The present sthdy was undertaken in Dharwad and Belgaum districts and data were collected mainly from processing units during 2002 03. The data relating to the Investment and Procurement management of milk for last three years Le., 2000-2003 were drawn from the ledger account and purchase books. Figures pertaining to the costs and margins have been taken from the profit and loss accounts and the balance sheets in case of both the co-operative sector and private sector units. The results indicated that the investment in private processing unit was quite high compared to the co-operative sector unit. The performance with respect to economies of scale can be realized through adequate investment. The co-operative sector unit should also update the production technology through additional investment and the concerned organization may have to take keen interest in funding the co-operative sector units to improve efficiency of production. The procurement pattern of raw milk by the private sector unit involves many intermediaries like contractors , sub-contractors and there is lack of producers involvement due to absence of village level producer’s societies. So, the private sector unit should evolve a system by avoiding intermediaries by fonning milk producer’s associations/groups at village level for procuring raw milk directly from the producers.