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Monday, 4 April 2011

MILK PROCESSING


1. INTRODUCTION
1.1 The Indian dairy industry is contributing significantly to the country's economy, besides improving the health standard by increasing the nutrition value of the food. The value of output from Dairy Sector increased to Rs.5,00,510 million in 1994-95 from Rs.2,75,080 million in 1990 and is expected to reach the level of Rs. 8,50,000 million by the year 2000 A.D.
1.2 India occupies first position in the world having a total bovine population of 288 million compared to the world's total bovine population of 1420 million. As per 1992 livestock census, the country has about 62.90 million breedable cows and 42.46 million breedable buffaloes (Statewise and species/breedwise figures are given in Annexure I). The cross bred cattle are predominant in Kerala, Maharastra, Tamil Nadu , Punjab and Uttar Pradesh, While buffaloes are very common in Uttar Pradesh, Andhra Pradesh, Rajasthan, Madhya Pradesh, Maharastra, Gujarat, Punjab, Bihar, Karnataka , Haryana and Tamil Nadu
1.3 There has been a major improvement in milk production which increased from 17 million tones in 1951 to 70.1 million tonnes in 1997 and the growth was maximum between 1980 and 1990. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Maharashtra, Gujarat, Andhra Pradesh, Haryana, Tamil Nadu and Bihar contributed to the extent of 85 percent of the total milk production in the country. Today, India is the second largest producer of milk in the world after the United States of America. The present per capita availability of milk is 205 gms as against the ICMR recommendation of 250 gms. The statewise milk production during 1992-93 and targets for 1996-97 along with the per capita availability of milk are given in Annexure I.
1.4 Recognizing the importance of the sector, the notable programmes taken up are key village schemes, intensive cattle development projects, crossbreeding projects through bilateral assistance, operation flood programme and technology mission by establishing National Dairy Development Board (NDDB).
1.5 In 1970 under the aegis of NDDB, "Operational Flood" programme was launched to modernize the dairy sector and flood the 4 metro cities with milk from dairy cooperatives. By the end of 1996-97, 74,383 village milk producers cooperatives were organised in 264 districts with an average rural milk procurement of 12.26 million liters per day.
1.6 Another step was taken in 1989, to augment rural income by launching Technology Mission on Dairy Development (TMDD), which aims at applying modern technology to improve productivity, reduce costs of operation and thus ensure grater availability of milk and dairy products.
1.7 With the liberalization of the Indian economy in 1991, the dairy sector too was delicenced. However, on June 9, 1992 GOI issued a Milk and Milk Products Order (MMPO), according to which, a dairy handling more than 10000 liters of milk per day is required to get itself registered. The registering authority shall be an officer of the State Government or Union Territory in respect of units handling upto 75000 liters/day, or 3750 MT of milk solids per annum, where the entire milkshed of the unit lies within a State / Union Territory. In case of those units, which are handling more than 75000 liters of milk per day or 3750 MT of milk solids per annum, the registering authority is Department of Animal Husbandry and Dairying ,Ministry of Agriculture, Govt. of India.
2. MILK PROCUREMENT AND PROCESSING
The organized dairy sector (both cooperatives and private) is presently handling only 10-12 percent of total milk production in the country. The target and achievements of milk production, procurement and processing in cooperative sector by the end of VIII Five year plan are given in Annexure II. Thus it indicates, there is a wide scope for processing of milk and manufacture of milk products for domestic consumption as well as export.
3. EXPORT PERFORMANCE
Dairy products form one of the fastest growing segments in the livestock product export. The major products exported are malted milk foods, ghee and cheese (to some extent) to the countries like Bangladesh, UAE, Nepal, Sri Lanka, Bahrain and Oman. The export performance during the years 1980-81 to 1995-96 are given in Annexure III.
4. EXPORT POTENTIAL AND MARKETS
Bangladesh, United Arab Emirates, Nepal, Sri Lanka and Oman are the potential countries for export of malted milk products, butter and ghee. The export of milk and milk products to currently existing markets would increase to Rs.285 million and to new markets to Rs. 155 million. Thus the exports is likely to touch Rs.440 million (APEDA estimates) by the turn of the century.
The GATT agreement further gave a boost to the dairy industry, as India has a comparative cost advantage in regard to milk production. NABARD has been actively involved in credit disbursement in number of schemes in dairy sector. It also encourages development of new products through its research and development funds besides guiding various entrepreneurs in new areas of business and technology.
5. OBJECTIVES OF THE PROJECT
The financial assistance is extended for processing of milk with the following objectives.
i) To enhance the keeping quality of milk and also to avoid economic losses to farmers.
ii) For manufacturing various milk products to make it available for the domestic market
as well as for export markets.
6. TYPE OF PROJECTS
The type of milk processing projects that are normally considered for financial assistance are:
i) Milk Chilling plants:
It involves collection of milk from the villages, chilling the milk to 3-4 degree Celsius and transporting to the main dairy for further processing and manufacture of products;
ii). Market Milk Plants:
It involves procurement of milk from the villages, chilling, pasteurization, homogenization, packing of milk of various brands (whole, standard, toned and double toned milk) and supplying them to the consumers. The surplus fat is converted into ghee or table butter or sold as cream to bakeries;
iii). Composite Milk Processing Plants :
The project involves the collection of milk and processing into market milk and products like milk powder, cheese, butter, ghee, etc.;
7. POTENTIAL AREAS:
The scope for financing milk processing activities exists in the entire country. However, it is limited in East and North Eastern parts of the country because of under utilization of existing processing capacities, low milk production and scatteredness of production base.
8. BENEFICIARIES
The beneficiaries may be individuals, partnership firms, companies, corporate bodies and cooperative societies/unions.
9. PROJECT DETAILS
9.1 Land and Location:
i) Ample space is required for buildings, future expansion, parking of transport vehicles and for empty cans. About two acres of land is required for a milk processing plant handling about 10000 liters of milk per day (8 hours). However the built up area to total area should be around 1:3 ratio;
ii) The location of a plant should be close to the milk producing area in case of products manufacturing unit and if liquid milk is the main product it should be close to the consumer;
iii) The location of site should have proximity to road/rail facilities, services, such as water, electricity and effluent mains, social infrastructure, etc.
iv) The subsoil of the site should be firm with proper drainage.
9.2 Site Development:-
i) Preferably the entire site should be fenced with barbed wire or compound wall is constructed with gates at suitable places;
ii) Internal roads should be of tar/bricks/WBM depending upon the soil conditions, rainfall and the number of vehicles moving every day.
9.3 Layout and Buildings:-
The civil works comprises of factory building, quarters, office, garages, security post etc. The factory building for the milk reception, quality control, processing, packing and storage of milk products should be as per the BIS. The total covered area depends on the processes involved, products manufactured, the quantity of milk handled and the equipment chosen for services and product manufacturing. About 4000 sq.ft. area of building is required for handling 10000 liters of milk.. The essential sections of a milk processing plant are given in Annexure IV. The layout plans for a plant of 10000 liters per day is given in Figure 1 .
9.4 Plant and Machinery:
The sectionwise equipment required, their specifications, quantity and costs for 10,000 litres capacity plant are given in Statement 3. The machinery should be as per the BIS. Most of the dairy machinery are manufactured in the country by ALFA-LAVAL, L&T, HMT, Nichrome Pvt. Ltd., Samarpan Fabricators , Goma Engineering Ltd. etc.
9.5 Technical Collaboration:-
Normally the technical collaboration may be for supply of machinery, technical know-how for manufacture or marketing of products. If any such collaboration arrangement is there, name of the firm, country and term of agreement is required to be mentioned.
9.6 Manufacturing Process:-
The operations involved in the manufacturing process should be given in the form of a flow diagram. The flow diagram for a 10,000 litre per day milk processing plant is furnished in the Annexure V for guidance.
9.7 Infrastructural Facilities for Raw Material and Utilities
9.7.1 Raw Material:
The principal raw material is milk. The extent of milk shed area, milch animal population , average milk yield, percentage of animals in milk, marketed surplus ,etc will determine the size of the plant. The method of procurement, transportation of milk and input supply to the farmers is required to be highlighted. The availability of other inputs such as packing materials, disinfectants and consumable should be ascertained.
9.7.2 Utilities:-
i) Power:
Normally a three phase electricity supply is required for milk processing plants. The power requirement depends upon the load to be connected and the necessary approval from SEB should be obtained for connection. Depending upon the position of power supply, standby generators may be considered for connecting the essential sections.
ii) Water:
A milk processing plant requires the water in the ratio of 2:1 (2 liters of water for 1 liter of milk processed) for cleaning of equipment, cold storage and drinking purposes (source of water supply, quantity available and suitability for the purpose has to be mentioned). Accordingly , the size of the well is required to be designed and depends on the quality of water, the water softening plant may be considered.
iii) Steam:
The steam requirement (kg/hr) depends upon the processes involved and the source of steam may be met by coal/oil/gas fired / electric boiler;
iv) Fuel:
LDO/coal/gas requirement and the availability to be ascertained.
v) Compressed Air:
It will be required for various pneumatic operations flow control operations as well as for cleaning purposes. The total requirement of compressed air and the capacity of the compressors is required to be furnished.
vi) Vehicles :
The vehicles required for procurement and distribution of milk depends on the quantity of milk to be handled. The number of vehicles required, source of supply, rental charges etc. need to be furnished. Depending upon the need, the requirement of vehicles may be considered in the project cost.
vii) Other Services:
Although a maintenance workshop is an integral part of milk processing for carrying out repairs and maintenance of equipment.
viii) Communication:
Proper communication facilities is essential.
9.8 Manpower:
While selecting the site, the availability of manpower should be looked into and the total requirement of manpower depends on the operations involved and the quantity of milk handled. For a plant handling 10000 liters of milk per day the manpower required is given in Annexure VI
9.9 Environmental Aspects and Pollution Control:
There are no hazardous effluents generated from a milk processing plant. However, construction of effluent treatment plant is necessary in case of multiproduct large size plants for treating the effluents before discharging for proper disposal. The final effluent should meet the requirements of Pollution Control Board and is necessary to get clearance from them.
9.10 Schedule of Implementation
The activity wise schedule of implementation is to be given in the project.
9.11 Products
The major products and by products proposed to be manufactured along with quantities, composition in terms of fat and SNF and costing should be indicated.
9.12 Marketing and Selling Arrangements
The market for the product (domestic and export), type of arrangements for distribution and sales, commission and additional incentive to be given, the proposed net work and the advertisement plans should be furnished. Detailed market survey report is required to be submitted.
9.13 Business Prospects:
It involves the present demand-supply for various products, gap in supply and expected demand for various products. The major competitors and their present share is to be ascertained. The company projections for the next 3-5 years and the basis for projection may have to be furnished. The product wise quantities and countries where it is to be exported need to be mentioned.
10. CAPITAL COST OF PROJECT:
Broadly the capital cost includes the cost of land, development of land, fencing, internal roads, civil works (Plant building, office, quarters, godowns, etc.), plant and machinery, preliminary and preoperative expenses, margin money for working capital, etc. Salient features of 10000 litre model milk processing plant is given in Statement 1.Capital cost of a model dairy processing plant with capacity to process 10000 litres per day works out to Rs.116.581 lakhs. The project cost comprises of Rs. 4.81 lakhs on land and land development , Rs.14.52 lakhs on civil structures, Rs. 64.38 lakhs on plant and machinery , Rs.22.43 lakhs on account of misc. fixed assets, deposits & preliminary and preoperative expenses, Rs. 3.50 on vehicles, Rs.4.57 lakhs of contingency and Rs. 2.37 lakhs of margin money for working capital. The detailed assessment of working capital and extent capitalised as margin money on working capital are presented in statement 2. The details of project cost are furnished in statement 3.
11. ECONOMICS OF THE PROJECT
Based on the various techno-economic parameters, the economics of the project has to be worked out for the project period or till the repayment of bank loan. The items of income includes sale of liquid milk, milk products and miscellaneous items. while the expenditure includes the cost of raw material, transportation and commission, power, fuel packing distribution, wages and salary, repairs and maintenance, insurance, advertisement and other overheads. The income as well as expenditure for each year has to be worked out and then it should be subjected to cash flow analysis. For the model diary processing plant of 10000 litres per day, the relevant techno-economic parameters are furnished in statement 4. The methodology for estimating the income and expenditure is given in statement 5 and 6 respectively. The depreciation schedules on straight line method and written down value are worked out (statement 7).
12. FINANCIAL ANALYSIS:
The cash flow statement covering the Benefit Cost Ratio (BCR), Net Present Worth (NPW) and Internal/financial rate of return (IRR/FRR) has to be worked out for the project. Normally the BCR should be greater than 1, NPW should be positive and IRR/FRR should be greater than 15%. For the model project under consideration, the BCR is 1.12:1, NPW is Rs. 134.75 lakhs and IRR is more than 50%. The details of the cash flow analysis (without considering income tax) is given in statement 8. For arriving at the tax liabilities, profit before tax was estimated and income tax was considered @35% as per the existing rates . On post tax income the FRR of the project is worked out as shown in statement 9. The entire bank loan can be repayable in six years including one year grace period during which only interest will be recovered (statement 10).
13. FINANCIAL ASSISTANCE
The projects on milk processing including manufacturing of milk products would be considered for refinance support by National Bank. Therefore, all participating banks may consider financing this activity subject to their technical feasibility, financial viability and bankability .
14. LENDING TERMS AND OTHER REQUIREMENTS:
14.1 Margin Money:
The promoters/company should normally meet 25% of the project cost out of their own resources. However, NABARD could consider providing margin money assistance in suitable cases.
14.2 Interest Rate:
Interest rate will be determined by RBI/NABARD from time to time.
14.3 Security:
As stipulated by the RBI.
14.4 Repayment Period:
Depends upon the gross surplus generated, it may be upto 8 years with first one/two years as the grace period.
14.5 Refinance Assistance:
NABARD provides refinance assistance as per the existing pattern from time to time.
15. CHECK LIST:
A check list of various points to be considered for feasibility of the project is appended.
Statement 1
Project at a glance for 10000 litres model milk processing plant
1
Land requirement
2 acres
2
Milk handling capacity
10000 liters/day
3
Products to be manufactured
Toned milk, Standard milk, Cream, Gee
4
Market
Domestic
5
Cost of the project
Rs. 116.581 laches
6
Bank loan
Rs. 87.436 laches
7
Margin money (Down payment)
Rs. 29.145 laches
8
Financial viability ( at 15% D F )


BC R
1.12 : 1

N P W
Rs.134.75 lakhs

I R R
> 50%

FRR ( Considering income tax liability)
>50%
9
Repayment
6 years with one year grace period
Statement 2

CALCULATION OF MARGIN MONEY ON WORKING CAPITAL
(Rs. in lakhs)
Sr.No.
Particulars
Unit cost
(Rs.)
Period days
Years




I
70%
II
80%
III onwards 90%
1
Stock in progress
7.80
1
0.546
0.624
0.702
2
Packing material
0.40
30
0.840
0.960
1.080
3
Chemicals & detergents
0.07
30
0.147
0.168
0.189
4
Stores, spaces and fuel**
--
30
0.399
0.408
0.405
5
Finished goods






Toned Milk
9.00
1
0.394
0.450
0.504

Standard Milk
10.00
1
0.220
0.250
0.280

Saleable Cream
40.00
10
0.400
0.460
0.540

Saleable Ghee
40.00
30
6.686
5.577
6.798
6
Receivables

7
5.670
6.523
7.452

Total ( 1 to 6)


13.301
15.420
17.950

Less sundry creditors (days)

7
3.822
4.368
4.914

Total working capital required


9.479
11.052
13.026

Margin money @ 25% of working capital


2.370
2.763
3.259

Bank Cash credit


7.110
8.289
9.377

Interest on working capital @ 16%


0.569
1.326
1.564
 

         
** Outlay on stores and spares is considered @ Rs.0.19, Rs.0.17, Rs.0.15 per litre during first year, second year and third year onwards respectively on assuming 40% of power and fuel charges and repairs and maintenance. (statement 5).
Note : 1. Interest on working capital during first year is considered for 6 months only.
2. It is assumed that payment to the producers are made once in a week.
Statement 3
CAPITAL COST OF THE PROJECT
Sr. No.
Particulars
Specification
Quantity
Unit Cost (Rs)
Total Cost (Rs. In lakhs)
1
2
3
4
5
6
A)
LAND AND SITE DEVELOPMENT




i)
Land (including registration charges)
--
2 acres
78000/acre
1.56
ii)
Development charges
brick wall
424 RM
165/RM
0.70
iii)
Gates
Steel
2
15000 each
0.30
iv)
Land leveling and roads
WBM
--
LS
0.50
vi)
Water Supply (borewell, tank, pump)
--
--
LS
1.75

Total



4.81
B)
CIVIL WORKS




i)
Dairy plant building
RCC
3000 sq.ft
300/sq.ft.
9.00


ACC
1000 sq.ft.
200/sq.ft.
2.00
ii)
E T Tanks
--
--
LS
0.75
iii)
Condenser tank
--
--
LS
0.57
iv)
Superviser quarters
ACC
450 sq.ft.
250/sq.ft.
1.12
v)
Workers quarters
ACC
600 sq.ft.
180/sq.ft.
1.08

Total



14.52
C)
PLANT AND MACHINERY




i)
Can conveying and washing system
--
--
LS
1.23
ii)
Weigh scale
500 kg
2
1,18,000
2.36
iii)
Dump tank and accessories
1000 lts
1
59,000
0.59
iv)
Detergent tank
--
1
LS
0.31
v)
Milk chiller
3000-5000lph
1
LS
0.97
vi)
Cream Separator
2000-5000 lph
1
LS
5.7
vii)
Milk pasteuriser
5000 lph
1
LS
7.82
viii)
Storage tanks
10,000 lts
2
3,19,000
6.38
ix)
S S tanks
300 lts
1
75,500
0.76
x)
Packaging machine & accessories
2500 pph
1
3,13,500
3.14
xi)
Ghee boiler
500 kg
1
1,76,000
1.76
xii)
Ghee storage tank
1000 lts
1
99,000
0.99
xiii)
Boiler & accessories
300 kg/h
1
LS
5.46
xiv)
D.G. set
62.5KVA
1
LS
3.00
xv)
Refrigeration equipment
--
--
LS
15.21
xvi)
Electrical panels & cables
--
1 set
LS
3.02
xvii)
Pumps
--
4
30,000
1.20
xviii)
S S pipes & fittings
--
--
LS
2.00
xix)
Erection & commissioning
--
--
LS
2.50

Total



64.38
D)
MISC. FIXED ASSETS




i)
Furniture
--
--
LS
0.50
ii)
Computer
Pentium
--
LS
0.50
iii)
Fire fighting equipment
--
--
LS
0.10
iv)
Collection centre equipment
Centrifuge, butyr.20
--
3000/centre
0.60
v)
Work table
--
--
LS
0.28
vi)
Milk cans
40 lts (plastic)
500
600
3.00
vii)
Crate conveying system & trolleys
--
--
LS
0.52
viii)
Lab equipment
--
--
LS
2.50
ix)
Effluent treatment plant
--
--
LS
3.25
x)
Water softener
--
--
LS
0.20

Total



12.45
E)
VEHICLES
    
 
 
i)
Jeep Mahindra

1
3,25,000
3.25
ii)
Scooter Bajaj

1
25,000
0.25

Total



3.50
F)
DEPOSITS




i)
State electricity board
--
--
LS
0.35
ii)
Telephone
--
--
LS
0.25

Total



0.60

PRELIMINARY & PREOPERATIVE EXPENSES




i)
Incorporation of company



0.20
ii)
Project preparation



0.25
iii)
Market survey



0.30
iv)
Establishment ( Salary & wages )



4.73
v)
Travelling



0.3
vi)
Consultancy



1.00
vii)
Administrative expenses



1.00
viii)
Interest during construction



2.50

Total



9.38
H)
CONTINGENCY ( @ 5% of cost of buildings, plant & machinery and misc. fixed assets )






 
 
 
4.57
I)
MARGIN MONEY FOR WORKING CAPITAL
 




( 25% of first year's requirement - statement - 2 )



2.37
J)
GRAND TOTAL ( A+B+C+D+E+F+G+H )



116.58
Statement 4  
TECHNO ECONOMIC PARAMETERS




YEARS

S.No
Particulars
Unit
I
II
III onwards
1.
Installed capacity
litres /day
10000


2.
Capacity utilisation
%
70
80
90


Litres
7000
8000
9000
3.
No. of Working days

182
365
365
4.
Raw material – Milk
lakh litres/yr.
12.74
29.20
32.85
5.
Cost price of milk
Rs. /litre
7.40
7.40
7.40
6.
Commission on milk collection
Rs. /litre
0.20
0.20
0.20
7.
Transportation charges
Rs. /litre
0.20
0.20
0.20
8.
Power and fuel
Rs. /litre
0.42
0.37
0.33
9.
Packing material
Rs. /litre
0.40
0.40
0.40
10.
Chemicals & detergents
Rs. /litre
0.07
0.07
0.07
11.
Salaries and wages
Lakhs Rs./ yr
4.73
9.49
9.49
12.
Repairs and maintenance
Rs. /litre
0.05
0.05
0.05
13.
Over heads (incl. Of insurance)
Rs. /litre
0.12
0.12
0.12
14.
Milk distribution cost
Rs. /litre
0.60
0.60
0.60
15.
Product mix




i)
Toned milk (3% fat)
litres /day
4375
5000
5600
Ii)
Standard milk (4.5% fat)
litres /day
2200
2500
2800
Iii)
Cream (50% fat)
litres /day
390
460
555
Iv)
Saleable cream (25% of iii approx.)
litres /day
100
115
135
v)
Ghee
Kg/day
142
169
206
16.
Selling prices





Toned milk
Rs. /litre
9.00
9.00
9.00

Standard milk
Rs. /litre
10.00
10.00
10.00

Cream
Rs. /litre
40.00
40.00
40.00

Ghee
Rs./kg
110.00
110.00
110.00
17.
Depreciation (%)

Straight line method

Written down value method

Civil Structures

3

10

Plant and Machinery

10

25

Misc. Fixed assets

10

33
Statement 5
INCOME PROJECTIONS
S.No
Particulars
Unit

Years




I
II
III onwards
1
Milk procured
litres/day
7000
8000
9000
2
Yield per day




i)
Toned milk ( 3% fat )
litres/day
4375
5000
5600
ii)
Standard milk (4. 5% fat )
litres/day
2200
2500
2800
iii)
Cream ( 50% fat )
litres/day
390
460
555
iv)
Saleable cream ( 25% of iii approx. )
litres/day
100
115
135
v)
Ghee
kg/day
142
169
206
3
Income per day




i)
Toned milk (Rs.9.00 / litre )
Rs. Lakhs
0.394
0.450
0.500
ii)
Standard milk ( Rs. 10.00 / litre )
Rs. Lakhs
0.220
0.250
0.280
iii)
Cream ( Rs.40.00/ litre)
Rs. Lakhs
0.040
0.046
0.054
iv)
Ghee ( Rs. 110.00/kg)
Rs. Lakhs
0.156
0.186
0.227






4
Total income/day
Rs. Lakhs
0.810
0.932
1.065












5
Income per year (1st year for 6 months i.e. 182 days)
Rs. In lakhs
147.411
340.144
388.579






Statement 6
EXPENDITURE PROJECTIONS
S.No
Particulars
Unit

YEARS




I
II
III onwards

 



 
1.
Milk processing per year
Lakh litres/day
12.740
29.200
32.850
2.
Raw material - milk
Rs.7.40/litre
94.276
216.080
243.090
3.
Commission on milk collection
Rs.0.20/litre
2.548
5.840
6.570
4.
Transportation charges
Rs.0.20.litre
2.548
5.840
6.570
5.
Power and fuel (As per statement No. 4)
-
5.351
10.804
10.841
6.
Packing material
Rs.0.40.litre
5.096
11.680
13.140
7.
Chemicals & detergents
Rs.0.07.litre
0.892
2.044
2.300
8.
Salaries and wages(as per statement4)

4.733
9.492
9.492
9.
Repairs & maintenance
Rs.0.05.litre
0.637
1.460
1.643
10.
Overheads
Rs.0.06.litre
1.529
3.504
3.942
11.
Milk distribution cost (As per statement 4)
--
7.644
17.520
19.710

Total operational cost
Rs. lakhs
125.253
284.264
317.297
Statement 7
DEPRECIATION SCHEDULES OF CIVIL WORKS, PLANT & MACHINERY AND MISC. FIXED ASSETS

Straight line method
Written down value method
Year
Civil Structures
Depreciation @ 3 per cent per annum
Plant & machinery, Misc.fixed assets & vehicles
Depreciation @ 10 per cent per annum
Civil Structures
Depreciation @ 10 per cent per annum
Plant & machinery
Depreciation @ 25 per cent per annum
Misc.fixed assets & vehicles
Depreciation @ 33 per cent per annum
1.
14.52
0.44
80.33
8.03
14.52
1.45
64.38
16.1
15.95
5.26
2.
14.08
0.44
72.30
8.03
13.07
1.31
48.29
12.07
10.68
3.53
3.
13.65
0.44
64.26
8.03
11.76
1.18
36.22
9.05
7.16
2.36
4.
13.21
0.44
56.23
8.03
10.59
1.06
27.16
6.79
4.8
1.58
5.
12.78
0.44
48.20
8.03
9.53
0.95
23.37
5.09
3.21
1.06
6.
12.34
0.44
40.17
8.03
8.57
0.86
15.28
3.82
2.15
0.71
7.
11.91
0.44
32.13
8.03
7.72
0.77
11.46
2.86
1.44
0.48
8.
11.47
0.44
24.100
8.03
6.94
0.69
8.59
2.15
0.97
0.32
9.
11.04
0.44
16.07
8.03
6.25
0.63
6.45
1.61
0.65
0.21
10.
10.60
0.44
8.03
8.03
5.63
0.56
4.83
1.21
0.43
1.14
Note : The figures corresponding to each year represent end year values for the
preceding year.
Statement 8
CASH FLOW ANALYSIS WITHOUT CONSIDERING THE INCOME TAX LIABILITY
(Rs. In lakhs)
Sr.No.
Particulars
I
II
Years
III to V
VI
1.
Costs





i) Capital cost $
114.212




ii) Recurring cost
125.253
284.264
317.296
317.296

Total cost
239.465
284.265
317.297
317.297
2.
Benefits
147.411
340.144
388.579
388.579

i. Residual value of





a) Civil Structures
--
--
--
11.906

b) Plant & machinery & misc. fixed assets
--
--
--
--
--
--
--
31.312

Total benefits
147.411
340.144
388.579
431.797
3
Net benefits (3-(1+2))
-92.054
55.880
71.283
114.501
4
D F at 15%
0.869
0.756
1.726
0.432

a) P W of costs @ 15% DF
208.095
214.904
547.654
137.072

b) P W of benefit @ 15% D F
128.100
257.148
670.687
186.536


BCR = 1.12:1




NPW = + 134.75


5
D F at 50%
0.667
0.444
0.625
0.088
6
N P W at 50% D F
-61.369
24.810
44.552
10.076


IRR is more than 50%.


$ The capital cost considered excludes the capitalised margin money on working capital.
Statement 9
CASH FLOW ANALYSIS ON CONSIDERING THE INCOME TAX LIABILITY
(Rs. in lakhs)


Years
Sr.
No.
Particulars
I
II
III
IV
V
VI
1
Income (Statement 5)
147.411
340.144
388.579
388.579
388.579
388.579
2
Operational cost (Statement 6)
125.253
284.264
317.297
317.297
317.297
317.297
3
Gross operating profit
22.158
55.880
71.283
71.283
71.283
71.283
4
Less






i)
Interest on term loan @ 16%
9.609
12.812
10.250
7.559
4.869
2.130
ii)
Interest working capital @ 16%
0.569
1.326
1.564
1.564
1.564
1.564
iii
Depr. On straight line method





Civil works
1.452
1.307
1.176
1.059
0.953
0.857

Plant and machinery
16.096
12.072
9.054
6.791
5.093
3.820

Misc. fixed assets
5.263
1.150
2.362
1.583
1.060
0.711
iv.
Amortisation of preliminary and preoperative expenses
0.215
0.215
0.215
0.215
0.215
0.215
5.
Profit before tax
-11.046
26.997
46.661
52.512
57.528
61.986
6.
Tax at 35%
0.000
9.449
16.331
18.379
20.135
21.695
7.
Net profit
-11.046
17.548
30.330
34.133
37.394
40.921
8.
Net income available (7+4)
22.158
46.431
54.951
52.903
51.148
49.588
9.
Net benefit after tax (capital cost in 1st yr. + residual value in last year)
-82.242
46.431
54.951
52.903
51.148
92.806
10.
Financial rate of return (%)







Discount factor @ 45%
0.690
0.476
0.328
0.226
0.156
0.108

Discounted financial returns
-56.719
22.083
18.025
11.968
7.980
9.985

Discount factor @ 50%
0.667
0.444
0.296
0.198
0.132
0.087

Discounted financial returns
-54.828
20.636
16.282
10.450
6.735
8.148
F R R is more than 50%
Statement 10
REPAYMENT SCHEDULE
(Rs. in lakhs)
Year
Loan outstanding
Principal
Int. on Term Loan $
Int. on Working capital
Total repayment (4+5+6)
Net income
Balance left with company (8-7)
1
2
3
4
5
6
7
8
9

Begining of year
End of year






1
80.077
80.077
0.000
9.609
0.569
10.178
22.158
11.979
2
80.077
64.062
16.015
12.812
1.326
30.154
46.431
16.276
3
64.062
47.246
16.816
10.250
1.564
28.631
54.951
26.321
4
47.246
30.429
16.816
7.559
1.564
25.940
52.903
26.963
5
30.429
13.312
17.117
4.869
1.564
23.550
51.148
27.597
6
13.312
0.000
13.312
2.130
1.534
16.976
49.588
32.611






135.429
277.178







D S C R = 2.047:1

  1. $ During the first year the average loan utilisation is considered at 75% of the total amount.
  2. Repayment period : 6 years including 1 year grace period.
  3. Interest on Term loan and Working loan is assumed @ 16% per annum.
Annexure I
STATE WISE CATTLE AND BUFFALOES, MILK PRODUCTION AND PER CAPITA AVAILABILITY OF MILK
Population – in thousands (1992 census)
Production – in thousand tonnes
Availability – in gms.
Sr. No.
Name of the state
Cattle
Buffaloes
Milk production
Per capita availability


Cross
bred
Indige-
nous
Total

1992-93
1996-97 Target
1994-95
1
2.
3.
4.
5.
6.
7.
8.
9.
1.
Andhra Pradesh
221
2411
2632
4729
4221
4400
163
2.
Arunachal Pradesh
7
88
95
3
22
44
64
3.
Assam
136
2931
3067
298
698
740
80
4.
Bihar
65
5301
5366
2586
3250
3390
97
5.
Goa
4
26
30
20
36
39
81
6.
Gujarat
126
1990
2116
3130
4459
4750
280
7.
Haryana
159
543
702
2220
4062
4062
630
8.
Himachal Pradesh
122
602
724
468
663
700
332
9.
Jammu & Kashmir
251
774
1025
417
780
900
257
10.
Karnataka
277
3605
3882
2315
3004
3260
173
11.
Kerala
905
825
1730
110
2117
2370
192
12.
Madhya Pradesh
89
8590
8679
3501
5048
5205
195
13.
Maharashtra
897
4879
5776
3201
4811
5200
156
14.
Manipur
28
147
175
38
64
62
89
15.
Meghalaya
10
190
200
10
54
57
77
16
Mizoram
3
21
24
3
14
18
51
17
Nagaland
45
71
116
10
46
44
92
18
Orissa
262
3965
4227
434
584
650
48
19
Punjab
730
449
1179
2808
6215
7100
795
20
Rajasthan
43
4478
4521
4091
5103
5350
296
21
Sikkim
16
48
64
1
32
34
200
22
Tamil Nadu
800
2493
3293
1552
3695
3867
174
23
Tripura
44
255
299
7
38
40
35
24
Uttar Pradesh
648
6297
6945
10097
11321
12463
209
25
West Bengal
430
5256
5686
233
3250
3440
123
26
Union Territories
41
62
103
174
364
387
80

GRAND TOTAL
6359
56297
62656
42456
63951
68581
191
Source : Directorate of Economics and Statistics and State Department of Animal Husbandry and Dairying.
Annexure II
DAIRY DEVELOPMENT TARGETS AND ACHIEVEMENTS FOR VIII FIVE YEAR PLAN




Sr. No.
Particulars
Targets
Achievements




1.
Milk production (million tonnes)
65
70.1
2.
Per Capita availability (gm)
192
205
3.
No. of Milk sheds
191
170
4.
No of Dairy Co-operatives
150000
74383
5
Average milk procurement(LLPD)
150
122.60
6
Processing capacity(LLPD)
220
265.10
Annexure III
YEARWISE EXPORT OF DAIRY PRODUCTS
Year
Quantity(tonnes)
Value
(Rs. in crore)
1980-81
1084
1.99
1985-86
395
1.04
1990-91
604
2.4
1991-92
2643
11.24
1992-93
3800
8.37
1993-94
2031
12.47
1994-95
8957
40.11
1995-96
NA
32.57
Annexure IV
ESSENTIAL SECTIONS OF A MILK PROCESSING PLANT
The milk processing plant shall have the following essential facilities.
i) Raw Milk Receiption Dock (RMRD) - consisting of can conveyor, can washer, weighting balance, dump tank etc.
ii) Processing Hall - cream separator, chiller, homogenizer, pasteuriser and other related machinery are installed.
iii) Storage area- for milk storage tanks.
iv) Products manufacturing area-depends upon the type of products and the quantity of milk handled, the required equipment needs to be installed.
v) Packing area-for packing of liquid milk and other products.
vi) Cold storage-for keeping the milk and milk products before sending to market.
vii) Quality Control Laboratory-for testing the quality of milk and milk products.
viii) Utilities area-for installing boiler, generator set, water treatment plant, maintenance and store area for spares.
ix) Waste water treatment plant area-for treating the dairy effluents before releasing to the fields.
x) Quarters and office area-for all the essential staff.
xi) Vehicle parking area-both for the milk procurement and distribution vehicles.
xii) Input supply area- for providing veterinary service, supply of feed, fodder seeds, etc.


 Annexure VI
SALARIES AND WAGES
Sr.No.
Particulars
Number
Salary/Wages
(Rs./month)
Total
(Rs.year)
1.
Plant Manager
1
7500
90000
2.
Procurement officer
1
5000
60000
3.
Field supervisors
2
3000
72000
4.
Processing supervisors
2
3000
72000
5.
Mechanics
2
2000
48000
6.
Driver
1
1500
18000
7.
Watchman
3
1500
54000
8.
Administrative staff
3
2000
48000
9.
Laboratory staff
2
2000
48000
10.
Unskilled labour
8
1500
144000

Total
25

678000

Other perks
(40% of the salary

271200

Total salary and wages


949200

Index to Figure 1
S.No
Particulars
Quantity
H.P
Capacity/ Make
1
Roller conveyor
1
-
5 mts
2
Dump tank
1
-
1000 lts
3
Milk pump
1
2.5
5000 lph
4
Float balance tank
1
-
100 lts
5
Milk pump
1
2.6
5000 lph
6
Simple filter
1
-
-
7
Pasteuriser
1
-
5000 lph
8
Holding vessel
1
-
-
9
Control panel
1
-
-
10
Milk transfer pump
1
210
5000 lph
11
Hot water generator
1 set
1.5
100000 KCal/hr
12
Hot water pump
1
1.5
-
13
Electrical panel
1set
-
-
14
Remote control panel
1
-
-
15
IBT agitator
1
3.0
-
16
Ice bank tank
1
-
-
17
IBT coils
1
-
-
18
Liquid separator
1
-
-
19
Chilled water pump
2
6.0
Beacon
20
Frion Compressor
2
-
FK 750
21
Motor for compressor
2
15.0
Kirloskar
22
Frion recoveror
1
-
-
23
Pouch filling machine
1
2.5
2500/hr
24
Air compressor
1
7.5
Elgi Kirloskar
25
Air cooling unit
2
2.0
-
26
Cream separator
1
1.5
1000 lph
27
Can steaming block
1
-
-
28
Can scrubber
1
1.0
200 cans / hr
29
Can wash through
1
-
-
30
Ghee boiler
1
1.0
250 kg/hr
31
Ghee storage tank
1
1.0
500 kg
32
Ghee transfer pump
1
1.0

33
Raw milk storage tank
2
2.0
5000 lts each


Appendix
Check list for Milk Processing Project
A) ORGANISATIONAL
i) Type of beneficiary : Individual/Co-op Society  Partnership Firm/Company
ii) Address - Plant site Office :
iii) Objectives of the organisation
iv) Copy of the by-laws/  Regn.Certificate/ Memorandum and Articles of association (as applicable)
v) Certification of incorporation/commence-ment of business
vi) Bio-data of directors
vii) Profit and loss account  and balance sheet for the last three years.
viii) Technology Indigenous/Imported.
        Name and address of foreign collaborator (If any).
ix) Brief write up on the organisation and collaborators (Giving information on projects implemented, expertise etc.)
x) Copy of agreement with foreign collaborator
xi) Copy of import license for equipment/plant and machinery.
xii) Copy of the RBI clearance regarding Foreign Exchange/Exports, if applicable.
xiii) RBI Code Number :
xiv) Import-export code No. :
xv) Approvals / permissions required
a)NA permission from competent authority
b)Pollution Control Board :
c)Factory inspector :
d)Electricity board :
e)Irrigation dept. for water lifting etc :
f)Ground water report from competent authority
g)Registration of brand name :
h)MMPO registration :
PART B : FINANCIAL
i) Financial outlay with phasing (itemwise detailed break up of the outlay).
ii) Promoters contribution :
iii) Foreign collaborators contribution/equity participation from any organisation. :
iv) Public issue, if any :
v) Bank loan (Indian Rupee) :
    Name and address of the bank branch (letter of consent to be enclosed).
vi) Foreign exchange component loan :
vii) Name of the bank providing foreign exchange and letter of consent. :
viii) Working capital requirement (Itemwise detailed estimates) :
ix) Arrangement for the working capital loan :
x) Subsidy component (if any) and name the details regarding the organisation giving subsidy. :
xi) Marketig arrangement/buy back arrrangements(letter of consent) :
xii) Arrangements for insurance of capital goods and the product. :
xiii) Lending terms - rate of interest, repayment schedule, security. :
PART C : TECHNICAL
i) Location(present constraints on procurement, storing, transportation, processing, packaging). :
ii) Present market demand/ supply and future projections - domestic and export. :
iii) Promoters :
iv) Proposed plant capacity :
v) Availability of raw Material :
vi) Site location - suitability of site, environmental social Issues. :
vii) Project engineering :
a) Site plan and map along with necessary approval :
b) Land, Land Development fencing, drainage, :
c) Civil works - detailed drawings, specifications quantities and costs. :
d) Machinery - specification and costs, quotations, and layout plan (Section wise). :
e) Detailed list and cost of imported items of equipment and license for import. :
f) Utilities - water electricity, fuel with detailed specifications . :
g) Detailed processing mechanism (process flow Chart) :
h) Byproduct processing :
i) Handling, processing, packaging, preservation and marketing of milk including countries to be exported. :
j) Effluent treatment :
k) Other amenities, transport facilities, etc. :
l) R & D, quality control lab and equipment. :
m) Office, essential quarters etc. :
viii)Man power requirement Technical staff and training needs. :
ix) FDA regulations and Export of quality products. :
x) Implementation schedule and PERT Chart. :
xi) Steps to involve farmers participation in maintaining milch animals. :
xii) Supply of inputs - Al, vety. aid, Feed, fodder, fodder seed, etc. :
 

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