Dudh Saritha (Milk Booth)

1. Introduction

National milk output during the year 2007-08 reached the level of 104.8 million tonnes
(provisional). This has not only placed the country on top in the world, but also
represents sustained growth in the availability of milk and milk products for the
burgeoning population of the country. Dairying has become an important secondary
source of income for millions of rural families and has assumed the most important role
in providing employment and income generating opportunities. The per capita
availability of the milk is 241 grams per day.

2. Objectives

Financial assistance is extended for establishment / renovation of milk booth i.e. Dudh
Sarita etc. to the educated unemployed youths with the following objectives.

• To provide good quality milk and milk products to the consumer of the area under
hygienic conditions.
• To provide employment to the youths in urban area.
• Renovation/Replacement of old milk booths to maintain neat and clean condition
in the booth.

3. Scheme Area

The scheme shall be implemented in urban areas by Government / Cooperative /

Private dairies with permission from municipal corporation. It can also be implemented
in big villages and on highways near hotel, dhabas etc.

4. Beneficiaries

• Educated unemployed youth selected by Government / Cooperative / Private

milk supply scheme for setting up of a new milk booth on his own land or leased
land.
• Those youths who will be able to sell at least 90 litres of milk per day.

5. Items of Investment and Unit cost

The milk booth (8’x6’) is made of MS steel, the booth will have a small size show case/
cupboard (3’x3’x1.5’) and a platform (5’x1.5’). The unit cost is Rs.56300/- and the
details are given in Annexure-I. Upto 90 litres of milk per day sale is a part time job
and the booth owner can utilise remaining time for other works like sale of bread, eggs,
biscuits, snack packets, magazine etc. He can also run a STD-PCO booth and earn
more income.
6. Financing Bank

For obtaining bank loan, the beneficiary should apply through the dairies to the nearest
branch of a commercial / Cooperative / Regional Rural bank in their area in the
prescribed format which is available in the branches of financing banks. The technical
officers attached to the bank or the bank manager can guide the beneficiary in
preparing the project report for obtaining the bank loan. Banks can avail refinance for
this project from NABARD. Since the beneficiaries are educated unemployed, a margin
of 15% of Total Financial Outlay (TFO) is considered. The loan amount works out to be
Rs.48000. However, down payment & bank loan shall be decided by financing bank as
per RBI guidelines.

7. Working capital

The dairies will sell/supply the milk and milk products to the booth owner on “cash &
carry” basis for which there is a need to provide working capital. The requirement of
working capital for a booth selling 90 litres of milk per day is worked out at Rs.37000/-
(Annexure-II). However, the banks may assess & extend working capital on the basis
of need of each booth.

8. Interest rate

The rate of interest on both the term loan & working capital shall be decided/fixed by the
concerned financing bank to the ultimate beneficiary. Here for calculation of cash flow
and repayment an interest @ 12% per annum has been assumed.

9. Economics of the project

The assumptions and various techno economic parameters for working out the
economics of the milk booth are given in Annexure - III. The detailed economics of the
scheme is given in Annexure-IV.

10. Financial analysis

The cash flow analysis covering the Benefit Cost Ratio (BCR), Net Present Worth
(NPW) and Internal Rate of Return (IRR) has been worked out for the project model
presented in Annexure-IV. In brief, the financial parameters are as under:

BCR:1.83:1
NPW:Rs.84508
IRR :>50%
DSCR : 1.78
11. Security

Security will be as per RBI guidelines issued from time to time.

12. Repayment period of loan

The repayment period depends upon the gross surplus generated. The loan shall be
repaid in suitable monthly/quarterly installments within a period of about 5 years without
any grace period. From Annexure-V it is observed that after repaying bank loan and
interest thereon, sufficient amount (avg. Rs.21000/year) is left to the beneficiary during
the project period besides the stock value of assets Rs.19000/- at the end of project
(after 5 years). For assured repayment a tripartite agreement between the financing
bank, dairy and the borrower may be executed.

13. Insurance

The financing bank may ensure that the borrower takes adequate insurance of assets
created, subject to availability of insurance cover.

14. Conclusion

Captioned proposal is found to be technically feasible and financially viable.

 
 

Annexure-I
Establishment of "Dudh Sarita" Milk Booth
Project Cost
No. Items of investment Amt. Rs.
1 Steel Booth (8'x6')
a) Booth 20000
b) With small size 3'x3'x1.5' show 3500
case/almirah & 5'x1.5' platform
2 Fridge 200-250 lit. (1) 13000
3 Ceiling fan (1) 1000
4 Furniture - stool or chair (1) 300
5 Deposit with Dairy 6000
6 Electrification 1000
7 Margin money for working capital 9000
8 Miscellaneous/contingencies 2200
Total Project Cost 56000
9 Margin money (15% ) 8500
10 Bank loan 47500
Total project cost 56000

Note
Item-wise costs are average & indicative costs only. Banks are at liberty to vary
the costs and also the items of investment to any extent depending upon the local
conditions and subject to financial viability/bankability.
Annexure-II
Requirement of working capital - Dudh Sarita

Sr. No. Items Requirement Amt. Rs.

1 Sale of milk on credit (50%) One month 29700
2 Land lease @ Rs,4000/annum One year 4000
3 Electricity charges @Rs.500/month Two months 1000
4 Insurance amt. @Rs.2000/ Annual 2000
5 Misc. exp. @Rs.200/month One month 200
Total 36900 i.e. 37000
6 Margin money to be capitalised 25% 9250 i.e. 9000
7 Cash Credit Limit 28000

Note
1. The Dairies sell milk to booth owner on cash & carry basis. Margin money for working capital has been
capitalised @ 25%. Cash Credit limit is to be given for the remaining amount

2. For the purpose of calculation of interest on cash credit, the outstanding amount of Rs.22400 (80% of the limit) has been
assumed throughout the project period

Techno economic parameters

A.
Income criteria per booth
Quantity Commission
i (Rs)
ii Liquid Milk 90 L/day 1.5
iii Ghee 1 Kg/month 10
iv Shrikhand 1 Kg/month 10
v Table butter 1 Kg/month 10
vi Paneer 1 Kg/month 10
vii Curd 1 Kg/day 10
viii Peda 1 Kg/month 10

Note: Seasonal products like flavoured milk, lassi, butter milk may also be included based on demand

B.
No. Income calculations
Product Amount
i (Rs)
ii Liquid Milk 4050
iii Ghee 10
 iv Shrikhand 10
v Table butter 10
vi Paneer 10
vii Curd 300
Peda 10
Total income per month 4400
Total annual income 52800
C.
No. Expenditure per annum

1 Particulars Amt. Rs.

2 Electricity @ Rs.500/pm 6000
3 Land lease rent 4000
4 Insurance of booth, equip (5% per 2000
year)
5 Repair & maintenance of booth 2000
from 2nd year (Rs./annum)
Miscellaneous expenses 2400
@Rs.200/pm
Total 16400

Annexure-IV

Income Expenditure & Cash Flow Analysis

No. Particulars I year II year III year IV year V year

A COSTS
a) Capital cost 56000
b) Recurring cost 14400 16400 16400 16400 16400
Total cost 70400 16400 16400 16400 16400
B BENEFITS
a) By way of commission 52800 52800 52800 52800 52800
b) Stock value of assets
(Depreciation : @10% per
year) 0 0 0 0 19000
Total benefit 52800 52800 52800 52800 71800
C Net Benefit -17600 36400 36400 36400 55400
D Gross Surplus 38400 36400 36400 36400 36400
NPV at 15% DF 84508
 BCR at 15% DF 1.83:1
IRR >50%
 

Annexure-V
Repayment Schedule

Bank loan Rs 47500

Interest rate 12%
CC utilised (80%) Rs 22400

No. Particulars I year II year III year IV year V year

1 Gross Surplus 38400 36400 36400 36400 36400
2 Repayments
a) Principal 16000 6500 7500 8500 9000
b) Interest on TL 5700 3780 3000 2100 1080
c) Interest on WC 2688 2688 2688 2688 2688
d) Total repayment 24388 12968 13188 13288 12768
3 Net Income 14012 23432 23212 23112 23632
4 DSCR 1.74 1.81 1.76 1.74 1.85
Avg DSCR 1.78