IJCBM e ISSN 0976 7940 International Journal of Commerce and Business Management Volume 7 Issue 2 October, 2014 300-304 DOI: 10.15740/HAS/IJCBM/7.2/300-304 Visit us : www.researchjournal.co.in RESEARCH PAPER Business performance of milk union - A case of Belgaum district co-operative milk producers union limited (BEMUL) of Karnataka SANTOSH B. BALIKAI AND N.M. KERUR Received : 17.07.2014; Revised : 17.08.2014; Accepted : 28.08.2014 ABSTRACT Livestock sector has been playing an important role in Indian economy and is an important sub sector of Indian agriculture. A study was conducted to analyse the performance of dairy co-operatives and their impact on milk production, income and employment. The average milk sales were increased by 6.76 per cent per annum due to the popularity of milk brand in the operating area of the union. The physical performance of the societies in the study area revealed that the overall physical indicators had an increasing trend along with the number of employees working in the societies. The profits of societies showed increasing trends in union areas. The share capital, total sales value of milk also increased along with the increase in the members. The compound growth rates in respect of the physical indicators, membership and milk procured were highly significant in the study area. The compound growth rate of financial indicators was almost better in the all aspects and showed highly significant in the study area. It is essential to educate the consumer about the KMF products by using appropriate promotional techniques like advertising simultaneously in radio, television and newspaper. The sales promotional techniques have not materialized during the past years. Therefore, a market research survey is required to identify the different sources by which the consumers receive the information which is required for the improvement of sales promotion measures. KEY WORDS : Business performance, Dairy enterprise, Milk union, Co-operative and growth rate How to cite this paper : Balikai, Santosh B. and Kerur, N.M. (2014). Business performance of milk union - A case of Belgaum district co-operative milk producers union limited (BEMUL) of Karnataka. Internat. J. Com. & Bus. Manage., 7(2) : 300-304. Dairy enterprise is an important occupation of farmers. In India, nearly 67 per cent of the people depend on agriculture and it is the backbone of India. Dairy is linked with agriculture industry to a large extent. Animal husbandry in India is an essential part of agriculture. It is MEMBERS OF THE RESEARCH FORUM Correspondence to: SANTOSH B. BALIKAI, Department of Agribusiness Management, College of Agriculture, University of Agricultural Sciences, DHARWAD (KARNATAKA) INDIA Authors affiliations: N.M. KERUR, Department of Agribusiness Management, College of Agriculture, University of Agricultural Sciences, DHARWAD (KARNATAKA) INDIA mainly a rural occupation closely associated with agriculture. Livestock sector has been playing an important role in Indian economy and an important sub sector of Indian agriculture. The dairy and animal husbandry received serious attention after the independence. There were many progressive steps taken by the government through Five Year Plans. This led to the formation of National Dairy Development Board (NDDB) in 1965 and thus in 1970; it was decided to bring a White Revolution throughout the country. Initially 10 states were selected for this purpose excluding Karnataka. In Karnataka during 1974, an integrated project was launched to restructure and recognise the dairy industry on Co-operative principle of AMUL and to lay foundation for new direction in dairy industry. The first dairy in Karnataka
SANTOSH B. BALIKAI AND N.M. KERUR was started in Kudige of Kodagu district in 1955, further in June 1974, an integrated project was launched in Karnataka to reconstruct and reorganize the dairy industry on the cooperative principle and to lay foundation for a new direction in dairy development. In 1975, the World Bank aided dairy development was initiated. The present Karnataka Milk Federation (KMF) came into existence in 1984 as result of merging of Karnataka Dairy Development Corporation, Small Co-operatives and Karnataka Milk Production Development and loose vendors. At the end of the March 1998, the network of 8023 Dairy Co-operative Societies (DCS) have been established which are spread over 166 taluks of the total 175 taluks in all 27 districts of Karnataka. There are 13 Milk Unions and Belgaum Milk Union (BEML) is one among them. There are 135 chilling centres, 3 farm coolers, 15 liquid milk plants and 2 product dairies for chilling, processing, conservation and marketing of milk. To supply cattle feed, there are 4 cattle feed plants. Karnataka Milk Federation is implementing a special programme for overall development of womenfolk in rural areas through Support to Training and Employment Programme for women (STEP) launched during 1997 with the financial assistance of ministry of Human Resource Development, Department of Women and Child Development for providing access to credit, awareness generation, nutrition education and sensitization of project functionaries. In Belgaum milk union, it has chilling centres at Gokak-20 TLPD (Total Litres Per Day), Ramadurga-14 TLPD and Athani-04 TLPD with total capacity of 38 TLPD. There are 8 Bulk Milk Cooler and 93 Automatic Milk Collection units in the union. The union procures on an average of 0.88 lakh litres/day of milk and sells 0.72 lakh litres/day. To ensure supply of quality germplasma, bull breeding farm and frozen semen bank is also available. A study was conducted to analyze the business performance of milk union and their impact on milk production, income and employment. METHODOLOGY Belgaum is a city and a municipal corporation in Belgaum district in the state of Karnataka, India. It is the fourth largest city in the state of Karnataka. The Belgaum District Cooperative Milk Producers Union Limited (BEMUL) was established on 24-12-1985 as a co-operative organization. The union is one among the thirteen unions operating in Karnataka state with mother dairy at Bangalore, the union covers whole Belgaum district as its jurisdiction areas operation. The union has three chilling centers in Ramdurg, Gokak and Athani and main dairy plant is located at Belgaum. For the analysis the objectives of the study, both primary and secondary data were utilized. The primary data were collected from the sample respondents through the help of retailers and from the administration officials with the help of pre-tested questionnaire. The secondary data on several aspects of the activities like balance sheet, procurement and profit and loss account receipts and payment statements and trading accounts were abstracted from the annual reports and audit reports of KMF etc. which were collected from different sources for a period of ten years from 2002 to 2011 depending up on the availability of the required information for the study. Growth rate and tabular were used for analysing data. ANALYSIS AND DISCUSSION The findings of the present study as well as relevant discussion have been presented under following heads : Product profile of milk union : Table 1, reveals comparison between Belgaum and Goa market prices of milk and milk products. The toned milk is sold in Goa market at Rs. 22 per litre and it is Rs. 1 more than the Belgaum market. Then standardized milk price was Rs.24 in Goa market, it was Rs.1 more than the Belgaum market and full cream milk also showed Rs.2 more than the Belgaum market. Many processed products are manufactured by the union, these are ghee, pedha, curd, flavoured milk, sterilized flavour milk, tetra pack flavoured milk, sweet lussi, khunda and jamoon. Among all the processed products, highest per kg price was seen for ghee (Rs.260) and khunda (Rs.260) followed by jamoon (Rs.250) and Pedha (Rs.230). By looking at Table one can understand that the market price of BEMUL milk products in Goa are more compared to Belgaum. The reasons is supply of milk and its products in Goa is less compared to Belgaum and this less supply is because of less production in that particular area or locality and it is because of less cultivable area and people dependent on agriculture are also few. Table 1 shows that in the Belgaum market for 500 g of ghee price was 5 Rs. less than Goa market and price of Kunda in Belgaum market was 5 Rs. less than the Goa market for 250 gram packet and almost for all other commodities prices were same in the both markets.in Belgaum people depending on agriculture are more and also irrigated cultivable land is more, this accounts for more production of milk and one more important reason is that the increase in supportive price for milk from Govt. of Karnataka. In Goa we can find more number of customers compared to Belgaum since large number of population is settled in urban areas. Trends in sales of milk and its products : Table 2 shows all the products which were sold by the union up to 2011. The union sold milk, ghee, peda, curd, flavoured milk, sweet lassi, kunda, ice cream jamoon and milk powder. The table reveals that during the period under study sale of Pedha registered a highest growth of 19.83 per cent per annum followed by ghee (16.27 %) and ice cream (15.07 %) whereas, lowest (5.52 %) growth rate was observed in sale of 301
BUSINESS PERFORMANCE OF MILK UNION OF KARNATAKA milk powder. The revenue from other products that is milk derived products have followed an increasing trend from 2002 to 2011 and this was mainly because of quality parameters followed by the union and also because of special feel in the taste of products. Especially Peda and ghee recorded 19.83 and 16.27 per cent growth rate, respectively in their sales over the study period. Patel and Prabharan (1980) indicated the choice of pack size varied and their findings revealed that one litre sachet was desired by 61 per cent of people and half litre was liked by 20 per cent of people. Nine per cent preferred low volume packs (250 ml). Physical and financial performance : Physical performance : Table 3 reveals that, the total number of DCSs registered increased by 4.11 per cent, and membership has increased by 22.58 per cent over ten years. The total number of employees of DCS had increased from 141 in 2002 to 206 in 2011 registering a significant growth of 46.09 per cent over base year. The milk procurement had increased by 90.49 over ten years i.e., from Table 1 : Product profile in marketing by the Belgaum Milk Union Belgaum Milk Union Limited Belgaum Goa Sr. No. Particulars Dealers (Rs.) Margin (Rs.) MRP (Rs.) Dealers (Rs.) Margin (Rs.) MRP (Rs.) Milk 1. Toned milk/lit 20.00 1.00 21.00 20.00 2.00 22.00 2. Standardized milk/lit 22.00 1.00 23.00 22.00 2.00 24.00 3. Full cream milk/lit 25.00 1.00 26.00 26.50 1.50 28.00 Products 1. Ghee 500g 117.00 8.00 125.00 122.00 8.00 130.00 2. Ghee/kg 230.00 15.00 245.00 242.00 18.00 260.00 3. Peda 250 g 51.00 4.00 55.00 55.00 5.00 60.00 4. Peda / kg 204.00 16.00 220.00 210.00 20.00 230.00 5. Curds 200 ml 6.00 0.50 6.50 6.00 1.00 7.00 6. Curds 500 ml 14.50 1.50 16.00 15.50 1.50 17.00 7. Flavoured milk 200 ml 9.00 1.00 10.00 9.00 1.00 10.00 8. Sterilized flavored milk 250 ml 10.76 1.24 12.00 10.76 1.24 12.00 9. Tetra pack flavored milk 250 ml 10.20 1.80 12.00 10.20 1.80 12.00 10. Sweet lassi 200 ml 4.00 1.00 5.00 4.00 2.00 6.00 11. Kunda 250 g (tin packed) 60.00 5.00 65.00 64.00 6.00 70.00 12. Kunda/kg 235.00 15.00 250.00 242.00 18.00 260.00 13. Jamoon 200 g 46.00 4.00 50.00 50.00 5.00 55.00 14. Jamoon/kg 225.00 15.00 240.00 233.00 17.00 250.00 Source : Records of the Belgaum Milk Union Table 2 : Trends in sales of milk and its products by the Belgaum Milk Union (Litre/day) Growth Sr. No. Milk and its products 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 rate (%) 1. Milk 45455 44331 43927 43185 56610 57200 62079 70286 69433 72564 6.76** 2. Flavoured milk 315 386 510 617 629 650 661 673 756 864 9.79** 3. Ghee 186 254 394 493 496 512 546 561 847 915 16.27** 4. Peda 121 235 391 486 501 504 582 609 815 934 19.83** 5. Curd 255 337 513 663 671 673 691 701 912 968 13.34** 6. Sweet lassi 273 356 564 646 712 714 781 784 881 1151 13.92** 7. Kunda 315 434 613 742 778 781 797 809 1247 1346 14.30** 8. Ice cream 195 297 431 586 614 637 654 671 796 893 15.07** 9. Jamoon 170 278 459 610 619 624 638 647 663 781 14.03** 10. Milk powder 120 260 535 887 1076 1236 1123 1291 1354 1410 5.52** Note: ** indicate significance of values at P=0.01, respectively 302
SANTOSH B. BALIKAI AND N.M. KERUR 17.05 lakh litres in 2002 to 32.48 lakh litres in 2011. The total members of the union increased from 57323 in 2002 to 75928 in 2011. The membership in union was increased year after year over the study period. The membership increased by 22.58 per cent over the ten years of the study period i.e., from 2002 to 2011 more and more people became members with increased dairy farming and for easy marketing of milk through societies. Financial performances : The financial performance of the union could be judged by examining the trend of various financial indicators such as share capital, total sales value of milk, total assets, total liabilities, fixed assets, net profits. The financial indicators are presented in Table 4. The share capital had increased from Rs. 1.22 crores in 2002 to 2.63 crores in 2011. Total sales value of milk too showed constant increase from 35.70 in 2002-03 to 81.74 in 2011. The total assets had increased from Rs. 9.15 crores in 2002-03 to 12.89 (2011). Total liabilities also increased from 7.79 crores to 10.43 crores along with total assets and sales. Fixed assets, as part of the total assets, also increased from Rs. 7.34 crores to Rs. 7.54 crores during the period from 2002-2011. Net profits had increased every year except in the year of 2009 and 2010, but overall it showed increasing trend from 40.15 crore to 74.80 crores. The net profit showed upward and downward swings over the study period because of competitive market and competition from local dairies but resulted in profit at the end of study period and remained constant in market. The cooperative society was good in its functioning, the physical and financial indicators showed increasing trend over the study period. Kale et al. (2000) studied the financial position of working and operational efficiency of 23 dairy co-operatives in Raigad district of Maharashtra. They studied the economic efficiency through income expenditure ratio, expenditure income ratio, rate of return on capital and rate of turnover. Compound growth rate of physical and financial indicators : Physical indicators : The compound growth rates of different physical indicators are presented in Table 5. It could be seen from table that total No. of Dairy Co-operative Societies (DCS) grew at the rate of 0.79 per cent per annum. Among the various Table 3 : Physical performance of Belgaum Milk Union from 2002 to 2011 Total no. of DCS Total DCS Total No. of Years registered membership employees in union Total milk procured (lakh litres) Total members 2002 437 321 141 17.05 57323 2003 443 310 152 18.07 58197 2004 434 317 158 18.86 64867 2005 442 326 169 19.10 66630 2006 462 328 175 19.34 68259 2007 443 328 176 20.56 70291 2008 456 324 181 23.25 67625 2009 499 330 185 26.22 69172 2010 454 364 198 29.55 72943 2011 455 380 206 32.48 75928 % increase over 10 years 4.11 22.58 46.09 90.49 32.45 Table 4 : Financial performance of Belgaum Milk Union from 2002 to 2011 (Rs. in crores) Years Share capital Total sales Total assets Total liabilities Fixed assets Net profit 2002 1.22 35.70 9.15 7.79 7.34 40.15 2003 1.24 36.55 9.25 7.80 7.58 42.05 2004 1.25 36.90 9.25 7.81 7.68 42.70 2005 1.31 37.47 9.48 7.92 7.75 43.80 2006 1.30 37.78 9.59 8.11 7.97 44.52 2007 1.37 37.98 9.71 8.17 7.99 45.70 2008 1.59 45.21 10.58 8.21 8.30 49.86 2009 1.73 53.55 11.10 9.05 8.47 36.38 2010 2.47 67.75 11.79 11.31 8.77 26.98 2011 2.63 81.14 12.89 10.43 7.54 74.80 303
BUSINESS PERFORMANCE OF MILK UNION OF KARNATAKA physical indicators, highest (7.21 %) growth was registered by milk procurement followed by No. of total employees in the union (3.87 %) and total members (2.76 %). The compound growth rate of physical indicators like total DCS membership and total milk procured were highly significant at 1.92 per cent and 7.21 per cent per annum, respectively. The growths for all the indicators were found highly significant. Table 5 : Compound growth rate of selected physical and financial indicators Sr. Compound Particulars No. growth rate (%) Physical indicators 1. Total No. of DCS registered 0.79** 2. Total DCS membership 1.92** 3. Total no of employees in union 3.87** 4. Total milk procured (lakh litres) 7.21** 5. Total members 2.76** Financial indicators 1. Share capital 8.85** 2. Total sales value of milk 8.95** 3. Total assets 3.73** 4. Total liabilities 3.75** 5. Fixed assets 1.58** 6. Net profit 1.29** Note : ** indicate significance of values at P=0.01, respectively Financial indicators : The share capital of the union increased significantly at the rate of 8.85 per cent per annum. The share capital increased along with the membership. The total sales value of milk showed a growth rate of 8.95 per cent, the growth of total assets, total liabilities, fixed assets were highly significant. The net profit showed significant growth rate of 1.29 per cent per annum. Shankaramurthy (1986) studied the performance of Karnataka State Co-operative Marketing Federation Limited. He employed financial ratio analysis to evaluate the financial performance of the federation. He used different ratios to study the different aspects of financial position of the federation such as solvency, liquidity, turnover, profitability, efficiency and strength. He said that the ratio analysis would provide better idea of the financial position of the federation. Conclusion : The union may go for diversifying its liquid milk by introducing whole milk and supplying more standardized milk so as to compete with the private traders. Before union could make any policy regarding the milk and milk products diversification it should undertake a consumer survey to assess the consumers preference and market segmentation, analyze the competitors in the field. Adequate technical and input services should be provided by the union to the members to increase the milk production and productivity. The compound growth rates in respect of the physical indicators, membership and milk procured were highly significant in the study area. The compound growth rate of financial indicators was almost better in the all aspects and showed highly significant in the study area. It is essential to educate the consumer about the KMF products by using appropriate promotional techniques like advertising simultaneously in radio, television and newspaper. The sales promotional techniques have not materialized during the past years. Therefore a market research survey is required to identify the different sources by which the consumers receive the information which is required for the improvement of sales promotion measures. REFERENCES 7t h Year of Excellence Jithendra Kumar, D.S. (1990). Performance of dairy co-operatives and their impact on milk production, income and employment in Chitoor district (A.P.). J. Agric. Econ., l57(3) : 535-545. Kale, N.K., Tilekar, S.N., Borude, S.G. and Hinge, B.J. (2000). An economic enquiry in to working of dairy co-operatives in coastal area of Maharashtra. Indian Co-Op. Rev., 38(4) : 426-433. Patel, R.K. and Prabharan, R. (1980). Consumer awareness and preference for milk in Madras city. Indian J. Mktg., 11(4): 13-16. Shankaramurthy, H.G. (1986). Performance of the Karnataka state co-operative marketing (KMF) Ltd. and its impact on farm market : An economic analysis. Ph. D. Thesis, Andhra Pradesh Agricultural University, Hyderabad, A.P. (INDIA). 304