1.1 Introduction

The Indian cattle feed industry is about 35 years old. It is mainly restricted to dairy and

poultry feed manufacturing. Feed manufacturing on a commercial and scientific basis started

around 1965 with the setting up of medium-sized feed plants in northern and western India. Feed

was produced mainly to cater to the needs of dairy cattle. The poultry sector was not developed

at that time and was restricted to backyard production. The poultry industry is now growing in

importance. The cattle feed industry is been utilizing the indigenous raw material i.e.; coconut

cake, which is the residue after the extraction of oil from copra which is mainly used as a cattle

feed. Coconut cake contains 4-5% oil generally used for industrial purpose and de-oiled is used

to make mixed cattle feed. The trainee did her internship training in KSE as it is one of the

famous cattle feed manufacturing firms in Kerala. Internship training for two weeks is an integral

part of the PGDM curriculum of Bhavan’s Royal Institute of Management during the first year of

study.

1.2 Need and Significance of the Study

1 To familiarize with the functions of the business organisation.

2 To study the work culture of the executives and the workers.

3 To familiarize with the different departments in the organisation, the structure and their

functioning.

4 To understand how key business processes are carried out in organisations.

5 To understand how the theoretical knowledge and practical knowledge go together in order

to achieve organizational goal.

1.3 Objectives of the Study

The main objective of the study is to get knowledge about the organization and the

activities of various departments. The purpose is to acquaint the trainee with a large company’s

organizational climate.

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1. To get the knowledge about the organizational functions and strategies followed by

different departments to fulfill organizational goals.

2. To study how the management tries to control and co-ordinate various departments to

achieve organizational goal.

3. To do SWOT analysis of the firm.

4. To get an insight about the cattle feed industry

1.4 Scope of the Study

By doing this organization study one can understand about all the activities of the

organization .similarly this study help anyone to know about the manufacturing process of

concern and also understand the practical side of the theories, that taught in the class. This study

also given a clear picture of the Kerala Solvent Extraction Ltd, Irinjalakuda

The scope of the study is to understand the interrelation between various departments like

Purchase, Marketing, Finance, Human resource, Quality assurance etc. The study helped me to

develop an understanding about the structure and dynamics of a business firm. Due to time

constraint it was not possible to study the functions and operation of the entire organization.

Hence the scope of this report is constraint to 8 departments.

1.5 Methodology of the Study

The study conducted was a descriptive study sought to collect information about an organization

in its actual working environment. For this purpose the data was collected with the help of

primary data and secondary data.

The researcher used observation method and interview techniques to collect the required primary

data

1) Observation method

The observation method is the most commonly used methods. The

information obtained in this method relates what is currently happening. It is not complicated by

either the past method behavior and future intention or attitude. This method is particularly

suitable in studies which deal with reason on the other.

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2) Interview method

This method require a person generally in face to face contact known as

the interviews asking questions generally in direct face to face contact to the forms of direct

personal investigation and it may be indirect personal investigation. In this case of direct

personal investigation the interviews than to collect the information personally from the sources

concerned. But in certain cases it may not be possible to contact directly with a person who

belongs to the firm.

Sources of Secondary Data

Secondary data means the data which is already available that is, they

refer to the data which may either be published data. Usually published data are available in

a) Various publications of central, state government. b) Technical and trade journal c) Books,

magazines and news papers d) reports and publications connected with business and industry etc

and reports prepared by research scholars, universities, economists etc. e) company websites .

The sources of unpublished data are many they may be found in diaries, letters, unpublished

biographies and auto biography etc.

1.6 Scheme of Reporting

The first chapter deals with introduction, need of significance, objective behind conducting the

study, methodology used to collect data for the study, scope of the study, limitations of the study,

and the scheme of reporting.

Second chapter deals with the industry profile in global, national and state aspects and also

giving a small picture about the future of the respective industry.

Third chapter gives an idea about the company profile which includes history of the company,

mission and vision of the company, product profile etc.

Fourth chapter deals with the information gathered from company about the working, activities,

procedures etc.

Fifth chapter deals with the findings and recommendation and conclusion.

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2.1 Cattle Feed Industry

In the past, the cattle population was in proportion to the amount of resource available

to feed them. But today things have changed and the natural feed available for the cattle has

also come down drastically. In addition to this the demand for the milk and milk product have

also been increasing ,thus making it absolutely necessary for rearing cattle which produce high

yield. From this arose the concept of producing cattle feed wherein there is no compromise

over the nutritional composition.

The productivity of the cattle is limited of their genetic make-up, so high quality

compound feed (industry feed) may not necessarily generate a significant improvement in

productivity and this has hampered growth of the cattle feed industry because most farmers

reluctant to use compound fully. They compromise by using such field in proportions of 5to 6%,

making up the balance with their formulation.

According to “Extract From Animal Feeding Safely”, report of an FAQ expert

consultation present condition of cattle feed is “worldwide, tonnage of feed exceeds 4 billion

tonnes per annum of which some 550 million tonnes are milled feeds. The largest portion of the

billion tonnes of feed involves subsistence farming on the Indian subcontinent and Asia”

India is currently self sufficient live stock feeds and does not depend on imports. Instead,

the country exports large quantities of solvent extracted meals which are a major source of

foreign exchange earnings.

2.2 World Scenario

The global animal feed market is growing at a steady pace and has a promising future

because of the globally increasing demand for meat and meat products. Feed additives are

becoming an important part of feed for animal growth and nutrition. Recently, disease outbreaks

such as avian flu and foot-and-mouth diseases have also increased concern over animal health

across the world. Environmental concerns, such as reduction of phosphorous content in manure

are promoting feed additives consumption for animals.

The Europe and the U.S. are the largest markets for animal feed additives and Asia is

emerging as a high growth market.

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Live stock production is growing rapidly as a result of the increasing demand for animal

products. A joint IFPRI /FAO/ILRI study :Live stock to 2020.the next food revolution (Delgado

1999),suggest that global meat production and consumption will rise from 233 million tons

(2000) to 300 million tons(2020),and milk from 568 to 700 million tons over the same period .

Over the few decades, the increasing demand has been largely met by the worldwide growth in

intensive livestock production, particularly poultry. This is expected to continue as real income

grows in the emerging economies.

Intensive livestock production is very efficient in using feed conversion rates of 1.8-1.9

are possible .feed conversion for layers is now below 1.65kg/dozen eggs. But production relies

heavily on grain, soya, fishmeal and other feed which frequently need to be imported into

developing countries. Feed grains are thought to compete directly, or in the use of land, with

grains for human consumption and livestock are often blamed for inefficient use of feed and

energy. Indeed, in some systems, e.g. beef feedlots, energy and nitrogen conversion is poor.

However, if efficiency is seen over the entire production chain, and expressed as input of edible

human food/output in human edible food, the view of animal production is more positive. If it is

assumed that all 1000 million tonnes of cereals, roots and tubers used for livestock are edible for

humans (in practice, they are not) then livestock use 80-100 million tonnes edible protein. On the

positive side, the 233 million tonnes meat, 568 million tonnes milk and 55 million tonnes eggs

produced globally contain 65 million tonnes of protein. So while input is higher than output, if

improved protein quality on the output side is considered, a reasonable balance emerges.

Industrial livestock production depends on external inputs. Technology, capital and

infrastructure requirements are based on large economies of scale and labour efficiency, which

may or may not be seen as positive in developing countries. One person can operate a unit of 10-

12,000 laying hens and 35-40,000 broilers, 6.5 times per year. Hence industrialisation requires

less labour than traditional systems. However, given the rapid increase in demand, there is

additional employment above the current level and further jobs are created in the supply and

processing industries. And as a way of providing eggs, poultry meat and pork at competitive

prices, it has been successful in meeting the escalating demands for low cost animal products in

rapidly growing urban centres of the developing world.

The industrial system is also associated with environmental problems. Industrialisation

implies large numbers, large volumes of wastes, animal and human health risks, and poor animal

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welfare. Waste products are often dumped without accounting for the environmental costs.

Manure storage and disposal is one of the main problems of large industrial operations. Pigs and

poultry excrete some 65 and 70 percent, respectively, of their nitrogen and phosphate intake.

Nitrogen, under aerobic conditions, can evaporate in the form of ammonia with toxic, eutrophic

and acidifying effects on ecosystems. Nitrous oxide, a greenhouse gas, is formed as part of the

denitrification process with particularly harmful effects on the environment. Nitrates are leached

into groundwater posing human health hazards, and run-off and leaching of nitrogen directly lead

to eutrophication and bio-diversity loss of surface waters and connected ecosystems. Phosphorus,

on the other hand, is rather stable in the soil, but, when P saturation is reached after long term

high level application of manure, leaching occurs and this also causes eutrophication or rivers

and lakes.

To control the undesirable effects of industrial livestock production, The Livestock and

Environment authors proposed:

1. to establish zoning for industrial production systems;

2. to bring animal densities in line with the absorptive capacity of land and water, through

quota systems, as already imposed in many parts of the world; and

3. to prescribe regulations for waste control from processing and industrial production units,

and use of noxious substances, management practices, and labelling.

They also point out that there may be environmental benefits of industrial production

systems. Firstly, the rapid development of pig and poultry systems helps to reduce total feed

requirements of the global livestock sector to meet a given demand. The shift from red to white

meat (i.e., ruminants to monogastrics) implies a great improvement in feed conversion

efficiency. It may therefore alleviate pressures for deforestation and degradation of rangelands,

such as is happening in parts of Latin America and Asia, thus saving land and preserving

biodiversity. Secondly, the feed-saving technologies developed for this system can be effective at

any scale and therefore can be successfully transferred to smaller farming systems. Thirdly,

waste management and treatment technologies have been developed which may convert it into

valuable organic fertilizer and energy in the form of biogas or electricity.

More benign development of pig and poultry production systems requires attention to national

and local government policy to promote and encourage effective solutions.

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2.3 Indian Scenario

The Indian feed industry is about 35 years old. It is mainly restricted to dairy and poultry

feed manufacturing; the beef and pork industry is almost non-existent. The quality standards of

Indian feeds are high and up to international levels. Raw materials for feed are adequately

available in India (there is the advantage of a successful soyabean industry with some 5.7 million

hectares in production). The industry's production is about 3.0 million tonnes, which represents

only 5 percent of the total potential, and feed exports are not very high. The feed industry has

modern computerized plants and the latest equipment for analytical procedures and least-cost

ration formulation, and it employs the latest manufacturing technology. In India, most research

work on animal feeds is practical and focuses on the use of by-products, the upgrading of

ingredients and the enhancing of productivity. The projected increase in the demand for livestock

products has important implications for the livestock feed industry, and the demand for energy

and protein raw materials. At present rates of growth, it is projected that production will have

reached 5 million tonnes by 2020.

Sustainable agriculture, integrated systems and organic farming methods have been

promoted by development agencies for many years, and yet their real impact is very small. Over

the last 30 years, FAO has worked in the field to develop technologies for integrated farming

systems appropriate to small producers, particularly in the tropics. For ruminant livestock, urea

treatment of straw and the use of multi-nutrient blocks have been shown to greatly improve

nutrition of animals fed on low quality roughage diets. The use of sugarcane and its by-products

has been demonstrated in many countries, including the feeding of pigs on sugarcane juice and

molasses while ruminants consume the pressed cane stalk or bagasse. Legumes and tree forages

have also provided needed protein inputs into cattle, sheep and goat production systems, while

benefiting the environment through nitrogen fixation and organic matter. Attention has been paid

recently to the use of mulberry, Morus alba, as a high quality forage for cattle. Finally, the use of

water plants (Azolla, Lemna, etc.) has been shown to provide good DM production and animal

performance in studies in Latin America and Asia.

These technologies have been combined into integrated farming systems for the small

producer that are biologically sustainable and achieve high levels of production, with minimal

environmental problems as the manure is recycled or used for biogas production.Much of this

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work is described in publications by T.R. Preston, of which one is cited here.Undoubtedly, the

technologies have contributed to the improvement of income and lifestyle of small farmers and

represent an effective approach to sustainable development and poverty alleviation. But the

approach has been divorced from the parallel growth of intensive systems and industrial

livestock throughout the world, which can be seen as providing the bulk of supply to meet the

demand.

The challenge is to enable small producers (who are usually the ones applying the more

sustainable technologies and integration of farming activities) to have access to a wider market -

termed Ruralizing the Livestock Revolution. There is also a need and demand for low cost and

simple technologies for livestock and product processing. All too often, the middle-men or

traders take the greatest share of the profit because they have the means, the knowledge and the

access to the consumer market. Emphasis needs to be given to the development of small-scale

and village-level processing, including equipment, training, distribution and marketing. India

already has an advantage in this area.Medium sized and small cooperative livestock systems

India's very positive experience with the NDDB and milk production could have

important lessons for the development of other parts of the livestock sector. If the cooperative

system and organized marketing is applied more to the poultry sector, there is enormous

potential for expanded production in rural areas, supplying the cities. The authors of the FAO

report suggest that backyard production could be coordinated through local units, given that the

scavenging hen produces the cheapest eggs. But this may not be the most effective method to

advance production and supplies to meet the demand. It may be better to develop medium sized

cooperative commercial units which are more susceptible to technological improvement and

sustained supply. Such systems would not be the very small, backyard operations but medium

sized village cooperatives of say 10000 to 50000 birds. The advantages of such development

would include:

1. Ownership remains with village people

2. Enterprise is larger and enjoys some economy of scale

3. Some of the technical advantages of industrial systems compared to backyard farming

4. A small but viable feed mill can be operated

5. Management is more efficient: breeding, feeding, veterinary treatment, etc.

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6. Extension work is facilitated

7. Can still be less capital intensive than industrial units

8. Labour is reduced and allows for secondary employment/income

9. Marketing is more efficient: regular supply, increased scale, improved standards possible...

10. More people participate and benefit from the market

11. Easier to apply Good Agricultural Practices than either industrial or backyard farming

12. Environmental and ethical advantage over industrial units could be exploited for added value

Given the potential market for an additional million tonnes each of eggs and poultry

meat, the is considerable opportunity for participation in this expanding sector. It also implies

more than 2-3 times the required capacity for poultry feed production, preferably in small

integrated units.

The implications for local feed production are that these small units (10,000

layers/35,000 broilers) would need 1-2 tonnes per day of poultry feed. This might be further

integrated, particularly in the states of Karnataka, Kerala, Andra Pradesh, Tamil Nadu and

Maharashtra, with soya bean production and small-scale processing.

Such vertical integration, albeit on a relatively small scale, is desirable and appears

feasible with these numbers. Cooperative marketing is required to ensure the scale needed to

supply the cities.Unfortunately, experience in the Indian poultry industry has been mixed with

wide shifts in prices and failures of companies as a result.

There is suspicion of the present 'integrators' and a need for a more organized and

sustainable system to develop the sector effectivelyThe above analysis highlights the potential

for livestock production globally and in India particularly. However, there are serious concerns

about food safety and the environment associated with the growth of intensive, commercial

livestock which need to be addressed if the livestock sector is to develop in a sustainable way,

satisfying the more exacting demands of the consumer and world markets.In recent years and in

many countries, public concern about the safety of foods of animal origin has heightened due to

problems that have arisen with bovine spongiform encephalopathy (BSE), dioxin contamination,

outbreaks of foodborne bacterial infections, as well as growing concern about veterinary drug

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residues and microbial resistance to antibiotics. These problems have drawn attention to feeding

practices within the livestock industry and have prompted health professionals and the feed

industry to closely scrutinise food quality and safety problems that can arise in foods of animal

origin as a result of animal feeding systems.

Some foodborne diseases have recently become more common. For example, outbeaks of

salmonellosis have been reported for decades, but within the past 20 years the disease has

increased in incidence on many continents. In the Western hemisphere and in Europe,

Salmonella enteritidis (SE) has become the predominant strain. Investigations of SE outbreaks

indicate that its emergence is largely related to consumption of poultry or eggs. In 1994, there

was a nationwide outbreak of salmonellosis in the United States as a result of contamination of

pasteurized ice cream during transport in lorries that had previously carried nonpasteurized liquid

eggs containing Salmonella enteritidis. It is estimated that 224,000 persons were affected by the

outbreak.

Other foodborne pathogens are increasing in prevalence because they are new

microorganisms or because the role of food in their transmission has been recognized only

recently. Infection with Escherichia coli serotype O157:H7 (E. coli) was first described in 1982.

Subsequently, it has emerged rapidly as a major cause of bloody diarrhoea and acute renal

failure. The infection is sometimes fatal, particularly in children. Outbreaks of infection,

generally associated with beef, have been reported in Australia, Canada, Japan, United States, in

various European countries, and in southern Africa. In 1996, an outbreak of Escherichia coli

O157:H7 in Japan affected over 6,300 school children and resulted in 2 deaths. This is the largest

outbreak ever recorded for this pathogen.

Listeria monocytogenes (Lm) is considered emerging because the role of food in its

transmission has only recently been recognized. In pregnant women, infections with Lm can

cause abortion and stillbirth, and in infants and persons with a weakened immune system it may

lead to septicemia (blood poisoning) and meningitis. The disease is most often associated with

consumption of foods such as soft cheese and processed meat products that are kept refrigerated

for a long time because Lm can grow at low temperatures. Outbreaks of listeriosis have been

reported from many countries, including Australia, Switzerland and the United States. Two

consecutive outbreaks of Listeria monocytogenes in France in 1992 and 1993 were caused by

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contaminated pork.tongue and potted porkFAO data show that livestock production, and

demand for animal products, will grow rapidly in the next 20 years. These predictions show a

massive increase in animal protein demand, needed to satisfy the growth in the human

population. Consumption of livestock products, with the associated demand for feed grains and

the environmental effects of this pressure, will grow even faster in some countries. It is predicted

that there will also be a greater concentration and associated problems of livestock in the cities

and peri-urban areas. These problems will include environmental pollution and, not least, the

increasing risks of zoonotic diseases affecting humans.

The big increase in animal protein demand over the last few decades has been largely met

by the world wide growth in intensive livestock production, particularly poultry. This is expected

to continue as real income grows in the emerging economies. Industrial production relies heavily

on grain, soya and fishmeal, and has a high cost in terms of fossil fuel consumption. The

concentration of animals, disassociated from land and crops, presents alarming problems of

waste disposal. Technologies are needed to make use of the waste as fertilizer and fuel.

Sustainable agriculture, integrated systems and organic farming methods have been

promoted by development agencies for many years, and yet their real impact is very small. The

challenge is to enable small producers to have access to a wider market. There is also a need and

demand for low cost and simple technologies for livestock and product processing. Emphasis

needs to be given to the development of small-scale and village-level processing, including

equipment, training, distribution and marketing.

It may be better to develop medium sized cooperative commercial units which are more

susceptible to technological improvement and sustained supply. If the cooperative system and

organized marketing is applied to the poultry sector, there is enormous potential for expanded

production in rural areas, supplying the cities. The advantages of such development are:

ownership remains with village people; enterprise is larger and enjoys some economy of scale;

some of the technical advantages of industrial systems compared to backyard farming; a small

but viable feed mill can be operated; regular supply, increased scale, improved standards

possible; more people participate and benefit from the market; its is easier to apply good

agricultural practices than either industrial or backyard farming; and there are environmental and

ethical advantage over industrial units that could be exploited for added value.

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Fulfilment of consumer demand is not only quantitative but also qualitative. Livestock

products must be produced from disease-free animals and under hygienic conditions. We must

also question the use of additives that 'improve' production but are unacceptable to the consumer.

At the policy, producer and processor level, the provision of safe and wholesome food must be

recognised as the cornerstone to sustainable livestock and product development.

FAO is engaged in developing Codes of Good Agricultural Practices (both in the feed

industry and from 'farm to fork') which will support Quality Assurance schemes that address

issues of human health, animal health and the environment

India's animal wealth is quite large in terms of its populations of cattle, poultry, sheep and

goats, camels, horses and pets Recently, aquaculture has also been growing in importance in

India.

Feed manufacturing on a commercial and scientific basis started around 1965 with the

setting up of medium-sized feed plants in northern and western India. Feed was produced mainly

to cater to the needs of dairy cattle.

CLFMAwas formed in June 1967 as an association of feed manufacturers and associated

industries such as ingredient suppliers, importers, feed additive manufacturers, consultants,

hatcheries and milk cooperatives and feed machinery manufacturers.

The objectives of CLFMA are to promote the concept of nutritionally balanced

compound feed; to promote, assist, organize and coordinate scientific research in the field of

animal nutrition; to conduct, assign, sponsor or co-sponsor surveys and studies; to collect,

classify and circulate information related to animal feed to its members and government; to offer

suggestions to government in formulating policies; and to impart training to livestock farmers,

feed mill personnel, veterinarians, students and others. The office-bearers of CLFMA are elected

and operate for a maximum of two years at one level.

 Over the years, CLFMA has been able to solve many problems of the industry, but many

others still remain unsolved. CLFMA is gradually becoming a representative of the entire

livestock industry.

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Formed in June 1967 as The Compound Feed Manufacturers Association, CLFMA now

has around 200 members, including all sectors of the livestock industry. CLFMA OF INDIA is

recognized not only by livestock farmers, Central and State Governments, Government

Departments, Agricultural Universities, Veterinary Colleges and National Research Institutes in

the country, but also by related sectors outside the country.

CLFMA's views are solicited and reckoned with by our Central and State Governments

while formulating policies governing not only animal feed industry but also the entire gamut of

animal production.

CLFMA, the sole, All-India representative of manufacturers of nutritionally balanced and

scientifically compounded feed for cattle, poultry, fish, prawns etc., manufacturers and suppliers

of feed supplements & raw materials, feed plants & machinery and other service providers

business associated with livestock industry. Today CLFMA has around 200 members including

all sectors of the industry.

Few animal feed manufacturers’ way back in 1964 initiated the dialogue to give

organizational bent to this industry. As a result, CLFMA was formed and registered on 8th June

1967, which in 1969 was registered as a charitable public trust. The prime objective of CLFMA

is helping the promotion of overall animal husbandry, by promoting the concept of balanced

feeding of animals in accordance with their nutritional requirements for deriving the maximum

output from them through productivity improvement.

CLFMA is fully committed to manufacturing and supplying high quality; safe and

conversion-efficient animal feeds to livestock farmers at prices affordable to them. During 2001,

at the AGM held at Goa, the resolution was passed to form a Sub-Committee to broad-base

CLFMA. It was agreed by the members present that all sectors of livestock industry should come

together for the progress of the industry.

 The share of compound cattle feed manufactured by the industry, in relation to the overall

potential, is low for the following reasons:

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1. The cattle population is fragmented and spread over large parts of the country. Farmers'

low level of education and strong traditional beliefs mean that there is generally little

awareness of compound cattle feed.

2. More than 50 percent of the country's total milk production comes from a very large

number of low-yielding cows and buffaloes. A further 25 percent of milk production

comes from buffaloes and only the remaining 25 percent of the total is produced by

cross-bred and improved cows.

3. Industrially manufactured compound cattle feed has proved its value for cross-bred cows

and buffaloes but not for low-yielding cattle because of their genetic limitations. Home-

mixed feed is very frequently used for buffaloes and low-yielding cattle.

2.4 Kerala Scenario

Cattle feed industry is growing in Kerala. There are many cattle farmers as well as

laboratories, so cattle feeds industry is growing. The major players n Kerala are Kerala feeds

Godrej Feeds Ltd, Milma feeds, Sunandhini Feed , Prima Feed.

a) Kerala Feeds

Kerala Feeds Ltd is a public sector stock feed manufacturing Unit under the Government

of Kerala which was set up in 1995 with a total project cost of approximately Rs.35 Crore. The

plant is located in Panjapally (Now Feed Nagar) in Kalletumkara Village of Thrissur District, 2.5

kms away from the Irinjalakuda Railway station. The commercial production was started in

1999. Within a short period of 4 years the company has increased its total production from

3793.49 MT in 1998-1999 to 125567 MT in 2004-2005. The technology used for manufacturing

is MMCP (Milling, Mixing, Cooking & palletizing). The machinery is imported from

Netherlands

b) Milma

The name MILMA has been derived from the cumbersome predecessor, Kerala Livestock

Development Board and Milk Marketing Board (KLD&MMB). KLD&MMB existed from 1976

to 1981. The name MILMA was coined at the official level by Mr. S. Nagarajan IAS. A 1961

batch Indian Administrative Service (IAS) officer, he took over KLD&MMB as its first

chairman.

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Milk distribution in Kerala was available at only a few locations in Kerala. The

distribution and sale was handled by the employees of the Board. The consumers had to purchase

coupon booklets in advance and exchange the coupons in exchange for milk. No mechanism

existed to tally the sale of milk and the coupons received. Mr. Nagarajan bought about a change

in this system by making the consumer pay for milk at the time of purchase instead of the coupon

booklet system. Moreover at that time milk was being sold in bottles and for the first time in

India he introduced milk in ½ liter sachets. He had a prototype machine for packaging milk in

sachets installed in Thiruvananthapuram. From the public sector he moved the sale of milk to the

private sector. Milk booths permits were issued to private entities for the sale of milk from

MILMA. From 1981 onwards under the advice of Dr. V. Kurien, by forming cooperative

societies Prayar Gopalakrishnan and others were able to introduce MILMA to the whole of

Kerala

The KeralaCo-operative Milk Marketing Federation (KCMMF) or Milma started its

operation in 1980 with its head office at Thiruvananthapuram. It was started under the Indo-

Swiss project The project was launched in 1963 on the basis of a bilateral agreement executed

between the Swiss Confederation and the Government of India. The project has made great

strides in the improvement of livestock farming in the state. One of them is the development of

Swiss Brown, a cross breed suited for the state's conditions. The project is now managed by the

Kerala Livestock Development and Milk Marketing Board. It main motive was to implement the

Operation Flood programme started by the National Dairy Development Board (NDDB) in

Kerala.

The project impact was so widespread that close to about 83 % of the adult cattle of the

state got converted to the new breed – Sunandini-, the milk production increased by over ten

times and the per capita availability of milk increased by over 7 times with over a million

families dependent on milk production. The project has succeeded in integrating better

technology and management to the traditional small holder production system. It also

demonstrated how the high productive, semi stall fed cows led to a spontaneous decline in the

total bovine population of the state from 34.6 lakh in 1977 to 21.86 lakh in 2003 when the total

bovine population of India went through an upsurge. This contributed immensely to

environmental sustainability. By demonstrating a growth model for productivity enhancement,

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the project not only impacted the million small livestock holders in Kerala, but also millions

outside the state

The project demonstrated revolutionary institutional changes beginning with the Indo

Swiss project of Kerala, an autonomous institution under the govt. of Kerala to the Livestock

Development and Milk Marketing Board and then to the present autonomous company - the

Kerala Livestock Development Board, with the formidable dairy cooperative system under the

Kerala Cooperative Milk Marketing Federation (MILMA), under the able guidance of its first

managing director S. Nagarajan IAS, spun off as successful an independent entity.

Kerala's milk demand / consumption per day is 10.90 Lakhs liters, whereas total

production in Kerala amounts to 7.80 Lakhs liters per day. Thus, Kerala imports round about 3

Lakhs liters per day of milk from Karnataka, Tamil Nadu and Maharashtra.

c) Prima Feeds

Prima Agro Products Ltd is a Cochin based company. The Company is a Prima Group

Company. The company has identified Ms Jung Won Corporation, Seoul, South Korea as a

collaborator for the expansion project. The company has launched in the Kerala market its

Rich Foods brand of food products. It has entered the capital market in August 1993 with a

public issue of Rs 360 lakhs. It has already launched cattle feed products in different varieties

under the brand name Prima Feed

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2.5 Porter’s Five Forces Analysis

The Porter’s five forces model is an analysis of the structure of the industry should be

undertaken in order to find effective sources of competitive advantage. Therefore, in

ordertoanalyze the competitive environment of KSE, Porter’s five forces analysis has been us

Fig No.2.1 Porter Five Force Model for Industry Analysis

1. Threat of new entrants

The threat of new entrants is moderate mainly because of the

1. It would be very difficult for a new company to enter this industry because

they would not be able to compete with the established brand names,

distribution channels, and high capital investment.

2. Need of high end and sophisticated technology requirements is pausing the

entry of new players.

3. The new companies who are entering are Active Kerala feeds, Milma etc

2. Bargaining power of buyers

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Rivalry Among

Competing Firms in Industry

Threat of New

Entrants

Bargaining Power of

Buyers

Threat of Substitute Products

Bargaining Power of Suppliers

The buyers in India have variety of choice. There are more than 6 cattle feed

producing companies in India. So, the bargaining power of buyers is more because they

have lot many choices available to purchase cattle feed.

1. They can switch from one company to other since the switching cost is very

low because the cost of cattle feed is almost same in every company.

2. Since the buyers of cattle feed purchase in bulk quantities the buyers has the

power to bargain over the price of cattle feed.

3. Bargaining power of suppliers

The supplier population in this industry has low to moderate bargaining power due to the

following matters:

1. Bargaining power of supplier depends on famers availability. When the

demand for farmers is more suppliers will drive the bargaining power.

2. The switching cost is also very low. It’s not going to cost much for the industry to

shift from one supplier to another and this is one big threat for the supplier and

other reason is there is lots of supplier.

4. Threat of substitute Products

There is not much substitute in this case. Customers view the substitute based on the

cattle feed industry as extremely satisfactory in terms of quality, comfort and

convenience

5. Rivalry Among Existing Competitors

Companies are able to maintain a competitive advantage with innovation due to the large

amount of technology that goes into the products and services. Obtaining that competitive

advantage is a key factor. Economies of scale can play a huge role in success as well as

the market can also be price sensitive. Due to the fact that the cost of raw materials can

sometimes be volatile, the company must plan ahead in order to remain efficient as extra

expenses can only be made up by passing the burden to their customer. 

Major cattle feed industries are Milma, kerala feeds, etc.

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3.1 Introduction

It was in 1963 that Kerala Solvent Extraction Limited now known as KSE Limited

entered the solvent extraction industry, setting up the very first solvent extraction plant in Kerala.

Although Kerala produces 80% of total copra produced in the country, large part of it was

sold to other states as copra itself and they were earning good profit when mills in Kerala wasn’t

able to get enough copra for their daily needs. When oil industry in other parts of the country

was thriving, in Kerala it was struggling. So they understood the need for modernization of their

mills. At that time Dr.P.S.Loknathan committee setup to study the feasibility of starting new

industries in Kerala, recommended the establishment of three solvent extraction plants. And one

of them was in Thrissur district. The oil mill owners in and around Irinjalakuda, who where

thinking in similar lines saw the opportunity and took the initiative to establish a solvent

extraction unit. Thus KSE was established.

Thus in 1976 KSE LTD entered the cattle feed industry, setting up new plant

manufacturing ready mixed cattle feed. The last 3 decades have been KSE LTD emerging as the

leader in ready mixed cattle feed in the country. Today KSE LTD commands the resources,

expertise and infrastructure of manufacture arrange of livestock feed in high volumes, driven by

a commitment to high quality

On the road to success, there were many hurdles. Initially, the mobilization of capital

posed the greatest challenge. The future looked grim. But determination and optimism paid off.

Thus on 25 September 1963 the Kerala Solvent Extraction Limited was registered as a public

limited company. The solvent extraction plant went on stream in 1972 and in 1976 a new plant

was set up to manufacture ready mixed cattle feed, which was pioneering step. Since then there

was no looking back.

The last three decades have seen KSE emerging as the leader in solvent extraction and

ready mixed cattle feed in the country. And through these years of consolidation and

diversification, KSE has created a niche for itself.Today KSE commands the resources, expertise

and infrastructure to manufacture a range of live stock feed, in high volumes, coconut oil from

coconut oil cake, and refined edible oil.

19

KSE had computerized its operations way back. In the year 1999, KSE went on to

upgrade its EDP setup further. A custom made ERP software was developed for its units and

head office through M/s.R.R Software Private Ltd, Cochin and online computerization was fully

implemented at all its plants. Being custom made for KSE this ERP software, with SQL

RDBMS, front end on Visual Basic and Windows NT OS, seamlessly had integrated all

functions of the organization such as FA, Inventory, Billing, Payroll, PPC, MIS, Share

Accounting etc.

The Head office at Irinjalakuda has 2 servers and 40 nodes running the application. Other

units, in all, have about 8 severs and about 50 nodes. Their latest plant at Vedagiri, Kottayam has

a computerized control room for monitoring, homogenization, size reduction, batching, and

pellet cooling and aspiring systems.

From a single unit, solvent extraction plant, KSE has grown in to a multi-unit, multi-

product organization. Infrastructure for growth has always been viewed as a priority at KSE.

With modern manufacturing facilities spread over three states, KSE caters to a vast belt

stretching across south India.

With a strong commitment to customers and product quality and being cost competitive

KSE, stands poised to meet new challenges.

3.2 Vision

The company shall Endeavour to maintain leadership through quality products explore

new avenues in product development and marketing create stronger bond between the

management ,workforce, dealers and customers ,contribute to social development and rural up

liftman and constantly strive for excellence in all shapes of our objective.

3.3 Mission

1. To maintain the market leadership.

2. To minimize the cost incurring in production process.

3. To maintain the product quality.

4. To be competitive at all markets.

5. To be compliment to all global quality standards.

20

6. To maintain top position in the industry.

7. To utilize the new technological changes for the benefits of the company.

3.4 Corporate Objectives of the Company

The memorandum of association of the company lists out 38 broad objective for which the

company is registered .Out of these the most important objectives are:

1. To produce, manufacture, extract purchase, refine prepare import, export, sell and generally

to deal in oil bearing materials to carry on business of the refining the hydrogenation of oil

and manufacturing of by products there from and of trades connected there with.

2. To acquire erect construct establish .operate and maintain oil mills, extraction plants, ghee

plants and workshop.

3.5 Growth Chronicle of KSE Ltd.

1972 Solvent plant commences operation.

1976 Mixed cattle feed production beginnings.

1987 Cattle feed production reaches 180 tones and introduction of computers in the factory.

1988 New mixed cattle feed plant starts operation at Swaminathapuram, in Tamil Nadu with a

daily production capacity of 180 tones.

1989 A solvent unit with a capacity of 120 tons per day commences operation at Tamil Nadu

plant.

1990 Introduction of KS Supreme pellets, a by –pass protein Cattle feed in the market.

1991 Open Palakkad branch.

1992 Cattle feed manufacturing beginning in 3rd party unit.

1993 Enters the export market.

1994 Introduction of feed supplement KS FORTE, public issue and listing of shares.

21

1995 Vegetable oil refining plant commissioned, KS Supreme-sunflower oil launched, and

Open Calicut branch.

1996 240 TDP cattle feed commences at Vedagiri.

1997 Company renamed as KSE LTD

1998 4th Production unit at Palakkad. Launches dairy product

1999 A modern children park and information centre have been completed at

Irinjalakuda for the benefits of the public.

Company introduces new product KS deluxe plus the new pellet feed in HDPE bags of

Kerala market

2000 Company starts production and distribution of milk and milk products from Konikara

dairy units.

2001 Company started production and marketing of poultry feed at Palakkad.

2002 Company started production of ice cream and marketed under the brand name of Vesta.

2004 ISO 9001:2000 accreditation for Irinjalakuda plant.

Company commissioned 200 TDP solvent extraction plant at KINFRA industrial park,

with Koratty with a production capacity of 100tonnes solvent extraction

2005 Cattle feed production capacity at Irinjalakuda unit increased to 210 MIT

perday.Company acquired at Mysore.

2007 Company started production at Edayar Erode at lease

2008 Ice cream production Commissioned at Thalyathu

2009 Cattle feed production at Swaminathapuram increased to 200 MTs per day

Commenced 500 TDP fully state-of the art Germen technology animal fed plant at

Irinjalakuda

22

2010 Ice-cream production unit at Vedagiri commission

3.6 Product Profile

1. K.S Cattle feed

There are 6 type of cattle feed. There are,

i. K.S-Mash

ii. K.S Supper

iii. K.S Ordinary

iv. K.S Delux pellet

v. K.S Delux and pellet

vi. K.S Premium pellet

2. K.S Supreme(Refined Sunflower Oil)

3. Jersey copra

4. K.S Forte (Feed Supplement-Tonic )

5. K.S Mineral mixture

6. Milk Products

i. K.S Milk

ii. K.S Ghee

iii. K.S Curd

iv. K.S Butter Milk

v. Vesta ice cream

3.7 Future Scope of the Industry

India’s animal wealth is very large in term of its population of cattle, poultry, sheep, goat,

camel, horses and pets. This India’s lives stock industry will be facing with a lot of challenges in

the coming decades. The per capital consumption of milk, meat and eggs expected to doubly by

2020.Globally the demanded for the food of animal origin will increase. These will be shift of

live stock production from temperate and dry areas warm and humid areas. Hence there is

tremendous opportunity for India’s to be a leading exposure. INDIA would need to become very

competitive in a world of globalize.

23

3.8 Future Scope of the Company

1. After three decades of credible growth and achievements, KSE is looking forward .Plans

are already a foot to strength its operation in the edible oil business. Dairy business and

reinforce its core capabilities and continue the process of forward integration.

2. Company has acquire a land property in mysore.Company is in the process of planning in

respect of the project that property

3. Company has endeavored for a Karnataka market survey.

4. Company is planning to dispose of its solvent extraction plant at Irinjalakuda unit which

has been worn out completely and install a cattle feed plant. This project of 2000 core

Rupees.

5. The company has plan to strengthen its dairy business by increasing production and

adding more items to that product line

6. Plan to pelletize at Palakkad unit

3.9 Company’s Philosophy on Corporate Governance

In KSE Limited, they believe that good governance is a systematic process which enables

the company to operate in a manner that meets with the ethical, legal and business expectations

and at the same time fulfils its social responsibilities. The company believe in good Corporate

Governance, with utmost transparency in its operations achieved by proper disclosures in its

Annual report, Quarterly Result, Public Announcements, Press releases and all other

communications to shareholders, so as to provide shareholders and all other concerned with

information about their company’s working, its strength weakness, opportunities and threats and

thereby enabling them to develop a proper and balanced perspective on the working of their

Company .

24

3.10 Organizational Structure

Fig: No: 3.1 Showing the Organizational Chart

25

Board of Directors

Who Time DirectorExecutive Director

Program Manager

Quality Manager

Marketing Manager

HR Manager

Purchase Manager

Finance Manager

General Manager

Managing Director

Executive Officer

Security Officer

Customer Service

Chief Nutritionist

Assistant Sales Manger

EngineerExecutive Officer

Share Department

Assistant Finance

Assistant A/c Manager

Clerk Clerk

Sales Representatives

Lab Attainder

Clerk

Worker

Security Guard Executives

Department Details

In KSE the work activities that are similar and logically connected are grouped to

form departments. At present there are seven departments in the organization. They are as

follows.

1) Finance Department

2) Marketing Department

3) Human Resource Department

4) Production Department

5) Purchase Department

6) Store Department

7) Quality Department

The study was confined only to four departments of the firm due to lack of time. The

department s covered under the study were marketing, finance, quality control.

4.1 Finance Department

Fig: No: 4.1 Showing the Structure of Finance Department

26

Finance Manager

Deputy Account Deputy Finance Manager

Deputy Share Manager

Executive Officer

Clerk

Executive Officer Executive Officer

Clerk Clerk

Learning Objective:

To study the;

a) Department structure

b) Accounting Policies

c) Marketing Price Data

d) BSE Sensex

e) Summarized Balance sheet for the last five years

f) Summarized profit and loss account for the last five years

Finance is regarded as the life blood of the business .In modern money oriented

company; Finance is one of the basis foundations of all kinds of economic activities. It is the

master key, which provides access to the entire source for being employed in manufacturing and

merchandising activities.

Finance plays a key role in all the activities of business. It may be defined as the service

of money. It deals with the principles and of administrating it by those who control it. The

success of finance function depends on how finance function depends on how finance is planned

at the various levels of administration under the management.

The share holders Equity (Net worth) is 3335.34 during the year 2010-2011.Its shares are

listed in Stock exchange of Mumbai,Chennai,Cochin.the Total turnover during the year grew by

22% compared to the previous years. But unfortunately the profit was declined inconsistently

compared to previous years. The total sales of the company was increased from 37227.87 to

45368.03(in lakhs).The Company is focusing on cost competitiveness and also is in search of

new product lines to further improve its overall performance. Financial data, which are not

audited, published by the company in quarterly. The company accepts fixed deposits from the

public at the rate of 15%per annum.The company keeps book such as purchase daybook, sales

day book, and cashbook and bank book

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4.1.1 Capital Structure

The share capital of the company comes to 320 lakhs from around 6500 shareholders. Its

shares are listed in stock exchange of Mumbai, Chennai, Cochin. This 320 lakhs where divided

as 32 lakhs share of Rs/-10 each

4.1.2 Banker

Company’s banker is ICICI bank limited which allows a cash credit subject to a

maximum limit of Rs cores.

4.1.3 Source of Finance

The company makes use of two types of source to finance its activities, they are

1. Share holders fund

2. Share capital

3. Reserves And Surplus

4. Loan Funds

4.1.4 Functions of Financial Department

1. Maintain a good financial structure

2. Identify the future financial requirement

3. Dividend payment

4. Salary payment

5. Collection of cheque

6. Receipt

7. General payment

8. Payment of raw materials

4.1.5 Maintenance of Cost Record

As far as KSE limited is concern maintainer of cost records is not mandatory as none of its

products fall with in that category. Even though not mandatory, Company maintains necessary

cost records to meet its own requirements.

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4.1.6 Internal Control

The system of internal controls may define as the organizational plan and all the methods

and procedure adopted by the management of the entity to assist in achieving.

1. Timely preparation of reliable financial information

2. Accuracy and completeness of accounting records

3. Prevention and completeness of accounting records

4. Safeguarding asset

5. Adherence to management policies

6. Orderly and efficient conduct of its business

4.1.7 Auditing

The company has constituted on adult company, three independent non-executive directors

assists members. The main auditors of the company are Varna and Varna

a) Internal Audit

It is independent appraisal function within an organization, for the review of activities as

a service to all levels of management. Its objective is to measure, evaluate, and report upon the

effectiveness of internal controls, financial and others as a contribution to the efficient use of

resource with an organization. The KSE Limited’s internal audit is taken care of by assistant

manager, some of the units are audited by himself and the rest, mainly situated in other districts

and states are performed by independent chartered accountant firms.

b) Internal Check

The company has devised internal check measures. Internal check refers to a system of

book keeping and arrangement of staff duties in the organization in such a manner that no one

person can completely carry through a transaction and record every aspect there

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4.1.8 Budgeting

Budget is prepared by each year .The budget is prepared in the month of February. Profit

and loss account is prepared monthly by finance department .Two committee meeting are

conducted by the management.

4.1.9 Dividend

Considering the profits for the current year, your Directors recommend a dividend of

100% ( Rs.10 per share of Rs each) for the year ended 31 st march 2011 which, if approved at the

ensuring Annual General Meeting, will be paid to those members whose names appear in the

Register of members of the company as on 28.07.2011.In respect of share held in

dematerialized form, the dividend will be paid on the basis of beneficial ownership as per the

details furnished by the Depositories for this purpose at the end of business hours as on

18.07.2011

4.1.10 Capital Expenditure

The ice-cream manufacturing unit adjacent to our existing cattle feed plant at Vedagiri has

been commissioned on 28.03.2011.The capital outlay of the new ice-cream unit is Rs 127 lakhs

as on 31.03.2011 excluding the value of land already owned by the company.

30

4.1.11 Financial Highlights

Table 4.1 Showing the Financial Highlights for the Period of 2009-2011

2009-2010 2010-2011Sales and other income 37227.89 45436.07

Gross profit (Profit before depreciation and interest)

1917.38 1359.80

Profit before tax 1266.14 667.31

Net Profit after tax 827.27 449.81

Share holder’s equity (Net worth) 3257.45 3335.34

Capital employed 6456.64 6065.52Gross fixed asset 6956.64 7220.58

Rs RsShare holder’s equity per share 104.23 101.81Earnings per share of Rs.10 each 14.06 25.85Dividend rate 1.00 1.00

Source: Company Records

Table 4.2 Showing the Sales Comparison of Last Six Years

Years Net Profit (In Lakhs) Sales(In Lakhs)

2004-2005 675.58 21309.852005-2006 591.23 24060.442006-2007 101.09 27503.592007-2008 258.38 28947.52008-2009 320.54 35007.872009-2010 827.27 37094.192010-2011 449.81 45368.03

Source: Company Record

Table 4.3 Showing the Market Price Data

31

(During the financial year 2010-2011 Based on BSE Data)

Month High(Rs) Low(Rs)April 293.50 190.00May 239.80 195.20June 234.45 211.00July 287.95 205.00

August 233.40 192.50September 230.00 190.25

October 230.00 162.00November 238.00 171.00December 218.95 170.00January 202.00 173.00

February 195.00 156.00March 181.00 159.00

Source: Company Records

4.1.12 Accounting Policies:

Accounts in KSE Limited are prepared under historical cost convention on accrual basis

unless otherwise specifically stated in the notes to account

Fixed asset

1. Asset put to use have been stated at less depreciation.

2. Asset not put to use have been stated at cost.

Depreciation

1. Depreciation on fixed asset has been provided on written down value method at the rate

prescribed in the company act1956.

Investment

1. Long term investments are stated at a cost less provision, if any for permanent

elimination in the value of such on investment.

Inventories

1. Inventories as at the close of the year are valued at lower of cost or net realizable value.

32

Retirement benefits

1 .Contribution to provident fund and employee welfare fund is charged to profit and loss

account.

2. The accruing liability towards gratuity of employees is covered by the group gratuity

assurance scheme of life insurance Corporation of India.

4.1.13 Financial Procedure

1) Payment of Raw Materials

Purchase department purchase raw materials according to purchase order .90% of

payment of raw material are made on delivering time. Balance payment will paid after checking

the quality of raw material, this need material received report, order, and bill of lad report .It

includes item, weight gross quality, net quantity, net quantity, etc.This report will be signed by

head of purchase department. If the quality is not satisfactory, rebate will be charged.

2) General Payment

This includes electricity charges, stationary items, telephone charges, salary, ESI, PF,

housing loan, state tax income tax, etc.

3) Receipts

This mainly includes sales receipt. The company accepts sales receipt in the form of cash,

DD, Cheque: the company will not accept credit sale.

4) Cheque Collection

5) The company has account in 12 banks. Bank of Baroda keeps large amount of deposit of

company. These banks also provide loan facilities to the company maximum limit is up to and

cores.

6) Salary Payment

Plant workers will get salary on 6th day of month. Office staff will get salary on 31 st of

the month .If an employee needs salary as advance; he can take 50% of salary. Another function

of finance department is to collect or transfer surplus fund from other unit to centre unit.

33

7) Other Payments

Share holder will get dividend. This will be paid on interim dividend and final dividend

and now the value of the share is Rs55. Another function of finance department is to provide

festival gift in the form of cash, bonus payment of upto20% of salary. Profit and loss account

will be prepared monthly. It is published quarterly in the news paper. The company also has

public deposit amounts to 6 cores.

4.2 Marketing Department

Fig: No: 4.2 Showing the Structure of Marketing Department

Learning Objectives:-

1. To know the idea about product mix of KSE Ltd.

2. To study the pricing mix of KSE Ltd.

34

MARKETING MANAGER

Sales Manager

Clerk

Sales Executive

Senior Assistant

Office Assistant

Customer Service Manager

Sales Executive

Senior Assistant

Office Assistant

Clerk

3. To know the organization structure of marketing department.

4. To familiarize the distribution system of KSE Ltd.

5. To get the idea about the promotional activities of KSE Ltd

“Marketing is the process of planning and executing the consumption, pricing,

promotion and distribution of ideas, and services to create exchange that satisfy individual and

organizational structure”.

The story of success of KSE Limited would reveal the excellence of the marketing

brains of the company .During 1976, When KS cattle feed launched in Kerala market, the

market was in the hands of Godrej and Tata the big boys. The transformation from that level to

the market leader of the south and to the second largest seller of the cattle feed in the industry

tell the entry story. The fact that KSE limited could export cattle feed adds another feather to its

cap.

The company must design a marketing organization that can carry out marketing

strategies and plants. If the company is very small, one person might do all of the research,

selling, advertising, customer service and other marketing activities. As the company expands a

marketing department emerges to plan and carry out marketing activities. The most common

form of marketing organization in which a functional specialist heads different marketing

activities are headed by a functional specialist ,a sales manager ,advertising manager, Marketing

research manager, and Customer service manager

The marketing department is headed by a marketing manager .the company has a large

network which is directly under the control of the marketing department .All planning and

strategy formation regarding the marketing activities of the company are devised ,Implemented

and monitored by this department.The department is divided in to two:

a) Sales division.

b) Complaints and customer care division.

4.2.1 Sales Division

35

This is headed by an assistant manager .As mentioned earlier all the dealers are

controlled by the company directly .all orders from the dealers all over the state are received

by him. In consultation with the production managers of the various plants. He makes the

allotment. The allotment is made from the various plants he makes the allotment .the allotment

is making from the various plants depending upon the availability and proximity to the

dealer .The manager at the sales division informs the production manager about the demand for

the various products so as to plan production accordingly.

4.2.2 Complaints and Customer Service

This division is headed by an assistant manager .Since KSE Limited has network of

dealers directly under their control, maintenance of this net work is very difficult .The dealer

area is very small and closely situated. Overlapping of agencies is a problem .complaints

regarding agencies will reach this department. The complaints are studied and necessary actions

are taken. Similarly, companies regarding the product are also taken care here. As and when a

complaint is received, inspection team is sent to the specified area and details are collected and

necessary actions will be taken immediately.

4.2.3 Marketing in Modern World

In the olden days, marketing has identified as physical movement of goods from

producer to consumer. But modern concept of marketing aims at satisfying the needs and wants

of consumers with a reasonable amount of profit alone.

According to modern concept, profit, profit can be earned only through customer

satisfaction. To satisfy a customer his needs are to be known. This is possible only when

information is collected from the customers. Marketing research starts at this stage .Through

marketing research information is flowing back to customers from producers. Thus modern

marketing starts with customers and ends with customers.

Table No: 4.4 Showing the Sales of the Company in the Last Five Years

36

Years Sales( In Lakhs)2006-2007 45436.072007-2008 37094.192008-2009 35007.872009-2010 28947.502010-2011 27503.59

Source: Company Records

4.2.4 Marketing Strategy of KSE Limited

1) Necessary publicity will be provided for assistance. The company reduced its

advertising expenditure and concentrates more on radio, wall paintings and hoardings.

2) Seminar will be conducted on relevant topics.

3) Cost of operation kept to be minimum.

4) Sales representatives will be providing for assistance.

5) Supply quality products at reasonable prices using advanced production technique.

6) Other marketing strategies.

4.2.5 Channel of Distribution

1. Manufactures

2. Dealers

3. Retailers

4. Customers

a) Selection of Dealer

The field staff under assistant customer service and complaint manager will evaluate the

dealer on the basis of certain things those are..

1. Financial position of the dealer

2. Good and spacious go down.

3. Marketing potentiality

4. Dealers credit worthiness

5. One dealer within an area of 5 KM

a. If the dealer doesn’t buy at last one load of cattle feed in row of 3 month,

automatically the company will terminate his dealership.

37

b) Dealer Commission

1. For KS cattle feed 10%

2. For de oiled coconut cake (jersey)5.5%

c) Market Segmentation

It is the process of spiting customers in to different group or segment, with in which

customers with similar characteristics have similar needs. By this each one can be targeted and

reached with a distinct marketing mix. Being the company’s main emphasis on animal fed

products company has adopted following steps to segment the market. Company first decided

on the animal-cow and buffalo after choosing target industry(cow and buffalo) it segment on the

basis of geographical area it plants to focus on Kerala, Tamil Nadu,Karnataka.further

segmentation was on the basis of the size of the company/farmer-medium and large scale.

Finally on the basis of purchasing criteria, customers seeking good service and quality.

4.2.6 Marketing Information System

These are collected from:

1. Daily call reports by sales representatives

2. Field force like sales representatives.

3. Competitors telephoning

4. Customer telephoning

5. Report from sub dealers

6. Directly from dealers

a) Marketing Research

1. It is done by company’s sales force by

2. Redressal of customers complaints

3. Seeing the competitors activity

4. Checking whether the channel in the distribution system is weak or not.

4.2.7 Sales Promotions Activities

1) Farmers meet and dealers meet

38

These are conducted by the company once in every two years at different head quarts.

(TVM, ERM, TCR ,Calicut)these meet are conducted in five star hotels. It is a one day

programme with two sessions. In that dealers can express their problem current market for the

product, farmer’s attitude towards the product etc.

2) Giving incentives

Dealer’s promotion KSE give a target to dealers. If any dealer achieves that target KSE

gives incentives.

3) Coupons

Coupons are put inside the package; these offers are made in onam season. Coupons are

certificates offering a started amount of reduction in the purchase of specific product. This

method includes customers to buy a particular brand.

4) Seminars

Seminars will be conducted for farmers about cattle feed. In this seminar, an award is

given for the best farmer this award is in the form of cattle feed.

4.2.8 Sales Procedure

Order is received through phone or in person. Name and expected date of delivery of

goods will be entered in a computer system. The advance payment is received in the form of

cash (up to Rs 200000), DD, or premium cheque along with the indent form in which the

product needed quantity required, expected date of delivery along with some remark are

specified, sale department issues delivery order to the go down people .There will be three

copies of delivery order, one kept for data storage in computer, the other two with go down

people out of which one is sent back to sales department for the preparation of invoice. One

copy is kept in files and other two copies are sending to the dealer from which the carrier

returns one copy.

a) Location of Sales Offices

39

1. Vedagiri near kottayam

2. Irinjalakuda

3. Palakkad

4. Edayar near cochin

b) Marketing Mix of KSE Limited

Marketing mix is the combination of elements that are used by the marketer to bridge

the gap between the company and the market. In short, Marketing mix is a combination of

elements like product, place, price promotion ,etc in the right proportion to provide maximum

satisfaction to consumers and maximum profit to the company.

4.2.9 Product Line of KSE Limited

KSE Limited produce various kind of cattle feed products which helps the customers to

select their product according to necessity .Different flavors packaging price differentiation

contents variation etc,are maintained by the company in its product line .It will help to attract

more customers to buy the product.

40

Table No: 4.5 Showing the Details Regarding the Products Produced by the Co:

LINE 1 LINE 2 LINE 3 LINE 4 LINE 5 LINE 6 LINE 7

KS Cattle feed

KS Supreme coconut oil

Keyes forte

KS pall KS Ghee

KS Ice cream

KS Butter milk

KS Mash KS Solvent Extraction Oil

KS forte

KS Milk KS Ghee 500 ml

Mango bar KS Butter Milk 200

MlKS Special Mash

KS Refined oil

KS Homogenize

KS Ghee 200ml

BudkaKulfi

KS Supper Mash

KS Ghee

Vesta Sundae

100 mlKS Deluxe Pellets

KS VestaContopGhee 50 ml

KS Deluxe plus

KS Choco barGhee5Ltr tin

KS Supreme Pellets

Vesta Flavours

Source: Company Records

4.2.10 Brand Loyalty

It is strong attachment of buyers towards a particular product of KSE Limited such as

KS cattle feeds, KS Pal and Vesta Ice-cream. Brand loyalty offers a numbers of advantage to

the KSE Limited Brand loyalty are the repeat purchase made by the customers out of

commitment to the brand. Brand loyalty customers start building a relationship with brand.

They may become advocate of the brand by their positive word of mouth. The brand loyal

customer may become passionate about the brand and from the clubs which results in further

strengthening of the brand

Reasons for Brand Loyalty for KSE Limited

41

1. Different product line

2. Better customer relationship

3. Promotion and advertising

4. Affordable price

5. Better than competitor

6. High quality of product

7. Uninterrupted distribution

Advantages of Brand Loyalty for KSE Limited

1. Reduce the competition

2. Repeated purchase

3. Reduction in promotional activities.

4. Keeping the product quality

5. Increased profit earning ability of the company

6. All around development of the firm

7. Introduction of new product as per the customer specification.

8. Good relationship with the company by customer

4.2.11 Price Mix

Price is the amount paid by a buyer to seller for a product .It is the exchange value of a

product in the term of money .Price means nothing to customers and something else to the

seller. To the seller, price is a source is revenue. To the buyer, it is the cost of something.

Price Mix in KSE Limited

Objective of pricing

1. To maximize the profit

2. To maintain the market share

3. To achieve a desired rate of return on investment

4. To meet the competition

5. To stabilize the product price

6. To build the image and enhance the good will.

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7. Ensure the coverage of all cost.

Pricing Method of KSE Limited

1) Cost Based Pricing Policy

The policy of selling price essentially on the basis of total cost per unit.KSE is super

manufacture in the field of cattle feed, so they can fix cost based pricing policy irrespective of

the competitors. It is influencing their competitors pricing policy such as Godrej, Kerala feeds

2) Competitors Based Pricing Policy

All products are not equal strength of the company .Such product are more strengthen

than competitors such as milk product like Vesta ice cream KS ghee. KS Butter Milk, KS paal,

In such case company cannot fix price its own style so they follow competition based pricing

policy especially milk products such as KS pal, The share of milk is controlled by Milma so the

milk price purely depends upon the Milma milk price.

In short this policy of the price mainly on the basis of price fixed by the competitors.

This policy does not necessarily means settings of price save.

4.2.12 Place Mix

“Distribution is the operation which creates time, place and form utility through the

movement of goods and persons from one place to another”

There are two type of distribution

1) Ex factoryrate: Company need not bear the transportation and insurance cost.

2) Rate at destination: Company need to bear the transportation and insurance cost.

4.2.13 Promotion Mix

“Promotion consists of those activities that are designed to bring a company’s goods and

service to the favorable attention of customers”

Objectives of promotion mix

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1. To create awareness of the product.

2. To retain loyal customers

3. To become market leader

4. To popularize brand name

5. To help distributors or agent

6. To stimulate the demand

4.2.14 Promotion Mix in KSE Limited

Promotion mix is the combination of components or elements of promotion.

Each promotional tools are different from the product .KSE Limited

used various promotional tools to their products according to the product characteristics, such

promotional tools are follows:

1) Advertising

KSE Ltd used advertising to its products for promoting sales.Avertisement are gives the

company according to the product nature. In cattle feed product, they are using radio

advertisement. They do not wish to advertisement T.V because it doesn’t cover target group

such as farmers in rural areas.

Following are other type of advertising media used by the firm

1. Magazines

2. Newspapers

3. Yearly calendar

4. Cloth Banners

5. Cinema slides

6. Notices

7. Product pamphlet

8. Wall painting

2) Public Relation

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KSE Ltd trying to maintain the good public relation to general public relation. It is enhancing to

build their brand image and brand loyalty.

3) Sales Promotion

KSE provided various sales promotion schemes to its dealer and customers for

increasing sales. Such activities like seminar, conference of farmers, Classes conducting

Company’s chief nutrition. He can solve various doubts of farmers in the field of cow

farming .And also provide advertisement materials like advertisement to dealers ,Money refund

offer , free trails, demonstrations, premium offers, dealers contests.

4).Personal Selling

Sometime KSE executives approached to the customers to face to communication and

presentation for the purpose of making sales and clarifying their doubts.

4.2.15 Sales of KSE Limited

KSE Limited is the number one cattle feed industry in south India.The cattle feed is

mainly two types, mash and pellet. They are in bags of 50kg, 75kg, 57kg, and 40kg.KSE limited

seller the product through its dealers. The daily sales of the concerned come to about 100 tones.

The total turnover during the year grew by14% compared to the previous year,

the profit also improved considerably compared to previous year. The advertisements place a

great role in improving the performance of the company

4.3 Human Resource Department

45

HR MANAGER

Fig: No: 4.3 Showing the Structure of Human Resource Department

HR department is the main and the most important of a manufacturing concern.KSE

Limited is proud of its well co-ordinate labour force. The HR department was seen as a place

where the lesser productive employees could be placed with minimal damage to the organization

Human resource management is concerned with all aspects of managing the human

resource of an organization. More specifically, human resource management involve determining

an organization need of human resource, recruiting and selecting the best available employees

developing counseling and rewarding employees, acting as a liaison with unions and government

organization and handling other matters related to the wellbeing of employees.

Each of the functions is necessary to some degree irrespective of nature and size of the

organization that is why in most of the organization a separate department is known as personnel

department or Human resource department is created for effective performance of these

functions. In KSE limited personnel department deals with following objective.

1. Employees selection procedure

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Executive Officer Security Officer

Senior Security Officer

Officer

Junior Officer

Security GuardSenior Assistant

Watch ManOfficer Assistant

Clerk

2. Remuneration of workers

3. Allowance of employees

4. Statutory liabilities

5. Trade union

6. Workers welfare activities

7. Workers safety measures

8. Leaves and retirements

9. Other functions

4.3.1 Functions of Human Resource Department

1. Recruitment

2. Man power planning

3. Welfare function

4. Grievance handling

5. Discipline

6. Industrial relations

7. Public relations

8. Job decription

9. Job specification

10. Training

11. Performance appraisal

4.3.2 Employee Selection Procedure

Employees are selected strictly based on their educational qualification. Work experience

technical knowhow and age .company will do the recruitment by giving ads in news papers,

through employee exchange. And also promoting its own employees based on their performance.

Remuneration

There are three types of wage earners:-

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a) Unskilled but permanent workers-gets daily wages

b) Badali workers-wages on weekly basis

c) Office staff-salary on the last working day of every month

Salary Consist of:-

1) Basic pay

2) Fixed dearness allowance

3) Variable dearness allowance

Allowances

1) Dearness allowance

This is given to permanent employees.D.A is divided into two classes:-

Fixed asset DA: Calculated at the rate of 15% of the basic salary

Variable DA: Based on cost of living index published by Govt.of Kerala

2) Conveyance allowance

3) Washing allowance

4) Canteen subsidy

5) Leave and travel allowance

6) Housing subsidy

7) Shift allowance

8) Overtime allowance

9) Scholarship for employee’s children

10) Employees welfare fund

Statutory Liabilities

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Provident fund: From the basic salary the company and the employees channelized 12%

into the provident fund account equally. Out of the12% contributed to P.F fund 8.33% are

transferred to the pension account.

a) Employee’s State Insurance: The Company pays about 4.75% of total salary of

employees to ESI. The employees pays a contribution of 1.75% of total salary

b) Gratuity: An employee needs minimum 5 years of service to avail this fund.

c) Bonus: It varies according to their grades

4.3.3 Trade Union

In this company there are four recognized trade unions like CITU, INTUC, and BMS

CITU-Confederation of Indian Trade Union

INTUC-Indian National Trade Union Congress

BMS-Bharat MazdoorSangh

A committee consisting of Chairman, Managing Director, Whole time Executive

Director, General Manager Works Manager and Personnel Manger approve the demands of

workers.

Works Welfare Activities

The company established a trust know as employee’s welfare trust in which ensuring sound

working condition.

a) Ensuring fair wage system.

b) Protecting the right of workers.

c) A committee consisting of Chairman, Managing Director, Whole time Executive

Director, General Manager Works Manager and Personnel Manger approve the demands

of workers.

d) Rs.20 is paid both by the employees and the company every month. Additional funds are

provided to employee during the death of employee or in case of employee’s sibling’s

marriage.

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4.3.4 Safety Measures

For safety of workers at plant, they are provided with mask, first aid facility, dust

extraction system in plant, which help to suck the dust arising at the time of production.

1.Leave

a) Casual leave: 9 days for workers and 11 days fir staff

b) Privilege leave: For workers 1 day for 15 days worked, for staff its 30 days

c) Sick leave:7 days

2. Retirement

Retirement age of employees is 58 years.

4.3.5 Qualification Required for Different Jobs

a) Unskilled Workers: He should be group 25-30 years, should not have studied more than

8 th standard and should be residing within a radius of 5 KMs of KSE limited.

b) Office Staff: He should be a graduate.

c) Shift Engineer: He should be a diploma holder from ITI.

d) Security Man: He should be an ex-service man in age group of 35-40 years.

4.3.5.1 Training

KSE LIMITED gives the jobs training to the employees. They are kept in probation for 6

months. If company found it unsatisfactory, then probation period may be extended. Introduction

training is given at this period.

Workers are selected as a substitute worker. If a substitute worker works for a period for

a minimum of 240 days within a year they would be made a permanent worker.

Fresh blood would be preferred for lower divisionalworks.Based on this policy company

promotion for a senior post is made. After probation period the manager under whom the

employee is working gives an appraisal report to the personnel manager. Confirmation of job is

given after that.

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4.3.5.2 Classification of Employee/ Workmen

Permanent employee is one who has been engaged on a permanent basis by a written

order to that effect and include any person who has satisfactorily completed a probationary

period of 6 months, including period of service in any other post to which he may be transferred,

breaks due to sickness, accident, leave, lock out, inventory closure of the establishment and who

has been confirmed in writing as permanent.

a) Probationer: is one who is provisionally employed to fill permanent vacancy in a

permanent post.

b) Substitute is one who is appointed in the post of permanent workmen or probationer who

is temporarily absent. If a substitute worker for a minimum of 240 days within 12

months, he will be made permanent.

c) Temporary Employee: is one who is employed for work which is of an essentially

temporary nature likely to be finished within a limited period.

Casual employee is one whose employment is of casual nature and who is not entitled to claim

for future and continuous employment.

Each of the five categories of employee shall be grouped as follows. Monthly rate s

employee/workmen whose salaries or wages are calculated at a monthly time. Daily rated

employee/workmen whose salaries or wages are calculated at a daily rate.

4.3.6 Manpower planning

KSE Limited proud of its well-coordinated labor force .The personnel department

was seen as a place where the lesser productive employees could be placed with minimal damage

to the organization ongoing operation.

Employees are selected based on their educational qualification, work experience,

technical knowhow and age. Company ads on news papers through employment exchange and

by promoting its own employees based on performance. In KSE Limited, Total numbers of

employees are more than 900 including the employee in its 4 units. In this 500 employees

attached to Irinjalakuda Unit.

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4.3.7 Industrial Relation

The company has 926 employees in its rolls as on 31.03.2011.The company is exception

to the adverse labour conditions existing in Kerala. During its working of 39 years the company

had lost only few man days by labour unrest .During the lockout period’s management had made

alternative arrangements to ensure regular supply to the dealers and the performance of the

company. There were no labour issues of a serious nature in any units of the company.

4.4 Production Department

Fig: No: 4.4 Showing the Structure of Production Department

Learning Objective:

To study the:

1. Department structure.

2. Function of the production Department.

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Store Officer

PRODUCTION MANAGER

Elect Foreman

Godown Executive

Store Supervisor

Maintence Officer

Shift Engineer

Boiling Operator

Electrical Supervisor

Officer

Plant Engineer

Engineer

Main Foreman

3. Function of the solvent plant.

4. Function of the cattle feed plant.

5. MCCP Technology.

6. Refining plant.

7. Quality parameters.

8. Quality control in solvent and cattle feed plant.

9. Product specification and ISO certification.

The core of a production system is its conversion sub system, where in workers materials

and machines are used to convert inputs into product and service. This process of conversion is

at the heart of production function and is present in some form in all organization. It may be

stated that every organization irrespective of its purpose, has a production function where

departments and personnel play a central role in achieving the objective of the organization.

Functions

1. Production process

2. Employee supervision

3. Maintenance of machines

4. Quality assurance

5. Production plan

6. Production control

7. Maintaining a hygiene work place

8. Management of different shift of employee

9. Maximizing the production with minimum resources

4.4.1 KSE-Production Units

Kerala

1) KSE Limited, Irinjalakuda Unit

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2) KSE Limited, Vedagiri unit Kottayam

3) KSE Limited, Palakkad Unit

4) KSE Limited, Edayar Unit, Cochin

5) KSE Limited, Konikara Unit (Dairy)

6) KSE Limited, Koratty

Tamil Nadu

1) KSELimited Swaminathapuram unit

2) KSE Limited,Thalyathu(dairy)

3) KSE Limited, Erode

Karnataka

1) KSE Limited, Mysore unit

4.4.2 K.S.E & Its Products

K.S Cattle Feed

There are 6 type of cattle feed. There are,

a) K.S-Mash

b) K.S Supper

c) K.S Ordinary

d) K.S Delux pellet

e) K.S Delux and pellet

f) K.S Premium pellet

7. K.S Superme (Refined sunflower oil)

8. Jersey copra

9. K.S Forte (feed supplement-tonic)

10. K.S Mineral mixture

11. Milk products

a) K.S Milk

b) K.S Ghee

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c) K.S Curd

d) K.S Butter Milk

e) Vesta Ice Cream

In KSE, Production takes place in 3 plants

1) Solvent extraction Plant

2) Cattle feed plant

3) Refining plant

Solvent plant

The raw material used the company in this plant is recoiled coconut cake having about 8 %

of oil content. The coconut cake is being put into a slow moving conveyor or belt. The next

process is heating up of the cake and after that hexane a product of petroleum would be spread

into the cake. The mixture of oil and hexane is known as miscella.the next step is to separate the

solvent form the cake and is stride fir use. For one tonnes of coconut cake the usage of hexane is

9.19 kg, Here 24 hr production takes place and it produces 200 tonnes per day.

There are 3 shifts

8. A.M -4 P.M

4. P.M-12.A.M

12. A.M-8.A.M

Cattle feed plant

In this plant the company uses different types of cakes. According to their availability

apart from other material the company uses coconut cake, sun flower cake, mustard cake, soya

been, wheat, calcium, vitamins, cottonseed, phosphate, tapioca, maize jowar and other vitamins.

Except from the coconut cake all other material are purchase from other state. Here 24 hr

production takes place and it produces 650 tones per day.

4.4.3 MMCP Technology

a) Milling

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This is being used for ensuring that all the granules are grinded, screened 3 mm sieve.

The materials feed into grinder are powered and it passes through the screen provided at the

bottom side of the grinding chamber. The hammer mills at 30 tonnes per hour together are used.

b) Mixing

The raw material will be mixed thoroughly by using horizontal mixer. Capacity of this

mixer is 6 m.

c) Cooking

The steam for cooking is produced using 3 million tonnes boiler. The mixer or

homogeniser carry out a strong mixing while the mash is moved forward and added with dry

saturated steam. The cooking is carried out at a temperature of 80 degree Celsius using a high

pressure dry saturated steam.

d) Pelleting

The pellet mill dye by rotating drags the mixture of mash and steam towards the roller.

Which press it and consequently compel i to pass through the hole of the dye. It increases the

density of the mixture, which together with heat generated by the saturated steam facilitates the

extraction of the pellet. Two pellet machines are there with 15 million tonnes per hour capacity

each.

Refining Plant

In this plant oil is refined according to the seasonal demand .Here two types oil are

refined

1. Solvent Extraction Oil

2. Sunflower Oil

Here 20 tons per day is produced .The oil so produced will be colourless and dourless so

it is not used for household consumption. The main users of this oil are oil millers, industries

who use this as an ingredient for its product.

4.5 Purchase Department

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PURCHASE MANAGER

Fig: No: 4.5 Showing the Structure of Purchase Department

Purchase department in KSE Limited mainly concentrate on the purchase of raw

materials for cattle feed. They purchase stock normally for the 20 days .They take stock report

daily and they purchase on the basis of shortage of materials required in production.

The nutritionist prepares the formula for production and requirement of raw material

depend on it. He will prepare the formula by considering the quality ability of raw material etc.

They place order on the basis of fund, go down capacity, availability of labor, space allotted to

each materials and equipment, etc.....

4.5.1 Functions of Purchase Department

57

EXECUTIVE OFFICER

JUNIOR OFFICER

SENIOR ASSISTANT OFFICER

OFFICE ASSISTANT

CLERK

1) To keep a regular check with contracting brokers all over India and thus know the

market price.

2) Check whether the weight of goods in correct or not.

3) Storing the goods in appropriate places for easy retrieval and use.

4) Forwarding payment of foreign charges.

5) To give order to buy the goods.

6) To keep a feasible market to purchase.

4.5.2 Purchase Contract

It is a contract prepare for the purchase of materials. It is signed by two signatories that

is, the purchase manager and the other is GM or FM .It include the following details

1) What material they are going to purchase

2) What quality they are going to purchase

3) At what rate they are going to purchase

4) Whether there is tax included or not

5) Time of purchase

6) The type of packaging

7) Mode of payment

Purchase contract is printed in six copies, 2 copies send to the parties.1 copy returned

with their signature as a token by conformation.1copy for account department .1copy for

godown.1 copy for purchase department.1 copy used as running life. This is the usual system

followed in purchase department.

4.5.3 Purchase Procedure

1) Purchase Requisition

It is a document through which the user department requests the purchase manager to

make arrangement for purchasing the material required. Each departmental head prepares the

purchase requisition report and send it to the purchase manager. On receipt of purchase

requisition report the purchase manager will make necessary steps for purchasing material

that has been mentioned in the purchase requisition report.

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2) Plans are made by the purchase department about what to purchase, how to purchase. When

to purchase and so on.

3) Materials are purchased through brokers. They are not charging any brokerage. They will

send the rate of the materials from different suppliers according to the specification.

4) A meeting of purchase committee held after receiving the quotation. The committee includes

general manager, finance manager and marketing manager.

5) The purchase committee selects the supplier after proper evaluation.

6) The purchase manager then discusses with the suppliers about rate, quality requirements,

quantity, delivery time and packing.

7) If both parties agree they will enter in to purchase contract according to supply and payment.

There will be 6copies of the contract.2 copies to supplier.1 copy to accountsdepartment.1

copy to godown, 1 copy running file in dispatch session, 1copy as a token of confirmation

should send it back by supplier.

8) Purchase order

After selecting the supplier purchase order is send to the supplier .it includes the date of

order, description of the material to be supplied and mode of supply.

9) Receiving and inspection of material

When the material is arrived in to the company, they can enter into the material to check

any compliant in vision and select sample randomly and keep it in 3 packets. Then material

received report will be prepared in factory after getting permission from purchase

department .Company will check whether the bill is as per the contract and enter the order

number and give permission to lorry people. At the time of unloading ,take the sample of from

three packets 1 sample to lab, 1 to nutritionist and 1 sample keep it as check sample in go down.

Generally 90% of the payments are made in advance, when the company receives the

specified material and bill passed on to the stores department. The purchase department will pay

the remaining 10% only after the approval from the laboratory the department. The department

will make cuttings according to the lab reports.

The following table explains the procedure of purchase in solvent plant:

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Table No: 4.6 Showing the Details Procedure of Purchase in Solvent Plant

Purchase Requisition for Materials

Selection of Suppliers

Placing the Purchase Order

Follow up the Order

Receiving and Inspecting Materials

Checking and Passing of Bill of Payment

Source: Company Records

Godowns

1) Storing of goods.

2) Sending material received report to purchase department.

3) Checking goods on arrival.

4) Unloading and preparation of daily stock summery report.

4.6 Store Department

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Fig: No: 4.6 Showing the Structure of Store Department

Store is a place where all the materials required for the production except raw materials is

ordered, received stored and issued. The store all the mechanical spare parts, company broachers,

hand gloves, safety goggles etc....the materials are issued from the store to various departments

on the receipts of requisition form duly signed by the authority.

If the stock of material is less than the minimum required quantity, the store clerk gives

purchase requisition to the store through works manager. On the receipt of the material he enters

it in the system. He also updates on the issues of the materials. So the system quantity and the

physical quantity will be the same

The officer in charge of the general store is store keeper .The store keeper is responsible

for identifying the materials that has reached the order level and is responsible for its storing .the

main item purchased and stored here are spare part of machinery ,packing material, belt chain,

and other miscellaneous articles. This store issues the material to solvent plant, cattle feed plant,

refinery plant and to some other department

61

STORE DEPARTMENT

STORE OFFICER

GO DOWN EXECUTIVE

GODOWN SUPERVISOR

GODOWN ASSISTANT

WORKERWORKER

STORE CLERK

STORE SUPERVISOR

4.6.1Functions

1. Identify the material that has reached the re order level.

2. Storage and proper keep on material.

3. Store all date regarding the storage and supply of material in the

computer .Computerization of this department has helped the company to save a lot of

time and eliminate various records like storage ledger.

4. Issuing material to the consumer department.

4.6.2Inspection of Materials

The materials purchased by the purchase department are inspected by the general stores

and if satisfied are accepted. Otherwise the materials are rejected. The store keeper has the right

to reject the materials if he is not satisfied with the conditions

After checking and verifying the material the general store department repair the material

received report (MMR).It is prepared in 2 copies and one copy is retained the general stores

department for office purpose and the other two copies are send to the purchase department.

4.6.3 Issues of Materials

The store department issues the material only when it is required by the receiving

department by material requisition or slips. These slip are received from the required department

in two copies. out of this 1 copy is send to the accounts department and other one is kept by the

general store department itself.

4.6.4 Periodical Checking of Store

Periodical checking of stores is done by the store department in every six month. The

checking is done by checking physically each and every item in the stores. A written report is

given to the management once in every six month and this report contains the value of materials

also.

4.6.5 Store Handling

62

The store are handled through the required department –personnel .there is no separate

device for store handling .The required department prepare the material requisition or issue slips

and submit to the general store keeper.

It is a full –fledged department itself functioning under marketing department to become

an exclusive dealer of the company ;company sees that the dealer’s agency would be 5kms

away from other KSEL agencies .Market study with the help of the sale representatives will be

undertaken. Social status, financial capacity, go down facility etc of the dealer will also be

studied; the demand of competitors product in the market also will be assessed before giving the

dealership

4.6.6 Store Consumption Statement

It is prepared by the storekeeper and send to the account department for recording it in

the profit and loss account .The consumption of this material by each department are shown in

this statement

4.6.7 General Store

The officer in charge of the general store is store keeper. The store keeper is responsible

for identifying the material that has reached the re order level and is responsible for its storing.

The main item purchased and stored here are spare part of machinery, packing, material, belt,

chain and other miscellaneous articles.

4.6.8Godown

The company store raw material for one month or one and half month. The company has

got more than 7 godowns. In the case of sampling of good all the visible impurities are

identified. The impurities like, fatty acid can be found only after lab analysis. In the go down

they follow FIFO .As the department is computerized annual stock can be calculated easily.

4.7 Quality Control Department

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Fig: No: 4.7 Showing the Structure of Quality Department

The main task of this department is to completely analyze the raw material and point out

defect in it. Normally every week the nutrition has to alter the formula of cattle feed which in

time governed the availability, rate and quality of raw material

Quality parameters

1. Moisture

2. Crude protein

64

Quality Control Department

Nutritionist

Assistant Manager

Chemist

Junior Chemist

Lab Attendent

3. Acid insoluble ash

4. Calcium

5. Crude fibre

For each parameter asset of standard is maintained it should not exceed or below the

standard if it is minimum, then that ingredient is taken with a warning of party

If the level exceed standard then concerned committee can reject that at the spot of

examination

4.7.1 Quality Control in Solvent Plant

In this plant the raw material used is coconut cake. There are many quality tests

conducted to check the quality of material. Air over method is used for identification of the

percentage of protein.sox method is used for determination of percentage of crude fat.

4.7.2 Quality Control in Cattle Feed Plant

The raw material are randomly selected and if it is found defective it would return to

supplier and if the supplier has got any dispute regarding the credibility of company’s

laboratory, the company will send the sample to independent labs. Final statements are made

according to the lab report .After the production of feed quality test is conducted agin.Quality is

the factor ,which helps the company to sell all its products.

4.7.3 Production Specification

1) KS Cattle feed

Protein : 14-16%

Oil content : 2%

2) KS Special Cattle feed

Protein : 14-16%

Crude fibber : 11-12%

3) KS Supper Cattle feed

Protein : 14-16%

Oil : 2%

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Fibber : 12%

4) KS Deluxe

Protein : 16-17%

Fat : 2%

Fibber : 12%

5) KS Deluxe plus

Protein : 17-18%

Fat : 3%

Fibber : 12%

6) KS Supreme

Protein : 22%

Fat : 2%

Fibber : 12%

Sand & Silica : 2

4.7.4 ISO (International Organization for Standardization)

Now days the concept of Quality is undergoing a great change .Quality control often

involve testing well during and after production. Today I.S.O 9000 certification is becoming

almost essential for Indian business house to export their products.

One of the requirements of the I.S.O standard is an effective management

representative who would be responsible for the effective documentation, implementation, and

co-ordination of activities of all senior activities

The standard requires that the management of the organization must clearly

enunciate its quality policy, the intensions and directions of the organization vis-s-vis quality.

Everybody in the organization must understand the policy and work towards its implementation

and maintenance.

The I.S.O (International Standard Organization) certification is applied to quality

management system encompassing quality in all functions such as marketing, design, purchase,

assembly, testing, packing, shipping, installation, after sales service and all other activities of an

organization. I.S.O certification is the mechanism by which a customer can have confidence in a

66

company and is most effective when carried out by a national certification body. The I.S.O series

of standards serve as a basic for ensuring to all providers of goods and services.

4.7.5 Areas Covered in I.S.O 9000 Series

1) I.S.O 9000 provides the guidelines for selection and use of the quality standard.

2) I.S.O 9001 is a quality system model for quality assurance in design/development, production,

installation and servicing. This is the most exhaustive standard. The engineering organizations,

where the manufacturing capabilities are based on in-house design have to work for I.S.O 9001

certification. Manufactures of(a) perishable consumer goods like tooth paste etc. Which have

both servicing and design/development have to work towards I.S.O.9001

3) I.S.O 9002 provides a model for quality assurance only in production and installation. This does

not cover areas of design/development and servicing. I.S.O 9002 also looks at internal quality

audits. Steel plants, departmental store, hospitals, chemical plants etc., where the designing and

do not constitute the key activities may prefer I.S.O 9002.

4) I.S.O 9003 deals only with quality related to final inspection and testing.

5) I.S.O 9004 provides guideline for quality management and quality system elements.

4.8 SWOT Analysis of KSE Limited

1. Learning Objective:

2. To get an idea about strength and weakness Of the company

3. To get an idea about threat and opportunity Of the company

4. To provide valuable suggestions to the company

5. To analyze the performance of the company

6. To know the societal ethics of the company

Table No: 4.7 Showing the Strength and Weakness of KSE Limited

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Strength Weakness

1.      Over 38 years of Experience in the field

1.      High over head cost due to the large size and hike in diesel price

2.      Leadership in the market2.      Cost & availability of raw material is affected by the monsoon

3.      Reputation & brand image of the company & consistent quality of its products

3.      Stagnant number in cattle population affecting mkt growth

4.      Good network of dealership4.      Inadequate promotional activities for dairy products

5.      Capable marketing personal5.      An industries are importing cheaper oils which affects the demand of solvent extracted coconut oil

6.      Financial strength of the company

7.      Acceptability of the feed and it’s Quality standard in the market

8.      Fully computerized plant

9.      Efficient employer-employee relationship

10.  Excellent infrastructure for manufacturing products

11.  Prompt after sales services & good customer relation

12.  Judicial purchase of raw materials

Source: company records

Table No: 4.8 Showing the Opportunities and Threat of KSE Limited

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Opportunities Threat

1.      Expanding its distribution areas1.      Probable entry of multinational entities

2.      Growing demand of its products

2.      Competition from other manufactures of organized and un organized sectors, mostly of recent origin with lower over heads as regards labour

3.      Financial strength of 80%copany leading to better purchasing power

3.      Upward revision of crude oil price increasing the price of ingredients manifold

4.      Removal of value added tax on sale of cattle feed & dollied cake enables the co to effective complete with the other units

4.      Indirect control by government over the price of the milk

5.      Presence of production units in three states helps co those states competitively

5.      The cost and availability of raw material is affected by the monsoon

6.      Setting up of more ice cream productions units for improving volume of products there by profitability of dairy division

Source : Company Records

SWOT Analysis of KSE Ltd. (2011 - 2012)

Strengths:

1. KSE Ltd has got vast experience of over 38 year. Kerala Solvent Extraction limited now

known as KSE Limited was established in 1963,bya handful of coconut millers in and around

Irinjalakuda .the company now produce 750 -800 metric tons of coconut cake a day with

four cattle feed production unit and two solvent extraction plant. The company has

diversified into the area of dairying establishing 2 dairy plants for production of pasteurized

milk and milk products. It has obtained ISO recognition for its commitment to quality and

professionalism.

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2. KSE feed have been highly accepted in the market. Its leadership in the market is mainly due

to its quality standards.

3. KSE provides prompt after sales service and good customer relation.

4. The turnover of the company improved by 22% to Rs.371 crores from Rs.454 crores during

the financial year 2011-2012.through a portion there of may be attributed to the increase in

the selling price of cattle feed. There is considerable volume wise growth in sale of cattle

feed. Cattle feed, Cattle feed sales volume improved by12%when it grew from2.86 lakhs

tones in the previous year to 3.20lakhs tons in the current year.

5. The company has multi-units (having production unit in Irinjalakuda, Palakad, kottayam,

Konikkara,in Kerala state and Swaminathapuram and Thalayuthu in Tamil Nadu state and

Mysore in Karnataka State)multi product company (product such as Cattle feed, Poultry

Feed, Edible oils and milk and milk products)and exporter of cattle feed.

6. KSE is a company which is listed in stock exchange in the country. The shares are listed in

BSE and NSE.

7. The Dairy division excelled its performance by improving the profits from that division by

43% compared to that of previous year. The company achieved a 12.50% growth in ice-

cream sales.

8. KSE has got good network of dealership. Majority of the milk societies in the Thrissur

District are dealers of KSE Ltd, for cattle feed.

9. The company commissioned a new ice-cream plant with 20001 pt capacity at Vedagiri in

March 2011.Though there is stiff competition from other local brands; the company is aiming

to better the performance of Dairy Division with the additional capacities.

10. KSE Ltd has won the best productivity performance Awards instituted by the National

productivity Council, New Delhi in the category of animal feed processing industry for ten

years beginning with 1996-1997.The company has also won the SEA Award constituted by

Solvent Extractors Association of India for Highest processor of Coconut Oil Cake for the

year 2010-2011.this Award is being received by the company for the past 20 years

consecutively since the inception of the award.

Weakness

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1. Cattle feed and solvent industries are passing through a very challenging period. The average

cost of cattle feed ingredients more than doubled over the last 5 years. The company does not

expect a significant fall in the cost of cattle feed ingredients in the immediate future, at the

same time also not expecting a sudden spurt. By optimizing the feed formulation and

adjusting suitably the selling price in tune with the ingredient prices, the company expects to

better their performance in the next year.

2. Upward increase of diesel prices in small dozes and the usage of grains for manufacture of

bio-diesel and ethanol by the developed countries also fuelled the price rise.

3. The availability of local copra cake is still experiencing short supply and high price.The

company has made arrangement s to cover up the shortfall by import of copra cake from

Philippines and Indonesia at comparatively economical price. The price of coconut oil had

surpassed Rs.100a Kg.,which has almost doubled compared to the price a year before, and

this is expected to rule for another 6 months.

4. The State government’s stubborn decision to retain to retain the retail price of milk at

uneconomical levels for the farmer, also is a hurdle for the company to adjust the price of the

cattle feed in tune with the ingredient prices. The competing brands controlled by the state

government holding their feed prices for reasons other than economical also affected our

flexibility in adjusting the feed price.

5. In oil cake processing division, there is a slight fall of 2.65% in the quality of cake processed

.In the fourth quarter the company could not procure sufficient quality of copra cake locally

due to non-availability at reasonable prices and there was delay in the arrival of imported

cake.

6. In dairy division, there is a fall in ice cream sales volume by 3.37% .But this fall in volume is

after reporting an improvement in volume to the tune of 12.50% in previous year.

Opportunities:

1. Removal of value added tax on sales of cattle feed and de-oiled cake enables the company to

work effectively.

2. Presence of production units in two states helps company cover those states competitively.

3. State of the art research facilities and qualified research personal enable the company to add

innovative products and improve exciting products.

4. Expanding its distributing areas.

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5. Growing demand of its products.

Threats:

1. Probable entry of foreign entities in the case of raw material purchasing.

2. Stagnant number in the cattle population affecting market growth in future as a cattle rearing

is still not very economical.

3. Competition from other manufactures of organized and unorganized sectors.

4. Indirect control by government over price of milk which is bottle neck increasing price of

feed to offset increase in raw material prices.

5.1 Observation

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1. Good working environment

2. Updated technology and concepts

3. Performance appraisal system

4. Strict disciplinary action

5. Training programs, meeting according to the needs

6. Satisfying the needs of the customers and employees

7. Safety and security policy

8. Harmony relation between the management and its employees

9. Good co-ordination among the various departments

10. Improved quality standards.

5.2 Suggestion

1) Seasonality is affect the company adversely ,the company must under take some measure s

to solve the problem seasonality.

2) Perishability is one of the main limitation of this industry; new technologies must be

introduced to avoid such problems.

5.3 Conclusion

In Kerala KSE, a company having an annual turnover of Rs.350 crores, is the largest

manufacturer of cattle feed. It provides employment to around 1500 people directly and another

5000 indirectly. Its shares are being listed in three stock exchanges in Cochin, Chennai and

Mumbai. The company commenced its production in the year 1972.

It is marketing of superior quality cattle feed about 1.80 lakh tons annually. KSE had

successfully launched its Vesta brand Ice Cream which has been well accepted in the market for

its matching international quality standards. KSE plans to add more ice cream production units

across Kerala in the coming years to serve all pockets.

KSE is in the oil extraction industry for past 36 years. It is having two solvent plants with

processing capacity of 100 tons per day. The company has also a chemical oil refining plant of

20 tons per day. The company has secured the National Productivity Award for the year 2001-

2002 for being first in terms of production efficiency in the animal feed sector. This is the sixth

time in a row that the company is being selected for this most coveted award.

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It is pertinent to note that in the Kerala industrial scenario, where many companies are

closing down, either due to labour unrest or due to other economic reasons, KSE continues to

commence new ventures each year and run them successfully. The company is having six units

at different locations. The relation with the labour unions of all these units is very warm and

cordial. KSE, with a capital base of Rs.36 crores embarks on an expansion to double its solvent

extraction capacity and add a most modern eco friendly vegetable refining plant. The company

has already identified six acres of land in the KINFRA small industries park, Koratty for this

expansion.

In the first phase, the company plans to install one 200 MT per day solvent plant for

processing oil cakes and also a 100 MT per day physical refining plant. Both these plants will be

of international standard using most modern technologies, where the process loss is kept to

minimum. The project will generate direct employment to 125 and indirect employment to

another 500 numbers. In the second phase, a 100 MT per day oil fractionation unit will also be

added.

As a pioneer in the solvent extraction industry, leader in cattle feed manufacture, and an

emerging force in ice cream and a resourceful new entity in diary development and milk

products, KSE is determined to move with the times, taking on new challenges, achieving new

milestones.

The study helped to know and understand how the management of this company make

use of the management concept ,theories and its principles in the practical environment of the

organization.

5.4 Bibliography

a) Annual report KSE Ltd. 2010 - 2011

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b) www.kseltd.com

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