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MONITORING

OFOPERATIONALEFFICIENCY

SUBMITTED TO:Mr. Manoj M Agarwal

Chief manager- commercial

SUBMITTED BY:

Name: Jaspreet kaurClass: MBE

College: SD College chd.

MASTER OF BUSINESS ECONOMICS

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PROJECT REPORT

Submitted in partialFulfillment of the requirement for

The MBE Degree

Topic: Monitoring Of Operational Efficiency

By : Jaspreet kaur

Project Guide: Mr. Manoj M AgarwalChief Manager- commercial

Retail Business

DECLARATION

I here by solemnly declared that this projectreport is my original work. I have endeavored toensure that all the material has been gathered

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through my own efforts and put together underthe guidance of my Project Guide

Mr.Manoj M Agarwal

I also declared that this project report has notbeen submitted to anyone else to PunjabUniversity.

Jaspreet Kaur

MBE, 2nd SEM

ACKNOWLEDGEMENT

It gives me pleasure to express my sincerestthanks and gratitude to all those under whom

gratitude, co-operation and advice, I have beenable to complete my PROJECT REPORT

My first and foremost thanks to the project incharge Mr. Manoj M Agarwal (Chief

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Manager-Commercial) and all other staff ofReliance Dairy Foods Limited.

At the time of training the all the staff memberswere very helping and supporting.

I am sincerely grateful and indebted toMr. Manoj M agarwal who provides me fulladvice, encouragement, valuable suggestions,

inspiration and valuable time without which thisproject would have not possible.

Last but not least I like to thanks all that helpedme in getting experience working with RDFL.

MONITORING OF OPERATIONAL EFFICIENCY1. companys profile

Introduction

Board of Directors

Corporate governance Subsidiaries & Associates

Products & Brands

Reliance Business

Reliance Retail Limited

Awards in Retail & Franchising

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Reliance Dairy Foods Limited (RDFL)

2. organizational structure of RDFL

3. Definition of milk

4. Operation of RDFL (activities)

(a) Procurement

(b) Processing

(c) Distribution

5. General theory

6. Objectives of operational efficiency

7. Process for monitoring operational efficiency

Procurement

MIS of procurement

Processing

MIS of processing

Distribution

MIS of distribution

Strategy of distribution

8. 4Ps analysis of RDFL

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(a) Product

(b) Price

(c) Promotion

(d) Place

RELIANCE INDUSTRIES LIMITEDINTRODUCTION:

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest

private sector enterprise, with businesses in the energy and materials value chain. Group'sannual revenues are in excess of US$ 25 billion. The flagship company, RelianceIndustries Limited, is a Fortune Global 500 company and is the largest private sectorcompany in India.

Backward vertical integration has been the cornerstone of the evolution and growth ofReliance. Starting with textiles in the late seventies, Reliance pursued a strategy ofbackward vertical integration - in polyester, fiber intermediates, plastics, petrochemicals,

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petroleum refining and oil and gas exploration and production - to be fully integratedalong the materials and energy value chain.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn andfiber producer in the world and among the top five to ten producers in the world in major

petrochemical products.

The Group exports products in excess of US$ 15 billion to more than 100 countries in theworld. There are more than 25,000 employees on the rolls of Group Companies. MajorGroup Companies are Reliance Industries Limited (including main subsidiaries ReliancePetroleum Limited and Reliance Retail limited), Indian Petrochemicals CorporationLimited and Reliance Industrial Infrastructure Limited.

Reliance Industries Limited (RIL) is Indias largest private sectorcompany on all major financial parameters with turnover of Rs 89,124 crore (US$ 20billion), cash profit of Rs 13,174 crore (US$ 3 billion), net profit of Rs 9,069 crore (US$

2 billion), net worth of Rs 49,804 crore (US$ 11 billion) and total assets of Rs 93,095crore(US$20.9billion).RIL is the first and only private sector company from India to feature since 2004 FortuneGlobal 500 list of Worlds Largest Corporations and ranks amongst the worlds Top 200companies in terms of profits, RIL is also ranked amongst the top 25 climbers in the listfor second consecutive year. RIL emerged in the worlds 10 most respectedenergy/chemical companies and amongst the top 50 companies that create the most valuefor their shareholders in a global survey and research conducted byPricewaterhouseCoopers and Financial Times in 2004. RIL also features in the ForbesGloballist of worlds 400 best big companies and in FT Global 500 list of worlds largestcompanies.

RELIANCE INDUSTRIES (BOARD OF DIRECTORS)

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largestprivate sector enterprise, with businesses in the energy and materials value chain. Group'sannual revenues are in excess of US$ 25 billion. The flagship company, RelianceIndustries Limited, is a Fortune Global 500 company and is the largest private sector

company in India.

Backward vertical integration has been the cornerstone of the evolution and growth ofReliance. Starting with textiles in the late seventies, Reliance pursued a strategy ofbackward vertical integration - in polyester, fiber intermediates, plastics, petrochemicals,petroleum refining and oil and gas exploration and production - to be fully integratedalong the materials and energy value chain.

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The Group's activities span exploration and production of oil and gas, petroleum refiningand marketing, petrochemicals (polyester, fiber intermediates, plastics and chemicals),textiles and retail.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and

fiber producer in the world and among the top five to ten producers in the world in majorpetrochemical products.

The Group exports products in excess of US$ 15 billion to more than 100 countries in theworld. There are more than 25,000 employees on the rolls of Group Companies. MajorGroup Companies are Reliance Industries Limited (including main subsidiaries ReliancePetroleum Limited and Reliance Retail limited), Indian Petrochemicals CorporationLimited and Reliance Industrial Infrastructure Limited.

CORPORATE GOVERNANCE

Growth through Governance

Reliance is in the forefront of implementation of Corporate Governance best

practices

Corporate Governance at Reliance is based on the following main principles:

Constitution of a Board of Directors of appropriate composition, size and

commitment to discharge its responsibilities and duties.

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Ensuring timely flow of information to the Board and its Committees to enable

them discharge their functions effectively. Independent verification and safeguarding integrity of the Company's financial

reporting. A sound system of risk management and internal control.

Timely and balanced disclosure of all material information concerning theCompany to all its stakeholders.

Transparency and accountability.

Compliance with all the applicable laws and regulations.

Fair and equitable treatment of all its stakeholders including employees,

customers, shareholders and investors.

SUBSIDIARIES & ASSOCIATESMajor Subsidiaries & Associates

RIL has ownership interest in the following subsidiaries & associates.

Major Subsidiaries :

Reliance Petroleum Limited

Reliance Netherlands BV (including Trevira)

Reliance Retail Limited

Ranger Farms Private Limited

Retail Concepts and Services Private Limited

Reliance Retail Insurance Broking Limited

Reliance Dairy Foods Limited

Reliance Retail Finance Limited

RESQ Limited

Reliance digital Retail Limited

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Reliance Service Solutions Limited

Reliance Jamnagar Infrastructure Limited

Reliance Haryana SEZ Limited

Reliance Industrial Investment & Holdings LimitedReliance Ventures Limited

Reliance Strategic Investments Limited

Reliance Exploration & Production - DMCC

Reliance Industries (Middle East) DMCC

Reliance Global Management Services (P) Limited

Reliance Commercial Associates Private Limited

RIL (Australia) Pty Limited

Major Associates :

Indian Petrochemicals Corporation Limited

Reliance Industrial Infrastructure Limited

Reliance Europe Limited

PRODUCTS &BRANDS

The Company expanded into textiles in 1975. Since its initial public offering in 1977, theCompany has expanded rapidly and integrated backwards into other industry sectors,most notably the production of petrochemicals and the refining of crude oil.The Company now has operations that span from the exploration and production of oiland gas to the manufacture of petroleum products, polyester products, polyesterintermediates, plastics, polymer intermediates, chemicals and synthetic textiles andfabrics. The Company from time to time seeks to further diversify into other industries. InJanuary 2006, the Company approved a plan to establish a retail business through asubsidiary Reliance Retail Limited that will operate, among other things, supermarkets,convenience stores and specialty stores across India. The Company approved initialexpenditure of US$ 750 million to fund the initial stages of this plan.

The Company's subsidiary Reliance Infrastructure Ltd. is currently establishinginfrastructure facilities such as roads and buildings for the proposed Special EconomicZone (SEZ) at Jamnagar, Gujarat. The Company's major products and brands, from oiland gas to textiles are tightly integrated and benefit from synergies across the Company.Central to the Company's operations is its vertical backward integration strategy; rawmaterials such as PTA, MEG, ethylene, propylene and normal paraffin that werepreviously imported at a higher cost and subject to import duties are now sourced from

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within the Company. This has had a positive effect on the Company's operating marginsand interest costs and decreased the Company's exposure to the cyclicality of markets andraw material prices. The Company believes that this strategy is also important inmaintaining a domestic market leadership position in its major product lines and inproviding a competitive advantage.

The Company's operations can be classified into three segments namely:

Petroleum Refining and Marketing business

Petrochemicals business

Others (including Crude Oil and Natural Gas Exploration & Production business.

The Company's refinery at Jamnagar is the third largest refinery at a single location in theworld.

The Company is:

The world's largest producer of Polyester Fiber and Yarn

4th largest producer of Paraxylene (PX)

5th largest producer of Purified Terepthalic Acid (PTA)

7th largest producer of Polypropylene (PP)

RELIANCE BUSINESS

RETAIL

Growth through Value Creation

Relianceis gearing up to revolutionize the retailing industry in India. Towards this end,we are aggressively working on introducing a pan-India network of retail outlets in

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multiple formats. A world class shopping environment, state of art technology, aseamless supply chain infrastructure, a host of unique value-added services and above all,unmatched customer experience, is what this initiative is all about.The retail initiative of Reliance will be without a parallel in size and spread and makeIndia proud. Ensuring better returns to Indian farmers and manufacturers and greater

value for the Indian consumer, both in quality and quantity, will be an integral feature ofthis project. By creating value at all levels, we will actively endeavor to contribute toIndia's growth.

The project will boast of a seamless supply chain infrastructure, unprecedented even byworld standards. Through multiple formats and a wide range of categories, Reliance isaiming to touch almost every Indian customer and supplier.

EXPLORATION AND PRODUCTION

Growth through Energy Security for India

India imports about two-thirds of its crude oil requirement. Exploration and production ofoil and gas is critical for India's energy security and economic growth. Reliance's oil andgas exploration and production business is therefore inexorably linked with the nationalimperative. Exploration and production, the initial link in the energy and materials valuechain, remains a major growth area and Reliance envisions evolving as a global energymajor.Over the years the E&P industry has registered significant growth, primarily due tospiraling crude oil and gas prices. With growing competition and ever growing demandfor energy, especially from developing countries, the focus is on energy security. India's

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share is a meagre 0.5 % of global oil reserves of 1,189 billion bbl, while it consumes 3.2% of global oil consumption every year.

The growing demand for crude oil and gas in the country and policy initiative ofGovernment of India towards increased E&P activity, have given a great impetus to the

Indian E&P industry raising hopes of increased exploration.

Under the New Exploration Licensing Policy (NELP) of Government of India, blockshave been acquired by various E&P companies for exploration. The efforts have resultedin a number of oil and gas discoveries in India and have changed the perception andprospects of the Indian sedimentary basins and the focus on Indian E&P Industry.

RIL is the largest Oil & Gas acreage holder among the Private sector companies in Indiawith 34 domestic exploration blocks covering an area of about 331,000 sq. km. This is inaddition to its interest in one exploration block each in Yemen and Oman RIL also has 5coal bed methane (CBM) blocks covering an area of about 4,000 sq. km. RIL is India'sfirst private sector company in the Exploration and Production (E&P) sector to havediscovered large gas reserves. The E&P strategy of RIL is aimed at further enhancing the

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level of vertical integration in its energy business, and realizing value across the entireenergy chain, while fulfilling important national priorities.

In the years to come, RIL is well positioned to be amongst the largest value creators inthe upstream oil and gas sector. RIL's portfolio of E&P assets, gives it the potential to

create value across entire value chain from wellhead to burner tip. Accretion of newreserves through exploration, development of existing oil and gas reserves anddevelopment of related downstream infrastructure facilities would result in significantvalue creation for RIL in future. RIL has achieved a high success rate of 74 % in terms ofdiscoveries made from the wells drilled thus far, excluding wells under evaluation.

PETROCHEMICALS

Polymers

Reliance's polymer business is integrated with its cracker facility at Hazira, as well as itsrefinery at Jamnagar, ensuring feedstock availability at all times. The company operatesworld-scale plants for Polyolefins and PVC with state-of-art technologies from globallicensors like Novacor, Geon and Union Carbide. Reliance's manufacturing capacities arePolypropylene (PP) 1,150 KTA, Polyethylene (PE) 450 KTA and Poly Vinyl Chloride(PVC) 325 KTA. Along with IPCL, Reliance is among the world's top 10 plasticproducers.

Reliance commissioned its first PP plant with a capacity of 350 KTA in October 1996 at

Hazira. This was followed by the commissioning of two lines of 200 KTA each atJamnagar in April 1999. The third line at Jamnagar of 200 KTA was commissioned inReliance commissioned its Suspension PVC plant with a capacity of 160 KTA inDecember, 1990 at Hazira. Debottlenecking over the years has lead to capacityenhancement to the tune of 165 KTA, thus the current capacity standing at ~ 325 KTA.

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PRODUCT APPLICATION & RESEARCH CENTRE (PARC):

The PARC of Reliance Industries Limited at Mumbai caters to the technical needs of thelarge and the growing plastic processing industry. It has state of the art processing andtesting equipments to meaningfully service and support customers on issues related tograde selection, product development, processing techniques and end productperformance.

CUSTOMER SERVICE

We at Reliance Industries Limited strongly believe in being close to the customers andunderstanding their needs. Our professional set of Sales & Marketing executives as wellas technical service team are in constant touch with Customers, offering solutions andhelp to upgrade Product performance by suggesting and working alongside in theirproduction units.

BUSINESS DEVELOPMENT

The business development group constantly monitors the progress of processing industryto identify new business opportunities. Project profiles are prepared and guidanceprovided on project identification, machinery selection and manpower training. Reliancederives growth aspiration from the commitment to the growth of its Customers.

CUSTOMISED GRADES

Our proficient and effective in-house technical team in co-ordination with Customers areconstantly formulating and researching with new special grades with tailored propertyparameters which would result in cost effective solutions to meet the needs of theprocessing industry.

DISTRIBUTION

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Reliance Industries Limited has established a wide marketing network for distributingRelene / Reclair PE grades in India consisting of Regional offices, Resident sales offices,dealers and agents, spread throughout the country. This ensures that the customer,wherever located, is served efficiently and benefit from any of this depth and breathe ofmarketing reach.

Relene / Reclair Polyethylene thus reach the Customer with a comprehensive package ofproduct quality and service unmatched by any other alternative sources in the marketplace.

OTHER PERTOCHEMICALS

PETROLEUM REFINING AND MARKETING

Growth through Energy Products

Petroleum Refining and retailing is the second link in Reliance's drive for growth andglobal leadership in the core energy and materials value chain. Reliance operates the thirdlargest refinery in the world at any single location, with a capacity of 30 million tons peryear or 0.6 million barrels per day of crude throughput, at Jamnagar, Gujarat

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.

The Reliance petroleum refinery, first in the private sector in India, has now completedfive years of successful operations. In January 2005, Reliance processed the 1,000millionth barrel of crude oil. With the Jamnagar Refinery significantly improving

domestic product availability, India has become a net exporter of petroleum products.

Reliance is in the process of doubling the petroleum refinery at Jamnagar, which willmake it the largest petroleum refinery in the world. Reliance is also rolling out a state-of-the-art, pan-India petroleum retail network aimed at providing the Indian consumer withworld-class retail experience.

We at Reliance are committed to total customer satisfaction in terms of Quality &services for entire range of our products. Our continued commitment to excellence andinnovative efforts help us stay ahead as market leaders.

TEXTILE

Growth through Consumer Products

Reliance's Naroda Textile Complex, one of India's largest and modern textile complexes,produces about 25 million meters of fabric both for domestic and international markets. It

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is the only textile complex in India to offer the maximum marketed range of productcategories.

Reliance's Naroda Textile Complex, one of India's largest and modern textile complexes,produces about 25 million metres of fabric both for domestic and international markets. It

is the only textile complex in India to offer the maximum marketed range of productcategories.

RELIANCE RETAIL LIMITED

Why Retail for Reliance?

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For a long time, organized retail in India remained theattraction of only a few enterprising Indian entrepreneurs,who took the plunge into the deep sea of a hithertouncharted territory.

It is only in the last 10-15 years that the retail sector'sinherent attractiveness started catching the attention of largecorporate houses in India, like the Raheja Group, RPGEnterprises, and the Piramal Group etc. But with due respectto all of them, their vision has remained conservative andthey have been modest in scaling up their retail businessmodels to take it to the next level of operations with a pan-India presence.

What clearly lacked was the level of investments; the slowpace of consolidation and indecisiveness in experimenting

and migrating between multiple formats, categories and channels. This has prevented them fromreaping the true benefits of modern retailing.

What is it that we can label as the compelling drivers of this new retail thrust in India with a large

corporate house like Reliance Industries announcing big, not to mention international retail giantswho are getting impatient to enter India?

The first driver is a self-sustaining buoyant Indian economy that is growing at eight per cent ayear.

The second is that as the economy grows and expands, the consumption habits and patterns ofpeople also change and it is changing real fast in India.

The third important driver of organized retail is the country's demography India is home to thelargest and the youngest population in the world.

India's 300 million-odd middle-class, the real consumers, is catching the attention of the world.

Going by its past track record of business acumen and foresight, Reliance Industries could notafford to miss out on this great potential that organized retail offers. The opportunity has all alongbeen there for all Indian businesses to grab, and indeed some have made a serious attempt. But,it is RIL's announcement of entering the retail sector in this big and grand manner that has reallyprovided the needed thrust for take-off, it has shaken up not only the entire Indian retail fraternityand key stakeholders therein, but has also evinced the interest of other business groups to lookup to retail and consider sizeable greenfield investments in retail ventures as also in building upthe supply chain from farm/manufacturer to retail stores.

Hital Meswani Gives First Hint of RIL's Retail Plans at IRF'05

It was at the India Retail Forum 2005, organized by the IMAGES Group, when Hital Meswani,Executive Director, Reliance Industries Limited, highlighted the changing dynamics of retailing inkey areas such as demand, supply, technology, supply chain management and on how theindustry expects government to foster and facilitate a more proactive retail trade policy.

Hital Meswani remarked, at the IRF '05, that change in demand patterns have provided a huge

a a

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opportunity to organized retail, as it realigns itself with global trends in value-oriented shoppingexperiences. He opined that change in supply trends provides the greatest challenge to retailersas price points grow competitive and new formats emerge on a large scale, and to provide all ofthat to the ever-demanding customer without compromising on assured supply and highestquality. These remarks were an indication of the seriousness with which RIL was working towardsits retail venture and the leaflets of the blueprint started unfurling thereafter, albeit cautiously.

RETAIL PLANS & STRATEGIES

Manoj Modi and Hital Meswani, flanked by a core team of trusted lieutenants and business aidesconstitute the top hierarchy in Reliance Retail. They have access to close supervision fromMukesh Ambani himself. The retail plans are humungous and Reliance insiders claim that theobjective is to 'do a Wal-Mart' in India.

Targets 90,000 Crore Turnover by 2010

RIL has set a revenue target of Rs 90,000 crore (US$ 20 billion) from its retail operations by year2010, almost 10 per cent the size of the current organized retail business in the country. It dwarfsIndia's current numerous uno in organized retail chain, Pantaloon Retail, which currently has anannual turnover of US$ 240 million from its 84 outlets spread over 30 cities and has projected

revenues of US$ 2 billion by 2009.

RIL's plans include a pan-India footprint of its stores, across multiple formats and categories, inmore than 800 cities and towns, and in record time.

Multiple Formats with Investment of Rs 30,000 Crore

The brains behind the mega retail venture have been able to ideate and develop a low cost pan-India supply-chain model that will involve massive economies of scale.

The strategy is to set up a chain of hypermarkets, supermarkets, discount stores, specialitystores, and convenience store formats in 800-odd cities and towns across the length and breadthof the country at an investment of around Rs 30,000 crore (US$ 8 billion).

The retail foray will have almost all the leading Indian and international brands, and possibly asizeable presence of private labels as well, and would clearly try and build a loyal customer basewith tens of millions of consumers from across the country.

While the sheer scale of operations will ensure Reliance's retail business a 20 per cent return oninvestment over a span of five years, its rural low cost-high return investment will ensure sufficientcompetitive edge vis--vis purely urban retail operators.

First Phase: 1,575 Outlets by March 2007

The first phase will see around 1,575 retail outlets coming up in just three months betweenDecember 2006 and March 2007. The first of these outlets will be opening around September thisyear, either in Mumbai or Ahmedabad.Reliable sources say that the retail business would start with 20 destination points in A-classcities in India, and soon expand to over 100 destinations in a very short span of time. On anaverage, each of these retail centre could be spread over 100 acres of land that would houseleisure and entertainment facilities, small hospital complex, eateries and a big mall. RIL insiders

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are, of course, tight-lipped about everything.Further, it has been reported in the media circles that initially the company has targeted the fivestates of Maharashtra, Gujarat, Punjab, West Bengal and Andhra Pradesh for the first phase ofretail rollout.Gradually, in the next two to three years, Reliance Retail plans to establish a pan-India presenceof all its formats, targeting not only the major metros and cities, but also the second-tier townsand semi-urban and even rural centers. Quite clearly then, the number 800 towns and cities has been very strategically and meticulously worked upon.

F&B to Generate 40% Sales Revenue, Direct Employment to Over 5 Lakh

It is internally estimated that the food and beverages category will account for as much as 40 percent of the total revenue generated from the Reliance Retail venture and that the company plansto give direct employment to more than five lakh people. About 23 CEOs across multiplefunctions and categories will oversee the retail operations.

The popular format in towns and rural settings will be hypermarkets, which will be warehouse-style stores spread over 150,000 sq.ft and will be selling products ranging from consumerelectronics and groceries to fresh food and clothes. There will also be smaller 75,000 sq.ftsupermarkets.

RIL has roped in leading retail consulting firm, Technopak Advisors, and management consultingfirm AT Kearney to provide specific and specialized strategic inputs, and advise the topmanagement of Reliance Retail during the entire planning, design and implementation, andexecution stages of the massive retail foray, reports say.

Evaluation of Category Mix & Formats

Reliance Retail has studied the potential of all possible categories of products and servicesretailing. In fact, it is keen on capturing market leadership in every possible retail category, once ithas rolled out and consolidated its retail operations.

The market insights and intelligence derived from this effort has helped Reliance to evaluate each

category on its market-size, growth rate and potential as being one of the main determinants forits retail rollout operations. This can clearly be taken as a precursor to Reliance's understandingof the retail market in India, in terms of clear understanding of: The primary sources of procurement of products Average inventory (retail and warehouse) that is normally maintained at retail stores acrossvarious categories Seasonal sales variation in categories across different regions in the country Shrinkage and wastage of products and percentage of returns thereon The number of SKUs brands and categories

The credit details (across in terms of the number of days and cash) that retailers normally getfrom their supplier across various product categories; and The average gross margin (percentage of MRP) that the retailer generally gets on its products.

Apart from food and grocery, which will contribute 40 percent to total sales, the company isstrongly looking at apparel, lifestyle, consumer durables, and leisure and entertainmentoperations as its major drivers of business. It is considering the establishment of both multi-brandas well as exclusive brand outlets for certain categories of operations.

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While most of outlets will be company-owned, the convenience-store format could possibly be theonly exception to be operated through a franchisee route in collaboration with mom-and-popkirana shop-owners, which in itself is a novel concept that could work very well in the Indiancontext.

Reliance Retail: The Mega Retail Story

RIL all set to redefine Indian retail and lead from the front

By G D Singh and Pravahan Mohanty

A targeted sales turnover of Rs 90,000 crore (US$ 20 billion) by 2010 with a plannedinvestment of Rs 30,000 crore over the next five years that's the retail vision of MukeshAmbani and his RIL retail team. RIL's retail venture seems all set to achieve the status ofbeing the flag-bearer of India Retail Inc, and that too in record time!

Culling information from all possible sources, Images F&R Research attempts to put the RelianceRetail jigsaw in order and see how the concept and strategy differentiates from the existingcompetition, how it impacts the intermediaries and consumers, and more interestingly, how will it

stand up to the real competition from global retail powerhouses like Wal-Mart, Carrefour, Target,Metro, Sears and Tesco that are eager to enter the Indian retail arena once the FDI barrier islifted. Read on for the full story

It's been in the news for quite some time now. Earlier, about a year ago, it was only whispered inclose industry circles. Slowly the whispers become louder, and the word gained ground thatIndia's largest private sector company, Reliance Industries Limited (RIL), is entering the Indianretail sector in a real big way.

But with virtually nothing coming from anyone in the know inside RIL about their retail plans; thishas to be one of the most closely guarded secrets of India's corporate story.

Blueprint for 800-odd Towns/Cities: Initial Investment Rs 3,350 Crore

Amidst all sorts of speculations in the media circles about RIL's intended retail foray, the wordfinally came out on January 23, 2006, when the Mukesh Ambani-controlled Reliance IndustriesLimited presented the mega retail initiative plans to its board of directors who subsequently gavetheir consent to pursue the retail business through a wholly-owned subsidiary of the company likely to be christened Reliance Retail Limited.

The Reliance Retail blueprint envisages nation-wide chains of hypermarkets, supermarkets,discount stores, department stores, convenience stores and specialty stores, in about 800-oddcities and towns across the length and breadth of India. The RIL board of directors approved theinitial phase of the retail foray at an estimated cost of Rs 3,350 crore (US$ 750 million).

That was big news for both the national and international media, which went all agog again withintense speculation. Giving full respect to the importance of this announcement, more than oneleading international daily chiefly, The Financial Times gave this news a front-page treatment,speculating (like many others) that this investment could just be an initial trance of a much largercommitment from Reliance Industries towards the retail project.

Just how big and grand this investment is for the Indian retail sector can be gauged by the simplefact that the entire Indian retail sector is estimated to be at Rs 1050,000 crore (US$ 233 billion)

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growing at five per cent annually and the estimated share of organized retail is only Rs 36,000crore (US$ 8 billion), at present, albeit growing at over 30 per cent every year.

That makes Reliance Retail's proposed investments equivalent to about 10 per cent of India'sorganized retail market such a level of investment in the Indian retail arena has beenunprecedented in the country's most promising sunrise industry retail.

So much so, projections by the Images-KSA India Retail Report 2005 of an organized retailmarket of Rs 100,000 crore (US$ 22 billion) by 2010 now appears conservative, likely to beachieved much earlier than 2010.

If Indian retail was lacking a whole-hearted and full-blooded thrust from a big and large corporatehouse (apart from the lukewarm investments made by the Tatas and ITC), it is now all set tochange. Mukesh Ambani, who has been nourishing retail ambitions for quite some time now, hasclearly positioned himself in to the role of redefining the entire landscape of Indian retail.

RIL Set To Become World's Largest Real Estate Property Owner

What is even more interesting is that Reliance Industries Limited will far out-surpass the CatholicChurch in becoming the world's largest owner of real-estate property by virtue of its mega Retail

and Satellite Township plans, in the next two to three years!

Now what exactly does this mega retail plan portend for the Indian retail sector? In fact, whatexactly are RIL's plans, in terms of retail strategy? How will RIL differentiate its stores andconcept from existing players who have already moved into the retail space earlier, and havealready established a good foothold? How will this impact the existing retail majors the likes ofPantaloon Retail, Trent India, Shoppers' Stop, RPG, etc? How will the consumer benefit fromRIL's venture and how will intermediaries like traders, suppliers and farmers all along the supplychain network benefit? What will be the USP of Reliance Retail?

And, more significantly, how will this impact the major international retailers who plan to enter theIndian retail market? Reliance Retail is in fact giving India for the first time a real feel of the scaleat which these global retail powerhouses actually operate, it is preparing India to stand up to the

ensuing competition and in the process, allow consumers the full benefits of modern retail.

Retail Will Become Core Business of RIL

Reliance Industries Limited is the largest and one of the fastest growing private sector companiesin India, with business activities encompassing almost all major growth sectors of the Indianeconomy. The company manufactures and markets a wide range of products with marketleadership in almost all its businesses.

All of Reliance Group production and services ventures have one common feature global scaleoperations employing state-of-the-art technology in all fields. The company is truly emerging as awell diversified conglomerate with global competence in technology, management and financialcapabilities to meet the needs of a rapidly growing Indian market.

With domestic market shares ranging from 40-80 per cent, RIL is also ranked among the top 10producers globally, for all its major product segments. It is one of India's largest businessconglomerates with total revenues of Rs 1, 00,650 crore (US$ 22.6 billion).

It is being speculated within the industry that the ROIs made by RIL in the retail space will far out-shadow its existing core flagship businesses and very soon retail will become the core businessfor the Mukesh Ambani-controlled Reliance Empire.

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Household Merchandise: 150 Qwik Marts

Select RIL fuel stations across India, initially 150 of them, will have retail outlets branded as QwikMart a chain of quick service, quick transaction stores. The Qwik Mart value proposition offersconvenience through multiple offerings under one roof, speed of service and value-based pricing.They will be sub-branded as 'Commute' for those located within cities, 'Journey' for those onhighways, and 'Neighborhood' for those in residential areas.

Three Qwik Mart outlets have already been launched in Mumbai and one along the Ahmedabad-Vadodra Expressway.

Emphasis on Dairy Products

Further, RIL is planning to make dairy products an important growth driver for its retailingventure. Sources in the know of the dairy project revealed that RIL chairman, MukeshAmbani, has already made a detailed presentation in this regard to the Punjab ChiefMinister, Captain Amarinder Singh. RIL, according to informed sources, has alsoexpressed a willingness to provide micro-finance to farmers to buy cattle and establishtheir own milk auction markets (mandis).

Rs 8,000 Crore Earmarked for Pan-India Supply Chain Network

The success of any mega retail venture hinges on the scale and efficiency it can establish inSupply Chain Management (SCM). Reliance is strongly focused on establishing a robust andcost-effective supply chain network that will ultimately pass the cost-benefits to its customers.

It is estimated that more than a quarter over Rs 8,000 crore of Reliance Retail's plannedinvestments of Rs 30,000 crore would be spent on setting up of the supply chain network. Thisunprecedented level of investment in building the supply chain network will become a keydifferentiator for Reliance's Retail project.

Strongly believing in the 'farm-to-fork' model, RIL top brass made a few trips to various states lastyear to work out an exclusive contract-farming project with the farmers whereby Reliance Retail

will purchase fresh vegetable and farm produce from these states and transport the same to itswarehouses, which will subsequently transport the same to the inter-connected Reliance retailcenters.To strike an example, pineapples that are sold at a mere 25 paisa a piece in the North-East willbe purchased in bulk by Reliance Retail, and shipped to the entire network of Retail stores allover the country. What this also ensures is that farmers and growers get a fair price for theirproduce and the huge cost benefits of wholesale procurement gets passed on to the end-consumer.

As part of its backward integration, the company has plans to set up an integrated supply chaininfrastructure, including a cold chain for foods. The blueprint envisages retailing everything. It isbelieved that RIL will feed the huge retail chain through seven large wholesale terminals. Its plansinclude over 150 warehouse clubs or distribution centers, catering to the supply and requirementsof its speciality stores, hypermarkets, supermarkets, department and discount stores. Variousmedia reports suggest that the company is actively scouting for real estate across India and mayeven hire large malls for its purpose.

In the consumer durables sector, Reliance Retail is reported to have entered into agreements andcontracts with the leading manufacturers to procure merchandise directly from their factories.

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RIL's huge warehousing facilities are to be dotted all over the country and expected to be the hub,the nerve-centre for the supply base that will feed the network of stores.

Bangalore, for instance, is likely to be the base for Reliance Retail's apparel operations.

CONCLUSION

The magnitude and strategy of RIL's retail foray is sure to have far reaching social and economicimplications by directly influencing the lifestyles of hundreds of millions of consumers, besidesindirectly impacting the livelihood of tens of millions. This indirect impact will be on those engagedin a wide range of economic activities including farming, consumer goods manufacturing, and ahost of myriad other services that bring hundreds of categories of goods and services from theproducers to the final consumers.

Business analysts feel that Mukesh Ambani's advantage is his huge financial strength coupledwith a track record of implementing mega projects in record time, at globally competitive capitalcosts. Mukesh Ambani has learned to dream big from his great visionary father, the lateDhirubhai H Ambani, who is acknowledged as one of India's tallest, most ambitious andsuccessful business leaders for his sharp business acumen and skilled people management

ability. If the announced retail project is any indication, Mukesh Ambani has indeed inherited allthese skills from his father. Re-writing the rules of business has been the forte of Dhirubhai andMukesh is attempting the same in retail.

Quite clearly, RIL is now all set and ready to conquer the organized retail domain. The Indianretail scene is now going to witness some real fast-paced action, with the consumer as always

having the best deal.

AWARDS IN RETAIL AND FRANCHISINGGrowth through Recognition

Reliance's commitment to excellence has won several national and international awardsand accolades.

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Retail and Franchising Awards

Franchise Award 2005.o Innovative Retail Concept of the year - Special Award

o Best Franchiser of the year Award - 2005 Star Award, Hall of Fame across

all categories Innovation and Technology in Franchising - (The Reid & Taylor Awards for

Retail excellence) at The India Retail Summit 2005 for its various innovations inPetroleum Retailing.

Retail Concept of the year for Reliance Truck Stops- Images Retail Awards at

India Retail Forum 2005.

RELIANCE DAIRY FOODS LIMITED

DAIRY PRODUCTS

RIL now plans dairy foray for retail thrust (January '31, 2006)

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Its probably one of the best guarded secrets about Reliance Industries Ltds (RIL) Rs3,375 crore retail forays. RIL is planning to make dairy products an important growthdriver of the retailing venture.

With a veteran of the dairy industry, Harsev Singh, a senior executive of the National

Dairy Development Board who was on deputation with Verka, the Punjab cooperativemilk marketing federation for some time, being roped in to head RILs retail dairyventure, sources revealed that mega plans are being made to take on dairy biggies likeAmul.Sources in the know of the dairy project revealed RIL chairman Mukesh Ambanihas already made a detailed presentation in this regard to the Punjab CM AmarinderSingh.

Punjab is a milk surplus state and can be a major source both for milk as well as dairyproducts. Moreover, there are a whole lot of private players in the milk business in thisstate, said a source.

RIL, according to sources, also expressed a willingness to even provide micro finance tofarmers to buy cattle and establish their own milk auction markets or mandis. Not onlythat, RIL is also eyeing the Netherlands, which apart from having a world class dairyindustry, is also an acknowledged leader in dairy technologies.

Indications are that the RIL retail venture may collaborate with the Dutch both fortechnological know-how as well as a potential export market, the source said. It is alsoreliably learnt that RIL has been scouting around for a dairy products major to packproducts under the Reliance brand.

The world over, milk is big business in retailing as it ensures footfall and dairy productsconstitute 15% of the retail business. Most large multinational retail majors also havetheir own branded dairy produce, revealed an industry insider.

However, those in the business are skeptics about RILs proposed foray into the dairybusiness in India. When multinationals like Nestle and Britannia have beenforced toexit the business in major product categories, wheres the chance for RILs survival?quipped an industry expert

Punjab to be agri-dairy hub of Reliance

By IANSMonday July 31, 04:42 PM

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New Delhi, July 31 (IANS) Punjab Tuesday moves towards becoming the agriculture anddairy business centre of Reliance Industries' retail foray, a Rs.50 billion (approx $1billion) investment that will see creation of five major agri hubs in the state.

Despite opposition to the deal, the Punjab government had last month cleared the

necessary land allocation for implementation of RIL's mega deal that is expected to createwealth for farmers and around 30,000 jobs.

With the formal signing of the agreement in Chandigarh Tuesday, RIL will begin theprocess of setting up infrastructure for the five hubs near Chandigarh before Oct 31,official sources said.

'Besides the five main hubs, RIL has plans to set up 52 rural business hubs and over 300satellite rural business hubs in different parts of the state, with each hub spread over 20 to40 acres,' the sources told IANS.

The business model hinges on imparting training to farmers and giving them access toquality seeds and other inputs to facilitate best farm yield, which Reliance would procureand supply through proposed 22,000 retail outlets.

'Apart from farm products, Reliance is looking at Punjab as the main dairy hub where itwill strive to replicate the success of dairy cooperatives like Gujarat Cooperative MilkMarketing Federation (GCMMF) and make it a major milk and dairy products centre,'sources said.

Reliance's dairy plans include not only raising milk production in the state manifold, butalso setting up a processing unit for value added products.

The multifaceted model evolved for Punjab will see Reliance also launching agriculturalinsurance and banking finance in the state.

Besides Punjab and Haryana, where RIL last month clinched a contract with the stategovernment, the diversified conglomerate is planning similar agro-based projects inHimachal Pradesh, West Bengal and Andhra Pradesh for an across the country presencefrom farm gate to retail customers.

Organizational structure of RDFL

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CHIEF EXECUTIVE

OPERATION COMMERCIAL SALES & MARKETING IT

HUMAN RESOURCES BUSINESS PLANNING

PROCUREMENT

Definition:

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The RDFL is in the dairy business its operation involves procurement,processing, distribution of the milk, In order to understand the functioningand operation the first and foremost we have to understand milk.

WHAT IS MILK?Milk consist of the three parts and these three part further consist of somepercentage and formed the proper definition of milk that has to be procured,processed and distributed.

Fat: is the first element of the milk which is about 3-10% in the milk

for e.g. product having fat (ghee and butter)

SNF: is the second element of the milk which is about 7-10% in the

milk. For e.g. product produce from SNF (curd, Paneer etc.) Although

this products are having fat contents also.

Water

Operation of RDFL

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The operation of the RDFL is organized in the above mentioned diagram. Itincludes the three functions:

PROCUREMENT PROCESSING DISTRIBUTION

PROCUREMENT OF MILK:

OPERATION OF

RDFL

PROCUREMENT PROCESSING DISTRIBUTION

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ACTIVITIES OF THE PROCUREMENT OF THE MILK:

Procurement of the milk includes the various activities like it includes thecollection of milk, chilling of the milk, and movement of milk from villagelevel to processing plant

MP: - (milk producers) MPs are farmers at villages having cattles for

producing milk and pour the milk at the pooling point.

PP: - (pooling points) is the milk collecting point at each village

where all the milk producers or MPs of that villages pour milk at PP

for chilling.

VSP: - (village service provider) as the name suggested village service

provider provides the service of collecting the milk from the milkproducer or MP at the pooling point. VSPs after collecting the milkfrom the MP transported to the MCC/BMC.

MCC/BMC: - these are called the milk chilling centers where the milkhas to be chilled.

PLANT: - plant is the final destination or the final step of

procurement of the milk. After transporting the milk to theMCC/BMC its transported to the plant for the further processing.Here milk has been processed and different dairy products have beenmanufactured (e.g. curd, lassi, butter milk, paneer)

FUNCTIONING OF THE PROCUREMENT:

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PROCESSING OF MILK:

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Processing of the milk is the second step to go with. Milk is processed manytimes to get the final product from it. Processing is done with the purpose ofchanging the raw form of the milk in different form of products.

DAIRY PRODUCTS

LIQUID MILK

FRESH MILK PRODUCTSTONNEDMILK

STDMILK

FULLCREAMMILK

DOUBLETONNEDMILK

FLAVOUREDMILK

CURD LASSI BUTTER MILK

PANEER

AMBIENT PRODUCTS CHILLED PRODUCTS FROZEN

PRODUCTS

GHEE(RETAIL)

GHEE(BULK)

SMP(BULK)

SMP(RETAIL)

LONGLIFEMILK

CHEESE-DOMESTIC

CHEESE-EXPORT

TABLEBUTTER(RETAIL)

WHITEBUTTER(BULK)

STERLISEDCREAM

ICE CREAM

This above mentioned table shows the different dairy products to beproduced after processing Milk. Milk is processed to get the fresh milkproducts such as curd, lassi, butter milk, Paneer. Wherein the milk isprocessed further for the ambient products, chilled products, frozenproducts. While producing different products quality parameter has to beconsidered.

FUNCTIONING OF THE PROCESSING OF MILK

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First step of the processing is to bring the milk to the plant for the

processing.

Second step: - Milk is processed in which its fat, SNF and remaining

contents used to produce the different Diary Products.

Milk fat is use to produce Ghee, Butter etc.

Lower fat milk is processed to get Paneer, Curd.

The remaining contents of the milk are processed in order to make

Chocolates, Cerelac, and Milk Powder.

This processing is very important in order to provide the finalprocessed Diary Products to the end consumers.

DISTRIBUTION OF FINISHED DAIRYPRODUCTS:

The Third step to come is the Distribution of Finished Dairy Product.After the processing of the milk and transformed the milk intofinished product distribution has started before distributing thefinished goods to the consumer. There are some intermediaries i.e.Wholesaler/Distributor and Retailers that provide the final product tothe end consumers.

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RDFL is indulging in the Procurement, Processing, and Distribution

of the milk. RDFL Also taken into consideration the quality of

product before it reaches to the end consumer.

FUNCTIONING OF DISTRIBUTION OF FINISHED PRODUCTS

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MONITORING OPERATIONAL EFFICIENCY

ENDCONSUMER

(end consumer arethe real users)

ENDCONSUMER

(end consumer arethe real users)

DISTRIBUTOR(After the

processing goodsare provided to thedistributor)

DISTRIBUTOR(After theprocessing goodsare provided to thedistributor)

RETAILER(Distributor providesthe good to theRetailer for the finalsale of the product tothe final consumer)

RETAILER(Distributor providesthe good to the

Retailer for the finalsale of the product tothe final consumer)

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GENERAL THEORY:

Monitoring of operational efficiency required to have proper control on thecompanys working performance and also to look after the improvementrequired for the smooth running of the business. Strong managementinformation system is the tool for monitoring operational efficiency whichlooks after each activity of the organization.

OBJECTIVES:

1. Proper management of the day today operations.

2. Flow of information and proper communication.

3. Better control over process.

4. Measurement of performance.

Optimum utilization of resources

Cost control

Maximum profitability

5. Timely decision making

6. Immediate corrective actions

Monitoring of operational efficiency of DairyBusiness

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Monitoring of operational efficiency system is the process under which theinformation flows should be taken into consideration for knowing the

companys performance, to make proper control over it. Its functioning is asfollows:

PROCESS OF MONITORING OPERATION EFFICIENCY

Development of strong MIS system Analysis of actual performance Route cause of the result of analysis/deviations Identification of corrective measures Implementation

DIAGRAMMATICAL PRESENTATION OF PROCESS

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MIS

IDENTIFI-CATION OFCORRECTI

VEMEASURES

IMPLEME-NTATIONS

ANALYSISOF

ACTUALPERFORM-

ANCE

ROUTECAUSE OFRESULT

ANALYSIS/DEVIATION

S

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IN DAIRY BUSINESS OPERATIONAL EFFICIENCY CAN BEMONITOR AT DIFFERENT FUNCTIONS:

Procurement

Processing

Distribution

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PROCUREMENT

PROCUREMENT:

Procurement is the process of collecting the milk from thevarious VSPs and transported it to the chilling centers. Procurement is thecollection of the milk from the milk provider at the pooling point and VSPscollect the milk from these milk provider and collected milk transported tothe MCC/BMC.

PROCUREMENT

COST CONTRL MAXIMUM PROCUREMENT QUALITY OF RAW MATERIA

Milk procurement cost Collection cost Transportation cost

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MONITORING OF OPERATIONAL EFFICIENCY

IN PROCUREMENT FUNCTIONING

Operational efficiency of procurement functioning can be improved through

following points:

(A)MAXIMUM PROCUREMENT OF MILK PROCURED

(B) HIGH STANDARD OF QUALITY OF MILK PROCUREMENT

(C) COST CONTROL

OPTIMUM COST OF THE MILK

MINIMUM COLLECTION AND CHILLING COST

MINIMUM TRANSPORTATION COST

PROCESSING

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PROCESSING:

Processing of the milk is done at the plant where milk istransported from the MCC/BMC and is processed many times to get thefinal product. Processing is the process of transforming the raw milk indifferent form of products.

MONITORING OF OPERATIONAL EFFICIENCYIN PROCESSING FUNCTIONING

Operational efficiency of processing functioning can be achieved throughthe following points:

PROCESSING

COST CONTROL MINIMUM WASTAGEOPTIMUM PRODUCT

MIX

Raw material cost Packaging cost Overhead cost

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(A) OPTIMUM PRODUCT MIX

(B) CONTROL OVER THE WASTAGE

(C) COST CONTROL

MINIMUM PACKAGING COST

CONTROL OVER PACKAGING MATERIAL WASTAGE

MINIMUM OVERHEADS COST

MAINTAINING THE STANDARD OF QUALITY

DISTRIBUTIONDISTRIBUTION:

Distribution is the process of distributing the finished dairyproduct after the final processing of the milk into the final products.

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Distribution of the final product should be perfect so that it can easily beavailable to the final consumers.

MONITORING OF OPERATIONAL EFFICIENCY

IN DISTRIBUTION FUNCTIONINGOperational efficiency of distribution functioning can be improved throughfollowing point:

(A) OPTIMUM PRODUCT MIX

DISTRIBUTION

OPTIMUM PRODUCT MIX LOW DISTRIBUTIONCOST

PRICE

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(B) COMPETITIVE PRICES

(C) INTRODUCTION OF NEW PRODUCTS

(D) DISTRIBUTION COST

MINIMUM TRANSPORTATION COST

OPTIMUM MEDIATERIES CHARGES

(E) STRATEGY FOR DISTRIBUTION

PRODUCT

PRICE

PROMOTION

PLACE

DISTRIBUTION STRATEGY

PRODUCT Minimum wastage

Better quality

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PRICE Competitive pricing

PROMOTION Frequent promotional scheme

PLACE Expansion of distribution channel

Easy availability of product to customer

CUSTOMER Value for money

SATISFACTION Survey of customers satisfaction

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PRODUCT (PROCUREMENT)

1. Maximum procurement2. Minimum cost3. Cost control

PRICE (CUSTOMER COST)

1. Price differentiation to be checked2. Reasonable prices to the customer3. Better quality to customer at lowest prices

PROMOTION (COMMUNICATION)

1. More advertisement2. Motivation and train sales force

3. Integrated market communication4. Easy availability of product to the customer

PLACE (CONVENIENCE)

1. Expansion of distribution channel

2. Better availability of product at Reliance Retailing stores to thecustomer

3. To reach target customer4. Focus on logistic: promptness in service delivery at the retail

stores.

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CONCLUSION

This project on operational efficiency has been prepared to list out theoperational aspect as well as the functioning of the company. All thefunctioning of the organization can be better operate through of operationalefficiency. Monitoring of operational efficiency required to have proper

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control on the companys working and performance and also to look afterthe improvement required for the smooth running of the business.

In Dairy business, operational efficiency monitored at different functions:Procurement, processing, distribution. In procurement the operationalefficiency can be monitored through maximum procurement of milk,

high standard of quality and cost control. In processing this operational

efficiency can be maintained by optimum product mix, control over the

wastage. In distribution, operational efficiency maintained by the

competitive prices, introduction of the new products, distribution cost

and strategy for marketing of products.

The operational efficiency of any organization depends on the proper

management of the day today operations, Better control over process,

Timely decision making, and immediate corrective actions. Thus theoperational efficiency in the organization can be maintained through

the proper co-ordination and co-operation. The systematic implication

of the objectives helps in monitoring the operational efficiency and

provides the opportunity to the organization to grow and progress.

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THANKS