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Bailur Milk Depot
Kousali Institute of Management Studies Page 1
What is a Project?
Series of actions to achieve a result
Single occurrencea unique, non-repetitive assignment
Time limitationswith a pre-defined date of delivery
Clear purposespecified from one or more goals (well defined, measurable and realistic), do not
mix project goals and effect goals
Unpredictable structure it consists of a number of complex activities with mutual
interdependencies
Own organisatione.g. Not in the original line of work
Procurerinternal or external acquirer that has expectations on the result.
Introduction to the industry:
Karnataka Milk Federation (KMF) sells products by the name of Nandini. They are famous for
taste and quality. Nandini sweets like pedha, jalebi, paneer, curds and milk are savored by
thousands of people in India. As the name suggests it is the federation of milk producers
association working on cooperative principles. Almost every district in state of Karnataka hasmilk producing co-operatives. The milk is collected from farmers who are its members,
processed and sold in the market by the brand of Nandini. It is the second largest milk co-
operative in India after AMUL.
KMF has 13 Milk Unions throughout the State which procure milk from Primary Dairy
Cooperative Societies (DCS) and distribute milk to the consumers in various urban and rural
markets in Karnataka State.
Managing Director: Dr. M.N.Venkataramu
Chairman: G. Somashekara Reddy
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Bailur Milk Depot
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BASIC INFORMATION:
Type of Business: Dealership for milk and milk products and local supply
Location for Business: Congress Road, Belgaum590006
Area of coverage: Channamma Nagar, Congress road, Maratha colony, Bhagyanagar and
Shahapur
Form of Organisation: Sole Proprietary
Name of Promoter: Mr. Prashant Bailur
Background of promoter:
Name: Prashant Bailur
Address: H.No. 2545/B
Meerapurgalli, shahapur,
Belgaum: 590003
Qualification: B.Com, MBA
Age: 24 Years
Experience: 3 Years
Products: Milk and milk products
Cost of the Project: 4,29,000
Financing Pattern:
The amount of 2.29L will be invested as equity money the remaining is of loan from the bank
Sources of Finance: Loan from the Bank
Life cycle: Minimum of 20 years and maximum of no limit
Implementation:1stApril 2014
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Bailur Milk Depot
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Objective:The main objective of this project is to maximize the profit and also to give the best
service to all the customers.
Assumptions:
TheWorking shift is of 4 hours a day and 365 days in a year
The rate of interest on total Term loan is taken as14%
The unit is located with ownedpremise
For this firm working capital includes all expenses
The firm has no tax
Payment of 50,000 to local vendor for transferring 210 customers
The amount including service charge will be accepted in the 1
st day of every
month.
The sales will increase at 5% on the total price
The salary will increase at 10% for 2styear and 15% there after
The service charges will rise at 10% every year
Petrol expenses will increase by 5% every year
Rate of depreciation is 10% at straight line method
Change the price of milk also leads to increase the margin hence it has taken with the
constant price
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Marketing Analysis
Market Potential
India is one of the leadings exporters of milk . India i s second l arges t
p ro d u ce r o f mi l k i n t he w or l d . I t h as co n t r i b u t i n g 1 3 3 m i l l i o n t o n s l i t e r s
o f m i l k . I n d i a i s a n a g r i c u l t u r e b a s e d c o u n t r y w h e r e i n t h e d e m a n d f o r t h e
p ro d u c t l i k e mi l k a nd o t h e r mi l k p r o d u c t s i s v e r y h i g h . S u s t a i n ab i l i t y i s
v e r y e a s y i n t h e b u s i n e s s o f m i l k .
Marketing Strategy:
Purchase of a customers from existing agent and supplier by paying some consideration.
The marketing will be done by taking individual attention once the business gets started.
ProductsApplications:
The milk and milk products are having an intense demand in the country. Likewise the
places like Karnataka also gained a lot of importance. The state Maharashtra is one of the
leading state to produce milk. The various products available with us:
Milk Butter milk
Curd Flavored milk
Butter Ghee
Lassi Basunde etc.
Business Objectives
The business objective is to increase the volume of sales at least 10% in every year and provide
a quality service to every customers.
1. Consumer satisfaction:
Consumer here refers to the customer to whom this products will be supplied for future
processing and making ready for final consumption.
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2. Profit earning:
The second objective is to earn profit through satisfying the customer as business cannot
survive without earning profit.
3.
Performing Social responsibility:
Performing the social responsibilities of business enterprise is also one of the basic
moral responsibilities. Social responsibility will be fulfilled by giving employment
opportunities, providing good quality product at reasonable rate.
Financial Analysis
Capital Investment:
S.No Description Amount Rs.
1 Fixed Capital 379000
2 Working Capital 311438
Total Project Cost 690438
Details of proposed project:
Capital investment includes physical assets like:
Building
Computer
Vehicles
Furniture
Refrigerator
Cooler
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Investment in fixed assets
Consumption and payment to supplies per annum(Material)
Sl.No Items Sales Litres/Packets/Kgs Rate Amount Rs.
1 Full cream milk 160 36 2102400
2 Standard milk 40 34.5 503700
3 Toned milk 80 30.5 890600
4 Curd 20 7.5 54750
5 Lassi 10 6.8 6800
6 Butter milk 5 4.75 2138
7 Ghee3 282 10152
8 Butter 5 280 16800
9 Basunde 10 340 3400
Total 3590740
Sl.No Description Qty. Rate Amount Rs.
1 Building (20*30) 300000
2 Vehicles (cycles) 3 3000 9000
3 Furniture 1 25000 25000
4 Refrigerator 1 19000 19000
5 Cooler 1 7000 7000
6 Computer 1 19000 19000
Total 3,79,000
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Calculation of sales
Sale of milk 280 liters per day (+/-10)
Particulars Total sale per day Rate per litresValue per
Annum
Full cream milk 160 litres Rs. 38 2219200
Standard milk 40 litres Rs. 36 525600
Toned milk 80 litres Rs. 32 934400
Curd 20 packets Rs. 10 73000
Lassi 10 packets Rs. 10 10000
Butter milk 5 packets Rs. 6 2700
Ghee 3 litres(a month) Rs. 314 11304
Butter 5 kgs (per month) Rs. 300 18000
Basunde 10 Packets Per year Rs. 380 3800
Service charge (210*40) 100800
Total 38,98,804
Note:
Total customers 210 and total 230 litres of door delivery rest are spot sales
Note:
Lassi will be sold in the seasons and for only 100 days
Butter milk will be sold for only 90 days(3 months)
Salaries (per month)
Sl.No Description Nos. Sal/mon. Amount Rs.
1 Supervisor 1 6000 6000
2 Unskilled workers 3 1050 3150
Total 9150
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Note: No need for skilled workers in supply of milk
Other Expenses (per month)
Sl.No Description Amount Rs.
1 Petrol Expenses 1500
2 Advertisement Expenses 100
3 Miscellaneous Expenses 800
4 Power 340
5 Water 90
6 Cable 230
Total 3060
Total Working Capital (per month)
S.NoAmount
Rs.
1 Salaries 9150
2 Payment towards supply 299228
3 Other Expenses 3060
Total 311438
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Projected expenditure of 5 years
Expenses: 1st Year2nd
Year
3rd
Year4th Year 5th Year
Salaries 109800 120780 126270 138897 145210.5
Payment towards supply 3590739 3770276 3958790 4156729 4364566
Petrol Expenses 18000 18900 19845 20837 21879
Advertisement Expenses 1200 1200 1200 1200 1200
Interest on Loan
(200000*0.14) 28000 23764 18935 13429 7162
Miscellaneous Expenses 9600 9600 9600 9600 9600
Power 4080 4080 4080 4080 4080
Water 1080 1080 1080 1080 1080
Cable 2760 2760 2760 2760 2760
Total 3765259 3952440 4142559 4348613 4557537
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Projected Income Statement for 5 years:
PARTICULARS AMOUNT
1st Year 2nd Year 3rd Year 4th Year 5th Year
Sales Revenue 3898804 4098784 4309267 4530829 4764079
Less: Expenses 3765259 3956676 4151625 4363183 4578375
EBDIT 133545 142108 157643 167646 185704
Less: Interest on Bank Loan 28000 23764 18935 13429 7162
EBDT 105545 118344 138708 154216 178542
Less: Depreciation 37900 37900 37900 37900 37900
PBT 67645 80444 100808 116316 140642
Less: Tax 0 0 0 0 0
PAT 67645 80444 100808 116316 140642
Add: Depreciation 37900 37900 37900 37900 37900
CFAT 105545 118344 138708 154216 178542
Add: WC requirements 174520 182164 183770 191884 192972
Total CFAT 280065 300508 322478 346100 371514
Estimated Sales for 5 years:
Income 1st Year 2nd Year3rd
Year4th Year 5th Year
Sale of milk & its products 3798004 3987904 4187299 4396664 4616498
Service Charge 100800 110880 121968 134165 147581.28
3898804 4098784 4309267 4530829 4764079
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Calculation of Depreciation on Straight Line Method
Depreciation = (Cost of Asset-Salvage Value)/Life of the Asset
S.No Description Qty. Rate Amount Rs. Depreciation
1 Building (20*30) 300000 30000
2 Vehicles (cycles) 3 3000 9000 900
3 Furniture 1 25000 25000 2500
4 Refrigerator 1 19000 19000 1900
5 Cooler 1 7000 7000 700
6 Computer 1 19000 19000 1900
Total 3,79,000 37900
Balance sheet for 5 years
Assets 1st Year 2nd Year 3rd Year 4th Year 5th Year
Fixed Assets
Building 300000 270000 243000 218700 196830
Vehicles (cycles) 9000 8100 7290 6561 5905
Furniture 25000 22500 20250 18225 16403
Refrigerator 19000 17100 15390 13851 12466
Cooler 7000 6300 5670 5103 4593
Computer 19000 17100 15390 13851 12466
Total 379000 341100 306990 276291 248662
less: Depreciation 37900 37900 37900 37900 37900
Net Value 341100 303200 269090 238391 210761.9
Closing balance of cash 97287 157373 237823 333782 454065
Total 438387 460573 506913 572173 664827
Liabilities 1st Year 2nd Year 3rd Year 4th Year 5th YearOwn Capital 229000 229000 229000 229000 229000
Bank Loan 169742 135248 95925 51096 0
PAT 67645 80444.37 100807.9593 116316.254 140641.5704
Total 466387 444692 425733 396412 369642
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Cash flow statement
PARTICULARSImplementatio
n Period1st Year 2nd Year 3rd Year 4th Year 5th Year
Sources Of Cash
Own Capital 229000 0 0 0 0 0
Term Loan 200000
PAT 0 67645 80444 100808 116316 140642
Depreciation 0 37900 37900 37900 37900 37900
TOTAL (A) 429000 105545 118344 138708 154216 178542
PARTICULARSImplementatio
n PeriodYear 1 Year 2 Year 3 Year 4 Year 5
Uses Of Cash
Fixed Assets 379000 0 0 0 0 0
Repayment of
loan 30258 34494.12
39323.296
8
44828.5583
5 51096Interest on term
loan0
28000 23764 18935 13429 7162
Tax paid 0 0 0 0 0 0
TOTAL (B) 379000 58258 58258 58258 58258 58258
Opening Balance 0 50000 97287 157373.37237823.329
3
333781.583
3
(A-B) 50000 47287 60086.3780449.959
3
95958.2539
8120284
Closing Balance 50000 97287 157373 237823 333782 454065
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Bank Loan Repayment Schedule:
Principal Amount = 200000
Rate of Interest = 14% per annum
Loan Period = 5 years
Calculation of EAI = Loan Amount / PVAF @ 14%, 5 years 58258
Year Installment InterestPrincipal
Repayment
Outstanding
Amount
0 0 0 0 200000
1 58258 28000 30258 169742
2 58258 23764 34494 135248
3 58258 18935 39323 95925
4 58258 13429 44829 510965 58258 7162 51096 0
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