SlideShare a Scribd company logo
1 of 33
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
Agenda 
INDUSTRY 
ANALYSIS 
PRIMARY 
RESEARCH 
VALUE CHAIN 
ANALYSIS 
ENTRY STRATEGY 
& BUSINESS 
OPPORTUNITIES 
FINANCIALS
ENTRY STRATEGY 
& BUSINESS 
OPPORTUNITIES 
Agenda 
INDUSTRY 
ANALYSIS 
PRIMARY 
RESEARCH 
VALUE CHAIN 
ANALYSIS 
INDUSTRY FINANCIALS 
ANALYSIS
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
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
Agenda 
INDUSTRY 
ANALYSIS 
• Growing Industry 
• Large Scope for 
Organizing the 
industry 
PRIMARY 
RESEARCH 
VALUE CHAIN 
ANALYSIS 
ENTRY STRATEGY 
PRIMARY & BUSINESS 
FINANCIALS 
RESEARCH 
OPPORTUNITIES
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
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)
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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%
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
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
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
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 
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
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
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
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
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%

More Related Content

What's hot

What's hot (20)

AMUL PRESENTATION
AMUL PRESENTATIONAMUL PRESENTATION
AMUL PRESENTATION
 
Report on banas dairy
Report on banas dairyReport on banas dairy
Report on banas dairy
 
Mother dairy
Mother dairyMother dairy
Mother dairy
 
A project report on consumer perception towards nandini milk
A project report on  consumer perception towards nandini milkA project report on  consumer perception towards nandini milk
A project report on consumer perception towards nandini milk
 
Dairy Market Presentation
Dairy Market PresentationDairy Market Presentation
Dairy Market Presentation
 
summer internship project on AMUL
summer internship project on AMULsummer internship project on AMUL
summer internship project on AMUL
 
Indian dairy industry
Indian dairy industryIndian dairy industry
Indian dairy industry
 
Dharwad Milk Union Ltd. KMF project
Dharwad Milk Union Ltd. KMF projectDharwad Milk Union Ltd. KMF project
Dharwad Milk Union Ltd. KMF project
 
MBA -Project Study Report
MBA -Project Study Report MBA -Project Study Report
MBA -Project Study Report
 
Amul supply chain management
Amul supply chain managementAmul supply chain management
Amul supply chain management
 
Mother Dairy
Mother DairyMother Dairy
Mother Dairy
 
GCMMF ( Gujarat Co-operative Milk Marketing Federation Limited )
GCMMF ( Gujarat Co-operative Milk Marketing Federation Limited )GCMMF ( Gujarat Co-operative Milk Marketing Federation Limited )
GCMMF ( Gujarat Co-operative Milk Marketing Federation Limited )
 
A project on retailer's perception and behaviour towards AMUL fresh product d...
A project on retailer's perception and behaviour towards AMUL fresh product d...A project on retailer's perception and behaviour towards AMUL fresh product d...
A project on retailer's perception and behaviour towards AMUL fresh product d...
 
Amul Facts
Amul FactsAmul Facts
Amul Facts
 
Amul
AmulAmul
Amul
 
Amul ppt
Amul pptAmul ppt
Amul ppt
 
Amul
AmulAmul
Amul
 
Mother dairy final report
Mother dairy final reportMother dairy final report
Mother dairy final report
 
indian dairy sector
indian dairy sectorindian dairy sector
indian dairy sector
 
Amul in rural markets
Amul in rural marketsAmul in rural markets
Amul in rural markets
 

Viewers also liked

7 Things Banks should do with Blockchain
7 Things Banks should do with Blockchain7 Things Banks should do with Blockchain
7 Things Banks should do with BlockchainSam Wouters
 
Digital Business. Countries – leaders, issues, initiatives. Companies – shift...
Digital Business. Countries – leaders, issues, initiatives. Companies – shift...Digital Business. Countries – leaders, issues, initiatives. Companies – shift...
Digital Business. Countries – leaders, issues, initiatives. Companies – shift...Natalia Berdyeva
 
The future of Bitcoin & 9 ways to improve it
The future of Bitcoin & 9 ways to improve itThe future of Bitcoin & 9 ways to improve it
The future of Bitcoin & 9 ways to improve itSam Wouters
 
Peter Minkjan - Likeconomics
Peter Minkjan - LikeconomicsPeter Minkjan - Likeconomics
Peter Minkjan - LikeconomicsUpstream
 
Why How What - The Blockchain
Why How What - The BlockchainWhy How What - The Blockchain
Why How What - The BlockchainSam Wouters
 
Fintech and Transformation of the Financial Services Industry
Fintech and Transformation of the Financial Services IndustryFintech and Transformation of the Financial Services Industry
Fintech and Transformation of the Financial Services IndustryRobin Teigland
 
55 Business Models to Revolutionize your Business by Michaela Csik
55 Business Models to Revolutionize your Business by Michaela Csik55 Business Models to Revolutionize your Business by Michaela Csik
55 Business Models to Revolutionize your Business by Michaela Csikjindrichweiss
 
Disruptive Technologies McKinsey
Disruptive Technologies McKinseyDisruptive Technologies McKinsey
Disruptive Technologies McKinseyOscar Valentin
 
How Digital Has Changed These 7 Banking Roles
How Digital Has Changed These 7 Banking RolesHow Digital Has Changed These 7 Banking Roles
How Digital Has Changed These 7 Banking RolesMX
 
What I Carry: 10 Tools for Success
What I Carry: 10 Tools for SuccessWhat I Carry: 10 Tools for Success
What I Carry: 10 Tools for SuccessJonathon Colman
 
Disruption in Digital Banking
Disruption in Digital BankingDisruption in Digital Banking
Disruption in Digital BankingBackbase
 
FinTech Industry Report 2016
FinTech Industry Report 2016FinTech Industry Report 2016
FinTech Industry Report 2016Bernard Moon
 
Netflix Business Model & Strategy
Netflix Business Model & StrategyNetflix Business Model & Strategy
Netflix Business Model & StrategyEvgenii Gvozdev
 
Block chain 101 what it is, why it matters
Block chain 101  what it is, why it mattersBlock chain 101  what it is, why it matters
Block chain 101 what it is, why it mattersPaul Brody
 
The Blockchain - The Technology behind Bitcoin
The Blockchain - The Technology behind Bitcoin The Blockchain - The Technology behind Bitcoin
The Blockchain - The Technology behind Bitcoin Jérôme Kehrli
 
2016 Banking Trends
2016 Banking Trends2016 Banking Trends
2016 Banking TrendsMX
 

Viewers also liked (20)

Module - Creativity, Innovation & Entrepreneurship
Module - Creativity, Innovation & EntrepreneurshipModule - Creativity, Innovation & Entrepreneurship
Module - Creativity, Innovation & Entrepreneurship
 
7 Things Banks should do with Blockchain
7 Things Banks should do with Blockchain7 Things Banks should do with Blockchain
7 Things Banks should do with Blockchain
 
Digital Business. Countries – leaders, issues, initiatives. Companies – shift...
Digital Business. Countries – leaders, issues, initiatives. Companies – shift...Digital Business. Countries – leaders, issues, initiatives. Companies – shift...
Digital Business. Countries – leaders, issues, initiatives. Companies – shift...
 
The future of Bitcoin & 9 ways to improve it
The future of Bitcoin & 9 ways to improve itThe future of Bitcoin & 9 ways to improve it
The future of Bitcoin & 9 ways to improve it
 
Peter Minkjan - Likeconomics
Peter Minkjan - LikeconomicsPeter Minkjan - Likeconomics
Peter Minkjan - Likeconomics
 
Netflix: An Analysis
Netflix: An AnalysisNetflix: An Analysis
Netflix: An Analysis
 
Why How What - The Blockchain
Why How What - The BlockchainWhy How What - The Blockchain
Why How What - The Blockchain
 
Fintech and Transformation of the Financial Services Industry
Fintech and Transformation of the Financial Services IndustryFintech and Transformation of the Financial Services Industry
Fintech and Transformation of the Financial Services Industry
 
55 Business Models to Revolutionize your Business by Michaela Csik
55 Business Models to Revolutionize your Business by Michaela Csik55 Business Models to Revolutionize your Business by Michaela Csik
55 Business Models to Revolutionize your Business by Michaela Csik
 
Blockchain
BlockchainBlockchain
Blockchain
 
Disruptive Technologies McKinsey
Disruptive Technologies McKinseyDisruptive Technologies McKinsey
Disruptive Technologies McKinsey
 
How Digital Has Changed These 7 Banking Roles
How Digital Has Changed These 7 Banking RolesHow Digital Has Changed These 7 Banking Roles
How Digital Has Changed These 7 Banking Roles
 
What I Carry: 10 Tools for Success
What I Carry: 10 Tools for SuccessWhat I Carry: 10 Tools for Success
What I Carry: 10 Tools for Success
 
Netflix case study
Netflix case studyNetflix case study
Netflix case study
 
Disruption in Digital Banking
Disruption in Digital BankingDisruption in Digital Banking
Disruption in Digital Banking
 
FinTech Industry Report 2016
FinTech Industry Report 2016FinTech Industry Report 2016
FinTech Industry Report 2016
 
Netflix Business Model & Strategy
Netflix Business Model & StrategyNetflix Business Model & Strategy
Netflix Business Model & Strategy
 
Block chain 101 what it is, why it matters
Block chain 101  what it is, why it mattersBlock chain 101  what it is, why it matters
Block chain 101 what it is, why it matters
 
The Blockchain - The Technology behind Bitcoin
The Blockchain - The Technology behind Bitcoin The Blockchain - The Technology behind Bitcoin
The Blockchain - The Technology behind Bitcoin
 
2016 Banking Trends
2016 Banking Trends2016 Banking Trends
2016 Banking Trends
 

Similar to Milk Business strategy

Amul strategy presentation ppt
Amul strategy presentation pptAmul strategy presentation ppt
Amul strategy presentation pptsweetmonti
 
Mahindra's entry into dairy sector
Mahindra's entry into dairy sectorMahindra's entry into dairy sector
Mahindra's entry into dairy sectorRahul Gupta
 
A Study of the Sales and Distribution System at AMUL
A Study of the Sales and Distribution System at AMULA Study of the Sales and Distribution System at AMUL
A Study of the Sales and Distribution System at AMULRAJAT GARG
 
SDM1_Group7_Amul
SDM1_Group7_AmulSDM1_Group7_Amul
SDM1_Group7_AmulRAJAT GARG
 
Gopaljee : transforming traditional supply chains
Gopaljee : transforming traditional supply chainsGopaljee : transforming traditional supply chains
Gopaljee : transforming traditional supply chainsJiji Raju
 
Future recommendations to Amul Packaged milk for expansion in NCR
Future recommendations to Amul Packaged milk for expansion in NCR Future recommendations to Amul Packaged milk for expansion in NCR
Future recommendations to Amul Packaged milk for expansion in NCR Akash Tyagi
 
GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINS
GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINSGOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINS
GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINSSARIN RAJU
 
SM FINAL PROJECT (1).pptx
SM FINAL PROJECT (1).pptxSM FINAL PROJECT (1).pptx
SM FINAL PROJECT (1).pptxHira Naz
 
Commercial dairy farming India
 Commercial dairy farming India  Commercial dairy farming India
Commercial dairy farming India vivekanand Nalla
 
Establishing a Dairy Farm
Establishing a Dairy Farm Establishing a Dairy Farm
Establishing a Dairy Farm himosh
 
Value chain of amul
Value chain of amulValue chain of amul
Value chain of amulShivani Kela
 
Role of Sourcing in Supply Chain: A Case Study on Milk Product of Milk Vita
Role of Sourcing in Supply Chain: A Case Study on Milk Product of Milk VitaRole of Sourcing in Supply Chain: A Case Study on Milk Product of Milk Vita
Role of Sourcing in Supply Chain: A Case Study on Milk Product of Milk VitaMd. Adib Ibne Yousuf
 
Dairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRER
Dairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRERDairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRER
Dairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRERAfrican Dairy Conference and Exhibition
 
Dairy industry in india
Dairy industry in indiaDairy industry in india
Dairy industry in indiaAayush Wadhwa
 

Similar to Milk Business strategy (20)

Amul strategy presentation ppt
Amul strategy presentation pptAmul strategy presentation ppt
Amul strategy presentation ppt
 
Mahindra's entry into dairy sector
Mahindra's entry into dairy sectorMahindra's entry into dairy sector
Mahindra's entry into dairy sector
 
A Study of the Sales and Distribution System at AMUL
A Study of the Sales and Distribution System at AMULA Study of the Sales and Distribution System at AMUL
A Study of the Sales and Distribution System at AMUL
 
SDM1_Group7_Amul
SDM1_Group7_AmulSDM1_Group7_Amul
SDM1_Group7_Amul
 
Gopaljee : transforming traditional supply chains
Gopaljee : transforming traditional supply chainsGopaljee : transforming traditional supply chains
Gopaljee : transforming traditional supply chains
 
Future recommendations to Amul Packaged milk for expansion in NCR
Future recommendations to Amul Packaged milk for expansion in NCR Future recommendations to Amul Packaged milk for expansion in NCR
Future recommendations to Amul Packaged milk for expansion in NCR
 
GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINS
GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINSGOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINS
GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINS
 
Amul
AmulAmul
Amul
 
Dairy farming
Dairy farmingDairy farming
Dairy farming
 
SM FINAL PROJECT (1).pptx
SM FINAL PROJECT (1).pptxSM FINAL PROJECT (1).pptx
SM FINAL PROJECT (1).pptx
 
Commercial dairy farming India
 Commercial dairy farming India  Commercial dairy farming India
Commercial dairy farming India
 
Go cheese
Go cheeseGo cheese
Go cheese
 
Amul
Amul Amul
Amul
 
Establishing a Dairy Farm
Establishing a Dairy Farm Establishing a Dairy Farm
Establishing a Dairy Farm
 
Value chain of amul
Value chain of amulValue chain of amul
Value chain of amul
 
Role of Sourcing in Supply Chain: A Case Study on Milk Product of Milk Vita
Role of Sourcing in Supply Chain: A Case Study on Milk Product of Milk VitaRole of Sourcing in Supply Chain: A Case Study on Milk Product of Milk Vita
Role of Sourcing in Supply Chain: A Case Study on Milk Product of Milk Vita
 
Presentation made in india 1
Presentation made in india  1Presentation made in india  1
Presentation made in india 1
 
Dairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRER
Dairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRERDairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRER
Dairy Development, the Responsibility of the Dairy Industry-Manu SCHÄRER
 
Building successful AgVCF Business Models: lessons from India, Bangladesh and...
Building successful AgVCF Business Models: lessons from India, Bangladesh and...Building successful AgVCF Business Models: lessons from India, Bangladesh and...
Building successful AgVCF Business Models: lessons from India, Bangladesh and...
 
Dairy industry in india
Dairy industry in indiaDairy industry in india
Dairy industry in india
 

Recently uploaded

NewBase 24 May 2024 Energy News issue - 1727 by Khaled Al Awadi_compresse...
NewBase   24 May  2024  Energy News issue - 1727 by Khaled Al Awadi_compresse...NewBase   24 May  2024  Energy News issue - 1727 by Khaled Al Awadi_compresse...
NewBase 24 May 2024 Energy News issue - 1727 by Khaled Al Awadi_compresse...Khaled Al Awadi
 
Falcon Invoice Discounting Setup for Small Businesses
Falcon Invoice Discounting Setup for Small BusinessesFalcon Invoice Discounting Setup for Small Businesses
Falcon Invoice Discounting Setup for Small BusinessesFalcon investment
 
A Brief Introduction About Jacob Badgett
A Brief Introduction About Jacob BadgettA Brief Introduction About Jacob Badgett
A Brief Introduction About Jacob BadgettJacobBadgett
 
How to refresh to be fit for the future world
How to refresh to be fit for the future worldHow to refresh to be fit for the future world
How to refresh to be fit for the future worldChris Skinner
 
LinkedIn Masterclass Techweek 2024 v4.1.pptx
LinkedIn Masterclass Techweek 2024 v4.1.pptxLinkedIn Masterclass Techweek 2024 v4.1.pptx
LinkedIn Masterclass Techweek 2024 v4.1.pptxSymbio Agency Ltd
 
Toyota Kata Coaching for Agile Teams & Transformations
Toyota Kata Coaching for Agile Teams & TransformationsToyota Kata Coaching for Agile Teams & Transformations
Toyota Kata Coaching for Agile Teams & TransformationsStefan Wolpers
 
Raising Seed Capital by Steve Schlafman at RRE Ventures
Raising Seed Capital by Steve Schlafman at RRE VenturesRaising Seed Capital by Steve Schlafman at RRE Ventures
Raising Seed Capital by Steve Schlafman at RRE VenturesAlejandro Cremades
 
Elevate Your Online Presence with SEO Services
Elevate Your Online Presence with SEO ServicesElevate Your Online Presence with SEO Services
Elevate Your Online Presence with SEO ServicesHaseebBashir5
 
PitchBook’s Guide to VC Funding for Startups
PitchBook’s Guide to VC Funding for StartupsPitchBook’s Guide to VC Funding for Startups
PitchBook’s Guide to VC Funding for StartupsAlejandro Cremades
 
HR and Employment law update: May 2024.
HR and Employment law update:  May 2024.HR and Employment law update:  May 2024.
HR and Employment law update: May 2024.FelixPerez547899
 
What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...AnaBeatriz125525
 
Revolutionizing Industries: The Power of Carbon Components
Revolutionizing Industries: The Power of Carbon ComponentsRevolutionizing Industries: The Power of Carbon Components
Revolutionizing Industries: The Power of Carbon ComponentsConnova AG
 
Series A Fundraising Guide (Investing Individuals Improving Our World) by Accion
Series A Fundraising Guide (Investing Individuals Improving Our World) by AccionSeries A Fundraising Guide (Investing Individuals Improving Our World) by Accion
Series A Fundraising Guide (Investing Individuals Improving Our World) by AccionAlejandro Cremades
 
How Do Venture Capitalists Make Decisions?
How Do Venture Capitalists Make Decisions?How Do Venture Capitalists Make Decisions?
How Do Venture Capitalists Make Decisions?Alejandro Cremades
 
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot ReportFuture of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot ReportDubai Multi Commodity Centre
 
The Inspiring Personality To Watch In 2024.pdf
The Inspiring Personality To Watch In 2024.pdfThe Inspiring Personality To Watch In 2024.pdf
The Inspiring Personality To Watch In 2024.pdfinsightssuccess2
 
Copyright: What Creators and Users of Art Need to Know
Copyright: What Creators and Users of Art Need to KnowCopyright: What Creators and Users of Art Need to Know
Copyright: What Creators and Users of Art Need to KnowMiriam Robeson
 
Creative Ideas for Interactive Team Presentations
Creative Ideas for Interactive Team PresentationsCreative Ideas for Interactive Team Presentations
Creative Ideas for Interactive Team PresentationsSlidesAI
 
Stages of Startup Funding - An Explainer
Stages of Startup Funding - An ExplainerStages of Startup Funding - An Explainer
Stages of Startup Funding - An ExplainerAlejandro Cremades
 
Team-Spandex-Northern University-CS1035.
Team-Spandex-Northern University-CS1035.Team-Spandex-Northern University-CS1035.
Team-Spandex-Northern University-CS1035.smalmahmud11
 

Recently uploaded (20)

NewBase 24 May 2024 Energy News issue - 1727 by Khaled Al Awadi_compresse...
NewBase   24 May  2024  Energy News issue - 1727 by Khaled Al Awadi_compresse...NewBase   24 May  2024  Energy News issue - 1727 by Khaled Al Awadi_compresse...
NewBase 24 May 2024 Energy News issue - 1727 by Khaled Al Awadi_compresse...
 
Falcon Invoice Discounting Setup for Small Businesses
Falcon Invoice Discounting Setup for Small BusinessesFalcon Invoice Discounting Setup for Small Businesses
Falcon Invoice Discounting Setup for Small Businesses
 
A Brief Introduction About Jacob Badgett
A Brief Introduction About Jacob BadgettA Brief Introduction About Jacob Badgett
A Brief Introduction About Jacob Badgett
 
How to refresh to be fit for the future world
How to refresh to be fit for the future worldHow to refresh to be fit for the future world
How to refresh to be fit for the future world
 
LinkedIn Masterclass Techweek 2024 v4.1.pptx
LinkedIn Masterclass Techweek 2024 v4.1.pptxLinkedIn Masterclass Techweek 2024 v4.1.pptx
LinkedIn Masterclass Techweek 2024 v4.1.pptx
 
Toyota Kata Coaching for Agile Teams & Transformations
Toyota Kata Coaching for Agile Teams & TransformationsToyota Kata Coaching for Agile Teams & Transformations
Toyota Kata Coaching for Agile Teams & Transformations
 
Raising Seed Capital by Steve Schlafman at RRE Ventures
Raising Seed Capital by Steve Schlafman at RRE VenturesRaising Seed Capital by Steve Schlafman at RRE Ventures
Raising Seed Capital by Steve Schlafman at RRE Ventures
 
Elevate Your Online Presence with SEO Services
Elevate Your Online Presence with SEO ServicesElevate Your Online Presence with SEO Services
Elevate Your Online Presence with SEO Services
 
PitchBook’s Guide to VC Funding for Startups
PitchBook’s Guide to VC Funding for StartupsPitchBook’s Guide to VC Funding for Startups
PitchBook’s Guide to VC Funding for Startups
 
HR and Employment law update: May 2024.
HR and Employment law update:  May 2024.HR and Employment law update:  May 2024.
HR and Employment law update: May 2024.
 
What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...
 
Revolutionizing Industries: The Power of Carbon Components
Revolutionizing Industries: The Power of Carbon ComponentsRevolutionizing Industries: The Power of Carbon Components
Revolutionizing Industries: The Power of Carbon Components
 
Series A Fundraising Guide (Investing Individuals Improving Our World) by Accion
Series A Fundraising Guide (Investing Individuals Improving Our World) by AccionSeries A Fundraising Guide (Investing Individuals Improving Our World) by Accion
Series A Fundraising Guide (Investing Individuals Improving Our World) by Accion
 
How Do Venture Capitalists Make Decisions?
How Do Venture Capitalists Make Decisions?How Do Venture Capitalists Make Decisions?
How Do Venture Capitalists Make Decisions?
 
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot ReportFuture of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
 
The Inspiring Personality To Watch In 2024.pdf
The Inspiring Personality To Watch In 2024.pdfThe Inspiring Personality To Watch In 2024.pdf
The Inspiring Personality To Watch In 2024.pdf
 
Copyright: What Creators and Users of Art Need to Know
Copyright: What Creators and Users of Art Need to KnowCopyright: What Creators and Users of Art Need to Know
Copyright: What Creators and Users of Art Need to Know
 
Creative Ideas for Interactive Team Presentations
Creative Ideas for Interactive Team PresentationsCreative Ideas for Interactive Team Presentations
Creative Ideas for Interactive Team Presentations
 
Stages of Startup Funding - An Explainer
Stages of Startup Funding - An ExplainerStages of Startup Funding - An Explainer
Stages of Startup Funding - An Explainer
 
Team-Spandex-Northern University-CS1035.
Team-Spandex-Northern University-CS1035.Team-Spandex-Northern University-CS1035.
Team-Spandex-Northern University-CS1035.
 

Milk Business strategy

  • 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
  • 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%