Milk Business strategy

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Milk Business strategy

  1. 1. STRATEGY FOR DAIRY SECTOR Caselet: Agri Business Case 2 Submitted By Team ‘Gangs of FMS’ • KS PREETI, 2nd Year, preeti.k13@fms.edu • MOHINEESH Y, 2nd Year, mohineesh.y13@fms.edu • PARISH AGGARWAL, 2nd Year, parish.a13@fms.edu • VIKRAM SINGH KAPANY, 2nd Year, vikram.ka13@fms.edu
  2. 2. Agenda INDUSTRY ANALYSIS PRIMARY RESEARCH VALUE CHAIN ANALYSIS ENTRY STRATEGY & BUSINESS OPPORTUNITIES FINANCIALS
  3. 3. ENTRY STRATEGY & BUSINESS OPPORTUNITIES Agenda INDUSTRY ANALYSIS PRIMARY RESEARCH VALUE CHAIN ANALYSIS INDUSTRY FINANCIALS ANALYSIS
  4. 4. Dairy Industry holds strong potential driven by expanding domestic market and export trends 700 CAGR:4.47% 206.2 256.1 316.9 390.8 466.5 585.6 600 500 400 300 200 100 0 250 CAGR: 4 % 17% 13% 5% 5% 5% 4% 51% 200 150 100 50 20% 15% 10% 5% 0% 127 155 188 229 0 Past Milk Production in India (Mn Tonnes) Projected Milk Production in India (Mn Tonnes) Share in World Milk Production (1) Cumulative figures for the 5 Year Blocks Growing since past 30 years Future demand to remain high Highest Milk producer in the world REASONS TO ENTER EXPANDING MARKET LOW PER CAPITA CONSUMPTION SCOPE FOR INNOVATION EXPORT POTENTIAL 1 2 3 4
  5. 5. Highly unorganized market & low per capita consumption provide scope for new players MARKET STRUCTURE Indian Dairy Industry Organized (20%) Private Dairies (532) Cooperative Societies (254) Unorganized (80%) Government (46) • Unorganized sector has several problems including exploitation faced by farmers and low productivity • Entry of many new private players a positive indicator • Other ventures include Sahara Dairy expected in 2013 CONSUMPTION TRENDS • Global per capita consumption is 108 kg per annum • Per capita domestic consumption low as compared to world average • Middle East, South East Asia and Africa with low consumption are good export targets Source: FAO, Technopak
  6. 6. Agenda INDUSTRY ANALYSIS • Growing Industry • Large Scope for Organizing the industry PRIMARY RESEARCH VALUE CHAIN ANALYSIS ENTRY STRATEGY PRIMARY & BUSINESS FINANCIALS RESEARCH OPPORTUNITIES
  7. 7. Primary Research was conducted at Mother Dairy Plant in Karkardooma, Delhi Images from the Plant Visit With the Customer Info Officer Tanker undergoing Cleaning Silos for storage of milk Milk Supply Routes VALUE ADDED PRODUCTS HAVE HIGHER MARGINS • Maximum procurement from Private sources • Quality issues with private procurement • New Generation Cooperatives run by Sahayaks • Sub-contracts for milk sourcing/packaging to (1) Model Dairy Karnal (2) JK Dairy, Gajraula (3) Cooperative Societies in Rohtak, Ballabhgarh, Noida Challenges in the dairy sector: 1. Export ban in 1991 and Government Policy 2. Unavailability of proper animal fodder 3. Adulteration of pure milk by Private players Dr. Ashok Kumar Tripathi Deputy GM, Procurement Dr. S.K. Bhalla COO, Mother Dairy KEY TAKEAWAYS • Tetra packaging replacing powder milk in milk deficient areas • Cost of producing & packaging UHT milk high •Milk Collection center costs around Rs 1.2 Lakh INDUSTRY TARGETING UNORGANIZED SECTOR INCREASING REVENUE SOURCES FROM UHT MILK AND EXPORTS
  8. 8. Primary Research was conducted at GSK Plant, Sonepat • Procure milk from surrounding areas such as MCC BMC Rent Rs 50,000 Rs 1650 Cost/litre Rs 0.68 Rs 0.11 1. NABHA 2. SONEPAT 3. JALANDHAR KEY TAKEAWAYS FOCUS ON DAIRY DEVELOPMENT TO GET CLOSE TO THE FARMER BULK MILK COOLERS BEST WAY OF PROCUREMENT OF MILK COMPANIES RELYING ON OWN MILK DUE TO QUALITY ISSUES Milk Supply from Different Channels Ishewal and Bhadson • Lean Milk Procurement system through outsourced model for transportation and manning of collection centers • Key Challenges are high operational expenses in own milk production Plant Locations in Northern Grid • Focus on DDA to increase farmer loyalty 1) Cryocans given to farmers for safe insemination 2) Regular Multi-functional medical camps 3) De-worming medicines free of cost • Nearly Rs 1,300,000 in 2011 on DDA Dairy Development Activities (DDA) • Own area milk increased from 20,006 MT in 2007 to 30,036 in 2011 by shifting to BMC Shift from Milk Collection Center (MCC) to Bulk Milk Coolers (BMC)
  9. 9. Primary Research was conducted at National Dairy Development Board, Noida Activities Under National Dairy Plan IMPROVE QUALITY OF MILK THROUGH BETTER BREEDING • Successful New Gen Cooperatives experiment in Rai Bareilly and Sultanpur – 50 Lakh surplus in UP • Increased milk rates to farmer from Rs 7/ litre to nearly Rs 30 per litre • 2nd White Revolution to increase dairy productivity under the National Dairy Plan SEMEN PROCESSING LAB EDUCATING FARMERS RATION BALANCING • Farmers prefer giving milk to local “DUDHIYAS” • Dudhiyas provide milk to private players, but exploit the farmers with loans • In Bulandsheher, NDDB waived off loans of 300 farmers, but they continue giving milk to Dudhiyas Mr Vinod Rai, Head, Finance & Accounts • Easy and ready loans facility to help him • Advisory regarding type of feeds, artificial insemination, ways to increase productivity • Facility to give milk in local villages instead of traveling Dr. Ananth Padmanabhan Head HR Total Outlay Of Rs 2242 Cr KEY TAKEAWAYS NEED INNOVATIVE WAYS TO PROVIDE FINANCE TO FARMERS FOCUS ON GIVING THE FARMER HIS DUE
  10. 10. ENTRY STRATEGY & BUSINESS OPPORTUNITIES Agenda INDUSTRY ANALYSIS • Growing Industry • Large Scope for Organizing the industry PRIMARY RESEARCH • UHT & Value Added Products market • Dairy Extension services VALUE CHAIN ANALYSIS FINANCIALS VALUE CHAIN ANALYSIS
  11. 11. Major issues and challenges lie along the value chain which could be converted into opportunities Inputs for Dairying Milk Production Milk Collection Chilling and Bulk Cooling Transportation of chilled Milk Processing and Packaging Transportation of packaged products Marketing & Distribution Consumers SERVICES Inputs • Fodder Farmers • Veterinary aid Production • Large/Medium/Small scale and marginal farmers ISSUES SERVICES • Inadequate feeding of animals • Low genetic potential • Exploitation of farmers • High production costs • Delayed payment of dues Chilling • Chilling at chilling centers at villages • Bulk cooling centers at district level Transportation • Refrigerated vans & Insulated Tankers ISSUES SERVICES • Milk base mainly consisting of small holders • Involvement of too many intermediaries • Gaps in information Processing plants • Co-operative dairy plants • Private dairy plants • Government dairy plants ISSUES SERVICES • Own retail outlets • Supermarkets • Any retail outlet • Majority of the market is still • Seasonality of production and fluctuating supply ISSUES unorganized • Acceptability of the consumer base • Less penetration to the rural markets • Absent quality standards • Adulteration and food safety • Lack of trained and skilled worker Inputs for Dairying Milk Production Milk Collection Chilling and Bulk Cooling Transportation of chilled Milk Processing and Packaging Transportation of packaged products Marketing & Distribution Consumers
  12. 12. Opportunity Assessment exposes major entry areas like procurement from unorganized segment, tetra packed milk and custom packaging Entry Opportunities in Value Chain Dairy Extension services Milk farming from milch animals Procurement from unorganized players Hi-tech AMCs to be installed at Samridhi centers BMCs at village/district level Manufacturing & custom packaging (Tetra packs, VAP) Selling loose milk/homogenized milk Refrigerated transport systems (Solar powered trucks) Importance in value chain Synergy Potential Market Potential Set-up own distribution channel and start B2C business Few of the entry areas in Dairy industry have a strong synergy with existing businesses of Mahindra group P P P P P P Source: Team Analysis
  13. 13. INDUSTRY ANALYSIS • Growing Industry • Large Scope for Organizing the industry PRIMARY RESEARCH • UHT & Value Added Products market • Dairy Extension services Agenda VALUE CHAIN ANALYSIS • Milk Processing • Transportation &Logistic are the key areas of growth ENTRY STRATEGY FINANCIALS ENTRY STRATEGY & BUSINESS OPPORTUNITIES
  14. 14. Mahindra could enter and become a key player in the dairy industry value chain backbone Inputs for Dairying Milk Production Milk Collection Chilling and Bulk Cooling Transportation of chilled Milk Processing and Packaging Transportation of packaged products Marketing & Distribution Consumers Phase 1 Phase 2 Phase 3 Tetra Packed Milk Value Added Products Manufacturing Phase Wise Entry Low cost Tetra packed milk Custom Packed Value Added Products Refrigerated Transport & Bulk Milk Coolers 1. TETRA PACKED MILK 2. VALUE ADDED PRODUCTS 3. MANUFACTURING MAHINDRA DAIRY WILL BE A KEY PLAYER IN THE BACKBONE OF THE VALUE CHAIN 1. PIONEER IN PRODUCTION OF LOW COST TETRA PACK MILK 2. MAJOR PLAYER IN CUSTOM PACKING OF VALUE ADDED PRODUCTS 3. PIONEER IN MANUFACTURE OF SOLAR POWERED REFRIGERATED TRANSPORT SYSTEMS AND BULK MILK COOLERS
  15. 15. Setting up plant at Jaunpur gives locational advantage from procurement and supply perspective AZAMGARH JAUNPUR GHAZIPUR PRATAPGARH FAIZABAD VARANASI SULTANPUR PROCESSING PLANT AROUND JAUNPUR • Surrounded by Milk Surplus districts • Absence of Big Players • Largely unorganized dairy industry • Proximity to milk deficient markets, such as North East RATIONALE More details in Appendix 1 Source: Press, Company Websites
  16. 16. Mahindra could overcome challenges in Milk Procurement by creating a strong pull through its existing businesses SOLUTION KEY CHALLENGES Lack of good quality produce and knowledge deficit Farmers unwilling to give milk due to financial constraint SOLUTION LEVERAGE MAHINDRA’S CONNECT WITH FARMERS THROUGH MAHINDRA SAMRIDDHI CENTERS WITH DAIRY EXTENSION SERVICES CONSULTANCY ABOUT BREEDING, ARTIFICIAL INSEMINATION RATION BALANCING AND NUTRITION FEED HEALTH MANAGEMENT OF LIVESTOCK LEVERAGE MAHINDRA FINANCE CONNECT WITH RURAL POPULATION IN PROVIDING FINANCING FLEXIBLE LOANS TO PURCHASE MORE ANIMALS FLEXIBLE PERSONAL FINANCING FREEDOM FROM DUDHIYAS 1 2
  17. 17. Low cost Tetra Packs could revolutionize the milk industry 1 PROBLEM AREAS 2 Milk Deficient Areas such as North East where transportation is an issue UHT Milk not produced due to high costs MASS PRODUCED LOW COST UHT MILK WITH SHELF LIFE OF 120 DAYS LOW COST TETRA PACKAGING WITH LONG SHELF LIFE TETRA FINO ASEPTIC PACKAGING Pillow shaped Tetra packaging Lesser cost of production than Tetra Brick packaging Easy transportation to far flung areas Available in all packet sizes from 100 ml to 1000 ml New technology, set to revolutionize UHT in India • HUGELY SUCCESFUL IN EGYPT • In a Loose milk market, Juhayna Dairy grew to 894 Million packs from 0. DISRUPTIVE INNOVATION THROUGH PACKAGING Business Opportunity 1: UHT TETRA PACK MILK
  18. 18. Technology innovation in UHT milk would bring cost down and increase penetration 1 PROBLEM AREAS 2 Milk Deficient Areas such as North East where transportation is an issue UHT Milk not produced due to high costs REDUCING COSTS THROUGH TECHNOLOGY INNOVATION • OneStep Aseptic technology • Revolutionary UHT processing • Cuts operational costs by 50% • Capital Costs reduced by 30% • Use of solar power sources • Hybrid solar power steam generators for heating purpose • Custom packaging of Milk for Dairies and other companies • Milk Deficient States such as North East India, Orissa, Jharkhand • Defense and Army • Export to Milk Deficient countries Business Opportunity 1: UHT TETRA PACK MILK • SOLAR POWERED DAIRY PLANTS SETUP IN CALIFORNIA • High cost savings CLIENT PROFILE DISRUPTIVE INNOVATION THROUGH REVOLUTIONARY LOW COST UHT MILK REVENUE POTENTIAL OF Rs 942 Cr ANNUALLY LOW COST TETRA PACKAGING WITH LONG SHELF LIFE MASS PRODUCED LOW COST UHT MILK WITH SHELF LIFE OF 120 DAYS Source: Attached Excel Sheet
  19. 19. Custom packaging of VAP offers huge potential PROBLEM AREAS 2 MANUFACTURE OF HIGH QUALITY VALUE ADDED PRODUCTS PRODUCT PORTFOLIO 1. CHEESE 2. BUTTER 3. GHEE 4. YOGHURT 5. DAIRY WHITENER 6. SKM 7. LACTOSE CLIENT PROFILE REVENUE ESTIMATED AT 20% OF MILK MARKET SALES Low margins in pure milk production 1 CUSTOM-PACKAGING OF HIGH QUALITY VALUE ADDED PRODUCTS FOR OTHER COMPANIES Fast Food Companies FMCG Companies selling Dairy products Cooperatives Other Dairy Players Institutional Market Defense Lack of a large, organized player in Value Added Products space Business Opportunity 2: VALUE ADDED PRODUCTS
  20. 20. EXPORT PRODUCTS Consumer Packs UHT Milk Ghee Butter Paneer Shreekhand Ice Cream Flavored Milk Fresh cream Sweets Lassi Buttermilk Bulk Packs Milk Powder Major export target regions are Middle East and South East Asia Afghanistan Bangladesh Sri Lanka Nepal Malaysia New Zealand Australia China Japan Hongkon g Philippines Thailand Brunei USA St. Maarteen Kenya Qatar Bahrain UAE Kuwait Singapore EXPORT LOCATIONS KEY TAKEAWAY: THERE ARE 21 VIABLE EXPORT LOCATIONS More details in Appendix 2, 3, 4
  21. 21. Domestic manufacturing of Solar powered refrigeration equipment holds great potential in light of increasing demand Why Manufacture ? Milk Production Estimates (India) (Mn Tonnes) Inputs for Dairying Milk Production Milk Collection Chilling and Bulk Cooling Transportation of chilled Milk Processing and Packaging Transportation of packaged products Marketing & Distribution Consumers 127 155 188 229 250 200 150 100 50 0 • Milk Production increasing at a CAGR of 4% • Milk collection centers to increase manifold • Milk chilling units required in large quantities • Refrigerated milk transport systems required OPPORTUNITY FOR MANUFACTURING Milk Collection Chilling and Bulk Cooling Transportation of Chilled Milk Manufacturing Bulk Milk Coolers Manufacturing Refrigerated Transport Systems • Backward Integration of Mahindra Dairy • Self Sustainable in Chilling and Transport • Decrease long term costs as rentals • Sale to other clients Business Opportunity 3: MANUFACTURING
  22. 22. Business Opportunity 3: CLIENT PROFILE It helps attain self sustainability and cost efficiency 1 2 • Milk Co-operatives • Milk Unions • Organizations like GSK, Nestle that procure milk • Financed 75% through loan at 12% interest (NABARD) • Capacity Utilization to reach 100% by fifth year OPPORTUNITIES FINANCIAL ASSUMPTIONS ADVANTAGES BMC 2000 litres 5000 litres Total Cost Rs. 7 lakh Rs. 18 lakh Repayment 7 years 6 years IRR 35% 43% Manufacture Bulk Milk Coolers Manufacture Refrigerated Transport Systems ATTAIN SELF SUSTAINABILITY AND REDUCE COSTS BULK MILK COOLER CHARACTERISICS Extensively used for cooling milk at the collection point Maintain the quality of milk for a longer period of time Hygienic and Easy to use Available in various sizes ranging from 500lts to 15000lts LOW COST SOLAR POWERED REFRIGERATION SYSTEMS Reduction in souring and curdling of milk Chilling at the main dairy can be avoided Flexibility in collection time results in more volume collected Reduces frequency of transport to main dairy reducing costs Source: NABARD MANUFACTURING
  23. 23. It helps attain self sustainability and cost efficiency 1 OPPORTUNITIES 2 Manufacture Bulk Milk Coolers Manufacture Refrigerated Transport Systems LOW COST SOLAR POWERED REFRIGERATION SYSTEMS Business Opportunity 3: MANUFACTURING ATTAIN SELF SUSTAINABILITY AND REDUCE COSTS REVOLUTIONARY CHANGE IN USAGE OF TECHNOLOGY • Roof Mounted PhotoVoltaic solar panel modules • Thin-film • Light-weight • Reduces noise level of refrigeration system • Saves upto 1000 litres of diesel fuel annually* • Achieves a reduction in CO2 emissions of 2.5 metric tons* DISRUPTIVE INNOVATION THROUGH REVOLUTIONARY TECHNOLOGY Source : SolarServer Magazine, 2010 TESTED IN USA • Manufacturing costs reduced by half • Performance efficiency increased by 27%
  24. 24. INDUSTRY ANALYSIS • Growing Industry • Large Scope for Organizing the industry PRIMARY RESEARCH • UHT & Value Added Products market • Dairy Extension services VALUE CHAIN ANALYSIS • Milk Processing • Transportation &Logistic are the key areas Agenda ENTRY STRATEGY & BUSINESS OPPORTUNITIES 1. Low Cost UHT Milk 2. Value Added Products 3. Manufacturing FINANCIALS FINANCIALS
  25. 25. With a Capital Expenditure of around Rs 138 Crore, a profitability of 18.8% can be expected over 5 years SOURCES & USES OF FUNDS REVENUE PROJECTIONS 385 928 1096 1278 1342 56 174 216 260 278 1400 1050 700 350 0 Forecasted Revenue and Net Profits (INR Crores) Internal Sources = Rs 34 Crores Bank Loan = Rs 104 Crores Capital Expenditure (Rs 138 Crore) Average Profitability = 18.8% More details in Appendix 5
  26. 26. Disruptive evolution by Mahindra Dairy will quicken mass adoption of new packaging and position Mahindra as leading player in Global dairy arena Loose Milk Homogenization Packet Milk Disruptive Evolution Mass Adoption of UHT UHT FINO Milk Export Leadership Solar Powered Refrigeration Trucks Solar Power UHT Technology Normal Evolution Time Bottled Milk Pre 1950s 1960s 1970s 2013 2018 2020
  27. 27. THANK YOU!
  28. 28. APPENDIX – 1 : Processing Plant Technology COMPANY GEA PROCESSING ENGINEERING LTD, SIEMENS INDIA SPECIFICATIONS • Simatic PCS 7 System with advanced engineering tools for Dairy Industry • Dairy Functional Toolset tailored specifically to dairy operations • Safe material transfer, reliable tank management, traceable material movements, and consistent product specifications. • Online instrumentation and powerful pump drives ensure that the correct quantity and quality of material are provided at each process, be it cleaning and separating skimmed milk and cream, setting the fat content, pasteurization, homogenization, sterilization, or cooling • Successful implementation at Boisar, Vasundhara Dairy for a 400,000 lt plant
  29. 29. APPENDIX – 2: Export – Quality : BIS Certifications and standards DAIRY PRODUCTS DAIRY EQUIPMENT S.No Dairy Product Certification 1 Burfi IS-5550-1970 2 Butter Oil (Butter fat) IS: 13689 - 1992 3 Butter Pasteurized IS: 13690 - 1992 4 Casein (edible Quality) IS: 1167-1995 Cheese Natural processed, 5 processed cheese spread and soft IS: 2785 - 1979 6 Cheese Powder IS: 9584 - 1980 7 Cream Sterilised IS: 4884 - 1968 8 Dahi IS: 9617 - 1980 9 Dairy whitener IS: 12299 - 1998 10 Ice cream IS: 2802 - 1964 11 Ice cream cones IS: 7187 - 1989 12 Ice cream mix dried IS: 7839 - 1975 13 Khoa IS: 4883 - 1980 14 Lactose Commercial IS: 1000 - 1989 15 Milk flavored IS: 4709 - 1968 16 Milk Powder IS: 1165 - 1992 17 Milk - foods malted IS: 1806 - 1975 S.No. Dairy Equipment Certification 1 Aluminium Milk cans IS: 1825 - 1983 2 Stainless steel vats IS: 2336 - 1963 3 Insulated milk storage tanks IS: 2688 - 1974 4 Steam jacketed ghee pans IS: 2829 - 1979 5 Settling tanks for ghee IS: 4743 - 1968 6 Milk pipes and fittings IS: 3382 - 1965 7 Batch pasteuriser IS: 2689 - 1964 8 Aluminium alloy milk cans IS: 1825 - 1975 For determination of: Moisture Fat Total Solids Protein Ash Lactic Acid Sucrose content Titrable acidity • Buildings where the milk is received, processed, bottled, stored and where equipment is cleaned and sterilized • Surroundings and waste disposal • Personnel Health and cleanliness TESTING STANDARDS PRODUCTION PROCESS
  30. 30. APPENDIX - 3: Exports: Factors affecting exports and Measures 7 7 19 4 16 9 9 11 14 4 20 18 16 14 12 10 0 2 4 6 8 Factors Affecting Export Potential of Dairy Products in % IMPROVE QUALITY STANDARDS PREVALENT QUALITY ISSUES Operational Aspects Infrastructure Related • Adopting Codex or modifying PFA to match Codex • Ensuring Quality products for international markets assuring international standards • Adopting GMP GHP GLP & HACCP and following TQM, TPM & Six Sigma • Adopting international food laws, environmental standards Lack of Qualified Quality professionals in the Dairy sector leading to haphazard implementation, less R&D Lack of cleanliness (shortage of water) Lack of education and understanding of hygiene factors Inadequate power supply Cost incentives required for maintaining standards like ISO 9001, 2000, HACCP OPERATIONAL ASPECTS INFRASTRUCTURAL ASPECTS MAINTAINING STANDARDS KAIZEN TECHNIQUES 1. Reduce Power Consumption 2. Reduce losses 3. Reduce Inventory 4. Reduce Timeover
  31. 31. Appendix – 4: KAIZEN techniques: Process re-engineering Demo Action KAIZEN steps for implementation Impact Modification of cold storage •Dividing the cold storage into 4 chambers with flexible glass insulated partitions •Only required chamber needs to be refrigerated and rest could be kept at ambient temperature •0.3 per litre saving in power consumption Prevent spillages and leakages at various points •Training of staff involved in handling •Standardizing operating and handling practices •Margin to increase from 0.3/litre to 0.45/litre Increasing the frequency of distribution •Supply of milk to hotels, offices, restaurants etc… during day time •Small trucks could be used for such players Reducing set-up and productivity loss •Using SMED (Single Minute Exchange of Die) technique used by Toyota •Change time could be reduced to 10 minutes from current 10.5 hours •Useful in cases where set-up changes are needed for half toned and full toned milk 1 2 3 4 Power Consumption Handling loss of Milk Inventory Changeover time
  32. 32. Appendix – 5: Financial Projections (a) Income Projections S.No Particulars Unit Years I II III IV V 1 Milk processed litres/day 420000.0 480000.0 540000.0 600000.0 600000.0 2 Yield per day i) Tetra Pack Milk litres /day 394500.0 450857.1 507214.3 563571.4 563571.4 ii) Cream (50% fat) litres /day 24000.0 27428.6 30857.1 34285.7 34285.7 iii) Saleable cream (25% of iii approx.) litres /day 6000.0 6857.1 7714.3 8571.4 8571.4 Iv) Ghee Kg/day 8640.0 9874.3 11108.6 12342.9 12342.9 3 Income per day i) Tetra Pack Milk Rs. /Litre 17752500.0 21303000.0 25164168.8 29358196.9 30826106.7 ii) Cream Rs. /Kg 1350000.0 1620000.0 1913625.0 2232562.5 2344190.6 iii) Ghee Rs./Kg 2073600.0 2488320.0 2939328.0 3429216.0 3600676.8 4 Total Income/day Rs. Lakhs 21176100 25411320 30017122 35019975 36770974 5 Total Income per year Rs. In Crores 385.4 927.5 1095.6 1278.2 1342.1 Expenditure Projections S.No Particulars Years I II III IV V 1 Milk processing per year (Litres) 76440000 175200000 197100000 219000000 219000000 2 Raw material - milk 1681680000 4047120000 4780660500 5577437250 5856309113 3 Commission on milk collection 76440000 183960000 217302750 253519875 266195869 4 Transportation charges 76440000 183960000 217302750 253519875 266195869 5 Power and fuel 152880000 367920000 434605500 507039750 532391738 6 Packing material 152880000 367920000 434605500 507039750 532391738 7 Chemicals & detergents 30576000 73584000 86921100 101407950 106478348 8 Salaries and wages 51309041 102900000 113190000 124509000 136959900 9 Repairs & maintenance 22932000 55188000 65190825 76055963 79858761 10 Overheads 55036800 132451200 156457980 182534310 191661026 11 Milk distribution cost 275184000 662256000 782289900 912671550 958305128 12 Mini Samridhi Center running cost 48000000 50400000 52920000 55566000 58344300 Total Operational Cost (In Crores) 262.3 622.8 734.1 855.1 898.5
  33. 33. Capital Expenditure Required (in Crores) Land and Site Development 14.67 Civil Works 23.79 Plant and Machinery 61.63 Misc Fixed Assets 8.75 Vehicles 4.99 Deposits 0.90 Prelimnary and Preoperative Exenses 6.15 Contingency 12.09 Working Capital 5.16 TOTAL 138.12 Appendix – 5: Financial Projections (b) Income Statement (in Rs Crores) Years Sr.N o. Particulars I II III IV V 1 Income 385.41 927.51 1095.62 1278.23 1342.14 2 Operational cost 262.34 622.77 734.14 855.13 898.51 3 Oerating profit 123.07 304.75 361.48 423.10 443.63 4 Less: i) Interest on term loan @ 16% 12.43 16.57 12.43 8.29 4.14 ii) Interest working capital @ 16% 1.24 2.88 3.31 3.75 3.82 iiiDepreciation: Civil works 2.38 2.14 1.93 1.73 1.56 Plant and machinery 15.41 11.56 8.67 6.50 4.88 Misc. fixed assets 4.58 3.05 2.03 1.36 0.90 iv. Amortisation of preliminary and preoperative expenses 1.03 1.03 1.03 1.03 1.03 5 Profit before tax 86.01 267.52 332.09 400.45 427.30 6 Tax at 35% 30.10 93.63 116.23 140.16 149.55 7 Net profit 55.91 173.89 215.86 260.29 277.74 Net Profit Ratio 14.51% 18.75% 19.70% 20.36% 20.69%

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