Mssi Final ++

8/7/2019 Mssi Final ++

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Gulshyam Dairy Products

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Table Of Contents

Sr.No. Topic Pg. No.

1 Statement of Purpose 02

2 Marketing Plan 05

3 Marketing Mix 08

4 Financial Statements 24

5 Break Even Analysis 27

6 Capital Equipments 28

7 Organisation Plan 33

8 Annexure


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Statement of Purpose

Milk is a basic household need. It is consumed by almost everyone in one form or the

other. The dairy industry is one of the fastest growing industries and so because of

constantly rising demand for milk and milk products. Milk, cheese, ghee and butter are the

most popular and highest demanded products of milk. (Co. Name) aims to fulfil these needs.

It aims to provide milk, ghee and butter and contribute towards the fulfilment of these

demands.

The company will buy 25 acres of land at Talasari at the rate of Rs.5 lac/acre.

This land will then be developed which includes building of sheds, fences, a building and

development of open areas of land. The buffaloes will be always in their sheds but cows will

be allowed to roam freely in the open lands when they are not in use. Application for

electrical connection and water supply will be made. 2 borewells will be dug which will

provide most of the water supply. All the paperwork will be taken care of in the most

appropriate manner. An agent will be hired who will be taking care of all the paperwork as

well as the development of the land.

We will be having 500 buffaloes and 300 cows. Each animal is capable of giving milk

for about 9 months every year and this continues for about 7-8 years in the livestocks life.

This makes it very expensive to purchase livestock as each buffalo costs about Rs. 50000 and

each cow costs about Rs. 30000. Also, since the livestock can give milk only for 9 months at

a time it is not feasible to buy livestock. An option to be considered is to maintain 2 lots of

livestock but it makes the initial investment too high which is not exactly feasible. To solve

this problem, we have entered into a contract with an agency that is into rearing of

livestock. Every year, the co. will pay Rs.2 crore to the agency which will provide livestock all

round the year. If at a point of time an animal stops giving milk the agency will replace the

animal.


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A cow is capable of giving about 25 litres of milk everyday and a buffalo is capable of

giving 13 litres of milk a day. The difference in the costs of a cow and a buffalo is because of

the fact that buffalos milk contains about 9% fat whereas cows milk contains only 3%. Also

buffalo milk is more popular due to this fact which drives up the demand for buffalo milk

leading to higher buffalo prices. In open market cows milk is sold at about Rs.21/litre and

buffalo milk is sold at Rs.28/litre. Also we will be selling skimmed milk which is beneficial to

health conscious consumers. We will be milking the cows and passing the milk through

various processes to reach our final products which we will be supplying to 2 agencies which

will distribute our products over various places. These agencies are located at Bhivandi and

the company has to transport the finished product to this place.

The company will be a partnership firm where there will be 5 partners who will

contribute in equal ratio. The PSR for Ms. Tehseen, Mr. Aditya, Ms. Nidhi, Mr. Abdul and Mr.

Varun will be 1:1:1:1:1. The proprietors will thus share 20% of the profits each and wil get

additional 12% interest on capital.

Co. will be taking a loan of Rs. 8 crore mainly because eof need for cash at hand

because of large expenses over the year. This loan in addition to the capital contributed will

take the total initial investment to Rs. 11 crore. These funds will be used for purchase of

land, development of land, purchase of machinery, contract with supplier of livestock, etc.

For more information check financial statements.

The loan will gradually paid off along with an annual interest at 12% which is equal to

Rs. 1 crore. This loan will gradually be paid off in about 4 years. For more details refer Break

Even Analysis. In the first year 1 crore loan will be paid off. In the second year 2 crore loan

will be paid off. In the third year 3 crore loan will be paid off and in the 4th

year 2 crore loan

will be paid off. Every year an interest of Rs. 1 crore will be paid. So over 4 years 8 crore

principal amount + 4 crore interest will be paid.

An amount of Rs. 2 lakhs will be maintained as working capital.


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LOAN REQUIRED

Loan Required : Rs. 8,00,00,000

This loan is required for starting the business. The annual revenue in the first year

being Rs. 11,00,00,000, it can be said that the loan is being taken because of requirements

of cash in hand to get the project underway and to have cash to conduct the daily activities

and pay for various expenses. The amounts are recovered each year because of which cash

inflow is always more.

REPAYMENT

The loan will be repaid in the following manner:

1st

Year: Rs. 1,00,00,000

2nd

Year: Rs. 4,00,00,000

3rd

Year: Rs. 3,00,00,000

In the first year Rs. 1 crore of the loan amount will be repaid.

In the second year Rs. 4 crore of the loan amount will be paid. This is because the company

will be saving on spendings on livestock, it wont have to spend on land and machinery.

Because of this, a lot of money will be spared which will be used to repay the loan. The

company will be saving Rs.1.5 crore every year on livestock, 1.25 crore on land, and certain

amount on machinery. In addition to this the revenue will begin to rise because the

company will be on its way to establish itself as a brand.

In the third year Rs. 3 crore of the loan amount will be repaid. This is because of continuing

profits and lack of expenditure on land, livestock and machinery.

This way the entire loan will be repaid in 3 years.

However in addition to the loan amount, every year Rs. 1 crore will be spent as interest on

loan which is charged at 12.5% per annum.


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Marketing Plan

DAIRY FARMING INDUSTRY IN INDIA

Dairy farming is the single largest contributor to India's GDP. Today, more than four

hundred dairy plants exist in the public, cooperative and private sectors in India. The

liberalization of the Indian economy in 1991 has attracted multinational dairy enterprises

like Heinz, Nestle, SmithKline Beecham, Nutricia, Baskin Robbins and hundreds more.

India is the world's highest milk producer and all set to become the world's largest food

factory. It has emerged as the biggest producer of milk with an output of 81 million tonnes

in 2000-01. Milk production has been growing at about 3-4% per annum, a trend which

looks likely to continue. 60% of the milk comes from buffalos where India has some 95

million of these animals or 57% of the worlds total. The rest comes from other breeds of

dairy cattle of which India has many different breeds. The total cattle population is in excess

of 260 million.

Dairy production in India is carried out by some 70 million households or one in two of rural

households in 130,000 villages across the country. It gives employment to 90 million people

of whom 75 million are women. 46% of the milk is consumed in a liquid form and 47% into

processed cottage (consumer) products and 7% processed industrially.


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COMPETITORS

We have a number of competitors in the dairy industry, probably in hundreds! But the

market leaders that are among the top five dairies in India are:

AMUL:

Amul was formally registered on December 14, 1946 , is a dairy cooperative movement in

India. It is a brand name managed by an apex cooperative organisation, Gujarat Co-

operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some

2.6 million milk producers in Gujarat, India[1]. It is based in Anand town ofGujarat. It is also

the world's biggest vegetarian cheese brand. Amul's product range includes milk powders,

milk, butter, ghee, cheese, curd, chocolate, ice cream, cream, shrikhand, paneer, gulab

jamuns, basundi, Nutramul brand and others.

MOTHER DAIRY:

Mother Dairy's range of products include the brands Mother Dairy (milk, milk products,

curd, ice cream, butter, dairy whitener etc), Dhara (range ofedible oils) and Safal (range of

fresh fruits and vegetables, frozen vegetables, fruit juices).

Mother Dairy was set up under the Operation Flood Programme in Delhi. It later expanded

in Mumbai, Punjab and eastern India. Future plans include expansion to South India.

AAREY:

Aarey Milk Colony (established in 1949) is situated in Goregaon East, a suburb of Mumbai.

On an average 16,000 cattle are reared on 1287 hectares of land, and 32 cattle farms.

MAHANANDA:

THE Maharashtra Government-owned Aarey dairy a well-known brand in Mumbai will

now be managed by Mahananda, a State-backed milk co-operative.

This was announced by Mr Jayant Patil, Maharashtra's Finance Minister on the 30th of

March, 2008.
http://en.wikipedia.org/wiki/December_14http://en.wikipedia.org/wiki/1946http://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/Amul#_note-0#_note-0http://en.wikipedia.org/wiki/Anand%2C_Gujarathttp://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/List_of_Amul_productshttp://en.wikipedia.org/wiki/Butterhttp://en.wikipedia.org/wiki/Gheehttp://en.wikipedia.org/wiki/Cheesehttp://en.wikipedia.org/wiki/Curdhttp://en.wikipedia.org/wiki/Chocolatehttp://en.wikipedia.org/wiki/Ice_creamhttp://en.wikipedia.org/wiki/Creamhttp://en.wikipedia.org/wiki/Shrikhandhttp://en.wikipedia.org/wiki/Paneerhttp://en.wikipedia.org/wiki/Gulab_jamunhttp://en.wikipedia.org/wiki/Gulab_jamunhttp://en.wikipedia.org/wiki/Milkhttp://en.wikipedia.org/wiki/Curdhttp://en.wikipedia.org/wiki/Ice_creamhttp://en.wikipedia.org/wiki/Butterhttp://en.wikipedia.org/w/index.php?title=Dairy_whitener&action=edithttp://en.wikipedia.org/wiki/Edible_oilhttp://en.wikipedia.org/wiki/Operation_Floodhttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Punjab_%28India%29http://en.wikipedia.org/wiki/Punjab_%28India%29http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Operation_Floodhttp://en.wikipedia.org/wiki/Edible_oilhttp://en.wikipedia.org/w/index.php?title=Dairy_whitener&action=edithttp://en.wikipedia.org/wiki/Butterhttp://en.wikipedia.org/wiki/Ice_creamhttp://en.wikipedia.org/wiki/Curdhttp://en.wikipedia.org/wiki/Milkhttp://en.wikipedia.org/wiki/Gulab_jamunhttp://en.wikipedia.org/wiki/Gulab_jamunhttp://en.wikipedia.org/wiki/Gulab_jamunhttp://en.wikipedia.org/wiki/Paneerhttp://en.wikipedia.org/wiki/Shrikhandhttp://en.wikipedia.org/wiki/Creamhttp://en.wikipedia.org/wiki/Ice_creamhttp://en.wikipedia.org/wiki/Chocolatehttp://en.wikipedia.org/wiki/Curdhttp://en.wikipedia.org/wiki/Cheesehttp://en.wikipedia.org/wiki/Gheehttp://en.wikipedia.org/wiki/Butterhttp://en.wikipedia.org/wiki/List_of_Amul_productshttp://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/Anand%2C_Gujarathttp://en.wikipedia.org/wiki/Amul#_note-0#_note-0http://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/1946http://en.wikipedia.org/wiki/December_14


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FUTURE OPPORTUNITIES

India progressing very fast, one of the worlds fastest growing economy. GDP growth

8.5%.

Progress leading to more economic development which means more purchasing

power.

Per capita Milk consumption is still very low in our country (due to poverty). So,

tremendous growth potential.

Due development, demand for quality product will also grow so we need to organise

our business as compared to being carried out presently on old conventional system.

Modernisation will be the need of the hour, both production facility and packaging.

Must look into branding productlike organised companies (amul and mother dairy,

ect) and developing more efficient distribution network.


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Marketing Mix

PRODUCT

Whole Milk

Fresh Milk from which no cream has been removed. Amul Gold contains 5% fat and 9% SNF

minimum and is ideal for making sweet dishes (like kheer, payasam etc.) and for setting

curds. It is also ideal for drinking straight from the pack for kids and adolescents who simply

love the creamy taste of milk without the inconvenient cream layer.

Production: 2500 litres/day

Standardised Milk

A mixture of whole and toned milk to attain 3.5% fat and 8.5% SNF minimum. It is the ideal

multipurpose milk. Growing children will love its taste while benefiting from its

comprehensive nutrition.

Production: 2400 litres/day (Buffallo) + 2400 litres/day (cow)

Toned Milk

It is milk processed so as to remove a percentage of cream. It contains 1.5% fat and 9% SNF

minimum and is ideal for tea and coffee whitening and for setting curds. It is also just right

for drinking straight from the pack for those who would like to enjoy the taste the goodness

of natural while avoiding the hazards of too much fat.



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Double Toned Milk

It is milk for the health conscious milk lovers. With virtually zero fat content, nil cholesterol

and 8.7% SNF minimum, it gives you all the proteins, vitamins and minerals of natural milk

without your having to take in unnecessary fat in the deal.


Butter

Itis a dairy product made by churning fresh or fermented cream or milk. Butter is used as a

spread and a condiment, as well as in cooking applications such as baking, sauce making,

and frying. Butter consists of butterfat surrounding minuscule droplets consisting mostly of

water and milk proteins.

Production: 60 kgs/day

Ghee

It is made by melting butter and removing all forms of not fat solids, moisture and other

impurities from it so as to get up to 98% pure fat. In India Ghee is liked more than butter

and hence has a larger market potential. Our preparation methods ensure that the best

quality is served without losing the Desi Gheeaspect.

Production: 100 kgs/day

Fresh Cream

It is the cream layer which settles on milk and contains high percentage of fat. Some like it

plain, some use it on deserts. Our fresh cream can be used in any form of cooking without

much hassle as it is ready to serve right from the packet and so fresh that one will not be

able to distinguish it from fresh milk cream. Production: 60 kgs/day


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PRODUCT QUALITY

Treatment of Milk

All the products go through Ultra Heat Treatment (UHT), which has been adopted by the

leaders in the business like Amul and Nestle, to provide bacteria-free milk to its consumers

and help maintain a long shelf life of up to 150 days with or without refrigeration. The

product also goes through stringent quality checks and can be consumed straight from the

pack and no boiling is required.

Also the milk is homogenised before processing so that the milk can be enjoyed without the

cream layer settling on the milk even after a prolonged time.

Anti-adulteration Practice

Adulteration of milk has become a major concern among the households today. In order to

protect the milk from getting adulterated during retail we seal our packets with a specially

designed seal that is not possible to replicate from ordinary sealing machines. Also the milk

is directly transported from the dairy to the processing plant so that there can be no

adulteration during transportation.

Quality Certifications

The entire dairy is so installed so as to maintain high levels of hygiene and quality required

to meet the AGMARK and ISO 9000 certification. All the machines are pre equipped with

milk quality testers so that any stage the quality of milk can be checked.

ISO 9000: Quality Management and Quality Assurance Standards - Guidelines for selection

and use

AGMARK:Promotion of Grading and Standardisation of agricultural and allied commoditiesunder Agricultural Produce (Grading & Marking) Act, 1937.


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PRICE

Taking advantage of the benefits of a small scale industry and economies of scale, our

products are competitively priced without sacrificing on quality. The following is the price

list of our products as compared to the existing price trends in the market

For Retail:

Variety Fat (%) SNF (%)* Our Price(Rs)Existing Price

(Rs)

Whole milk 5 9 28 30

Standardised milk 3.5 8.5 26 28

Toned milk 1.5 9 24 26

Double toned milk Nil 8.7 26 29

Fresh Cream (1 kg) 60 4 85 90

Butter (500gms) 80 2 83 87

Pure Ghee (1 litre) 100 0 180 190

For Distributors:

Variety Fat (%) SNF (%)* Our Price(Rs)Existing Price

(Rs)

Whole milk 5 9 25 26

Standardised milk 3.5 8.5 24 25

Toned milk 1.5 9 22 23

Double toned milk Nil 8.7 23 25

Fresh Cream (1 kg) 60 4 79 84

Butter (500gms) 80 2 78 83

Pure Ghee (1 litre) 100 0 167 175

*Every 100 parts of SNF (Solids Not Fat) contains 56 parts of carbohydrates, 34 parts of

protein and 9 parts of minerals.


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Place

Plant for Production and Processing: Talasari, Maharashtra (150 kms from Mumbai)

Advantages of Plant Location

Cheap availability of huge stretches of land at just Rs 5,00,000 per acre as compared

to above Rs 30,00,000 per acre in and around Mumbai

A well developed network of transportation for quick transportation. The National

highway is only 3 kms away from the plant

Incentive are given by the Government for industrial development in the area like

availability of a soft loan up to 15 % of the total borrowed funds for setting new

industries in the area

Cheap availability of electricity and water required to run the plant and machinery

Availability of huge stretches of pasture land which is required to feed the cattle

Availability of cheap unskilled labour from nearby villages and skilled labour from

cities like Mumbai and Surat and Nasik.


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DISTRIBUTION

Distributors: Kasturi Foods: Bhiwandi, Thane West

National Dairy: Ulhasnagar No 4, Thane

The above distributors are located around 70-80 kms from Talasari and 70 kms from

Mumbai. Also these are the major distributors of their respective areas and have a wide

customer base. In order to eshtablish a goodwill before expanding to cities like Mumbai and

Surat these distributors will help build goodwill in surroundindg villages and smaller cities

like Nasik by promoting our products in exchange of better margins for the products. Also

these distributors own small stores where they sell dairy products other than door to door

delivery of milk. Milk will be supplied twice to these distributors once early in the morning

around 5 oclock and in the afternoon around 4.30 p.m.


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PROMOTION STRATEGY

Being a small scale industry we will be promoting our products well as our brand name on a

small scale. We cant afford to promote our products on a large scale by incurring heavy

expenditures i.e. advertising on televisions, radios, etc. Though we wont be promoting our

product on a large scale we will try to promote it in a more effective way such that the

people will notice our brand. Basically we will be following a low budget promotion strategy:

1. We will have our hoardings with our brand name and slogan printed on it

placed at different appropriate locations throughout Mumbai, Thane, Navi Mumbai,

Bhiwandi, Ulhasnagar, the places where we will be conducting our business. The hoardings

will also be placed at different locations throughout the National Highway no.8 between

Talasari and Mumbai. This is a PUSH STRATEGY to attract prospective customers. We will be

giving this contract to Kapole Hoarding Agency in Mumbai at a cost of around Rs20,00,000

excluding the fees charged.

2. The other promotion strategy we will be undertaking is distribution of pamplets giving

complete information about our products and brand. We will be distributing pamplets

through news paper agencies located throughout the areas where we will be conducting our

business. Besides that we will be distributing our pamplets at the retail shops who will be

selling our product. This is a PUSH STRATEGY to attract prospective customers. The

promotional activity will cost us around Rs10,00,000.

3. We will be undertaking an event which will be notified in news papers in our

advertisements. For this event we will be finalizing 6 locations (2 in mumbai and 1 in each of

the cities) where we will carry on the event on the given date. In this event we will be

holding a Milk Drinking Competition. The person who will win this event i.e. who will drink

the highest quantity of milk within 100 seconds will get 1 whole years supply of milk for free


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by us. (Max. 2 liters of milk daily). By this event we are trying to create a taste for our milk in

the people. This will indirectly lead to our brand by evoking recall for our brand. This will

indirectly increase the awareness of our brand and products. It will even help us to know

about the perception that consumers have about particular brands in dairy products as the

participants will even fill up feedback forms. This event will take place twice in the first year.

This is a PULL STRATEGY to attract prospective customers. The expenses incurred in carrying

out this whole event including right from the advertisements in paper will cost us around

Rs7,00,000.

4. We will be promoting our products in selected schools throughout the given cities. Here

we will try to create a relation with the entire family through their children. The basic idea

behind this is that children are the one who are being pampered in the family and its their

health which is taken care of and nothing else than milk can be considered as the best

health product for them as it provides them with the complete nutrients and energy. Here

we will be giving them a brief lecture on how to take care of health, what to eat and what

not to, importance of drinking milk and its benefits, the various milk products right from ice-

creams to sweets as per the products preferred by them and the scenario of dairy industryin India. After the brief lecture we will be providing them with 250ml of milk packets and

advising them how they can drink it by adding different flavors to it and making it more

delicious. This is a PULL STRATEGY to attract prospective customers. The entire cost of

operating this event will be around Rs8,00,000.


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SWOT ANALYSIS

STRENGTHS:

1. Demand scenario

India has quadrupled its milk output in forty years, becoming the worlds largest milk -

producing nation, with a gross output of 94.6 million tons in 2006. The supply of milk in

India is increasing daily in correspondence to increasing demand. Thus giving a lot of scope

to people engaged in this field. Indias production is likely to continue to grow at about 4%

per annum and production will exceed 100 million tons in next few years.

2. Changing the face of tabela in India

Despite this achievement, Indias dairy industry is relatively inefficient and unproductive,

with yields per cow less than one-fifth those of foreign producers. Moreover, much of

Indias milk products are of relatively poor quality, a consequence of poor animal health, a

polluted and unclean environment, and manual handling delays. The resulting poor quality

prohibits Indian milk from being exported. We will be tabela a new meaning in India by

trying to adopt western culture for rearing cows and providing them with more nature

friendly and pollution free environment. Cows will be reared in 6 acres of open lawn where

they will roam around freely and will feel close to nature. Buffaloes being a lazy animal wont

be reared in the lawn but will be kept in clean and hygienic conditions. There will be soft

music played in the background. All this will help us to increase the productivity as well as

quality.

3. Location

Talasari is located in Nationl highway no.8 thus giving it an easy access to most of the

location. There are many developed as well as developing areas situated nearby or

connected through Highway thus beimg in our reach we have an easy access to such places

in order to expand our business in future.


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4. Anti-adulteration Attempt

We will be selling milk in packets which will be sealed in packets having our brand name this

will provide guarantee for non-adulterated milk by our side.

The packaging material provided by us will be of certain quality so that it does not affect the

quality of the product. The milk will meet all PFA (prevention of food adulteration)

guidelines.

5. High Quality with Competitive Prices.

We will be proving our high quality products at competitive prices in order generate

demand for the product by the people by providing it to them at affordable and usual

prices. We will use the best machinery available in the market. We plan to also apply for

AGMARK and ISO certification, giving a guarantee for the quality of products provided by us.

For eg

Products Our Price (Rs/lt) Ongoing Market Price (Rs)

Cow Milk 21 20-25

Buffalo Milk 28 27-30

Ghee 185 175-190

6. Capacity to expand range of products.

Dairy industry is a industry where wide range of products can be manufactured. Productsrange extends from barfi to kulfi, shrikhand to kalkhand , ghee, cheese, butter, milk powder

are only few to be named. Thus theres lot of scope to expand business by expanding the

product range


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WEAKNESS:

1. No control over yield.The production of milk or the yielding capacity is an uncontrollable factor. In an average a

cow gives about 25 liters of milk daily while a buffalo gives about 13 liters of milk daily. We

can just try to improve the yielding capacity by providing them with more favorable

conditions but still the yielding capacity is not within our control sometimes the cattle may

yield less and sometimes more than it usually does.

2. Perishability of milk.

The shelf life of a fresh milk is 8-10 hours only. This is a major problem faced by many dairy

industries as the milk needs to be consumed within the specified time. This created lots of

time constraint with respect to delivery of milk and its consumption. However by using the

technique of pasteurization we can avoid this problem to some extent i.e. it will increase the

shelf life of milk by another 48 hours but still this too is a major concern.

3. Rising cattle prices and other costs but comparatively stable selling prices.

The prices of cattle are increasing day by day even the costs incurred on their maintenance

and development is also increasing daily. The maintenance of per cattle per day costs about

Rs110 this cost increases as time passes by but the selling price increases comparatively at a

very slow rate. This becomes a major concern the profit margin decreases.

4. Business of a small scale.

Its always been trend since the Industrial Revolution as the big fish feeds on small one

similarly large industry takes over the business of small scale industries. Here in dairy

industries also large scale industries like Amul, Aarey, Mother Dairy have already built their

brand name which operates on large scale and has larger capacity of production which

tends to be a serious threat as they face the benefit of working on a large scale.

5. Competition

As said earlier in this industry theres a lot of competition faced due to large scale industries

and not only that theres also competition from local vendors who distribute their milk at a

stall near the residential areas in fact they are the major competitors in developing cities.


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The other competitors as usual include big brand names like Amul, Aarey, and Mother Dairy

etc. As said earlier the supply is increasing day by day thus suplementing increase in demand

and increasing the competition further.

OPPORTUNITIES:

1. Rising demand for milk and milk products

As every day passes by the demand for milk and milk product also increases. India ranks 1st

in the whole world in production of milk it produced about 94.6 mn tones of milk in the year

2006. With the increase in demand its soon to cross 100mn tones nargin. Dairy industry is a

industry where wide range of products can be manufactured. Products range extends from

barfi to kulfi, shrikhand to kalkhand , ghee, cheese, butter, milk powder, ice creams are only

few to be named. People in India consume milk daily as a result about 60% of the milk

produced over here is consumed directly while the remaining 40% is used for producing

other milk products.

2. Increasing no. of health conscious population

Now-a-days people are becoming more health conscious and milk is a drink which provides

them with nutrients, proteins as well as fats. Previously people over here liked to consume

whole creamed milk but now-a-days due to increasing health consciousness people prefer

to drink skimmed which is low fattening thus we can see even though theres rise in health

consciousness milk is a part of their daily diet as it provides them with energy they need.

3. Rising standard of living

As the standard of living of the people increases their purchasing power also increases and

they tend to consume more. Here most of the people who used to drink milk one time daily

will start drinking milk twice a day due to increase in their purchasing power. They will

consume more of products like sweets, ice creams etc. which in a way or other requires

milk. Thus with the rise in the standard of living of a common man the demand for milk and

milk products will also increase.


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4. Capacity to expand to other cities due to proximity

We have selected a location in Talasari which is located on National Highway No.8 that

connects Mumbai-Ahemdabad-delhi and is near Maharashtra Gujarat border. As we are

now concentrating on only few cities and that too within Maharashtra in future we have a

scope to other major cities in Maharashtra and also in Gujarat.

5. Low transportation costs

We have the benefit of low transportation cost as we will not be doing the job of retailing.

We will be supplying goods up to Bhiwandi from where it will be carried forward to other

small retailers in the given cities. We will be supplying to the wholesalers at lower price than

the given MRP so that they can have their profit margin.

6. Incentives provided by government

Being a small scale industry the government promotes us by giving several incentives and

cash concessions. We have selected the location in Talsari as over here we get the benefit of

soft loan in which we get loans at relatively low interest rate i.e. between 3%-5% depending

on the project. After the White Revolution Dairy industry in India has gained the position of

leader in dairy industry now after the second stage its said to become a global giant.

7. Value Addition

There is a phenomenal scope for innovations in product development, packaging and

presentation. Here the over all package and the brand name can do wonders by creating an

identity for the company. This an industry where with the help of one raw material(milk) we

can manufacture variety of products theres only a need for innovation with respect to

increasing number of product listing under the category of dairy industry.

8. Export Potential

In the long term we plan to export our product to countries like Sri Lanka, Bangladesh,

Middle East where Amul one of the Indian brands has already made a mark by providing

high quality milk at competitive prices.


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THREATS:

1. Competition form large scale firms like Amul, Aarey, Gokul etcCompetition from huge co-operatives like Amul and Aarey and competing in the same area

as them will be a huge challenge looking at their huge capacities of over 1 lakh litres of milk

everyday, well eshtablished goodwill in the market and competing against their experience

is one of the biggest threat to any small scale industry.

2. Adulteration at selling points

We supply our milk to the wholesalers and not directly to the consumers or retailers thus

theres great scope of adulteration by the middle man. But in order to avoid such

adulteration we provide our products in sealed packages which will minimize the risk of

adulteration but still its just a precaution and not a cure for this problem.

3. Less land available for cattle rearing

The availability of land is a major problem as most of the land available in our country is

used for urbanization and industrialization. Now a days the problem is not only the

availability of land but also the cost of land which proves to be a major hurdle for acquiring

land and increasing the production capacity and expanding the business. The current rate of

land in Talasari is 4 lacks per acre but is said to shoot by another 50% within next 5 years.


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FUTURE PLANS

We plan to expand our current capacity from the current 13,000 litres to 25,000

litres per day by early 2010 in 2 phases of 6,000 litres expansion each.

We also plan to produce cheese after the first phase of expansion expected in Mid

2009.

Along with the cheese plant we plan to set up a plant for Whey Proteins, a by-

product during the production of cheese. It is currently not produced in India by any

dairy and therefore can be a big step towards the health care industry.

After the second phase of expansion in 2010, flavoured milks, butter milk (sweet and

salted), and other products will be introduced.

A technological upgrade is planned in mid 2014 so as to compete with the best in the

industry as far as quality of production is concerned.

We plan to enter the Gujrat market after the first phase of expansion after having

captured a good market share in Maharashtra and having developed a goodwill

among the consumers.


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Financial Statements

TRADING ACCOUNT

Dr. Cr.

Particulars Rs. Particulars Rs.

Livestock 35000000 Sales 100000000

Wages 3500000

Gross profit c/d 61500000

100000000 100000000

PROFIT & LOSS ACCOUNT

Dr. Cr.

Particulars Rs. Particulars Rs.

Advertising 5000000 Gross Profit b/d 61500000

Transport Costs 1100000

Bank Charges 5000

Audit 200000

Depreciation 100000

Electricity/Water 500000

Sundry Expenses 100000

Interest on Loan 10000000

Interest on Capital @ 12% 3600000

Maintenance of Livestock 29200000

Rates and Taxes 10000000

Net Profit 295000

61500000 61500000


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CASH FLOW SUMMARY

Inflow Rs. Outflow Rs.

Capital Account: Fixed Assets:

Varun 6000000 Land 12500000

Abdul 6000000 Machinery 8000000 20500000

Tehseen 6000000 Livestock 35000000

Nidhi 6000000 Building/Land Development 2000000

Aditya 6000000 30000000 Expenses:

Loan from SIDBI 80000000 Advertising 5000000

Sales 100000000 Transport 1100000

Bank Chs. 5000

Audit 200000

Depreciation 1000000

Elec./Water 500000

Sundry Expenses 100000

Interest on Cap.3600000

Rates and Taxes 10000000 21505000

Labour 3500000

Maintenance of Livestock 29200000

Loan Repay 30000000

220000000 141705000


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BALANCE SHEET

Liabilities Rs. Assets Rs.

Capital Account: Land 12500000

Add: Development 3500000

16000000

Varun 6000000 Machinery 8000000

Abdul 6000000 Less: Depn. 800000 7200000

Tehseen 6000000 Bank 55695000

Nidhi 6000000 Livestock 35000000

Aditya 6000000 30000000 Less:c/f 10000000 25000000

Loan 80000000

Less: paid off.10000000 70000000

Net Profit 295000

Interest on Capital 3600000

103895000 103895000


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BREAK EVEN ANALYSIS

SCALE

X AXIS : 1 UNIT = 2250 CUSTOMERS | Y AXIS : 1UNIT =50 LAKHS

CUSTOMERS (UNITS)

Total Revenue = Rs 10,00,00,000

Fixed Cost = Rs 8,42,05,000

Milk in litres(output) = 51,10,000

Unit Price = 21.52

Variable Cost/ unit = 2.94

BEP = Fixed Cost

Unit price Variable cost/unit

= 8,42,05,000 = 45,32,024 litres

21.52 - 2.94

0

2

4

6

8

10

12

0 5 10 15 20 25 30 35 40 45 50 55

TOTAL REVENUE

FIXED COST

VARIABLE COST


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CAPITAL EQUIPMENTS

Cow Milker

Description: An apparatus for milking cows. It consists of a glass receiver, having a cover

which may be closed air-tight. Through this cover extend

four rubber tubes, which terminate in metal tubes attached

to teates. Air is exhausted from the receiver by the pumps

shown, and the milk thus drawn down. Each milker can

milk up to 15 litres in 2 minutes.

Quantity: 10 Milkers of 15 Litres capacity each

Cost: Rs3,50,000 Each

Total 10 x 3.5 = Rs 35,00,000

Supplier: Goma Engineering Pvt Ltd, Thane

Stainless Steel Cream Can / Milk CanDescription: Stainless Steel container to store or transport processed/unprocessed milk or

cream for a short period without affecting the quality and taste of milk and protecting it

from the outer conditions.

Quantity: 200 Cans of 50 litres capacity each

Cost: Rs 3,000 each

Total: 200 x 3,000 = Rs 6,00,000

Supplier: Bishan Steel Industries, Navi Mumbai

Milk Tanker

Description: Used in transportation of milk over long distances. It contains facilities of

cooling milk to preserve even raw unprocessed milk for a short period of time without


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making the milk curdle in the process. Also used to distribute milk to various distributors or

taking the milk for processing.

Quantity: 1 Tanker of 10,000 Litres capacity

Cost: Rs 7,50,000

Supplier: Bharat Earth Movers Ltd

Ultra High Treatment Plant

The decisive factors in the selection of the appropriate Heat Treatment process for thermal

product treatment are product quality, production safety and efficiency. The UHT plants

allows for thermal and aseptic treatment of products with portions of fibres and particles.

Along with correct cooling, UHT is one of the most important safety measures in milk

processing. It destroys unwanted or disease-

causing bacteria without reducing the nutritional

quality of milk. The UHT technology is a step

ahead of the Short Time Heating Plant (STHT

plant) a.k.a. Pasteurizer in maintaining high levels

of product quality to maintain a shelf life of up to

150 days.

Quantity: The capacity of UHT plants range from

50 5,000 litres/hour for the treatment of low

and medium viscosity products.

Cost: Rs 15,00,000 for 5,000 litres/hour capacity

plant

Supplier: Larsen & ToubroLtd. / Alfa Laval (India) Ltd


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Homogeniser

Description: Homogenised milk is produced by mechanically forcing milk through a small

passage at high velocity. This breaks down the fat globules in milk into much smaller ones

and creates a stabile fat emulsion.Homogenisation

diminishes the tendency of the fat globules to

clump together and coalesce into cream.

Quantity: 1 Plant of 3,000 litres/hour capacity

Cost: Rs 3,50,000

Supplier: SSP India Pvt Ltd

Butter Churn

Description: Used to convert cream to butter by electronically churning, melting and

filtering the cream and attaining the desired fat , moisture and SNF percentage. Also

converts churned butter into the purer form Ghee by melting butter and removing all

moisture and SNF.

Quantity: 1 Unit of 100 litres/hour capacity

Cost: Rs2,50,000

Supplier: Alfa Laval (India) Ltd

Standardiser

Description: Milk standardisation ensures that different milk products - such as full fat,

skimmed and semi-skimmed - have the right level of fat concentration. The system uses a

centrifuge to separate the raw milk into standardised milk and cream, which are drawn off.

Another device is installed on the inlet feed to the centrifuge and measures the flow of raw


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milk into the separator. A signal is taken from the

instrument and used to control a pump which regulates the

flow of raw milk into the separator.

Quantity : 1 plant of 3,000 litres per hour capacity

Cost: Rs 5,00,000

Supplier: HMT Limited, Dairy Udyog India Ltd

Bag Filling and Packing Machine

Filling of processed milk into bags in a aseptic way so as to maintain a long shelf life with or

without refrigeration and to ensure novelty of seal to prevent resealing of packet and

prevent adulteration. Also used for stamping

packets with details like price, date of expiry

& manufacture.

Quantity: 1 machine packing 120 (30 x 4)

packets per minute

Cost: Rs 2,50,000

Supplier: Tetra Pak India Ltd

Liquid Transfer Pump

Description: Pumping milk through hoses over a

distance of one plant to another.

Quantity: 2 Pumps of 1 H.P. each


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Cost: Rs 30,000 each

Total: 2 x 30,000 = Rs 60,000

Supplier: M A N Industries

Milk Hose

Description: Hose for pumping milk safely and hygienically.

Quantity: 2 hoses of 100 feet each

Cost: Rs 2,000 each

Total: 2 x 3,000 = Rs 6,000


Milk Check Teat Wipes

Description: A cleansing wipe impregnated with 0.5% chlorhexidine

gluconate and 9.0% isopropyl alcohol for premilking teat preparation.

Wipes are thick, durable and gentle

Quantity: Stock for 6 months

Cost: Rs 7,000



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Organisation Plan

ORGANISATIONAL STRUCTURE

Functions of the Partners:

The promoters are responsible for the way the consumers look at our brand and the

way it is projected at them. Also it is their responsibility to maintain to look at future

prospects for expansion, select new means to reach the consumers, expanding capacity to

meet market demand, altering the products according to the changing needs of consumers,

handling professional services like finance, accounting and legalities of various decisions.

Also it is their responsibility to check the functioning of the works assigned to the Dairy

Farming Supervisor and the Milk Processing Supervisor. They are the ones who ensure that

the CSR activities promised by them are met. They form the management personnel of the

business.

Functions of the Supervisors:

They are the ones actually responsible for handling the day to day work of handling

the entire process given to them. They are responsible for allocating the work to the skilledand unskilled labourers and make sure both, the dairy farming unit as well as the milk

Abdul Aditya Tehseen

Supervisor1

DairyFarming

Supervisor2

MilkProcessing

Nidhi Varun


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processing unit work in co-ordination. They are also responsible towards keeping the

management informed about the problems faced and implement the decisions taken by the

management. It is their responsibility to ensure that the production meets the ISO and

AGMARK standard and that no type of adulteration takes place in the production process.

They are the link between the labourers and the top management and hence it is their

responsibility to ensure the smooth functioning and co-ordination of both the levels. They

are a part of the management personnel of the business.

Functions of the Dairy Farming Team:

They are the labourers actually responsible for milking the cows and buffalos,

feeding them, and maintaining hygiene in the farm, supplying milk to the milk processing

unit. They have to follow the directions of their supervisor. They are also responsible for

delivering the milk to the various distributors and make sure that no adulteration takes

place during the production as well as during delivery. They are responsible for keeping the

cattle in the best of health and informing their supervisors when the cattle need medical

attention. They are the non-management personnel involved in the functioning of the

business.

Functions of the Milk Processing Team:

They are the ones responsible for processing the milk, removing cream from it,

maintaining different levels of fat in it, ensuring that milk has a long shelf life, meeting the

norms of the PFA (Prevention of Food Adulteration Act) and the international certifications,

checking for adulteration at each and every process, making butter and ghee, packing and

making the products ready for transportation and delivery. They are trained to run their

machineries in the most effective manner and getting the most out of it. They are

responsible to their supervisor and must therefore follow all his instructions. They are the

non-management personnel involved in the functioning of the business.


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STAFFING

Unskilled Labour

Sweepers, Cleaners, Operators (Cow Milker), Driver : 50

Cost of labour: Rs 4,000 p.m.

Total : 50 x 12 x 4000 = Rs 24,00,000

Supervisors : 1

Cost of labour : Rs 10,000 p.m.

Total : 2 x 12 x 10,000 = Rs 2,40,000

Skilled Labour

UHT : 2

Salary : Rs 10,000 p.m.

Total : 2 x 12 x 10,000 =Rs 2,40,000

Supervisors : 1

Cost of labour : Rs 10,000 p.m.

Total : 2 x 12 x 10,000 = Rs 2,40,000

Standardiser, Butter Churn, Homogeniser, Packaging : 6

Salary : Rs 9,000 p.m.

Total : 6 x 12 x 9,000 = Rs 6,48,000

Veterinarian (Visiting) : 1

Salary : Rs 5,000 p.m.Total : 12 x 5000 = Rs 60,000


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PRODUCTION PROCESS

MILK

FRESH CREAM

Raw Milkfrom Farm

HeatTreatment

Homogenised Milk

MilkSkimming

QualityChecks

PackagingTranspor

taion

Distribution

Raw Milk

Raw CreamPasteurized

Cream

QualityChecks

Packaging

Transportation

Distribution


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Mssi Final ++

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