Designing a sustainable dairy business in India

Prepared for TRIF

February 23, 2019

SHUBHAM GUPTA
Agenda

 Executive Summary

 Current Situation

 Key Drivers

 Deep Dive – Driver optimization

 Questions

 Appendix
Executive Summary – Why choose a Dairy Business?

 India is almost reached 156 Million MT , and following ahead with reaching towards
220 Millions MT by 2020, By sharing of world 17 % milk production .

 Annual Production growth increasing at the rate 5 % , Market annual growth

increasing at the rate of 7 – 9 % in packaged food and dairy products.

 Few states such as Telangana and Hyderabad have major shortage of milk production
compared with demand and supply , which supplied by the neighbor states .

 Commercial dairy farm with cross breed and farm automation will be attractive and
more hygiene quality farm milk could be priced high and kept suitable for value added
products and exports.

Source: ‘https://www.slideshare.net/ksleeth/dairy-farm-presentation’
Agenda

 Executive Summary

 Current Situation

 Key Drivers

 Deep Dive – Driver optimization

 Questions

 Appendix
Current State of the Industry

Broad Industry Structure by consumption - 2017

Source: Dept. of Animal Husbandry, dairying & fisheries, Ministry of Agriculture & Farmers Welfare, GOI
Growth in Indian Dairy Industry over the years

Source 1: ‘http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Dairy%20Industry%20-%20driven%20by%20value-added%20products.pdf’
Agenda

 Executive Summary

 Current Situation

 Key Drivers

 Deep Dive – Driver optimization

 Questions

 Appendix
Dairy Business Model and Key Stake Holders

Artificial
Fodder
Insemination

DAIRY FARMERS

Farm Labour Vaccination

MILK

Distributors and
Transporters
Retailors
CHILLING AND
STORING
FACILITIES

Hardware
Community Banks
Suppliers
Source 1: ‘https://cgspace.cgiar.org/bitstream/handle/10568/73061/manual21.pdf?sequence=3’
Source 2: ‘https://www.agrifarming.in/dairy-farming-business-plan-guide/’
Key requirements for Dairy Farm

Cattle
At present, although the majority of India's cattle is non-
descript, there are 26 well defined breeds of cattle and 6
breeds of buffaloes found all over the country.

Cool/Conducive
Cows need to eat on average 18kg a day from the
Fodder paddocks.
Climate
During colder seasons, the farmer needs to ensure the cattle
is fed by hay or silage.

Milking
Machines and Broadly, the Indian climate is conducive for cattle, however
Infrastructure may vary geographically across India.

Necessary infrastructure includes a clean shed, milking

Dairy Farm machines, first aid, and drinking water

Source 1: ‘https://krishijagran.com/agripedia/indian-cattle-breeds-for-huge-milk-production/’
Source 2: ‘https://www.agrifarming.in/dairy-farming-business-plan-guide/’
Key drivers for a profitable dairy business

Product
Portfolio
and
Optimum
Pricing

Location &
Brand
Promotion

Profit And
Growth
Agenda

 Executive Summary

 Current Situation

 Key Drivers

 Deep Dive – Driver optimization

 Questions

 Appendix
Key attributes for a profitable dairy business

Market & Procurement analysis Customer Segmentation & Target

Markets
• Identify optimum cost suppliers
• Identify product bags and • Target markets based on customer mix
product • Identify key products per market

Pricing strategy per market

Target business channels and
cash flows • Optimum product pricing per
market per channel
• Target revenue channels for each • Value based
market • Cost based
• Competitor based
Current Product Mix - 2017
Fluid Milk Ghee
Butter Curd
Khoa (Partially Dehydrated Condensed Milk) Milk Powders
Paneer and Chenna (Cottage Cheese) Others - Cream, Ice Creams etc
1%

4% 2%
6%

7%

6% 46%

28%

Source 1: ‘http://www.indianmirror.com/indian-industries/dairy.html’
Geographic distribution of the industry

Source 1: ‘http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Dairy%20Industry%20-%20driven%20by%20value-added%20products.pdf’
Key factors driving consumption

The significant factors driving the growth in the dairy sector (especially VAP) are
increasing urbanization, working women, increased disposable income and rise in
HORECA (Hotels, Restaurants & Cafes) segment.

Source 1: ‘http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Dairy%20Industry%20-%20driven%20by%20value-added%20products.pdf’
Selling and Distribution Expenses as a % of net sales

Source 1: ‘http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Dairy%20Industry%20-%20driven%20by%20value-added%20products.pdf’
Competitive landscape

Domestic

Global

Source 1: ‘http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Dairy%20Industry%20-%20driven%20by%20value-added%20products.pdf’
Agenda

 Executive Summary

 Current Situation

 Key Drivers

 Deep Dive – Driver optimization

 Questions

 Appendix
Questions?
Agenda

 Executive Summary

 Current Situation

 Key Drivers

 Deep Dive – Driver optimization

 Questions

 Appendix
Contribution of cow wealth and health to the cosmos