Milk Business strategy

STRATEGY FOR DAIRY SECTOR

Submitted By Team ‘Gangs of FMS’• KS PREETI, 2nd Year, [email protected]• MOHINEESH Y, 2nd Year, [email protected]• PARISH AGGARWAL, 2nd Year, [email protected]• VIKRAM SINGH KAPANY, 2nd Year, [email protected]

Caselet: Agri Business Case 2

Agenda

INDUSTRY ANALYSIS

PRIMARY RESEARCH

VALUE CHAIN ANALYSIS

ENTRY STRATEGY & BUSINESS

OPPORTUNITIESFINANCIALS


OPPORTUNITIES

Agenda

INDUSTRY ANALYSIS

PRIMARY RESEARCH

VALUE CHAIN ANALYSIS FINANCIALSINDUSTRY

ANALYSIS

Dairy Industry holds strong potential driven by expanding domestic market and export trends

1982-1987

1987-1992

1992-1997

1997-2002

2002-2007

2007-2012

0100200300400500600700

206.2256.1

316.9390.8

466.5

585.6CAGR:4.47%

0%

5%

10%

15%

20% 17%

13%

5% 5% 5% 4%

51%2011-122016-17

2021-222026-27

0

50

100

150

200

250

127155

188

229CAGR: 4 %

(1) Cumulative figures for the 5 Year Blocks

Past Milk Production in India (Mn

Tonnes)

Projected Milk

Production in India (Mn

Tonnes)

Share in World Milk Production

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

Highly unorganized market & low per capita consumption provide scope for new players

Indian Dairy Industry

Organized (20%)

Private Dairies (532)

Cooperative Societies (254)

Unorganized (80%)

Government (46)

MARKET STRUCTURE

• 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

Agenda

INDUSTRY ANALYSIS

• Growing Industry• Large Scope for

Organizing the industry

PRIMARY RESEARCH

VALUE CHAIN ANALYSIS FINANCIALSPRIMARY

RESEARCH


OPPORTUNITIES

VALUE ADDED PRODUCTS HAVE

HIGHER MARGINS

Primary Research was conducted at Mother Dairy Plant in Karkardooma, Delhi

Tanker undergoing

Cleaning

Silos for storage of

milk

With the Customer

Info Officer

Milk Supply Routes

Challenges in the dairy sector:1. Export ban in 1991 and Government Policy2. Unavailability of proper animal fodder3. Adulteration of pure milk by Private players

Dr. Ashok Kumar Tripathi

Deputy GM, Procurement

Dr. S.K. BhallaCOO,

Mother Dairy

• 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

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

Images from the Plant Visit

MCC BMC

Rent Rs 50,000 Rs 1650

Cost/litre Rs 0.68 Rs 0.11

Primary Research was conducted at GSK Plant, Sonepat

1. NABHA2. SONEPAT3. 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

• Procure milk from surrounding areas such as 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 loyalty1)Cryocans given to farmers for safe

insemination2)Regular Multi-functional medical camps3)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)

IMPROVE QUALITY OF MILK THROUGH BETTER

BREEDING

Primary Research was conducted at National Dairy Development Board, Noida

• 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

Activities Under National Dairy Plan

• 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 OutlayOf Rs 2242 Cr

KEY TAKEAWAYS

NEED INNOVATIVE WAYS TO PROVIDE

FINANCE TO FARMERS

FOCUS ON GIVING THE FARMER HIS

DUE


OPPORTUNITIES

Agenda

INDUSTRY ANALYSIS



PRIMARY RESEARCH

• UHT & Value Added Products market

• Dairy Extension services

VALUE CHAIN ANALYSIS FINANCIALSVALUE CHAIN

ANALYSIS

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

SERV

ICES

Inputs• Fodder Farmers• Veterinary aidProduction• Large/Medium/Small scale and

marginal farmers

ISSU

ES

• Inadequate feeding of animals• Low genetic potential• Exploitation of farmers• High production costs• Delayed payment of dues

SERV

ICES

Chilling• Chilling at chilling centers at villages• Bulk cooling centers at district levelTransportation• Refrigerated vans & Insulated

Tankers

ISSU

ES

• Milk base mainly consisting of small holders

• Involvement of too many intermediaries

• Gaps in informationSE

RVIC

ES

Processing plants• Co-operative dairy plants• Private dairy plants• Government dairy plants

ISSU

ES

• Seasonality of production and fluctuating supply

• Absent quality standards• Adulteration and food safety• Lack of trained and skilled worker

SERV

ICES

• Own retail outlets• Supermarkets• Any retail outlet

ISSU

ES

• Majority of the market is still unorganized

• Acceptability of the consumer base• Less penetration to the rural markets

Inputs for Dairying

Milk Production

Milk Collection



Processing and

Packaging


Marketing & Distribution ConsumersInputs for

DairyingMilk

ProductionMilk

CollectionChilling and Bulk Cooling


Processing and

Packaging


Marketing & Distribution ConsumersInputs for

DairyingMilk

ProductionMilk

CollectionChilling and Bulk Cooling


Processing and

Packaging



Opportunity Assessment exposes major entry areas like procurement from unorganized segment, tetra packed milk and custom packaging

Dairy Extension services

Hi-tech AMCs to be installed at Samridhi centers

Procurement from unorganized players

BMCs at village/district level

Manufacturing & custom packaging (Tetra packs, VAP)

Refrigerated transport systems (Solar powered trucks)

Importance in value chain

Synergy Potential

Market Potential

Set-up own distribution channel and start B2C business

Entry Opportunities in Value Chain

Milk farming from milch animals

Selling loose milk/homogenized milk

Few of the entry areas in Dairy industry have a strong synergy with existing businesses of Mahindra group

P

PPPP

P

Source: Team Analysis

INDUSTRY ANALYSIS



PRIMARY RESEARCH



Agenda


• Milk Processing• Transportation

&Logistic are the key areas of

growth

ENTRY STRATEGY FINANCIALS

ENTRY STRATEGY &

BUSINESS OPPORTUNITIES

Mahindra could enter and become a key player in the dairy industry value chain backbone

Inputs for Dairying

Milk Production

Milk Collection



Processing and

Packaging



Phase 1 Phase 2 Phase 3

Tetra Packed Milk Value Added Products

Manufacturing

Phase Wise Entry

Low cost Tetrapacked milk

Custom Packed Value Added Products

Refrigerated Transport & Bulk Milk Coolers

1. TETRA PACKED MILK2. VALUE ADDED PRODUCTS3. 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

Setting up plant at Jaunpur gives locational advantage from procurement and supply perspective

GHAZIPUR

AZAMGARH

PRATAPGARH

JAUNPUR

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 1Source: Press, Company Websites

Mahindra could overcome challenges in Milk Procurement by creating a strong pull through its existing businesses

KEY CHALLENGESSOLUTION

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

Low cost Tetra Packs could revolutionize the milk industry

PROBLEM AREAS

Milk Deficient Areas such as North East

where transportation is an issue

UHT Milk not produced due to high

costs

1 2MASS 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

PROBLEM AREAS

Milk Deficient Areas such as North East

where transportation is an issue

UHT Milk not produced due to high

costs

1 2

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

• SOLAR POWERED DAIRY PLANTS SETUP IN CALIFORNIA

• High cost savings

DISRUPTIVE INNOVATION THROUGH

REVOLUTIONARY LOW COST UHT MILK

CLIENT PROFILE

• 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

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

Technology innovation in UHT milk would bring cost down and increase penetration

Source: Attached Excel Sheet

Business Opportunity 1: UHT TETRA PACK MILK

PROBLEM AREAS 2MANUFACTURE OF HIGH QUALITY VALUE ADDED

PRODUCTS

PRODUCT PORTFOLIO

1. CHEESE2. BUTTER3. GHEE4. YOGHURT5. DAIRY

WHITENER6. SKM7. LACTOSE

CLIENT PROFILE

REVENUE ESTIMATED AT 20% OF MILK MARKET SALES

Low margins in pure milk production

1CUSTOM-PACKAGING OF HIGH

QUALITY VALUE ADDED PRODUCTS FOR OTHER

COMPANIES

Fast Food Companies

FMCG Companies selling Dairy

products

Institutional Market

Defense

Other Dairy Players

Cooperatives

Custom packaging of VAP offers huge potential

Lack of a large, organized player in

Value Added Products space

Business Opportunity 2: VALUE ADDED PRODUCTS

EXPORT PRODUCTS

Consumer Packs

UHT Milk Ghee

Butter Paneer

Shreekhand Ice Cream

Flavored Milk Fresh cream

Sweets Lassi

Buttermilk

Bulk Packs

Milk Powder

Bangladesh

Sri Lanka

Nepal

New Zealand

Australia

China

JapanHongkong

Philippines

Brunei

Thailand

USA

St. Maarteen

Kenya

Qatar

Bahrain

UAE

Kuwait

Afghanistan

Singapore

Malaysia

EXPORT LOCATIONS

KEY TAKEAWAY: THERE ARE 21 VIABLE EXPORT LOCATIONS

Major export target regions are Middle East and South East Asia

More details in Appendix 2, 3, 4

Why Manufacture ?

Inputs for Dairying

Milk Production

Milk Collection



Processing and

Packaging



0

50

100

150

200

250

127155

188229

Milk Production Estimates (India) (Mn Tonnes) • 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


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

Domestic manufacturing of Solar powered refrigeration equipment holds great potential in light of increasing demand

Business Opportunity 3: MANUFACTURING

CLIENT PROFILE

• 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

BMC 2000 litres 5000 litres

Total Cost Rs. 7 lakh Rs. 18 lakh

Repayment 7 years 6 years

IRR 35% 43%

FINANCIALASSUMPTIONS

ADVA

NTA

GES

OPPORTUNITIES

Manufacture Bulk Milk Coolers

Manufacture Refrigerated

Transport Systems

1 2ATTAIN 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

It helps attain self sustainability and cost efficiency

Source: NABARD

Business Opportunity 3: MANUFACTURING

OPPORTUNITIES

Manufacture Bulk Milk Coolers

Manufacture Refrigerated

Transport Systems

1 2LOW COST SOLAR POWERED

REFRIGERATION SYSTEMSATTAIN 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 THROUGHREVOLUTIONARY TECHNOLOGY

Source : SolarServer Magazine, 2010

TESTED IN USA• Manufacturing

costs reduced by half

• Performance efficiency increased by 27%

It helps attain self sustainability and cost efficiencyBusiness Opportunity 3:

MANUFACTURING

INDUSTRY ANALYSIS



PRIMARY RESEARCH




• Milk Processing• Transportation

&Logistic are the key areas

Agenda


OPPORTUNITIES

1. Low Cost UHT Milk2. Value Added

Products3. Manufacturing

FINANCIALSFINANCIALS

With a Capital Expenditure of around Rs 138 Crore, a profitability of 18.8% can be expected over 5 years

20132014

20152016

2017

0

350

700

1050

1400

385

928

1096

12781342

56

174216

260 278

Forecasted Revenue and Net Profits (INR Crores)Internal

Sources = Rs 34 Crores

Bank Loan = Rs 104 Crores

Capital Expenditure

(Rs 138 Crore)

SOURCES & USES OF FUNDS REVENUE PROJECTIONS

Average Profitability = 18.8%

More details in Appendix 5

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

Mass Adoption of

UHT

UHT FINO Milk Export Leadership

Solar Powered Refrigeration

Trucks

Solar Power UHT

Tech

nolo

gy

Time

Normal Evolution

Disruptive Evolution

Bottled Milk

1960sPre 1950s 1970s 2013 2018 2020

THANK YOU!

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

APPENDIX – 2: Export – Quality : BIS Certifications and standards

S.No Dairy Product Certification1 Burfi IS-5550-19702 Butter Oil (Butter fat) IS: 13689 - 19923 Butter Pasteurized IS: 13690 - 19924 Casein (edible Quality) IS: 1167-1995

5Cheese Natural processed, processed cheese spread and soft IS: 2785 - 1979

6 Cheese Powder IS: 9584 - 19807 Cream Sterilised IS: 4884 - 19688 Dahi IS: 9617 - 19809 Dairy whitener IS: 12299 - 1998

10 Ice cream IS: 2802 - 196411 Ice cream cones IS: 7187 - 198912 Ice cream mix dried IS: 7839 - 197513 Khoa IS: 4883 - 198014 Lactose Commercial IS: 1000 - 198915 Milk flavored IS: 4709 - 196816 Milk Powder IS: 1165 - 199217 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: MoistureFatTotal SolidsProteinAshLactic AcidSucrose contentTitrable 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

DAIRY PRODUCTS DAIRY EQUIPMENT TESTING STANDARDS

PRODUCTION PROCESS

APPENDIX - 3: Exports: Factors affecting exports and Measures

Quality

of Pro

ducts

International

Standard

s

Cost of P

roducti

on

Delive

ry Sc

hedules

Lack

of Info

rmati

on

Capac

ity co

nstrain

ts

Inadequate

Tech

nology

cost

of Cred

it

Mark

eting S

upport

Others

0

4

8

12

16

20

7 7

19

4

16

9 911

14

4

Factors Affecting Export Potential of Dairy Products

in %

IMPROVE QUALITY

STANDARDS

• 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

PREVALENT QUALITY ISSUES

Operational Aspects

Infrastructure Related

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 factorsInadequate power supply

Cost incentives required for maintaining standards like ISO 9001, 2000, HACCP

OPERATIONAL ASPECTS

INFRASTRUCTURAL ASPECTS

MAINTAINING STANDARDS

KAIZEN TECHNIQUES 1. Reduce Power

Consumption2. Reduce losses3. Reduce Inventory4. Reduce Timeover

Appendix – 4: KAIZEN techniques: Process re-engineering

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

Demo Action steps for implementation ImpactKAIZEN

1

2

3

4

Power Consumption

Handling loss of Milk

Inventory

Changeover time

Income ProjectionsS.No Particulars Unit Years

I II III IV V1 Milk processed litres/day 420000.0 480000.0 540000.0 600000.0 600000.02 Yield per day

i) Tetra Pack Milk litres /day 394500.0 450857.1 507214.3 563571.4 563571.4ii) Cream (50% fat) litres /day 24000.0 27428.6 30857.1 34285.7 34285.7iii) Saleable cream (25% of iii approx.) litres /day 6000.0 6857.1 7714.3 8571.4 8571.4Iv) 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 30826106.7ii) Cream Rs. /Kg 1350000.0 1620000.0 1913625.0 2232562.5 2344190.6iii) 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 ProjectionsS.No Particulars Years

I II III IV V

1 Milk processing per year (Litres) 76440000 175200000 197100000 219000000 2190000002 Raw material - milk 1681680000 4047120000 4780660500 5577437250 58563091133 Commission on milk collection 76440000 183960000 217302750 253519875 2661958694 Transportation charges 76440000 183960000 217302750 253519875 2661958695 Power and fuel 152880000 367920000 434605500 507039750 5323917386 Packing material 152880000 367920000 434605500 507039750 5323917387 Chemicals & detergents 30576000 73584000 86921100 101407950 1064783488 Salaries and wages 51309041 102900000 113190000 124509000 1369599009 Repairs & maintenance 22932000 55188000 65190825 76055963 79858761

10 Overheads 55036800 132451200 156457980 182534310 19166102611 Milk distribution cost 275184000 662256000 782289900 912671550 95830512812 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

Appendix – 5: Financial Projections (a)

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

Income Statement (in Rs Crores) Years

Sr.No. 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

iii Depreciation:

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%

Appendix – 5: Financial Projections (b)