new milk road - mbacasecomp.com milk road to sarang & vivek, & executive board of prabhat...
Post on 02-Apr-2018
218 Views
Preview:
TRANSCRIPT
New Milk RoadTO SARANG & VIVEK,& EXECUTIVE BOARD OF PRABHAT DAIRYAmoy Consultants: Neil Zhang, Iris Zhao, Mia Yuan, Noah Zhou
Xiamen University – Amoy Consultants
Xiamen University – Amoy Consultants
Agenda
6 Conclusion
1 Key Issue & Solution
2 Analysis
3 Alternatives
4 Implementation
5 Financial Forecast & Risks
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Current Industry
Second biggest population in the world and half of Indian is under 30
1% annual income higher than $11,000. 9% in 2020, 24% in 2030
By 2030, 40% of India’s population would move to urban area
Food accounted for 51% of total annual expenditures
Unclear families with dual incomes are increasing
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Current Industry
Milk and cheese usage were decreasing, whereas yogurt was
increasing
India’s dairy market growth rate at 10% versus supply growth rate 7%
Farmer cooperative organization, GCMMF, has controlled marketing
and administration
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
A Glimpse of Prabhat Dairy
1998• Founded as private
family business• Seller of polypack
milk(B2C)• In Maharashtra
2010• Cadbury approached
with opportunity• Turned to B2C• New factory &
obtaining ISO certification
• Acquiring clients• Engaged with
HORECA by expand value-added products
2016• 2 manufacturing plants
in Maharashtra; 1.5million liters of milk per day
• In 2015, debt reached 2.4 billion Rupees
• IPO in Sep. 2015 that raised 3 billion
• Revenue reached 11 billion, 70% from B2B
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
What’s Wrong?
1. Margin is declining
2. How to balance B2C and B2B proportion
3. Working capital situation is worsen
Key Issue: You need to leveraging B2C & B2B proportion as well as improve operating status in order to increase your revenue and margin
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Our Recommendation
Supply Chain
B2B V.S. B2C70:30
B2B V.S. B2C50:50
Cooperation Model | Selling
Market Distribution
Brand Allocation
Cooperate with GCMMF in big cities to improve B2B
Launch new value added products in T2, T3 cities to improve B2C
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Gujarat Cooperative Model
Multi-tier structure: GCMMF
District-level cooperative (33)
Village cooperatives (18536)
Milk producersGCMMF: 25% organized sector dairyGM: 47%NP: 0.2%
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Amul Model
District milk unions
Selling branded milk & milk products Single brand name In Maharashtra (Bombay, Mumbai) Competition amongst
State cooperatives State Gov.
Individual brands lose economical scale
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
? 65 million dairy farmers not in the cooperative system
Pricing policyFat content of milk V.S. flat rate per liter
Cross breed cows V.S. buffaloesMore milk yield, but buffaloes more suitable for Indian
Payment termWeekly V.S. daily
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
India
Pricing policyFat content of milk V.S. flat rate per liter
Cross breed cows V.S. buffaloesMore milk yield, but buffaloes more suitable for Indian
Payment termWeekly V.S. daily
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
The Dairy Supply Side in India
Famers
Self-consumption
Unorganized sector
Organized sector
Private players
50%
20%
24%
6%
Production
Self-consum UnorganizedOrganized Private
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
The Dairy Demand Side in India
Northern India
18.7%: rural areas
20.3%: urban areas
72
28
01020304050607080
Rural Cities
POPULATION
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
India Diary Products
Product Market Size(Billion) Market percentage Margin (%)Milk 35,996 56.5% 6-7
Ghee (Butter) 5,275 8% N
Gurd (plain Indian yogurt) 5,038 8% 25-30
Flavored milk 2,466 N 30-35
Ice Cream 2,500 N 30-35
Paneer 399 N N
Yogurt 179 N N
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
India Diary Products
Product Market Size(Billion) Market percentage Margin (%)Milk 35,996 56.5% 6-7
Ghee (Butter) 5,275 8% N
Gurd (plain Indian yogurt) 5,038 8% 25-30
Flavored milk 2,466 N 30-35
Ice Cream 2,500 N 30-35
Paneer 399 N N
Yogurt 179 N N
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Supply Chain
Purchase milk(65% farmer,35% 3rd party) 450 milk collection points
15 centers
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Alternative I
Pros Cons
Focus on B2B sector in t1 city in India
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Alternative II
Pros Cons
Proceed B2C business with new products from T1 city
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Alternative III
Pros Cons
Proceed B2C business with new products start from T2, T3 cities and then T1 cities
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Evaluation of Alternatives
Revenue increase
Profit increase
Possibility on time
I
II
III
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | Model
Supply Chain
B2B V.S. B2C70:30
B2B V.S. B2C50:50
Cooperation Model | Selling
Market Distribution
Brand Allocation
Supply & demand balance Cash Flow EBIT Net profit Receivable cycle period
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | Supply
Expand number of milk cooperatives as 20%+ growth
Encourage former raise buffaloes
Narrow down payment term from weekly to daily
Bring supply & demand balance Minimized lead time Enhance brand image
Maintain strong supply relationship
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | supplyPain point
PRABHATfacility
Distribution500
distributors 250 sales
peoplefacility
Chain Store & Kirana
Store
Optimization
PRABHATfacility
1.Divide sales groups as specific regions2.Priority product life deliver level
Short shelf life
Long shelf life
Chain Store & Kirana
Store
Distribution350
distributors 150 sales
peoplefacility
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | Cooperation Model
[GCMMF]Gujarat
N
Maharashtra
India states and union territories
Milk Cooperate with GCMMF
Value added dairy products
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | Cooperation Model
N
Maharashtra
India states and union territories
Short term Long term
Milk
Value added dairy
products
B2C in T2, T3 citiesKick off
B2B:B2C50:50
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | marketing
T1
T2T3
Maintain B2B business install base e.g. sweetened condensed Single brand B2C marketing share expand
Kick off B2C business model Sign off customer awareness Allocated brand in new market
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | Brand & Products
Product Brand City ModelGheel Prabhat T1 B2B
Gurd Amul T2, T3 B2C
Flavored milk Flave T2, T3 B2C
Ice cream Amul T1, T2, T3 B2B+B2C
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Implementation | Milestone
6 Months 1 Year 2 Year 3 YearSupply
Expand cooperateEnhance relationship
Narrow down paymentBusiness model
Co-work with GCMMFBrand
Allocate productCreate one brandMarket distribution
Retail relationmanagement
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
0
20
40
60
80
100
120
140
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
1,800.00
2,000.00
2015 2016 2017 2018 2019
Prabhat Dairy's Financial Forecast (Million rupees)
Revenue Operating Expenses Profit after Tax
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
820.4 861.4 904.5 949.7
351.6 421.9
632.9
949.3
-
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
2016 2017 2018 2019
Break down of Prabhat Dairy's Revenue (Million rupees)
B2B B2C
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
(2/10,30)2015 2016 2017 2018 2019
Inventory days 23 23 21 12 10Receivable period 76 60 14 13 10Operating cycle 99 83 35 25 20
2015 2016 2017 2018 2019Working Capital Required (Million rupees) 37.42 221.98 110.99 66.59 33.30
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Risks• New product
performance• Local policy• Brand awareness
Mitigation• Deep investigation• Strong consultant team• AD on mobile phone
new media
Risks & How to Mitigate
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Our Recommendation
Supply Chain
B2B V.S. B2C70:30
B2B V.S. B2C50:50
Cooperation Model | Selling
Market Distribution
Brand Allocation
Cooperate with GCMMF in big cities to improve B2B
Launch new value added products in T2, T3 cities to improve B2C
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
(2/10,30)2015 2016 2017 2018 2019
Inventory days 23 23 21 12 10Receivable period 76 60 14 13 10Operating cycle 99 83 35 25 20
2015 2016 2017 2018 2019Working Capital Required (Million rupees) 37.42 221.98 110.99 66.59 33.30
50% 60% 50%
2015 2016Current assets 184.31 323.74current liabilities 146.89 101.76
Appendix I
Xiamen University – Amoy Consultants
Key Issue Analysis Alternatives Implementation Financials Conclusion
Prabhat Dairy's Financial Forecast (Million rupees) 2015 2016 2017 2018 2019Revenue 1,004.33 1,171.97 1,283.31 1,537.33 1,898.99 Operating Expenses 874.25 1,023.07 1,090.46 1,306.31 1,613.62
Personnel Cost 25.6 28.19 30.9 37.0 45.7
Depreciation 34.4 39.9 43.7 52.3 64.7
Interet & Financing cost 41.2 42.7 42.7 42.7 42.7
Provision for Taxation 2.9 13.59 14.4 15.3 16.2
Profit after Tax 25.98 24.52 61.11 83.91 117.72 3% 2% 5% 5% 6%
Break down of Prabhat Dairy's Revenue (Million rupees) 2016 2017 2018 2019B2B 820.4 861.4 904.5 949.7
B2C 351.6 421.9 632.9 949.3 B2B growth rate 5% 5% 5%B2C growth rate 20% 50% 50%
Appendix II
top related