Dr. M. SambaSiva Rao, President, is a Post Graduate and Doctorate in Zoology.

He served the state

and central governments for about two decades as a member of Indian Administrative Services(IAS). Before joining Heritage Foods ( India ) Ltd, Dr Rao was Joint Secretary in Department of Commerce under Ministry of Commerce and Industry, Government of India.

CA A Prabhakara Naidu, Sr General Manager - Finance & Accounts, is a Fellow member of the
Institute of Chartered Accountants of India and is a University rank holder in his science graduation from Sri Venkateswara University . He has 21 years of experience in Finance and Accounts. He is associated with the Organization since inception.

Umakanta Barik, Company Secretary, is M.A(Economics), LLB, and the Associate Member of the
Institute of Company Secretaries of India, New Delhi and has over 9 years of experience in the areas of Company Secretarial and Finance.

K Durga Prasada Rao, Chief Operating Officer - Dairy Division,is Diploma in Mechanical Engineering,
Diploma in Dairy Engineering from NDRI Karnal and Diploma in Dairy Technology from Hewkesburg Agri college, Australia . He worked 3 years in Amul Dairy, 24 years in AP Dairy Development Co-operative Federation Limited in various positions. He is associated with the Organization since inception i.e June 1992. S Jagdish Krishnan, Chief Operating Officer - Retail and Bakery Divisions, is M.B.A and MS (BITS) and has over 16 years of experience in the areas of Brand Management, Consulting, Corporate Communications and Retailing with leading Indian and Multinational Organizations. His last assignment was with the CavinKare Group at Chennai where he was the Head of the Retail Organization.

Anil Kumar Srivastava, Chief Operating Officer - Agri Business Division, is MBA and also PG Diploma in
Foreign Trade and Fruit & Vegetables Technology. He has around 29 years of rich experience to his credit with various reputed Food Processing Industries

The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is one of the fastest growing Private Sector Enterprises in India, with four-business divisions viz., Dairy, Retail, Agri, and Bakery under its flagship Company Heritage Foods (India) Limited (HFIL). The annual turnover of Heritage Foods crossed Rs.900 crores in 2009-10 and is aiming for Rs.1100 crores during 2010-11. Presently Heritages milk products have market presence in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Maharastra and Orissa and its retail stores across Bangalore, Chennai and Hyderabad. Integrated agri operations are in Chittoor and Medak Districts and these are backbone to retail operations and the state of art Bakery division at Uppal, Hyderabad, AndhraPradesh. In the year 1994, HFIL went to Public Issue to raise resources, which was oversubscribed 54 times and its shares are listed under B1 Category on BSE (Stock Code: 519552) and NSE (Stock Code: HERITGFOOD) The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is one of the fastest growing Private Sector Enterprises in India, with four-business divisions viz., Dairy, Retail, Agri, and Bakery under its flagship Company Heritage Foods (India) Limited (HFIL). The annual turnover of Heritage Foods crossed Rs.900 crores in 2009-10 and is aiming for Rs.1100 crores during 2010-11. Presently Heritages milk products have market presence in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Maharastra and Orissa and its retail stores across Bangalore, Chennai and Hyderabad. Integrated agri operations are in Chittoor and Medak Districts and these are backbone to retail operations and the state of art Bakery division at Uppal, Hyderabad, AndhraPradesh. In the year 1994, HFIL went to Public Issue to raise resources, which was oversubscribed 54 times and its shares are listed under B1 Category on BSE (Stock Code: 519552) and NSE (Stock Code: HERITGFOOD)

TONED MILK
Made from pure & fresh buffalo milk. Pasteurized, Homogenized and packed hygienically and rendered it more safe for consumption. Contains 3% Milk Fat and 8.5% Milk Solids Not Fat. It is Available in the pack sizes of 500ml & 1lt polyethylene pouches

FCM MILK
Full Cream milk It is packed in Clean, sound and sanitary Polythene Pouches . Containing 6% Fat and 9 % Solids Not Fat. A rich, creamier and tastier milk, Ideal for preparing home made sweets, Curds & Savories. Available in 500ml Pouches

DOUBLE TONED MILK

Made from Cow's pure milk, homogenized, double toned .At present the milk is being directly home delivered on request. Available in 200ml

GOLDEN COW MILK

Cow's milk in pure form is processed and packed in convenient Pack sizes of 200ml, 250ml and 500ml with out disturbing the natural quality of Cow milk. Available in 200ml, 250ml & 500ml

SLIM MILK
It is fat free milk contains as much low as 0.1 % Milk Fat and 8.7% min.of MSNF. It is enriched with vitamins A&D2 which tones up eye sight and bones strength.

UHT TONED MILK

Heritage Toned Milk made from pure milk to give smooth consistency preventing cream layer.Milk is sterilized through UHT process packed aseptically to keep same freshness until pack is opened. FAT 3.0%(Max)

SNF 8.5 %(Min)

UHT SLIM MILK

Heritage Slim Milk made from pure milk to give smooth consistency preventing cream layer. Milk is sterilized through UHT process packed aseptically to keep same freshness until pack is opened. FAT 0.5 %(Max) SNF 8.7 %(Min)

Stores V V Towers, Vikrampuri Colony, City:Secunderabad State:Andhra Pradesh Kimtee Banjara Heights, Rd no.12,Banjara Hills, City:Hyderabad State:Andhra Pradesh Sindhi Colony, Penderghast Road, City:Secunderabad State:Andhra Pradesh Opp. Swarajya Printing Press, Padmarao Nagar, City:Secunderabad State:Andhra Pradesh Vengalarao Nagar Colony, City:Hyderabad State:Andhra Pradesh Tejaswini Arcade, West Marred Pally, City:Secunderabad State:Andhra Pradesh Ashoka satyam Enclave, DD Colony,

City:Hyderabad State:Andhra Pradesh Yasmai Arcade, kapra AS Rao Nagar, City:Hyderabad State:Andhra Pradesh Sri Lakshmi Nilayam, Himayathnagar, City:Hyderabad State:Andhra Pradesh "Anand Capital Building" Ameerpet, City:Hyderabad State:Andhra Pradesh Bapujinagar, Sri Balaji Trading Center, Nacharam Road,Habsi guda, City:Hyderabad State:Andhra Pradesh Near Apollo Hospital, Filmnagar, City:Hyderabad State:Andhra Pradesh Durga Nagar, Dilsukh Nagar, City:Hyderabad State:Andhra Pradesh Gilbert Plaza, Santhosh Nagar, City:Hyderabad State:Andhra Pradesh Sri Sai Nilayam, R K Nagar, Malkajgiri. City:Hyderabad State:Andhra Pradesh Pincode:47

Nagole Village, L B Nagar, City:Hyderabad State:Andhra Pradesh Pincode:35 Srikrishna Classic, Vijayanagar Colony, City:Hyderabad State:Andhra Pradesh Pincode:57 1-10-209/135, Ashoknagar, City:Hyderabad State:Andhra Pradesh Pincode:20 K R Nagar, Bowenpally, City:Secunderabad State:Andhra Pradesh No. 2207,Hal 3rd Stage, Ward no 74, 80 feet Road, City:Bangalore State:Karnataka No 23,100ft Road, 2nd Block, Jayanagar. City:Bangalore State:Karnataka No 104,Lic Colony, West Off Chord Road, Bhimajyothi Cooperative society, City:Bangalore State:Karnataka No 83,10th Avenue, Ashoknagar, City:Chennai (Madras)

State:Tamil Nadu Pincode:600083 Bagyam Ceilo, 1 & 2 Bazar Road, Balaiah Garden, City:Chennai (Madras) State:Tamil Nadu Pincode:600091 VSR Complex, Velachey, City:Chennai (Madras) State:Tamil Nadu No.3,Main Road, Kottur Garden, Kotturpurem,Near TNSC Bank, City:Chennai (Madras) State:Tamil Nadu Secretarial Office 6-3-541/C, Panjagutta City:Hyderabad State:Andhra Pradesh Pincode:500082 Email ID:murali@heritagefoods.co.in Sales Depot 220, 3rd Cross, 2 nd Floor, Shivakrupa Complex, City:Bangalore State:Karnataka Sales & Marketing Office No: 8-3-166/5/2, Register Office Road, Behind Bata Show Room, City:Hyderabad State:Andhra Pradesh Shop No: 192 Cellar, Mamatha Estates, Allwyn Indhra reddy Colony, Besides Subcourt, Miyapur

City:Hyderabad State:Andhra Pradesh D.No: 1-30-418/1, Plot No:1, Venkateswara Colony, Kanaji Guda, City:Secunderabad State:Andhra Pradesh Sundararaja Puram, E R Palli Post, Chittoor - Puttoor Road City:Chittoor State:Andhra Pradesh D.No: 50-48-15/2, P&T Colony, NH-5 Facing, Seethammadhara City:Vishakapatnam State:Andhra Pradesh D.No: 19-12-154, RC Road, Bairagipatteda City:Tirupati State:Andhra Pradesh D.No: 75-8-12, First Floor, Vimmalamma Hospital Junction., Gandipuram-2 City:Rajahmundry State:Andhra Pradesh No: 540/1, CM Complex, Jayanagar - VII th Block, West of Kanakapura Road City:Bangalore State:Karnataka Yadavanahalli Village Anekal Taluq Gudahatti Road City:Bangalore State:Karnataka No: 2/14B, Kamarajar Street, Arunachalam Nagar,

Seneerkuppam Village, City:Chennai (Madras) State:Tamil Nadu Pincode:600056 Plot No: 219, Ganeshan Street, Bhuvaneswari Nagar Extension, Vellachery City:Chennai (Madras) State:Tamil Nadu Pincode:600042 Moorpatti Village, Vadamadurai Post City:Dindigul State:Tamil Nadu Pincode:624802 44/6, Igloo Cold Storage, APM Yard, Sector - 18, Vashi, City:New Mumbai State:Maharashtra Pincode:400705 No: 9, Akashvani Kendra - B, Munnalal Paradise, Pune - Sholapur Road, City:Pune State:Maharashtra Vijayanagar Sangvi, Phaltan Taluk, City:Satara District State:Maharashtra 211/3, Kavimani Street, Nehru Nagar, City:Madurai State:Tamil Nadu C10,IDA, Uppal City:Hyderabad State:Andhra Pradesh 54-18/1-2

ITI Road Prasanthi Nagar City:Vijayawada State:Andhra Pradesh 3017 B, Y Block 13th Main Road Annanagar (W) City:Chennai (Madras) State:Tamil Nadu 44-38-12/31 Srinivas Nagar Akkayyapalem City:Vishakapatnam State:Andhra Pradesh 6-11-741/B/B1 Moosarambagh Dilsuknagar City:Hyderabad State:Andhra Pradesh 541/1, West of Kanakapura Jayanagar 7th Block City:Bangalore State:Karnataka Survey No: 99, Segahalli Village, Bidarhalli Hobli, City:Bangalore State:Karnataka Pincode:560067 39-11-58, Muralinagar Vizag City:Vishakapatnam State:Andhra Pradesh 306, Bhanu Enclave, Beside ESI Hospital, Erragadda

City:Hyderabad State:Andhra Pradesh Sales & Admn Office No.4-3-142/1/A, Attapur Ring Road, Rajedranagar, City:Hyderabad State:Andhra Pradesh Registered Office 6-3-541/C Panjagutta City:Hyderabad State:Andhra Pradesh Pincode:500082 Email ID:umakanta@heritagefoods.co.in Web Url:http://www.heritagefoods.co.in Regional Office 8-49, Meghana Apts., Jayasankaranagar City:Tirupati State:Andhra Pradesh State Bank Colony, Addanki City:Prakasam District State:Andhra Pradesh Factory/plant Sangavi City:Satara District State:Maharashtra Kotananduru City:East Godavari Distri State:Andhra Pradesh Gantyada (V&M), City:Vizianagaram Dist State:Andhra Pradesh C/o Sree Sravani Milk Chilling Centre, L.Kota (V&M)

City:Vizianagaram Dist State:Andhra Pradesh Thalavaipatty Post, Attur Taluk City:Salem State:Tamil Nadu Opp. Govt Veternary Hospital, Ravikamatam Village City:Vishakhapatnam Dist. State:Andhra Pradesh Main Dairy Plant: 'Gokul' Tirupati-Chittoor Road, City:Chittoor District State:Andhra Pradesh Yerraguntla Village, Piler -Mandal City:Chittoor District State:Andhra Pradesh Basinikonda Village Madanapalle Mandal City:Chittoor District State:Andhra Pradesh Pincode:0 Bayyavaram Village Anakapalli (Taluq) City:Vishakhapatnam Dist. State:Andhra Pradesh Pincode:0 Somasipadi City:Tiruvannamalai State:Tamil Nadu Koorsampatti Village, Uthangarai Taluq City:Dharmapuri District State:Tamil Nadu Muppavaram,

Bytamanjuluru Post, J.Panjaluru Mandal City:Prakasam District State:Andhra Pradesh Kondapi Village & Mandal City:Prakasam District State:Andhra Pradesh Puthavaripalem Village Santhamaguluru Mandal City:Prakasam District State:Andhra Pradesh Rayapatnam Village, Madhira Mandal City:Khammam District State:Andhra Pradesh Shantipuram Village V Kota Road City:Chittoor District State:Andhra Pradesh Sundararajapuram E R Palle Post City:Chittoor District State:Andhra Pradesh Yadavanahalli Village Anekal Taluq City:Bangalore District State:Karnataka Vadamadhurai Village City:Dindigul State:Tamil Nadu Brahmanapalli, Piduguralla - Nalgonda Highway, Piduguralla Village, City:Guntur District State:Andhra Pradesh Korlagundem Village, Kalluru Mandal

City:Khammam District State:Andhra Pradesh Pamarru Near Ramachandrapuram City:East Godavari Distri State:Andhra Pradesh Mulapalem Village, Bapatla-Ponnur Road, Bapatla Mandal City:Guntur District State:Andhra Pradesh Bytamanjuluru Post, J Panjaluru Mandal, City:Prakasam District State:Andhra Pradesh Atmakur, Atmakur Post City:Nellore District State:Andhra Pradesh Katuturu Grampanchayat, Valetivaripalem Mandal, Kandukuru City:Prakasam District State:Andhra Pradesh Battiprolu Village Velaturu Mandal City:Guntur District State:Andhra Pradesh Narketpalle, Cherugattu Village City:Nalgonda District State:Andhra Pradesh Darsi Post City:Prakasam District State:Andhra Pradesh Namakkal, Navani Vellali Patti Village,

Pudusatram Post City:Namakkal State:Tamil Nadu Nandyal Sambavaram Village, Gosapadu Mandal City:Kurnool District State:Andhra Pradesh Industrial Growth Centre, Bobbili City:Vijayanagaram Dist. State:Andhra Pradesh Guraja, City:Krishna District State:Andhra Pradesh Metcheri, City:Salem State:Tamil Nadu B Kothakota City:Chittoor District State:Andhra Pradesh Kodada City:Nalgonda District State:Andhra Pradesh Vinukonda, City:Guntur District State:Andhra Pradesh Kaligiri City:Nellore District State:Andhra Pradesh Naidupeta City:Nellore District State:Andhra Pradesh Distribution Centre 4-79,M&N Warehouse, St.John Regional Church Compound,

Ramanathpur City:Hyderabad State:Andhra Pradesh Pincode:500013 C/o Agility Logistics, No: 8/1 A1, A2, GNT Road, Vijayanallur, (Near to Vijayanallur Indian Oil Pump) City:Chennai (Madras) State:Tamil Nadu Pincode:600097 Agility Logistics, Shed No. 8,No.31, 18 km,Old Madras Road, City:Bangalore State:Karnataka Door No.6-54,Survey No. 51, Peerzadiguda , Uppal,Ghatkesar Mandal, City:Ranga Reddy District State:Andhra Pradesh

Heritage Exports
Heritage Foods (India) Limited is one of the two Dairies in South India in Exports of Dairy Products. It has been accorded an Export License from Exports Inspection Council of India (Ministry of Commerce and Industry, Government of India) The major export products are: Heritage Pure Ghee in Bulk and Consumer Packs Heritage Butter in Bulk and Consumer Packs Heritage Dairy Plant (Gokul) at Kasipentla in Chittoor District (Near Tirupati) is certified and approved for the products of Ghee and Butter being Manufactured in this plant for Exports by Exports Inspection Agency, India. The said products are being exported to Asia, Europe and Gulf Countries including Singapore. For further information please write or call us at : Manager - Exports

Heritage Foods (India) Limited 6-3-541/C, Panjagutta, HYDERABAD Andhra Pradesh, INDIA. PIN: 500 082 Ph: 040-23391221/2, Mobile: 09848544005 Fax: 040-23391330 Email: hfilexports@heritagefoods.co.in

About Heritage Parlours

Heritage Parlours is a Franchisee based business model that provides excellent business opportunities for new entrepreneurs as well as existing business owners. Heritage Parlours are exclusive outlets selling the whole range of Heritage products, which includes Heritage milk, milk products, ice creams, bread, bakery products, eggs, labeled products, fruits & vegetables and also products supplied/approved by Heritage Foods (India) Ltd. With a well established network of over 1000 Parlours in Hyderabad, Vishkapatanam, Rajahmundry, Vijayawada, Tirupati, Chennai and Bangalore, Heritage Parlours plays a vital role in ensuring that Heritage products are available to the customers at their doorstep. Every Parlour is a Brand ambassador of Heritage and HFIL along with the Franchisee ensures that every Parlour delivers the right message to the customers.

To become Franchisee Visibility The shop should be in the residential/semi-commercial location

Shop area: 100-200 sft. Exclusive Heritage outlet- Selling only Heritage products and items supplied/approved by Heritage Foods (India) limited Need to take shops and establishment License and required statutory Licenses/Permissions The Franchisee has to renovate/modify the shop as per the HFIL design The Franchisee would be required to furnish and interest free refundable security deposit Rs 10,000/The delivery of products will be done through the regular channel of the company on cash and carry basis only (No credit). Heritage will Financially assist to some extent for the development of the Parlour One Deep freezer (300/400 Ltrs Capacity) for Ice Creams and one Chest Cooler/ Glass door refrigerator for Milk and Milk products. One oven for selling puffs. Franchisee should possess a bank account and should submit residential and identity proofs. Agreement with HFIL has to be executed by Franchisee for a period of three years Products sales depends on the seasonality: For example, Butter milk, Lassi and Ice creams will

have better sales in summer season and less in winter season. The Franchisee should put efforts to sell more quantities based on the season and should also cater to the milk and milk products requirement of the consumers/households and nearby residential colonies on a regular basis.

In case the Franchisee wants to discontinue before the expiry of the contract period, a 3 months prior notice should be given to HFIL. HFIL may agree for discontinuation, for which the Franchisee has to pay back the amount provided by HFIL as Financial assistance in the course of the Parlour Development.

Sales Offices
Dairy Division Sales Office's - Andhra Pradesh Uppal Hyderabad Erragadda Hyderabad No: C-10, IDA, Uppal Phone: 9848544003 No: 8-3-166/5/2, Register Office Road , Behind Bata Show Room, Erragadda, Hyderabad . Phone: 040 - 23705402 Miyapur Hyderabad L B Nagar Hyderabad Shop No:192 Cellar, Mamatha Estates, Allwyn Indhra H.No: 3-8-113, Shop No.23 & 24, Road No.5, reddy Colony, Besides Subcourt, Miyapur Phone: Chandrapuri Colony, L.B Nagar, Hyderabad 9666408561 Chittoor Road , Chittoor Phone: 08572 - 226708 Tirupati Phone: 0877 - 3205997 Vijayawada No: 54-18/1-2, ITI Road , Prasanthi Nagar, Vijayawada 8. Phone: 0866 - 3295568 Phone : 9848544010 Visakhapatnam Seethammadhara, Visakhapatnam 13 Phone: 0891 2729043, 2707715 Rajahmundry Junction., Gandipuram-2, Rajahmundry. Phone: 9912344403 D.No: 19-12-154, RC Road , Bairagipatteda, Tirupati. D.No: 75-8-12, First Floor, Vimmalamma Hospital

Sundararaja Puram, E.R PalliPost, Chittoor Puttoor D.No: 50-48-15/2, P&T Colony, NH-5 Facing,

Dairy Division Sales Office's - Tamil Nadu Poonamalle Survey No:16/6, Sennerkuppam Vadamadurai village, Pariwakkam Main Poonamalle, Chennai Vellachary Chennai Road, Plot No: 219, Ganeshan Street , Bhuvaneswari Chennai Nagar Extension, Vellachery, Chennai 600 042 Phone: 044 - 32512788 Chennai

-56 Phone: 09344772122 Moorpatti Village , Vadamadurai Post, Dindigul District 624 802 Phone: 04551 - 238841 Dairy Division Sales Office's - Karnataka

Bangalore

sales

office

1 Bangalore

sales Kasturinagar

office 560 016.

2 Phone:

No:42, Survey No:5&6, Bikasipura, Banashankari 5th Door No: 220, 3 rd Cross, 2 nd Floor, Shivakrupa Stage, Near Saibaba Temple, Bangalore. Phone: Complex, 09341440122 Bangalore Sales office - 3 Yadavanahalli Village, Anekal Taluk, Gudahatti Road, Attibele. Phone: 09343799721 Dairy Division Sales Office's - Maharastra Pune Mumbai Sai Sadan, Flat No:16, Survey No.52/10, Behind Gold Plot No:15, Shop No:5, Punit Plaza, Sector 30, Near Age Ashram, Near Mumbai Katrej Highway, Narhe - Sanpada Railway Station, Sanpada, Vashi, Navi Post, Haveli TQ, Pune 411042. Phone: Mumbai - 400705 Phone: 09323379778 09922966806 Sanghvi Vijayanagar Sangvi, Phaltan Taluk, Satara District. Phone: 021 66264352, 66264252 Dairy Division Sales Office's - Kolkatta Kolkatta C/o. M/s.Mohor Lal Sinha Pvt. Ltd (Consignee Agent).,167, Netaji Subhas Road, Rajakatra Room No. -11A, Kolkatta - 700007 Phone: 09433227616 09341440124

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Processing & Packing Plants

ANDHRA PRADESH

Gokul Heritage 25th Chittoor Chandragiri Chittoor Dist., Foods Km Road, (India) From Kasipentala

Limited

Tirupathi,

Village,

Mandal,

AP.

Bayyavaram Heritage Bayyavaram Bayyavaram Kasimkota Via: Vishakapatnam Dist., Foods Milk (India)

Limited

Plant,

Village,

Mandal,

Anakapalli,

A.P.

Commissioned : November '95 Pammaru Heritage Endagandi Pamarru Hq East Godavari Dist.,A.P Foods (India)

Limited

Village,

Mandal,

K.Gangavaram,

Commissioned : Feb '2005 Bobbili Heritage Growth Plot Near Bobbili, Vijayanagaram Dt. No.248, Mettavalasa Foods (India)

Limited

Center,

249,

(V),

Battiprolu Heritage Foods (India) Limited

Chilling Centres

Battiprolu - Velaturu Road, Velaturu, Battiprolu, Guntur Dist., A.P

Commissioned : Dec' 2002 Narketpally Heritage Foods (India) Limited Narketpally Milk Plant, Near OCTL, Narketpally, Nalgonda Dist., A.P.

Commissioned : June '95 Chittoor Heritage Foods (India) Limited Chittoor Milk Plant, Sunderajapuram, E.R.Palle (Post), Chittoor-Puttur Road, Chittoor Dist., A.P.

Commissioned : Apr'1993 B.Kothakota Heritage Foods (India) Limited. Bering Village, Sankarapuram (Post), B.Kotha Kota (Mandal), Chittoor Dist 517370.

Commissioned :

Heritage Foods (India) Limited. C-10, Road No.7, IDA Uppal, Hyderabad 500 039. ANDHRA PRADESH

Chilling Center - Kallur Heritage Foods (India) Limited V.M.Banjara Road, MAHARASHTRA Korlagudem (Po), Ramakrishna Puram, Sangvi Heritage Foods (India) Limited. Vijayanagar Sangvi, Phaltan Taluk, Satara District. Maharastra. Commissioned : May' 2004 Commissioned : Sep' 2007 Chilling Center - Madhira KARNATAKA Heritage Foods (India) Limited Rayapatnam Village, Yadavanhalli (Brindavan BPS) Madhira mandal, Khammam District.,A.P. Heritage Foods (India) Limited Yadavanhalli Village, Near Guestline Hotel, Atibela-Hubli, Ankal Taluq, Bangalore (South), KA. Commissioned : Feb' 2000 Chilling Center - Santhamanguluru Commissioned : Mar '2000 TAMILNADU Heritage Foods (India) Limited 19th Km from Narasaraopeta, Vinukonda Road, Puthavaripalem Village (Adda Road), Vadamaduri Santhamaguluru Mandal, Prakasham Dist.,A.P. Heritage Foods (India) Limited. 18 th K.M from Dindigul, Commissioned : Dec '99 Chilling Center - Darsi Heritage Foods (India) Limited Pulipadu (PO), 3 Km from Darsi, Commissioned : Dec' 2002 Darsi-Addanki Road, Darsi, Prakasham Dist., A.P. Dindigul - Chennai Highway No : 45, Dindigul Dist.,624 802, TN . Kallur (Md), Khammam Dist., A.P.

Commissioned : Sep' 2006

Commissioned : Dec' 98 Chilling Center - Muppavaram

Bulk Cooling Units

Bulk Cooling Units - Andhra Pradesh Alagadapa C/O Venkata Satya Sai Stone polishing Industry, Allagadapa Post, Miryalaguda (MD), Nalgonda Dist. AndhraPradesh Challagundla Commissioned : Sep' 98 C/O Vikas Concept School, Challagundla Village, Nakarikallu Mandal, Guntur Dist, AndhraPradesh. Chilling Center - Kondapi Dubucharla West Godavari Dist. AndhraPradesh. Ghattaprabha Belguam. Maharastra. K Venkatapuram Kammam, AndhraPradesh. Commissioned : August '2003 Nandigama Devineni Venkata Ramana Colony, Ramannapeta Chilling Center - Atmakur Road, Near Peddabbai Hotel, Nandigama Post & Mandal, KRISHNA Dt. Phone: 9912266233. Pangire Kolhapur Dist, Maharastra. Revidi Near Kasiraju Petrol Bunk, Modavalasa (V), Denkada(M), Vijayanagaram Dist. Pin 531 162. Samarlakota Commissioned : Dec '1999 E1, Industrial Estate, Adj: Preethi Oil Company, Opp:V.D.O. Training Centre, Samarlakota Mandal, Chilling Center - Kandukuru East Godavari Dist. Vatsavai Opp.Z.P.High School, Vastavai Village & Mandal, KRISHNA Dt Phone: 9912455011.

Heritage Foods (India) Limited Muppavaram Village, Bythamanjaluru Post, Between Ongole to Chilakalooripet, Bapatla J. Panjaluru Mandai, Mulapalem Village, Prakasham Dist.,A.P. Bapatla - Ponnur Road, Bapatla Guntur Dist, AndhraPradesh. Chinnagummuluru Chinnagummuluru (V & P), S Rayavaram Mandal, Visakhapatnam Dt. Duttaluru Heritage Foods (India) Limited C/O Padmaja Video Theater, Opposite Govt Chodavaram Village, Hospital, Duttaluru (Po & MD), Nellore Dist. Kondapi Mandal, AndhraPradesh. Prakasham Dist.,A.P. Hukkeri Belguam Dist, Maharastra. Mehagaon Kolhapur Dist, Maharastra. North Rajupalem Nellore Dist, Andhrapradesh. Heritage Foods (India)

Limited

Atmakur Chilling Palamaneru Nellore-Cuddapah Chittoor Dist, AndhraPradesh. Atmakur Sattenapalli Nellore Dist., A.P. C/O Sapthagiri Dall Mill, Industrial Park,Sattenapalli Mandal, Guntur Dist, AndhraPradesh. Sri kalahasti Pedda Kannali Village & Post, Chittoor Dist, AndhraPradesh. Venkatagiri Heritage Foods (India) Limited. Srikalahasti Mandal, Chittoor Dist. Kakuturu Grampanchayat, AndhraPradesh. Valletivaripalem Mandal,Kandukuru, Prakasham Dist., A.P.

Centre,

Road,

Post,

Commissioned : January' 2001

Chilling Center - Nandyal Heritage Foods (India) Limited Sambavaram village, Vepanapalli Vepanapalli Post, Krishnagiri Thaluk & Dist. Tamilnadu. Mini Chillers Jaggampeta/ Somavaram Commissioned : Dec '03 NH-5 Facing, Somavaram (V & P), Kirlampudi (M), East Godavari Dist. Chilling Center - Piler PIN - 533435. Kaligiri C/O Lakshmi Oil Mill, VenkannaPalem Road, Kaligiri (PO & MD)A, Nellore DT. Phone: 08626 248247. Kodada 2 Kms from Kodada - Vja road, NH9 Road, Durgapuram Post, T.B.Palem Village, Kodada Mandal, Nalgonda Dt. Phone: 9948123525. Commissioned : Nov '93 Podalakuru Thoderu Village, Podalakuru (Post & Mandal), Chilling Center - Madanapalli Nellore Dist - 524345. Phone: 99662 30574. Satyawada Tanuku - Velivennu Road, Satyawada Village, Undrajavaram Mandal, West Godavari Dt. Phone: 9948884366. Vinukonda #31-191, Sai Surekha Rice Mill, Enugupalem Road, Dist 522 647. Commissioned : August '94 Veeravalli Chilling Center - Kothanandur Krishna District. AndhraPradesh Veeravalli Village,Bapulapadu Mandal, Heritage Foods (India) Limited Hindupur Kotananduru (Vi & Mdl), Srikantapuram Village, Kagallu panchayat, Near Petrol Pump, Via Tuni, Hindupur Mandal, Anantapur Dist, East Godavari Dist 522 647. A.P. AndhraPradesh Commissioned : Sep' 2007 Kavali NH-5, Naidupalem Village, Dakshina, Chilling Center - Guraja Kodavuluru (Mandal), Harijanawada Panchayat, Heritage Foods (India) Limited Guraja (Village), Mudinepalli (Mandal) Krishna Dist 521 325 Kalakada C/o Aslam Godowns, Gurramkonda Road, Kalakada Mandal, Chittoor Dt. Phone: 08586 258244. Kanigiri Heritage Foods (India) Kotha Kuchipudi Palli (Vi), Pamur Road, Kangiri Pilar Milk (Mandal), Prakasam Dist. Pilar, Pilar Phone: , Chittoor Dist., A.P. Naidupet Pennepalli Village, Thalavaipadu (Post), Pellakuru (Mandal), Nellore (Dist). Phone: 99855 41224, Ravikamatam Ravikamatam V & Mandal, Opp: Vetarnary Hospital, Visakapatnam Dist, Pin - 531025. Phone: 9490109363. Heritage Foods (India) Limited. Velvadam Basinikonda Village, 5th KM Mylavaram - Nuziveedu Road, Velvadam Madanapalli-Punganoor Road, Village, Mylavaram Mandal, KRISHNA Dt. Madanapalli Mandal Phone: 9948217093. Chittoor Dist., A.P. Yerpedu 8thKm, Renigunta Srikalahasti Road, District. Phone: 9985541223. Chagalamarri Kallugotlapalli Village, Allgadda Mandal, Karnool District. AndhraPradesh. Poosapatirega Poosapatirega Village, Vijayanagaram Dist, AndhraPradesh. Gosapadu (Md), Wyra Kurnool Dist.,A.P. C/o.Venkata Ramakrishna Dal mill, Wyra Village & Mandal, Khammam Dt Phone: 9912455033.

Limited

Plant,

Mandal,

Near Agricultural Marketing Yard, Vinukonda, Guntur Seetharamapeta (Vi), YERPEDU Mandal, Chittoor

TAMILNADU

Chilling Center- Tiruvannamalai Heritage Foods (India) Limited Nellore District, AndhraPradesh 7th Km from T.V.Malai, T.V. Malai-Chennai Road, Somasipudi Pudur Village, Tiruvannamalai, T.S.R. Dist.,TN.

OUR COMMITMENTS Milk Producers

Change in life styles of rural families in terms of Regular high income through co-operative efforts Commissioned : Aug '97 in income generation Women participation Saved from price exploitation by un-organized sector Remunerative prices for milk Chilling Center - Uthangarai Increase of milk productivity through input and extension activities Shift from risky agriculture to dairy farming Financial support for purchase of cattle; insuring cattle Heritage Foods (India) Establishment of Cattle Health Care Centers Koosarampatti Supplying high quality Cattle feed Organizing "Rythu Sadasu" and Video programmes for educating the farmers in dairy farming Uthangarai 4TH kM Customers Timely Supply of Quality & Healthy Products Supply high : Aug '98 Commissioned quality milk and milk products at affordable prices Focused on Nutritional Foods More than 4 lakh happy customers Chilling Center - Shantipuram High customer satisfaction 24 hours help lines ( <10 complaints a day) Dharamapuri Dist., TN.

Limited

Village,

Taluq,

Heritage Foods (India) Limited Employees Enhancing the Technical and Managerial skills of Employees through continuous training and Shantipuram Milk Plant, development Shantipuram Mandal, Best appraisal systems to motivate employees Incentive, bonus and reward systems to encourage employees Shantipuram V-Kota Road, Heritage forges ahead with a motto "add value to everything you do" Chittoor Dist., A.P. Shareholders Returns Dividend Payment since Public Issue (January 1995) Service Highest importance to '95 Commissioned : February investor service; no notice from any regulatory authority since 2001 in respect of investor service Very transparent disclosures Suppliers Doehlar: technical collaboration in Milk drinks, yogurts drinks and fruit flavoured drinks Alfa-Laval: supplier of high-end machinery and technical support Focusing on Tetra pack association for products package. Society Potential Employment Generation more than 3500 employees are working with heritage more than 9500 procurement agents got self employment in rural areas more than 5000 sales agents associated with the company Employment for the youth by providing financial and animal husbandry support for establishing MINI DAIRIES Producing highly health conscious products for the society CORPORATE

Heritage at a Glance The Founder Mission & Vision Board of Directors Corporate Management Team Corporate Governance Our Commitments Code of Conduct Recognitions

PRODUCTS

Copyright 2011 Heritage Foods (India) Limited. All Rights Reserved.

FINANCIALS

Consistent Growth

Financial Year Turnover Other Income Total Income (Rs.in crores)

0910

0809

07-08

0607

05-06 04-05

0304

0203

0102

00-01

900.38 796.03 588.03 346.33 292.07 266.13 234.49 192.83 165.07 141.49 2.93 3.23 40.13 1.22 1.27 0.78 1.35 0.86 0.42 0.38

903.31 799.26 628.16 347.56 293.34 266.91 235.84 193.68 165.49 141.87

Earnings before Depriciation, Interest and 47.03 3.43 Tax(EBDIT) Depriciation Interest Provision for Taxation

23.66 12.17 25.23 20.91 31.60 27.86 20.10 14.48 4.80 0.40 6.39 4.01 0.60 6.14 3.94 0.28 9.75 4.50 0.13 8.33 2.49 0.38 6.12 2.29 1.24 2.85

19.64 17.22 10.55 6.78 16.67 14.58 12.43 1.84 4.98 6.58 (0.26) 1.82

Profit/(Loss) after Tax Cash Profit/ (Loss) Equity Dividend(%) Dividend Payout (Including Tax on Dividend) Equity Share Capital Reserves & Surplus Networth Gross Fixed Assets

5.60 (35.61) 0.94

1.72

13.64 10.16 17.62 14.91 11.11 8.10 18.44 14.17 21.57 19.41 13.60 10.39

30.35 (11.15) 11.49 8.50

18.00 Nil 2.42 Nil

18.00 30.00 30.00 30.00 27.50 27.50 20.00 16.00 2.13 3.51 3.42 3.42 3.10 3.10 2.00 1.90

11.53 11.53 11.53 9.99

9.99

9.99

9.99

9.99

10.78 10.80

75.35 69.24 104.17 59.31 62.50 52.65 45.84 34.53 24.14 19.97 86.87 80.77 115.70 69.30 72.49 62.64 55.83 44.52 34.92 30.69 294.24 264.47 206.45 128.88 80.15 72.69 63.87 53.62 43.77 40.69

Net Fixed Assets 215.24 203.68 162.41 95.38 53.33 50.38 45.49 38.82 32.96 32.15
Key Indicators

Earnings per share - Rs

4.85

(30.89) 0.92 1.73 13.65 10.17 17.64 14.93 10.29 7.50 9.96 8.51 18.46 14.19 21.59 19.43 12.61 9.62

Cash Earnings per 26.32 (9.67) share - Rs Book Value per share - Rs Debt:* Equity Ratio EBDIT/Turnover% Net Profit Margin % RONW %
* Long Term debt

75.35 70.05 1.34:1 1.50:1 5.22 0.43

100.35 69.37 72.57 62.70 55.88 44.56 32.38 28.42 0.96:1 0.79:1 0.00:1 0.00:1 0.01:1 0.01:1 0.14:1 0.19:1 4.02 0.16 0.81 3.51 0.50 2.48 8.63 4.65 7.86 3.81 13.48 14.45 12.18 10.23 7.47 7.70 6.71 5.71

0.62 (4.47) 6.45 (44.09)

18.81 16.22 31.56 33.49 31.82 26.39

INVESTORS

Investor Contacts Financials Quarterly Financials Share Ownership Listing Information Downloads

PRODUCTS


Copyright 2011 Heritage Foods (India) Limited. All Rights Reserved.

Indian dairy Industry - a profile

Today, India is 'The Oyster' of the global dairy industry. It offers opportunities galore to entrepreneurs worldwide, who wish to capitalize on one of the world's largest and fastest growing markets for milk and milk products. A bagful of 'pearls' awaits the international dairy processor in India. The Indian dairy industry is rapidly growing, trying to keep pace with the galloping progress around the world. As he expands his overseas operations to India many profitable options await him. He may transfer technology, sign joint ventures or use India as a sourcing center for regional exports. The liberalization of the Indian economy beckons to MNC's and foreign investors alike. Indias dairy sector is expected to triple its production in the next 10 years in view of expanding potential for export to Europe and the West. Moreover with WTO regulations expected to come into force in coming years all the developed countries which are among big exporters today would have to withdraw the support and subsidy to their domestic milk products sector. Also India today is the lowest cost producer of per litre of milk in the world, at 27 cents, compared with the U.S' 63 cents, and Japans $2.8 dollars. Also to take advantage of this lowest cost of milk production and increasing production in the country multinational companies are planning to expand their activities here. Some of these milk producers have already obtained quality standard certificates from the authorities. This will help them in marketing their products in foreign countries in processed form. The urban market for milk products is expected to grow at an accelerated pace of around 33% per annum to around Rs.43,500 crores by year 2005. This growth is going to come from the greater emphasis on the processed foods sector and also by increase in the conversion of milk into milk products. By 2005, the value of Indian dairy produce is expected to be Rs 10,00,000 million. Presently the market is valued at around Rs7,00,000mn Background India with 134mn cows and 125mn buffaloes, has the largest population of cattle in the world. Total cattle population in the country as on October'00 stood at 313mn. More than fifty percent of the buffaloes and twenty percent of the cattle in the world are found in India

and most of these are milch cows and milch buffaloes. Indian dairy sector contributes the large share in agricultural gross domestic products. Presently there are around 70,000 village dairy cooperatives across the country. The cooperative societies are federated into 170 district milk producers unions, which is turn has 22-state cooperative dairy federation. Milk production gives employment to more than 72mn dairy farmers. In terms of total production, India is the leading producer of milk in the world followed by USA. The milk production in 1999-00 is estimated at 78mn MT as compared to 74.5mn MT in the previous year. This production is expected to increase to 81mn MT by 2000-01. Of this total produce of 78mn cows' milk constitute 36mn MT while rest is from other cattle. While world milk production declined by 2 per cent in the last three years, according to FAO estimates, Indian production has increased by 4 per cent. The milk production in India accounts for more than 13% of the total world output and 57% of total Asia's production. The top five milk producing nations in the world are India ,USA, Russia, Germany and France. Although milk production has grown at a fast pace during the last three decades (courtesy: Operation Flood), milk yield per animal is very low. The main reasons for the low yield are Lack of use of scientific practices in milching. Inadequate availability of fodder in all seasons. Unavailability of veterinary health services. Milk Yield comparison:

Country

Milk Yield (Kgs per year)

USA

7002

UK

5417

Canada

5348

New Zealand

2976

Pakistan

1052

India

795

World (Average)

2021

Source: Export prospects for agro-based industries, World Trade Centre, Mumbai.

Production of milk in India

Year

Production in million MT

1988-89

48.4

1989-90

51.4

1990-91

53.7

1991-92

56.3

1992-93

58.6

1993-94

61.2

1994-95

63.5

1995-96

65

1996-97

68.5

1997-98

70.8

1998-99

74.7

1999-00(E)

78.1

2000-01(T)

81.0

E= estimated T= target / expected Source: DFPI, Annual Report-1999-2000

World's major milk producers

(Million MTs)

Country

1997-98

1998-99 ( Approx.)

India

71

74.5

USA

71

71

Russia

34

33

Germany

27

27

France

24

24

Pakistan

21

22

Brazil

21

27

UK

14

14

Ukraine

15

14

Poland

12

12

New Zealand

11

12

Netherlands

11

11

Italy

10

10

Australia

10

Operation Flood

The transition of the Indian milk industry from a situation of net import to that of surplus has been led by the efforts of National Dairy Development Board's Operation Flood. programme under the aegis of the former Chairman of the board Dr. Kurien. Launched in 1970, Operation Flood has led to the modernization of India's dairy sector and created a strong network for procurement processing and distribution of milk by the cooperative sector. Per capita availability of milk has increased from 132 gm per day in 1950 to over 220 gm per day in 1998. The main thrust of Operation Flood was to organize dairy cooperatives in the milkshed areas of the village, and to link them to the four Metro cities, which are the main markets for milk. The efforts undertaken by NDDB have not only led to enhanced production, improvement in methods of processing and development of a strong marketing network, but have also led to the emergence of dairying as an important source of employment and income generation in the rural areas. It has also led to an improvement in yields, longer lactation periods, shorter calving intervals, etc through the use of modern breeding techniques. Establishment of milk collection centers, and chilling centers has enhanced life of raw milk and enabled minimization of wastage due to spoilage of milk. Operation Flood has been one of the world's largest dairy development programme and looking at the success achieved in India by adopting the co-operative route, a few other countries have also replicated the model of India's White Revolution. Per Capita availability of milk

Year

gm/day

1950

132

1960

127

1968

113

1973

111

1980*

128

1990

178

1992

192

1996

198

1997

200

1998

202

1999

203

2000

212

2001E

225

2002P

250

E= Estimated P= Provisional * Operation flood was launched in 1970

Fresh Milk Over 50% of the milk produced in India is buffalo milk, and 45% is cow milk. The buffalo milk contribution to total milk produce is expected to be 54% in 2000. Buffalo milk has 3.6% protein, 7.4% fat, 5.5% milk sugar, 0.8% ash and 82.7% water whereas cow milk has 3.5% protein, 3.7% fat, 4.9% milk sugar, 0.7% ash and 87% water. While presently (for the year 2000) the price of Buffalo milk is ruling at $261-313 per MT that of cow is ruling at $170267 per MT. Fresh pasteurized milk is available in packaged form. However, a large part of milk consumed in India is not pasteurized, and is sold in loose form by vendors. Sterilized milk is scarcely available in India. Packaged milk can be divided according to fat content as follows, Whole (full cream) milk - 6% fat Standardized (toned) milk - 4.5% fat Doubled toned (low fat) milk - 3% fat Another category of milk, which has a small market is flavoured milk.

The Indian Market - A Pyramid

Consumer Habits And Practices Milk has been an integral part of Indian food for centuries. The per capita availability of milk

in India has grown from 172 gm per person per day in 1972 to 182gm in 1992 and 203 gm in 1998-99.This is expected to increase to 212gms for 1999-00. 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 278 gm, west 174 gm, south 148 gm and in the east only 93 gm per person per day. This disparity is due to concentration of milk production in some pockets and 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 milch animals. In India about 46 per cent of the total milk produced is consumed in liquid form and 47 per cent is converted into traditional products like cottage butter, ghee, paneer, khoya, curd, malai, etc. Only 7 per cent 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 procured by cooperatives and other private dairies. While for cooperatives of the total milk procured 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 dairy 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, the 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. 8,000 crores. Quality of milk sold by unorganized sector however is inconsistent and so is the price across the season in local areas. Also these vendors add water and caustic soda, which makes the milk unhygienic. India's dairy market is multi-layered. It's 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, maybe a glassful for use as whitener for their tea and coffee. Nevertheless, it adds up to a sizable volume - millions of litres 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.

Growing Volumes
The effective milk market is largely confined to urban areas, inhabited by over 25 per cent of the country's population. An estimated 50 per cent of the total milk produced is consumed here. By the end of the twentieth century, the urban population is expected to increase by more than 100 million to touch 364 million in 2000 a growth of

about 40 per cent. The expected rise in urban population would be a boon to Indian dairying. Presently, the organized sector both cooperative and private and the
traditional sector cater to this market. The consumer access has become easier with the information revolution. The number of households with TV has increased from 23 million in 1989 to 45 million in 1995. About 34 per cent of these households in urban India have access to satellite television channel.

Potential for further growth

Of the three A's of marketing - availability, acceptability and affordability, Indian dairying is already endowed with the first two. People in India love to drink milk. Hence no efforts are needed to make it acceptable. Its availability is not a limitation either, because of the ample scope for increasing milk production, given the prevailing low yields from dairy cattle. It leaves the third vital marketing factor affordability. How to make milk affordable for the large majority with limited purchasing power? That is essence of the challenge. One practical way is to pack milk in small quantities of 250 ml or less in polythene sachets. Already, the glass bottle for retailing milk has given way to single-use sachets which are more economical. Another viable alternative is to sell small quantities of milk powder in mini-sachets, adequate for two cups of tea or coffee.

Marketing Strategy for 2000 AD

Two key elements of marketing strategy for 2000 AD are: Focus on strong brands and, product mix expansion to include UHT milk, cheese, ice creams and spreads. The changing marketing trends will see the shift from generic products to the packaged quasi, regular and premium brands. The national brands will gradually edge out the regional brands or reduce their presence. The brand image can do wonders to a product's marketing as is evident from the words of Perfume Princess Coco Channel: In the factory, we pack perfume; in the market, we sell hope!

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 Parlour 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 (19952010) would exceed 1457.6 million tonnes 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 areas, 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 in USA. The lower penetration is due to peculiar food habits, relatively 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 and West, which are milk surplus regions. North accounts for 57% of ghee consumption and West for 23%, South & East together account for the balance 20%. A large part of ghee is made at home and by small/ cottage industry from 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 a large metros. Market Size And Growth Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT valued at Rs470bn. 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, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk products is concentrated in these milk surplus States. The top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat together account for 58% of national production. Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70's, 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 1999. Production of milk powder

including infant milk-food has risen to 2.25 lakh MT in 1999, whereas that of malted food is at 65000 MT. Cheese and condensed milk production stands at 5000 and 11000 MT respectively in the same year.
(Source: Annual Report 1999-2000, DFPI)

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, etc. Amrut Industries, once a leading player in the sector has turned bankrupt and is facing liquidation. Packaging Technology Milk was initially sold door-to-door by the local milkman. When the dairy co-operatives initially started marketing branded milk, it was sold in glass bottles sealed with foil. Over the years, several developments in packaging media have taken place. In the early 80's, plastic pouches replaced the bottles. Plastic pouches made transportation and storage very convenient, besides reducing costs. Milk packed in plastic pouches/bottles have a shelf life of just 1-2 days , that too only if refrigerated. In 1996, Tetra Packs were introduced in India. Tetra Packs are aseptic laminate packs made of aluminum, paper, board and plastic. Milk stored in tetra packs and treated under Ultra High Temperature (UHT) technique can be stored for four months without refrigeration. Most of the dairy co-operatives in Andhra Pradesh, Tamil Nadu, Punjab and Rajasthan sell milk in tetra packs. However tetra packed milk is costlier by Rs5-7 compared to plastic pouches. In 1999-00 Nestle launched its UHT milk. Amul too re-launched its Amul Taaza brand of UHT milk. The UHT milk market is expected to grow at a rate of more than 10-12% in coming years.

Export Potential
India has the potential to become one of the leading players in milk and milk product exports. Locational advantage : India is located amidst major milk deficit countries in Asia and 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 is scale insensitive and labour intensive. Due to low labour 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. There is a vast market for the export of traditional milk products such as ghee, paneer, shrikhand, rasgolas and other ethnic sweets to the large number of Indians scattered all over the world

India's exports of milk products

1995-96 Description (Quantity, M T.: Value, Rs. million) Quantity Value

1996-97

1997-98

Quantity

Value

Quantity

Value

Skimmed milk powder

4,638.62

3,35.32

282.70

19.64

5.00

0.375

Milk and Milk Food for babies

8.27

2.019

111.37

4.27

11.00

2.02

Milk cream

332.23

28.04

1.00

0.084

Sweetened condensed milk

41.73

2.84

9.22

0.97

60.39

7.22

Whey

78.46

3.75

11.50

1.01

6.00

0.342

Ghee/Butter/Butter oil

7,895.08

431.1

299.97

19.2

4,352.08

2,38.95

Cheese

(a) Fresh

0.10

0.013

(b) Processed

5.67

1.20

2.1

0.375

22.10

2.19

(c) Other

66.64

8.35

36.78

0.69

24.84

4.55

TOTAL

8,72.7

52.4

2,55.6

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 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. Among several areas of potential participation by NRIs and foreign investors, the following list outlines a few promising opportunities:

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 biologics, 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, pediococcin, 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.

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 powders. 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 of omelet, sandwiches, entrees, and soups. In addition, cheese sauce is used as a topping on potatoes and vegetables and may be incorporated in pasta 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.

Technology-driven manufacturing units:

These plants would fulfil an essential need by providing a centralized and specialized facility for hire by the units which cannot justify capital investment but do need such services. Potential areas for state-of-the-art contract-pack units may conceivably specialize in cheese slicing, or dicing line, cheese packaging, butter printing, and aseptic packaged fluid products.

Training centers for continuing education:

NRIs could set up technology transfer and updating centers for conducting seminars and workshops - catering to the needs of workers at all levels of the dairy industry. Here technical, marketing and management topics can be offered to ensure that the manpower continues to acquire the latest know-how of their respective fields.

The entrepreneurs need powerful tools to implement their plans. Appropriate investment and involvement by NRIs can serve as a catalyst for India's dairy food industry leading to exploration of business potential in domestic and export trade. Risk factors must be identified and managed by in-depth study of chosen areas so that chances of rewards are maximized under the current liberalization climate. Indian (traditional) Milk Products There are a large variety of traditional Indian milk products such as 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/Paneer - milk mixed with lactic acid to coagulate. 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. There are several sweetmeat shops, which have built a strong brand franchise, and have several branches located in various parts of a city. 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 (Britannia), 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 can be adapted for several products. For instance,

equipments used to manufacture yogurt also can be adapted for large scale production of Indian curd products (dahi and lassi). Significant research work has been done on dairy equipments under the aegis of NDDB. Mafco Limited sells Lassi under the Aarey brand and flavoured milk under the Energee franchise (in the Western region, mainly in Mumbai). Britannia has launched flavored milk in various flavors in tetra packs. GCMMF has also made a beginning in branding of other traditional milk products with the launch of packaged Paneer under the Amul brand. It has also created a new umbrella brand "Amul Mithaee", for a range of ethnic Indian sweets that are proposed to be launched The first new product Amul Mithaee Gulabjamun has already been launched in major Indian markets. Western Milk Products Western milk products such as butter, cheese, yogurt have gained popularity 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 branded butter is sold in the towns and cities. The major brands are Amul, Vijaya, Sagar, Nandini and Aarey. Amul is the leading national brand while the other players have greater shares in their local markets. The latest entrant in 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 Amul brand, it is expected to give stiff competition to the existing players. In 1999-00 the butter production is estimated at 4 lakh MT of this only 45K MT is in the white form used for table 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 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.

Demand for various types of cheese in the Indian market

Type of cheese

% of total consumption

Processed

50

Cheese spread

30

Mozzarella

10

Flavoured/Spiced

Others

The major players are Amul, Britannia, and Dabon International dominating the market. Other major brands were Vijaya, Verka and Nandini (all brands of various regional dairy cooperatives) and Vadilal. 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 Capacity expansion in Cheese

Company

Brands

State

Capacity

Dynamix Group

Manufactures for Britannia

Maharashtra

35 tons per day

GCMMF

Amul

Gujarat

20 tons per day

APDDCF

Vijaya

Andhra Pradesh

10 tons per day

Milk Powder Milk powder are 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 10000 MT to 60% from 15%. For imports less than 10000 MT the basic customs duty has been left unchanged at 15%. In 1999-00 India is estimated to have imported about 18,000 tonnes of milk powder against a total estimated production of 2.40 Lakh MTs. In 2000-01 India is expected to export 10000 MT of skimmed milk powder due to rise in international prices to $2300 per MT from last year's levels of $1400 per MT. These expectations are based on the strong demand from Russia, East Asia and Latin America, and also on tightening of supply in EU, which accounts for 75% of the annual global Skimmed Milk Powder exports. 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 Nestle's Everyday, GCMMF's Amulya, Dalmia Industry's Sapan, Kwality Dairy India's KreamKountry, Wockhardt's Farm Fresh and Britannia's MilkMan Dairy Whitener. Condensed Milk The condensed milk market has grown from 9000 MT in 1998 to 11000 MT in 1999. 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. Nestle's 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 Nestle's Nestum (made from rice). In infant formula also Nestle's Lactogen formula and Lactogen standard formula are the leading brands with around 75% market share. Other brands are Heinz's Lactodex Farex, Wockhardt's Raptakos, and Amul's Amulspray Regulatory Framework

The dairy industry was de-licensed in 1991 with a view to encourage private investment and flow of capital and new technology in the segment. Although de-licensing attracted a large number of players, concerns on issues like excess capacity, sale of contaminated/ substandard quality of milk etc induced the Government to promulgate the MMPO (Milk and Milk Products Order) in 1992. Milk and Milk Products Order (MMPO) regulates milk and milk products production in the country. The order requires no permission for units handling less than 10,000 litres of liquid milk per day or milk solids up to 500 tpa. MMPO prescribes State registration to plants producing between 10,000 to 75,000 litres of milk per day or manufacturing milk products containing between 500 to 3,750 tonnes of milk solids per year. Plants producing over 75,000 litres per day or more than 3,750 tonnes per year of milk solids have to be registered with the Central Government. The stringent regulations, government controls and licensing requirements for new capacities have restricted large Indian and MNC players from making significant investments in this product category. Most of the private sector players have restricted themselves to manufacture of value added milk products like baby food, dairy whiteners, condensed milk etc. All the milk products except malted foods are covered in the category of industries for which foreign equity participation up to 51% is automatically allowed. Ice cream, which was earlier reserved for manufacturing in the small-scale sector, has now been de-reserved. As such, no license is required for setting up of large-scale production facilities for manufacture of ice cream. Subsequent to de-canalization, exports of some milk based products are freely allowed provided these units comply with the compulsory inspection requirements of concerned agencies like: National Dairy Development Board, Export Inspection Council etc. Bureau of Indian standards has prescribed the necessary standards for almost all milk-based products, which are to be adhered to by the industry. Proposal to Amend the MMPO A proposal to raise the exemption limit for compulsory registration of dairy plants, from the present 10,000 litres a day to 20,000 litres, is being considered by the Animal Husbandry Department. The 75,000-litre limit is likely to be raised either to 100,000 litres or 125,000 litres in the amended order. The new order would also do away with the provision for reregistration.

Amul's secret of success

The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. What's more, it does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic upliftment and common good. Looking back on the path traversed by Amul, the following features make it a pattern and model for emulation elsewhere. Amul has been able to: Produce an appropriate blend of the policy makers farmers board of management and the professionals: each group appreciating its roles and limitations Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment

Provide a support system to the milk producers without disturbing their agroeconomic systems Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers and Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change.

The Union looks after policy formulation, processing and marketing of milk, provision of technical inputs to enhance milk yield of animals, the artificial insemination service, veterinary care, better feeds and the like - all through the village societies. The village society also facilitates the implementation of various production enhancement and member education programs undertaken by the Union. The staff of the village societies have been trained to undertake the veterinary first-aid and the artificial insemination activities on their own.

Amul's success: A model for other districts to follow.

Amul's success led to the creation of similar structures of milk producers in other districts of Gujarat. They drew on Amul's experience in project planning and execution. Thus the 'Anand Pattern' was followed not just in Kaira district but in Mehsana, Sabarkantha, Banaskantha, Baroda and Surat districts also. Even before the Dairy Board of India was born, farmers and their leaders carried out empirical tests of the hypotheses that explained Amul's success. In these districts, milk producers and their leaders experienced significant commonalties and found easy and effortless ways to adapt Amul's gameplan to their respective areas. This led to the Creation of the National Dairy Development Board with the clear mandate of replicating the 'Anand pattern' in other parts of the country. Initially the pattern was followed for the dairy sector but at a later stage oilseeds, fruit and vegetables, salt, and tree sectors also benefited from it's success.

GCMMF: An Overview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money.

Members:

12 district cooperative milk producers' Union

No. of Producer Members:

2.12 million

No. of Village Societies:

10,411

Total Milk handling capacity:

6.1 million litres per day

Milk collection (Total - 1999-00):

1.59 billion litres

Milk collection (Daily Average 1999-00):

4.47 million litres

Milk Drying Capacity:

450 metric Tons per day

Cattle feed manufacturing Capacity: 1450 Mts per day

Sales Turnover

Rs (million)

US $ (in million)

1994-95

11140

355

1995-96

13790

400

1996-97

15540

450

1997-98

18840

455

1998-99

22192

493

1999-00

22185

493

Major dairy products manufacturers Some of the major dairy products manufacturers in the country:

Company

Brands

Major Products

Nestle India Limited

Milkmaid,Cerelac, Lactogen, Milo, Everyday

Sweetened condensed milk, malted foods, milk powder and Dairy whitener

Milkfood Limited

Milkfood

Ghee, ice cream, and other milk products

SmithKline Beecham Horlicks, Maltova, Viva Limited

Malted Milkfood, ghee, butter, powdered milk, milk fluid and other milk based baby foods.

Indodan Industries Limited

Indana

Condensed milk, skimmed milk powder, whole milk powder, dairy milk whitener, chilled and processed milk

Gujarat Co-operative Amul milk Marketing Federation Limited

Butter, cheese and other milk products

H.J. Heinz Limited

Farex, Complan, Glactose, Bonniemix, Infant Milkfood, malted Milkfood Vitamilk

Britannia

Milkman

Flavoured 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 cows buffaloes 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 inevitably 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 litre 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. In other countries dairy industries have attempted to reach lower income consumers by variation of compositional quality or packaging and distribution methods or blending milk in vegetable ingredients in formula foods for vulnerable groups. For instance, pricing of products rich in butter fat or in more luxury packaging above cost level so as to enable sales of high protein milk products at a some what a reduced price has been widely practiced in developing countries. This policies need to be brought in Indian Dairy scenario.

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 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.

Policy
The total amount of milk produced has more than tripled from 23 million tonnes back in 1973 to 74.70 million tonnes 26 years later in 1998. The tremendous rise in milk production is primarily the fallout of the dairy farming policy reflected in Operation Flood. Following the success of dairy farming policy, the Government has set up a dairy processing policy, reflected in the Milk and Milk Products Order. In addition, the Government uses a variety of import restrictions to protect its domestic dairy market.

Milk Processing
The milk processing industry is small compared to the huge amount of milk produced every year. Only 10% of all the milk is delivered to some 400 dairy plants. A specific Indian phenomenon is the unorganised sector of milkmen, vendors who collect the milk from local producers and sell the milk in both, urban and non-urban areas, which handles around 65-70% of the national milk production. In the organised dairy industry, the cooperative milk processors have a 60% market share. The cooperative dairies process 90% of the collected milk as liquid milk whereas the private dairies process and sell only 20% of the milk collected as liquid milk and 80% for other dairy products with a focus on

value-added products.

Domestic Consumption
The huge volume of milk produced in India is consumed almost entirely by the Indian population itself, in a 50-50 division between urban and nonurban areas. Increasingly, important consumers of the dairy industry are fast-food chains and food and non-food industries using dairy ingredients in a wide range of products.

Trade
In spite of having largest milk production, India is a very minor player in the world market. India was primarily an import dependent country till early seventies. Most of the demand-supply gaps of liquid milk requirements for urban consumers were met by importing anhydrous milk fat / butter and dry milk powders. But with the onset of Operation Flood Programme, the scenario dramatically changed andcommercial imports of dairy products came to a halt except occasional imports of very small quantities. In the 1990s, India started exporting surplus dairy commodities, such as SMP, WMP, butter and ghee. The Agricultural and Processed Food Products Export Development Authority (APEDA) regulated the export and import of dairy products till early 1990s. However, in the new EXIM Policy announced in April 2000, the Union Government has allowed free import and export of most dairy products. The major destinations for Indian dairy products are Bangladesh (23.1%), UAE (15.4%), US (15.6%) and Philippines (8.9%). In terms of products, SMP is the most important product accounting for about 63% of total export volume, followed by ghee and butter (11.7%) and WMP. Export figures clearly demonstrate that the Indian dairy export is still in its infancy and the surpluses are occasional. Indigenous milk products and desserts are becoming popular with the ethnic population spread all over the world. Therefore, the export demand for these products will increase and hence, there is a great potential for

export. On the other hand, there has been a sharp increase in import of dairy products (especially milk powders) after trade liberalisation. As per the latest report of Foreign Trade Statistics of December 2004, the imports of dairy products (milk and cream) has reached a cumulative total of 22.145 million tonnes for the period April - March 2004, as compared to only 1473 million tonnes for the same period during the previous year. The main reasons for sharp rise in imports are huge export subsidies given by developed countries (mainly the US and EU). India has recently concluded a tariff rate quota to deal with US, EU and Australia on imposing custom duty of 15% on imports of SMP and WMP upto 10,000 tonnes and 60% on imports beyond this level.

Key Areas of Concern in the Dairy Industry

1. Competitiveness, cost of production, productivity of animals etc. The demand for quality dairy products is rising and production is also increasing in many developing countries. The countries which are expected to benefit most from any increase in world demand for dairy products are those which have low cost of production. Therefore, in order to increase the competitiveness of Indian dairy industry, efforts should be made to reduce cost of production. Increasing productivity of animals, better health care and breeding facilities and management of dairy animals can reduce the cost of milk production. The Government and dairy industry can play a vital role in this direction. 2. Production, processing and marketing infrastructure If India has to emerge as an exporting country, it is imperative that we should develop proper production, processing and marketing infrastructure, which is capable of meeting international quality requirements. A comprehensive strategy for producing quality and safe dairy products should be formulated with suitable legal backup. 3. Focus on buffalo milk based speciality Dairy industry in India is also unique with regard to availability of large proportion of buffalo milk. Thus, India can focus on buffalo milk based speciality products, like Mozzarella cheese, tailored to meet the needs of the target consumers. 4. Import of value-added products and export of lower value products With the trade liberalisation, despite the attempts of Indian companies to develop their product range, it could well be that in the future, more value-added products will be imported and lower value products will be exported. The industry has to prepare themselves to meet the challenges. 5. Provisions of SPS and TBT At the international level, we have to ensure that provisions of SPS and TBT are based on application of sound scientific principles and should become defacto barriers to trade. Operation Flood Era Dairy sector witnessed a spectacular growth between 1971-1996, i.e.

Operation Flood era. An integrated cooperative dairy development programme on the proven model of Anand pattern was implemented in three phases. The National Dairy Development Board was designated by the Government of India as the implementing agency. The major objective was to provide an assured market round the year to the rural milk producers and to establish linkage between rural milk production and urban market through modern technology and professional management. Milk production grew from 21 million tonnes in 1970 to nearly 69 million tonnes in 1996 - more than three fold, at the compound growth rate of 4.5 per cent. Some ten million farmers were enrolled as members in about 73000 milk cooperative societies. By 1996, milk cooperatives attained a dominating share of the Indian dairy market - butter 96%, pasteurized liquid milk over 90%, milk powder 59% and processed cheese 85%. India was reckoned as a major threat in the dairying world. In retrospect, it was by no means an easy task. Let us all salute the visionary and the architect of the white revolution in India, Dr. Verghese Kurien, without whose dynamic leadership all this may not have been possible. The dairy cooperative movement has continued to grow in thepost Operation Flood-era.

New Challenges of Globalisation and Trade

Liberalisation - Perspective 2010 The NDDB has recently put in place Perspective 2010" to enable the cooperatives to meet the new challenges of globalization and trade liberalization. Like other major dairying countries of the world, the Indian cooperatives are expected to play a predominant role in the dairy industry in future as well. However, India is in the mean time, attaining its past glory and is once again becoming DOODH KA SAGAR. But, what percentage of this SAGAR is handled by the cooperatives just a little over 7%. Since liberalization of the dairy sector in 1991, a very large number of private sector companies / firms have, despite MMPO, established dairy factories in the country. The share of the total milk processing capacity by private sector is 44% of total installed capacity of 73 MLPD (Million Litres Per Day) in the country. Therefore, the total share of the organized sector, both cooperatives as well as the private sector is barely 12%. What is, therefore, disquieting is that as much as 88% share of the total milk production is commanded by the unorganized sector - who specializes in selling sub-standard, unpasteurised milk more often than not adulterated with harmful chemicals. Besides, growth in milk production is likely to continue at the present rate of 4.4% in the near future. Who is going to handle this incremental milk? We must bear in mind is both income and price what we must bear in mind both income & price elasticity account for approximatily 15% of the total expenditure of food.Demand for milk, at current rate of income growth is estimated to grow at 7% per annum. Interestingly, demand for milk is expected to grow steadily over the next two decades as the low income rural and urban families who have higher expenditure elasticity would also increase their income due to new economic environment. Let us

now look at some other economic indicators. According to the World Bank, India is the fourth largest economy in the world going by the purchasing power parity estimates. Further, India has been identified as among the first 10 emerging markets in the world. India has the vastest domestic market in the world with over one billion consumers - a majority of whom are vegetarians with drinking of milk as habit. The untapped potential of the dairy sector is immense and opportunity to set up a new dairy venture is great. In the works of Dr. Amrita Patel, Chairperson, NDDB, there is enough place under the scheme for both private and cooperative sectors. Notwithstanding the above potential it is cautioned that, entering dairy sector is not going to be a cakewalk.

Conclusion
Globalization and Liberalization are the Mantras of the new economy today, which is now on the fast track. Industrial production is rapidly moving forward. The dairy industry is no exception. With the World Trade Organization (WTO) coming into effect, from 01 April 2001 and the imports and exports getting liberalized in the global economy, the dairy industry, which includes dairy products, faces both an opportunity for growth as well as a threat for its growth. There is no doubt that there is tremendous scope for the growth of the dairy industry in the new millennium. The product mix of world dairy trade is likely to shift further towards cheese. This has been developed in the world markets. As the market opens up, consumption trends associated with these markets will have increasing influence on the world trade. Whole milk powder is likely to continue to be a substantial beneficiary and growth substiantially in the middle eastern countries. As standards of living in the importing country rises, exporting countries will increasingly concentrate on whole milk powder and cheese with the assistance of butter and skimmed milk powder. There is vast potential for the export of dairy products, the cost of milk production in India being the lowest. The major factor influencing production of bye products is the newer uses that may be developed through R & D support. Milk proteins are being utilized increasingly replacing animal and vegetable proteins in special bakery products and instant foods. Through the application of membrane proven process, milk proteins isolates are being produced. These are being utilized for ice milk mixes and other such applications. Most of the dairy plants in the Government, Cooperatives and Private Sector produce almost similar dairy products like varieties of milk, butter, ghee, skimmed milk powder and whole milk powder. There are 7 large-scale cheese manufacturers and 14 manufacturers are producing infant foods and malted milks. There is immense scope for the broadening of the products range and some of the products, which are likely to have considerable demand in the coming decade, have been identified. The cheese market, presently valued at about Rs.80 crore is growing at about 9% annually. There are more than thousand varieties of cheese, which have been listed out of which cheddar; mozzarella, gouda and processed cheeses are being manufactured in India. Pizza is becoming a very popular item in the market. This segment alone commands 5% of the share in the cheese market and

other area is fermented milk products. Dahi even though is a Rs.15000 crore market, the share of the organized sector is only around 10%. This product has immense potential for growth. Varieties of milk shakes are also increasing wherein milk and fruit pulp are mixed in different proportions to produce different beverages. Some of the milk and fruit based beverages which are likely to have demand are a combination of milk with mango, banana, sapota, strawberry, papaya, etc. Some of these beverages can also be produced in dehydrated form and can be an excellent health food. There are varieties in traditional milk based sweets, manufactured in the country. The market size is around Rs.12000 crore. However, there are very few nationally known brands in this category. Many of the organized dairies are involved in the manufacture of varieties of milk based sweets: pedha, paneer, shirkhand, etc. These are now restricted to certain areas only but can go national. As the world is getting integrated into one market, quality certification is becoming essential in the market. However, there are very few plants in the country, which have successfully obtained ISO, HACCP certification. There is scope for introducing newer plants adopting newer processes by the dairy industry in the country. Packaging of dairy products is also another very promising area. NRI and overseas investments can take place in manufacturing dairy processing equipment, fruit packaging equipment and equipments for biotechnology related dairy industry.