1. INTRODUCTION

Dairy is a primary livelihood source for major rural communities in India because

growing demand for milk and market access at doorsteps. The major problems faced by

the farmers are lack of fodder and problems of low milk yielding. Due to decrease in

forest area there is substantial decrease is fodder production. Introduction of high yielding

dwarf varieties of crops have furthered hampered the availability of fodder. The lag in

supply is being tried to restore with commercial feeds which in turn increases cost of

production of milk. To increase the quantity of milk artificial milk boosters are mixed

with urea in the commercial feeds which has harmful effect on the quality of milk

produced and the lifespan of the livestock. It also leads to lethal diseases like cancer and

other coronary alignments in human beings. Animal health has a direct impact on the

production and quality of milk. Besides forage and water animals require salts and

essential trace elements for productivity and maintenance of health. Indian dairy farmers

lack scientific knowledge of maintaining the milk animals.

Salt and minerals are essential part of the daily diet of all livestock if they are to perform

cost effectively.

It plays a major role in the diet and is essential for efficient feed utilization. Additionally,

it stimulates saliva production, promoting digestion and making fodder more palatable.

Deficiencies are most likely in rapidly growing animals and also in lactating stock.

Salt deficiency can lead to:

1.1. Loss of appetite and poor intakes

1.2. Depressed growth rates in growing and fattening stock

1.3. Poor milk production in lactating livestock

Visible symptoms of salt deficiency are often seen in the form of cravings for salt,

drinking urine and the licking of gates, walls, stones and soil are examples of this.

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Literature Review

Rural population accounts for 70% of the total Indian population and it is increasing at a high

rate in comparison to urban population. The buyers of rural and urban areas differ in their

characteristics while buying any product. The reasons behind this differentiation are many,

like:

• Age and life-cycle stage

• Occupation

• Economic situation

• Life style

• Personality and self concept and

• Psychological factors like perception, cognition, and motivation.

Buying decision of the consumer of different age, occupation differs from rural to urban area.

The rural area is more bounded by the traditions, customs, and values which bring a gigantic

change in the life style and personality of the consumers of rural area in comparison to urban

area where people are more attracted towards the western culture. Low per capita incomes of

the consumers in the rural area restricts them for low consumption patterns as compared to

urban population where the consumers are more brand conscious and are ready to pay high.

The major difference in rural and urban market is, rural market is under developed and the

consumers are also less aware about the new trends and brands as compared to the urban

consumers. The medium of communication for rural, is also different in comparison with the

urban market. Words of mouth, print, radio, puppetry, melas and folk theatres are few of the

medium of promotion where as television and print media advertisement are the leading

source of promotion for urban market. Language diversification is also a problem as India

never had a common language which could be understood by the masses; it is a barrier in

effective communication in the rural market as languages vary from state to state, place to

place and district to district.

The strength of rural marketing lies in the 4 A approach i.e. affordability, acceptability,

availability, and awareness of the consumers, though the weakness like low per capita

income, illiteracy and etc. can be overcome as more and more companies are taking interest

into rural marketing in India to capture the untapped market. Opportunities for rural

marketing are the vast size of rural market in India, around 128 million households; huge

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potential market for FMCG and durables, rise in the literacy rate of rural population, easy

reach of mass media and television has influenced the consumer behavior. Threats for the

rural marketing are its unpredicted nature as compared to urban market.

2. PRODUCT

2.1 Applications

When salt ad minerals intake is below that required to meet the animal’s need, the animal

adjusts by conserving salt. Urine output of sodium and chloride nearly stops. A continuous

low salt intake affects the health of animals through a loss of appetite and weight. Feed

utilization decreases and it takes more feed per unit of gain or product produced. Animals

soon develop a craving for salt. They may consume considerable amounts of dirt, wood,

rocks and other materials, if they do not have access to salt blocks. Lactating animals are

most susceptible to a salt deficiency because milk contains a considerable amount of sodium

and chloride.

Our salt and mineral block gives them adequate amount of minerals and other trace elements

that help them remain healthy and affect the quantity and quality of the milk produced.

2.2 Compliances and quality standards

Compliance with PFA Act is necessary whereas registration under AGMARK is advisable.

BIS has specified quality standards vide 546 IS 546:1975.

3.0 MARKET POTENTIAL

Animals are spiritually and emotionally related with our Indian cultural. The dairy Industry is

constantly increasing due to increase in milk and milk products demand and out of door

market availability. This has increased the demand of milk from dairy farmers. They face

lack of scientific knowledge and lack of availability of fodder. Moreover, the most essential

minerals are not found in the available fodders. This effects the health of cattle which in-turn

reduces the quantity of milk. Deficiency of such elements, especially sodium and calcium ,

results in loss of appetite and weight. Feed utilization decreases and it takes more feed per

unit of gain or product produced. Milk boosters effect the milk contents and makes it

contaminated with harmful substances that can cause cancer and other diseases in human

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bodies. This Mineral and salt bock will complete their requirement. Make and keep them

healthy, help them develop good immune system, increase the quality and quantity of milk

and increase their fertility.

Some NGO’s have trained and educated farmers about it and concluded that:

1. The awareness and knowledge on cattle lick salt was increased among villagers.

2. The villagers are showing interest on cattle lick salt.

3. The technology is accepted for adaptation.

4.0 MANUFACTURING PROCESS

Manufacture of 2 Kg Cattle Lick salt Block:

Equipment’s:

1. Wooden Mould. 2. Balance 3. Hydrometer. 4. Measuring weights 5.Measuring Jar

6.Wooden Hammer.

Raw Material.

Common salt 2.B Grade chemicals.

Process:

The process consists of the following steps:

1. Weighing of chemicals.

2. Preparation of Magnesium chloride solution to 24 Be

3. Mixing of chemicals in the salt.

4. Adding gradually at internals Manganese chloride solution to the salt mixture

& mix well.

5. Moulding of the wet mixture in a wooden block.

6. Sun drying of the mould block.

In order to prepare a cattle lick salt block of 2 Kg. The following chemical proportions are

required.

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Copper sulphate: 4 grams, Cobalt chloride: 1 gram, Magnesium sulphate: 4 gram, Ferric

oxide 4grams, Zinc sulphate: 4 grams, Calcined Mangesite: 80grms, Potassium Iodide: 0.03

grams.

Ground common salt is taken and mixed thoroughly with the above qualities of the trace

elements. To this calcinated magnetite is added and once again mixed well. The Magnesium

and iodide solution of 20 Be already prepared, is gradually added at intervals and mixed well

till such a time that the salt mixture can be formed into small lobes which does not break by

itself. The contents are then emptied into a wooden mould. The wet mixture is introduced in

the mould in small quantities and removed with a wooden hammer having a rectangular base.

The block is filled up gradually and then a tapered peg is inserted into the center of the block

up to the depth of about 3”.The peg is now carefully removed from the mould with the

material inverted and a slight tapping at the bottom is given. The wooden block is carefully

removed and the 2 Kg cattle lick block is kept in open for sun drying. The dried salt block is

hung before the animal for its choice for lick. The salt and trace elements enters the body of

the animal

5.0 CAPITAL INPUTS

5.1 Land and Building

Around 200 sq.mtrs. of plot with built-up area of 100 sq.mtrs. is sufficient. The cost of land

could be Rs. 0.50 lac whereas the built up area would cost Rs.1.75 lacks. The construction

cost is taken on a lower side as this will be like a typical Ghani and will not require RCC slab

on the entire building. Thus, total cost of land and building shall be in the region of Rs.2.25

lacks.

5.2 Machinery

We will start with small production unit with a production capacity of 110.40 tones at 100%

capacity utilization. The plant will operate for about 280-300 days a year. To have this rated

production capacity, following machines will be needed:

Items Qty. Price (Rs.)

Wooden Moulds 12 60,000

Computer regulated Balance, Hydrometer, Measuring Weights 3 70,000

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Electronic Measuring containers 5 55,000

Other Support equipment, electric

Motor and testing facilities -- 40,000

Total 2, 25,000

5.3 Miscellaneous Assets

Assets like storage tanks, packing tables, furniture, storage racks etc. are likely to cost

Rs.50, 000/-.

5.4 Utilities

Power requirement would be 25 HP and water shall be required for potable and sanitation

Purposes. The annual cost under this head at 100% activity level is estimated to be

Rs.60, 000/-.

5.5 Raw Material

The raw materials will be bought thorough government authorized chemical vendors.

6.0 MANPOWER REQUIREMENTS

Particulars Nos. Monthly Total Monthly

Salary (Rs.) Salary (Rs.)

Skilled Worker 2 1,800 3,600

Semi-skilled Workers 2 1,500 3,000

Helpers 2 1,200 2,400

Salesman 1 2,500 2,500

Total 11,500

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7.0 TENTATIVE IMPLEMENTATION SCHEDULE

Activity Period (in months)

Application and sanction of loan 2

Site selection and commencement of civil work 1

Completion of civil work and placement of

orders for machinery

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Erection, installation and trial run 1

8.0 DETAILS OF THE PROPOSED PROJECT

8.1 Building

Particulars Area (Sq.Mtrs) Total Cost (Rs.)

Land 200 50,000

Building 100 1, 75,000

8.2 Plant and Machinery

The total cost under this head is estimated to be Rs. 2.25 lacks as narrated before.

8.3 Miscellaneous Assets

The total expenditure is likely to be Rs. 50,000 as explained earlier.

8.4 Preliminary & Pre-operative Expenses

A provision of Rs .40,000/- is adequate towards expenditure like establishment charges,

interest during implementation of the project, trial run expenses, etc.

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8.5 Working Capital Requirement

At 60% capacity utilization in the first year, the working capital needs would be as under:

(Rs. in lacks)

Particulars Period Margin Total Bank Promoters

Stock of Raw and PM ½ Month 30% 0.91 0.61 0.30

Stock of Finished Goods ½ Month 25% 1.20 0.90 0.30

Receivables ½ Month 25% 1.25 0.95 0.30

Working Expenses 1 Month 100% 0.20 -- 0.20

Total 3.56 2.46 1.10

8.6 Cost of the Project and Means of Financing

(Rs. in lacks)

Item Amount

Land and Building 2.25

Plant and Machinery 2.25

Miscellaneous Assets 0.50

P&P Expenses 0.40

Contingencies @ 10% on Land & Building and

Plant and Machinery 0.45

Working Capital Margin 1.10

Total 6.95

Means of Finance

Promoters' Contribution 2.10

Loan from Bank/FI 4.85

Total 6.95

Debt Equity Ratio 2.31: 1

Promoters' Contribution 30%

Financial assistance in the form of grant is available from the Ministry of Animal Husbandry,

Govt. of India, towards expenditure on technical civil works and plant and

Machinery for eligible projects subject to certain terms and conditions.

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9.0 PROFITABILITY CALCULATIONS

9.1 Production Capacity and Build-up

Production capacity at 100% would be 110.40 tons of salt blocks considering working of

about 280-300 days every year. It is assumed that the plant would be operated at 60% and

75% respectively during first 2 years.

9.2 Sales Revenue at 100%

Product Qty. Selling Price Sales

(Tones) (Rs) (Rs. in lacks)

Gahukalya

(Salt and Mineral) 110.40 46/Kg 50.80

(Block)

9.3 Utilities

The annual expenditure at 100% activity level is assumed to be Rs.60, 000/-.

9.4 Interest

Interest on term loan of Rs. 4.85 lacks is calculated @ 12% considering repayment in 5 years

Inclusive of a moratorium period of 1 year. Interest on working capital assistance from bank

is taken at 14% per annum.

9.5 Depreciation

It is computed on WDV basis and rates assumed are 10% on building and 20% on machinery

and miscellaneous assets.

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10.0 PROJECTED PROFITABILITY

(Rs. in lacks)

No. Particulars 1st Year 2nd Year

A Installed Capacity ---- 110.40 tons ----

Capacity Utilization 60% 75%

Sales Realization 30.48 38.10

B Cost of Production

Raw and Packing Materials 21.78 27.22

Utilities 0.36 0.45

Salaries 1.38 1.55

Stores & Spares 0.21 0.30

Repairs & Maintenance 0.30 0.42

Selling Expenses @ 7.5% 2.29 2.86

Administrative Expenses 0.24 0.36

Total 26.56 33.16

C Profit before Interest & Depreciation 3.92 4.94

Interest on Term Loan 0.55 0.41

Interest on Working Capital 0.34 0.43

Depreciation 0.68 0.55

Net Profit 2.35 3.55

Income-tax @ 20% 0.45 0.70

Profit after Tax 1.90 2.85

Cash Accruals 2.58 3.40

Repayment of Term Loan -- 1.15

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11.0 BREAK-EVEN ANALYSIS

(Rs. in lacks)

No. Particulars Amount

[A] Sales 30.48

[B] Variable Costs

Raw and Packing Materials 21.78

Utilities (70%) 0.25

Salaries (70%) 0.97

Stores & Spares 0.21

Selling Expenses (80%) 1.83

Admn Expenses (50%) 0.12

Interest on WC 0.34 25.50

[C] Contribution [A] - [B] 4.98

[D] Fixed Costs 2.63

[E] Break-Even Point (D ÷ C) 53%

12.0 LEVERAGES

Financial Leverage

= EBIT/EBT

= 3.24 ÷ 2.35

= 1.38

Operating Leverage

= Contribution/EBT

= 4.98 ÷ 2.35

= 2.12

Degree of Total Leverage

= FL/OL

= 1.38 ÷ 2.12

= 0.65

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13.0 DEBT SERVICE COVERAGE RATIO (DSCR)

Debt Service Coverage Ratio (DSCR)

(Rs in lacks)

Particulars 1st Yr 2nd Yr 3rd Yr 4th Yr 5th Yr

Cash Accruals 2.58 3.40 3.61 3.86 4.12

Interest on TL 0.55 0.41 0.30 0.17 0.08

Total [A] 3.13 3.81 3.91 4.03 4.20

Interest on TL 0.55 0.41 0.30 0.17 0.08

Repayment of TL -- 1.20 1.20 1.20 1.25

Total [B] 0.55 1.61 1.50 1.37 1.33

DSCR [A] ÷ [B] 5.69 2.36 2.60 2.94 3.15

Average DSCR ------------------------------------ 3.34 -------------------------------------

14.0 INTERNAL RATE OF RETURN (IRR)

Cost of the project is Rs. 6.95 lacks.

(Rs. in lacks)

Year Cash 24% 28% 32%

Accruals

1 2.58 2.08 2.02 1.96

2 3.40 2.21 2.07 1.95

3 3.61 1.89 1.72 1.57

4 3.86 1.63 1.44 1.27

5 4.12 1.40 1.20 1.03

17.57 9.21 8.45 7.78

The IRR is around 34%.

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Note: The above stated machines are easily available locally. Other

suppliers are:

1. Industrial Equipments, Guwahati

2. Archana Machinery Stores, Guwahati

RURAL MARKET & MARKETING STRATEGY:

Indian Rural Context:

A rural area is defined as one that does not fall under a municipality/corporation, cantonment

board or a notified town area, with a population of less than 5000 persons, with a population

density of less than 400 per.sq.Km, and where majority of the people are involved m

agricultural activity (Velayudhan 2002).

According to 2001 census, rural population constitutes 72.22 per cent of India’s total

population (Acharyulu 2004). The literacy rate of this huge rural population is around 27 per

cent, and more than 60 per cent of the population comprises of adults in the age group of 15

to 59 years (Pande 1997).

The rural economy is driven by two kinds of activities: agricultural and allied, and

nonagricultural. The agricultural and allied activities comprise of fanning, dairy farming,

poultry, aqua-culture, tree growing, salt fanning, etc., and the non-agricultural activities

comprise of collage industries, khadi, handlooms and handicrafts, other businesses like

trading in general goods, agro-inputs, construction hardware materials, cement etc., and

providing services like transport, communication, banking, input supply, marketing of farm

and non-farm produce. The agriculture and allied activities contribute 75 per cent to the total

revenue generated in the rural economy, and the contribution of the rural economy to the

overall GDP of India was about 24 per cent in 2000-0 1 (Acharyulu 2004).

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Definition:

“Rural marketing can be seen as a function which manages all those activities involved in

assessing, stimulating and converting the purchasing power into an effective demand for

specific products and services, and moving them to the people in rural area to create

satisfaction and a standard of living to them and thereby achieves the goals of the

organization.”

This definition states that rural marketing emphasis not only on marketing of goods to rural

people but also urge them to increase the standard of living by providing high quality

product.

Around 70 per cent of the total households in India reside in the rural areas. The total number

of rural household is expected to rise from 135 million in 2001-02 to 153 million in 2009-10.

This presents the largest potential market in the world. According to the study conducted by

NCEAR, the number of `lower middle income' group in rural areas is almost double as

compared to the urban areas, having a large consuming class with 41% of the Indian middle

class and 58% of the total disposable income.

The Indian rural market has been growing at 3-4% per annum, adding more than 1 million

new consumers every year and now accounts for close to 50% of the volume consumption of

fast-moving consumer goods (FMCG) in India. The market size of the fast moving consumer

goods sector is projected to be more than double to US$ 23.25 billion by 2010 from the

present US$ 11.16 billion. As a result, it is becoming an important market place for fast

moving consumer goods as well as consumer durables.

Keeping in mind the enormous growth potential in Indian rural market, this paper tried to

study the consumer behavior and decision making pattern of rural people.

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At present, the basic model of rural consumer behavior is as follows:

The environment consists of

• Socio – Cultural factors like culture, social class, groups, family, role and status in the

society

• Technological factors

• Economic factors, and

• Political factors.

These environmental factors along with marketing offer and mix generates stimuli in the

minds of the rural consumer and creates an urge to make a purchase.

The actual buying process/action takes place as per the stimuli and buying behavior of the

consumer. The buying decision process of rural consumer undergoes following steps.

While making a purchase decision consumer first tries to understand the need of the product,

especially in rural India where cost is still a major consideration and necessities are prime

purchase. Information search is through the neighbors, friends, and society. Evaluation of

alternatives is done by

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• Expectancy value model

• Lexicographic model

• Conjunctive model, and

• Disjunctive model.

Depending upon the need, buying power, and other environmental factors, decision is then

made to select the best alternative to consume. After the actual purchase, comes the after

purchase behavior which depends upon the satisfaction or dissatisfaction level of the

consumer. In this paper, efforts are taken to understand the buying characteristics and major

influences in buying decision-making in rural market for FMCG. For the purpose of the

study, three talukas viz. Khatav, Khandala and Koregaon in Satara district, Maharashtra were

selected for the empirical study.

[A] 4 A’s of Rural Marketing (For Gahukalya)

1. Availability: To tap this rural market we will set up 1 area office between

three surrounding villages and each village will have rural/remote area offices.

2. Affordability: Our product ‘Gahukalya (Salt and Mineral Blocks)’ is priced 46

Rs/Kg. Other harmful milk boosters are priced much higher and decrease the

life of animal and quality of milk.

3. Acceptability: A research done by an NGO in Chitoor district confirmed that:

1. The awareness and knowledge on cattle lick salt block was increasing

among villagers.

2. The villagers are showing interest on cattle lick salt blocks.

3. The technology is accepted for adaptation.

4. Awareness: Few NGO’s have started to educate dairy farmers about the

various benefits of salt and mineral blocks.

We will carry out exhibitions and road shows. We will also have banners and wall

displays in regional languages that will have all the necessary information about the

product and its benefits. At the time of launch we will distribute free 0.5 kg samples

with other “Pashu Aahar” products to spread the brand awareness.

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The Concept of “BUZZ” in “GAHUKALYA”

Emmanuel Rosen in his book “The Anatomy of Buzz” uses the compact term ‘Buzz’, which

he defines as “the aggregate of all persons to person communication about a particular

product, service or company at any point of time”. It is a continuous humming, informal thrill

and quick attraction of attention to signal the informal word or speech in a fashionable

manner to others.

Normally the buzz includes,

a. Customers experiencing a new aspect of store experience.

b. Those who are listening and watching start discussing or talking on that subject.

c. They repeat it with the same group and other group and even with the people in the

formal and informal gathering at any place.

d. They spare time to listen and act or decide based in the reliability of the people who are

casually and formally talking about a product, service or concept.

e. The people who decided or made such purchase or investment action again start buzzing

it repeatedly wherever possible.

f. So it creates a faster and wider network by word of mouth advertisement.

g. It makes many related and unrelated people to involve or to listen. Many buzzing people

start purchasing or investing on the said items or plan.

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Central Part (Buzz Group)

Here the central part is ‘Buzz group’. This group is automatically developed or already

developed group where in the members casually talk about anything. They also include and

entertain the strangers during the course of their discussion.

Mineral blocks for farm livestock

ANIMAL mineral supplements are high margin products which have been marketed

very successful for many years.  Farmers buy them in much the same way as people buy

vitamin pills.  You think you need them and feel they do some good, and they don't seem

to do any harm.  If you stop taking them maybe you'll go down with a cold, or

something worse.  So the few pence a day on the vitamin pill seems like a good

investment.

I - Influencing Group, A - Action Group, <—> - Communication (formal or iStageII )

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Main reasons for giving animals proper mineral intake..

Farmers feed minerals because they are generally advised to.  Reasons are one or more of the

following:

a.  they see their stock licking the ground, drinking dirty water and urine, eating earth, all

activities which the stockman sees as a sign of deficiency

b.  Modern day forage is grown with fertilizer and so contains less minerals than that which

isn't 'forced'.

c. vets attribute commonly found diseases and conditions on mineral deficiencies.  Pregnancy

toxemia (hypoglycemia) occurs due to a lack of dietary energy in heavily pregnant ewes. This

causes the animal to mobilize body reserves too quickly; causing a build-up in ketones that

causes damage to the brain and nervous system.

Milk fever (hypocalcaemia) is the manifestation of low blood-calcium levels, but this is often

not the result of a diet low in calcium. Many interactions occur between mineral elements in

the metabolism of animals, and the most obvious solution is often not appropriate.

Hypocalcaemia is often related to intake of high-oxalate plants, but may also be related to

grass tetany and low magnesium levels.

Hypomagnesaemia (grass staggers) Occurs due to a low level of magnesium in the blood.

Cows don’t have large reserves of magnesium in the body and only a small proportion of

magnesium in the diet is absorbed from the gut.  The risk is highest early in the grazing

season and sometimes in the autumn. Magnesium is less available in young lush grass,

especially if rich in nitrogen or potash.  The adverse effects of any magnesium deficiency can

be accentuated by stress such as oestrus, high milk yield, excitement or adverse weather. 

First signs of a problem may include nervousness as well as the characteristic staggering gait.

The onset can often be so quick that a sudden death is the first symptom seen.

Acidosis   The optimum rumen pH is around 6.4 - 6.5. The digestion of feeds produces a

variety of acids which lower rumen pH and many feeds we offer are acidic themselves,

particularly silage at a pH around 4.0.  Feeding high levels of starch or sugars that are rapidly

digested in the rumen can reduce the pH below the level where the rumen floras are most

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active. This slows down forage digestion and feed intake is reduced. In severe cases, cows go

off their feed completely and milk yields plummet.  Some feeds do not release acid to the

same extent when digested (unmolassed beet pulp), whilst others (caustic treated wheat and

caustic treated straw) are clearly alkaline. Cows can buffer rumen acidity (via saliva) but

when they fail acidosis is likely. Forages stimulate saliva production to a greater extent that

straights / concentrates, but adequate water and salt are required. 

Encourage cows to maximize saliva production by providing rock salt or proprietary salt

licks, together with adequate water.

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