0

The Editorial Contents

Address,
India, the world’s largest & fastest growing market for • Cover Story 2
dairy products, contributing to up to 35% of the total milk
produced in Asia. It is, therefore, aptly called ‘The Oyster’
-- The “Milk” Route
of the global dairy industry. Yet, adulteration, inflation,
etc. are issues that have caused a major blow to the dairy • Article 4
industry over the past few years. We thus dedicate this
issue of The PUMBA Gazette to the Indian Dairy Industry. -- Cold Chain Logistics – Challenges
in India
Ever-increasing demand, inadequate production,
compromised product quality are few of the factors
responsible for the plight of the dairy industry today. • ‘Innov’Era 5
Amidst this, efficient Supply Chain Management (SCM)
has emerged as a phoenix, bringing to the forefront its
-- The ‘IT’ way to Procurement
ability to change the fortunes of the industry which deals
majorly in perishable products . In order to study the • The Industry Buzz 6
SCM of dairies & its importance in meeting the customer
requirements, the students of PUMBA undertook a -- Emami loses, Reckitt Benckiser
project that is discussed in the Cover Story- The “Milk” wins!
Route.
-- Sun Pharma Gets Going!!!
An article on the cold-chain logistics industry in India, its
organization & the challenges associated has also been
included.
• Candid Talk 7
-- An Interview with Dr. Pramod
‘e-Procurement’ has been instrumental in altering the
supply chain environment of many organizations, in Wadikar
recent times. ‘Innov’ERA includes a brief account of the
same, also analyzing its various attributes. • PUMBA News 8
The BT news section highlights two of the recent -- Summers 2010
acquisitions in the dynamic Indian pharmaceutical
industry. -- NAAC Visits PUMBA
-- PUMBA Honesty Store
The Candid Talk section includes an interview with Dr.
Pramod Wadikar, on the recent trends & practices in the
SCM segment of various industries.

A section upon the recent happenings in PUMBA has also

been included.

Sincerely Yours,
Chief Editor
Radhika Agarwal,
MBA Biotechnology SEM IV
(The PUMBA Gazette Team)

Your feedback and suggestions are welcome at-

thepumbagazette@gmail.com
(The detailed project report shall be provided on enquiry.
Kindly send in your enquiries at
thepumbagazette@gmail.com)

1
 Cover Story
THE “MILK” ROUTE
The total milk consumption of the nation is met by public,
Milk and milk products, being an eclectic mix of many
private and co-operative organizations, the contribution
nutrients have always been deemed as essential
of co-operative societies being the largest. The private
constituents of a healthy diet. Apart from milk in its liquid
sector targets a very narrow segment of exports and
form, popularity of other dairy products and their
emerging urban areas. India’s unique pattern of
consumption is on an upswing owing primarily to the
production, processing, marketing and consumption of
increased affordability of the consumers and a growing
dairy products consists of over 11 mn farmers organised
affinity towards a modern, changed diet.
into about 0.1 mn village Dairy Cooperative Societies.
These form part of a National Milk Grid which links the
The Dairy Industry
milk producers throughout India with consumers in more
The composition of dairy products varies across different
than 700 towns and cities, handling about 18 mn kg of
regions with liquid milk as the overall most important
milk per day.
product by volume. However, processed dairy products
have become more important with increasing incomes
The Dairy Supply Chain
and better living standards. In developed countries the
The supply chain of a dairy is extensive and complex; its
trend is veering towards high value functional foods that
complexity defined by the sector it belongs to and the
require considerable research investments and
number of players in the chain. Under Indian conditions,
sophisticated processing & packaging.
milk has to be regularly collected & transported twice a
day (morning & evening). Tanker is one of the
Due to unequal demand rates in these products all over
transportation equipments widely used which is a quicker
the world, hardly at all in developed and strongly in some
mode of transport facilitating lower cost, better
developing regions, the challenges dairy
temperature control, less risk of
companies face vary depending on the
contamination, more time & labour
market they operate in. These
saving, lower investment in cans (used for
challenges include a growing demand
handling small quantities) & overall
for dairy products, with world demand
savings in detergents used for disinfection
growing by 2 per cent a year. Also, they
purposes.
face an increasing number of consumer
requirements in combination with
Problems in relation to collection &
increasing customer power. Food
transportation of milk include its liquid
processing industry being the key The supply chain of a state, perishability & bulkiness, tropical
customer for dairy products, the leading
dairy is extensive and climate of the country, small & scattered
companies in the sector like AMUL,
Nestle, etc. tend to be significantly complex; its production of milk, lack of countrywide
complexity defined by organizations for milk collection &
larger than the players in the dairy
transport and vested interests among
industry. The on-going global the sector it belongs to
local milk merchants.
consolidation process in the industry by and the number of
means of mergers, acquisitions and
players in the chain. Supply chains play a major role in timely
strategic alliances is further increasing
delivery and reduction in wastage of
their market power and has been very
perishable dairy products. They are also major cost
pronounced and is expected to continue.
centres because the temperature and other
environmental conditions are required to be maintained
The Indian dairy industry
stringently in this industry. Hence, detailed study and
“India is the largest producer of milk producing more
changes for improvement in supply chain in dairy
than 100 million tonnes of milk per annum. Yet, her per
industry have acquired importance.
capita milk consumption is around 250 g per day”- Milk
and Dairy Products in India - Production, Consumption
In this project we aimed to analyse the supply chains of a
and Exports Report, 2008. India also has one of the
cooperative as well as a government run dairy. Both,
highest rates of milk consumption in the world, growing
primary and secondary data were used for this purpose.
at a rate of over 4% per year according to FAO. At
1. Public sector operated dairy-
present, there is a gap of 1.8 mn tonnes between the
Government Milk Scheme, Pune.
demand and current milk supply. This demands an
2. Co-operative run dairy- Katraj Dairy, Pune.
average incremental increase in milk production of 5 mn
tonnes per year as against the annual increase of 3.2 mn
during the last 15 years.

2
 POINT OF DISTINCTION GOVERNMENT MILK SCHEME CO-OPERATIVE DAIRIES
Capacity utilization (% of
10% approx. 50% approx.
total capacity)
High
Penetration of the Low
(Well-established network, numerous
procurement network (handful of collection centres)
collection centres)
Comparatively higher profit margins.
Availability of raw milk Lower profit margins drive away
Many small capacity societies are linked
suppliers dairy farmers
to the processing unit
Control over the supply No control beyond the processing Entire supply chain monitored and
chain unit managed by the dairy
Availability of spare Resources like transport facilities & Procuring additional resources lead to
resources vacant space available readily fresh costs
Basic technology in place. Advanced
Absolutely rudimentary, extreme technology like e-procurement,
Use of technology
need for automation standardization of crates cans,
alphanumeric coding, etc. required.
Tankers with large capacities are used.
However, GPS tracking of vehicles &
Transport model As per the agents’ discretion
automated loading unloading of vehicles
is required
TABLE 1: Differences In The Operations And Supply Chain Management Of Public Sector Dairies And Co-Operatives

Observations
There are a few differences in the operations and supply
chain management of public sector dairies & co-
operatives.
 The processing unit which lies at the centre of the
flow of milk from the producers to the consumers
depicts severe under utilization of capacity. The
reasons for this are the difficulties faced in procuring
unprocessed milk-
 Capacities of individual collection centres /
cooperatives is very low
 Collection centres are scattered over a large
radius
 Competition between cooperative societies is
high for the limited number of collection centres
 Private dairies offer more incentives and a higher
margin thereby attracting more suppliers /
farmers.
 Also, in case of Government Milk Scheme, Pune, the
processed milk is procured by agents from the
processing unit by themselves individually. A lack of
an established network of such agents results in the
dairy’s inability to control the size of the consumer
population. This is not seen in case of cooperatives &
private dairies.
 Changes in policies regulating the government run
dairies can go a long way in enhancing their
competency to compete with cooperatives.
Along with improving the public sector dairies, the nation
needs to focus on beefing up the total production
capacity to satisfy the increasing demand.
Short term measures:
1. Increasing availability & improving quality of fodder
by using improved seed varieties.
2. Ceasing the slaughter of milch animals for export of
beef.
Medium term measures:
1. Improving the infrastructure involved in milk chilling,
transportation, processing & storage facilities,
thereby reducing operational costs and quantity &
quality losses.
2. Application of technology is of utmost importance at
every stage in the supply of milk and milk products.
Long term measures:
1. Increasing milk productivity through cross breeding
and amplifying the availability of better germplasm
for breeding, etc.
2. Availability of land for fodder cultivation needs to be
increased. E.g. using non-agricultural land.
Compiled By:
Abhijit Shinde, Aniket Bacchav, Chime Mishra, Nandini
Sengupto, Radhika Agarwal, Sayali Kulkarni, Shantanu
Raut, Sumantsinh Girase (MBA Biotechnology SEM IV)

3
 Article
COLD CHAIN LOGISTICS - CHALLENGES Most of the cold chain rooms in the country are old &
require substantial upgradation. A large part of the cold
IN INDIA chain equipment in the country is currently operating on
obsolete CFC refrigerant (aging cold chain equipments).
‘Cold chain logistics’ refers to a temperature controlled Cold chain management is observed to be poor in some
supply chain methodology used to extend and ensure aspects (including that in private practices), for instance,
shelf-life of perishable & volatile materials like temperature recording and thus increasing the risk of
agricultural produce, frozen foods, photographic films, freezing the freeze-sensitive vaccines.
chemicals and pharmaceuticals. Cold chain distribution
process is an extension of the GMP environment of Some of the other shortcomings of the industry include
pharma products enforced by national and international inadequate trained manpower at every level of cold chain
health regulatory bodies. Most of the cold chain logistics logistics, lack of an integrated approach, efforts for
facilities operate between temperatures of 2-8 0C. effective policy formulation, good infrastructure and
information dissemination. Viability of the cold chain
India is the 2nd largest producer of fruits and vegetables system continues to remain a question mark for the
currently producing 180 million tonnes of the same. The above mentioned reasons. Also, current costs of cold
food processing industry is rapidly expanding with chain facilities are affordable only to big pharma
diversification and value addition in food & processed companies and retail giants like Reliance Fresh, Spencers,
products. Also, the Indian etc. Supply chain requirements
pharmaceutical industry is growing are found to be different in every
at the rate of 18%. It produces 14- industry in terms of logistics,
20% of global generic drugs & is the temperature, volume & duration
biggest producer of Active of storage etc.
Pharmaceutical Ingredients (APIs) in
the international arena. Serums, What the industry requires today
vaccines, antibiotics & other is rapid upgradation of
therapeutics produced by the technologies used in cold chain
industry require cold chain transportation & implementation
transportation facilities as ...inadequate trained manpower
of best practices like RFID
specified by health regulatory at every level of cold chain
technology for better efficiency.
bodies. logistics, lack of an integrated Industry expos like the ‘India Cold
approach, efforts for effective Chain Expo 2010’ and ‘Cold Chain
But, despite the availability of
policy formulation, good Summit 2010’ organized by
these cold chain facilities, 20-30% Confederation of Indian Industries
of the total agricultural produce is infrastructure and information
(CII), can help increase interaction
wasted. The post-harvest loss of dissemination.
with various other industries and
perishables in India has been also facilitate raising of funds.
estimated to be close to Rs. 1 trillion a year. As much as With ample support from the Government, for example,
57% of it is avoidable by eliminating wastage. in the form of provisions in the Union Budget for 2010-11
Commissions and avoidable costs of storage make up the regarding concessions & subsidies in the cold chain
remaining 43% of the loss. arena, there can be tremendous improvement in these
practices.
The cold chain logistics industry is estimated to be as
large as Rs. 10,000 - 15,000 crores, growing at the rate of
20-25% and it is expected to touch Rs. 40,000 crores by Compiled by:
2015. As per industry estimates, approximately 104 Shantanu Raut (MBA Biotechnology SEM IV)
million tonnes of perishable produce is moved in the
country in a year, out of which around 100 million tonnes
goes through non–reefer modes and the remaining 4
million tonnes go through reefer transport. It is estimated
that about 25,000 vehicles are involved in this type of
transportation of which, dairy (wet milk) constitutes
about 80%, thereby leaving only about a fleet of 5,000
refrigerated transport vehicles for all other categories put
together.

4
 ‘Innov’Era
THE ‘IT’ WAY TO PROCUREMENT 2. Seller-centric models, where the supplier
implements the software and the buyer uses it via
the internet. However, buyers lose control over the
Efficient Supply Chain Management is the backbone of
catalogue data and have to access different systems
any successful organization is an established fact today.
for different suppliers.
However, what about the procurement system in the
3. Third-party e-Procurement models, where the third
same organization? Is it not essential that they go hand in
party is at the hub & the buying and selling
hand? Procurement of all the requirements in an
organizations trade through a common marketplace.
organization locks up a considerable amount of capital &
It is least expensive for both parties in terms of
hence, due importance must be given to the procedures
overall initial costs.
involved in procurement. One of the latest trends in
purchasing is e-Procurement and many organizations are
Organizations can evaluate all their available options and
adopting this development owing to the numerous
select the one that best suits their requirements. In an
benefits associated that are discussed hereafter.
industry like Biotechnology, where perishable products
form a majority of the raw material, precious time can be
E-Procurement can simply be described as a sourcing
saved by using e-Procurement solutions that shorten the
strategy that uses the World Wide Web as a platform for
purchasing cycle considerably. Today, most of the
interaction & negotiation with the suppliers. In reality
softwares are available as
though, there are many
SaaS (Software as a Service)
intricate details to this
models, wherein one need
apparently simple procedure.
not purchase the software
The traditional purchasing
but pay for the amount of
procedure requires
usage only.
considerable investment in
terms of time, money &
The major benefits of e-
energy. It is also a circuitous
Procurement include reduced
one wherein the purchase
cost of purchasing, increased
order passes through many
procedural transparency,
hands and one has to manage
shorter procurement cycles,
numerous channels for all the
better vendor relationships &
transactions. However, with
reduced manpower use for
the onset of e-Procurement
procurement. On the flipside,
software solutions, this
The major benefits of e-Procurement however, there are a few
procedure has been
drawbacks like additional
appropriately streamlined. include reduced cost of purchasing, training of purchasing staff to
They have dramatically
increased procedural transparency, use the required software,
brought vendors &
loss of personal rapport with
purchasers closer. E-
shorter procurement cycles… suppliers & importance of
Procurement can be broadly
suitable web connectivity,
classified into three types-
thus increasing investment in
Business-to-Business, Business-to-Consumer or Business-
IT resources. But, the benefits of employing e-
to-Government.
Procurement clearly outweigh its drawbacks. Hence, in
Today, purchasing solutions like MS Market, ProcureIT,
this rapidly advancing technological abyss, e-
Purchasing plus+, eProProcure, Purchasing Assistant, etc.
Procurement is indeed, here to stay!
are being marketed by many companies. These offer a
host of functions like bidding, tendering, discounts &
special offers. These software models can be categorized
into the following three types, Compiled by:
Chime Yangzom Mishra (MBA Biotechnology SEM IV)
1. Buyer-centric model, where the software is
implemented by the buyer to support his
procurement needs & the model can be customized
according to their specifications while making the
entire process automated. Here, the buyers have to
keep in mind the costs borne owing to the
maintenance of the software.

5
 The Industry Buzz
EMAMI LOSES, RECKITT BENCKISER SUN PHARMA GETS GOING!!!
WINS!
The Indian Pharmaceutical giant
Sun Pharma is in no mood to
Reckitt Benckiser, the British company has agreed to buy
stop. The Pharma Company
Indian company Paras Pharma for $ 726 million. The
recently got an Israeli firm, Taro
Indian company’s shares are owned by different holders
Pharmaceuticals Ltd. in its bag
like Actis (a private equity firm), the founder of Paras- Mr.
after a long fought battle. Now,
Girish Patel and his family. They will all be selling their
with sufficient capital available,
stakes in the company to the British firm.
the company wishes to acquire
some more foreign companies.
Paras had clocked sales of
This time it is a US-based firm
more than Rs. 400 crores
Caraco Pharmaceutical Laboratories Ltd. Sun Pharma is
in the last financial year
planning to buy 25% shares of the company, with a lot of
till March. India being one
premium being offered to the shareholders apart from
of the promising
the $4.75 per share, the total amount being $48 million.
healthcare markets in the
world with a strong
It is believed that the move by Sun Pharma has come at
business folio becomes an obvious choice for the foreign
very right moment in the market considering the struggle
players to invest in.
of Caraco Pharmaceutical to overcome its losses. Caraco
has been facing problems in its domestic market with the
Earlier a lot of companies were in fray to acquire Paras
US FDA. The FDA has been scrutinizing operations and
Pharmaceuticals. The front runner
the manufacturing facilities of the company. Besides, the
was Emami ltd. The Emami
company has been facing
shareholders were slightly unwilling
regulatory problems. Since
to go ahead with the move of the
it had to settle the
management. The company had bid
regulatory issues with FDA,
maximum next to Reckitt, but finally
it had to pay a hefty
Reckitt won the battle. Emami shareholders responded
amount of consulting fees,
positively to the news that Emami could not acquire the
royalties and also the huge expenses were incurred in
shares of Paras. They feared that the company might be
filings for shifting the generic drug production sites
overpaying for the deal and might end up in large debt.
elsewhere. Though it recorded 25% rise in sales in the
last quarter, the losses incurred because of the above
A lot of other big companies like GSK, Sanofi Aventis,
mentioned factors were high.
Novartis, Johnson&Johnson had also showed interest in
buying some of the stakes in
On the other side, for Sun Pharma the win over Taro
Paras Pharma. With this
Pharmaceuticals increased the financial flexibility. The
acquisition, many price of the acquisition would have been more than
popular brands like current $48 million, had it lost the Taro battle.
MOVE, KRACK HEEL
CARE LOTION, and While the foreign companies are out shopping in India
acquiring the big players, the Indian Pharma giant is
D’COLD have been added to the bag of Reckitt Benckiser.
slowly but steadily entering the foreign market and
making its presence felt there.
In the past few years, many foreign companies have
shown interest in buying Indian firms owing to the
Compiled by:
tremendous market potential and the strong research
Sumantsinh Girase (MBA Biotechnology SEM IV)
base, which has always been an attraction for the foreign
companies.

6
 Candid Talk
AN INTERVIEW WITH DR. PRAMOD Q.5 What measures would you suggest for improving the
efficiency of the Supply Chain Management system of an
WADIKAR organization?
Supply Chain Management is primarily concerned with
Dr. Pramod Wadikar, a Mechanical Engineer & also a the efficient integration of organizations involved in filling
management graduate, has a vast experience in the fields customer need for products/services. Structured
of inventory management & SCM. He has about 35 years approach for effective integration across the organization
of experience in the industry as a consultant & trainer deserves consideration. Design and implementation of
and also in education. He is currently a visiting faculty at formal and structured customer service strategy, use of 4
PUMBA. PL and increased use of IT would help in making supply
The PUMBA Gazette team had the opportunity to catch chain more efficient.
up with sir & obtain his views on the current supply chain
scenario.
Compiled by: The PUMBA Gazette Interview Team
Q.1 How important is efficient supply chain management
for the successful running of an organization?
Martin Christopher’s statement “Supply chains compete,
not companies” clearly explains the vitality of managing
supply chain in competitive and globalised business
environment. At organizational level, managing Supply
Chain efficiently is important as it directly affects profits
and customer service.

Q.2 What would be the check-points to monitor the

efficiency of the supply chain of an organization?
Wish You All A Very
The check-points will vary depending on numerous
factors like the nature of business, the business
environment, etc. Service level, delivery performance,
cost reduction, inventory control are some of the
important parameters for monitoring supply chains.

Q.3 Which, according to you, are the key developments

in supply chain management of perishable goods in
recent times?
The Indian supply chain practices have changed &
improved tremendously owing to the technological
advancements in this area. Some of the important
developments include-
 Effective cold chain across the supply chain
 Increased use of racking system like of RFID
 Automated crossdocking
 WMS
 Product development for longer shelf life
 Use of 4PL Service providers
 Green /sustainable supply chain.

Q.4 Tremendous amount of wastage resulting from

inefficient supply chain management is a matter of
concern, particularly in case of perishable goods. What
are the steps taken in order to avoid & minimize this
Happy New Year 2011
wastage?
The three basic steps for minimizing wastage are Waste
Identification, Waste Reduction and Waste Elimination.
Lean Concepts, 5S, KAIZEN & Process Mapping are some
of the approaches widely used for waste elimination in
various industries.

7
 The PUMBA News
SUMMERS 2010
Summers ’10, a national level summer internship project
competition, was held on 18th of December, 2010 at the
PUMBA campus. This event gives students from leading
B-Schools in India an opportunity to present their project
work & compete with other applicants. Summer
internship provides the new batch of management
students with adequate corporate exposure before they
enter the dynamic business world.
PUMBA HONESTY STORE
PUMBA is an institution which holds a strong ground for
values like honesty, dignity and truthfulness to thrive.
The trust a PUMBAite has in PUMBA and other fellow
PUMBAites, lays the foundation for the ‘PUMBA
HONESTY STORE’. This noble initiative has been taken up
by Mr. Anand Oswal a second year finance student to
promote honesty as well as entrepreneurship at PUMBA.
The objective of the store is to make available at hand a
chosen range of merchandise.

The event was inaugurated by Chief Guest Mr. Anant

Sardeshmukh, Director General at Mahratta Chamber of
Commerce Industries and Agriculture (MCCIA) and Dr.
(Capt.) C.M. Chitale, Professor & Head, PUMBA. The
judges for the event were dignitaries from various
specializations along with the faculty members from the
department.
Students from various renowned colleges such as
Jamnalal Bajaj Institute of Management Studies, N.L.
Dalmia Institute of Management Studies & Research, K J
Somaiya Institute of Management Studies & Research,
etc. participated in the event. With overwhelming
participation by applicants, efficient organization by the
students of PUMBA & constant encouragement &
support from the PUMBA faculty, “Summers ‘10” was a
huge success.
The store is an unmanned store from where one can
purchase products (mainly foodstuffs); the uniqueness of
the transaction being that you yourself shall be both the
executing (buying and selling) parties. This means one
can take the products he wishes to purchase, while
depositing the equivalent cash in the cash box. The goods
chosen are priced in multiples of Rs. 5 or are bundled
with other goods to round off their price to multiples of
Rs. 5, for the sake of convenience.
PUMBA invites all its alumni to

NAAC VISITS PUMBA

The National Assessment and Accredition Council (NAAC)
team visited the University of Pune on 20th and 21st
December, 2010. PUMBA being a student-driven
institution, various student activities carried out year
round at the campus were presented to the team. Also,
research reports, patents, achievements & recognitions,
PhD theses were displayed. Other innovative activities &
workshops such as QMTI & The Police Internship
Programme were also presented. The team interacted
with faculty, students, alumni, parents & the non-
teaching staff of PUMBA & various other departments of
the university as well.