CHAPTER I

INTRODUCTION

1.1 Introduction of Sitaram Gokul Milks Kathmandu Limited

Pertaining to the context of Nepal's economy and uplifting the living standard of Nepalese farmers, Nepal's dairy sector is providing handsome contribution. It is one of the nation's small industrial sectors that are contributing for paving the path of economic growth. And Sitaram Gokul Milks Kathmandu Limited is helping in concreting the backbone of nation's economy. It is one of the branch organizations of leading Kedia Group.

Sitaram Gokul Milks Kathmandu Limited embarked its career in 2052 B.S. as mediator for social welfare and development of Nepalese farmers.

It was lead by Late Shankar Lal Kedia with an investment about 26 corers, whose main objective was to act as mediator in transferring the milk of farmers to the Nepalese homes. As the time changed, it established itself as one of the emerging commercial organization by introducing product line of milk, ghee, butter, peda etc. keeping the objective uniform. Regarding organization's configuration, it is structured with line-staff organization forming seven departments as well as concreted by the sources like

100 government operatives

30 cooperatives

And about 4 lakhs of farmers are directly dependent on this organization for their livelihood.

At present organization is supplying the milk and various products to Nepalese homes by collection raw milk mainly from the district Chitwan, Nawalparasi, Kavre, Nuwakot and Rupendehi. It is providing goods and services from 13 chilling centres among which 11 are run by the organization itself and the remaining by the co-operatives. It has 7 road tankers that start delivering the milk in the market from 4:30 A.M. Its average sales are about 35000 litres per day. The main targeted area is

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capital city and nearby places that includes 60% of middle class consumers and 40% of others. For all this social and economical service, it has got workforce of 100 people (skilled and semi-skilled) and 48 sales forces through which milk is being marketed. It has occupied 20% of the total market share and stands second to the leading competitor of DDC.

Location:

Location refers to the place where the organization is located. Generally, organization locates in a place where different types of facilities are available like labour supply, water facility and various others factors.

Regarding the location of the Sitaram Gokul Milks Kathmandu Limited is located in Kirtipur, ward no. 4, Kathmandu. It is near Dudhpokhari (famous for water resources during Rana regime) named after water tastes like milk. And it is also near to the Kathmandu so it has provided benefit to the organization.

Organizational Structure:

FIGURE 1: ORGANIZATIONAL STRUCTURE

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WORKERS WORKERS WORKERS WORKERS WORKERS WORKERSWORKERS

PROCUREMENTDEPARTMENT

PRODUCTIONDEPARTMENT

MAINTENANCEDEPARTMENT

STORAGEDEPARTMENT

DISTRIBUTIONDEPARTMENT

ADMINISTRATIONDEPARTMENT

MARKETINGDEPARTMENT

BOARD OF DIRECTORS

GENERAL MANAGER

DEPUTY GM

TABLE 1: WORKFORCE QUANTITY AND CONSTITUENTS

CONSTITUENTS NAME WORKFORCE/QUANTITYChilling Centres 13Staffs 100Sales Forces 48Road Tankers 7Raw Materials From Districts 5Average Daily Sales 35000 Litres/Day

Standing of the Organization in the Market:

Nepal's dairy market comprises of various organizations providing their products and services to the consumers. In its ten years operation SITARAM GOKUL MILKS KATHMANDU stands at second rank among the competitors. Despite of entering new organizations in this sector, the organization is being consistent in its service and trying its best to develop and benefit the consumers as well as the farmers. In the context of market share it has occupied 20% of the total market. And it has targeted to achieve the first position in coming seven years. The following information can be shown in the diagram below.

FIGURE 2: PIE CHART SHOWING THE MARKET SHARE OF THE DIFFERENT DAIRY ORGANIZATION

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1.2 History of Dairy Organization in Nepal

Nepal's first milk processing plant was built in Lainchaur 40 years ago with help from New Zealand and the UN. Until then, even in Kathmandu, people kept cows at home and had no reason to buy processed milk.

The Dairy Development Corporation (DDC) was formed in 1969 and as Kathmandu became urbanised, demand for processed milk soared. Another plant capable of processing 5,000 litres and hour was set up in 1978 in Balaju. Two more plants were built in Hetauda and Pokhara with Danish assistance.

Veterinarian Heramba Rajbhandari oversaw the DDC's expansion during those heady days. But he understood that the government would never be able to meet Kathmandu's growing demand for milk and dairy products. In fact, by the early 1980s, Nepal had a milk deficit.

Rajbhandari dreamt of starting his own dairy and remembers calling a pledging conference of his friends in 1981 to finance the launch of private dairy. "Each person promised to loan me Rs. 10,000" Rajbhandari recalls. This wasn't enough to cover the cost, so he built a small shed in his garden and started producing yogurt. That was where Nepal Dairy was born.

Today Nepal Dairy employs 200 people directly in its Khumaltar plant and has seven outlets in Kathmandu, Pokhara, Hetauda and Biratnagar. Nepal Dairy does not penalise farmers with milk holidays but buys all oversupply and has made product diversification and value addition its twin mantras. It has followed this up with professional marketing, investing in the attractive 'ND' logo and branding milk bars and dairy outlets. ND has also branched out into products that make extensive use of milk with bakery products, Nepali sweets and cheese.

1.3 Objectives of the study

The field visit of Sitaram Gokul Milks Kathmandu Limited on the 4th Ashad 2064 was carried out for the following Purposes:

1. To observe the Operation Management of the Organization.

2. To observe how the production process incurred.

3. To observe the various capacities of the organization.

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4. To observe the administration of the organization.

5. To tackle the random distractions occurred during production process.

6. To have the knowledge about the waste management of the

organization.

7. To study the market strategies carried out by the organization.

8. For overall developments of students.

9. For extracting practical experiences and comparing it with the

theoretical knowledge.

1.4 Operation Management

Operation Management is concerned with the process of converting or transferring raw into the form of designed output in most effective and efficient way so that overall organizational objectives can be achieved easily. The following are the components of Sitaram Gokul Milks Kathmandu Limited.

FIGURE 3: COMPONENTS OF SITARAM GOKUL MILKS LIMITED

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RANDOM DISTURBANCES:

Strikes Labour inefficiencies Government Policies

TRANSFORMATION PROCESS

INPUTS Raw Milk Administra

tive staff Chemicals Plants etc.

OUTPUTS Processed

Milk Ghee Butter Curd Peda etc.

1.4.1 Inputs

Inputs of Sitaram Gokul Milks Kathmandu Limited are the basic needs and resources of the system. They converted into required output. The inputs or resources include raw material, parts, supplies or finished products from another system, capital, information, machine, land.

1.4.2 Transformation Process

Transformation process is the process of converting inputs into desired outputs. It includes machines and equipments, technology, and processing steps in which inputs are converted into desired outputs. And it is one of the main components of operation management. Sitaram Gokul Milks has it's own transformation process in which the inputs (raw milk) are transformed into outputs (processed milk) and other various products. The transformation process of the organization is shown as in the diagram below.

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FEEDBACK MECHANISM

FIGURE 4: TRANSFORMATION PROCESS OF

THE ORGANIZATION

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PHYSICALANALYSIS

TEST

SENSORYTEST

FAT TEST

SOLID NOT FAT TEST

PLATFORMTEST

CLUT ON BOILING

ETHYL ALCOHOL

STANDARDIZATION OF MILK

HOMOGENEITY OF MILK

PASTEURIZATION OF MILK

CHILLING OF MILK

STORING

PACKING

COLD STORAGE

PHYSIOCHEMICAL

TEST

RAW MILK RECEIVING

WEIGHING & RECORDING

QUALITY TEST OF MILK

Figure 5 Pasteurisation of Milk

1. Raw Milk Receiving:

The insulated tanker is used for receiving the raw milk from all the chilling centres.

2. Weighing And Recording Of Received Milk:

After receiving the milk it is weighted and recorded.

3. Quality Test Of Milk:

Quality test of milk undergoes testing like platform test and physic chemical test. Under platform test two types of testing is done i.e.3.1 Platform test:

Under this test two types of tests are performed i.e.3.1.1 Cult on boiling test:

Under it, milk is tested whether it cults or not.3.1.1 Ethyl Alcohol test:

Under it, using Ethyl Alcohol checks the milk. If it cults again then it is not used.

3.2 Physic Chemical test:It is also followed by the following respective tests.3.2.1 Physical analysis test:

Under this test milk is tested for its purity. 3.2.2 Sensory test:

Under it, the sensitivity of milk i.e. clotting and taste is checked.

3.2.3. Fat test:Under it, the fat presented in the milk is tested.

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3.2.4 Solid Not Fat (SNF) test:Under it, SNF is tested which should not be not be less as per Nepal Food Act.

4. Standardization of Milk:

In this step the required amount of water is checked in the milk and cream separation from milk is done.

5. Homogeneity of Milk:

Under this process, quality of milk is checked i.e. the mixture of water in the milk.

6. Pasteurisation of Milk:

The Organization used HIST and Batch technology for pasteurising the milk. The main objective of pasteurising the milk is to destroy the pathogenic organisms present in the milk. Pasteurisation process is conducted by using three steps i.e. regenerating, pre-heating and heating. Under this technology, milk is heated for fifteen seconds and the milk is pasteurised.

7. Chilling of Milk:

The main objective of chilling milk is to preserve it at low temperature and make it very cold so it may not destroy. The organization chills the milk at 3-5 degree centigrade.

Figure 6 Chilling Machine

8. Storing:

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After chilling the milk is stored in tank.

9. Packing:

The milk is packed in standard plastic package of one-litre volume.

Figure 7 Packing

10. Cold Storage:

The organization has cold storage under which the packets of milks are store under low temperature about 2-4 degrees centigrade.

Figure 8 Storing Space

1.4.3 OutputOutput may be defined as the desired results of the system. They are

obtained from conversion of inputs.After the transformation process,Output is obtained. And the outputs of the organization are as follows:

a. Pasteurised milkb. Butterc. Ghee

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d. Yoghurte. Peda, etc.

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1.4.4 Random Disturbances

Random disturbances are the disturbances that arise from the unplanned and uncontrollable factors and cause reduction in the actual output.

And the random disturbances like political instability, bandh, had greatly affected the organization. The inefficiency of labour had also caused the quality of the product to decline. Thus the poor quality of product may cause negative impact in the market.

1.4.5 Feedback Mechanism

It is the process of giving information to the concerned authorities and managers about the result of their operation.

The managers in the Organization should be active towards the feedback mechanism. They should check the quality of milk before packing. If the milk isn't good enough then they should complain to the operation management so that they (labours) shouldn't make the mistake again. If the labour is inefficient then they should make effective by providing various trainings. In the case of milk holiday, they should produce limited quantity of milk according to the demand of consumers.

1.5 Waste ManagementIt is managing the waste in an efficient way. And the Organization had

managed its waste in a proper way. The Organization produces three types of wastes, which are as follows.

i) Solid Waste:The Organization produces poly film and it is collected and dumped.

ii) Liquid Waste:Liquid waste like caustic soda, nitric acid, sulphuric acid,

amyl alcohol, which is produced by the organization has no effect on the surroundings.

iii) Gas Waste:As the gas pipe is erected as per Nepal Company act, it

also creates no effect on the surroundings.

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1.6 Limitations of the Study

This is simply a partial study of Sitaram Gokul Milks Kathmandu Limited. Because of limited time, studying and analyzing data is difficult. Its limitations can be pointed as below:

1. The report is based on secondary data due to lack of time for collecting primary data.

2. This report is based on limited data available from the organization because the organization wants to keep the transaction details secret.

3. Due to unavailability of data for the current year, this report is based on the data from previous years only.

4. The study was conducted with limited financial resources.

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CHAPTER II

PRESENTATION AND ANALYSIS OF DATA

2.1 Measuring Capacities

2.1.1 Designed Capacity

It is the maximum rate of output that can be achieved under ideal condition. It depends upon the number and capacity of the machine and equipment coupled with labour. Designed capacity of Sitaram Gokul Milks Kathmandu Limited is 80,000 litres milk per day.

2.1.2 Effective Capacity

In the practical sense, if a facility is need to make a different products a set up time will be required between batches of different products to be produced. These setups are required to replace the raw materials and components for the raw batch of different products to be processed on the machine. Also machine may require adjustments welding, oiling, cleaning, etc. Some units of initial output may be lost in quality testing. Thus, it is not practically possible to achieve design capacity. What can be achieved is effective capacity.

Therefore, effective capacity is the maximum rate of output, which can be achieved under the operating constraints. Effective Capacity of Sitaram Gokul Milks Kathmandu Limited is 60,000 litres per day.

2.1.3 Actual Capacity:

The maximum rate of output which is actually achieved under the constraints of machine break down, labour inefficiencies, and absenteeism effective products, net deliveries of materials by the suppliers, and so on. Actual capacity of Sitaram Gokul Milks Kathmandu Limited is 35,000 litres milk per day.

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TABLE 2 SHOWING DIFFERENT TYPES OF CAPACITY OF SITARAM GOKUL MILKS

Types of Capacity: Litres (per day)Designed Capacity 80,000Actual Capacity 35,000Effective Capacity 60,000

2.2 Capacity Performance Measurements

Capacity Performance Measurements of Sitaram Gokul Milks Kathmandu Limited:

2.2.1 System Utilization

System Utilization = (Actual Output / Designed Capacity) x 100%= (35,000 / 80,000) x 100%= 43.75 %

2.2.2 System EfficiencySystem Efficiency = (Actual Output / Effective Capacity) x 100%

= (35,000 / 60,000) x 100%= 58.33 %

Thus, both system Utilization and system efficiency is less than 60% which means company is not utilizing its resources optimally. So, company should utilize their resources optimally.

2.3 SWOT Analysis

SWOT is an acronym for internal strengths (S) and weakness (W) of an organization, and external opportunities (O) and threats (T) facing that organization. SWOT analysis is one of the important steps in formulating a

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strategy. Based on SWOT analysis, managers at different levels of the organization select strategies. The following is the SWOT analysis of Sitaram Gokul Milks Kathmandu Limited.

2.3.1 Strength

It is the native strength that comprises any organization regarding to the context of Sitaram Gokul Milks Kathmandu Limited its strength can be pointed as below.

1. They have good technology.2. They are producing different products so waste is less or they are

using their resources properly.3. Their capacity is more than what they are supplying so their market

share will be increased if they supply more without any change in the plant.

4. This organization is located in the suitable place because waste is easily deposed, enough water is available and not too far from their main market.

5. They have more chilling centre than other organization.6. They are the only organization that produces milk in original form, i.e.

what they receive them, they dispatch.

2.3.2 Weakness

It shows the weaker areas where any organization should overcome for the efficient and effective working. The following weaker areas are encountered during the visit so that they can operate smoothly.

1. Its full capacity is not meeting its actual capacity.2. It is penetrating the market, i.e. new markets are not being searched.3. Poor in regarding advertising its products unlikely to its competitors.4. Not having the efficient feedback mechanisms.

2.3.3 Opportunities

An opportunity is a major favourable situation in the organization's environment. The following are the major opportunities for Sitaram Gokul Milks Kathmandu Limited.

1. The organization should reduce the competitors for more market share that is more than present 20% in the upcoming future.

2. Most diaries product should be introduced in order to concrete the product line and to avoid brands witching of consumer.

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3. To increase economic growth rate.4. To facilitate more farmers in order to increase their standard of living.5. To provide space for Nepalese skilled and semi-skilled manpower in

order to use their innovation and creativity as well as to reduce the unemployment opportunities.

2.3.4 Threats

A Threat is a major unfavourable situation in the organization's environment. The following threats are encountered in the context of Sitaram Gokul Milks Kathmandu Limited:

1. Growing new competitor in the market.2. Major changes in technology.3. Unusual milk holidays.4. Being neglected to most of farmers.5. Unstable Political situation.

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CHAPTER III

SUMMARY, CONCLUSION AND RECOMMENDATION

3.1 Summary

In Nepal, the Dairy Development Corporation (DDC) was established in 1969. Another plant capable of processing five thousand litres per hour was setup in 1978 in Balaju. Two more plants were built in Hetauda and Pokhara with Danish assistance. Nepal’s dairy sectors are providing more contribution. It is one of the nation’s small industrial sectors, that contributing for paving the path of economic growth. Sitaram Gokul Milks Kathmandu Limited is helping in concreting the backbone of nation’s economy. Sitaram Gokul Milks Kathmandu Limited embarked its career in 2052 B.S. as mediator for social welfare and development of Nepalese Farmers.

Designed capacity of Sitaram Gokul Milks Kathmandu Limited is 80,000 litters milk per day. Its effective capacity is 60,000 litters milk per day and actual capacity is 35,000 litters milk per day. This organization is located in the suitable place and not too far from their main market.

3.2 Conclusion

By observing, analysing, and studying above-mentioned all the factors we can conclude that this company is established by Kedia group as a social

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service organization, which later turned as business organization. They are helping four lakhs people of different districts like Nawalparasi, Rupendehi, Kavre, Chitwan, Nuwakot etc.

Currently, they are working with hundred workers, more than six hundred distribution booth and forty-eight salesperson and good infrastructure. They have eleven chilling centre of their own and two with association with corporate chilling centre. They have seven departments as soon before, that means there is distribution of work. They are selling 35000 litres milk per day along with curd, butter ghee, peda etc in the Kathmandu valley. Despite of unstable political situation of the country this organization is doing well. They have twenty percent market share. Their capacity of production is more than what they are supplying today. They are trying to increase their through different strategies in the near future.

3.3 Recommendations

After analysing the whole operating process and administration management Sitaram Gokul Milks Kathmandu Limited has got capacities to overcome its weakness. As per the objective set by the organization that is to lead the diary sector incoming seven years, the organization should utilize its resources to optimum level. It should increase its actual capacity (35,000 lt. per day) to sixty to seventy thousand litres per day in order to meet the objectives. It should search new markets and consumers for competitive advantage. The organization should also recruit more skilled manpower and should adapt new technology in order to meet the goal.

Though, the objective seems to be challenging, Sitaram Gokul Milks Kathmandu Limited has established itself as an emerging organization and providing handsome contribution for the betterment of poor Nepalese farmers. With its strong manpower and other resources Sitaram Gokul Milks Kathmandu Limited will overcome the challenges and will set itself as one of the leading organization in the context of Nepalese economy.

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Bibliography

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Enterprises Pvt. Ltd., Kathmandu 2004.

2. Stephen P. Robbins and Mary Coulter, Management, Prentic Hall of

India, 2002.

3. Agrawal, G.R., Organizational Behaviour in Nepal, M.K. Publishers,

Kathmandu, 2003.

4. J. Gerson, Sharon and M. Gerson Steven, Technocial Writing, Third

Edition.

5. Website: www.kediaorganization.com

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