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CHAPTER-I

INTRODUCTION

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INTRODUCTION

Finance

If we trace the origin of finance, there is evidence to prove that it is as old as human life on
earth. The word finance was originally a French word. In the 18th century, it was adapted by English
speaking communities to mean the management of money. Since then, it has found a permanent
place in the English dictionary. Today, finance is not merely a word else has emerged into an
academic discipline of greater significance. Finance is now organized as a branch of Economics.

Meaning of Finance

Furthermore, the one word which can easily replace finance is EXCHANGE." Finance is
nothing but an exchange of available resources. Finance is not restricted only to the exchange and/or
management of money. A barter trading system is also a type of finance. Thus, we can say, Finance
is an art of managing various available resources like money, assets, investments, securities, etc.

At present, we cannot imagine a world without Finance. In other words, Finance is the soul
of our economic activities. To perform any economic activity, we need certain resources, which are
to be pooled in terms of money (i.e. in the form of currency notes, other valuables, etc.). Finance is a
prerequisite for obtaining physical resources, which are needed to perform productive activities and
carrying business operations such as sales, pay compensations, reserve for contingencies
(unascertained liabilities) and so on.

Hence, Finance has now become an organic function and inseparable part of our day-to-day
lives. Today, it has become a word which we often encounter on our daily basis.

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Definition of Finance

Finance is defined in numerous ways by different groups of people. Though it is difficult to

give a perfect definition of Finance following selected statements will help you deduce its broad
meaning.

1. In General sense

"Finance is the management of money and other valuables, which can be easily converted
into cash."

2. According to Experts

"Finance is a simple task of providing the necessary funds (money) required by the business
of entities like companies, firms, individuals and others on the terms that are most favourable to
achieve their economic objectives."

3. According to Entrepreneurs

"Finance is concerned with cash. It is so, since, every business transaction involves cash
directly or indirectly."

4. According to Academicians

"Finance is the procurement (to get, obtain) of funds and effective (properly planned)
utilisation of funds. It also deals with profits that adequately compensate for the cost and risks borne
by the

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Financial Management

There are three key elements of the process of financial management:

(1) Financial Planning

Management need to ensure that enough funding is available at the right time to meet the
needs of the business. In the short term, funding may be needed to invest in equipment and stocks,
pay employees and fund sales made on credit.

In the medium and long term, funding may be required for significant additions to the
productive capacity of the business or to make acquisitions.

(2) Financial Control

Financial control is a critically important activity to help the business ensure that the
business is meeting its objectives. Financial control addresses questions such as:

Are assets being used efficiently?

Are the businesses assets secure?
Do management act in the best interest of shareholders and in accordance with business rules?

(3) Financial Decision-making

The key aspects of financial decision-making relate to investment, financing and dividends:

Investments must be financed in some way however there are always financing alternatives that
can be considered. For example it is possible to raise finance from selling new shares, borrowing
from banks or taking credit from suppliers

A key financing decision is whether profits earned by the business should be retained rather than
distributed to shareholders via dividends. If dividends are too high, the business may be starved of
funding to reinvest in growing revenues and profits further.

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Financial management objectives

The main objectives of financial management are:-

Profit maximization :

The main objective of financial management is profit maximization. The finance manager
tries to earn maximum profits for the company in the short-term and the long-term. He cannot
guarantee profits in the long term because of business uncertainties. However, a company can earn
maximum profits even in the long-term, if:-

The Finance manager takes proper financial decisions.

He uses the finance of the company properly.

Wealth maximization :

Wealth maximization (shareholders' value maximization) is also a main objective of

financial management. Wealth maximization means to earn maximum wealth for the shareholders.
So, the finance manager tries to give a maximum dividend to the shareholders. He also tries to
increase the market value of the shares. The market value of the shares is directly related to the
performance of the company. Better the performance, higher is the market value of shares and vice-
versa. So, the finance manager must try to maximise shareholder's value.

1. Proper estimation of total financial requirements :

Proper estimation of total financial requirements is a very important objective of financial

management. The finance manager must estimate the total financial requirements of the company.
He must find out how much finance is required to start and run the company. He must find out the
fixed capital and working capital requirements of the company. His estimation must be correct. If
not, there will be shortage or surplus of finance. Estimating the financial requirements is a very

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difficult job. The finance manager must consider many factors, such as the type of technology used
by company, number of employees employed, scale of operations, legal requirements, etc.

2. Proper mobilisation :
Mobilisation (collection) of finance is an important objective of financial management. After
estimating the financial requirements, the finance manager must decide about the sources of finance.
He can collect finance from many sources such as shares, debentures, bank loans, etc. There must be
a proper balance between owned finance and borrowed finance. The company must borrow money
at a low rate of interest.
3. Proper utilisation of finance :
Proper utilisation of finance is an important objective of financial management. The finance
manager must make optimum utilisation of finance. He must use the finance profitable. He must not
waste the finance of the company. He must not invest the company's finance in unprofitable
projects. He must not block the company's finance in inventories. He must have a short credit
period.
4. Maintaining proper cash flow :
Maintaining proper cash flow is a short-term objective of financial management. The
company must have a proper cash flow to pay the day-to-day expenses such as purchase of raw
materials, payment of wages and salaries, rent, electricity bills, etc. If the company has a good cash
flow, it can take advantage of many opportunities such as getting cash discounts on purchases, large-
scale purchasing, giving credit to customers, etc. A healthy cash flow improves the chances of
survival and success of the company.
5. Survival of company:
Survival is the most important objective of financial management. The company must survive in
this competitive business world. The finance manager must be very careful while making financial
decisions. One wrong decision can make the company sick, and it will close down.
6. Proper coordination :
Financial management must try to have proper coordination between the finance department
and other departments of the company.

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7. Create goodwill :
Financial management must try to create goodwill for the company. It must improve the
image and reputation of the company. Goodwill helps the company to survive in the short-term and
succeed in the long-term. It also helps the company during bad times.
8. Increase efficiency :
Financial management also tries to increase the efficiency of all the departments of the
company. Proper distribution of finance to all the departments will increase the efficiency of the
entire company.
9. Financial discipline :
Financial management also tries to create a financial discipline. Financial discipline means:-
To invest finance only in productive areas. This will bring high returns (profits) to the company.
To avoid wastage and misuse of finance.

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FINANCIAL STATEMENT ANALYSIS

INTRODUCTION:
Financial statements, as used in corporate business house refer to a set of reports and
schedules, which accountants prepare at the end of each financial year of a business enterprise.
The financial statements are the means with the help of which the accounting system perform its
main function of providing summarized information about the financial affairs of the business.
This statement comprises Balance sheet or Position Statement and Profit and Loss Account or
Income Statement. In India, every company has to present its financial statements in the form
and contents as prescribed under section 211 of the companies Act, 1956.
1. Objectives of Financial Analysis:

To estimate the earning capacity of the firm.

To gauge the financial position and financial performance of the firm.
To determine the long-terms liquidity of the funds as well as solvency.
To determine the debt capacity of the firm.
To decide about the future prospects of the firms.
To help mobilization of resources.
To describe how best the resources of a company are optimally utilized.
To conduct the business practices of a company in according to the present and future
challenges with the persistence of available funds of a firm.
2. Types of Financial Statements Analysis:
A distinction can be drawn between various type of financial analysis and it may be as under:
According to the nature of the analysis (Lie material used)
External analysis: - It is made by those who do not have access to the detailed record of the
company. This group, which has to depend almost entirely on published financial statement,
includes investors, credit agencies and government agencies regulating a business in nominal
way.
Internal analysis: - The internal analysis is accomplished by those who have access to the
books of account and all other information related to business, while conducting this analysis, the
analyst is a apart of the enterprise he is analyzing, executives and employees.

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According to the Modus Operandi of Analysis:

Horizontal analysis: When financial statements for a number of years are reviewed
and analyzed, the analysis is called Horizontal Analysis. As it is based on data from year to
years rather than on one
date or period of time as a whole, this is also known as Dynamic Analysis
Vertical Analysis: It is frequently used for referring to ratios developed for one date
or for one accounting period. It is also called Static Analysis. This is not very conducive to
proper analysis of the firms financial position and its interpretation, as it does not enable to
study data in perspective.
According to the Objective of Analysis:
Long term analysis:
This analysis is made in order to study the long term financial stability, solvency and
liquidity as well as profitability and earning capacity of a business. The objective of this analysis
is to know whether the firm will be able to earn a minimum amount, which will be sufficient to
maintain a reasonable rate of return on the investment.
Short term analysis:
This analysis is made to determine the short term solvency, stability, liquidity and
earning capacity of the business. The requirement or not and sufficient borrowing capacity to
meet contingencies in the near future.
Parties Interested in Financial Analysis:

Financial Personnel
Management
Creditors
Investors
Government
Bankers

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3. Importance of Financial Analysis:

Financial Statement Analysis is very important for the management, shareholders,
creditors, investors and general public. Following are important points in this regard:
It simplifies, summarizes and systematizes a long array of accounting figures, which
prove very useful to the interested parties as it helps them in arriving at valuable
decisions
Financial analysis is powerful aid to the management in discharge of its basic function
of forecasting, planning, coordination, communication and control.
It identifies the financial health of enterprise by evaluating important aspects of business
like liquidity, solvency, profitability, capital gearing, etc. Such an evaluation enables
conclusion to be drawn regarding financial health of business.
The process of analyzing financial statements involves the preparation and
interpretation of meaning devices such as ratios and trend percentages
The financial statements are a mirror, which reflect the financial position and operating
strength or weakness of the business enterprise.

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FUNDS FLOW ANALYSIS

INTRODUCTION

Significant technique of financial analysis is Funds Flow Analysis. It is designed to

highlight changes in the financial conditions of a business concern between two points of time
which generally conform to beginning and ending financial statement dates. Funds flow
statement is also termed as a statement of sources and applications of Funds, statement of
changes in working capital, statement of changes in Financial Position, statement of Funds
supplied and Applied, statement of Funds Generated and Expended.

R.A.Foulk: A statement of sources and applications of funds is a technical devise

designed to analysis the changes in the financial conditions of a business between two dates.

FUNCTIONS OF FINANCIAL MANAGEMENT:

The financial functions can be divided into four broad categories:
1. Investment decisions.
2. Financing decisions
3. Dividend decisions.
4. Liquidity decisions.

1. Investment decision:
Investment decision or capital budgeting involves the decision of allocation of capital or
commitment of funds to long-term assets, which would yield, benefits in future. Its one very
significant aspect is the task of measuring the prospective profitability of new investments.
Future benefits are difficult to measure and cannot be predicted with certainty.

2. Financing decision:
Financing decision is the second important function to be performed by the financial
manager. Broadly, he must decide when, where and how to acquire funds to meet the firms
investment needs. The central issue before him is to determine the proportion of equity and debt.

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The mix of debt and equity is known as the firms capital structure. The firms capital
structure is considered to be optimum when the market value of shares is maximized.

3. Dividend decision:
Dividend decision is the third major financial decision. The financial manager must
decide whether the firm should distribute a portion and retain the balance. Like the debt policy,
the dividend policy should be determined in terms of impact on the shareholders value. The
optimum dividend policy is one, which maximizes the market value of the firms shares.

4. Liquidity decision:
Current assets management, which affects a firms liquidity, is an important finance
function. Current assets should be managed efficiently for safe guarding the firm against the
dangers of liquidity and insolvency. Investment in current assets affects firms profitability,
liquidity and insolvency. Investment in current assets affects firms profitability, liquidity and
risk. A conflict exists between profitability and liquidity while managing current assets.

Types of analysis:
1. Vertical analysis
2. horizontal analysis

Method of analysis:
Now the financial analyst may use one or multiple methods of financial analysis are:
i. Comparative statements.
ii. Common size statements.
iii. Trend analysis.
iv. Ratio analysis.
v. Funds flow analysis.
vi. Cash flow analysis.
vii. Cost-volume-profit analysis (cup analysis).

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CHAPTER-II

OBJECTIVES OF THE STUDY

NEED FOR THE STUDY
SCOPE OF THE STUDY
METHODOLOGY
LIMITATIONS OF THE STUDY

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NEED FOR THE STUDY

The main need of this study is to analyse the financial information of the Tirumala milk
products pvt ltd so that is can be helpful.

To find out the liquidity or short term solvency of the Tirumala milk products pvt ltd.
To know the different types of funds flow analysis and how it shows impact on
different organizations.
To allow the relationship among various aspects in such a way that it allows drawing
conclusion about the performance, strength and weaknesses of the company.
To know the short term servicing ability of the company.

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OBJECTIVES OF THE STUDY

The prime focus of this study is to analyze the financial information of the Tirumala milk
products pvt ltd.

To present a theoretical framework relating to financial analysis.

To evaluate the liquidity position of Tirumala milk products pvt ltd.

To understand the operating efficiency of Tirumala milk products pvt ltd.

To offer suggestions if any for the betterment of the company.

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SCOPE OF THE STUDY

The study is confirmed to the management of funds flow analysis in Tirumala Milk
Products pvt ltd Narasaraopeta the main aim of study is to assess the necessary of managing
funds. Properly and also current asset and current liabilities.

The scope of study is confined only five years i.e from 2011-2016

The study took in to account the data pertaining to the entire organization.

The funds flow statement show the movement of funds and it is a report of the financial
operation of the business under taking.

indicates various means by which funds were obtained during a particular period and
ways in. which these funds were In employed.

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METHODOLOGY OF THE STUDY

Methodology is scientific and systematic search for pertinent information on specific topic. The
reliability of management decision depends upon the quality of data. Basically we have two
types of data. These are primary data and secondary data.

Primary data:

Primary data is obtained from officials finance and other departments, the primary data is
obtained through discussions and contacts with the officials, the primary data is the data gathered
for the first time by the researcher. It is the original data. As for the study, primary data is
gathered through a series of detailed discussions with executives, managers of the company.

Data has been collected from financial statements and interaction with the employees
during the study for analyzing, interpreting; finding out the problems involved and giving
suggestions if any.

Secondary data:

Secondary data is the data collected by others, for the purposes other than solution at
hand secondary for the present study has been collected from magazines, journals, annual
reports; published books reference books websites and any other indirect source.

Secondary data also collected from the secondary data is obtained from the annual reports
or the documents maintained by the industry, the information is collected from the printed and
published financial statement of the company.

In the study maximum part of the data is obtained from secondary data that is annual
reports e.t.c.and the rest is from primary data.

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LIMITATIONS OF THE STUDY

While the study is undertaken about the financial analysis of the Tirumala milk products
pvt ltd the following limitations were encountered.

Due to limited time the overall analysis of the financial information of Tirumala milk
products pvt ltd. became difficult.

Since we are new to the company, company refused to provide its financial information.

The funds flow contains historical information. This in formation is useful; but an
investor should be concerned more about the present and future.

The funds flow does not clearly discuss the financial position of the company.

Some of the information was with registered office of the company, due to some statutory
requirements it became difficult to get the overall information of the company.

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CHAPTER-III

INDUSTRY PROFILE
&
COMPANY PROFILE

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INDUSTRY PROFILE AND COMPANY PROFILE

INDUSTRIAL PROFILE

Case Indias Food Processing Industry

The share of the organized and unorganized sectors varies across different segments of the
industries. The industry is estimated to growth at 9.12% on the basis of an estimated G D P
growth rate of 6 to 8%. Value addition of food products is expected to increase from the
currently around 2% of total production will increase to 10%by 2010 and to 25% by 2025 given
the size of the industry, the employment potential, and opening of the retail sector, the food
processing sector is a key focus are for the Government of India. The importance of the sector is
further enhanced by the fact that over 65% of countrys population depends upon agriculture
activates for livelihood. The industry Government efforts have been to focus on
commercialization and value addition of raw agriculture produce, minimize pre/post harvest
wastage, generate employment and export growth in this sector through a number of regulatory
and fiscal incentives.

Dairy industry in India

The developed countries in the world have recognized the importance of livestock enterprise and
have developed and around their agriculture, a prospectus, progressive and forward looking
livestock enterprise. The domestication of animals for masking the food requirements was the
beginning of the agriculture in the world.

Steps of dairy development

In India, there was no progress in the dairy industry before independency, Government of
India realized the necessity of increased milk production and by products their by availing
substantial job opportunities urban and rural community .The Govt. has also recognized the need
for getting a additional income and employment opportunities to the rural and urban people. The
Govt. of India has focused much more action on dairy development program me by allocating
more funds in the 4th and 5th fine year plans. The Govt. of India during 1970 have launched
massive programmed via. Flood and operation flood2 with the help of European and world

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production programmed cost Rs 500 corers. The Government of India has undertaken various
schemes through and institutions viz., Indi dairy corporation, India dairy development board,
animal husbandry department of all stases, private sector organization of milk producers, co-
operative and dairy plants, National dairy research institute, these programmed enable for
immediate development in dairy activities, Dairy development in our country with the help of
effective marketing system. Marketing is one of principle envoy to increase milk production and
milk productivity if dairy industry.

Operation flood programmed in India

In order to build to a viable and self, sustaining national dairy industry and co-operative
lines the NDDB launched a project christen operation flood mobilized from the sale of products
based on foreign food donations in the form of skim milk powder and butter oil. Operation
Flood, the largest development programmer undertaken in the world, was initiated closely on
heels. Green revolution in the country. Against the back drop of huge surplus of milk production
in the highly developed milk producing countries in the west and bundling per capita. Milk
availability at home with its pledge to provide milk to one and all, it was considered the worlds
largest dairy development program me. It spurred the India dairy industry to launch a White
Revolution.

The establishment of milk producers off co-operative societies to link dairy development
with milk marketing formed the central plant of the project which gave into a vigorous mild co-
operative movement under the basis of NDDB. This was a unique development effort which was
initiated at the gross root level the village and went up to the dairy federation of a state with its
operational effectiveness ascending at every step.

According to the agreement signed by food program (W F P) and Government of India

the W F P will arrange to supply 126000.00 metric tons of butter oil which the corporation will
handle on behalf of the Government utilization of commodities would generate funds estimated
at Rs.954 millions during the project period. These funds or to be invested in the plan of
operations agreed by the W F P in Government .The project aims at the improvement of milk

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marketing in the organized sector especially in the four major cities extended over ten states i.e.,
Punjab, Tamil nude, Andhra Pradesh ,Maharashtra and Gujarat

Phase Operation Flood-1 Operation Flood-2 Operation Flood-3

Duration July 1970 To April 1981 To April 1985 To

March 1985 March 1990
March 1981

Funds 1165.00 2772.00 6013.00

(Disbursed) (Disbursed) (Disbursed)

The important of dairy development in India was recognized internationally in the holding of the
58th annual session of the international(I.D.C) at new Delhi in 1974.The 19th international dairy
congress was a particular significance to India as its main theme was dairy as an instrument of
social and economic change.

Processing industry

The food processing industry is one of the largest Indus in India. It is ranked 5th in terms
of production, consumption, export and expected growth. The industry size has been estimated at
US $70 billion by the Government of India, contributing 6.3%GDP in 2003 and having a share
of 6% in total industrial production. The industry directly employees1.6 million people. The food
processing industry covers sectors such as agriculture, horticulture plantation, and animal
husbandry on fisheries. It also includes others industries that use agriculture inputs for
manufacturing of edible products. The ministry of food processing of Government of India
includes the following as part of the industries.

Dairy, Fruits &Vegetable processing

Grain processing
Meet Poultry processing

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Fisheries
Consumer foods including packaged foods, Beverages and packed drinking.

While the industry is large in size, It is still at a nascent stage in terms of development of
the countrys total agriculture and food produce only 2% goes in to processing for value edition.
The highest share of processed food 9s in the dairy sector, where 37% of the total produce is
processed. In the dairy sector, most of the processing is done by the unorganized sector. The
share of organized sector is less than 15%,it is expected to rise rapidly. Among the milk products
manufactured by the organized sector or ghee, butter, cheese, ice crmes, milk powders malted
milk food, condensed milk.

Sustainability of Dairy Marketing

Dairy marketing business organizations could be able to achieve sustainability

particularly in the new economic environment, through adopting professionalization and modern
operational management practices and administration. However, they must be made more
sustainable, and profitability to meet the needs of the new environment

Year Production(Million Tones) PerCapita Availability(gms/Day)

2003-04 63.08() 194(..)

2004-05 66.2(3.76) 197(1.55)

2005-06 69.1(4.38) 202(2.54)

2006-07 72.1(4.34) 207(2.50)
2007-08 75.4(4.58) 213(2.90)
2008-09 78.3(3.85) 217(1.90)
2009-10 80.6(3.00) 220(1.40)
2011-12 84.4(4.71) 225(2.30)
2012-13 86.2(2.13) 230(2.22)
2013-14 88.1(2.20) 231(0.43)
2014-15 91.0(3.30) 232(0.43)
2015-16 94.4( 2.9 ) 234( 1.23 )

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2015-16 97.3(1.2 ) 235( 2.3 )

It is heartening to note that the milk production and per capital availability of milk is
showing increasing trends .the effect an impact of white revolution have been felt in my milk
shed reason of the country. Due to the positive policy changes in the dairy sector, the country has
attained self/ sufficiency in milk production.

INSITITUTIONAL SUPPORT TO CO-OPERATIVE DAIRYING

INDIAN DAIRY CORPORATION

The Indian dairy corporation (IDC) was setup under companies act, on 13th February,
1970 it is a Govt. of India under taken, the immediate need to setup IDC was to handle the
popularly known as operation flood. Thus it became mainly a financing cum promotional
agency of central govt.

THE MAIN OBJECTIVES OF TIRUMALACORPORATION

1. To promote dairy industry on the counters.

2. To assist the state Govt. and other organization including co-operative societies
interested in the promotion of dairy industry to meet the requirement of milk and milk
products.

3. To provide a package of technical inputs for enhancement of milk production.

4. Resettlement of city based cattle in rural areas.

5. To assist in expending the capacity and operations of existing dairies in the big cities and
rural areas.

6. To assist in development of allied required meeting the needs of dairy development.

NATIONAL DAIRY DEVELOPMENT BOARD (NDDB)

At the time of inauguration of cattle feed factory at kanjari in October, 1964, the late
LalBahadurshastri, the prime minister of India made an unscheduled visit to milk production co-

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operative society and stayed there overnight. He was impressed by the socioeconomic changes
brought by milk co-operative in kaira district, and desired to have a national dairy development
board is the chief executive of the organization who is supported by professionals to carry out
boards activities.

ANAND PATTERN DAIRY DEVELOPMENT

The formation of Anand pattern of milk co-operative was landed with the organization of
the kaira district co-operative milk producers union limited at an and .In this pattern, the
functions of dairying milk production. Procurement processing and marketing are controlled by
milk producers themselves.

FUTURE FOCUS

India is the largest producer of milk in the world. Milk and milk products accounts for a
significant 17 %of Indias total expenditure on food. Indias total milk production is projected to
grow to 108 million tons by end of 2007 according to tenth five year plan estimates. India is on
the verge of assuming an important position in the global dairy industry. The 50000 tones
branded butter market, valued at US $ 133 million is estimated to be growing at8-10 percent per
annum. The cheese market is estimated to be US $ 110 million in value terms and an estimated
54000 tones in volume terms, and has been growing at a compounded annual growth rate in
(C.A.G.R) of 8-9% during 1999-2003.

The growth rate in urban areas has been higher at about 15 % per annum. The ice cream
market in India is estimated to be about US $199 million per annum.

A few corporate employers, including MNCs, are now focusing on this market. For
example, Nestle and Britannia have forayed into emerging segments such as Ultra Heated
Treatment (U.H.T) and flavored milk. Ultra Heat Treated (U.H.T) milk is becoming popular and
the market is estimated at US $33.4 million (Rs.1.5 billion).

The growth and future potential in the dairy sector have resulted in significant
investments in to this sector during 1991-2002 was around US $ 3.3million.of which foreign

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investment was US $ 245.5 million. Current consumer trends like increasing urbanization
indicate that this segment will continue to be attractive in the future.

DAIRY INDUSTRY IN ANDHRA PRADESH

In Andhra Pradesh, agriculture is the major activity and the dairy industry has a natural
link with it as it is a complimentary activity. The progressive farmers of Andhra Pradesh are
known for their scientific and technological applications in the forms. In the initial stages, the
dairy development was looked after by minister of Animal Husbandry, but the responsibility was
soon shifted to a directorate. At that time of the industry was mostly in the hands of private
individuals and the quality and price of milk was highly variable .A pilot project was started in
1961 and later the milk projects at Hyderabad and Vijayawada came into existence with the gift
of milk processing units from UNICEF. These projects gave a new turn to the industry and soon
chilling centers were established in Krishna district. Later, Co-operative dairies were started in
Nellore, Chittoor, Warangal and Kurnool.

Dairy development became a part of Ministry of Agriculture and food at the state level and the
activities of the Central dairy, its other dairy units and the Co-operative dairies came into
scrutiny in 1971.

THE INDIAN MARKET:

Consumer Habits and Practices

Milk has been an integral pat of Indian food for centuries. The par capital availability of milk in
India has grown from 172 gm per person per day in 1972 to 182 gm in 1992 and 203 gm in
1988-2008. This is expected to increase to 212 gms for 2008-09. However, a large part of the
population cannot afford milk. At this per capita consumption it is below the world average of
285 gm and even less than 220 gm recommended by the Nutritional Advisory Committee of the
Indian Council of Medical Research.

There are regional disparities in production and consumption also. The per capita
availability in the north is 278gm, west 174gm, south 148gm and in the east only 93 gm per
person per day. This disparity is due to concentration of milk production in some pockets and

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high cost of transportation. Also the output of milk in cereal growing areas is much higher than
elsewhere which can be attributed to abundant availability of fodder, crop residues, etc which
have a high food value for milk animals.

In India about 46% of the total milk produced is consumed in liquid form and 47% us
converted into traditional products like cottage butter, ghee, punier, khoya, curd, Malay, etc. only
7% of the milk goes into the production of western products like milk powders, processed butter
and processed cheese. The remaining 54% is utilized for conversion to milk products. Among the
milk products manufactured by the organized sector some of the prominent ones are ghee, butter,
cheese, ice creams, milk powders, malted milk food, condensed milk infants foods etc of these
ghee alone accounts for 85%.

It is estimated that around 20% of the total milk produced in the country is consumed at
producer-household level and remaining is marketed through various cooperatives, private
dairies and vendors. Also of the total produce more than 50% is produced by cooperatives and
other private dairies.

While for cooperatives of the total milk produced 60% is consumed in fluid form and rest is
used for manufacturing processed value added dairy products; for private dairies only 45% is
marketed in fluid form and rest is processed into value added products like ghee, makhan etc.

Still, several consumers in urban areas prefer to buy loose milk from vendors due to the
strong perception that loose milk is fresh. Also a current level of processing and packaging
capacity limits the availability of packaged milk.

The preferred dairy animal in India is buffalo unlike the majority of the world market, which
is dominated by cow milk. As high as 98% of milk is produced in rural India, which caters to
72% of the total population, whereas the urban sector with 28% population consumes 56% of
total milk produced. Even in urban India, as high as 83% of the consumed milk comes from the
unorganized traditional sector.

Presently, only 12% of the milk market is represented by packaged and branded pasteurized
milk, valued at about Rs.8,000crores. Quality of milk sold by unorganized sector however is

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inconsistent and o is the price across the season in local areas. Also these vendors add water and
caustic soda, which makes the milk unhygienic.

Indias dairy market is multi-layered. Its shaped like a pyramid with the base made up of a
vast market for low-cost milk. The bulk of the demand for milk is among the poor in urban areas
whose individual requirement is small, may be a glassful for use as whitener for their tea and
coffee. Nevertheless, it adds up to a sizable volume millions of liters per day. In the major
cities lies an immense growth potential for the modern sector. Presently, barely 778 out of 3,700
cities and towns are served by its milk distribution network, dispensing hygienically packed
wholesome, quality pasteurized milk. According to one estimate, the packed milk segment would
double in the next five years, giving both strength and volume to the modern sector. The narrow
tip at the top is a small but affluent market for western type milk products.

Emerging Dairy Markets:

Food service institutional market: it is growing at double the rate of consumer market.

Defense market: An important growing market for quality products at reasonable prices.

Ingredients market: A boom is forecast in the market of dairy products used as raw
material in pharmaceutical and allied industries.

Parlor market: The increasing away - from - home consumption trend opens new vistas
for ready - to - serve dairy products which would ride piggyback on the fast food
revolution sweeping the urban India.

India, with her sizable dairy industry growing rapidly and on the path of modernization, would
have a place in the sun of prosperity for many decades to come. The one index to the statement is
the fact that the projected total milk output over the next 15 years (1999 - 2014) would exceed
1457.6 million tones which is twice the total production of the past 15 years!
Penetration of milk products:-

Western table spreads such as butter, margarine and jams are not very popular in India.
All India penetration of butter / margarine is only 4%.This is also largely represented by urban

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area, where penetration is higher at 9%. In rural areas, butter / margarine have penetrated in 2.1%
of households only. The use of these products in the large metros is higher, with penetration at
15%.

Penetration of cheese is almost nil in rural areas and negligible in the urban areas. Per
capita consumption even among the cheese - consuming households is a poor 2.4kg pa as
compared to over 20kg expensive products and also non - availability in many parts of the
country Butter, margarine and cheese products are mainly manufactured by organized sector.
Similarly, penetration of ghee is highest in medium sized towns at 37.2% compared to
31.7% in all urban areas and 21.3% in all rural areas. The all India penetration of ghee is 24 1%.
In relative terms, penetration of ghee is significantly higher in North accounts for 57% of ghee
consumption and west for 23%. A large part of ghee is made at home and by small / cottage
industry form milk. The relative share of branded products in this category is very low at around
1-2%.
Milk powder and condensed milk have not been able to garner any significant
consumer acceptance in India as indicated by a very low 4.7% penetration. The penetration is
higher at 8.1% in urban areas and lower at 3.5% in rural areas. Within urban areas, it is relatively
higher in medium sized towns at 8.5% compared to 7.7% in large metros.
Market Size and Growth:-
Market size for milk (sold in loose / packaged form) is estimated to be 36mnMT valued
at Rs 470bn. The market is currently growing at round 4%pa in volume terms. The milk surplus
states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharasthra, Andhra
Pradesh, Karnataka and TamilNadu, the manufacturing of milk products is concentrated in these
milk surplus States.
Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70s,
under Operation Flood, production growth increased significantly averaging over 5% pa.
About 75% of milk is consumed at the household level which is not a part of
commercial dairy industry Loose milk has a larger market in India as it is perceived to be fresh
by most consumers. In reality however, it poses a higher risk of adulteration and contamination.
The production of milk products, i.e. milk products including infant milk food, malted
food, condensed milk & cheese stood at 3.07 lakh MT in 2009, whereas that of malted food is at

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65000MT. Cheese and condensed milk production stands at 5000 and 11000 MT respectively in
the same year.
(Source: Annual Report 2009-2010, DEPI)

Major Players:
The packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-
operative Milk Marketing Federation (GCMMF) is the largest player. All other local dairy
cooperatives have their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in Rajasthan,
Verka in Punjab, vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players
include J K Dairy, Heritage Foods, Indiana Dairy, Dairy Specialties, etcAmrut Industries, once a
leading player in the sector has turned bankrupt and is facing liquidation.

EXPORT POTENTIAL:
India has the potential to become one of the leading players in milk and milk product exports.
Lavational advantage: India is associated amidst major milk deficit countries in Asia Africa.
Major importers of milk and milk products are Bangladesh, China, Hong Kong, Singapore.
Thailand, Malaysia, Philippines, Japan, UAE, Oman and other gulf countries, all located close to
India.
Low Cost of Production:

Milk production in scale insensitive and labour intensive. Due to low labor cost, cost of
production of milk is significantly lower in India. Concerns in export competitiveness are
Quality:

Significant investment has to be made in milk procurement, equipments, chilling and

refrigeration facilities. Also, training has to be imparted to improve the quality to bring it up to
international standards.
Productivity:

To have an exportable surplus in the long-term and also to maintain cost competitiveness, it
is imperative to improve productivity of Indian cattle.

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There is a vast market for the export of traditional milk products such as ghee, pannier,
shrikhand, rasgolas and other ethnic sweets to the large number of Indians scattered all over the
world.

TABLE: India's exports of milk products:

Description (Quantity,
M.T: Value, 2014-15 2015-16 2015-16
Rs. Million) Quantity Value Quantity Value Quantity Value
Skimmed milk powder 4,638.620 335 320 282.700 19.640 5.000 0.375
Milk and milk food for 8.270 2.019 111.370 4,270 11.000 2.020
babies
Milk cream 332.230 28 040 1.000 0.084 -
-
Sweetened condensed 41.730 2.840 9.220 0.970 60.390 7.220
milk
Whey 78.460 3.750 11.500 1.010 6.000 0.342
Ghee / Butter / Butter 7,895.080 431.10 299.970 19.20 452.080 238950
oil
TABLE: Cheese

(a) Fresh 0.100 0.0130 - - - -

(b) Processed 5.670 1.200 2.10 0.375 22.100 2.190
(c) Other 66.640 8.350 36.780 0.690 24.840 4.550
Total - 872.70 - 52.40 - 255 .600

What does the Indian Dairy Industry has to Offer to Foreign Investors?

India is a land of opportunity for investors looking for new and expanding markets.
Dairy food processing holds immense potential for high returns Growth prospects in the dairy
food sector are termed healthy, according to various studies on the subject
The basic infrastructural elements for a successful enterprise are in place.
Key elements of free market system

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Raw material (Milk) availability

An established infrastructure of technology
Supporting manpower

An entrepreneur's participation is likely to provide attractive returns on the investment

in a fast growing market such as India, along with an export potential in the Middle East,
Singapore, Malaysia, Indonesia, Korea, Thailand, Hong Kong and other countries in the region.

Biotechnology:

Dairy cattle breeding of the finest buffaloes and hybrid cows

Milk yield increase with recombinant somatotropin
Recombinant chymosin, acceptable to vegetarian consumers
Dairy cultures, probiotics, dairy biologies, enzymes and coloring materials for food
processing
Fermentation derived foods and industrial products alcohol, citric acid, lysine, flavor
preparations, etc.
Biopreservative ingredients based on dairy fermentation, viz., Nisin, Pedicoccin,
Acidophilin, Bulgarican contained in dairy powders.

Dairy / food processing equipment:

Potential exists for manufacturing and marketing of cost competitive food processing
machinery of world - class quality.
Food packaging equipment:
Opportunities lie in the manufacturing of both machinery and packaging materials that help
develop brand loyalty and a clear edge in the marketing of dairy foods.
Distribution channels:
For refrigerated and frozen food distribution, a world class cold chain would help in providing
quality assurance to the consumers around the region.
Retailing:
There is scope for standardizing and upgrading food retailing in major metropolitan cities to
meet the shopping needs of a vast middle class. This area includes grocery stores of European
and North American quality, warehousing and distribution.

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Product Development:
Dairy foods can be manufactured and packaged for export to countries where Indian food
enjoys basic acceptance. The manufacturing may be carried out in contract plants in India. An
option to market the products in collaboration with local establishments or entrepreneurs can also
be explored, products exhibiting potential include typical indigenous dairy foods either not
available in foreign countries or products whose authenticity may be questionable.
Gulabjamuns, Burfi, Peda, Rasagollas, and a host of other Indian sweets have good business
prospects.
Products typically foreign to India but indigenous to other countries could also be
developed for export. Such products can be manufactured in retail package sizes and could be
produced from milk of sheep, goats and camel. Certain products are characteristically produced
from milk of a particular species. For example, Feta cheese is used in significant tonnage, in Iran.
Sheep milk is traditionally used for authentic Feta cheese. Accordingly, India's goat and sheep
herds can be utilized for the manufacture of such authentic products.
Ingredient manufacture:
Export markets for commodities like dry milk, condensed milk, ghee and certain cheese
varieties are well established. These items are utilized as ingredients in foreign countries. These
markets can be expanded to include value - added ingredients like aseptically packaged cheese
sauce and dehydrated cheese powers.
Cheese sauce:
Canned cheese sauce is made from real cheese to which milk, whey, modified food
starch, vegetable oil, colorings and spices may be added. Cheese sauce is useful in kitchens for
the preparation omelet, sandwiches, entrees, and soups. In addition, cheese sauce is used as a
topping on dishes.

Cheese powders:
cheese powders are formulated for dusting or smearing of popular snacks like potato chips,
crackers, etc. they impart flavor and may be blended with spices.With the globalization of food
items, an opportunity should open up for food service and institutional markets
Indian (traditional) Milk Products:

There are a large variety of traditional Indian milk products such as

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MAKKHAN - Unsalted butter ghee - butter oil prepared by Heat clarification, for longer
shelf life
KHEER - A sweet mix of boiled milk, sugar and rice

BASUNDI - Milk and sugar boiled down till it thickens

RABRI - Sweetened cream
DAHI - A type of curd
LASSI - Curd mixed with water and sugar / salt
CHANNA - Milk mixed with lactic acid to coagulate.
(Paneer)
KHOA - Evaporated milk. used as a base to produce sweet meats

The market for indigenous based milk food products is difficult to estimate as most of these
products are manufactured at home or in small cottage industries catering to local areas.

Consumers while purchasing dairy products look for freshness, quality, taste and texture,
variety and convenience. Products like Dahi and sweets like Kheer, Basundi, Rabri are
perishable products with a shelf life of less than a day. These products are therefore
manufactured and sold by local milk and sweet shops. There are several such small shops within
the vicinity of residential areas Consumer loyalty is built by consistent quality, taste and
freshness.

Branding of Traditional Milk Products:

Among the traditional milk products, ghee is the only product which is currently marketed,
in branded form. Main ghee brands are Sagar, MilkMan (Britania), Amul (GCMMF), Aarey
(Mafco Ltd), Vijaya (AP Dairy Development Cooperative Federation), Verka (Punjab Dairy
Cooperative). Everyday (Nestle) and Farm Fresh (Wockhardt).
With increasing urbanization and changing consumer preferences, there is possibility of large
scale manufacture of indigenous milk products also The equipments in milk manufacturing have
versatility and ca be adapted for several products for instance, equipments used to manufacture
yogurt also can be adapted for large scale production of Indian curd products (dhai and lassi).
Significant research work has been done on dairy equipments under the aegis of NDDB.

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Mafco Limited sells Lassi under the Aarey brand and flavored milk under the Energee franchise
(in the western region, mainly in Mumbai). Britannia has launched flavored milk in various
flavors in tetra packs.
Western Milk Products:

Western milk products such as butter, cheese, and yogurt have gained popularly in the
Indian market only during the last few years. However consumption has been expanding with
increasing urbanization.

Butter:
Most Indians prefer to use home made white butter (Makkhan) for reasons of
taste and affordability.Most of the banded butter is sold in the towns and cities. The major
brands are Amul is the leading national brand while the other players have greater shares in their
local markets. The latest entrantin the butter market has been Britannia. Britannia has the
advantages of a wide distribution reach and a strong brand recall. Priced at par with the
Amulbrand, it is expected to give stiff competition to the existing players. In 2009-2010 the
butter production is estimated at 4 purposes rest all is in the yellow form.
Cheese:
The present market for cheese in India is estimated at about 9.000 tonnes and is growing
at the rate of about 15% per annum. Cheese is mainly consumed in the urban areas. The four
metro cities alone account for more than 50% of the consumption. Mumbai is the largest market
(accounting for 30% of cheese sold in the country), followed by Delhi (20%), Calcutta (7%) and
Chennai (6%). Mumbai has a larger number of domestic consumers, compared to Delhi where
the bulk institutional segment (Mainly hotels) is larger.
TABLE:
Demand for various types of cheese in the Indian market:
Type of Cheese % of total consumption
Processed 50
Cheese spread 30
Mozzarella 10
Flavored / Spiced 5

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Others 5

The major players are Amul, Britannia, and Dabon international dominating the
market. Other major brands were Vijaya, Verka and Nandini (all brands or various regional dairy
cooperatives) and Davila. The heavy advertising and promotions being undertaken by these new
entrants is expected to lead to strong 20% growth in the segment. Amul has also become more
aggressive with launch of new variants such as Mozzarella cheese (used in Pizza), cheese
powder, etc, The entry of new players and increased marketing activity is expected to expand the
market. All the major players are expanding their capacities.
Milk powder:
Milk powder is mainly of 2 types
Whole milk powder
Skimmed milk powder

Whole milk powder contains fat, as distinguished from skimmed milk powder, which is
produced by removing fat from milk solids. Skimmed milk powder is preferred by diet conscious
consumers. Dairy whiteners contain more fat than skimmed milk powder but less compared to
whole milk powder. Dairy whiteners are popular milk substitute for making tea coffee etc. The
penetration of these products in milk abundant regions is driven by convenience and non
perishable nature (longer shelf life) of the product.

Dairy sector of advanced nations export milk products with a subsidy of $1000 per tonne
with a level of subsidy more than 60% of the price of milk powder produced in India, this has led
to large scale imports of milk powder both in whole and skimmed form. To protect the domestic
sector from these subsidized imports the central government has recently increased the basic
import duty on all imports of milk powder more than 10000MT the basic customs duty has been
left unchanged at 15%.

In 2009-2010 India is estimated to have imported about 18,000 tonnes of milk powder
against a total estimated production of 2.40 Lakh MTs. In 2011-12 India is expected to export
10000 MT of skimmed milk powder due to rise in international prices to $2300 per MT from last

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year's levels of $1400per Mt. These expectations are based on the strong demand from
Russia,

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MAJOR PLAYERS:

Milk powder / Dairy Whiteners: major skimmed milk brands are sagar (GCMMF) and
Nandini (Karnataka Milk Federation), Amul Full Cream milk powder is a whole milk powder
brand.

Leading brands in the dairy whitener segment are Nestele'sEveryday,GCMMF's Amulya,Dalmia

industry's Sapan,Kwality Dairy India's Kream Kountry,Wockhardt'sFarm Fresh and Britannia's
Milkman Dairy Whitener.
Condensed Milk:

The condensed milk market has grown from 9000 MT in 2008 to 11000 MT in 2009.
condensed milk is a popular ingredient used in home - made sweets and cakes. Nestle:s
Milkmaid is the leading brand with more than 55% market share. The only other
competitor is GCMMF's Amul.
Value addition in milk powder - infant foods:
Nestle is the market leader in the segment. This is a category where brand loyalties are
very strong as mothers want the best for their babies Heinz is the only other significant
competitor to Nestle in this segment. Nestles Cerelac and Nestum together have around 80%
market share and Heinz's Farex has close to 18% share. Wockhardt is a relatively new entrant
with its First Food Brand. Wockhardt also proposes to launch a new baby food Easum containing
moong (moong is one of the easily digestible pulses) The Easum brand will directly compete
with Nestles Nestum (made from rice). In infant formula also NestlesLactogen formula and
Lactogen standard formula are the leading brands with around 75% market share.
PROBLEMS OF DAIRY INDUSTRY
Dairy industry is of crucial importance to India. The country is the worlds largest milk
producer, accounting for more than 13% of worlds total milk production. It is the worlds largest
consumer of dairy products, consuming almost 100% of its own milk production. Dairy products
are a major source of cheap and nutritious food to millions of people in India and the only
acceptable source of animal protein for large vegetarian segment of Indian population,
particularly among the landless, small and marginal farmers and women. Dairying has been
considered as one of the activities aimed at alleviating the poverty and unemployment especially

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in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the
population live in rural areas and about 38% of them are poor. In 1986-87, about 73% of rural
households own livestock. Small and marginal farmers account for three-quarters of these
households owning livestock, raising 56% of the bovine and 66% of the sheep population.
According to the National Sample Survey of 1993-94, livestock sector produces regular
employment to about 9.8 million persons in principal status and 8.6 million in subsidiary status,
which constitute about 5% of the total work force. The progress in this sector will result in a
more balanced development of the rural economy.
GOVERNMENT POLICIES

National Dairy Development Board (NDDB):-

The Government of India had established the National Dairy Development Board
(NDDB), an autonomous body headquartered at Anands Co-operative in India. In order to
develop dairy in India, NDDN drew plans for operation flood.

Operation Flood:-

In the late sixties, the board drew up a project called Operation Flood (OF) meant to
crate a flood of milk in Indias villages with funds mobilized from foreign donations. Producers
co-operatives, which sought to link dairy development with milk marketing, were central plank
of this project. The Operation Flood, which started in 1970, concludes its third phase in 1996 and
has to its credit these significant results:-

The enormous urban market stimulus has led to sustained.

Production increases, raising per capita availability of milk to early 200 grams per day.
The dependence on commercial imports of milk solids are alone away with.
Modernization and expansion of the dairy industry and its infrastructure, activating milk
grid.
Marketing expanded to supply hygienic and fair priced milk to some 300 million
consumers in 550 cities and towns.

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A nationwide network of multi-tier producers co-operative, democratic in structure and

professionally managed, has come into existence. Millions of small producers participate
in an economic enterprise and improve the quality of their life and environment.
SUGGESTIONS

Availability of green fodder for the animals

To keep unproductive and low quality animals away from accessing the high value natural
resources as well as from reproducing more of their likes.

Developing a mass scale extension services for dairying in a fragmented scenario as well as for
developing a large pool of trainers for dairy industry.

TABLE:

Major dairy products manufacture

Some of the major dairy products manufacturers in the country:

Company Brands Major Products

Nestle India Limited Milkmaid, Cerelac, Sweetened condensed milk,

Milkfood Limited
Smith Kline Beecham
Limited
Indodan Industries Limited
Lactogen, Milo, malted foods, milk powder
Everyday and Dairy whithner
Milkfood Ghee, ice cream, and other milk
products
Horlicks, Maltova, Viva Malted Milkfood, ghee, butter,
powdered milk, milk fluid and
other milk based baby foods.
Indana Condensed milk, skimmed milk
powder, dairy milk whitener,
chilled and processed milk

Gujarat Co-operative Milk Amul Butter, cheese and other milk

Marketing Federation Products
Limited
H.J. Heinz Limited Farex, Compan, Infant Milkfood, Malted
Glactose, Bonniemix, Milkfood
Vitamilk

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Britannia Milkman Flavored milk, cheese, Milk

Powder, Ghee

Cadbury Bournvita Malted Food

FUTURE PROSPECTS:
India is the world's highest milk producer and all set to become the world's largest
food factory. In celebration, Indian Dairy sector is now ready to invite NRIs and Foreign
investors to find this country a place for the mammoth investment projects. Be it investors,
researchers, entrepreneurs, or the merely curious - Indian Dairy sector has something for
everyone.

Milk production is relatively efficient way of converting vegetable material into

animal food. Dairy cow's buffalo's goats and sheep can eat fodder and crop by products which
are not eaten by humans. Yet the loss of nutrients energy and equipment required in milk
handling inventory make milk comparatively expensive food. Also if dairying is to play its part
in rural development policies, the price to milk producers has to be remunerative. In a situation
of increased international prices low availabilities of food aid and foreign exchange constraints,
large scale subsidization of milk conception will be difficult in the majority of developing
countries.

Hence in the foreseeable future, in most of developing countries milk and milk
products will not play the same roll in nutrition as in the affluent societies of developed
countries. Effective demand will come mainly from middle and high income consumers in urban
areas.

There are ways to mitigate the effects of unequal distribution of incomes. In Cuba
where the Government attaches high priority to milk in its food and nutrition policy, all pre -
school children receive a daily ration of almost a liter of milk fat the reduced price. Cheap milk
and milk products are made available to certain other vulnerable groups, by milk products
outside the rationing system are sold price which is well above the cost level. Until recently,
most fresh milk in the big cities of China was a reserved for infants and hospitals, but with the
increase in supply, rationing has been relaxed.

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COMPANY PROFILE
Introduction:

Tirumala Milk Products (P) Ltd., established in 1998. It is one of the fastest growing private
sector enterprises in India with a team of dedicated professionals. The company has one of the
most modern and versatile plants in the Indian Dairy Industry with state of the art technology.

Tirumala Milk Products (P) Ltd., is a professionally managed company engaged in the
manufacture of a wide range of dairy products which include milk in sachets, Tetra FinoPaks,
sweets, flavored milk, curd in cups and sachets, Milk Powder, Butter, Ghee, Butter oil, Panner
and Ice cream in bulk as well as in consumer packs.

Our Registered Office is located at Kavuri Hills, Madhapur, Hyderabad.

Tirumala Milk Products (P) Ltd., sells a rich, nutritious, tasty and healthy food products under
well known brand. Taste, Health, Convenience, reliability and vitality for consumers are key
characteristics.

We have consignment agents spread across states of Rajasthan, Gujarat and Mumbai
for selling Ghee in bulk and consumers packs.

Worlds largest dairy player GroupeLactalis SA has acquired Tirumala Milk Products
Private Limited. According to a statement by Tirumala, the transaction marks France-based
Lactalis entry into India.

The deal to buy out 100 per cent stake in Tirumala was reportedly closed at $275 million
(Rs 1,750 crore) Lactalis Group Communication Director Michel Nalet said the deal was
officially finalised yesterday, but no amount regarding the deal was disclosed either in India or
France.

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Vision:

To produce and supply superior quality products with exceptional customer service
to eventually grow as market leader in dairy industry.

Mission:
Tirumala Milk Products (P) LTD. will constantly strive to market quality products at competitive
prices, provide value to our business partners, all the while delivering exceptional customer
service with the highest regard for business ethics.

Tirumala Milk Products commitments:

Tirumala Milk Products (P) LTD. is committed:

To serve our customers with better products and higher quality services than is available
from any other dairy company at present.
To continue the tradition as a trusted dairy by managing sustainable, profitable, and
environmental practices both within our company and our community.
To achieve longevity by adapting to our customers changing needs and market trends.
To invest in the abilities, opportunities, and teamwork of our employees thus igniting
passion, commitment, and success.
To produce products of international quality with acceptance from overseas clientele.

Areas of Operations:

Tirumala distributes milk to Tamil Nadu, Andhra Pradesh, and Karnataka. Gudur is the main
source for delivering milk and milk products to Chennai and other major parts of Tamil Nadu.
The procurement and processing section located at Pasupattur village of Chitoor district in
Andhra Pradesh is the source of milk, curd and products which are supplied in Bangalore and
Mysore Markets.

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The packing station located at Vellacheruvu, 20 KM away from our

administrative Office, plant at Gungal nearer to Hyderabad, Visakapatnam, Singavaram West
Godavari District supplies milk, curd and other products to major markets of Andhara Pradesh
which includes Hyderabad, and all other districts of the state.

Skim Milk Powder, Butter and Butter oil produced at Gudur and tetra pack milk
at gungal plant are supplied to major Industrial and Institutional customers located across India
and Overseas.

Our presence is across entire Tamil Nadu, Andhra Pradesh and Karnatka.

History and mile stones of company:

Tirumala Milk Products (P) Ltd. covers the entire spectrum of dairy products sold in markets.

The complete range of Tirumala Milk Products (P) Ltd. are highly nutritious, healthy and bring

you a world of goodness.

Tirumala Milk Products (P) Ltd. pasteurizes and packages all fresh dairy products in

technologically superior and hygienic conditions to ensure pure natural freshness.

Tirumala Milk Products (P) Ltd., Handles 12 Lakhs Liters of Milk per day in all their packing

Stations and main dairy plant which is the highest in the state of Andhra Pradesh.

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Tirumala Milk Products (P) Ltd. handles milk in the following locations

Packing Locations Handling capacity per day

Gudur 475000
Palamaner 225000
VellalaCheruvu 150000
Bhimadolu 200000
Hyderabad 400000
Vizag 30000
Gingee 70000
Total 1550000

Procurement of Milk

Tirumala Milk Products (P) Ltd. established 115 Chilling centers in Andhra Pradesh, Karnataka
and Tamilnadu to procure both Cow & Buffalo milk. Best quality milk is procured and chilled at
chilling centers, to retain freshness of milk. The strength of the Tirumala Milk Products (P) Ltd.
is to procure more than 12 lakh liters of milk Per day directly from agents/farmers using state-of-
the-art machinery and professionally trained staff.

Production

Gudur plant processes 4.0 Lakhs Lts of milk per day in automatic sachet filling machines
for supply and distribution to Chennai, Tirupati, Nellore, etc

It is the first time in south india, that a private sector dairy is using modern equipments
for packing tetra pack milk in our Gungalpalnt.

There is continuous growth in sale of milk from 50000 ltrs to 10000000 ltrs with in a
span of one-decade.

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Tirumala Milk Products (P) Ltd. has its own supply chain management, which is the key
to timely distribution.

Our Palamaner unit processes and supplies 1.40 lakh liters of milk and 50000 liters of
curd to Bangolore city every day.

Our Vellalacheruvu ,Gungal, Bhimadolu and Visakhapatnam packing stations processes

and supplies more than 6.0 lakhs liters of milk to Hyderabad, Warangal, Vijayawada.
Elur, Guntur, Rajahmundry, Karim Nagar, Adilabad and Medak districts of AP.

Products

The Main Plant has modern equipments to manufacture milk products like Buttter, Ghee
and Milk Powder.

Butter is made from pure cow & buffalo fat under hygienically processed through
continues butter making machine with a capacity of 8 tones per day.

Ghee is made from pure cow & buffalo butter under supervision of 30 years experienced
dairy technologists to retain granulation, color and aroma of ghee with a capacity of 8
tones per day.

Milk powder is made from fresh cow & buffalo milk and the plant is capable of
producing all type of milk powders with a capacity of 15 tones per day.

By-Products like Sterilized Flavoured Milk, Lassi, Khova, Milk Cake, Mysore
pak,Panner, etc. are produced in most of the plants.

Ice creams of all variants are produced and are available in the Market.

Tetra Fino Aseptic (TFA). We have recently launched Tetra fino packed Milk, with high
quality and long shelf life. TFA is sold across south India.

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ORGANIZATIONAL STRUCTURE:-

Directors

Michel Francois Olivier

Rahul Kumar Martial Jacques
Jacques Christophe
Srivastava Elian Sekely
Auguste Peslier Savarya

Sr.General
Manager

Financial Marketing Production

H R Manager
Manager Manager Manager

Account Transporation
Excecutives Workers Problem Solve
Sections Employee

Rahul Kumar

Managing Director at Tirumala Milk (Lactalis India)

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Tirumala Milk Products (P) Ltd Team

List of Director Details

Tirumala Milk Products (P) Ltd. has a seasoned List of Directors with a collective
blend of visionary leadership, consumer marketing expertise and technological
prowess.

Our list of Directors comprise of:

1)Mr. Michel Francois Jacques AugustePeslier

Additional director

2) Mr. Rahul Kumar Srivastava

Managing director

3) Mr. Martial Jacques Elian Sekely

Additional director

4) Mr. Olivier Christophe Savarya

Additional director

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(a) Company C.M.D

TMPPL has its main dairy plant at kadivedu with handling and local procurement. TMPPL has
well maintained laboratories in all their dairies. Technically qualified staff is looking after testing
of milk and milk products. Quality assurance programmers are implemented at every stage to
ensure quality of milk and products.

(b) Marketing Manager:

Main plant is processing 2.5 lakhs liter of milk per day in automatic sachet filling
machines to supply and distribution of milk to Chennai, Tirupathi, Nellore etc., in insulated pubs.

(c) Roles:

The main dairy has powder plant of 15 tons capacity per day. The plant has been designed
to product 15000 kgs of milk power on a 20hours/ day. Evaporation is done in multiple effect
falling film evaporators and powder is manufactured with high pressure nozzles pray dryer. The
water evaporation capacity of the evaporator is 9400kg/hr and spray dryer is designed to 753
kg/hr. Fluid dbe dryer is also provided.

FUNCTIONAL ACTIVITIES:
Marketing:-
TMPPL is having good marketing of milk and milk products, arketing offices at Chennai,
Bangalore & Hyderabad is having good distribution system. All the marketing Executives are
professionally trained and having good skills and experience in marketing products. To maintain
cold chain there are about 35 insulated puff vehicles to trans port milk to various towns. There is
tremendous in crease in sales of milk card milk products due to best quality, there are about 3000
out tets in AP, Tamilanadu and Karanataka. The dairy is catering need of 10 lakh customers daily
in southern region.
Finance:-
Your directors have pleasure is submitting they 10th annual report and audited accounts for
the financial year 2012-2013.

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REVIEW OF OPERATION:-

During the year under review the following companies are amalgamated.

Tirumala Milk Product Pvt.Ltd. Amalgamated Company

Tirumala Dairy Pvt.Ltd Amalgamating Company
Janaki Rama Dairy Pvt. Ltd Amalgamating Company
Pragathi Milk Products Pvt.Ltd Amalgamating Company
Bhaktanjaneya Milk Foods Pvt. Ltd - Amalgamating Company

As the share holders are aware of the amalgamation is to carry out the business more
economically and profitably by expanding the activities of the company. The scheme of
amalgamation is approved by the Honorable High Court of A.P as under Tirumala Dairy Pvt Ltd.
For 20 shares 1 share of Tirumala Milk Products (P) Ltd.,The share application money with
amalgamating shall be transferred to amalgamated company and will treat accordingly.

Review of Financial Statements:-

The company has achieved a turnover of Rs.28527 lakhs as against 22202 lakhs for
previous year recording increase of 28.49% over the previous year. And the net profit margin was
increased to 2.13% from 1.40% i.e Rs.608.10 lakhs 311.80 lakhs of previous year.

Fixed deposits:-

Your company has not accepted deposits during the year under review

Production:-

The main plant has capacities with equipment to manufacture milk products like butter, ghee and
milk powder.

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Basundi

Basundi is an Indian dessert and sweet concentrated milk. Basundi is a dense sweetened paste
made by boiling milk on low heat until the milk is reduced more than half. Heavy cream may be
added during the boiling process to hasten the thickening process.

Butter

Butter is prepared from pure milks. Butter is soft and increase taste of the food more delicious.
Butter is soft and increase taste of the food more delicious. Butter consists of butterfat
surrounding minuscule droplets consisting mostly of water and milk

Curd

Curd is prepared from pure, natural and unadulterated milk. Curd is even formulated with double
toned milk to make it fat free. Curd is used for the preparation of numerous sweet delicacies and
dishes.

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Paneer

Paneer is a fresh cheese common in South Asian cuisine. Paneer is a pressed variety of channa
obtained by acid coagulation of milk at about 85C followed by removal of whey and pressing.
Paneer is processed under the stringent hygienic conditions.

Flavoured Milk

Flavoured Milk is the milk in which some flavour and colour have been added to make it more
palatable. Flavoured milk should contain milk fat percent equal to the minimum legal
requirement prescribed for the milk from which it is prepared.

Butter Milk

Buttermilk is made from fresh pasteurized standardized milk curd that contains lactic acid
bacteria, diluted along with required amount of spices extracts and salt for added taste.
Buttermilk is an inseparable part of traditional South Indian meal.

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Milk Sweet

Milk sweet is prepared using raw cow & buffalo milk for manufacturing soft & tasty, good
nutritive value, preservative free, contamination free sweet.

Toned Milk

Toned Milk is the rich source of calcium and is widely used by the people of different age
groups. Toned Milk made from pure milk to give smooth consistency preventing cream layer.
Toned Milk is available in safe packing that preserve the milk for longer

Milk

Pure cow milk contains high nutritive value, calcium and essential nutrients. The milk is very
healthy and hygienic to take while keeping the freshness and tastes for a long period of time. It is
processed in hygienic conditions.

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Milk Powder

Milk Powder contains a rich amount of proteins, carbohydrates, fats and all essential nutrients.
Milk Powder comprises less sugar and is used to make milk, tea and coffee especially in trains
and airplane. The milk powder is tasty and natural in flavor.

Ghee

Ghee is a key ingredient in most Indian delicacies. Ghee is a perfect substitute for fresh milk,
these products are rich in nutrition and calcium. Pure Desi Ghee is clarified Butter made from
prime quality raw materials like milk, cream or butter.

Ice Cream

Ice Cream is a frozen dessert, usually made from dairy products, such as milk and cream, and
often combined with fruits or other ingredients and flavors.

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HUMAN RESOURCE:-

The primary functions of the personnel department are responsible for initiating evolving general
policies procedure with practiced common with the future objectives of the company.
Responsible for leaving uniform service conditions for all employees. Responsible for
recruitment and promotion of officers and respect of posting various groups users.

PRODUCTION:-

TMPPL has its main dairy plant at Kadiveedu with handing capacity of 4.0 lakhs. Lts.Of milk
per day from various chilling centers and local procurement.

Market Milk:-

Main plant is processing 2.5 lakhs liter of milk per day in automatic sachet filling machines to
supply and distribution of milk to Chennai, Tirupathi, Nellore etc, and insulated pubs.

There is continuous growth is sales of milk from 5000 lts to 2,50,000. Itswith in a span of
one decade. TMPPL maintaining consistency in quality and its standards consumers have
much confidence.
TMPPL having its own supply chain management, which makes ease in timely
distribution and assured supply, which gains customers satisfaction.
At our palamer unit process and supply of 1.00 lakh liters of milk and 2000 liters of cured
to Bangalore city.
At our Vellachervu&Bhimadolu packing stations processing and packing 2.00 lakhs liters
of milk to Hyderabad, Warangal, Vijayawada, Eluru, Guntur and Rajahmundry.
RESEARCH & DEVELOPMENT:

Quality Assurance:

TMPPL has well maintained laboratories in all their dairies. Technically qualified staff
are looking after of milk and products. Quality assurance programmes are implemented at
every stage to ensure quality of milk and milk products.

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This dairy is am ISO 9001:2000 and an ISO 22000:2005 certified company. The dairy is
following quality management system and food safety standards.

TMPPL is having ISI License and Agmark License and all other statutory standards as
per requirements.

There is continuous growth in procurement and sales the capacities of the plant are also
increased to handle the milk to manufacture milk products.

To meet the demand in market there is also plant to introduce products like cup curd,
lussey in retail markets.

From time to time consumer are identified and producing the new products to satisfy the
customer, continual surveys are conducted to get feedback information for analysis.

Tirumala Milk Products Quality

Tirumala Milk Products (P) LTD is stringent towards quality and hygienic dairy products. In
recognition of its efforts and achievements in the dairy foods industry, and in acknowledgment
of all the challenges surmounted, Tirumala Milk Products (P) Ltd. has won many awards and
certificates.

More enduring than any public recognition for our contributions is the satisfaction we enjoy by
creating a superior product and giving back to our communities.

Tirumala Milk Products (P) Ltd. is an ISO 9001:2000 and an ISO 22000: 2005 certified
company. The dairy is following Quality Management System and Food Safety Standards.

Apart from ISO certification, we have Certificate from SGS on SMP Analysis too. Tirumala
Milk Products (P) Ltd. has ISI Licence, AgmarkLicence and adheres to all other statutory
standards as per requirements.

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Tirumala Milk Products (P) Ltd Infrastructure

Tirumala Milk Products (P) Ltd Registered Office is located at Narasarao Pet, GuturDist and
Corporate Office is located at Ameerpet, Hyderabad. We handle 7 Lakh liters of milk per day in
our packing stations and dairy plant, which is the single largest plant in the state of Andhra
Pradesh. Our milk comes from cattle herd that receive the best care along with healthy and
nutritious diet in the form of quality feed to ensure that they produce wholesome, high-quality
milk.

Tirumala Milk Products has one of the most modern and versatile plants in the Indian Dairy
Industry with state-of-the-art technology. Tirumala Milk Products (P) Ltd. products meet
stringent quality control tests and cater to the premium segment of the market for Dairy Products.

Procurement of Quality Buffalo and Cow milk through a strong network of

chilling centers spread across states of Andhra Pradesh, Tamil Nadu and
Karnataka.
Strong roots in local markets and first-hand knowledge of the local culture.
Business intelligence and technical expertise that is applied to serve our
consumers.
Strong management focus

The major contributors to the success of Tirumala Milk Products (P) Ltd. are:-

Milk Procurement Network

Superior sales and marketing prowess
Strategic technological & infrastructural advantage
Efficient human investments

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RATIONALITY OF TAB THE TOPIC SELECTED IN THE COMPANY:

Capital Budgeting decisions are paramount importance in financial decision making. In

the first place, such decisions affect the profitability of a firm. They also have a bearing on the
competitive position of they enterprise mainly because of the fact that they relate of fixed assets.
The fixed assets represent in a services. The true earning assets of the firm. They enable the firm
the generate finished goods that can ultimately be sold from profit. The rather they precede a
buffer that allows the if firms to make sales and setend. True current assets are important the
operating. That with out fixed assets to generate finished products that can be converted into
current assets it firm involve a relatively small amount of funds therefore, such capital
investment decision may results in a major departive from what the company has been departive
from what the company has been doing in the past decision determine the future desty of it
company.

The study in A STUDY ON FUNDS FLOW STATEMENT IN TIRUMALA MILK

PRODUCT PVT LTD can to know that they are two sider of the project that the investment
side. The soeparetion principle says that the cash flows associated with these sides should be
separate while extrimating the cash inflowing an investment side do not consider it formal charge
like interest or dividend and fixed long term assets by the company. It is suggested to hold the
company in the same level. It also reveals that cases blows having ups and downs due to
expansions of assets simultaneously depreciation.

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