INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH
HUBLI
JUNE 2009
EXTERNAL GUIDE
Mr. K. B. Patil
(HOD of Finance Department)

IBMR - Hubli MBA, Programme. 2
PART A
INDUSTRIAL PROFILE
COMPANY PROFILE

INDUSTRIAL PROFILE
DAIRY INDUSTRY IN INDIA
Dairy enterprise is an important occupation of farmer. In India
nearly 70% of the people depend on agriculture. It is the backbone of
India. Dairy is linked with agriculture industry to a large extent. Animal
husbandry in India is an essential part of agriculture. It is mainly a rural
occupation closely associated with agriculture.
DEVELOMENT OF DAIRY INDUSTRY IN INDIA
During the Pre-independence year there was no serious stress given
to dairy industry. In 1886 the Department of Defense of the British
Government established the dairy farms for the supply of milk to the
British troops in Allahabad. Later, in 1920 serious steps were taken by
Mr. William Smith, an expert in dairy forming to improve the milk
production There was discrimination done to the Indians hence this led to
the rise of the first milk union in India. In Luck now in 1937 called the
Luck now milk producers Co-operative union Ltd.
In 1946 AMUL (Anand Milk Udyog Ltd) was started in Gujarat to
bring up the economic stability of villagers.
The dairy and Animal Husbandry received serious attention after
the independence. There were lot many of progressive steps taken by the
government through five year plans. This led to the formation of National
Dairy Development Board in 1965 & thus in 1970 he decided to Bring a “
White Revolution” through out the country, Initially 10 states were
selected were for this purpose excluding Karnataka.

In Karnataka in 1974 an integrated project was launched to
restructure and reorganize the dairy industry on Co-operative principle of
AMUL and to lay foundation for new direction in dairy industry.
NATIONAL DARIY DEVELOMENT BOARD:
History
The NDDB was founded to replace exploitation with
empowerment, tradition with Modernity, Stagnation with growth,
transforming dairy into and instrument for the development of Indian‟s
rural people.
The NDDB was established in 1965; the board is registered under
the Societies Registration Act and the public Trust Act, fulfilling the
desire of the Prime Minister of India – the late Lal Bahaddur Shastri to
extend the success of the Kaira Co-operative Milk producers union
(AMUL) TO OTHER PARTS OF India. Dr Vergese Kurien was the
founder chairman. The success combined the wisdom & energy of
farmers with professional management to successful capture liquid milk
and milk product markets while supporting farmer‟s investment with
inputs and services.
The Growth
NDDB began its operations with the mission of making dairying a
vehicle to a better future for millions of gross roots milk producers. The
mission archived helped to launce „‟Operation Flood‟‟, a programme
extending over 26 years and with the help of World Bank Loan India
become the world‟s largest milk producing country. As per March 2001
India‟s 96000 Dairy Co-operative are integrated thorough a three Tier Cc-
operative structure. The Anand pattern, which is owned by more than 10

million formers, procures an average of 1605 million liters of milk
everyday. The milk is processed and marketed by 170 milk producers co-
operative unions which, in turn own 15 state co-operative milk marketing
federation. Since its establishment the dairy development board has
planned and spearheaded India‟s Dairy programmer by placing dairy
development in the hands of milk producers and the professionals they
employ to manage their co-operatives. In addition, NDDB also promotes
other commodity based co-operative, allied industries and veterinary
biologically on an intensive and nation wide basis.
Objectives of NDDB:
 To sponsor, promote, manage, acquire, construct or control any
plant or work, which promote projects of general public utility
relation to dairying.
 To make information available on request to technical services
to increase production of Milk.
 To prepare initial feasibility studies of dairying and other dairy
related projects and undertake subsequent designing planning
and start up those projects.
 To undertake research and development programme related to
production and marketing of milk and milk products.
 To provide assistance for exchange of information to other
international agencies.

Services rendered by NDDB:
NDDB provide the following services.
 Planning dairy and rural development projects.
 Organization of farmer co-operative societies.
 Setting up of dairy and cattle feed plants.
 Manpower planning and training.
 Applied research and development.
 Implementation of milk production enchantment programme.
KARNATAKA MILK FEDERATION
The first dairy in Karnataka was started in Kudige in Kodagu
district in 1955, further in June 1974; an integrated project was launched
in Karnataka to restructure and reorganize the dairy industry on the co-
operative principle and to lay foundation for a new direction in dairy
development.
In 1975, the World Bank aided dairy development was initiated.
The present Karnataka Milk Federation (KMF) came into existence in
1984-as a result of merging of Karnataka Dairy Development Co-
operation, small co-operatives and Karnataka Milk Production
Development and loose vendors.
At the end of the March 1998, the network of 8023 Diary Co-
operative Societies (DCS) have been established which are spread over
166 taluks of the total 175 taluks in all 27 districts of Karnataka. There
are 13 Milk Unions and Dharwad Milk Union (DMU) is one among
them. There are 35 Chilling centers, 3 Farm coolers, 15 Liquid milk

plants and 2 Product dairies for chilling, processing, conservation and
marketing of milk. To supply cattle feed there are 4 cattle feed plants.
Karnataka co-operative Milk Producers’ Federation
Limited (KMF)
KMF is the apex Body in Karnataka representing Dairy
Cooperatives. It is the third largest dairy co-operative amongst the dairy
co-operatives in the country.
To impart training, institutes at Bangalore and regional training
institutes at Dharwad and Gulbarga are functioning. Three nitrogen plants
(2 plants of 25 CPM and 1 plant of 5 CPM) are been set-up to supply
nitrogen, which is used for Refrigeration purpose. Three diagnostic
centers have been set-up for monitoring diseases: three fodder farms at
Rajkunte, Kuttanahalli and Kodagu have been set-up to supply good
quality of fodder and seed production farm at Shahpur has been set-up.
The federation giving details of the latest technology in dairy
industry etc is published „‟Ksheer Sagar‟‟ magazine monthly.
KMF is a co-operative apex body in the state of Karnataka for
representing dairy organizations and also implementing dairy
development activities to achieve the following objectives.
 Providing assured and remunerative market for all the milk
produced by the farmer members.
 Providing hygienic milk to urban consumers.
 To build village level institutions in co-operative sector to
manage the dairy activities.
 To ensure provision of milk production inputs, processing
facilities and dissemination of know-how.

FUNCTIONS OF KMF
 Co-ordination of activities between the unions.
 Developing the markets for the increasing in milk production.
 To make the brand „‟Nandini‟‟ as a house hold name.
 Excellence in quality is to be maintained to lay a solid
foundation for wide
 Spread acceptance of „‟Nandini‟‟ products.
 To increase the market share of „‟Nandini‟‟.
COMPANY PROFILE
2.1) Dharwad Milk Union
Dharwad Milk Union Limited (DHAMUL) is functional in the
milk rich district of Belgaum in Karnataka. Its milk shed area includes the
whole district of Belgaum.
The government of Karnataka established the Belgaum Dairy in
1966 with a capacity of 10 LTPD (Litre Ton Per Day) and procurement
of 3000 kgs per day. In 1985 it was taken over by the Dharwad Milk
Union (DHAMUL). On its joining the KMF in 1985, it became as part of
the area in which the operation flood 3 was implemented. Under this a
new dairy with a capacity of 60 LTPD was established at a cost of
Rs.5.82 crores. A chilling center with a capacity of 20 LTPD and form
cooler with a capacity of 60 LTPD was also established as a part of this
scheme.

Today the union is procuring milk from over 435 DCSs (District
Co-Operative Societies) of which 319 are functional. Their Functional
DCSs of which 319 are functional. Their functional DCSs has shown
steady increase over the past few years with the member starting at 71787
in November 1997. The effort of the union on the procurement side has
lead to its procuring in an average of 461846 of its milk everyday.
Bankers - Belgaum Dist Co- operative Bank, State Bank of Mysore,
Belgaum
Malprabha Gramhina Bank
Auditor – Shri M. R. Joshi & co. Dharwad
Asst. Auditor – Shri S. B. Devarmuni Asst. Director
Shri K. V. Joshi Senior Auditor
Functions of DHAMUL
 The main function of is to procure milk from villagers and pay
them the right price.
 To educate the villagers about milk and its quality
 To make‟Nandini‟ as a part of daily life.
 To provide good quality of cattle feed, fodder, veterinary properly
and in an efficient manner.
 To see that the DCS‟s are carrying out their activities properly and
in an efficient manner.
 To see that the milk is brought from DCS‟s to the chilling centers
in the prescribed time.
 To look the account of the DCS‟s supervise the purchase process
and market the milk and milk products.

Objectives of DHAMUL:
 Providing hygienic and good quality of milk to the consumers.
 To build the economic strength of the milk products in villages.
 To eliminate middlemen‟s in the business so that the milk products
receive there appropriate share of bread.
 To educate the villages about the adulteration of milk and its
harmful effect on the body.
 To see that every citizen becomes healthy by consuming good
quality of milk.
 To make villagers self-viable and build self image.
Process at DHAMUL
The milk collected at DCS‟s is brought to the center thought carries
trucks etc. the quality and quantity of milk bought is checked at the
Reception center by a supervisor.
A sample of milk is taken and is tested in a laboratory for fat
content, Solid Not fat (SNF) acidity etc.
As the milk is at room temperature is to be brought down to 40
c to
50
c. so that it may check the growth of bacteria. To ensure this milk is
passed through a chilling chamber where the milk is chilled. Its
temperature is bought down and then the milk is stored in a tank called as
Ram Milk Tank
From this tank milk is pumped to a pasteurizing cell where the
milk is heated up to 720
c and 15seconds, so that all the bacteria and
microorganisms may be killed and then the milk is simultaneously cooled
to 40
C to 5o C and is store in a „Pasteurized Milk Tank‟
From here the milk is separated according to the requirement of
production of different types of milk and the remaining milk is used for
manufacturing milk products.

Nature of business carried
One of the core functions is procurement of milk, processing it and
marketing milk and milk products. DHAMUL markets its products under
the brand name Nandini.
VISION, MISSION AND QUALITY POLICY OF THE DHAMUL:
VISION STATEMENT
Dharwad Milk Union in committed to conserve to conserve energy
and Maintain in the areas of plants by educating all the connected staff
and thereby gaining competitive edge by reducing operation cost control,
increasing market share of milk and milk products for prosperity of
producers, consumers and employee for mutual help for nation and
organizations.
MISSION STATEMENT
At DHAMUL we Endeavor to satisfy the taste and nutritional
requirements of the customers. Through excellence in marketing by
DHAMUL committed team, DHAMUL committed to offering quality
products that provide best value for product.
QUALITY POLICY:
To ensure pure, hygienic milk and milk products through
continuous improvement of quality standards.
VALUES:
 Cleanliness
 Total quality maintenance
 Discipline
 Co-operation.
 Transparency

Product Profile
Nandini Toned Fresh and Pure milk
containing 3.0% fat and 8.5% SNF. Available in
500ml and 1litre packs.
Nandini Homogenized Milk is pure milk
which is homogenised and pasteurized. Consistent
right through, it gives you more cups of tea or
coffee and is easily digestible.
Full Cream milk. Containing 6% Fat and 9
% SNF.A rich, creamier and tastier milk, Ideal for
preparing home-made sweets & savouries.
Cow's pure milk, UHT processed bacteria
free in a tamper-proof tetra-fino pack which keeps
this milk fresh for 60 days without refrigeration
until opened. Available in 500ml Fino and in
200ml Bricks
A taste of purity. Nandini Ghee, made from
pure butter. It is fresh and pure with a delicious
flavour. Hygienically manufactured and packed in a
special pack to retain the goodness of pure ghee.
Shelf life of 6 months at ambient temperatures. Available in 200ml,
500ml, 1000ml sachets, 5lts tins and 15.0 kg tins.

Nandini Curd made from pure milk. It's thick
and delicious. Giving you all the goodness of
homemade curds. Available in 200gms and 500gms
sachet.
No matter what you are celebrating! Made from
pure milk, Nandini Peda is a delicious treat for the
family. Store at room temperature approximately 7
days Available in 250gms pack containing 10 pieces
each.
Great way to those soft and juicy jamoon treats
at home! Nandini Gulab Jamoon Mix is made from
Nandini skimmed milk powder, maida, soji and
Nandini Special Grade Ghee. Available in 100gms
and 200gms standy pouch with a five layer foil lamination. Shelf life of 6
months.
Nandini spiced Butter Milk is a refreshing
health drink. It is made from quality curds and is
blended with fresh green chillies, green coriander
leaves, asafoetida and fresh ginger. Nandini spiced
butter promotes health and easy digestion. It is
available in 200 ml packs and is priced at most competitive rates, so that
it is affordable to all sections of people.

Sterilised flavoured milk, a nutritious and healthy
drink and an all-season wholesome drink available in
five different flavours - pineapple, rose, badam, pista
and natural orange. Apart from refreshing energy.
Available in 200ml
Rich, smooth and delicious. Nandini Butter is
made out of fresh pasturised cream. Rich taste, smooth
texture and the rich purity of cow's milk makes any
preparation a delicious treat.Available in 100gms
(salted), 200gms and 500gms cartons both salted and unsalted,
Area of operation - Regional
Ownership pattern.
DHAMUL builds and runs under the co-operative institutions such
as
 District Co-operative Society. (DCS)
 National Dairy Development Board. (NDDB)

Competition Analysis
In towards world every organization is in search of the market
potential the Belgaum round about 5 lakh to 10 lakh population is their so
a huge population city can be easily targeted by the competitors.
The main competitor for every dairy is the milk man. They are the
one who have captured major share of the milk supply because of their
long term relationship and contacts they have maintained the customers
dairies like Mata, Mahalaxmi, Gokul, Arokya & based on religious
matters captured 5% of the market shares.
Most of the companies tried to face the competition but they where
failed.Firstly, DHAMUL was header in milk business, but now a days
because of entry of all these dairies it is facing lot of competition. The
neighboring state Maharashtra has entered into the mkt to complete mkt
the brands like Mahalaxmi, Sahyadri are entered into the Belgaum mkt.
Brief history about competitors of DHAMUL
The Belgaumers taste new brands of milk every year Right now/
till date there are 16 competitors in the mkt apart from Nandini. The 5
major brands which are very competitive for Nadini are Mayur,
Mahalaxmi, Arokya, Sahyadri and Aditya.
Arokya Dairy: it procures most of the milk from south side of the
Belgaum. It procures 10,000 litres of milk every day. It is located near
Desur a village of Belgaum district 10 kms away from city on NH4 A-
they supply most of the procured milk to the city.

Mayur Dairy: It procures milk mainly from Taluka‟s at Belgaum district
namely Chikkodi, Raibag & Athani they procure 25,000 litres per day. It
is located in Kolhapur & the supply milk to Belgaum as well as Kolhapur
district.
The standard milk of Mayur dairy contents a fat of 6.5% & 9%
with this fat & S.N.F they supply nearly 10,000 LTPD.
Sahyadri milk: The dairy is located in Shinnolli Taluka, Chandgad &
district Kolhapur. This is 15 kms away from Belgaum city. It procures
dairy about 30,000 LTPD which will be supplied in the Belgaum city as
well as in the Maharashtra state.
Mahalaxmi Dairy: The Mahalaxmi dairy plant is located near Kolhapur,
Maharashtra state which procure round about 15,000 to 20,000 LTPD &
its target mkt area in Belgaum district, Gokak & in Maharashtra
state.Besides above main brands to other competitive brands like,
Krishna, Gopal, Aditya, Arokya etc.
Infrastructural facilities.
Infrastructural facilities of DHAMUL are as follows.
 Security facilities.
 Canteen facilities.
 Shifts facilities-3shifts per day.
 Land 22 acres
Achievements or awards
No awards

Work flow Model
(End to End) Production process has the following workflow
model.
DCS
Fresh Liquid Milk
Chilling
Storing
Pasteurization
Storing
Packing
Dispatching
Sample Testing Fat and SNF
Separation
Homogenization

2.11) Future growth and prospectus
Government of Karnataka and NDDB has signed a memorandum
of understanding during February 2000, for further strengthening the
dairy development activities in Karnataka with an outlay of Rs.250
crores. Consequent to the announcement of new lending terms and
conditions by NDDB through an evolution of an action plan –perspective
2010 to enable dairy co-operative to face the challenges of an increased
demand for milk and milk products by focusing efforts. Enhancing
productivity, managing quality and building national information network
plans are under implementation.
 Reparing for ISO-9001 certification.
 Marketing quality improvement.
 Developing HACCP-hazards Analysis and Critical Control Points.
 Getting export grade milk powder
 Expansion of Gokak chilling centers

Part-B
McKensy’s 7S Model

Part-B
Mc Kensy’s 7S Frame Work
The 7S model is better known as McKensy‟s 7S, because the two
persons who developed this model, Tom Peters and Robert Waterman, have
been consultants at McKensy‟s and Co. at that time. They published their 7S
model in their article “Structure is not Organization” (1980) and in their books
“The art of Japanese Management” (1981) and “In Search of Excellence”
(1982).
The model consists of seven elements. Those seven elements are
distinguished in so called hard S‟s and soft S‟s. The hard elements are feasible
and easy to identify. They are Strategy, Structure and Systems of the
organization. The four soft S‟s are hardly feasible. They are highly determined
by the people at work in the organization i.e., Style, Staff, Skills and Shared
values

1. Structure
Organizational Structure
Board of Management
Managing Director
Procurement
& Input
Deputy
Manager
Account
Officer
Account
Assistant
Grade
I, II, III
Suprede
nt
Administ
ration
Clerks
Compute
r
Operator
s
Attainde
r
Security
Officer
Assistant
Security
Officer
Security
Guards
Canteen
Cooks
Manager
Deputy
Manager
P & I
Assistant
P & I
Extensio
n Officer
Deputy
Manager
F & F
Agricultur
e
Officer
Assistant
s
Deputy
Manager
Veterina
ry
Assistant
Manager
Grade
I, II, III
Administrati
on
Assistant
Manager
Assistant
s
Grade I
Helper
Finance Purchase
Veterina
ry
Assistant
s

Board of Management
Managing Director
Officer
Assistants
Assistants
Grade I,
II, III
Clerks
Manager
Assistants
Manager
Marketin
g Officer
M I S Marketing Manager
Dairy
Helpers
Dairy
Superviso
rs
Operator
s
Deputy
Manager
(Productio
n)
Assistants
Manager
Technical
Officer
Helpers
Technicia
ns
Helpers
Assistant
Manager
Engineerin
g
Technical
Officers
Dairy
Superviso
rs
I, II, III
Helpers
Quality
Control
Technical
Officer
Lab
Technicia
ns
Helpers
Stores
Stores
Officer
Stores
Assistant
Drivers
Transpor
t
Superviso
r
Clerks

DEPARTMENTS OF THE COMPANY
1. Production department
2. Administration department
3. Engineering department
4. Procurment & input department
5. Stores department
6. Security department
7. Processing department
8. Quality control department
9. Finance department
10. Markrting department
11. Distribution department
PRODUCTION DEPARTMENT
Production department is the main department wherein the raw material
is converted into finished into products. At DHAMUL production department
is well planned & adequately equipped manufacturing set up where all the
necessary infrastructure is available. The quality of the product is also
dependant on the production procedure.
In DHAMUL the raw milk is processed to form the good quality of
milk. During the processing the milk is differentiated depending on the contract
of FAT & SNF (Solids Not Fat)
The different types of milk different in quality are

TYPES OF MILK FAT SNF
Full Cream Milk 6% 9%
Toned Milk 3% 8.5%
Standardized milk 4.5% 8.5%
Full Cream Milk 6% 9%
Shubham milk 6% 9%
The production procedure at DHAMUL is done under different stages. The
stages are as follows:
1. COLLECTION OF MILK :-
In this stage the milk is bought from the various district co-operative
societies (DSC) to the main dairy in a can of 40 litters capacity in tempo‟s or in
any other vehicles. The cans marked with two different colours to differentiate
between the cow & the buffalo milk. One the milk is bought to the main dairy
it undergoes into following process.
2. UNLOADING
The cans were unloaded is called as dock station. The cans are unloaded
from the vans manually.
3. ORGANOLEPTIC TEST
This test is carried out by a person manually without using any machines
but using his sense organs like nose & hence it is called as organoleptic test.
This test is conducted before the cans are weighed. In this test various sub-tests
are conducted like:
 SMELLING (ODOUR) TEST:-
A man at dock station or platform checks the acidic nature of milk by
smelling or tasting the raw milk. If the tasted milk has bad odors then the dairy
will pay lower rate to such society members than the normal rate.

 EXTRANEOUS-MATTER APPERANCES:-
In this test the raw milk is undergone into the test, which is conducted
by the chemist. The chemist checks for two aspects mainly whether the milk is
contaminated or not & the milk is in liquid form or curd form. He also checks
for any extraneous matters like dust, flies etc. which lead to spoilage of milk.
 AICDIC TEST
As the payment to the suppliers or DSC depends mainly on FAT & SNF
content in the raw milk. The supplier may add sugar to the milk so as to
increase the FAT & SNF content. Hence to avoid this adulteration sugar test is
done.
Its procedure is 10ml of milk is shaken in a test tube & 1ml of
hydrochloric acid. Few crystals of resorcinol is mixed to it. The solution is
shaken well & heated for five minutes. If solution turns organ color it is
demanded that sugar is mixed to it.
 STORAGE OF CHILLED MILK:-
Once all the tests are over, the milk is allowed to store in the SILOS
(Storage tank). So as to maintain its cold level of 4 degree celcious. The
unions having 7 storage tanks, 3 tanks are vertical with 30000 litters‟ capacity
each and the remaining 4 are horizontal among which 2 are having the capacity
of 10000 litters each and other 2 of 15000 litters each. After chilling the milk is
passed through pasteurizer for pasteurization.
 PESTEURIZATION:-
This step of production includes heating every partical of milk at 72
degree celcious in 15 seconds and it cold in less then 4 degree celcious. When
it is passing through pasteurization the cream is removed depending on the
quality of the milk required (standardization).

 PACKING:-
Once the pasteurization closed is conducted the next step is to pack the
milk. The packing is done by the machine of fluid goods and were as it is done
manually in case of solid goods like pheda. The machine packs the raw milk in
two size that is 500ml and 1000ml pouches. These machines are automatic with
a capacity of packing 10000 to 14000 pouches per hour. The speed can be even
altered according to suitability. These machines are used to pack all different
types of milk in plastic bags. These plastics are polythene bags required for
packing milk is bought from Bangalore.
 STORAGE:-
The last but not the process is the whole of production process is
storage. The milk packed in 500ml and 1000ml pouches are arranged in the
crates. Each cater contain 10 litters of milk. This caters are stored in cold room
which has a temperature of about 5 degree Celsius or below.
ADMINISTRATION DEPARTMENT
 FUNCTOINS
1. Maintenance of attendance.
2. Establishment of billing.
3. Maintenance of service records.
4. Domestic enquiry.
5. To maintain shifts timing.
6. To look after recruitment process.
7. Conducting training to the new employees and also to the existing
once.
RESPONSIBILITIES OF ADMINISTRATION DEPARTMENT
 To look after the overall administration of time office management.
 Conducting training to the new employees and also to the existing once.
 To look after over recruitment process.
 To maintain shifts timings.

MARKETING DEPARTMENT
The marketing department is the nearest of any organization. In today‟s
highly complex and competitive world, marketing is the tool, which has to be
derived properly to sell the product. Marketing is the more of a complex job
and it requires a great deal of the knowledge about the market that its
competitors. The marketing management requires planning, analyzing,
implementing and controlling of programmes designing to create, build and
maintain beneficial exchange with target buyers for the purpose of achieving
organization objective.
OFFICE WORK:-
1. Checking daily sales as per the respective agents.
2. Finding new areas where there is demand for milk.
3. Issuing tender and receiving application for opening new parlors and
agencies.
4. Fixing/organizing milk distribution routes.
5. Sending of milk / milk products as per the indent.
6. Keeping in track of the timing of vehicles and timely supply of milk.
7. Collection of cash from agents and depositing the same to the milk.
8. Attending complaints from the agents.
9. Meeting agents to solve their problems.
10. Draw new advertising strategy.
FIELD WORK:-
Sales promotional activities like advertisement in reality selling. The
product in the real marketing is very hard and tough job. The marketing officer
has to go the field and study the market and they have to plan the strategy. The
marketing mix plays a vital role while appointing the agents they take initial
deposit of Rs.2000 for Belgaum district and Rs.1000 in Goa. After receiving
deposit they issue bond to them. The bond consists of rules and regulation of
the union.

2. Strategy
 To serve as an instrument of the national to achieve self reliance in the
design, development and Quality Production of DHAMUL Products to
meet the customer‟s changing and growing needs with special emphasis
on military requirements.
 In fulfillment as this objectives, the company shall regard itself
fundamentally responsible design and developments, relying however
on such relevant facilities as are available in other National institution
but always holding itself basically responsible for the growth.
 To conduct its business economically and efficiently that it contribute its
due share to the National Efforts to active self reliance and self
generating economy.
 Towards this end to develop, maintain an organization which will
rapidly respond to and adopt the changing Matrix as socioeconomic
relationship and where in a climate as growing technical competence.
Self discipline, mutual understanding deep commitment and sense of
belongingness will be fostered and each employee will be encouraged to
grow with accordance to his potential for the furtherance as
organizational goals.
 Consistent with the basic objectives of the state the personal department
of the corporate office has adopted certain specific objectives, which
will act as a source as inspiration and guidance in evolving per sonnet
policies and roaming rules and regulations for growth and development
or employees and to ensure their deep commitment and sense of
belongingness to the company, and the objectives are stated below.
1. Insure equality at all the levels and provide them the right work
Environment, job satisfaction and professional challenges.
2. Provide healthy blend or employee who have grown with original
those Selected from outside

3. System
The stores Department in DHAMUL follow the Codex system (Coded
Control system). A card is maintained for each item and a number is allotted.
The card is attached to each article consists of amount balance, date of issue,
purchase etc. this is later recorded in separate ledger book. The inventories are
of different kind ranging from mechanical, spares, packing items to animal
drugs etc.
This department has the following services:
 It tries to maintain maximum and minimum level of inventory
 Ordinary and locally available commodities are maintained at
minimum possible level.
4. Staffing
The staff deals with the various personnel policies followed by the
organization. Below are given the personnel policies followed by the
organization.
Personnel policies:
There are around 240 employees working. There are various policies
followed. The Administrative department forms the policies.
Recruitment and Selection:
Due to registration, termination, retirement and transfers the concerned
department head will give the manpower requirements along with the job
description.
The manpower sourcing is done through advertisement, manpower
consultant, and employment exchanges and personnel reference.
Promotion:
Promotion is on the basis of seniority.

Induction:
After an employee is employed in DHAMUL, he she has to make
familiar to the union and also to know the objective, value, functions and the
operations. This helps the employees to interact with senior staff members from
various departments.
Salaries and Employee Benefits:
Gross salary:
A regular staff member in the union will have a gross salary consisting
of basic salary, dearness allowance, cca, house rent allowance and conveyance
allowance.
Other facilities:
 Shift allowance
 Canteen facility
5. Skills
These are the distinctive competencies that are present in the
organization it is the design and development of products quality and service or
viability of product. The employees in this organization also have all the
distinctive skills that are required for the undertakings of research and
development activities. The DHAMUL is improving the employee‟s skills and
techniques through motivating them and giving proper training to them also
through giving proper working condition.
6. Style
a) DHAMUL has top to bottom or top down style system.
b) The style of organization is authoritarian. It means management cadre
follows authoritative.
The indicators of the style are:
 Follows rules and orders
 Reliable and dependable

Decision making parameter for day-to-day operation:
Top manager will tell marketing manager to collect information
regarding daily requi9rementsw of the sale of milk and milk products based on
demand. Then this information will provided to production department
indicating production activities
7. Shared Values
The core or fundamental values that are widely share in the organization
and serve as guidelines that are important, these values have great meaning
because they focus attention and provide broader since of purpose.
The values of the organizations are
1) Customer Satisfaction
2) Commitment to total quality
3) Cost and time consciousness
4) Innovative and creative
5) Trust and team spirit
6) Respect for individually
7) Integrity

PART-C
FINANCIAL STATEMENT ANALYSIS

ACCOUNTING POLICIES AND PRACTICES IN
DHARWAD MILK UNION
Dharwad Milk Union (DMU) follows double entry system.
The double entry system records both the aspects of transactions
and events. The accounting procedure, analysis transactions and
events in to debit and credit and records both the aspects in a
systematic manner. The accounts have been prepared to comply
in all material aspects with applicable accounting principles in
India. The discussion on accounting policies and paractices in
DMU covers the following issues:
1) Fixed Assets
2) Investments
3) Capital Account
4) Depareciation
5) Current liabilities
6) Profit and loss account
7) Inventories

Accounting system:
If an entity is to communicate financial information, it must have the ability of collect
and appropriately arrange the necessary data. This requires the development of a process for
taking bits of information (inputs) and converting them into meaningful reports (outputs). The
systematic process followed by a firm is accumulating and reporting its financial
information is referred to as an accounting system. The type of accounting system used by
a firm depends upon the type and information it needs. In effect, the output of an accounting
system dictates the way that information is to be accumulated. An accounting system must be
extremely flexible and capable of being tailored to the requirements of a particular firm.
There is no single accounting system which can be followed by all firms.
Accounting as the basis for decision making:
The primary purpose of business activity is to make a profit, the business enterprise,
regardless of its size operates by combining physical resources and individual talents to
provide a product or service for members of society. Hopefully, resources received by the
firm from the sale of its products or performance of its services exceed the capital and labour
consumed in producing the product or providing the service. To achieve this result, managers
of a business enterprise are responsible for obtaining maximum advantage from use of
resources placed at their disposal. Managers need internal financial information to help them
make decisions regarding the use of the firms resources. Investors, creditors, and other
outside parties need external financial information in order to make decisions regarding their
interests in the firm.

1. FIXED ASSETS :
Accounting Policies : Fixed assets are stated at original cost. Fixed assets held
with an intention of being used for production and providing goods and
services and which is not held for sale, for example fixed assets like, training
centre assets, Bore well, Canteen equipments, dairy equipments, Factory
building, furniture and fixture, milk parlour, office equipment, refrigerator,
vehicles, weighing equipment etc.
The fixed assets of DMU five year (1998-2003) is shown in Table 4.1
Table 4.1
Year Amount (Rs. in lakhs)
1998-99 1106
1999-2000 1084
2000-01 1041
2001-02 9980
2002-03 9709
Source : Annual Reports

The transactions relating to fixed assets which take place during a year
are suitable adjusted against the opening balance. The previous year balance
will be opening balance for current year. There is a decrease in the value of
fixed assets every year as evident from table.
2)Investments :
Accounting policies : Investment is keeping capital in assets for attaining the
return from them other than those in which the enterprise is dealing. These
include. KCC bank share, KMF shares, KMF central office, fixed deposit,
KMF share govt., co-operative institution investments are classified into
current investments which is carried in the financial statement at the lower of
cost and fair value; and long-term investment which is carried in the financial
statement are stated at cost, after providing for any diminution in value.
Investments made by DMU for five year (1998-2003) are shown in
Table 4.2

Table - 4.2
INVESTMENTS
(Rs. in lakhs)
Investments 1998-99 1999-00 2000-01 2001-02 2002-03
Co-operative
institution
0.25 0.25 0.25 0.25 0.25
KCC bank
share
6.87 6.87 6.87 6.87 6.87
KMF shares
LDBF
2.50 2.50 2.50 2.50 2.50
KMF central
office
2.20 2.20 6.20 6.20 6.20
Fixed depost -- 9.73 21.39 20.13 21.02
KMF shares -- -- 100.00 100.00 100.00
Total 11.82 25.55 137.21 135.95 136.85

Table 4.2 reveals that there has been an increase in investments, which
are used for stabilizing the liquidity position as well as strenghtening the
profitability position of DMU.
3)Capital Account :
Accounting policy : Capital is the amount invested by a proprietor or partner
in the business enterprise. The capital in a DMU is called share capital. The
share capitals ae classified into A class-share capital, these are the farmers
share; and B clas-share capital is the shares of government authorities.
The information relating to capital account of DMU is shown in Table 4.3
Table 4.3 CAPITAL ACCOUNT
(Rs. in lakhs)
Investments 1998-99 1999-00 2000-01 2001-02 2002-03
Reserves and supuls 475.77 475.77 478.08 489.32 489.32
Share capital – A class 74.27 83.20 78.03 78.15 78.27
Share capital-B class -- -- 200.00 200.00 200.00
Share suspence -- -- -- 0.00127 0.00127
Total 550.04 558.97 754.12 767.48 767.59

Table 4.3 reveals that during the year 1998-99, 2000-2001 there was
increase government shares. The Government observed that there was
contingent loss, it decided to investment a fixed amount of shares i.e. Rs. 2
crores in DMU for its development. From 2000 onwords every year the
government started investing shares in DMU. A class shares are from farmers
societies. There are 723 societies. Shares price is Rs. 1000 per share, shares @
Rs. 1000 for each 2000 shares.
4) Depreciation :
Accounting Policy – Dharwad Milk Union follows Writen down value (WDV)
method of depreciation method for depreciation. Depareciation is calculated on
the transactions relating to an asset which take place during a year (i.e.
additions and sale of an asset) depreciation is ascertained as the rates given by
the valuers. This amount is transferred to profit and loss account.
The information relating to depreciation account of Dharwad Milk
Union is shown in Table 4.4

Table 4.4
DEPARECIATION ACCOUNT
(Rs. in Lakhs
YEAR Dpreciation
1998-99 46.17
1999-2000 45.91
2000-01 46.93
2001-02 49.11
2002-03 46.83
Table 4.4 reveals that during the five years there is increase and decrease
in the value of an asset to additions and sales of an asset.
5) Curent liabilities.
Accounting policies : current liabilities are treated as contingencies.
Contingencies arise when uncertain conditions prevail. It includes grants other
liabilities salaries recovered security deposit, unpaid salary/wages, duties and
taxes, and sundry creditors.

The information relating to current liabilities of DMU is shown in Table 4.5:
Table - 4.5
Current liabilities
(Rs. in Lakhs)
YEAR Current liabilities
1998-99 431.37
1999-2000 45.91369.75
2000-01 46.93387.58
2001-02 49.11454.25
2002-03 46.83611.39
Table 4.5 reveals that during the year 1998-99 to 1999-2000 there is
decrease in value current liabilities. But from the year 1999-2000 to 2002-2003
there is increase in value of current liabilities.

6) Profit and loss Account :
Accounting policies : The profit and loss account is treated as revenue. It
includes all the expenses, purchases, sales and income. This accounting
standard deals with the various bases to be adopted in accounting the revenue
in profit and loss account.
The financial position of DMU for the last five years is shown in Table 4.6
below-
Table - 4.6
Profit and loss account
(Rs. in Lakhs)
Year Profit Loss
1998-99 -- 77.79
1999-2000 -- 71.33
2000-01 18.14 --
2001-02 -- 232.71
2002-03 -- 50.26

PART – D
ANNUAL REPORT

ANNUAL REPORT
BALANCE SHEET FOR THE YERR 2007-2008
PARTICULARS AMOUNT (Rs.) PARTICULARS AMOUNT (Rs.)
To, opening
balance
To, purchases
To, manufacturing
expenses
To, vehicle
To, wages and
salaries
To, postage and
telegram
To, selling and
distribution
To, bank loan
To, technical
expenses
To, grand total of
expenses
To, profit
80,56,515.23
21,74,19,491.24
2,46,51,716.92
1,79,344.93
2,27,26,295.45
31,97,145.32
1,28,98,156.15
34,51,969.20
33,75,948.79
32,09,565.00
14,04,269.59
By, sales
By, other expenses
By, closing stock
28,09,85,013.03
36,10,597.02
1,59,74,807.77
TOTAL 30,05,70,417.82 30,05,70,417.82

Balance Sheet Continued
As at 31-Mar-2007
Capital Account (C/A)
Reserves and Surplus
Share Capital
Share Suspense
Loans (Liability)
Secured Loans
Unsecured Loans
Current Liabilities
Grants
Interest Short profit U/S
68
O.S.L.
Other Liabilities
Salary recoveries
Security Deposit A/c
Short profit A/c U/s 68
Duties and Taxes
Provision
Profit and loss A/c
Opening Balance
Current period
Total
4,04,19,718.91
1,27,94,200.00
1,53,016.41
______________
3,79,04,974.00
89,727.07
______________
84,858.00
5,22,730.00
1,08,52,250.92
18,85,688.84
6,40,426.30
33,53,706.50
10,12,300.00
85,134.81
3,65,82,854.59
_______________
3,96,41,686.94
( - ) 49,50,948.64
5,33,66,935.32
3,79,94,701.07
5,50,19,949.46
( - ) 3,46,90,738.3
11,16,90,847.5
-----continued

ANNUAL REPORT
1-April-2007 to 31-March-2008
As at 31 – Mar – 2008
Application of found
Fixed assets
Fixed assets
Work in progress
Investments
B D C C BANK SHARE
BELGAUM DIST. CO. OP
UNION LTD. BGM
INDIAN FARMERS & F
OC OP LTD
I S B D HARAYAN
KMF SHARE
Current Asset
DEFFERED INT (NDDB)
INTEREST
RECOVERABLE U/S 68
MISAPPROPRIATION
RECOVERABLE DUE U/S
68
Closing Stock
Deposits (Assets)
Loans and advances
(Asset)
Sundry Debtors
Cash-in-Hand
Bank Accounts
D D F GRANT
RECIEVABLE
TOTAL
7,88,19,921.14
49,98,387.00
______________
4,01,000.00
_______________
58,16,576.41
5,22,730.00
3,24,812.19
10,12,300.00
89,70,871.95
19,71,972.50
6,93,827.30
19,54,337.35
3,76,727.35
57,29,318.04
63,144.00
_______________
8,38,18,308.14
4,36,102.00
25,100.00
1,00
10,000.00
1,00
2,74,36,437.41
_______________
11,16,90,847.55
-----Continued

Profit and Loss A/c
1-April-2007 to 31-March-2008
As at 31 – Mar – 2008
Trading Account :
Sales Accounts
Sale-cattle feed
Sale of milk
Sale of milk Product
Sale of P & I
Sale other sales
Cost of sale :
Opening stock
Add: purchase accounts
Less: closing stock
Direct Experience
P & IWING
EXPERIENCE
PROCE AND
MANUFACTURING
EXPES
Gross Profit :
Income Statement :
3,28,12,834.35
28,28,34,885.46
2,11,51,953.14
17,41,273.00
1,95,659.95
______________
75,26,736.80
25,31,82,193.69
89,70,871.95
______________
25,17,38,058.58
3,43,54,210.41
_______________
41,12,127.50
3,02,42,082.01
33,87,36,605.99
28,60,92,268.95
5,26,44,337.04
Indirect Incomes
OTHER INCOME 41,95,367.83
-----continued

DHARWAD MILK UNION –
Particulars 1-April-2007 to 31-March-2008
Indirect Experience
ADMN. EXPERIENCE
INTEREST AND
BANK CHARGES
SELLING AND DIST
EXPERIENCE
STAFF EXPENSES
BAD DEBTS A/C
DEPRECIATION A/C
EXP RELATING TO
PREVIOUS YR.
Net Profit
44,27,632.63
35,20,933.17
1,56,39,207.25
2,48,23,769.23
2,47,966.95
32,09,787.00
19,460.00
_______________
5,18,88,756.23
49,50,948.64
Present Sales Structure
Year Avg Sales (Litres)
2002-2003 47,320
2003-2004 46,696
2004-2005 45455
2005-2006 44,331
2006-2007 43,185
2007-2008 56,936

LEARNING EXPERIENCE GAINED IN THE KMF
1. Got complete knowledge of quality testing.
2. Method of maintaining accounts in proper manner.
3. Learnt about the marketing strategy and sales promotion.
4. To know about the types of milk and how can it will be stored in the cold
storage.
5. Proper manner of maintaining punch cards and every time alert security
centers.
6. Learnt about the distribution channels it contains wide area of networking
also speed of operation.
7. Time Management.

FINDINGS AND SUGGESTIONS

FINDINGS OF THE STUDY ARE
1) DMU has produced many milk products. It is truly remarkable
growth, but some have been failed in making profits.
2) DMU has incurred losses during five year i.e. 2000 to 2002
except in 2003 there is profit.
3) DMU has not adopted any of the sales promotional tools to
improve the sales performance and also it has not adopted
advertisement and publicity satisfactory.
4) It is true that the milk union has training centre to train villagers
in regard to rear the cows and buffaloes and how to feed them
and what are different types of cows and buffaloes and what
type of yielding animals are suitable for there villagers etc., Milk
union training centre is concentrating its attention on the
increase in milk capabilities of cows and buffaloes.
5) DMU has failed in having effective management and skilled
labourers.
6) It is found that trading and profit and loss account and balance
sheet is not satisfactory for all these five years. The milk union’s
gross profit and net profit is not at all improved but it has shown
losses continuously for the period of five years. And study has
pointed out that assets and liabilities were increased during
these periods.

7) DMU has not made profits from five years, hence it could not
distribute dividend to its village primary co-operative member
societies. This is in fact, not a healthy situation of the milk union.
It truly reflects that, DMU is in effective in management and
administration of the Milk Union and this situation is not
encouraging to village co-operative societies for its functioning.
8) The current ratio of the DMU is not satisfactory. As a convention
2:1 is considered to be satisfactory but the ratios of DMU shows
less than standard ratio. It means the DMU's capacity to
discharge the current obligation is not good. Least ratio is in the
year 2001-02 and highest ratio is in the year 1998-99.
9) The quick or acid test ratio of DMU is also very unsatisfactory.
As a convention a firm should have a quick ratio of 1:1 but the
ratios of DMU shows less than standard ratio. The first and third
year is some how manageable but other three years shows very
poor liquidity position.
10) The stock turnover ratio of DMU shows that the DMU manage
inventory efficiently. The ratio for the year 2000-2001 and 2001-
02 shows very high and it shows blocking of capital etc.

SUGGESTIONS
In the light of the above findings, the following suggestions have been
made to make the Dharwad co-operative Milk Producers Society Union Ltd
success.
1) The loss making milk products must be stopped immediately.
2) The quality and quantity of the milk products must be improved
and there must be product differentiation.
3) The management must keep in mind the satisfaction of
prospective consumers.
4) DMU has not made profits due to more number of employees
appointed in the Milk Union. This is one of the most important
factors leading to incurring losses. So here it is being suggested
that the number of employees should be decreased to the
minimum possible extent.
5) Expenditure made by the DMU is unnecessary. Union has
suffered net loss. It must check such expenses.

BIBLIOGRAPHY
 Human Resource Management
-By Subba Rao P.
 Company Annual Report.
 www.nandni.coop.
 http://www.7s model of Mckinsey.com
ANNEXURE
 Trading and profit and loss account & the balance sheet of DMU for the years
1998-99 to 2002-03.
CONCLUSION
If these suggestions are implemented, the DMU‟s overall performance
will be improved further.

17122316 sam-kmf-report-for-mku

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