EXECUTIVE SUMMARY

The present study assesses the factors affecting brand switching of packaged milk (RDFL) & to provide suggestive measures to RDFL to increase the market share. The study was conducted in South Extension and Kotla regions of New Delhi the capital of INDIA. The conclusion of the findings of the research shows that consumers were not satisfied with quality and taste of RDFL milk. There was lack of awareness among consumers regarding the brand and the product. Company was also lagging in terms of reach to customers.

MAJOR FINDINGS: The Delhi and NCR packaged milk market comprises around 4.5 million liters per day (MLPD) of milk currently and is dominated by Mother Dairy 2.8 million liters per day. The three important parameters which effect the buying decision of Household consumers are quality, taste and ease of availability while in case of Institutional consumers these are quality, ease of availability and price. The major reasons for not trying RDFL milk were lack of awareness of product and non-availability of the product for both household and institutional consumers. The major reasons for discontinuation of RDFL milk by Household and Institutional consumers were non-availability and quality related issues. The consumers were frequently facing problem of early spoilage of milk. The major problems faced by retailers were leakage in milk pouches, early spoilage of milk, late and irregular supply by distributor and lack of promotional activities by the company.
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 Sales closing reasons mainly include quality related issues, issues related to distributors, replacement policy regarding spoiled milk and leaked pouches, lack of promotional activities and lack of interaction with retailers and lack of quality reporting by RDFL officials. Company is facing huge competition from other players in terms of supply chain, reach to consumers and number of retailers and distributors.

SUGGESTIONS: As consumers were not satisfied with quality and taste of RDFL milk, the company should try to conduct camps and awareness programme to overcome this thinking of people. To raise the consumer awareness regarding adulteration of milk, RDFL can open its testing facilities. The vehicles used for transportation should be properly insulated to reduce the chances of spoilage of milk due increase in temperature. To increase awareness regarding the brand and product, promotional activities need to be increased and small banners should be provided to retailers. RDFL can open its own outlets to get maximum advantage of demand of dairy products which will also help in strengthening the brand.

Company Profile

"Between my past, the present and the future, there is one common factor: Relationship and Trust. This is the foundation of our growth."

Shri Dhirubhai H. Ambani Founder Chairman Reliance Group December 28, 1932 - July 6, 2002

Mukesh D. Ambani Chairman & Managing Director

RELIANCE GROUP
The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 28 billion. The flagship company, Reliance Industries Ltd, is a Fortune Global 500 company and is the largest private sector company in India. Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain.

The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre

intermediates, plastics and chemicals), textiles, retail and special economic zones (SEZ). Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products. Major Group Companies are Reliance Industries Ltd (including main subsidiary Reliance Retail Ltd) and Reliance Industrial Infrastructure Ltd.

INDIAN RETAIL INDUSTRY

Indian Retail Industry is ranked among the ten largest retail markets in the world. The attitudinal shift of the Indian consumer in terms of Choice Preference, Value for Money and the emergence of organized retail formats has transformed the face of Retailing in India. The Indian retail industry though predominantly fragmented through the owner -run " Mom and Pop outlets" has been witnessing the emergence of a few medium sized Indian Retail chains, namely Pantaloon Retail, RPG Retail, Shoppers Stop, Westside (Tata Group) and Lifestyle International. Given the attractiveness of the Indian retail sector, foreign retailers like Wal-Mart, Carrefour SA, Europe's largest retailer and Tesco Plc, the UK's largest retailer, were keen to enter this growing market, despite the Indian retail sector being closed to foreign direct investment (FDI). In February 2006, the Indian Government had announced its decision to allow FDI of up to 51% in single brand retailing.

RELIANCE RETAIL LTD

With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Ltd (RRL), a subsidiary of RIL, was set up in 2006 to lead Reliance Groups foray into organized retail. Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, Reliance is aggressively working on introducing a panIndia network of retail outlets in multiple formats.

A world class shopping environment, state of art technology, a seamless supply chain

infrastructure, a host of unique value-added services and above all, unmatched customer experience, is what this initiative is all about.

The retail initiative of Reliance will be without a parallel in size and spread and make India proud. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity, will be an integral feature of this project.

The project will boast of a seamless supply chain infrastructure, unprecedented even by world standards. Through multiple formats and a wide range of categories, Reliance is aiming to touch almost every Indian customer and supplier.

RIL's Retail Project will be through the following companies:

Reliance Retail Ltd Reliance Fresh Ltd Retail Concepts and Services (India) Ltd Reliance Retail Insurance Broking Ltd Reliance Dairy Foods Ltd Reliance Retail Finance Ltd RESQ Ltd Reliance Digital Retail Ltd Reliance Financial Distribution and Subsidiary of Reliance Retail Ltd Advisory Services Ltd Reliance Hyper mart Ltd Reliance Retail Travel & Forex Services Reliance Brands Ltd Reliance Wellness Ltd Reliance Footprint Ltd Reliance Integrated Agri Solutions Ltd Reliance Trends Ltd Reliance Lifestyle Holdings Ltd Reliance Universal Ventures Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of RIL Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd

Reliance Retail Ltd Reliance Autozone Ltd Strategic Manpower Solutions Ltd Reliance Gems and Jewels Ltd Delight Proteins Ltd Reliance F&B Services Ltd Reliance Agri Products Distribution Ltd Reliance Leisures Ltd Reliance Retail Securities and

Subsidiary of RIL Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd

Subsidiary of Reliance Retail Ltd Broking Company Ltd Reliance Home Store Ltd Reliance Trade Services Centre Ltd Reliance Food Processing Solutions Ltd Reliance Supply Chain Solutions Ltd Reliance Loyalty & Analytics Ltd Reliance Digital Media Ltd Reliance-Grand Optical Private Ltd Reliance Vantage Retail Ltd Reliance People Serve Ltd Reliance Infrastructure Management Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd

Reliance Retail Ltd Services Ltd Reliance One Enterprises Ltd Reliance Personal Electronics Ltd Reliance Review Cinema Ltd Reliance Replay Gaming Ltd Reliance Nutritional Food Processors Ltd Reliance Petro Marketing Ltd LPG Infrastructure (India) Private Ltd

Subsidiary of RIL

Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd Subsidiary of Reliance Retail Ltd

Growth through Value Creation

Since its inception in 2006, Reliance Retail Ltd (RRL) has grown into an organisation that caters to millions of customers, thousands of farmers and vendors. Based on its core growth strategy of backward integration, RRL has made rapid progress towards building an entire value chain starting from the farmers to the end consumers.

In the last year, Reliance Retail Ltd (RRL) continued to fulfil its commitment of enriching Indian consumers shopping experience and providing quality merchandise at an attractive value proposition. More than 3 years into operation, RRL has now expanded its presence in more than 85 cities across 14 states in India. RRL forged ahead with its expansion plans and rolled out stores
10

across the country. RRLs footprint now spans a network of more than 1,000 stores. RRL operates several value & specialty formats. The value formats that RRL operates are: Reliance Fresh, a neighbourhood concept, Reliance Mart, an all under one roof supermarket concept & Reliance Super, a minimart concept. The value formats offer a wide range and assortment of products required for daily household needs. The specialty formats are: Reliance Digital, a consumer durables & information technology concept, Reliance Trends, an apparel & accessories concept, Reliance Wellness, a health, wellness & beauty concept, iStore by Reliance Digital, an exclusive Apple products concept, Reliance Footprint, a footwear concept, Reliance Jewels, a jewellery concept, Reliance TimeOut, a books, music & entertainment concept, Reliance AutoZone, an automotive products & services concept and Reliance Living, a homeware, furniture, modular kitchens, furnishings concept.

RRL rapidly expanded the stores network it operates through strategic partnerships with world-class companies such as Marks & Spencer and Pearl Europe. RRL also entered into an exclusive distribution arrangement with Asics Corporation Japan to market Asics brands of shoes and accessories in India. RRL has recently opened its flagship store under its franchise agreement with Hamleys and plans to expand the store network in the coming year. RRL has also expanded its presence in business-to-business office supplies through its joint venture with Office Depot. Through Reliance One, RRLs loyalty membership program, RRL enjoys the patronage of over 5.5 million customers. In the coming year, RRL will continue on its mission to delight the customers every visit. RRL will
11

continue to provide unprecedented value to customers across all its formats and stores.

Retail and Franchising Awards

Franchise Award 2005.

Innovative Retail Concept of the year - Special Award Best Franchiser of the year Award - 2005 Star Award, Hall of Fame across all categories

Innovation and Technology in Franchising - (The Reid & Taylor Awards for Retail excellence) at The India Retail Summit 2005 for its various innovations in Petroleum Retailing.

Retail Concept of the year for Reliance Truck Stops- Images Retail Awards at India Retail Forum 2005.

12

Reliance Retail Enters Dairy Sector with Liquid Milk

RIL at Hotel Inter Continental The Grand, Mumbai, on 12th October 2006, organized a seminar on Dairy Industry - Current and Future Packaging Trends

Entry in dairy sector through RILs retail dairy venture Reliance Dairy Foods Ltd was probably one of the best-guarded secrets about Reliance Industries Ltds (RIL) Rs 3,375 crore retail forays. RIL is planning to make dairy products an important growth driver of the retailing venture. With a veteran of the dairy industry, Harsev Singh, a senior executive of the National Dairy Development Board who was on deputation with Verka, the Punjab cooperative milk marketing federation for some time, being roped in to head RILs retail dairy venture.

RIL is making mega plans to take on dairy biggies like Amul. RIL also expressed a willingness to even provide micro finance to farmers to buy cattle and establish their own milk auction markets or mandis. Not only that, RIL is also eyeing the Netherlands, which apart from having a world-class dairy industry, is also an acknowledged leader in dairy technologies. RIL retail
13

venture may collaborate with the Dutch both for technological know-how as well as a potential export market. Milk is big business in retailing as it ensures footfall and dairy products constitute 15% of the retail business. Most large multinational retail majors also have their own branded dairy produce. Reliance Retail has stepped into the dairy products sector in 2007 with a national pilot launch of its liquid milk (family milk segment) in Hyderabad, Andhra Pradesh. Reliance Retail currently has its processing and packaging facilities in Andhra Pradesh, Haryana and Rajasthan. The milk brand Dairy Life is being sold through Reliance stores and general trade (including milk retailers) in Haryana, Punjab, Andhra Pradesh, Tamil Nadu, Rajasthan, NCR (National Capital Region) and Himachal Pradesh.

14

ORGANISATIONAL HEIRARCHY

Central Organization:

Cheif Executive Officer

Project Planning Head Milk Plant Sales & Qualit Procuremen Hea Distribution y Head t Head d Head HR Head Commercial Logistics Head Head

State Organization:

State Head
Commercial Head Logistics Head Quality Head HR Head

Procurement Head

Plant Head

Sales & Distribution Head

15

Financial highlights of Reliance Dairy Foods Limited

Financial Results: The performance of the Company for the financial year ended March 31, 2010 is summarized below: 2009-2010 Profit/ (Loss) Before (386.31) 2008-2009 (434.47)

Depreciation, Interest and Tax Less: Interest Depreciation Profit/ (Loss) before Tax Less: Provision for Taxation Fringe benefit Tax Deferred Tax Profit/ (Loss) after Tax Add: Balance brought (203.04) 415.29 (763.39) (176.89) 450.05 (313.34) 10.14 3.36 228.66 (618.33) 0.62 181.71 (616.80)

forward from previous year Balance carried to Balance Sheet (Rupees in Millions) (1178.68) (763.39)

16

Operational Review: The Company strengthened its presence in the milk retailing business by launching Dairy Pure brand that are sold through general milk retailers along with Reliance Fresh stores. The Company presently operates in Andhra Pradesh, Haryana, Tamil Nadu, Maharashtra, Delhi, Punjab, and Rajasthan and is confident to further grow with the extension of product portfolio. The Company has incurred a loss of Rs. 415.29 Million for the financial year ended March 31, 2010. With the optimization of resources and further scaling up of operations, the Company is confident of posting better results in the future.

17

Profit and Loss Account for the year ended 31st March, 2010
2009-10 INCOME Turnover Other Income Variation in Stocks 29,349.25 2.84 996.86 30,348.95 EXPENDITURE Purchases Manufacturing and other Expenses Interest and Finance charges Depreciation 942.11 29,793.15 3.36 228.66 30,967.28 Profit/ (Loss) before Tax Provision for Fringe Benefit Tax Provision for Deferred Tax Profit/ (Loss) after Tax Add: Balance brought forward from Previous Year Balance carried to Balance Sheet (1,178.68) (763.39) (618.33) (203.04) (415.29) (763.39) 527.86 20,104.79 0.62 181.71 20,814.98 (616.80) 10.14 (176.89) (450.05) (313.34) 17,804.99 0.16 2,393.03 20,198.18 2008-09

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Dairy Industry
Table: World dairy market at a glance
2007 2008estimate 2009 forecast Change: 2009 over 2008 million tonnes milk equivalent WORLD BALANCE Total milk production Skim Milk Powder (SMP) Whole Milk Powder (WMP) Butter Cheese Other products Total trade SUPPLY AND DEMAND 76.1 4.1 0.8 0.3 5.9 75.1 9.4 687.7 24.6 31.6 62.3 87.9 481.3 39.7 699.0 25.0 32.1 64.0 89.8 488.0 39.4 1.6 1.6 1.6 2.7 2.2 1.4 -0.8 %

INDICATORS Per capita food consumption: World (kg/year) 02.4 45.4 4.0 0.8 103.1 246.9 65.5 5.8 103.6 249.6 66.9 5.6 0.5 1.1 2.1

Developed countries (kg/year) Developing countries (kg/year) Trade share of Production (%)

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2007

2008

2009

Change: Jan-May 2009 over Jan-May 2008(%)

FAO Index

Dairy

Price

( 2002-2004=100) * Jan-May 2009

12

220

119*

-52

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Introduction to Indian Dairy Industry

21

INDIAN DAIRY INDUSTRY: An Overview

Indias calendar year (CY) 2010 milk production is estimated at 117 million tons and is forecast to increase approximately 4 percent to a record 121.5 million tons in 2011, reflecting a near normal monsoon, improving management practices, increasing efforts of the private and public sector to improve cattle genetics, and good feed/fodder availability. In March 2010, India permitted duty-free imports of 30,000 tons of non fat dry milk (NFDM) and 15,000 tons of butter oil, due to concerns of a repeat of the 2009 weak monsoon. However, a sufficient 2010 monsoon, accompanied by the duty-free imports, has led to carry over stocks for next year Indian dairy has come of age! India has not only emerged as a largest producer of milk, having crossed 100 million tons mark, it has also entered the international trade market with a bang. The export of milk products, during the financial year 2005-06 were 59,746 MT, including 40,436 MT of SMP (Skimmed Milk Powder), which declined due to ban imposed on export of SMP by GOI. This ban has resulted not only in the loss of business, but also loss of face in international markets. The ban was imposed to control the rising food prices. One may ask, Why are millions of our farmers being deprived of making money, just to keep consumers in metro happy? As the worlds largest producer of dairy products (by volume) and home to the worlds largest dairy herd, India nonetheless faces a milk supply gap due to increasing demand from a growing middle class population. Industry sources currently estimate that Indian dairy production is growing at a rate of about 4 percent per year, while consumer demand is growing at approximately double that rate, thus contributing to forecasted record growth of domestic production
22

of liquid milk and butter. In response to strong demand for milk products, the Indian dairy industry is raising production in several ways. For example, farmers have responded to increasing dairy prices by increasing herd sizes, as is reflected in the 2007 Indian livestock census (updated as of 2010). Additionally, those farmers working directly with organized-sector buyers (industry estimates that between 40 and 50 percent of dairy producers work with the organized sector) generally have access to modern extension services, thus improving management, feeding, fertility and veterinary care. Many of these extension service providers offer artificial insemination services, further improving milk yields with new dairy cattle genetics. Artificial insemination services are expected to grow in the future, as the government of India continues to develop protocols for imported genetics products as well as encourage the growth of genetics services throughout the country. Finally, commercial dairies continue to build their presence in India. Based on the general trends outlined above, Post forecasts CY2011 liquid milk production at 121.50 million tons, approximately 4 percent more than the estimated record 117 million tons in 2010. CY 2010 liquid milk production is revised to reflect greater than 4 percent growth over 2009 production due to a strong monsoon and related good fodder availability. Despite a weak monsoon in CY 2009, Indian dairy production was still strong, with liquid milk production coming in at 112 million tons. This was likely due to improved management practices. Note that the Post production, supply and demand (PSD) estimates for liquid milk, NFDM and butter have been generally revised to reflect the calendar year in lieu of the April/March marketing year, necessitating a general shift in production and trade values over the past 10 years. Some production revisions were also made to reflect updated livestock numbers following the recent publication of the Indian Livestock Census through the year 2007 (See Gain Report IN1082).
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CY 2011 production of NFDM is forecast to increase to 410,000 metric tons. The growth in production is being driven by increasing demand for dairy products from Indias growing middle income population. Post has revised NFDM production estimates for CY 2010 downwards by 25,000 metric tons to 375,000 metric tons. The downward revision is due to Indias import of 30,000 metric tons of milk powder at nil duty in 2010, which was tendered on concerns of a supply crunch in 2009. However, a good monsoon in 2010 resulted in good milk production, and with significant imports of NFDM and strong demand for liquid milk, it is estimated that domestic production of NFDM will fall slightly in 2010. NFDM production in 2009 is also revised downwards by 10,000 metric tons at 360,000 metric tons. Although milk production grew in 2009, liquid milk consumption continued to grow at a greater pace, leading to lower NFDM production in 2009. Increased demand for reconstituted milk during the lean season and consistent exports of NFDM are also drivers supporting increased production of milk powder. Post forecasts 2011 production of combined butter and ghee (clarified butter) to increase by 25,000 metric tons to 4.18 million metric tons, following Indias increasing production trend. 2010 butter production is pegged at 4.16 million metric tons due to the expected record milk production. Post has not changed the production estimates of butter for 2009, previously forecasted at 3.91 million metric tons

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The Indian dairy sector is unique in its emphasis on both cattle and buffalo milk. Out of the total bovine population in milk in India, 40 percent are indigenous cows, 46 percent are buffaloes and 14 percent are imported European or North American cattle crossbreeds. Out of the total milk produced in India, 55 percent or slightly more comes from buffaloes, and the remainder from dairy cows. Traditionally, buffalo milk has been preferred for its high milk fat content. However, as the organized sector procures more milk, dairy cattle are increasing in popularity due to their increased yields and shorter dry periods. . In India, the market milk technology may be considered to have commenced in 1950, with the functioning of the Central Dairy of Aarey Milk Colony, and milk product technology in 1956 with the establishment of AMUL Dairy, Anand. Organized milk handling was started in India with the establishment of Military Dairy Farms. Handling of milk in Co-operative Milk Unions established all over the country on a small scale in the early stages. Pasteurization and bottling of milk on a large scale for organized distribution was started at Aarey (1950), Calcutta (Haringhata, 1959), Delhi (1959), Worli (1961), Madras (1963) etc. Milk Plants were established under the Five-Year Plans for Dairy Development all over India. These were taken up with the dual objective of increasing the national level of milk consumption and ensuing better returns to the primary milk producer. Their main aim was to produce more, better and cheaper milk. Indian Dairying is unique in more than one ways. It ranks first with its 185.2 million cattle & 97.9 million buffaloes accounting for about 51 percent
25

of Asias and about 19 per cent of worlds bovine population. India is also the worlds largest milk producer, accounting for around 13.1% of worlds total milk production. It is the worlds largest consumer of dairy products. According to the National Dairy Development Board (NDDB) milk production is increasing at one percent per annum in the world, while it is increasing at around 4 percent in India. 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. This impressive growth effort speaks volume about the cocoordinated efforts of large number of milk producing farmers, scientists, planners, NGOs and industry in achieving self-sufficiency in milk production.

The dairy foods space offers high margins of 10-12% that keeps growing. In terms of investment, companies need to make one-time investment for setting up processing units and supply chain units with cold storage facilities. The above features attract investment from private dairy companies. Now in India there are good numbers of private players in this sector like Nestle India Ltd, Parag Milk Foods, Reliance Dairy Foods Ltd, DMS, Gopalji, Britannia, and Paras Foods etc. It is good for the market to have more players and entry of large corporate houses would be beneficial for farmers as well as customers. But sizeable market presence cannot be built overnight in milk business and needs strong procurement and marketing network.

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Production Policy
Dairy production in India is characterized by a low input-low output system, whereby smallholder producers typically own no more than five cattle or buffalo and use locally available feedstuffs. While yields are below international averages, production costs are amongst the lowest in the world. Although animals are generally stall-fed, low production costs and low yields means that animal feeding typically relies on agricultural residues rather than grain based feeds or special fodder. As dairy product prices continue to rise and stable incomes from milk procurement become more available, there is a small but slowly growing trend amongst farmers to increase herd sizes and specialize in dairying. Additionally, private sector investors are building larger dairies, often in partnership with a major dairy processor. Indian dairy policy is currently focused on increasing milk output through a number of incentive schemes. While breeding stock development continues to take place through the Ministry of Agricultures research programs, the government of India has also taken steps to allow the importation of high quality genetics. Currently, India allows imports of bovine semen and embryos (subject to strict quality norms). Additionally, the GOI launched the National Project for Cattle and Buffalo Breeding (NPCBB) in October 2000. This program has targeted improving Indian indigenous breeds on a priority basis over a ten year period with an allocation of USD 255 million (Economic Survey 2009-10). The private sector is also playing a role by providing extension activities oriented at ensuring a stable supply of high-quality milk for procurement. Through the private sector, Indian dairy farmers are receiving artificial insemination services, veterinary care and other livestock management training. As genetic improvements
27

become more available, it is expected that Indian producers will continue to use higher yielding foreign cattle breed/local breed hybrid crosses, often provided through their milk procurement companys own extension services. In 2010, the government, along with the National Dairy Development Board, has drawn up a National Dairy Plan (NDP) with a proposed outlay of around USD 378 million to nearly double the countrys milk production by 2020. This plan will focus on increasing milk productivity of the Indian dairy herd through several means, including the use of imported genetics as well as selective breeding of local cattle. Additionally, the NDP proposes to improve access to quality feeds and improve farmer access to the organized market, by increasing cooperative membership and growing the network of milk collection facilities throughout India. (National Dairy Development Board).

Milk Production: The total amount of milk produced has increased from 21.2 million tonnes in 1968 to 108.5 million tonnes in 2008-09. India is the largest producer of Milk in the World. Per capita availability of milk presently is 258 grams/day in 2008-09, increased from 112 grams/day in 1968-69. Milk production in India is growing at 3.7 %/year and the net increase in availability is around 2.3 %/year. Contributing about 5.3 % to Indias agricultural GDP, milk is a leading agricultural produce.

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Milk Processing: About 35% of total milk produced in the country is processed. The organized sector process about 1.3 crore tonnes annually while the unorganized sector processes about 2.2 crore tonnes. There are currently 676 dairy plants in the organized sector that combines cooperative, private and government sector units.

ABOUT THE PRODUCT

Milk is the secretion derived after complete milking of healthy milk animal, excluding that obtained within 15 days before or after 10 days of calving.

Key Facts about Milk:

Milk is a rich source of calcium, vitamins and protein. Contrary to common belief milk is not high in fat. For those concerned about their overall fat intake, reduced fat milks such as semi skimmed and

29

skimmed milks, have lower energy content but without significant nutrient loss. Cows milk is not suitable as a drink for infants under twelve months. From six months onwards, cows milk can be added in small amounts to foods in order to soften them. In childrens diets, semi-skimmed (sometimes called low-fat) milk should not be introduced until two years. Provided that the child is a good eater and has a healthy diet, skimmed milks may be introduced gradually from five years onwards. Milk and water are healthier options than soft drinks. Flavoured milks offer a good option for children who do not like the flavour of plain milk. Their higher sugar content, however, can affect dental health, so they should be consumed with meals. Pasteurised milk should be stored at a temperature of 5C or less.

Constituents of Pasteurised packaged Milk

Milk Variants

FAT (in %)

SNF (in %)

Available Variants (volume)

Pouch

Full Cream Milk

1, 1/2 litre

Toned Milk

8.5

1, 1/2 litre

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Double Toned Milk

1.5

1, 1/2 litre, 200ml.

SUPPLY CHAIN

Process of procurement, processing, packaging & distribution of Milk: Procurement from farmers The company is collecting milk on daily basis from villages through the cooperative method. Besides, the main feature is that in every village from where milk is being procured by RIL, it has installed a fat and solid net fat machine to check the fat and other contents in the milk. These machines have been imported from Bulgaria, as at present the machines being used by the cooperatives can only check the fat content. Also, this machine gives an instant result and a print comes out, after which the farmer is paid on the spot depending on the quality of his milk.

To maintain freshness after procuring the milk, the company has established Milk Chilling Centres (MCC), one centre for every 50 villages, where the milk is chilled and then transported to milk plants for final processing. The objective of the company is that the milk is chilled in two hours, as other companies take about four hours, thus ensuring better freshness. From MCC milk is transported to plant through tankers.

Checking the quality of milk

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At the Dairy stringent hygienic standards are maintained. The milk in the tankers is first checked for quality and freshness and then unloaded into huge insulated stainless steel storage tanks. The presence of adulterants (impurities) like urea, neutralizers, preservatives and germs like bacteria are checked. All these tests ensure that only good quality milk is accepted. The storage tankers are thoroughly cleaned and sanitized using acid and alkali. The tankers are then finally rinsed with water.

Processing of milk Unprocessed milk may contain small dirt particles invisible to the naked eye. In order to remove these particles the milk has to be processed.

To process milk, the milk is first clarified. This is done in a clarifier which spins the milk at a very high speed, as a result of which the dirt particles are thrown out and drained.

The milk is then pasteurized to make it safe for human consumption. This process destroys any disease causing microbes and also increases the shelf life of the milk. During pasteurization the milk is heated to 80 o Celsius and then rapidly cooled down. This process, unlike boiling, does not affect the nutritional value of the milk. Pasteurized milk is safe to drink without boiling as long as it is kept cool at all times.

Homogenization At Reliance Dairy plants the milk is also homogenized. This ensures that the customers get uniform amount of cream in their milk.
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In this process the milk is pumped at a very high pressure turning the cream into tiny droplets thus distributing the fat throughout the milk. These droplets do not float to the surface to form a creamy layer. That is why no creamy layer appears when RDFL milk is boiled at home.Packaging of milk Dairy products being a highly perishable product, utmost care is needed in its preservation during storage, handling and transportation. At RDFL, after processing, the milk is chilled and stored in silos and then packaged in 6 litres, 1 litre, 500 ml, and 200 ml. flexible pouches. Flexible pouches have proved to be safe, quick and cost effective with a wide distribution network, providing ease of packaging and handling. In the formfill-seal system, the plastic film is formed into a tube, sealed along its length, sealed at the bottom to form a pouch, filled with milk and then sealed at the top. During packaging leaked packets are separated and are again sent to a separate pasteurized milk silo.

Storage at Cold room The packages are then transferred to cold room in plastic crates for storage till distribution. The Cold room is kept clean and its temperature is kept below 4o Celsius. This prevents spoilage of milk.

Distribution of milk The milk is distributed through insulated vehicles. The milk is sold through general milk retailers and Reliance Retail-owned stores. Distribution is done through private distribution agencies which supplies milk to retailers. Distributor sends their demand to office which is conveyed to plant on daily basis.
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Keeping milk cool RDFL takes care to keep milk cool and it is chilled before transporting in insulated vehicles. Keeping milk cool slows down the rate at which bacteria multiply. This also increases its shelf life.

RESEARCH OBJECTIVES

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RESEARCH OBJECTIVES:

1. Assessing the present status of milk market of different brands (packaged milk) in South Delhi. 2. Exploring the factors responsible for switching of customers from RDFL to other brands. 3. Suggesting suitable measures to increase market share of RDFL in study area.

35

SCOPE OF THE STUDY:

The research will highlight the areas where RDFL is lacking in providing milk products. RDFL will also know the new ways to provide better products to its customers and also add value to the customers.

This study will help in ascertaining what efforts RDFL should undertake to improve its customer relations. This study will also highlight the various factors that lead to lower level of customer satisfaction.

The suggestions given by the researchers at the end of the report will help RDFL to overcome the problems it faces to provide the best product to its customers.

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RESEARCH METHODOLOGY

37

RESEARCH METHODOLOGY
Research Type: Conclusive Data sources: Primary data and secondary data Research approach: Survey method Research instrument: Questionnaire Type of questions: Open ended and close ended Elements: Household Consumers and Retailers Method of collecting the data: Data was collected by personal interactions Sampling units: South Delhi: Kotla & South Extension Period of study conducted

38

5th May-5th July, 2011 Data analysis The collected data was depicted in the form of bar charts and pie charts Statistical tool- arithmetic mean, percentage etc. are used.

SAMPLING DESIGN Population size: A total of 500 household customers list which was provided by the different retailer of study area.

Sampling technique: Convenience sampling Sample size: 80 household customers and 15 retailers.

LIMITATIONS
The response of the customers can be biased. The response of the retailers can be biased. The researchers were novice. There were financial constraints.

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The sample size was small and the research is Ltd to South Delhi and some part of Haryana state viz: Malviya Nagar, Kotla, Chirag Delhi, DuxshinPuri, Marauli, Defence colony, Shahpurjat, Madangir, Munirka, Tuglakabad Ext. Sarta Vihar, Bhogal, Jangpura, Badarpur, areas only. So, it is difficult to get a holistic view of New Delhi.

The time period was also Lt

SWOT Analysis of RDFL

STRENGTHS The major strength of the RDFL is a recognized BRAND name as it is a subsidiary of Reliance Industries Ltd. The increasing demand for milk products presents a great

WEAKNESS Absence of RDFL Outlets. New player in Dairy sector. Supply weak Chain in Management comparison is to

competitors.

opportunity for the RDFL to increase and scale up the

production. RDFL is having a competitive edge in terms of pricing.

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OPPORTUNITIES There is a scope of business as there is a demand for dairy products. RDFL should open its own outlets to get the maximum advantage of the demand. Need to put more stress in the face-to-face direct marketing to reach to the customers. Dairy products are highly income elastic.

THREATS Presence of established players like Mother Dairy, Amul and DMS. Margin is very low in dairy industry. Strong supply chain management by the competitors.

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Findings of the Research

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Delhi NCR market:

Delhi National Capital Region (NCR), among the biggest milk markets in the country, is dominated by Mother Dairy currently. Delhis estimated 4.5 million liters per day (MLPD) of organized liquid milk is dominated by Mother Dairy (2.8 MLPD) and Gujarat Cooperative Milk Marketing Federation (GCMMF or Amul, which sells 1 MLPD). Besides these two, there is the public sector Delhi Milk Scheme (0.3 MLPD) and private brands such as Paras and Gopaljee (0.15-0.2 MLPD each). Amul and NDDB's non-compete agreement has prevented the former from launching its liquid milk in the Delhi market till 2003.With the non-compete agreement having run out, Amul launched its fresh milk in Delhi in two variants full cream and toned priced at par with that of Mother Dairy. Amul, to its delight, has seen the demand for its milk going up by leaps and bounds in the city and is now planning to enter into alliances with dairies located around Delhi such as Indian Potash and Modern Dairy to cater to the demand.

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HOUSEHOLD CONSUMERS

Analysis of five different parameters which effect buying decision of consumer:

Most Important parameter

25 No. of household consumers 20 15 10 5 0 Price Taste Quality Ease of availability Promotion RDFL Non-RDFL

Graph showing Most Important parameter which effects buying decision of Household Consumers.

Findings: The graph shows that the most important parameter which effects the buying decision of household consumers is quality. All of the RDFL consumers ranked quality as a most important parameter. 87% of Non-RDFL consumers ranked quality as a most important parameter that effects their buying decision, while 6.5% consumers considered taste as most important parameter. Nearly 6.5 % consumers considered ease of availability as most important parameter. This shows that for Non-RDFL consumers taste and

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ease of availability are also most important parameter. Hence to attract these consumers company needs to consider taste and availability factors.

Parameter of high importance

14 No. of household consumers 12 10 8 6 4 2 0 Price Taste Quality Ease of availability Promotion RDFL Non-RDFL

Graph showing Parameter of high importance which effects buying decision of Household Consumers

Findings: It shows that taste is considered as a parameter of high importance that effects the buying decision of consumers. Around 62% of RDFL consumers ranked taste as a parameter of high importance, while nearly 28% ranked ease of availability as a parameter of high importance. 9% of RDFL consumers ranked price as a parameter of high importance. 40% of the consumers surveyed who do not use RDFL milk considered taste as a parameter of high importance. They may find taste of RDFL milk inappropriate. The reason for not liking the taste was that they had become habitual of consuming either the other brands or the loose milk available from local dairies.
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Like taste, 40% of the consumers surveyed who do not use RDFL milk considered availability as a parameter of high importance. Either they were getting the milk they were consuming on their doorsteps or it was available near to their house.

Parameter of moderate importance

12 No. of household consumers 10 8 6 RDFL 4 2 0 Price Taste Quality Ease of availability Promotion Non-RDFL

Graph showing Parameter of moderate importance which effects buying decision of Household Consumers

Findings: 52% of RDFL consumers considered ease of availability as a parameter of moderate importance that plays a role in effecting their buying decision, while nearly 28% of RDFL consumers ranked taste as a parameter of moderate importance. Nearly 19% of RDFL consumers also considered price as a parameter of moderate importance.

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In case of Non-RDFL consumers 46% of them considered ease of availability as a parameter of moderate importance, while equal number of them considered price as a parameter of moderate importance. This shows that price should be competitive to attract consumers.

12 No. of household consumers 10 8 6 4 2 0 Price

Parameter of least importance

RDFL Non-RDFL

Taste

Quality

Ease of availability

Promotion

Graph showing Parameter of least importance which effects buying decision of Household Consumers

Findings: Majority of consumers either RDFL or Non-RDFL considered promotion as a parameter of least importance out of the five parameters.

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But it does not mean that there should be no promotion of the product. Until and unless people are not aware of the product, they would not buy it.

33% of RDFL consumers also considered price as a parameter of least importance, while nearly 27% of Non-RDFL consumers considered price as a parameter of least importance.

Have ever tried RDFL's Milk

Still consuming Tried but discontinued 22% 42% Never tried

36%

Around 42% of the household consumers have never tried RDFL milk. So this group can be target for action. Nearly 36% of consumers have tried but discontinued RDFL milk.

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Reasons for not trying RDFL

Others 7% Not aware 33% Customer loyalty with present brand 33%

Availability issues 27%

Pie-chart showing Reasons for not trying RDFL milk by Household consumers.

Findings: The chart shows that major reason for not trying RDFL milk is lack of awareness. This shows that there is need of good promotion so that people got aware of RDFL milk. Customer loyalty with present brand is also a major reason for not trying RDFL milk. Another major reason for not trying RDFL milk was its non-availability.

Analysis: Reasons for Discontinuation

The following Pie chart shows the major reasons for discontinuation of RDFL milk by a sample of household consumers.

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Reasons for Discontinuation

Price 0% Taste 13% Availability 53% Quality 34%

Pie-chart showing Reasons for Discontinuation of RDFL milk.

Findings: The major reason for discontinuation of RDFL milk was availability. Majority of household consumers discontinued RDFL milk due to its nonavailability followed by quality problems and taste. Price was not considered as a reason for discontinuation.

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How often experienced Bad/ Spoiled milk?

>4 times/month 0% 3-4 times/month 19% 2 times/month 24% <2 times/month 19% Never 38%

Pie-chart showing Frequency of experiencing Bad/Spoiled milk.

Findings: The graph shows that every fifth RDFL consumer had experienced bad/spoiled milk 3-4 times in a month, while 24% RDFL consumers had experienced spoiled milk 2 times in a month. This shows early spoilage was a major problem in RDFL milk. This is an area of concern for quality control. Correlation between Family Size and Consumption: When number of family members and average daily consumption were correlated then a Correlation coefficient of +0.5273 was found which shows that there is moderate positive correlation (0.5-0.75) between the two. When family size increases, the consumption of milk will increase moderately. Correlation between Monthly Household Income and

Consumption of Full Cream Milk:

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The correlation between monthly household income and consumption of full cream milk was found +0.017, which shows that consumption of full cream milk is very less effected with increase in monthly household income.

RETAILERS
Problems regarding distribution
Late and Irregular supply Unclean crates No Compensation/ Replacement on return of spoiled milk/ leakaged pouches

22%

22%

56%

Pie-chart showing Problems faced by retailers regarding distribution.

Findings: Majority of retailers have complained that the milk supply was late and irregular. The distributors supply was late which have negative effect on milk sale of retailers. This problem was frequent as reported by retailers. 22% retailers reported that the crates containing milk pouches crates containing milk pouches were unclean, while 22% retailers reported that distributor had not provided any compensation and replacement on return of spoiled milk or leakaged pouches.

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Means of Promotion
Small Banner Wall Painting Not Applicable

29% 50%

21%

Pie-chart showing Means of promotion.

Findings: Only 50% retailers reported that promotional activities were there. 29% of retailers reported that they had been given small banners for promotion of RDFL milk, while 21% reported that wall painting was means of promotion.

50% retailers reported that there was no means of promotionexcept word of mouth. These retailers have demanded small banners for promotion but were not provided.
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Quality of RDFL milk according to retailer

Good Average

25%

75%

Pie-chart showing Retailers response to quality of RDFL milk.

Findings: On asking about quality of RDFL milk, 75% of retailers reported it as average, while only 25% retailers reported it as of good quality.

Promotional activity
Effective Not Effective 12%

88%

Doughnut chart showing Effectiveness of promotional activities according to retailers.

Findings:

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Only 12% of retailers reported that promotional activities were effective, while majority of retailers said that promotional activities were not effective. Lack of promotion of the product gives rise to lack of awareness among consumers. Correlation between Promotion and Sales of RDFL milk: When promotional activities and sales of RDFL milk were correlated, the correlation coefficient was found +0.672, which shows that there is moderate positive correlation between promotion and sales.

Packaging according to retailers

Good Bad Average

38%

58% 4%

Pie-chart showing Retailers opinion regarding Packaging of milk pouches.

Findings: It shows that packaging of milk was not good. Retailers were not satisfied with packaging of milk pouches as 58% rated it as average while 4% rated it bad. This was mainly due to less durability of pouches as leakage was major problem.
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Last month Sales

Satisfactory Average Unsatisfactory

4% 38%

58%

Pie-chart showing Satisfaction level of retailers about last month sales before sales closing.

Reason(s) of sales being not satisfactory

Competition from local dairyies Lack of Promotion 10% 10% 3% Competition from other brands Taste not liked by customers

77%

Pie-chart showing Reason(s) for sales being not satisfactory.

Findings: The chart shows that the major reason for sales being not satisfactory was competition from other brands. The reason may be that the consumers were not satisfied with the quality of RDFL milk. 10% of retailers considered

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lack of promotion as a reason behind low sales. This shows that there is lack of awareness of the product among consumers. Nearly 10% of retailers reported that taste of RDFL milk was not liked by consumers and was a reason for low sales.

Pouch Leakage [Packets leaked(%)/week]

0% leaked Upto 2% leaked 17% 41% 21% 3-5% leaked >5% leaked

21%

Pie-chart showing Percentage of milk pouches leaked per week.

Findings: Leakage in milk pouches was a major problem for retailers. 59% of retailers have faced the problem of leakage. 17% of retailers reported that they got more than 5% of the pouches leaked in a week, while 21% of retailers got 3-5% of the pouches leaked in a week. Nearly 21% of retailers got upto 2% pouches leaked per week.

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Customer's response to RDFL Milk

Liked Mixed 4% 46% 50% Not Liked

Pie-chart showing Customers response to RDFLs Milk according to retailers.

Findings: Majority of retailers reported that there was not good response from customers to RDFL milk. 46% of retailers reported that RDFL milk was not liked by customers, while 50% of retailers reported that there was mixed response from customers. Only 4% of retailers reported that customers like RDFL milk.

This shows that the customers either may not be satisfied with the quality of RDFL milk or they find its taste inappropriate.

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Analysis of sales closing reasons:

Reasons of low sale according to retailers

Promotion Replacement policy regarding spoiled milk & leakaged pouches Issues related to Distributor Milk not last to expiry & spoilage Taste & odour not liked Low Quality compared to other brands 0 Graph showing Sales closing reasons. 1 2 3 4 5 6 7 Series1

Findings: Nearly 41% of retailers considered issues related to distributor were the main reason behind closing of sales. These issues include late supply, irregular supply, distributors shifting to other brand, supply less compared to demanded etc. 58% of retailers reported that quality of RDFL milk was low as compared to other brands. On asking about reasons of sales closing, nearly 29% of retailers reported that taste and odour was not appropriate according to customers. Nearly 17% of retailers considered lack of promotion as a reason behind sales closing, while equal number of retailers reported that replacement policy regarding spoiled milk and leaked pouches was a major reason behind sales closing. They reported that there was no replacement or compensation for leaked and spoiled milk pouches and it was resulting in loss

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of their margins. Spoilage and milk not lasting to expiry was also considered as a reason behind sales closing by 12% of retailers.

Recommendations & Suggestions

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Consumers:
As consumers were not satisfied with quality and taste of RDFL milk, hence the company needs to consider about this. The quality of milk should be consistently maintained. Company should try to conduct camps and awareness programmes in these areas to overcome this thinking of people. As availability and awareness issues are major reasons for not trying RDFL milk, the distributional channel need to be strengthened and there is need of good promotion of the product. Until and unless people are not aware of product they would not go for it. The promotion in dairy sector does not need to be in regular manner but there is need of different approach here. Before startup in a new area there should be good promotion through banners, pamphlets etc. Once people came to know about the product, then promotion is very less needed. The consumers were frequently facing problem of early spoilage, hence company should ensure that consumers get fresh milk. It may be due to increase in temperature during transportation. The vehicles should be properly insulated.

Retailers:
In case of old retailers, the major problem to them was leakage in milk pouches and frequent spoilage. The leakage problem was not found in case of new retailers, hence this issue is eliminated but still there are issues which need to be eliminated.

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As many retailers complained that they were not provided banners for promotion, so banners of small size should be provided as they create awareness about brand and its product.

Retailers were satisfied with profit margins in majority of cases. Schemes can be launched on basis of differential sales by retailers. When retailer sells a fixed amount of milk then extra profit margin can be given to them which motivate them to sell more milk.

Distributor:
Company needs to take attention in this section as distributors have hold over market and they are deciding factors in path of products success or failure. Firstly distributor should supply the product to retailers on time and should be regular in his work. Distributor should take care of product while handling which prevent damage of packages of milk as leakage was a major problem found in area of one distributor out of three.

Other suggestions:
The company should increase its product range in terms of variety as competitors are having different kind of products like curd, butter milk, lassi, butter, flavored milk etc. which gives extra edge in market.

To raise the consumer awareness regarding Adulteration of milk, RDFL can open its testing facilities. RDFL can work on "mobile labs" that

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can test milk in the residential colonies. This will create a commitment to provide the consumers with the purest milk.

BIBLIOGRAPHY
Books supporting Kotler Philip; Keller Kevin Lane; Koshy Abraham; JhaMithileshwar,Marketing Management, Pearson, 13th Edition,New Delhi Viswanathan P.K., Business Statistics: An Applied Orientation, Pearson, 1st edition
Kothari, C. R., Research Methodology, New Age International Publication, 2nd edition.

The Economic Times, 8th Feb 2010 India Retail Biz, November 16th, 2009 Indian Dairy Man, October, 2008

Web-Access www.indiadairy.com www.ril.com www.nddb.o

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Annexure-I
Questionnaire for Household Consumers 1. Which type of milk you prefer? (a) Pouch milk (b) Loose milk 2. Which Brand of pouch milk you use mostly? (a) Reliance : (d) Paras (b) Mother Dairy : (e) Vita (c) Amul : (f) Others : 3. Which variant you buy? (a) Full cream milk (b) Toned milk (c) Double toned milk

: :

4. How will you rank the following attributes in packed milk? (a) Taste (d) Easy availability (b) Quality (e) Price (c) Attractive packaging

5. What purpose you buy pouch milk? (a) Tea (b) Drinking (c) Curd (d) Other

6. How do you come to know about the product? (a) Advertisement (d) Other source 7. Have you tried Reliance Dairy Milk? (a) Yes (b) No (b) Word of mouth (c) Promotion/POP

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8. If No, Would you like to try it? (a) Yes (b) No

9. Would you like to change current brand? (a) Yes (b) No

10. If yes what attribute you expect from Reliance milk? 11. If not why? 12. Any Suggestion for improvement. 13. Personal Information : (a) Name (b) Age : :

(c) Gender (M/F) : (d) Location (e) Phone : :

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Annexure-II Questionnaire for Retailers

Market Survey Report Trainee name: Area: Distributor name: s. no Retailers Name: Address: Contact no.: Reliance Amul M.D Paras G.J Others Rem arks Date: brand

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

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67