2. METHODOLOGY
SECONDARY RESEARCH
NDDB, NABARD, PWC Reports, EBSCO,EMERALD
1
ANALYSIS & RECOMMENDATIONS
BUILDING SUPPLY CHAIN, DISTRIBUTION, PRODUCT PORTFOLIO
4
QUESTIONNAIRE
2 BRAND PERCEPTION, CONSUMPTION PATTERNS
PRIMARY RESEARCH
3IN-DEPTH INTERVIEWS
QUESTIONNAIRES
SITE VISITS:
MR. SANJAY MISHRA, DIRECTOR, PARAG INDUSTRIES
MR. ATUL AMIN, VP, SAMARPAN FABRICATORS PVT. LTD
MR. AMIT THAKUR, MANAGER, AMUL DAIRY
GOWARDHAN DAIRY, MANCHAR
AMUL PLANT, MANCHAR
KATRAJ MILK, PUNE
3. DAIRY SECTOR OVERVIEW
India's dairy
sector expected to
be worth US$100 bn
by 2015
Estimated shortage
of 40 million tonnes
of milk by 2020
Unorganized sector
accounts for nearly
85%
IMPEDIMENTS TO GROWTH
• Poor sanitary standards, inconsistent quality of processed milk / milk products
• Perishability of milk
• Lower milk yield of Milch animals
• Logistics of procurement
• Problematic distribution
Susceptible to high
Adulteration
Price elasticity of
demand for milk:
•Rural Areas -2.9
•Urban Areas -2.7
Income elasticity of
demand for milk:
•Rural Areas 1.36
•Urban Areas 1.07
0
50
100
150
200
250
300
0
20
40
60
80
100
120
140
INDIA'S MILK PRODUCTION AND PER CAPITA MILK AVAILABILTY
Milk Production(Million Tonnes)
Per Capita Milk Availability(Grams/Day)
1990-91 2011-12
Milk production growing at a CAGR of 4.7%
Consumer demand growing at CAGR of 7%
OPPORTUNITIES
• Large domestic Captive Market
• Value addition: phenomenal scope for innovations
• Estimated shortage of 40 million tonne of milk by 2020
**(Source: NDDB) 2011
• Integration with other Mahindra services
TRENDS FACTORS
4. DAIRY INPUTS
MILK
MILK PRODUCTION
MILK
COLLECTION, STORA
GE AND TRANSPORT
MARKETING &
DISTRIBUTION
CONSUMER
MONEY
Analyzing Indian Organized Dairy
Sector Supply Chain, we define
the Key Success Factors at every
Step.
DAIRY ORGANIZED SECTOR SUPPLY CHAIN
REVENUE
5. DAIRY EXTENSION SERVICES IN INDIA – A PLETHORA OF OPPORTUNITIES
DAIRY EXTENSION SERVICES IN INDIA
MARKET SIZE – $ 54 Million
GAPS IDENTIFIED-
• Strong need for Door Step Dairy Extension at Affordable Price
• Local Network and Know How will be critical
ISSUES
• Unregulated market
• Lack of Infrastructure
• Season Specific and Volatile Prices
• Lack of Awareness
• Lack of Regulation
• Dearth of Animal Heath Workers
OPPORTUNITIES • Door to Door Health Services
• Absence of Private Players
• Import High Quality Semen
• Information System to track
calves
• Huge Latent Demand
• UMMB and BPF – New Concepts
in Feeding
COMPETITIVE
LANDSCAPE
• Drug Market is Competitive
• Healthcare is Govt. Controlled
• Govt. Run Dairy Farms
• NGO’s and Co-operatives
• Co-operatives provide feed
• Unattractive for Private Players
CATTLE BREEDING HEALTHCARE MANAGEMENT CATTLE FEED
6. RECOMMENDATION – ENTRY INTO DAIRY EXTENSION SERVICES TO DEVELOP DAIRY PRESENCE
Mahindra Samriddhi
HEALTH CARE MANAGEMENT
CATTLE FEED
BREEDING
SECOND HAND EQUIPMENT• Provide Bovine Semen to Local
farmers to lead to production
• Provide In-House Breeding
Center Facilities
• Use Samriddhi as a platform to
enable imports of bovine
semen for farm use
• Each Samriddhi Center to have
one trained animal worker and
on call veterinary doctor
• To provide On-Door cattle health
services to farmers
• Record management for all cattle
through centralized database
• Cattle feed provided by co-
operatives perceived to be
lower quality
• UMMB licks and Protein Bypass
Protein Feed still in nascent
stages of adoption
• Right pricing, awareness and
availability are KSF’s
• Price differential between New
& Second hand equipment can
be as high as 50-60% for end
user
• Primarily as a support service to
‘Milk Agents’
Launch “Shweta Sagar” – a Dairy Extension initiative across
the 155 Samriddhi Centers
Build Awareness amongst Farmers by adopting few model
villages and informational campaign
Provide low cost Cattle Feed and Breeding Services at
Samriddhi Centers
Healthcare management initiatives to be focused on
convenience. Provide on door services with data
management.
Primary Aim is to build a comprehensive relationship with
farmers over next 2 years
“Shweta Sagar”
KEY SUCCESS FACTORS
• Acquiring High Quality Bovine Semen from
International Markets
• Developing Expertise & Research Capabilities in
Cattle Breeding & Health Care initiatives
• Acquisition or Production of High Quality Cattle Feed
• Managing Information for “Shweta Sagar” Initiative
• Acquisition of Second Hand Dairy Equipment from
Local and International Players
7. Milk adulteration and
irregular supply
source are the 2
major problem facing
Indian dairy industry
Mr. Sanjay Misra, Director
Parag Industries
DAIRY FARMING – a sustainable competitive advantage
MAHINDRA OWNED LARGE DAIRY FARMS
BENEFITS
• Ensure pure quality
• Milk supply consistency
• Cater to growing demand of organic milk
• Shorter time to reach scale
• Attached processing unit to produce dairy products *at
a large scale
• Offers high rate of return : 20-30% (Source: NABARAD)
• Area 20-25 acre
• 500-2000 cows
• Near to market
0NCR, Mumbai, Hyderabad
*etc.
SMALL DAIRY FARMS
• Area 100-500 acres
• 5000 – 10000 cows
• Located near milk-shed
*areas of milk processing
*plants
LARGE DAIRY FARMS
Due to serious quality
concerns in milk
supply it is important
to have control over
milk production
Mr. Amit Thakur, Manager
Amul Dairy
8. SMALLDAIRYFARMS
LARGEDAIRYFARMS
PRODUCTION & DISTRIBUTION
PACKAGED MILK
BUTTER
CURD
COTTAGE CHEESE (PANEER)
UHT MILK
TETRA PACK MILK
FLAVORED & FORTIFIED MILK
NUTROS MILK (FOR BABIES)
CHEESE
INDIAN SWEETS (PEDAS, SRIKHAND, ETC.)
GHEE
DISTRIBUTION
CHANNELS
School Canteens
Super Marts
Mom & Me
Milk Parlors
DISTRIBUTION
CHANNELS
Near by cities
Retail shops
Milk Parlors
Home Delivery
Focus on Specialty
Products
Use of imported
Technological
equipment
R&D - increasing
shelf life of milk
Production and
Infrastructure
development
Production Cost
reduction
State of art UHT &
aseptic packaging
capability
KEY SUCCESS FACTORS
Deliver fresh milk to
near by
markets, mostly
metros
Strong relationships
with farmers
Encouraging Social
Entrepreneurs
Production and
Infrastructure
development
KEY SUCCESS FACTORS
9. MILK SOURCING
2-5 CATTLE
10+ CATTLE 50+ CATTLE
COOPERATIVES
CHILLING &
BULK COOLING
AUTOMATIC MILK
COLLECTION CENTERS
SHG
10,000 Lt
CAPACITY
1,00,000 Lt
CAPACITY
DISRUPTION: Eliminating Middle Man
by SHG to provide more value to the
farmers for their milk
10. MILK PROCESSING UNIT
Sr. No. PARTICULARS 1,00,000 Litres 10,000 Litres
1 Land requirement 20 acres 2 acres
2 Milk handling capacity 1,00,000 litres/day 10,000 litres/day
5 Cost of the project Rs. 9,72,62,050 Rs. 1,11,66,700
6 Bank loan Rs. 7,29,46,538 Rs. 83,75,025
7 Margin money Rs. 2,43,15,513 Rs. 27,91,675
FINANCIALS
DSCR 131.16 76.96
N P V Rs. 8,27,45,379 Rs. 56,70,163
I R R 57.23% 40.03%
BCR 1.295 1.287
AUTOMATIC MILK COLLECTIN UNIT– 10,000 Ltr.
S.No. PARTICULARS AMOUNT
1 Investment cost
a Cost of Unit (Rs.) 1,27,000
b Margin Money @ 25% 31,750
c Bank loan (Rs.) 95,250
FINANCIALS
BCR @ 15% DF 1.463
IRR 34.83%
NPV Rs. 55,727
Average DSCR 1.645
DAIRY FARMING ECONOMICS
10 CATTLE 1000 CATTLE
PROJECT COST
Capital cost 3,55,500 18,52,90,000
Recurring cost 1,37,600 7,88,00,000
Total cost 4,93,100 26,40,90,000
Margin (15%) 73,965 3,96,13,500
Bank Loan 4,19,135 22,44,76,500
FINANCIALS
NPV 65715 4,93,07,306
B.C. Ratio 1.07 1.11
I.R.R. (%) 28.59% 32.29%
Average DSCR 1.425 1.203
PROJECT COST FOR BULK COOLING UNIT
S.No. PARTICULARS 2000 LITRES 5000 LITRES
1 Cost of Bulk Milk Cooler 6,80,000 18,00,000
2 Installation & Commissioning 20,000 30,000
3 Total cost 7,00,000 18,30,000
4 Margin Money (25%) 1,75,000 4,57,500
5 Bank loan (75%) 5,25,000 13,72,500
FINANCIALS 2000 Lt. CAPACITY 5000 Lt. CAPACITY
BCR 1.197 1.35
IRR 32.95% 43.56%
NPV Rs. 3,35,845 Rs. 17,37,085
Average DSCR 1.672 1.865
10,000 Lt
Capacity
1,00,000 Lt
Capacity
CHILLING &
BULK COOLING
AUTOMATIC MILK
COLLECTION CENTERS
ECONOMICS
10+ CATTLE COOPERATIVES
NPV & IRR - good growth.
DSCR & BC Ratios - less risk.
NPV & IRR - good growth.
DSCR & BC Ratios - less risk.
11. CUSTOMER SEGMENTATION
GLOBAL STRIVER ASPIRER DEPRIVED
AVG. HOUSEHOLD
INCOME
(IN LAKHS/YEAR)
10L+ 5L-10L 2L-5L <2L
MAJOR INFLUENCERS
GYM TRAINERS, DIETICIANS, CONTRACTOR, PAINTER,
FRIENDS AND FAMILY
NEIGHBORS, LOCAL VENDOR,
LOCAL DAIRY
MILKMAN, NEIGHBORS
IMPORTANT BUYING
FACTORS
HEALTH, PREMIUM QUALITY,
HYGIENE, PACKAGING
HEALTH, QUALITY, HYGIENE HYGIENE, COMFORT, BRAND PRICE
PRODUCTS USED
YOGURTS, REDUCED SALT
BUTTER, CHEESE SPREADS,
PROBIOTIC MILK PRODUCTS,
PREMIUM COTTAGE CHEESE
PACKAGED MILK, FLAVORED
MILK, CHEESE SLICES /
SPREAD, PROCESSED CHEESE,
PACKED COTTAGE CHEESE
MILK FROM BOOTH OR
MILKMAN, PACKED MILK,
BUTTER/GHEE, CURD
MILK FROM BOOTH OR
MILKMAN, HOMEMADE
CURD/GHEE
BENEFIT SOUGHT
LOW FAT, PREMIUMNESS,
STATUS
NUTRITION
NUTRITION, VALUE FOR
MONEY
MORE CREAM, MORE
HEALTH
PURCHASE FROM
DELIVERED TO HOME,
SERVANTS
FAMILY
SELF, MILKMAN MILKMAN DELIVERS IT
12. PRODUCT PORTFOLIO
MAHINDRA FARM FRESH MILK
STRAIGHT FROM THE FARM. TO YOUR DOORSTEP.
PURE.RICH.CREAMY
*From Mahindra’s Dairy Farm
*Untouched by human hand
*100% Pure, 100% Fresh
*Delivered at your doorstep
A Range of Premium Cheese Products
INSIGHT: Premium Dairy Products segment is largely Untapped
WHAT: Establish Mahindra as the leader in this segment
WHY: Build Brand Equity. Build Trust. Establish Brand
HOW: INTRODUCING FARM FRESH – a premium range of dairy products
HEALTH. DELIVERED AT YOUR DOORSTEP.
1
Money is not an issue where the
health of my family is concerned.
Give me quality and I’m a customer
for life
There is no such thing as FRESH
milk.
What we get is the price we pay
for convenience
13. 2
YOGURT WITH ADD-ONS – GRANOLA, FRUIT MIXES FLAVORED MILK / LASSI - FORTIFIED WITH NUTRIENTS
WHO: Female Students, Working Professionals
WHAT: A complete range of Dairy Products for the Health Conscious
Ideal for snacks, Alternative to Colas
WHERE: Educational Institutions, Corporate Offices, Gyms
WHY: Brand Mahindra is non-existent in the consideration set of Buyers
Success in this segment - Trickle down effect
Purchase influencers at home
14. BABY FOODS – LEVERAGING
“Baby food gets
spoiled easily, I travel
a lot and availability
is a constant issue”
3
WHY?
• One of the fastest growing segments
• Unique match with Retail Format
• Synergy with business unit
• Leverages the mom&me brand
WHAT?
• Tetra packs ensure Freshness
• Longer shelf life, Quality control
• Dairy Products in Mom&Me Retail
+
15. CRITICAL COMPETENCIES STRATEGIC RELATIONSHIPS
Mahindra Samriddhi
Indian Dairy Players
Dairy Association e.g. NDRI,
NDDB
International Dairy Players
Mahindra Automotive
Mahindra Finance
NGO’s
ORGANIC STRATEGIES• Launch of Shweta Sagar –
Dairy Extension Services
through Samriddhi
• Dairy Farming through Small
Farms – “Self Help Groups”
encouraged by Mahindra
Finance
• Partnership with existing
research Insitutions
INORGANIC STRATEGIES
• Acquisition of Small Indian
Dairy Cooperatives across
India eg. Sterling Agro
Industries
• Joint Ventures with Large
International Dairy Players like
Fonterra of Newzeland
KEY COMPETENCIES TO BE ACQUIRED ACROSS THE DAIRY VALUE CHAIN
16. ROADMAP TO SUCCESS
0-2 YEARS 2-4 YEARS 4-5 YEARS
• Partnerships with multinationals
(e.g. Fonterra , Falio)
• Acquisition of dairy firms like
Sterling Agro Industries which is
looking for buyers
• Build key partnerships across
supply and distribution chain
• Research and Development to
increase the milk life period
•
•Strategic takeovers for a country
wide reach
• Number of Processing Plants – 1
•Chilling and collection units
required (2000 capacity) - 25
•Chilling and collection units
required (5000 capacity) - 10
•Processing - 10,000
•Total Milk Processed by Mahindra
per day – 99,000 ltr.
•Market Share in litters/day – 4.95%
• ‘Shweta Sagar’ movement to
encourage milk production in
villages
• Establish another high tech dairy
farm
• Number of Processing Plants – 4
•Chilling and collection units
required (2000 capacity) - 40
•Chilling and collection units
required (5000 capacity) - 13
•Processing - 10,000
•Total Milk Processed by Mahindra
per day – 4,71,769 ltr.
•Market Share in litters/day –
20.38%
• Number of Processing Plants – 3
•Chilling and collection units
required (2000 capacity) - 35
•Chilling and collection units
required (5000 capacity) - 13
•Processing - 10,000
•Total Milk Processed by Mahindra
per day – 3,59,000 ltr.
•Market Share in litters/day –
16.32%
18. SAMRIDDHI – BRINGING THE NEXT WHITE REVOLUTION
Social
Entrepreneurship
“ Shweta Sagar “
An Initiative for Productivity
Efficiency Across Value
Chain
Mahindra RISE
Integration with Existing
Business
MAHINDRA DAIRY BUSINESS
Relationship
Building
Localized FocusDairy Extension Services
Equipments
Fresh Milk
“ Delivering Farm Tech Prosperity”
VISION
“ Self Help Group“
Enabling Rural Prosperity
“ Farm Fresh & Nutros“
Bringing Freshness to every
Door
Health Care Services
Convenience
Health & Wellness
Reduced Cost Liability
Distribution Services
EXECUTIVE SUMMARY – BRINGING IT ALL TOGETHER
Source: http://www.nddb.org/English/Statistics/Pages/Milk-Production.aspxhttp://www.foodnavigator-asia.com/Markets/Indian-dairy-sector-to-be-worth-US-100bn-by-2015-says-reportSince 2003, it said, India has imposed unwarranted sanitary and phyto-sanitary requirements on dairy imports, which have essentially precluded US access to India's dairy market, one of the largest in the world.http://www.dnaindia.com/money/report_us-asks-india-to-relax-norms-for-import-of-poultry-toys_167108640 percent are indigenous cows, 46 percent are buffaloes and 14 percent are imported European or North American cattle crossbreeds. Out of the total milk produced in India, 55 percent or slightly more comes from buffaloes While yields are below international averages, production costs are amongst the lowest in the world. As dairy product prices continue to rise and stable incomes from milk procurement become more available, there is a small but slowly growing trend amongst farmers to increase herd sizes and specialize in dairying. The department has also created the sanitary import protocol for the import of bovine semen in India and is working actively to strengthen the Indian dairy sector.
quality milk is defined as - Milk produced from healthy /disease free cows. The milk will be free of antibiotics, chemical substances, hazardous materials and adulterants. The mean SCC will be < 150,000/ml, and bacterial levels will be within prescribed international standards. Somatic cell count (SCC) is an indicator of the quality of milk