MIRA INFORM REPORT

Report Date :

16.03.2007

IDENTIFICATION DETAILS

Name :	MEHSANA DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LIMITED
Registered Office :	Post Box No. 1, “Dudhsagar Dairy”, Mehasana, Gujarat
Country :	India
Date of Incorporation :	8.11.1960
Legal Form :	A cooperative society with limited liability of the Members
Line of Business :	The society is engaged in collection of milk from various milk producer union to make milk product.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Good
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established society having satisfactory track. Trade relations are fair. Payments are usually correct and as per commitments. Nothing adverse reported. The society can be considered good for any normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Post Box No. 1, “Dudhsagar Dairy”, Mehasana
Tel. No.:	91-2762-253201
Area :	large
Location :	owned

SOLE PROPRIETOR/PARTNERS/DIRECTORS

Name :	Mr. M R Chaudhari
Designation :	Chairman
Name :	Mr. V D Patel
Designation :	Vice Chairman
Name :	Mr. K V Chaudhari
Designation :	Director
Name :	Mr. H N Patel
Designation :	Director
Name :	Mr. I G Desai
Designation :	Director
Name :	Mr. M A Thakor
Designation :	Director
Name :	Mr. M S Patel
Designation :	Director
Name :	Mr. A S Chaudhuri
Designation :	Director
Name :	Mr. G K Joshi
Designation :	Director
Name :	Mr. N B Prajapati
Designation :	Director
Name :	Mr. D K Chaudhari
Designation :	Director
Name :	Mr. D G Patel
Designation :	Director
Name :	Mr. M V Patel
Designation :	Director
Name :	Mrs. M J Chaudhari
Designation :	Director
Name :	Mrs. K V Dabhi
Designation :	Director
Name :	Mrs. L P Chaudhari
Name :	Mr. M K Patel
Designation :	Director
Name :	Mr. B M Vyas
Designation :	Director
Name :	Dr. K R Trivedi
Designation :	Director

BUSINESS DETAILS

Line of Business :

The society is engaged in collection of milk from various milk producer union to make milk product.

GENERAL INFORMATION

No. of Employees :	3000 persons.
Bankers :	The Mehsana District Central Co-operative Bank Limited, Mehsana Bank of Baroda, Mehasana.
Facilities :	--

Banking Relations :	--
Auditors :
Name :	Special Auditor (Milk), Chartered Accountant
Address :	Milk Audit Office, Gujarat State, Mehsana.

LOCAL AGENCY FURTHER INFORMATION

Fixed assets

Land, Fencing Wall, Roads, Building (Factory, Office, Godown Etc.), Plant & Machinery, Cans, Furniture, Fixtures & Equipments, Dead Stock Motor Tools Etc And Vehicles.

Press Release:

Milking success against odds

INDIA - Milking success against all odds, that could well sum up the success mantra of the Mehsana District Co-operative Milk Producers’ Union (MDMPU). Despite scarcity in fodder, unfavourable weather and poor resources, the co-operative has ranked highest in daily milk production among all 16 dairy co-operatives in Gujarat.

The MDMPU registered in the range of 16.50 lakh litres per day (LLPD) milk production in the year 2005-06, contributing to one-third of the LLPD milk production in the State. This year it stands at 50.83 LLPD, an increase by 1.90 per cent.

Chairman of the Mehsana District Co-operative Vipul Chaudhary attributes this to the fact that farmers in the areas have to mainly undertake milk producing activities in the absence of alternative livelihoods. ‘‘Due to adverse climatic condition, farming is not possible in the area and there is no other source of livelihood for people either. This leads them to fall back upon rearing cattle for producing milk,’’ he said.

Besides, calculated measures focused on increased milk production by the 1,241 societies that the Union involves, has also helped fight climatic odds, an important one being the scarce fodder supply as it’s a dry area. There has been a detailed effort on part of the Union to increase cattle fodder, Sagardan.

‘‘They have been making full-capacity utilisation of the Sagardan-producing plants at Boriavi and Ubkhal, which has a current capacity of 450 MT and 300 MT respectively,’’ said Lokesh Kulshrestha, assistant officer (Technical), Doodhsagar Dairy at Mehsana. The production capacity is expected to augment with an additional 150 MT capacity per day in each.

Introduction
The setting: Mehsana District

The Mehsana District Milk Producers' Union Ltd.

Livestock services in Mehsana District

Livestock services offered by the state government

Production inputs and livestock services in Mehsana Union

Compounded balanced cattle feed

Promotion of fodder production

Animal health care

Veterinary first aid

Mobile veterinary services

Animal health camps

Preventive veterinary care

Artificial insemination

Sperm station in Mehsana

Progeny testing of Mehsani buffalo bulls

Extension support Costs for inputs, services and extension support

Impact of the milk union and social dimensions

Lessons learned

Points for discussion

Annex. Activities of the Mehsana Union (1994–2000)

History

Gujarat is one of the most highly industrialised and progressive states in India, with high rates of growth both for industry as well as for agriculture. Gujarat is also the leader and trendsetter in India for organised dairy development in the co-operative sector. The Anand Pattern of co-operative movement is made up of a three tier co-operative structure comprising: (i) Dairy Co-operative Societies (DCSs) in villages; (ii) District Milk Producers' Unions (DCMPUs) affiliating the DCSs in districts; and (iii) the apex Co-operative Milk Marketing Federation affiliating the district unions at the state level. This model has now become the most stunningly effective institutional model for rural milk production and dairy development in India. These co-operatives, at all three levels, are fully owned by the members, enjoy complete autonomy and are directly managed by them through the boards of directors, elected by them from among themselves.

The Gujarat Co-operative Milk Marketing Federation (GCMMF), the apex body of the Gujarat milk co-operatives (13 district milk unions), is today the single largest food company in India and is the owner of the brand name 'Amul', famous all over the world for milk and milk products. In 1999–2000, the federation handled some 1.6 million tonnes of milk (daily average of some 4.4 thousand tonnes) collected by its member unions and had a turnover of Rs. 22.20 billion (US$ 1 = Indian Rupees 46.7 on 1 January 2001). Milk and milk products of Amul and its sister brand 'Sagar', are marketed all over India and in quite a few countries overseas. The Mehsana Milk Union, affiliated to this federation, is one of its founder members and a co-owner.

The setting: Mehsana District Mehsana is one of the 19 districts in the state of Gujarat, eighth in the order of size, with 9027 km² as its total area, located in North Gujarat between the Rann (Desert) of Kutch tothe west and the districts of Sabarkantha to the east, Banaskantha to the north and Ahmedabad forming the southern border. Mehsana was a part of the state of Baroda until the reorganisation of States post independence and enjoys a somewhat higher social development index compared to state averages. The literacy rate in the district for example is 55% as against the state average of 51% and it has a large basic educational infrastructure. The human population in Mehsana District was 2.94 million in 1991 and some 80% of them live in rural areas. The district had 11 Talukas (administrative divisions), 1093 inhabited villages and 15 urban agglomerations or towns, but only one out of them has a population of more than 100 thousand. The projected population in the district for 2001, based on the 1981–91 decennial growth rate, is 3.39 million.

About 0.94 million hectares are cropped in the district. Rainfall is medium (600–700 mm) and spread over 8 months, but most of it (90%) comes during the months of June to September. Mehsana is one of the top four irrigated districts in Gujarat and the sources of irrigation are deep bore wells (almost 70%), surface wells, tanks and canals. The gross irrigated area is 0.50 million hectares, over 50% of the total cropped area. Major crops grown in the district, in the order of area cultivated, are oil seeds, pearl millet, wheat, sorghum, rice and pulses; the minor crops are cotton, castor and psillium.

Distribution of land holdings in Mehsana is highly inequitable; it is the same as in the rest of the state and the country. Marginal and small farmers account for 61.45% of the total holdings, but they own or operate less than 26% of the total farming land. The average land holding is 0.55 ha in the case of marginal farmers and 1.45 ha for smallholders. Many of these holdings are held jointly by several members of the family, mostly male siblings. The distribution of the operational land holdings across the different categories and milch animal holding within land holding categories are presented in Figures 1 and 2.

Livestock holdings in general and bovine holdings in particular appear to be more equitable than land holdings. Marginal and small farmers account for nearly 48% of the milch animals. Even land less agricultural labourers own milch animals in Mehsana and earn additional incomes from the sale of milk. Together these three categories form the core milk production sector and own over 67% of the milch animals. This too is consistent with the national trends. Milch animal holding per household among them varies, with an average of one to two cows or buffalo or a combination of the two.

Mehsana District is richly endowed with high quality cattle and buffalo; the district is the natural breeding tract of two of the most promising Indian Breeds—the Mehsani buffalo and the Kankrej cattle. Mehsani buffalo is a new breed buffalo in India. Historical evidence indicates that during the rule of the Gaekwad, Sayaji Rao of Baroda state, Murrah buffalo bulls were imported into the district from as far away as Alwar in north-eastern Rajastan as a regular policy, for improving milk production in the local Surti breed of buffalo. The present day Mehsani buffalo evolved as the result of several generations of inter se mating of the Surti × Murrah hybrids under this policy. They are large animals closer to the Murrah breed in appearance, milk or fat yields and to the Surti in breeding efficiency. The Mehsani buffalo are good dairy animals and produce 1500–2000 kg of milk per lactation with 7% average fat. Data from the Dairy herd Improvement Programme Action (DIPA) Scheme of the Mehsana Union show that standard first lactation milk yields of progeny test heifers average some 1900 to 2070 kg and age at first calving average some 35 to 46 months, for records spread over 10 years between 1991–2000 and for some 3500 daughters under village conditions. High yielding females among the Mehsani buffalo produce 3000 to 3500 kg milk per lactation and such animals are regularly exported to Bombay city for commercial milk production in the city stables.

Kankrej cattle are large, white and majestic with adult body weight averaging 500–600 kg and full-grown breeding bulls weigh some 800 kg. They are officially listed as a dual-purpose breed, but are good milkers. Castrated Kankrej male (bullocks) are considered to be the best draft animals among cattle in India and have a power rating of 0.7 horse power. They can till some 0.3 ha of farm land in a 6 hour working day. Kankrej cows average some 1200 kg of milk per lactation with 4% fat. They have wide selection differential for production traits (a small percentage of the cows produce well over 3000 kg per lactation and institutional herds of Kankrej cows are known to have the first calf by the age of 36 months) and are excellent candidates for development as a commercially viable dairy breed through selective breeding.

The population of cattle and buffalo in Mehsana District in 1992 (results of the 1997 round of the quinqennial livestock census are not available as yet) is presented in Table 1. Milk production estimates for the state and for Mehsana District for 1995–96 are 4.61 and 0.65 million tonnes, respectively, roughly 60% of it is contributed by buffalo. Mehsana is a district with the highest milk production in Gujarat and accounts for some 14% of the state's total milk production.

Table 1. Cattle and buffalo population in Mehsana District.

No.	State and District	Cattle: Crossbred/indigenous	Buffalo
1	Gujarat	231,323/6,572,151	5,267,785
2	Mehsana	44,054/254,006*	635,762**
3	Per cent to state total	17.34/3.86	12.07

Mostly made up of Kankrej and Kankrej type of cattle. ** Mostly made up of Mehsani and Mehsani type of buffalo.

The Mehsana District Milk Producers' Union Ltd.

The milk producers' co-operative movement started in Anand, Kaira District of Gujarat in the mid forties, set up by the milk producers and their enlightened leaders, as an alternative to the highly exploitative and unfair milk trade foisted on them by middlemen and private dairy companies in Anand and Bombay. The spectacular success of the Anand Milk Union Ltd (Amul), its rapid growth and democratic management set up, made it an ideal model for rural milk production and marketing for the rest of Gujarat. It enabled the milk producers to gain direct access to far flung urban milk markets, earn a lion's share of the consumer rupee for their products, eliminating middlemen. Shri. Mansinhbhai P. Patel, the then Vice President of the Mehsana District Development Board was inspired to copy the model in Mehsana for the benefit of the milk producers in that district. The Mehsana District Co-operative Milk Producers' Union Ltd. came into being in November 1960 with the help and sustained support of the Anand Milk Union. By 1965 the Mehsana Milk Union had its own dairy plant for processing the milk produced by its members. The Mehsana Union then proceeded to steadily build up an infrastructure for collection, processing, and marketing of the growing volumes of milk supplied by its members and to provide the members with all inputs and services required by them to enhance milk production, reduce costs and improve farmers' incomes.

Mehsana Milk Union is registered under the Gujarat State Cooperative Societies Act of 1965 and is governed by the rules and regulations of this Act. The Act is more restrictive than enabling and is overdue for revision and modernisation. Though the union is strong and vibrant both in its structure as well as in financial terms, and even though it receives no financial assistance from the state government, the Act enables the government to intervene in the affairs of the union and to supercede its legally elected farmer board at will. There had been repeated demands from the farmer members and their elected leaders for review and revision of the Act.

The management structure of the union comprises the Board—board from among the primary members nominated by the DCSs and a chairperson elected from among the board members. Professionals manage the union under the guidance and control of the board. The tenure of the chairperson is one year and a new chairperson is elected each year, even though the incumbent chairperson is eligible for re-election and is often re-elected for continuity and to support long-term development of the union. The present chairperson of the Mehsana Union, Mr Motibhai R. Chaudhury, had been the chairperson of the union for over 30 years. Elected boards from among the primary members of the society also govern the DCSs; and they in turn elect a chairperson from among them. The paid secretary of the DCS and his staff work under the supervision and control of the board.

Milk collection in Mehsana Milk Union follows the Anand Pattern Co-operative set up through village dairy co-operative societies in all major villages in the district, organised along viable milk collection routes (see Map). The DCSs collect milk from their members twice a day, test it for fat content and pay a quality based price to the members, twice daily. The milk collected is picked up by the route milk trucks or tankers twice a day and is delivered to the dairy plant or chilling plant of the union for processing or storage or marketing. Starting with 11 DCSs and an opening volume of some 5000 litres per day, the Mehsana Milk Union now covers the entire district, and has some 1078 dairy co-operative societies and, by 1999, a daily average milk collection volume of 1.13 million kg; and some 415.2 thousand tonnes annually. The end use of the milk collected is presented in Table 2.

Table 2. End use of milk collected.

No.	End use	Quantity  (× 10^3 t)
1	Liquid milk	32.1
2	Skim milk powder	9.7
3	Whole milk powder	3.1
4	Baby food	11
5	Dairy whitener	3.1
6	Table butter	8.3
7	White butter	1.2
8	Ghee (clarified butter)	4.71

Source: GIS database, National Dairy Development Board, Anand.

Notes: Dark dots indicate DCSs; large dots indicate urban agglomerations.

Map. Spread of dairy co-operative societies (DCSs) in Mehsana District.

Milk collection in Mehsana has seasonal swings, as buffalo are seasonal breeders with most of the freshening taking place in the monsoon and winter months. This influences milk procurement substantially. The lean flush ratio of procurement volumes is usually 1:2. This in turn influences the union's milk processing capacity, as the union has to pitch the dairy plant capacity to peak collection volumes. The union also has to programme its product mix in order to enable it to mop up all the surplus milk produced by the members during the flush. To have some influence on the milk production swing, the union practices a judicious milk price swing, paying farmers a lower price for the flush season milk and a rewarding increase in price for lean season production. Mehsana has now become the largest among the milk unions in Gujarat in terms of milk collection volumes and overall turn over. Milk procured by the union averages some 65% of buffalo milk and 35% cow milk. Pricing of milk is therefore based on a 'two axis pricing system' (valuing fat and solids-not-fat in milk on the basis of what the market pays for them and determining on that basis price parity between fat and solids-not-fat) to enable fair prices for both cow and buffalo milk, as they have distinctly different solids contents ratio. At the DCS level actual payment is made to members using a ready reckoner. The unions growth over the years 1960–2000 is presented in Table 3.

Table 3. Growth of the Mehsana Milk Union 1960–2000.

Growth factors	1960–61	1965–66	1972–73	1994–95	1999–2000
Dairy co-operative societies (no.)	11	239	407	1009	1078
Primary producer members (no.)	1000	22,000	70,000	289,600	366,555
Milk procurement (t)	219	13,602	–	257,200	415,200
Share capital (×10^6 Rs.)	0.01	0.28	4.08	42.1	49.09
Reserve and other funds (× 10^6 Rs.)	0.01	1.56	19.54	143.5	187.19
Net worth of the union (× 10^6 Rs.)	Na	7.52	19.96	157.5	332.73
Value of milk purchased (× 10^6 Rs.)	0.63	9.70	73.54	2355.8	5794.75
Turnover of the union (× 10^6 Rs.)	0.12	12.16	101.38	3400.3	6870.00
Net profit of the union (× 10^6 Rs.)	–	0.20	1.02	72.08	291.00

Livestock services in Mehsana District

Livestock services in Mehsana District come from two sources: (i) the State Department of Animal Husbandry (for all species and for all livestock owners); and (ii) the Mehsana Milk Union, exclusively for cattle and buffalo, owned by the union's members and by non-members who supply milk to the DCSs.

Livestock services offered by the state government

As in all other districts in the state, Mehsana has livestock services offered by the state government through the state department of animal husbandry and the institutions under it. These are the veterinary polyclinic (1), veterinary dispensaries (28), first aid veterinary centres (37) and mobile veterinary dispensary (1). A total of 67 veterinary institutions. Qualified veterinarians operate the hospitals or dispensaries and para-veterinary staff manage the other centres. In addition, the department operates an intensive cattle development project (ICDP) in Mehsana with 1 frozen semen production station and 8 artificial insemination (AI) centres, covering 20 villages. In 1995–96 the ICDP carried out some 14 thousand AI services in the district. The veterinary institutions deliver curative veterinary care for all species of livestock and AI for cattle and buffalo. All services offered by the department are delivered at the centre and the livestock owners have to take their animals to the centre for treatment or for AI services. All services offered by the department are free or are highly subsidised.

The quality of the service is poor and the institutions seldom have adequate drugs and medicines in stock, as they receive only a token supply from the department. A farmer gets only a prescription in these institutions and invariably he/she has to buy the drugs and pharmaceuticals from the retail trade. Fiscal deficits and budget constraints have reduced government support to these institutions to salaries of staff employed and establishment costs. The department of animal husbandry spends nearly 95% of the annual budget allocations it receives from the government (public funds) on salaries and establishment costs. Government veterinarians in Gujarat treat some 75% of the cases that come to them as private practice, delivered at the farmer's residence and charge fees and expenses close to market prices.

Production inputs and livestock services in Mehsana Union

The union, as a production support measure, purchases the milk production inputs and livestock services needed by the members. These fall into two distinct categories: (i) those that create a congenial environment for production and generate immediate responses from the milch animals; and (ii) those that bring about progressive and permanent improvements in productivity over the long term. Livestock in Mehsana villages are seldom managed optimally by the farmers and they are perpetually under nutritional and health stress. The category (i) inputs and services are designed to relieve some of these stresses, so that the animal is enabled to respond quickly with moderate increases in output reducing the yield gap—the difference between potential and actual yields. Balanced, compounded cattle feed and improved fodder; preventive veterinary care for control of animal epidemics; curative veterinary services and extension support, fall in this category. Category (ii) inputs and services comprise AI to help reduce inter-calving period, improve fecundity and, with the use of high genetic quality semen (progeny testing of AI bulls), genetic and productivity improvement, generation after generation.

The inputs and services provided by the union are not targeted primarily towards the members and their milch stock, but are also provided to non-members who supply milk to the DCSs. All services are efficient and sensitive to the needs of the members. The inputs are all of a quality acceptable by the member producers, and access to the inputs and services is equal among members irrespective of the quantity of milk supplied or the location of the member's residence because the users of the inputs and services are the shareholders and owners of the union.

As far as possible the union uses the same channel, the DCS network, for milk collection to market the inputs and some of the services. The cattle and buffalo population that comes under the priority attention of the union are the milch animals owned by the members and their numbers are presented in Table 4.

Table 4. Target animals for the union's inputs and services.

No.	Category of animals	Kankrej cattle	Crossbred cattle	Mehsani buffalo
1	Breeding female	82,198	47,566	479,516
2	Breeding female in-milk in May 1999	41,823	29,380	246,602
3	Breeding female pregnant in May 1999	30,008	19,246	218,967

Implementation of the inputs and services for milk production in the Mehsana Union is the responsibility of the Dudh Sagar Research and Development Association, a specialist body and a registered society fully owned by the Union, with the chairperson of the union as its chairperson. The Research and Development Association was established in 1967 and is fully funded by the union; and some special programmes like the Mehsani Buffalo and Kankrej Cattle Sire Evaluation Programmes are jointly funded by the union and supporting agencies like the National dairy Development Board (NDDB). All input and extension activities discussed in the following paragraphs, except manufacture of balanced cattle feed, are managed and implemented by the Research and Development Association.

Compounded balanced cattle feed

Milk production in Mehsana is based entirely on crop residues (straw or stover of rice, pearl millet and sorghum), supplemented by chance grazing, cut green seasonal herbage and small quantities of balanced cattle feed manufactured by the union. The union has established two large modern feed milling plants with a combined capacity of 500 t of balanced feed output per day, one at Boriavi and the other at Ubkal in Mehsana District. The feed composition is formulated by the animal nutritionist of the union, assisted by the NDDB's consultancy service, and is subject to strict quality control procedures (for both raw materials and finished product) to ensure that the feed meets all the nutritional requirements including minerals and micronutrients. The feed formulation process is a dynamic exercise, computerised and takes into account the seasonal fodder availability or varying seasonal availability and prices of raw materials all over India, and uses the least cost linear programming for utmost economy.

The union supplied some 171,597 t of feed (Sagar Dan) in 1999–2000, the entire quantity marketed through the DCSs for member consumption. The union does not market feed to the local trade, but helps other unions if spare capacity is available in the feed plants. As the policy of the union is to encourage traditional family milk production using available household resources, the recommended feed used by the farmers is 400 g of the feed per litre of buffalo milk of 7% fat and 9% solids-non-fat (SNF) and 300 g for cow milk of 4% fat and 8.5% SNF. Average feed consumption in 1999–2000 was consistent with the recommended dosage, some 410 g per litre of milk procured (cow and buffalo together) by the union. The feed is currently available to the farmer at the DCS at Rs. 5.00 per kg, while the ruling milk prices are Rs. 13.69 for buffalo milk and Rs. 8.81 for cow milk (same quality as discussed above). Therefore the farmer's out-of-pocket expenditure is Rs. 2.00 per litre for buffalo milk, and Rs. 1.50 for cow milk and for feed supplementation. All DCSs carry stocks of 'Sagar Dan' at all times and sell it to farmers loose or in bags as required by them. In addition, the union's feed plants manufacture special feeds such as by-pass protein, fat etc. for high yielding animals and mineral mixture is used to balance the feed and calf starters for calves. Another plant at Ubkal also manufactures urea-molasses blocks, a supplement used to enhance digestibility of straw-based ruminant diets.

Promotion of fodder production

Traditionally farmers in Mehsana use a small part of their pearl millet or sorghum grain crop as green fodder for milking animals. The union introduced cultivation of alfa alfa (Lucerne) as a standard practice for feeding milch animals and recommend cultivation of a tenth of an acre of the crop, per milch animal, in the winter season. The union procures and supplies good quality seeds from the market or buys from the members whatever they can produce and sell to other members. In 1999–2000 the union sold some 1724 kg of alfa alfa seeds to 51 DCSs (roughly to 250 ha belonging to 6250 farmers). Alfa alfa seeds are now stocked by the local retail trade in Mehsana District and a number of farmers buy seeds directly from the local markets as the practice of alfa alfa cultivation in winter months in Mehsana has now become a standard practice. Many farmers now raise alfa alfa in winter, take three cuts of green fodder and then let the plant seed for seed production. Other fodder seeds that the union promotes are oats, sorghum and maize.

Another promotional activity of the union for fodder production is variety trials on farmers' land for fodder varieties of sorghum and maize. Villages in Mehsana have common grazing lands attached to them from time immemorial. Private and public agents have usurped many of these areas for other purposes. Of the remaining areas some have been taken over from the government by the DCSs and are used for producing fodder crops both as a demonstration, as well as a source of green fodder for the community. The extent varies and the number of DCSs carrying out the activity varies from year to year (see Annex).

Animal health care

The union has a three prong approach to animal health care: (i) veterinary first aid at the village level located in the DCSs (ii) mobile veterinary services operating from the union head quarters and delivering services at the farm gate and (iii) special animal health care camps for special ailments. In addition the union has a preventive veterinary health care programme for control and containment of epidemics.

Veterinary first aid

Every DCSs affiliated to the Mehsana Milk union is equipped with a veterinary first aid kit, which comes as a one-time gift from the union. The union also trains a nominee of the DCS from the same village as a first aid and AI worker for a period of six weeks in the union's training centre. The trainee would then become a part of the DCS staff and provide the members with veterinary first aid at all times since he resides in the DCS village. Replenishment of drugs and reagents in the kit is taken care of by the DCS and the service is provided free or at a token charge of Rs. 1 per visit. The first aid worker also acts as a sentinel against epidemics and reports any untoward animal health happenings in the village to the veterinary department of the union for immediate investigation. Mehsana Union has 1078 veterinary first aid units, one in each DCS. During 1999–2000 the first aid units treated a total of some 23,892 cases.

Mobile veterinary services

Members of the union are assured of the services of a qualified veterinarian at their doorstep. To fulfil this commitment the union operates 35 mobile veterinary clinics. Each mobile veterinary unit is provided with a vehicle and a staff of one veterinary doctor, one attendant and a driver. Invariably the vehicle is a hired one on long-term contract and the driver comes with the vehicle. Each mobile units is equipped with a good supply of medicines, drugs and all veterinary instruments for treatments and surgery, all consumables for practice and a radio-telephone for communication with the control room. The union's veterinary department has a control room and they receive calls from the members or from DCSs through the milk trucks' wireless telephones on a 24-hour basis. Each mobile unit operates along an established route and the vet in charge attends to calls falling on his route as advised by the control room from time to time. The services are delivered at the owners' doorstep and are charged at the rate of Rs. 40 for a fresh call and Rs. 20 for repeat calls. The charges cover the cost of transport, cost of all drugs and consumables, and the vets' fee. The calls cost the union some Rs. 77 per case. The expenses of the union for veterinary services come out of the union's revenues and therefore are really paid for with the members' own money, but immediate charges are imposed on the members to avoid attracting unnecessary demands on the service. The 35 mobile veterinary units operating in Mehsana together treated some 234,196 cases in 1999–2000. The mobile units also carry frozen semen and on demand provide AI services. The staffs of the mobile units are all employees of the union and are paid salaries, allowances, other incentives and over time payments for their services. The charges collected from members for the veterinary services form part of the revenues of the union and are remitted to the union.

Animal health camps

Animal health camps are the union's answer to herd health problems like infertility, repeat breeders and metabolic disorders. Camps are invariably organised on the initiative of a cluster of DCSs with special herd health problems and are attended by a large number of farmers along with their animals requiring attention. In addition to the senior and experienced veterinarians of the union, specialists from the veterinary college, the universities and the State Department of Animal Husbandry join the camps and make their skills and experience available for solving problems. In 1999–2000 such camps provided by the Mehsana Union treated some 22,424 animals.

Preventive veterinary care

 The union's veterinary department keeps vigil on epidemics in and around their area of operation and in the neighbouring states with the help of the NDDB's Animal Disease Research Laboratory and the State Department of Animal Husbandry. It takes decisive action to prevent epidemics or contain outbreaks in the district. The union participates in the NDDB–led geographical information system (GIS) for disease surveillance. The two most important diseases for Mehsana are haemorrhagic septicaemia (HS) and foot and mouth disease (FMD). Vaccination campaigns are mounted usually following the first report of outbreaks. Large numbers of cattle and buffalo, over half the population at risk in the case of FMD in the area, are protected by vaccination. In the case of HS, outbreaks are usually localised and only animals in contact and nearby areas are vaccinated to contain outbreaks. In 1999–2000 the union carried out some 282,650 vaccinations against FMD and some 62,878 vaccinations against HS.

Artificial insemination

The AI set up of the Mehsana Union is also based predominantly on the DCS network. AI centres are located in DCSs, each manned by a trained AI technician (veterinary first aid cum AI technician) who resides in the village and is easily available to the farmers. The centres are equipped with one liquid nitrogen container for the storage of frozen cattle and buffalo semen. Frozen semen and liquid nitrogen are supplied by the union once a month or as often as required in case of emergencies. Farmers in the village bring their animals for AI to the centre, often not more than a two minute walk thus not putting the animals under any stress. In new areas the union has now started cluster AI centres to make more economic use of the equipment, reduce costs, use manpower more optimally, and to bring larger areas under AI coverage rapidly. The cluster AI centre operates from one DCS. It is mobile (a moped or scooter) and covers a cluster of up to ten DCSs daily. The farmer still has to bring the animals to the DCS for AI. Out of the 1078 societies spread over 11 Talukas of the union's area, only 349 have AI centres and another 130 are covered under cluster AI services. AI is yet to spread to other DCS areas. In 1999 the union's AI system carried out some 147.7 thousand AI in cattle and over 167 thousand in buffalo. The service is efficient and averages over the years a conception rate of 40–50% (some 2.5 AI per calf born, see Table 4). The spread of AI centres in the union's area is presented in Table 5. The DCS/Union charge the farmers Rs. 5 per AI, while the unions cost per AI comes to some Rs. 31.90. Here again the costs are met out of the unions revenues and hence is paid with farmers money.

Table 5. Spread of artificial insemination (AI) centres in Mehsana Union.

Taluka	AI Centres
	DCS	Cluster
Chansma	27	–
Harij	5	2
Kadi	20	–
Kalol	24	1
Kheralu	48	–
Mehsana	43	1
Patan	11	2
Sami	1	1
Sidhpur	42	1
Vijapur	98	5
Visnagar	30	–
Total	349	13

Sperm station in Mehsana

The union has a well-equipped sperm station for the production of frozen semen in Jaguthan, which produces mainly Mehsani buffalo semen. This station is primarily concerned with frozen semen production for the ongoing Mehsani bull progeny testing programme of the union and carries stocks of frozen semen from under test as well as proven Mehsani bulls.

For the crossbreeding (local cattle) and the inter se mating programmes in crossbred cattle in Mehsana, the union buys Holstein–Friesian, Jersey and crossbred frozen semen from the Sabarmathi Ashram Goshala, Bidaj and Gujarat. The station has a capacity to operate up to 60 bulls for frozen semen production and to stock up to 0.60 million doses of frozen semen. The status of the station in March 2000 is presented in Table 6.

Table 6. Sperm station in Mehsana, status 2000.

Category of bulls	No. of bulls	Category of bulls	Frozen semen doses
Mehsani buffalo	38	Frozen semen production 1999–2000	397,540
Kankrej cattle	2	Semen, Mehsani buffalo	437,307 stock
Crossbred Jersey cattle	1	Frozen semen, Holstein–Friesian	3367 stock
Crossbred HF cattle	12	Frozen semen, Jersey	12,856 stock
		Frozen semen, Kankrej	33,250 stock
		Frozen semen, cross bred HF (F1)	23884 stock
		Frozen semen, crossbred HF (F2)	2151 stock
		Frozen semen crossbred Jersey	25,589 stock
		Frozen semen test bulls (84)*	437,307 stock
		Frozen semen proven bulls (11)**	41,264 stock

*Mehsani bulls tested so far; ** Mehsani bulls proven so far (both part of the total Mehsani frozen semen stock at serial no. 2); HF = Holstein–Friesian.

Progeny testing of Mehsani buffalo bulls

Starting 1987 the Mehsana Union has been participating in the NDDB-financed Dairy herd Improvement Programme Action (DIPA), for proving Mehsani bulls for the AI system in the union. The statistical design involves testing of provisionally selected bulls, at least 20 in a batch, testing mating a minimum of some 2000 randomly identified females per bull spread over the entire district, and collection of the first lactation records of daughters born. The principle of the test is to analyse the variance among the records, partition the genetic variance from the total variance and then work out the breeding value of the bulls.

The procedure in practice compares the standardised records of the daughters of each bull with the daughters of all other bulls and estimating the breeding values of the bulls using best linear unbiased prediction (BLUP). The bulls are then ranked according to their breeding value for milk yield as well as fat and protein yield and percentage (see Sire Index, Table 8). The top two or three bulls among them in each analysis are used for producing the breeding stock for the next generation. Mehsana has so far tested six batches of Mehsani bulls (total 84) and selected 11 as proven bulls. The summary of the test is presented in Tables 7 and 8.

Table 7. Progeny test of Mehsani buffalo bulls.

Batch	Bulls	MFSL^1 kg/daughters	MAFC^2months/daughters
1	13	1971/676	43.6/728
2	20	1918/681	44.1/743
3	12	1942/707	44.9/730
4	15	2033/296	45.5/346
5	12	1962/486	46.2/544
6	12	2007/234	41.9/295
7	11	2069/51	34.9/66

1. MFSL = mean first standard lactation; 2. MAFC = mean age at first calving.

Table 8. List of proven lactation of Mehsana bulls and their milk index.

No.	Bull no.	Daughters	Index/milk
1	117	29	+100.2
2	91	26	+86.9
3	114	23	+68.7
4	104	49	+54.9
5	75	24	+53.1
6	115	23	+47.7
7	53	19	+47.7
8	86	50	+46.6
9	20	58	+46.6
10	50	31	+44.9
11	24	40	+40.9

While it is too early to comment on the impact of the test, the trends shown in Figure 3 indicates steady progress in the population. The union of course, needs to increase the number of bulls per batch, the number of recorded daughters per bull and the base population size (now the test is confined to 35 DCS areas; it should spread to the entire area of the union) in order to increase the accuracy of the test and gain substantial genetic improvements generation after generation. Records for 1997–2000 will be complete in a couple of years and this will help confirm the observed trends.

.

Field recording of the test of daughters is carried out by the DCSs as are the fat tests of milk samples on the test dates. Supervision of the recording is excellent and the DCS set up has emerged as a most reliable village data collection network. All costs incurred by the DCSs are reimbursed by the union. The dairy improvement programme for Mehsana needs review and mid course correction to make the test more accurate and somewhat faster. The union has recently started a dairy improvement programme for testing Kankrej bulls and to introduce selective breeding of the Kankrej population using proven bulls.

Extension support

The Mehsana Union has a well focused extension support programme acting on two distinctly separate levels among the producer members: for co-operative development and for production enhancement and technology transfer. Both are designed as member education. Co-operative development activities get support and funds from the NDDB and this is the programme that keeps the hundreds of thousands of members well knitted and well informed of their responsibilities, rights and obligations to their co-operative institutions. The programmes consist of group meetings in villages, workshops and training of village opinion leaders, both men and women.

On the production front the programme comprises induction programmes of both men and women from member families. Groups of men and women from DCS areas are taken to the union head quarters regularly and are given well-focused exposure on the set up and functions of the union and their business progress. They also visit the feed plants, sperm station and the veterinary division and learn about feed formulations, nutrition and diets for milch animals, about AI and about animal diseases and vaccinations.

One bus load of men or women visit the union and the other institutions of the union every working day throughout the year. As a result, over the years every DCS village has several batches of men and women who have gone through the induction programmes and can explain and 'sell' the union and its input programmes and services. This has helped the union gain enormous credibility among the members by giving the members an overwhelming sense of ownership and has helped immensely in technology introduction and their rapid adoption by members.

Costs for inputs, services and extension support

The union's recurring costs together for all inputs and services for 1999–2000 add up to some Rs. 37.43 million, just 0.6% of the current year's turnover and less than Rs. 0.10 per litre of milk procured by the union in 1999–2000. The costs in the case of the extension support programme are even lower at 0.05% of the turnover and less than Rs. 0.01 per litre of milk procured.

Impact of the milk union and social dimensions

Milk production in Mehsana, like in the rest of the state and country, takes place in millions of tiny smallholdings. The landless, marginal and small farmers constitute the core milk production sector in Mehsana and account for nearly 89% of the union's primary members (see Table 9) and own some 80% of the milch cattle and buffalo. They also supply over 80% of all milk collected by the union.

Table 9. Distribution of members in land holding categories (numbers and percentage of total).

Land holding category	Numbers	Percentage of total
Landless	59,901	16.5
Marginal	122,708	33.8
Small	139,401	38.4
Others	41,022	11.3
Total	363,032	100

In 1999–2000, the average daily milk collection of the union was some 1.13 million litres, an average of 3.5 litres per member. Based on current prices for cow and buffalo milk, this collection volume equals to Rs. 12.50 million of income pumped into the district village economy in the district every day of the year and an average of some Rs. 35 per member (this calculation is only for an illustration of the impact on incomes. At any point of time not more than 60% of members will be pouring milk in the DCS on account of animals going dry during a part of the year) of the society as daily cash income from milk prices.

For a family living in rural Mehsana this amount is a substantial income and makes all the difference between starvation and prosperity. And this is only a subsidiary income. In addition to the direct price paid by the union at the time of purchase, the union ploughs back a substantial part of the annual profit to the farmer at the end of the year as a bonus, and the bonus often exceeds 20% of the milk price he/she receives in the year.

There are many other economic and social benefits impacting the individual members and the rural society as a whole. For example, the ability to improve capital formation and freedom from debts at the family level and daily transfer of wealth from urban to rural communities stimulate the rural economy to growth and stability. On the social front too the union and the co-operative movement have considerable impact on the village society particularly in removing social inequities and bringing in social discipline in day to day life. These are not discussed as part of this case study.

Annex. Activities of the Mehsana Union (1994–2000)

Activities	1994–95	1995–96	1996–97	1997–98	1998–99	1999–2000
Milk procurement (× 10^6 kg)
Buffalo	169.8	189.5	233.0	240.0	252.9	264.1
Cow	87.4	96.7	119.3	120.1	133.9	151.1
Total	257.2	286.2	352.3	361.0	386.8	415.2
Manufacture of products (t)
Milk powders	24,315	25,332	30,593	36,404	30,128	29,679
Ghee (clarified butter)	8084	4396	6230	7022	5947	5311
Butter (includes white butter)		7347	10,364	9407	10,212	10,502
Sweetened condensed milk	–	125	959	1890	2710	3265
Sale of milk and products
Liquid milk (× 10^6 litre)	61.7	90.1	86.0	90.00	131.1	149.9
Milk products (t)	38,680	37,824	39,951	48,469	53,355	47,672
Sales turnover (× 10^6 Rs.)	3400.3	4100.1	4554.2	5377.1	6529.8	6867.2
Breeding programme*
Progeny testing
No. of calves born	2272		2969	3548
Conceived at age (in months)	30	31.7	33.5	35.01
Average milk yield in 1st lactation	1993	1988	1971	2011
Average milk yield in 2nd lactation	2254
No. of frozen semen centres	371	355	355	357	372	378
Insemination cow	103,549	103,395	122,557	137,102	168,450	147,700
Insemination Buffalo	121,660	135,012	147,632	158,924	178,231	167,040
Feed and fodder
Cattle feed, calf starter and urea-molasses blocks	86,338	92,997	113,475	128,779	143,154	171,556
Fodder farms (ha)	120	97	97	97		74
Production of green fodder (t)	2807	2213	3164	2156	1465	1871
Production of dry fodder (t)	38	53	44	37	19	4
No. of beneficiaries	2618	3615	3906	4398	2052	2245
Small	929	1197	1534	1673	606	647
Marginal	531	587	725	1075	498	553
Landless	952	1599	1415	1322	822	849
Others	204	232	232	319	126	196
Hand chaff cutters (no.)	4538	3864	3929	2678	4424	2761
Subsidy paid (Rs.)	385,730	349,145	368,490	261,105	487,638	323,027
Improved sickles (no.)	7730	9771	11,334	4725	10,286	6040
Subsidy (Rs.)	23,310	29,313	34,002	14,157	30,858	18,120
No. of fodder demonstration
Fodder farms in DCS	104					30
Supply of improved seeds (Qts.)	230.94	244.5	877.0	425.8	104.2	8.56
Subsidy provided (Rs.)	166,160	212,840	30,250			14,980
Co-operative development
Women participants (no.)	11,661	24,318	18,042	15,847	27,728	20,401
Men participants (no.)	7415	17,123	15,196	14,086	18,060	15,332
Management committee members (no.)	665	1488	1467	1447	2053	2159
Farmer induction programme (no.)	19,741	42,929	34,705	31,380	41,841	37,892
Milk days celebrations
No. of participants (women)	1838	4132	1850			2900
Veterinary treatment	279,575	241,533	259,230	268,462	288,247	284,780
Cases treated on special visits	159,198	142,949	176,945	180,207	198,227	234,196
FMD vaccinations (no.)	117,574	140,202	204,740	175,846	199,055	282,650
Hemorrhagic septicemia	106,625	82,472	64,797	42,224	64,795	62,878
Social welfare schemes
No. of women beneficiaries	180	80	85
Cumulative no. since inception	3650	3730	3815
Amount (× 10^6 Rs.)	3.528	1.231	0.881
Cumulative amount (× 10^6 Rs.)	18.134	19.365	20.246
Group insurance scheme
For members of DCS (no.)	883	893	897	911	936	955
Women insured	67,180	62,127	69,047	78,520	85,000	102,670
Male members insured	100,934	99,460	97,589	102,071	105,924	127,241
Subsidy provided by union
Amount (× 10^6 Rs.)	1.443	1.936	1.488	1.603	2.541	3.137
Claims settled (no.)	1847	1773	2026	1584	2264	1858
Amount received against claims (× 10^6 Rs.)	9.315	9.00	10.490	8.46	12.30	9.75
Savings linked insurance scheme
(a) DCS participating (no.)	233	230	228	234	233	240
(b) Claims settled	384	302	347	332	364	250
Amount paid (× 10^6 Rs.)	1.92	1.510	1.735	1.219	1.820	1.250
Group cattle insurance
No. of participating DCS	452	415	420	287	388	272
No. of animals covered	73,096	71,751	73,092	55,839	83,239	82,650
Premium paid by union (× 10^6 Rs.)	2.845	2529	–
No. of claims settled	3924	2874	3763	3664	3667	5072
Amount paid (× 10^6 Rs.)	16.189	7.628	19.646	20.011	23.283	27.614
DCS with Milko Tester machines (no.)		911	948	981	1014	1022
No. of Milko testers				1214	1282	1311
Automatic milk collection stations in DCS (no.)			25	25	92	98
* The numbers in rows 'Breeding programme', and 'Progeny testing' relate to sets of bulls tested, not years.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.42.30
UK Pound	1	Rs.84.11
Euro	1	Rs.57.3

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5
DEMERIT POINTS
--BANK CHARGES	YES/NO	NO
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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