Milk Processing & Packaging

Introduction
Milk processing

Milk processing and packaging are vital for ensuring safe, high-quality milk
reaches consumers. The process begins with raw milk collection, followed by
rigorous quality checks. Processing removes impurities and adjusts milk
composition.

Clarification removes sediment, while separation divides milk into cream and
skim milk. Standardization adjusts fat content to create various milk types (whole,
semi-skimmed, skim). Homogenization breaks down fat globules, preventing
separation and creating a smooth texture. Crucially, heat treatment, like
pasteurization (heating to a specific temperature for a set time) or UHT (ultra-
high temperature) treatment, destroys harmful microorganisms, extending shelf
life.

Milk Packaging

Packaging protects milk from contamination and extends its usability. Aseptic
packaging, used for UHT milk, maintains sterility, allowing for unrefrigerated
storage for extended periods. Other packaging options include cartons, bottles
(glass or plastic), and pouches, each offering different shelf-life and convenience
features. Filling machines precisely measure and dispense milk into containers,
followed by secure sealing to prevent spoilage.

Modern advancements focus on efficiency, sustainability, and enhanced

preservation. Membrane filtration removes bacteria without intense heat,
preserving more natural flavours. Aseptic blow molding creates sterile plastic
bottles, and there's a growing shift towards eco-friendly packaging materials like
plant-based plastics and recycled materials. These continuous improvements
ensure safe, nutritious milk reaches consumers efficiently and sustainably.
Raw Material

The raw materials for milk processing and packaging can be broadly categorized
into those for processing the milk itself and those used for containing and
protecting the final product.

Milk Processing:

 Raw Milk: This is the fundamental raw material, sourced from dairy
animals like cows, goats, or sheep. Its quality is crucial and is assessed
based on factors like:
 Fat content: Determines the type of milk produced (whole, semi-
skimmed, skim).
 Protein content: Affects the nutritional value and processing
characteristics.
 Bacterial count: Indicates hygiene and influences shelf life.
 Somatic cell count: Reflects the health of the dairy animal.
 Absence of antibiotics and other contaminants: Ensures safety for
consumption.

 Additives (optional):
 Vitamins and minerals: Used for fortification to enhance
nutritional value (e.g., Vitamin D).
 Flavourings: Added to create flavoured milk varieties (e.g.,
chocolate, strawberry).
 Stabilizers: Help maintain texture and prevent separation in some
products.

Milk Packaging:

The choice of packaging material depends on factors like the type of milk
(pasteurized or UHT), desired shelf life, cost, and environmental considerations.
Common materials include:

 Plastics:
 Polyethylene (PE): Widely used for pouches and bottles due to its
flexibility, low cost, and moisture barrier properties. Different
densities are used (LDPE, MDPE, HDPE) depending on the
application.
  Polyethylene terephthalate (PET): Used for bottles, offering good
clarity and strength. Often used for pasteurized milk.
 Polystyrene (PS): Used for some containers and lids, but less
common for liquid milk packaging due to its brittleness.
 Paperboard:
 Cartons: Made from paperboard coated with polyethylene for liquid
resistance. Often used for UHT milk in aseptic packaging.
 Glass:
 Glass bottles: Traditionally used for milk packaging, offering
excellent protection and recyclability. However, they are heavier
and more fragile than other options.
 Aluminium:
 Aluminium foil: Used in combination with other materials in
aseptic packaging to provide a barrier against light and oxygen,
extending shelf life.

Market Outlook

The market outlook for milk processing and packaging in India is very promising,
driven by several factors:

Strong Growth Drivers:

 Rising Milk Production: India is the world's largest milk producer, with
production steadily increasing. This abundant raw material supply fuels the
growth of the processing and packaging sectors.
 Increasing Demand for Packaged Milk: Consumers are increasingly
shifting from loose milk to packaged milk due to rising awareness of
hygiene, food safety, and longer shelf life. This trend is particularly strong
in urban areas.
 Changing Lifestyles and Urbanization: Busy lifestyles and increasing
urbanization are driving demand for convenient, ready-to-consume food
products, including packaged milk and dairy products.
 Growing Disposable Incomes: Rising disposable incomes are enabling
consumers to spend more on value-added dairy products and better
packaging.
 Government Initiatives: The Indian government is actively promoting the
dairy sector through various initiatives, including subsidies, infrastructure
development, and quality control measures. This support is encouraging
investment in milk processing and packaging.
Key Trends:

 Focus on Food Safety and Quality: Consumers are increasingly

concerned about food safety and quality, driving demand for advanced
processing and packaging technologies that ensure hygiene and extend
shelf life.
 Demand for Variety and Convenience: Consumers are seeking a wider
variety of milk products, including flavored milk, fortified milk, and ready-
to-drink dairy beverages. Convenient packaging formats, such as single-
serve packs and on-the-go options, are also gaining popularity.
 Sustainable Packaging: There is a growing emphasis on sustainable
packaging solutions, such as recyclable and biodegradable materials, to
reduce environmental impact.
 Technological Advancements: The industry is adopting advanced
technologies such as membrane filtration, aseptic packaging, and
automation to improve efficiency, reduce costs, and enhance product
quality.

Market Segmentation:

 By Product Type: The market can be segmented into various milk types
(whole, toned, double toned, skimmed), flavoured milk, UHT milk, and
other dairy products.
 By Packaging Type: Key packaging segments include pouches, cartons,
bottles (plastic and glass), and cans.
 By Distribution Channel: The market is served by various distribution
channels, including supermarkets/hypermarkets, convenience stores,
online retailers, and traditional milk vendors.

Challenges:

 Cold Chain Infrastructure: Inadequate cold chain infrastructure,

particularly in rural areas, poses a challenge for the distribution of chilled
milk products.
 High Packaging Costs: The cost of advanced packaging technologies can
be a barrier for some smaller players in the market.
 Competition from Unorganized Sector: The presence of a large
unorganized sector in the dairy industry creates competition for organized
players.
Manufacturing process

The manufacturing process in a milk processing and packaging unit involves a

series of steps to transform raw milk into safe, consumable products.

1. Raw Milk Reception:

 Collection: Milk is collected from farms using insulated tankers to

maintain a low temperature.
 Quality Checks: Upon arrival at the processing plant, milk undergoes
rigorous testing for:
 Temperature
 Acidity
 Density
 Fat and solids-not-fat (SNF) content
 Antibiotic residues
 Bacterial count

2. Pre-processing:

 Filtration/Clarification: Removes visible impurities like dirt, straw, and

sediment using filters or centrifugal clarifiers.
 Chilling: Milk is chilled to around 4°C to inhibit bacterial growth and
maintain quality.
 Storage: Chilled milk is stored in insulated silos or tanks until further
processing.

3. Processing:

 Separation: Centrifugal separators divide milk into cream and skim milk
based on density differences. This allows for standardization of fat content.
 Standardization: The desired fat content is achieved by blending cream
and skim milk in specific proportions to produce various milk types
(whole, toned, double toned, skimmed).
 Homogenization: Milk is forced through tiny nozzles at high pressure to
break down fat globules into smaller sizes. This prevents cream separation
and creates a stable emulsion with a smooth texture.
 Heat Treatment: This is a crucial step to eliminate harmful
microorganisms:
 Pasteurization: Milk is heated to a specific temperature (e.g., 72°C
for 15 seconds) and then rapidly cooled. This extends shelf life under
refrigeration.
 Ultra-High Temperature (UHT) Treatment: Milk is heated to a
higher temperature (e.g., 135-150°C for a few seconds) and then
 aseptically packaged. This allows for extended shelf life at room
temperature.

4. Packaging:

 Packaging Material Preparation: Packaging materials (pouches, cartons,

bottles) are prepared and sterilized if necessary (especially for UHT milk).
 Filling: Processed milk is filled into the chosen packaging using automated
filling machines. Precise filling levels are maintained to ensure
consistency.
 Sealing: Packages are sealed to prevent contamination and maintain
product quality. Different sealing methods are used depending on the
packaging material.
 Coding and Labelling: Packages are coded with production dates, batch
numbers, and expiry dates for traceability. Labels with nutritional
information, ingredients, and branding are applied.

5. Post-Packaging:

 Cooling (for pasteurized milk): Packaged pasteurized milk is quickly

cooled to maintain quality and extend shelf life.
 Storage: Packaged milk is stored in controlled temperature conditions
(refrigerated for pasteurized milk, ambient for UHT milk) until
distribution.
 Distribution: Milk is transported to retailers in refrigerated trucks to
maintain the cold chain.

Machine details

1. Raw Milk Reception & Pre-processing:

 Milk Reception Tank: Large, insulated tanks to receive and store raw
milk.
  Milk Filter/Clarifier: Removes impurities using filters or centrifugal
force.

 Plate Heat Exchanger: Used for chilling incoming milk.

2. Milk Processing:

 Milk Separator: Centrifugal separator to separate cream and skim milk.

 Homogenizer: High-pressure pump to reduce fat globule size.

  Pasteurizer: Equipment for heating and cooling milk for pasteurization.
This can be a plate heat exchanger or a vat pasteurizer.

 UHT Processing System: Complex system for ultra-high temperature

treatment, often involving direct or indirect heating methods.

3. Packaging:

 Pouch Filling Machine: Fills and seals milk in plastic pouches.

 Carton Filling Machine: Forms, fills, and seals cartons for milk.

 Bottle Filling Machine: Fills milk into glass or plastic bottles and caps
them.

 Aseptic Packaging Machine: Specialized machine for filling sterile milk

into sterile packaging under aseptic conditions (for UHT milk).
4. Other Essential Equipment:

 Pumps: Various types of pumps for transferring milk between different

stages.

 Piping and Valves: Stainless steel piping and valves for hygienic transfer
of milk.
 Control Panels: Electronic control systems to monitor and control the
entire process.

 CIP (Cleaning-in-Place) System: Automated system for cleaning and

sanitizing equipment.
 PROJECT AT A GLANCE - TOP SHEET

1 Name of the Beneficiary XXXXXX

2 Constitution(Legal Status) Individual

3 Father/Spouse Name XXXXXXX

4 Unit Address XXXXXX

Taluk/Block: XXXXXX
District : XXXXXX
Pin: XXXXXX State: XXXXXX
E-Mail : XXXXXX
Mobile XXXXXX

5 Cost of Project : Rs. 9.33 in Lakhs

(i) Plant & Machinery 5.50 in Lakhs
(ii) Furniture & Fixtures 0.50 in Lakhs
(iii) Working Capital Required 3.33 in Lakhs

6 Means of Finance : Rs.

(i) Term Loan 5.40 in Lakhs
(ii) Working Capital 3.00 in Lakhs
(iii) Own Capital 0.93 in Lakhs
9.33 in Lakhs

7 Debt Service Coverage Ratio : 4.96

8 Break Even Point : 36.72%

9 Plant & Machinery : Milk pasteurizer, refrigeration units, packaging machine Etc.

10 Major Raw materials : Raw Milk,additives (optional) etc.

11 Employment : 5

12 Power Requirement : 3

13 Name of the project / business activity : Milk Processing & Packaging

PROJECTED CASH FLOW STATEMENT

PARTICULARS YEAR-I YEAR-II YEAR-III YEAR-IV

SOURCES OF FUND

Capital 0.93 - - -
Reserve & Surplus 4.94 6.56 8.30 10.30
Depriciation & Exp. W/off 0.88 0.75 0.64 0.54
Increase in Cash Credit 3.00 - - -
Increase In Term Loan 5.40 - - -
Increase in Creditors 0.53 0.10 0.10 0.11
Increase in Provisions 0.50 0.03 0.03 0.03

TOTAL : 16.18 7.44 9.06 10.98

APPLICATION OF FUND

Increase in Fixed Assets 6.00 - - -

Increase in Stock 0.57 0.11 0.11 0.12
Increase in Debtors 3.63 0.89 0.87 0.94
Repayment of Term Loan 1.08 1.44 1.44 1.44

Drawings 3.00 4.50 6.30 8.00

TOTAL : 14.28 6.95 8.72 10.49

Opening Cash & Bank Balance - 1.90 2.39 2.73

Add : Surplus 1.90 0.49 0.34 0.48

Closing Cash & Bank Balance 1.90 2.39 2.73 3.21

PROJECTED BALANCE SHEET

PARTICULARS YEAR-I YEAR-II YEAR-III YEAR-IV

SOURCES OF FUND

Capital Account - 2.87 4.93 6.93

Add: Addition 0.93
Add : Net Profit 4.94 6.56 8.30 10.30
5.87 9.43 13.23 17.23
Less : Drawings 3.00 4.50 6.30 8.00
NET OWN FUNDS 2.87 4.93 6.93 9.23

Term Loan 4.32 2.88 1.44 -

Cash Credit 3.00 3.00 3.00 3.00
Sundry Creditors 0.53 0.63 0.74 0.84
Provisions & Other Liab 0.50 0.53 0.55 0.58

TOTAL : 11.22 11.97 12.66 13.65

APPLICATION OF FUND

Fixed Assets 6.00 6.00 6.00 6.00

Less : Depreciation 0.88 1.62 2.26 2.80
Net Fixed Assets 5.13 4.38 3.74 3.20

Current Assets
Sundry Debtors 3.63 4.52 5.38 6.32
Stock in Hand 0.57 0.68 0.80 0.92
Cash and Bank 1.90 2.39 2.73 3.21

TOTAL : 11.22 11.97 12.66 13.65

- - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS YEAR-I YEAR-II YEAR-III YEAR-IV

Capacity Ulisation % 50% 55% 60% 65%

SALES

Gross Receipts/Sale 36.25 45.19 53.84 63.21

Total 36.25 45.19 53.84 63.21

COST OF SALES

Purchase & Consumables 15.95 18.98 22.08 25.28

Elecricity Expenses 3.26 4.07 4.85 5.69
Other Direct Expenses 2.18 2.71 3.23 3.79

Cost of Production 21.39 25.76 30.15 34.76

Add: Opening Stock /WIP - 0.57 0.68 0.80

Less: Closing Stock /WIP 0.57 0.68 0.80 0.92

Cost of Sales 20.81 25.65 30.04 34.65

GROSS PROFIT 15.44 19.54 23.80 28.56

42.58% 43.25% 44.21% 45.19%
Salary to Staff 6.89 8.27 9.92 10.91
Selling & Adm Expenses Exp. 1.81 3.16 4.31 6.32
Depriciation 0.88 0.75 0.64 0.54
Interest on Term Loan 0.59 0.48 0.32 0.16
Interest on Working Capital 0.33 0.33 0.33 0.33

TOTAL (D+G) 10.50 12.98 15.51 18.26

NET PROFIT 4.94 6.56 8.30 10.30
13.62% 14.52% 15.41% 16.29%
CASH ACCRUALS 5.81 7.31 8.93 10.84
 COMPUTATION OF PRODUCTION
Milk Processing & Packaging

Production Capacity per hour 50 Liter/hr

Working Hour 10.00
Production Capacity per month 500 Liter/day

No of Working Days per month 25

No. of Months 12

Total Production Per Annum 1,50,000 Liters

Year Capacity Liters

Utilisation

YEAR-I 50% 75,000

YEAR-II 55% 82,500
YEAR-III 60% 90,000
YEAR-IV 65% 97,500

COMPUTATION OF SALE

Particulars YEAR-I YEAR-II YEAR-III YEAR-IV

Op Stock - 2,500 2,833 3,094

Production 75,000 82,500 90,000 97,500

75,000 85,000 92,833 1,00,594
Less : Closing Stock 2,500 2,833 3,094 3,353

Net Sale 72,500 82,167 89,739 97,241

Rate Per Liter 50.00 55.00 60.00 65.00

Net Sale (in lacs) 36.25 45.19 53.84 63.21

COMPUTATION OF DEPRECIATION

Plant/Machinery Furniture TOTAL

Description
Equipments

Rate of Depreciation 15.00% 10.00%

Opening Balance - - -
Addition 5.50 0.50 6.00
5.50 0.50 6.00
Less : Depreciation 0.83 0.05 0.88
WDV at end of Year-1 4.68 0.45 5.13
Additions During The Year - - -
4.68 0.45 5.13
Less : Depreciation 0.70 0.05 0.75
WDV at end of Year II 3.97 0.41 4.38
Additions During The Year - - -
3.97 0.41 4.38
Less : Depreciation 0.60 0.04 0.64
WDV at end of Year III 3.38 0.36 3.74
Additions During The Year - - -
3.38 0.36 3.74
Less : Depreciation 0.51 0.04 0.54
WDV at end of Year IV 2.87 0.33 3.20

TERM LOAN

Closing Interest @
Year Opening Balance Repayment
Balance 11%
1st 5.40 1.08 4.32 0.59
2nd 4.32 1.44 2.88 0.48
3rd 2.88 1.44 1.44 0.32
4th 1.44 1.44 0.00 0.16
BREAK EVEN POINT & RATIO ANALYSIS
Particulars 1st Year 2nd Year 3rd Year 4th Year
Fixed Cost 9.57 11.62 13.70 15.91
Variable Cost 22.32 27.12 31.96 37.12
Total Cost 31.89 38.74 45.66 53.03

Sales 36.25 45.19 53.84 63.21

Contribution (Sales-VC) 13.93 18.07 21.88 26.09

Capacity 50% 55% 60% 65%

B.E.P in % 34% 35% 38% 40%

Break Even Sales in Rs. 12.45 15.98 20.23 25.05

Net Profit Ratio 13.62% 14.52% 15.41% 16.29%

CALCULATION OF D.S.C.R
PARTICULARS YEAR-I YEAR-II YEAR-III YEAR-IV

CASH ACCRUALS 5.81 7.31 8.93 10.84

Interest on Term Loan 0.59 0.48 0.32 0.16

Total 6.41 7.79 9.25 11.00

REPAYMENT
Instalment of Term Loan 1.08 1.44 1.44 1.44
Interest on Term Loan 0.59 0.48 0.32 0.16

Total 1.67 1.92 1.76 1.60

DEBT SERVICE COVERAGE RATIO 3.83 4.07 5.26 6.88

AVERAGE D.S.C.R. 4.96