Principles and Practices of Management Project on Co-operative Society at KMF: An Overview

Karnataka State law University. Navanagar, HUBLI – 580 025. ------------------------------------------------- Phone: 0836-2222392 Fax: 0836-2223392 ------------------------------------------------- Website: www. kslu. ac. in Principles and practices of management PROJECT:- done at KMF ( co-operative society) NAME:- Santosh B. M. CLASS:- B. B. A. ,LL. B(HONS)(1STSEM) R. NO:- 08 DATE:- 20-10-2012 SUBMITED TO:-Mr. Gangadhar G. TABLE OF CONTENTS * INDUSTRIAL PROFILE a) Introduction to co-operative society, ) Background, c) Evolution or development. *

COMPANY PROFILE

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• a) Background of company,
• b) Vision and mission statement society,
• c) Evolution of KMF,
• d) Products profile,
• e) Area of operation,
• f) Ownership pattern,
• g) Competitor information,
• h) Infrastructural facilities,
• i) Achievement or award if any,
• j) Future prospectus. *

MC KENSY’S 7s FRAME WORK

• a) Structure,
• b) Skill,
• c) Style,
• d) Strategy,
• e) System,
• f) Staff,
• g) Share value. *

SWOT analysis. * Summary of latest annual report. (a)

INTRODUCTION TO CO-OPERATIVE SOCIETY

There is no universally accepted definition of a co-operative. In general, a co-operative is a business owned and democratically controlled by the people who use its services and whose benefits are derived and distributed equitably on the basis of use. The user-owners are called members. They benefit in two ways from the co-operative, in proportion to the use they make of it. First, the more they use the co-operative, the more service they receive. Second, earnings are allocated to members based on the amount of business they do with the co-operative.

In many ways, co-operatives resemble other businesses. They have similar physical facilities, perform similar functions and must follow sound business practices. They are usually incorporated- under state law by filing articles of incorporation, granting them the right to do business. The organizers draw up bylaws and other necessary legal papers. Members elect a board of directors. The board sets policy and hires a manager to run the day-to-day operations. But in some ways, co-operatives are distinctly different from other businesses.

These differences are found in the co-operative's purpose, its ownership and control, and how benefits are distributed. They are reflected in co-operative principles that explain the unique aspects of doing business on a co-operative basis. CO-OPERATIVE SOCIETY A co-operative society is formed by the people of limited means for self help through mutual help. It is set up to protect economically the poor sections of the society. It is set up for cooperation, not for competition. The motto of a society is self help, without dependence on other business units.

DEFINITION

According to Herrik,"Cooperation is an action of persons voluntarily united for utilizing reciprocally their own forces, resources or both under mutual management for their common profit or loss. " According to Mr. Plunket, "The cooperation is self help made effective by organization. " Co-operative Society

ADVANTAGES OF CO-OPERATIVE SOCIETY

Following are the important advantages or merits of co-operative society:

• 1. Advantage for Farmers
• 2. Easy Formation
• 3. Equal Rights .
• 4. Equal Distribution of Wealth
• 5. Economic Democracy .
• 6. Elimination of Middlemen
• 7. Financial Assistance
• 8. Friendly Relations
• 9. Improve the Standard of Living.
• 10. Increase in Employment

DISADVANTAGES OF CO-OPERATIVE SOCIETY

Following are the disadvantages of co-operative societies:

• 1. Lack of Capital
• 2. Untrained Supervision
• 3. Defective Organization
• 4. Illiterate and Ignorant.
• 5. Lack of Experience
• 6. Lack of Discipline
• 7. Lack of Sincere Management
• 8. Lack of Profit Incentive
• 9. Lack of Secrecy
• 10. Lack of Knowledge (b)

BACKGROUND AND EVOLUTION OF CO-OPERATIVE SOCIETY

In one sense, cooperation is probably as old as civilization.

Early people had to learn to work together to meet their common needs, or perish. The Pilgrims who settled at Plymouth, jointly cleared fields abandoned by the Indians, broke up the soil, and planted and cared for their corn. After the harvest, celebrated with the Indians in 1621 with a Thanks giving fest, the corn was shared equally among the settlers. Legend suggests that the initial structured co-operative business in the United States was the Philadelphia Contribution-ship for the Insurance of Houses from Loss by Fire, a mutual fire insurance company established in 1752.

This association's reputation is likely based on two factors. First, Benjamin Franklin was the organizer. Second, the business has been conducted so efficiently over the years that it is still operating today. In the early 1800s, co-operative businesses appeared on several fronts. In Britain, co-operatives were formed as a tool to deal with the depressed economic and social conditions related to the struggles with Napoleon and industrialization. In the United States, farmers began to process their milk into cheese on a co-operative basis in diverse places such as Goshen, CT, and Lake Mills, WI.

Writers sometimes trace the origin of co-operatives from the Rochdale Equitable Pioneers' Society, an urban, consumer co-operative organized in England in 1844. It sold consumer goods such as food and clothing to persons unhappy with the merchants in the community   While neither the first nor most successful early co-operative, the Rochdale Society developed an active outreach program, encouraging and assisting others to form co-operatives. It also prepared a written list of practices and policies that seemed consistent with success of such efforts.

This list became one of the first sets of co-operative principles, characteristics that distinguish co-operatives from non co-operative businesses. The Grange, founded in 1867, quickly became the major thrust behind agricultural and rural co-operatives in America. In 1874, a Grange representative went to Europe to gather information about co-operatives. In 1875, the Grange published a set of rules for the organization of co-operative stores, based on the Rochdale principles. Local granges organized stores to serve their rural members.

They sold groceries and clothing as well as general farm supplies, hardware and agricultural implements. Granges in the South marketed cotton. Those in Iowa operated grain elevators. In Kentucky, they sponsored warehouses for receiving and handling tobacco. California Granges exported wheat and marketed wool. As the country recovered from the depression of the 1870s, fewer Granges were organized and many co-operatives went out of business, but the impact of the Grange co-operative movement survives.

It demonstrated that the Rochdale type of co-operative, which handled goods at prevailing prices and distributed net savings according to use, offered a sound basis for co-operative efforts in America. Cooperation flourished during the three decades from 1890 to 1920. As many as 14,000 farmer co-operatives were operating by the end of the period. Co-operative growth was fueled by the wave of other farmer movements and farm organizations sweeping the country, such as the American Society of Equity, National Farmers Union, and the American Farm Bureau Federation.

They were engaged in marketing virtually every farm crop and furnishing supplies and services to their producer-members. Many of today's major farmer co-operatives were formed during this period. The following decades have seen farmer co-operatives develop their own financial institutions through the Farm Credit System. Non agricultural co-operatives likewise developed the National Co-operative Bank. With help from the Rural Electrification Administration, rural residents used co-operatives to bring electric and telephone services to their towns and farms.

The rural electrics formed the National Rural Electric Co-operative Finance Corporation (CFC) as a supplemental source of financing. Some co-operatives have become larger, partially in response to growing concentration among their competitors and the firms their members must deal with. They have adopted modern management techniques and sophisticated processing, distribution and marketing methods. Today rural and urban residents use co-operatives to acquire consumer services such as housing, credit and other financial services (through credit unions), groceries, education and telecommunications. Franchisees, governmental nits, hardware and grocery stores, florists and numerous other businesses use co-operatives to market their products and secure the supplies they need at competitive prices. (a) BACKGROUND Of KMF Every one in karnataka as well as india knows a bit about ‘ Karnataka Co-operative Milk Producers' Federation Limited' (KMF) is the Single Body in Karnataka representing Dairy Farmers' Co-operatives. It is the second largest dairy co-operative amongst the dairy co-operatives in the country. In South India it stands first in terms of procurement as well as sales. One of the core functions of the Federation is marketing of Milk and Milk Products.

The Brand  ‘NANDINI’ is the household name for Pure and Fresh milk and milk products. KMF has 13 Milk Unions throughout the State which procure milk from Primary Dairy Co-operative Societies(DCS) and distribute milk to the consumers in various Towns/Cities/Rural markets in Karnataka. The first ever World Bank funded Dairy Development Program in the country started in Karnataka with the organisation of Village Level Dairy Co-operatives in 1974. The AMUL pattern of dairy co-operatives started functioning in Karnataka from 1974-75 with the financial assistance from World Bank, Operation Flood II ; III.

The dairy co-operatives were established under the ANAND pattern in a three tier structure with the Village Level Dairy Co-operatives forming the base level, the District Level Milk Unions at the middle level to take care of the procurement, processing and marketing of milk and the Karnataka Milk Federation as the Apex Body to co-ordinate the growth of the sector at the State level. Coordination of activities among the Unions and developing market for Milk and Milk products is the responsibility of KMF. Marketing Milk in the respective jurisdiction is organized by the respective Milk Unions.

Surplus/deficit of liquid milk among the member Milk Unions is monitored by the Federation. While the marketing of all the Milk Products is organized by KMF, both within and outside the State, all the Milk and Milk products are sold under a common brand name NANDINI. (b) MISSION AND VISION OF COMPANY Vision * To march forward with a missionary zeal which will make KMF a trailblazer of exemplary performance and achievements beckoning other Milk Federations in the country in pursuit of total emulation of its good deeds. To ensure prosperity of the rural Milk producers who are ultimate owners of the Federation. * To promote producer oriented viable co-operative society to impart an impetus to the rural income, dairy productivity and rural employment. * To abridge the gap between price of milk procurement and sale price. * To develop business acumen in marketing and trading disciplines so as to serve consumers with quality milk, give a fillip to the income of milk producers. To compete with MNCs and Private Dairies with better quality of milk and milk products and in the process sustain invincibility of co-operatives. MISSION * Heralding economic, social and cultural prosperity in the lives of our milk producer members by promoting vibrant, self-sustaining and holistic co-operative dairy development in Karnataka State (c) Evolution Karnataka Milk Federation which is most popular as KMF, evolved itself as a premier and most profitable dairy farmers' organization in the State of Karnataka.

As an agency in 1975 to implement the World Bank Aided Dairy Development Projects, Karnataka Dairy Development Corporation (KDDC) was formed, the company grew itself fast and as it spreads the wings of new found rural economic activity - Dairying all over the State, the genesis of apex co-operative body took the shape of KMF in 1983 encompassing entire State with 13 District Co-operative Milk Unions executing the various parameters of Dairy activity - organization of Dairy Co-operatives, Milk Routes, Veterinary Services, Procurement of milk in two shifts of the day, Chilling, Processing of milk, distribution of milk and also establishment of Cattle Feed Plants, Nandini Sperm Station, Liquid Nitrogen Supply, Training Centres - as its main stay. The entire system was reconstructed on the model of now well known `ANAND' pattern dairy co-operative societies. Eight southern districts of Karnataka was considered initially with a target of organizing 1800 Dairy Co-operative Societies, four Milk Unions and processing facilities were set up to the tune of 6. 5 lakhs per day by 1984. Under Operation Flood - II ;III, project which started in 1984 ; 1987 covered the remaining parts of Karnataka. Thirteen milk unions are organized in 175 talukas of all 20 districts then and the field work was extended by organizing more dairy co-operative societies. The processing facilities i. e. hilling centers, milk dairies and powder plants were transferred in phases to the administrative control of respective co-operative milk unions and the activities continued to be implemented by these District Organisations. Additional processing facilities were created ; existing facilities augmented every decade with the help of Govt. / Zilla Panchayat and NDDB to handle ever increasing milk procurement without declaring milk holidays. The processing facility as exists at 32. 25 lakh liters/day is further strengthened. (d) AREA OF OPERATION IN KARNATAKA KARNATAKA MAP In this Karnataka map we can see the area of operation of K. M. F the symbol is K. M. Fs area of operation in Karnataka. K. M.

F is having branches in almost all districts of KARNATAKA UNITS OF KMF KMF has the following Units functioning directly under its control: * Mother Dairy, Yelahanka,Bangalore. * Nandini Hi-Tech Product Plant, Channarayapatna. * Nandini Milk Products, KMF Complex, Bangalore. * Cattle Feed Plants at Rajanukunte/Gubbi/Dharwad/Hassan. * Nandini Sperm Station (formerly known as Bull Breeding Farm ; Frozen Semen Bank) at Hessaraghatta. * Pouch Film Plant at Munnekolalu, Marathhalli. * Central Training Institute,Bangalore ; Traning Institutes at Mysore/Dharwad. * Sales Depots at B'lore,Mysore,M'lore,Hubli,Gulbarga,Tirupathi ; Kannur (e) OWNERSHIP PATTERN Ownership K. M. F is like this a) District co-operative societies (b) National dairy development board (f) PRODUCTS PROFILE Nandini homogenized milk in pure milk which is homgenized And pasteurization consistent right through it gives you more cup of tea and coffee and its easily digestable. Nandini ghee made purely from cows milk and not adultrated. and good for health Cows pure milk, UHT processed bacteria free in tamper proof tera fino pack . which keep milk fresh upto 60 days without refrigeration until opened , available in 500 ml and also in 1 liter Toned milk from nandini fresh and pure milk containing 3. 0 % fat and 8. 5% snf . available in 500 ml 1 liter .

Full ice cream milk from nandini containing 6% fat and 9% SNF a rich creamy and tastier milk for home made sweets. (e) COMPETATORS INFORMATION 1. Arokya milk dairy- it procures most of its milk from milk unions of belgum . it procures 10,000 liter’s of milk every day. It’s located near desur ,near belgum 10 km away from city on NH-4. 2. Mayor dairy - it procures milk from belgum and other regional dirsticts mainly chikkodi, rayabhag ,and athani. Procures more than 25,000 liters daily. its located near kholapur,and supplys milk to all over state. 3. Adity milk dairy – a well known company in north Karnataka and procures milk 25,000 milk (approx) 4. Ram-Rahim milk dairy - this is solely owned small scale rivate company established in1987 with an investment of 2. 28 lack in dharwad (f) FUTURE PROSPECTUS PERSPECTIVE PLAN- 2010 - After the closure of OF-III project. Government of Karnataka and NDDB signed an MOU during February 2000, for further strengthening the Dairy Development Activities in Karnataka with an outlay of Rs. 250 Crores. Consequent to the announcement of new lending terms and conditions by NDDB through an evolution of an action plan - Perspective 2010 to enable the dairy co-operatives to face the challenges of the increased demand for milk and milk products by focusing efforts in the four major thrust areas of Strengthening the Co-operatives.

Enhancing Productivity, Managing Quality and building a National Information Network, plans are under implementation. FUTURE VISION To consolidate the gains of Dairying achieved in the state of Karnataka and with a view to efficiently chill, process and market ever developing and increasing milk procurement with an utmost emphasis on the Quality and in the process conserve the socio-economic interests of rural milk producers, the Govt. of Karnataka through KMF has proposed to undertake several projects with financial and technical support of NDDB for which an MOU was signed between Govt. of Karnataka and NDDB on 10th Nov. 2004. (g) THE GROWTH PROCESS The growth over the years and activities undertaken by KMF is summarised briefly hereunder:

ITEMS| UNITS| 1976-77| 2011-2012(Up to Mar'12)| 2012-13(Upto Aug'12| Dairy Co-operatives| Nos| 416| 13006 REGED / 11568 Funct|     13242 REGED /11773Funct                   | Membership| Nos| 37000| 21. 51 Lacs|                 21. 84 Lacs| Avg. Milk Procurement| Kgs/day| 50000| Avg. 42. 85   Peak Proc. 46. 49(Nov'11) LKPD| Avg. 49. 45Peak Proc. 52. 76(June'12LKPD| Milk Sales| Lts/day| 95050| 28. 90 LLPD / Curd:2. 74 LKPD / Good life  2. 19 LLPD| 28. 18 LLPD / Curd:3. 11 LKPD / Good life  2. 19   LLPD| Cattle Feed Consumed| Kgs/DCS| 220| 2958| 3025| Daily Payment to Farmers| Rs. Lakhs| 0. 90| 785|                     987| Turnover| Rs. Crores| | 5823. 69|                ----------| World Bank Study - Observations

The World Bank, in its study on the effect of Co-operative dairying in Karnataka, has pointed out that : * The villages with Dairy Co-operative Societies are much better off than those without. * The families with dairy cattle are economically better than those without dairy cattle. * Women who had no control on the household income have better control in terms of Milk Money. * A single commodity ? MILK? has acted as a catalyst in the change in the Socio-Economic impact of the rural economy. * There is a positive impact on those at the lower end of the economic ladder both in terms of landholding and caste PART B MC KENSY’S 7S FRAME WORK

MC Kensys’s 7s frame work – the 7s is popularly known as mc kensy’s 7s ,because two persons developed this model Tom peter and Robert waterman . they both have been consultants at MC Kensy’s co. At that time they published 7s in their article ‘STRUCTURE IS NOT ORGANISATION’ , in 1980 . ‘ART OF JAPANESE MANAGEMENT’ in 1981,and in ‘IN SEARCH OF EXCELLENCE’ in 1982. Model consists of 7 elements they are distinguished as ‘hard and soft skills’. Hard skills are feasible and easy to understand, soft skills are known by workers department. I. (a) STRUCTURE OF ORGANISATION UNDER BOARD OF MANAGEMENT II. (b) STRATAGY * To achieve national goal K. M. F works a lot to change according to consumer needs and taste. Maintaining consistant growth adn expansion of market all over india. * Tries to stick to stick to plan and achieves objectives. * Maintaining quality of product and acquiring market. III. (c) SYSTEM K . M. F works in a systematic manner in production and in management ,while producing they follow to ways * Maintaining enough inventory. * Well equipped storage facility. * Fast transportation. IV. (e) STAFF - This co-operative society makes use of various principle of staffing and recruitment Other like personel, promotion, induction, salaries, and other benifits to make thir woekers perform well and to extract maximum from their work. V. (f) SKILL

Here staff is recruited according to skill , like differentiating between educational skill and hard skills . and they also train their workers for skill development. VI. (g) STYLE K. M. F a specific style of work like it (a) strictly follows rules and regulation (b) co-ordination between workers (c) reliable and dependable VII. (h) SHARED VALUES Some fundamental and core values which are spread and shared in the organisation in KMF they are * Consumer satisfaction, * Commitment to quality, * Cost and time conciseness, * Innovative and creativity, * Trust and team spirit , * Individual respect, * Integrity. PART C S. W. O. T ANALYSIS STRENGHTS * enjoys good market, * Wide distribution, * It has good will, * Enjoys market region * Less transport cost to local areas, * WEAKNESS * Less sales and consumer handling, * Commissions paid is less compared to other brands, * In adequate sales promotional activities, * OPPORTUNITIES * There is scope in new developing areas * Availability of milk , * Wide area to extract source, * THREATES * Lots of emerging pioneer companies, * Low level of consumer awareness, * Tough competition. ANNUAL REPORT As we can see that annual report of company is quite impressive , and company is performing well. BIBLIOGRAPHY 1. KMF DHARWAD.

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