Bailur Milk Depot

What is a Project?
Series of actions to achieve a result
Single occurrence a unique, non-repetitive assignment
Time limitations with a pre-defined date of delivery
Clear purpose specified 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 organisation e.g. Not in the original line of work
Procurer internal 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 has
milk 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 cooperative 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

BASIC INFORMATION:
Type of Business: Dealership for milk and milk products and local supply
Location for Business: Congress Road, Belgaum 590006
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:1st April 2014

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Bailur Milk Depot

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 owned premise
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 1st day of every
month.
The sales will increase at 5% on the total price

The salary will increase at 10% for 2st year 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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Bailur Milk Depot

Marketing Analysis
Market Potential
India is one of the leadings exporters of milk. I n d i a i s s e c o n d l a r g e s t
producer of milk in the world. It has contributing 133 million tons liters
of milk. India is an agriculture based country wherein the demand for the
product like milk and other milk products is very high. Sustainability is
very easy in the business of milk.

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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Bailur Milk Depot

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.

Fixed Capital

379000

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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Bailur Milk Depot

Sl.No

Description

Qty.

Rate

Amount Rs.

Building (20*30)

Vehicles (cycles)

3000

9000

Furniture

25000

25000

Refrigerator

19000

19000

Cooler

7000

7000

Computer

19000

19000

300000

Total

3,79,000

Investment in fixed assets

Consumption and payment to supplies per annum(Material)

Sl.No

Items

Sales Litres/Packets/Kgs

Full cream milk

160

36

2102400

Standard milk

40

34.5

503700

Toned milk

80

30.5

890600

Curd

20

7.5

54750

Lassi

10

6.8

6800

Butter milk

4.75

2138

Ghee

282

10152

Butter

280

16800

Basunde

10

340

3400

Total

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Rate

Amount Rs.

3590740

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Bailur Milk Depot

Calculation of sales
Sale of milk 280 liters per day (+/-10)
Value

Particulars

Total sale per day

Rate per litres

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

per

Annum

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

Supervisor

Unskilled workers

Total

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Nos.

Sal/mon.

Amount Rs.

6000

6000

1050

3150
9150

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Bailur Milk Depot

Note: No need for skilled workers in supply of milk

Other Expenses (per month)
Sl.No

Description

Amount Rs.

Petrol Expenses

1500

Advertisement Expenses

100

Miscellaneous Expenses

800

Power

340

Water

90

Cable

230

Total

3060

Total Working Capital (per month)

Amount

S.No

Rs.

Salaries

9150

Payment towards supply

299228

Other Expenses

3060

Total

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311438

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Bailur Milk Depot

Projected expenditure of 5 years

2nd

3rd

Year

Year

109800

120780

Payment towards supply

3590739

Petrol Expenses
Advertisement Expenses

Expenses:

1st Year

4th Year

5th Year

Salaries

126270

138897

145210.5

3770276

3958790

4156729

4364566

18000

18900

19845

20837

21879

1200

1200

1200

1200

1200

(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

Interest

on

Loan

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Bailur Milk Depot

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

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:

3rd

Income

1st Year

2nd 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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Year

4th Year 5th Year

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Bailur Milk Depot

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

300000

30000

Building (20*30)

Vehicles (cycles)

3000

9000

900

Furniture

25000

25000

2500

Refrigerator

19000

19000

1900

Cooler

7000

7000

700

Computer

19000

19000

1900

3,79,000

37900

Total

Balance sheet for 5 years

Assets
1st Year
Fixed Assets

Building
Vehicles (cycles)
Furniture
Refrigerator
Cooler
Computer
Total
less: Depreciation
Net Value
Closing balance of cash
Total
Liabilities
Own Capital
Bank Loan
PAT
Total

1st Year

2nd Year

3rd Year

4th Year

5th Year

300000
9000
25000
19000
7000
19000

270000
8100
22500
17100
6300
17100

243000
7290
20250
15390
5670
15390

218700
6561
18225
13851
5103
13851

196830
5905
16403
12466
4593
12466

379000

341100

306990

276291

248662

37900
341100
97287
438387

37900
303200
157373
460573

37900
269090
237823
506913

37900
238391
333782
572173

37900
210761.9
454065
664827

2nd Year
3rd Year
4th Year
5th Year
229000
229000
229000
229000
229000
169742
135248
95925
51096
0
67645
80444.37 100807.9593 116316.254 140641.5704
466387

Kousali Institute of Management Studies

444692

425733

396412

369642

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Bailur Milk Depot

Cash flow statement
PARTICULARS
Sources Of Cash
Own Capital
Term Loan
PAT
Depreciation
TOTAL (A)
PARTICULARS
Uses Of Cash
Fixed Assets
Repayment of
loan
Interest on term
loan
Tax paid
TOTAL (B)

Implementatio
n Period
229000
200000
0
0
429000

1st Year

2nd Year

67645
37900
105545

80444
37900
118344

100808
37900
138708

116316
37900
154216

140642
37900
178542

Year 1

Year 2

Implementatio
n Period

4th Year

Year 4

0
44828.5583
5
13429
0
58258
237823.329
3
95958.2539
8
333782

30258

34494.12

0
39323.296
8

0
379000

28000
0
58258

23764
0
58258

18935
0
58258

50000

97287

157373.37

(A-B)

50000

47287

60086.37

Closing Balance

50000

97287

157373

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5th Year

Year 3

Opening Balance

379000

3rd Year

80449.959
3
237823

Year 5

0
51096
7162
0
58258
333781.583
3
120284
454065

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Bailur Milk Depot

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

Principal
Repayment
0

Outstanding
Amount
200000

58258

28000

30258

169742

58258

23764

34494

135248

58258

18935

39323

95925

58258

13429

44829

51096

58258

7162

51096

Year

Installment

Interest

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