Akshaya dairy farm equipments business plan

Abstract

The demand for dairy products has seen a perennial growth in India. This applies all the way from the unprocessed milk to most of the milk products/ by products. Operation Flood , though it had made its initial mark in India, was not able to meet the demands of the ever growing Indian population. According to experts the dairy market is expected to grow by more than 7% a year1.In order to meet the demand, the large scale dairy farmers are able to invest heavily in costly equipments that are imported from western countries for automation. But small scale dairy owners, who contribute to major share of the liquid milk market, are not able to employ labor to sustain profits. This is due to reasons such as non availability of labor due to mass migration of people from the rural to the urban areas and other economic factors.Given the growth and the profitability of the liquid milk segment, there is a huge potential market for dairy farm equipments such as manure removal, cow cleaning and automated milking equipments that can drastically reduce labor and also ensure cleanliness and success of the farm. While there is heavy competition in the automated milking equipments area, the manure removal is literally uncontested and is a promising market in India. The product would cater to a niche segment which is currently not attempted in India in the small scale dairy segment .Also, the economic value of the manure is increasing in line with the demand for organic products in India. This greatly boosts the need for equipments than can efficiently handle and process the cow manure. Since the success of the farm and the milk yield of the cowis purely dependant on the feed and cleanliness of the farm, such equipments greatly enhance the chances of success of a small scale dairy farmer. There is a two tier market to which this equipment can be marketed. Tier 1 is the dairy owners who are having more than 10 cows and tier2 are dairy owners who have less than10 cows, but would like to increase the size of the farm. The number of dairy farmers who own more than 10 cows in Tamil Nadu alone is about 4000 and would be focus of the current plan. While the engineering drawings are available to start the R and D process, an initial amount of around Rs 400,000 is required to develop the prototype, conduct field tests, to start the commercial production of the equipment, to fund the initial sales force and to fund all cash requirements till the venture start generating cash. This would be done in a bootstrapping mode. The product is expected to be priced between 45,000 and 50,000 and the gross margins are expected to be between 35-50%. The growth in the year 1-2 is expected to between30% and 40% and then decline to around 15-20% year on year. The business can also be cashed out most profitably in the 4-5 year.