MWR presentation

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. Agenda
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
ENTRY STRATEGY
& BUSINESS
OPPORTUNITIES
FINANCIALS

3. ENTRY STRATEGY
& BUSINESS
OPPORTUNITIES
Agenda
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
INDUSTRY FINANCIALS
ANALYSIS

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. 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. Agenda
INDUSTRY
ANALYSIS
• Growing Industry
• Large Scope for
Organizing the
industry
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
ENTRY STRATEGY
PRIMARY & BUSINESS
FINANCIALS
RESEARCH
OPPORTUNITIES

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. THANK YOU!

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. 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. 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. 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. 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. 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%