India’s new EPR policy attepmts to improve plastic waste collection; but falls short of addressing the core issues of inadequate infrastructure for waste segregation and poor financial viability of recycling related business. Detailed analysis of the new EPR policy is available here.
India uses nearly 10,000 tonnes of single use plastic every day including plastic bags, multi-layer laminates and disposable cutlery. Imminent ban on single use plastic is likely to create huge demand for alternatives that can replace such products. One such opportunity is emerging in the tableware segment, where use of plastic plates/takeaway boxes/bowls is rampant.
Bagasse based tableware, an eco-friendly substitute to single use plastic, is rapidly gaining market acceptance, and a number of new enterprises are contemplating entering this field. In this blog, we answer key questions that you may have about starting such a business.
What is Bagasse and can it be directly used to make Tableware?
Bagasse refers to the waste from sugar cane after its juice has been extracted by the sugar mill. it is generally used as fuel in the sugar mills or brick kilns.
Bagasse cannot be directly used to make the tableware. It has to be first converted into pulp, by a paper mill. There are two suppliers for such pulp in India; Yash Papers Ltd and Century Paper and Board Mills Ltd. Pulp can also be imported from Thailand and Iran.
What’s the manufacturing process and minimum viable capacity?
Bagasse based pulp is first mixed chemicals that make it oil and water resistant. It is then fed into forming machine, where it is poured on to moulds and heated for nearly 30 minutes. The finished product is inspected for quality, its edges are trimmed and then it is packaged and dispatched.
The machinery comprises a pulp homogeniser along with several moulding machines, where products of different shapes can be obtained. Minimum viable capacity would be 1 tonne per day.
How does bio degradable cutlery work vis a vis plastic?
Bagasse based cutlery works perfect for disposable applications in terms of its ability to hold oily food as well as hot and liquid products (See Table1). However, since it is made in small volumes, it is at least twice as expensive compared to plastics. Other eco-friendly products such as tableware made from Areca nut leaves also cost as much.
How big is the opportunity?
Market for plastic based tableware is estimated to be nearly 3 lakh tonnes per annum, assuming that biodegradable cutlery can initially replace 25% of the plastic based products, its market could be around 70,000 tonnes per annum.
The product finds acceptance in quick service restaurants, schools, cinema halls, temples and organisations such as Railways that provide catering services to their passengers. In addition it could also be bought by caterers, who are currently using plastic table ware.
What is the capital requirements and return on investment?
The capital requirement for a minimum viable capacity (1 tonne per day) would be up to Rs. 2.5 -3 crores, depending on the pulping capacity and product mix. The capital requirement per tonne of capacity decreases as the capacity increases as large part of the capital expenditure is towards pulp mixing capacity, whose cost doesn’t increase significantly with rising volumes. For example a pulping machine for 6 tonnes per day of capacity may cost only 30% higher than a pulper that has a capacity of 2 tonnes per day.
The return on investment would be a function of the ability of the company to sell large volumes. In order to breakeven (recover the fixed cost such as interest, depreciation, labour), one needs to operate the plant at 50% utilisation.
What are the key challenges in this business?
Marketing remains the most important challenge across all businesses and Tableware is no different. While demand scenario remains favourable, the product needs across clients are very different. For example product offering required for a QSR may be very different from temple that only needs bowls for prasadam, or an udipi restaurant that would need takeaway container to hold hot liquids. Therefore one must first decide target clientele before finalising the product mix and ordering machinery.
The second important aspect would be to manage raw material supplies and minimise wastage. Pulp has a short shelf life of around 15 days after which it may attract fungal infection, therefore raw material inventory needs to be optimised. Further, product quality should meet user’s specifications, thus minimising rejections.
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Business Opportunity: Eco-friendly Tableware From Bagasse
Multi layered plastics (MLP) such as potato wafer packet, chocolate wrapper, wrappers for ready to eat foods and pharma products are criticised for their lack of recyclability, leading to littering of our cities and oceans. However, MLPs remain the cheapest and most viable option for packaging of food and pharma products and it may not be possible to completely replace them atleast in the near term. In this blog, we examine entrepreneurial opportunities available in MLP waste management and challenges faced by these businesses.
How big is the MLP waste problem?
India consumes close to 150001 tonnes of plastics per day, of which only 60% is recycled. Packaging plastics (MLPs and single use plastics such as light weight plastic bags, coffee cups, disposable utensils), contribute to majority of the non-recycled plastics. MLPs cannot be recycled economically, as these are made of two or more layers of plastics and separating the layers is not cost effective.
MLP waste can be broadly divided into two categories: industrial waste and post use waste. Industrial waste refers to the waste generated in the flexible packaging /converting units, this waste is relatively clean and can be converted into products such as plastic ropes/bags or fuel. Post use waste comprises waste generated from households and other consumption centres such as malls, commercial establishments. Such MLPs are contaminated and have high moisture content as they are mixed with the organic waste; it is this waste, which mostly finds its way to the landfill.
Is there a shortage of MLP waste processing capacity?
MLP waste can typically be converted into power or fuel, through a number of processes (see picture 1). Additionally, it can also be used a filler for laying roads.
Picture 1: Laminate waste treatment options
Among above mentioned methods, co processing in cement plants has taken off to an extent. Currently around 542 cement plants all over the country have made investments in co processing facilities that allows them to use alternate fuel in the kiln. As per Cement Manufacturers Association (CMA), cement plants currently have a Thermal Substitution Rate (TSR) of 4%, indicating that they meet 4 per cent of their fuel requirements from alternate fuels including plastic waste. Cement industry has proposed to increase their TSR to 25% by 2025, which will allow them to consume up to 12 million tonnes of plastic waste. While cement plants can handle contaminated waste, it has to be moisture free as wet waste is difficult to process.
Waste To Energy (WTE) plants burn unsegregated waste to produce power. Currently there are around 7 operational WTE plant, 403 under different stages of construction. WTE plants are ideally meant for processing dry waste, as wet waste (largely organic in nature) has lower calorific value and therefore is ineffective. However, given the lack of availability of segregated waste, they use mixed waste. While these plants have faced issues related to their compliance with pollution control norms, they are still preferred by the municipalities around the country as they can handle large amounts of unsegregated waste.
Pyrolysis refers to the process of converting plastic to oil, which can be used as a fuel. This process also needs clean /moisture free waste. Pyrolysis is yet to take off, largely to due unavailability of clean waste and risks related to the pollution compliance of such units. However, these plans can work well in industrial estates where availability of 2-3 tonnes of clean waste per day is assured.
Plastic has been used to build roads in Chennai, Indore, Pune and Meghalaya. The challenges again are lack of availability of required amount of clean plastic waste.
As such, the key issue that hampers laminate waste management is lack of availability of clean laminates that are fit to be processed and not shortage of waste processing facilities as such. The existing capacity of the cement and waste to energy facilities is enough to meet the needs of the industry.
Where are the opportunities for new businesses?
On the one hand, there is huge amount of MLP and plastic waste which needs recycling and on the other hand waste treatment providers such as cement kilns, WTE and pyrolysis plants don’t get desired quality of waste. Thus, there is a large opportunity to set up businesses that can incentivise households to segregate dry and wet waste, collect the segregated waste and channelize it to recyclers. Given the potential opportunity, a number of companies (see Table 1) have started aggregating household waste and supplying it to recyclers.
|Table 1: Waste Management companies|
|Lets recycle||Ahmedabad||Waste management, waste handling and reporting services for corporates, also owns recycling facilities, funded by impact investors such as Aavishkaar and Asha impact|
|Waste ventures||Hyderabad||Waste collection, segregation and channelization , has been funded by Vilcap investments|
|Karo Sambhav||Gurugram, Haryana||E waste PRO, funded by IFC, clients includes HP, Apple Del and Xiaomi|
|GEM enviro||Delhi||Plastic waste PRO, counts Bislery, Pepsi, Coco Cola among its clients|
|Raddi Connect||Mumbai||Waste collection and channelization|
|Thekabadiwala.com||Bhopal||Doorstep waste collection and channelizing the waste, recently raised angel funding of Rs. 3 crores|
|Saahas zero waste||Bangalore||Waste management, EPR and consulting services, has raised funds from India Angels network|
|Rudra Environmental Solutions||Pune||Collects plastic waste and converts it to fuel in their own pyrolysis plant. Has been acquired by Blue Planet environmental solutions Pte limited, Singapore|
|Source: FineTrain research|
Further, changing regulatory landscape in plastic waste management sector has boosted the viability of this sector. The regulations on plastic waste management are evolving and EPR (extended producer responsibility) was introduced in 2016. EPR makes producers, importers and brand owners responsible for processing of end of life plastic waste generated by their products. These companies can also take services of a Producer Responsibility Organisation (PRO) to manage their waste. Although, EPR for plastic waste is still in its early days, some FMCG companies have started warming up to this idea. For example, Indian Pollution Control Association (IPCA), a Delhi based PRO is implementing a project called “We Care” on behalf of FMCG companies such as PepsiCo , Nestle, Dabur and other to collect MLPS and channelize them to the recyclers. Recognition and acceptance of a PRO in plastic waste management provides a sustainable source of revenue for waste management companies and therefore makes their operations more viable.
Regulation is also slowly making an impact on waste segregation mindset of Indians. For example, in Mumbai and /Bangalore in situ (on site) composting is mandatory for bulk generators who generate more than 100 kg of waste every day as the municipality does not collect wet waste from such bulk generators.
Increasing awareness about consequences of informal recycling on the health of workers and environment is also bringing about a change in the mindset of people to own up their waste and sell it only to authorised recyclers. This in turn is likely to lead to an increase in demand for PROs in the long term.
What are the key challenges?
While the opportunity is large, the waste management companies face challenges related to lack of adequate clean waste and funding.
- Competition from informal sector: Almost all companies in formal waste recycling sector including e waste, bio-waste and plastic waste do not get adequate waste. For example more than 90 per cent of4 e waste is handled by informal sector and 50 per cent5of plastic recycling is done by informal sector, resulting in less than adequate availability of waste to the formal recyclers. The informal sector is able to offer higher prices for the waste vis a vis formal recyclers as they their processing costs are lower due to lower operational/manpower costs/capex costs. For example, a formal plastic recycling units needs to invest at at-least Rs. 1 cr in a recycling unit including the processing machinery and pollution control equipment for treating dust and waste water. However, the cost for informal sector are negligible as most of the work is done manually, and without any compliance to pollution control.
- Access to funding: The waste related business are working capital intensive, as they need to pay for the waste upfront, while they get paid only after sizable quantity of each type waste is collected, sorted and sent to the recycler. Additionally, they need large godown for waste storage and employ a number of people in sorting the waste. Further, they require funds for conducting awareness campaigns and marketing. Since these businesses do not have large physical assets, traditional channels such as bank are not able to meet their requirements. Similarly, such businesses also find it difficult to attract equity capital, as it is difficult to scale up operations across geographies.
However, emergence of impact investors and green funds has improved the funding prospects of these businesses. As can be seen in the Table 1, a number of investors including IFC, Aavishkaar, Asha impact and angle investors have invested in waste related businesses.
How can we help?
We are an advisory firm for small and medium enterprises in green industries. We can help you assess viability of your proposed plastic waste related venture including availability of waste, technology selection and market for recycled products. If you already have a waste related business, we can support you in raising capital for your growth plans and also in acquiring green businesses.
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Though Biogas has been around for nearly three decades, it has been a small industry, dominated by family size plants used for providing cooking fuel and power. Prospects for Biogas plants are improving slowly but significantly, largely driven by the government policies that have allowed use of Bio-CNG (purified Biogas, also known as Compressed Bio Gas or CBG) in commercial vehicles and availability of subsidy for large scale plants. In September 2018, government of India (GOI) announced a policy on Sustainable Alternative Towards Affordable Transportation (SATAT), which proposes to set up 5,000 new Bio-CNG units across the country by 2025 and generate 15 million tonnes of Bio-CNG.
India is the third largest energy consumer in the world with fossil fuels accounting for over 90 per cent of the energy mix. Renewable fuels such as Bio-CNG present a huge opportunity as they not only reduce our dependence on imports but also offer a solution to tackle the growing amount of organic waste and pollution arising out of crop burning.
No wonder then that Bio-CNG industry is suddenly attracting several entrepreneurs, including existing Biogas facilities that are looking to upgrade to Bio-CNG. Profitability of Bio-CNG businesses depends on a host of factors including macro issues that influence demand for cleaner fuels and local elements such as availability of feedstock, capital requirements and ability of entrepreneurs to market their products. This article analyses four key factors that affect viability of Bio-CNG ventures.
1. Demand for cleaner fuels
Natural gas contributes to around 23% 1of primary energy mix (see Figure 1) in India, with a consumption of around 164 MMSCMD2 (equivalent to 45 million tonnes per annum), growing at around 4 per cent per annum. Power, Fertiliser and City Gas Distribution (CGD) are key consuming sectors (see Figure 2). Since the domestic production of gas has not increased significantly, consumption of imported gas (LNG) has been rising (see Figure 3).
Consumption of gas is constrained by the limited availability of infrastructure related to its supply and distribution. Gas distribution network pipelines are available only in 96 districts in Northern and Western parts of country. Similarly, there are only 1424 CNG dispensing stations, 82% of which are located in Maharashtra and Gujarat3. Petroleum and Natural Gas Regulatory Board (PNRB) is expanding City Gas Distribution (CGD) network significantly so as to cover 400 districts and set up additional 9000 CNG pumping stations. The CGD network will be used to supply Bio-CNG also, therefore boosting its demand.
2. Cost competitiveness of Bio-CNG vis-a-vis other fuels
For large scale adoption, Bio-CNG would need to be cost competitive with LNG, commercial LPG and fuel oil that are used by the transport and industrial sectors. As per SATAT, the introductory price (ex- factory) of Bio-CNG is likely to be Rs. 46/kg and retail price could be around Rs. 52-55 per kg ($14–$15 per MBTU).
The prices of LNG have been decreasing of late, and landed prices of LNG in the near term are expected to be around $ 13 per MBTU, thus translating into a price of Rs. 48 per kg. Over the long term, significant decrease in LNG prices, would put pressure on Bio-CNG prices also.
Note: landed prices of LNG have been calculated by adding $5 to the cost of contracted LNG, to account for cost of regasification and distribution
With regard to Bio-CNG’s cost competitiveness with industrial fuels such as LPG and fuel oil, according to CRISIL4 , at an average crude price of $64 per barrel, landed cost of fuel oil and LPG would be $12.1 per MMBtu and $16.9 per MMBtu respectively, as against Bio-CNG’s expected prices of $14-15 per MMBtu. Therefore any significant decline in crude prices from current levels could also put pressure on Bio-CNG prices.
The key question that needs to be analyzed is whether a Bio-CNG plant will be profitable at a price of Rs. 46 /kg (ex-plant). Important components of Bio-CNG cost include feedstock, power, and manpower and capital costs, with feedstock cost accounting up to 40% per cent. Therefore feedstock cost (including transport) and its biogas yield play a critical role in determining viability of Bio-CNG unit. For example, a feedstock such as cow dung has a poorer biogas yield vis-a-vis other sources, resulting in lower Biogas output and higher capital costs. However it may be available free of cost, thus reducing the operating cost and making the operations viable.
|Table 1: Bio-CNG cost (Rs/Tonne)|
|Interest and depreciation||12,195.66|
An indicative cost structure for a press mud based BIO-CNG unit is provided in Table 1. It has been assumed that the capacity of the plant is 10 TPD of Bio-CNG and its capital cost is Rs. 34 crores, with a subsidy of Rs. 8 crores. The plant procures press mud at a price of Rs. 800 per tonne and press mud yields about 105 cubic meter of Bio gas per tonne.
As can be seen from the Table 2, the cost of Bio-CNG increases from Rs. 39,000 per tonne to Rs. 52,000 per tonne due to an increase in the feedstock cost from Rs. 600 per tonne to Rs. 1100 per tonne.
As such, to be competitive, the Bio-CNG unit must get feedstock almost free; therefore units with captive access to the feedstocks are more likely to succeed.
3. Capital cost
As a thumb rule, cost of a project that handles around 200 tonnes of waste per day (produces 10 tonnes of Bio-CNG per day) is likely to be around Rs. 30-35 crores. The fixed cost (interest and depreciation) contributes to as much as 30 per cent of the total cost of production and this can vary depending on the cost of land and machinery and timely receipt of subsidy, as described below.
- Land cost: Around 4 acres of land is required to set up a plant that can handle 200 tonnes of waste per day. The cost can vary hugely depending on the location and whether the land is agricultural or industrial, land cost is typically funded by the entrepreneur.
- Machinery and civil work: These together contribute to almost 70 % of the cost of a Bio-CNG plant. The machinery comprises biogas holder, scrubber, upgradation unit, plant automation equipment and piping/electricals and its cost can vary a lot across vendors depending on whether they are manufacturing it in house or procuring it from others. Civil work is typically executed through local contractors and its costs may not differ across vendors.
- Timely receipt of regulatory approvals: A Bio-CNG unit requires a number of permissions including a license from Petroleum and Explosives Safety Organisation (PESO), fire safety certifications and a certification from MNRE (Ministry of New & Renewable Energy). Ability of the company to secure these licenses on time can minimize delays in commissioning of the plant and result in cost savings. Additionally, receipt of subsidy is also subject to project completion and commencement of commercial production and any delay in project commissioning would also delay the subsidy, therefore increasing the interest cost.
Since purity/quality and specifications to standards is of topmost priority for a Bio-CNG unit, quality of machinery/upgradation technology should not be compromised. Significant cost savings can be realised by working directly with OEMs who can provide both biogas fabrication and CBG upgradation technology, instead of engaging with contractors who would outsource critical plant components.
While the offtake for Bio CNG from OMC is assured to an extent, it would be important to develop alternate set of customers such as industries/hotels, who can perhaps provide better pricing/payment terms and provide cushion when the demand from OMC declines. Also, the potential for sale of organic fertiliser would need to be assessed. Fertilisers/compost are typically sold through dealer network and require large sales force that can educate farmers on benefits of organic fertilisers. Alternatively, the option of bulk sale to fertiliser companies needs to be explored.
The need for cleaner fuels is evident given that by 2030, under the Paris Climate Change Agreement, India has committed to meeting 40% of its electricity con from renewable energy sources. While macro environment remains positive, the key risk to a Bio-CNG plant viability is lack of any linkage between the feedstock and final product price and lack of clarity on the price revision mechanism under SATAT. Since Bio-CNG would compete with fossil fuels, its pricing would depend on the price of CNG/LPG, whereas the price of its feedstock may move very differently. This is already the case with biogas based power plants/waste to energy plants that are not able to compete with decreasing tariffs of solar/wind power plants. Therefore, feedstock analysis, availability and long term agreements for purchase of feedstock are critical to the viability of Bio-CNG plants. Industries such as sugar mills, distilleries, and poultry farms that have captive access to feedstock would be most favourably disposed to take advantage of this opportunity.
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We can help you assess viability of your proposed Bio-CNG venture and support you in raising capital for the same. If you are looking to purchase/sell an existing Biogas/waste management company, we can identify prospective buyer/ seller and support you throughout the transaction.
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The union cabinet recently approved a change in the definition (see Table 1) of Micro, Small and Medium enterprises (MSME), to base it on their turnover as against investment in fixed assets. The Micro, Small and Medium Enterprises Development Act, 2006 will be amended accordingly to reflect the new definition. A change in definition of MSME assumes significance as it is used to provide a number of incentives such as capital, interest and technology/market promotion subsidy by the central and state governments.
|Table 1: MSME definition|
|Enterprise||Earlier definition||New definition|
|Micro||Manufacturing enterprises: Investment in plant and machinery< INR 25 lakhs|
Service enterprises: Investment in equipment/machinery<INR 10 lakh
|Annual Turnover< INR 5 crore|
|Small||Manufacturing enterprises:Investment in plant and machinery between INR 25 lakhs and INR 5 crore|
Service enterprises:Investment in equipment between INR10 lakhs and INR 2 crore
|Annual turnover between INR 5 crore and INR75 crore|
|Medium||Manufacturing enterprise: investment in plant and machinery between INR 5 crores and 10 crore|
Service enterprises: investment in equipment between INR 2 crores and 5 crores
|Annual Turnover between INR 75 croreand 250 crore|
|Note: Turnover of enterprises is likely to be calculated based on GST returns|
The new classification may result in many medium enterprises being classified as small enterprises (or small getting classified as micro) based on their turnover. Such reclassification would be positive for enterprises in sectors such as engineering, machine fabrication, apparel, construction contractors etc, where a large number of MSMEs are vendors to public sector enterprises (PSUs). These PSUs reserve 20 per cent of their procurement requirements for micro and small enterprises.
Further, a turnover based definition coupled with incentives for filing GST will encourage MSMEs to file taxes and transact through bank accounts, resulting in improved information availability on the sector for the policy makers. The GST filings of 2017-18, already show an increase of almost 50 per cent in the number of unique indirect tax payers.
The most significant impact though would be on state governments who would now have to revise their industrial policies that currently offer incentives to new enterprises based on their investment in plant and machinery. These policies could broadly be divided into two categories:
- Capital investment subsidies (subsidies on machinery, building); and
- Interest related subsidies where loans given to micro and small enterprises attract lower interest rates.
For example Government of Telangana offers Interest subsidy under Pavala vaddi on the term loan taken for fixed asset by new micro and small enterprises. The amount of loan is currently governed by the investment guidelines as defined by the MSME Development Act, 2006. This scheme may have to beredesigned to reflect the new MSME definition. Similarly, central government schemes such as PMEGP (Prime Minister Employment Generation Programme) that provide subsidy to micro and small enterprises will also have to be revised accordingly.
As such, the change to a more transparent mechanism based on turnover is a welcome step as it would make it easier for MSMEs to grow and transition from micro to small and medium enterprises. Further, unlike earlier definition which incentivised enterprises to remain small (as the incentive decreased with the increase in fixed assets), the new definition would likelystimulate investment in the sector.
Precast Building elements refer to building parts such as walls, columns, beams, slabs that are made in the factory and transported to the construction site, as against conventional method of onsite construction. These can be used for all types of construction including high rise residential buildings, commercial projects, villas etc. Precast walls can be used for factories, warehouses and also as fences, partition walls etc. Since precast concrete elements are made in a factory, construction is faster and more precise as compared to onsite construction.
Precast is not new in India, it has been well adopted in civil structures such as tunnels, bridges, flyovers and underpasses. Usage of Precast concrete products for commercial & residential construction has started getting acceptance over the past 5 years, mostly in IT offices, factories and hospitals.
Precast technology requires considerable initial capital expenditure (for the factory and equipment) and is most suitable/viable for projects where a large amount of quality construction has to be delivered quickly. Potential for use of precast elements on a large scale seems to be emerging from the growth of affordable housing, which is attracting a number of real estate developers as well as financial institutions that are looking to lend to affordable home buyers. The sector has got an impetus from Pradhan Mantri Avas Yojana, which was launched in November 2015 and aims to build 2 crore houses by 2022. The GOI has provided several incentives including the status of infrastructure sector for easy access to funding, 100% tax deduction on profits on affordable housing projects for the developer and credit linked subsidies for the home buyers.
Who are the key players?
The players in the precast market are of two types – builders who have invested in this technology for their captive usage and construction contractors who provide turnkey solutions. Some of the real estate developers who have set up their own precast plants include Supertech, Amrapali, and Sobha Developers etc. The contractors that provide precast related turnkey solutions are PRECA solution, Teemage Precast, KEF Infra, VME Precast, L&T etc.
Markets such as Bangalore, Noida, and Chennai have seen early adoption of the precast technology. Hyderabad is also picking up and two new precast plants have been set up there by the local construction industry.
What is the manufacturing process?
The process starts with the preparation of concrete in the batching plant, followed by casting on the specially prepared bed, curing and transportation to the site. Manufacturing can be semi/fully automated depending upon the capital investment (See Figure 1).
Figure 1: Manufacturing process
The machinery required for the plant setup includes batching plant, pallet/bed, shuttering profiles, concrete distributor, oscillator (for compacting concrete), plotting & cleaning unit (can be done manually), concrete smoothening device, cranes, automation and miscellaneous equipment. The machinery is provided by a number of international companies such as Elematic (Finland), Sommer Precast, Weckenmann (both Germany) and Spiroll (UK) that have offices in India.
How much Capital is required and what will be the profitability?
The capital required for a production capacity of 600 sq.m/shift including investment in plant and machinery and working capital would be over Rs. 30 crores. The overall profitability & return on investment would be contingent on the entrepreneur’s ability to secure regular orders. In order to breakeven, the entrepreneur should be able to run the plant at 50% capacity or construct around 4-5 lakh sq.ft. per annum.
What are the key challenges?
Despite its merits, there are some challenges for entrepreneurs looking to enter the Precast industry.
- Given the large amount of capex required to set up a precast unit, it is viable when the construction volumes are large and hence the entrepreneur/construction contractor should be addressing a large market or have some anchor customers that would allow at least 50% utilisation of the capacity.
- Unlike other building materials such as light weight bricks, panels etc., precast material is not sold off the shelf. Therefore the company that is contemplating entering the precast market should also have design and construction expertise.
How can we help?
We can help you start a precast building elements manufacturing unit through a number of services including market research, techno economic feasibility assessment and assistance in raising funds. In case you are looking to acquire an existing precast/building material unit, we can assist you in identifying such a company and in the process of acquisition.
Houses with 30 square meters carpet area in the four metro cities and 60 square meters carpet area in the rest of the country
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Compostable plastic bags are plastic bags that decompose into natural components such as carbon, water and biomass upon their contact with soil. As per DS6400, the most widely recognised international standard for compostable plastics, such plastics should completely disintegrate into natural components within 180 days in composting environment.
India generates huge amount of plastic waste (nearly 15,000 tonnes per day). It is estimated that only around 60 per cent of this waste is recycled and remaining gets dumped in the landfills and other places. Prominent among non-recyclable plastics are poly bags made from Polyethylene (PE), which can take up to 100 years to disintegrate.
Plastic bags have been completely banned in Maharashtra (except for milk packets and some specific applications). Further, 17 States and Union Territories in the country have imposed partial ban on these bags with restriction on the thickness of the bags to minimum 50 microns. Increasing awareness about environmentally sustainable products along with restrictions on the usage of plastic bags have improved the prospects of compostable bags.
What are compostable Plastics?
Compostable plastics can be made out of bio based or petroleum based compounds (Resins) as shown below.
Figure1: Types of compostable plastics
Currently, the market for compostable resins is small, at around 1 million tonnes (less than 0.5% of world’s annual plastic consumption of 320 million tonnes). These resins are patented by large multinationals such as BASF, NOVAMONT and have to be purchased from them or their dealers, thus resulting in higher price and limited availability. However, their consumption is predicted to grow at a CAGR of 20% over the next five years, and with the rise in demand, the availability of such plastics is likely to increase and their prices would become competitive.
How do compostable bags compare with conventional bags?
Compostable resins’ tensile strength, printability and weight bearing capacities are similar to that of conventional polymers such as Polyethylene (PE). In fact, in some specific applications, compostable resin may offer higher density and tensile strength as compared to PE, thus resulting in requirement of less tonnage of the resin vis-à-vis PE.
However, currently, the compostable plastic resin is 2-3 times costlier than the conventional resins. Further, the costs of processing these resins into products such as bags are also higher due to smaller size of the processing capacities. As a result, these bags are 3 times as costly as conventional bags. For example, a medium size compostable garbage bags is currently priced at Rs. 220 (for a pack of 30 bags) as compared to a price of Rs. 70-80 for similar conventional bags.
What are the international and domestic standards for compostable Plastics?
There are a number of standards for compostable plastics including ASM D6400 (USA) and EN 13432 (Europe) and ISO 17088.
An Indian manufacturer of compostable plastic bags has to obtain a certification from Central Pollution Control Board (CPCB) for selling compostable bags and related products. The certification process requires the product to be tested in a government authorised lab to check its compliance to ISO 17088.
|Table 1. International Standards for compostable bags|
|1||ASTM – American Society for Testing and Materials||ASTM D6400|
|2||European Standards||EN 13432, EN 14995|
|3||ISO – International Organization for Standardization||ISO 17088|
Is manufacturing compostable bags complex?
No, the manufacturing is very simple and is a two-step process; first the resin is processed into a film through a blown film manufacturing machine, the film is then cut, printed and sliced as per the bag sizes. Currently most Indian manufacturers use conventional LDPE blown film machinery for sheet extrusion. The resin is either directly imported from the manufacturers (list of bioplastic resin manufacturers is available in Table.2), or their dealers.
|Table 2. Bio Resin manufacturers|
Is there a market for compostable bags?
The demand for compostable bags is rising driven by growing concern about the environment and changing regulatory landscape. The waste management regulations in India are getting more stringent about handling and disposal of all types of waste including plastic. Therefore, specific segment of the market such as trash bags, bags for nurseries are witnessing a lot of interest from supermarkets, retail chains etc.
Given the demand, a number of new manufacturers have entered the market in past two years. The number of CBCB registered manufacturers of compostable bags has increased to 12 from just 2/3 a couple of years back ( a list of CPCB approved vendors is available here ).
The usage of other biodegradable/environmentally sustainable products is also increasing. Recently McDonald’s India has proposed to replace its plastic cutlery with a combination of wooden and biodegradable plastic cutlery ( available in this link: McDonald’s India kicks out plastics )
How much capital is required and what will be the profitability?
The capital requirements would depend on the machinery and the scale of operations. For example, a blown film machine of a capacity of 15-20 tonnes a month available for around Rs. 30 lakhs. However a European machinery (smallest capacity of 400 kg per hour) specifically made to handle bioplastics can cost more than Rs. 3 crores.
The minimum capital requirement including working capital is likely to be over Rs. 60 lakhs. The overall profitability and return on investment would be contingent on the manufacturer’s ability to secure regular orders and keep processing costs under control.
What are the key challenges?
- Most states do not have a policy on regulation of usage of compostable plastic bags currently. The guidelines on allowing such bags in retail market would be critical for the growth of the industry.
- The processing machinery is designed for conventional plastic, which can withstand higher temperature as compared to compostable plastics. Therefore getting the right product requires a number of trials.
- The certification process for compostable bags is time consuming and can take up to 6-8 months.
 As per the circular, dated 10th July 2018 of Maharashtra Environment department, the compostable plastic bags are allowed for horticulture, agriculture, and handling of solid waste.
 Source: Global production of bioplastics, a publication by European bioplastics
 Source: European-bioplastics.org
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Plastics are the 6th largest traded products, globally. Indian plastic exports are estimated to be around $ 7.6 billion (Rs. 45,000 crores), accounting for around 3 per cent of our total exports. Top destinations for Indian plastics include USA, China, UAE and United Kingdom. There are over 2300 exporters in India, largely located in Maharashtra and Gujarat. The exporters include both large manufacturers such as Garware-Wall Ropes Ltd, Supreme industries Limited and a number of small and medium enterprises.
Figure 1: Plastic exports-product wise and country wise breakup
Source : Plastics Export Promotion Council
 In FY 16
 There are around 2300 exporters registered with the Plastics Export Promotion Council
Raw materials (polymers) account for around 30 per cent of our plastics export and value added products for the remaining 70 per cent. Among value added products, plastic sheets, woven sacks, table and kitchenware are the key products. The exports of these products have increased at a CAGR of around 12-20 per in the past decade (Table 1)
|Table 1. Growth in key categories of Plastics (INR crs.)|
|HS code||Item||2006-07||2016-17||CAGR (%)|
|39269099||Miscellaneous plastic products||315.82||2,093.41||20.82|
|39232990||Plastic sacks bags||439.73||1,964.31||16.15|
|39269080||PP articles such as woven sacks||226.71||1,191.73||18.05|
|39239090||Plastic articles for conveyance and packaging such as crates||160.16||615.81||14.42|
|39219099||Plastic sheets, films, foils strips, plates, etc.||30.33||575.69||34.22|
|39219096||Laminated Flexible packaging items (plates, sheets, films, foils, strips. Etc.)||58.93||393.84||20.92|
|3917||Tube , Pipes and Hoses and fittings||284.99||947.19||12.76|
|39241010||Plastic insulated Tableware Kitchenware||89.81||386.24||15.71|
|Source : Directorate General of Foreign trade|
How To Tap The Export Market
Entering the foreign requires a lot of preparation towards market research and product development, as the products have to meet the requirements of new customers, who may have different standards of quality, design and product packaging. Also, diversifying into exports entails extensive documentation of company’s processes related to quality, purchase and sales, thus requiring a few dedicated resources. As such, venturing into export market comprises following steps:
Select The Market
Markets can be selected based on size of the opportunity, ease of entry and company’s competitiveness vis a vis other suppliers. The below given graph highlights key markets for various plastic products.
As can be seen, the key markets are different for each category of product, for example in FY16, UK accounted for the highest share in exports for plastic bags and sacks, whereas USA was the largest buyer for polypropylene (PP) products. One can do a detailed market analysis to understand the key consumer countries as well as other suppliers that are supplying to the same market and the competitiveness of your goods vis a vis other suppliers.The competitiveness of the product also gets impacted by the trade and non-trade barriers as explained below.
These refers to custom related tariffs, anti-dumping duties that are imposed on the imported products by the countries so as to protect their domestic industry. For example, recently Govt of USA announced its plans to levy a tariff of 25% on imported steel and a 10% of Tariff on imported Aluminium products from a number of countries except Canada, Mexico.
However, the import tariffs are typically lower among trading partners who are party to different agreements such as Free Trade agreements (FTA), Comprehensive Economic Agreement (CEA) etc. For example, India has trade agreementswith a number of countries including ASEAN, whereby the tariff on a number of products among the ASEAN countries is gradually being brought down to zero. Many of ASEAN members are importers of plastics (HS code 39) and India currently has very limited share in these markets (see Table 4), thereby presenting an opportunity.
|Table 3. Plastic imports by ASEAN countries , 2016|
|Country||Country wise Plastic imports from the world ($ mn)||Country wise plastics imports from India ($ mn)||Share of India in plastic imports|
|Source : Strengthening ASEAN-India Partnerships: Trends and Future prospects, a report by Export-Import bank of India|
Non Trade Barriers
These refers to legislations/other technical requirements that make it very expensive for Indian products to access a particular market. For example the cost of certifications of food grade plastics products in US and Europe are high at around $ 4000-5000 per product per year, thus making it very difficult for Indian SMEs to target these markets.
As such it may be easier for a new exporters to start with Asian markets, where the customers’ preferences are similar to India. However a detailed analysis of market size and competitiveness of our products vis a vis other suppliers is a must.
Market Entry Strategy
Having selected the market, a company can choose to enter the market by directly contacting the buyer, selling to a local distributor or participating in a joint venture with a local partner.The trade fairsand buyer’s sellers meet are commonly used by SMEs to identify the buyers as well as test market their products. Some of the trade fairs related to plastics industry include National Plastics Exhibition (NPE), USA, Chinaplas (a plastics and rubber trade fare in China) and Plastindia (Plastic trade fare in India).
The ministry of MSME offers a number of schemes to exporters for market development assistance including exposure visits to foreign markets and concessions in stall charges and air fare to participate in exhibition. These schemes are administrated by Plastics Export Promotion Council (PLEXCONCIL) or Federation of Indian exporters (FIEO), who also organise trade fares in India and facilitate meeting with international buyers.
Meet The Technical Requirements
The exporters need to comply with the technical requirements of the destination country and obtain relevant product certifications. These certifications can be broadly divided into two parts: certifications related to process and safety such as ISO and product related certifications.In general, product certifications required for US and Europe markets are more stringent than those needed for Asian, African and other markets. A summary of important certifications across plastic products is provided below.
|Table 4. Technical Certifications for plastics products|
|Injection moulded products||ISO and product certification based on applications|
|Pipes and fittings||Water Regulation Advisory Scheme (WARS) for UK, NSF for USA, DVGW for Germany|
|Food grade plastics||US FDA guidelines, European Commission (EC ) guidelines|
|Toys||Consumer product safety improvement act (CPSIA) in USA, EU Toy Safety Directive in Europe|
|Woven sacks||Labour data certificate for FIBC (Flexible intermediate bulk container)|
|Source : Discussion with NSF officials and FineTrain research|
Estimate The Capital Investment And Profitability Of Export Market
The costs can be divided into two categories: fixed cost and variable costs. The fixed cost or capital investment required for the export market would depend on the product adaptations/customisations, certification costs and working capital requirements.The working capital cycle can be up to 3 months including the time realised in getting the payment from the buyers as well as for claiming refunds/incentives from the government.
The price of the product in foreign markets should factor the costs such as commercial costs (shipping, packaging, and duties, insurance), marketing costs over and above the product cost.The marketing expenses such as cost of catalog, samples and visits to the destination country can add up to a significant chunk.
Some of the common costs that are incurred by the exporters include transport cost from factory to port of departure, import duty and taxes, custom clearance, ground transportation from port to customer’s warehouse and marketing agent’s commission.
As such the exporter needs to factor in both fixed and variable before quoting the price and also estimate the minimum volumes they need to sell to recover their costs.
Secure The Order And Finalise Trade Terms
Once the buyer is interested in your product, the next steps would be to finalise the trade terms also known as Incoterms. These typically define the responsibilities of buyers and sellers and costs and risks undertaken by each party. Some of the commonly used terms include EXW (pricing is ex-factory and buyer is responsible for the transport/insurance), FOB (Free on Board, pricing includes cost of transport till the port of origin) and CIF (Cost insurance and freight, the pricing includes the freight costs and insurance required for transporting the goods to destination).
How Can We Help?
If you are interested in exporting your plastics products, we can assist you in the following
- Identifying potential markets for your products
- Viability study for entering a particular market
- Assistance in generating a list of potential buyers and in scheduling meetings
 Based on discussions with NSF International’s office in India
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Table sauce is a common condiment for a number of products such as bakery, Chinese food and fast food. It is typically used to add flavour or texture while cooking or dipping. Broadly, there are four categories of sauces
- Tomato Ketchup & Sauce
- Chinese Sauces
- Pizza, Pasta & Barbeque Sauces
- Mayonnaise and other bread spreads
The table sauce category in India, estimated to over INR 1000 crores is growing at over 20 per cent per annum. Tomato sauce accounts for over 65% of the table sauce consumption, other categories (such as Chinese sauces, Mayonnaise), while relatively smaller in size are also growing rapidly.
Innovation in variants and packaging is the key driver for the growth of this industry. For example Nestle has introduced a number of variants of its tomato sauce (no onion tomato sauce, hot and sweet tomato sauce, masala sauce, tamarind sauce) over the years. The company has also launched pichkoo, where the sauce is packaged in flexible packaging material, thus allowing it to be squeezed easily. Similarly, Dr. Oteker, India (manufacturer of Fun food brand of products) offers a large variety of products including mayonnaises, sauces, spreads, salad dressings, cakes, dessert toppings. For its mayonnaise range alone, the company sells 8 flavours.
Sauce manufacturers have two business models: Business to Business (B to B) and Business to Consumer (B to C). Small and medium enterprises typically start with supplying to businesses and then go retail. For example, Fun foods has been associated with subway in developing customized variants of sauces. Veeba foods, a recent entrant in the market which supplies sauces and dips to restaurants and fast-food chains, recently raised $6 million and forayed in retail segment through its own VEEBA brand.
Why is table sauce manufacturing an attractive opportunity?
Increasing customer appreciation for western cuisine has resulted in a growth of sauces, dressings and condiments industry. International cuisines such as Italian, Mexican and Thai are gaining popularity which in turn act as demand drivers for specialised sauces and dressings. Given the market growth, many multinational fast food chains (Wendy’s, Taco bells) have entered India in the past five years. India is the second largest market for Domino’s Pizza after the US.
Besides consuming the sauces as part of eating out, consumers are also purchasing these sauces to use them for food preparation. The cooking sauce (soya sauce, pasta sauce) category makes up around 33 per cent of the sauce market. Supermarkets and convenience stores have become popular channels for purchase of such products.
Where is the table sauce manufacturers located?
The industry can be categorised into two types of players: large FMCG multinational companies such as HLL, Nestle that dominate tomato ketchup market and other players (see Table 1) such as Dr. Oetker, Delmonte specialising in specific category of sauces. Most of the manufacturing units are located in Maharashtra, Haryana and New Delhi.
Down south, post bifurcation, both Andhra Pradesh and Telangana have been focussing on developing food processing sector by offering financial incentives to the food processing industry and developing industrial infrastructure. Although these two states together account for almost 20 per cent of food processing factories in the country, they don’t have many table sauce manufacturing units, thus making it an attractive opportunity to set up a sauce manufacturing unit here.
|Table 1: Manufacturers of Table Sauces (other than ketchup)|
|S. No.||Company Name||Brand and Product Range||Remarks|
|1||Field Fresh foods Pvt Ltd, Gurgaon, Haryana||Delmonte:Pasta Sauces, mayonnaise & Ketch up||A joint venture between Bharti enterprises (Telecom major) and Philippines-based Del Monte Pacific Limited, turnover over INR 500 crores|
|2||Capital Foods Limited, Mumbai, Maharashtra.||Ching’s Secret & Smith & jones: Soups, pastes & sauces||Manufactures Chinese sauces, revenue of around INR 500 crores|
|3||Dr. Oetker India Pvt Ltd, New Delhi||Fun foods: Mayonnaise, Italian sauces, sandwich spreads, Chinese sauces, salad dressings||A German company that acquired Fun Foods, an Indian manufacturer of table sauces in 2008, current revenue of over INR 150 crores |
|4||Cremica Food Industries Pvt. Ltd, Ludhiana, Punjab||Cremica: Ketchup, Pizza & pasta sauce, salad dressings||Started as a homebased enterprise, current turn over more than INR 200 crores.|
|Source: FineTrain Research|
Manufacturing process and capital requirements
Sauces can be prepared from varied range of items such as eggs, vegetables, fruits, beans, milk etc. as shown in Figure1.
Figure 1: Sauce Manufacturing Process
In addition to the processing machinery discussed above, the manufacring facility needs to have infrastructure including cold storage, waste water treatment facilities and a strong R&D team. The budget required for an entry level capacity of around 1 tonne per day would be over INR 2 crore.
Key Success factors
Critical success factors for this business include:
- Nimbleness in identifying variants
- Good relationships with exiting suppliers and customers
- Building up a niche segment
- A strong R&D team that can develop new products
- Adequate financing to meet large working capital needs
How we can help you
If you are interested in setting up a table sauce manufacturing unit, we can assist you in the following:
- Competitive landscape
- Financial viability
- Location analysis
- Market entry strategy
- Regulatory issues and government incentives
- Detailed project report preparation
- Support in project execution
Call us/reach us
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India is world’s largest producer of milk, with a production of around 155 million tonnes per annum, contributing to 20 per cent of the world’s milk output. The dairy sector is one of the fastest growing sectors in India, growing at a CAGR of over 15-20 percent, largely driven by the growth of value added products such as yogurt, cheese, ice-cream etc.
The demand growth in dairy industry has also spurred an interest in dairy farming by entrepreneurs from rural as well as urban India. This blog discusses factors that influence profitability and sustainability of a dairy farm. These include macro factors such as international and domestic prices of milk, and farm level factors such as size of the dairy farm,its cattle management practices and its marketing strategies.
How are local milk prices linked to international milk prices?
While milk is a perishable commodity mostly sold locally, Skimmed Milk Powder (SMP) is traded in the global market and international prices of SMP influence India’s SMP exports. SMP is a large end user of milk, asalmost 11 tonnes of milk is needed to make 1 tonne of milk powder. Since SMP has a long shelf life as compared to milk, dairy companies keep their surplus milk stock as SMP, and also use it to manufacture milk based products such as ice-cream and yogurt. Adecline in international prices of SMP reduces the export of SMP from India and therefore increases domestic milk availability. Increased domestic availability can sometimes impact the prices at which dairies procure milk from farmers.
For example, India’s SMP exports declined to 15,930 tonnes (INR 293.01 crore) in 2015-16 from a peak of 1.3 lakh tonnes (valued at INR 2,717.56 crore) in 2013-14 due to a steep decline in global SMP prices. During the same time, milk procurement prices declined by as much as INR 10 per litre in North India and Maharashtra.
As can be seen from Figure 1, the prices of SMP tend to fluctuate, which can lead to volatility in the domestic milk prices as well.
Why is marketing strategy for milk so crucial to the profitability of my milk farm?
Dairy farmerstypically sell their milk to a number of customers including public and private sector dairies milk traders, milk processors and directly to consumers. Dairies are the largest bulk buyers accounting for over 20 per cent of milk procurement. They currentlyprocure the milk at around INR 25-35 per litre across the country and the product is sold at a retail price of INR 35-45 per litre. However, the retail prices for branded, farm fresh milk are higherINR 60-70 per litre.Over the past decade, there has been a spurt in dairy farms that sell their milk as farm fresh milk, desi cow milk, chemical free milk or A2 milk etc. directly to the customers. Some of these players are shown in Table 1
|Table 1: Dairy farms selling branded fresh milk|
|Company name||Product||Value proposition|
|Vrindavan Milk, Bangalore||Pure Natural cow milk, Desi A2 milk||Delivered directly from farm, no chemicals used to inject cows.|
|Klimom, Hyderabad||Cow milk, A2 milk||Delivered in eco-friendly glass bottles within a few hours of milking|
|Astra Dairy, Chennai||Cow milk and dairy products||From farm to your home in 12 hours|
|Pride of cows, Pune (aventure of Parag Milk Products)||Pasteurized cow milk||Farm to home fresh milk, completely untouched by human hands|
As a dairy farmer, you have many choices; you can choose to find an assured market in a large dairy or milk processing companies, sell fresh milk under your brand name or sell value added products such as flavoured milk, yogurt etc.Therefore, market related choices should be made first and then you can work backwards to make decisions related to animals, location, investment and farm automation.
What are other profitability drivers?
The success of a dairy farm is aligned with the productivity of its animals and the following elements play an important role in determining a farms profitability:
- Milk yield: Milk production over the productive life of the dairy animals is one of the most important drivers of the profitability of a dairy farm. It depends on many factors such as animal’s age at first calving, number of lactations and yield per lactation. Further, milk production can be enhanced by providing adequate amount of green fodder and keeping animals disease free.
- Self-sufficiency in Fodder:The cost of feed accounts for majority (about 70%) of the costof running a dairy farm. The fodder can broadly be divided into three parts: Green fodder, Dry Fodder and Concentrated Feed. Of the three, Green fodder, which is needed in large quantities, remains most scarce, due to gradual reduction in the green cover of our landscapes. Further, the fodder prices can be volatile and do not move in line with the milk prices. Therefore, in order to be sustainable, a dairy farm must be self-sufficient to meet its green fodder needs. The fodder requirements for a farm with 20 cows are illustrated in Figure 2.
Figure 2: Fodder Requirements of a dairy farm
Since fodder cultivation requires a lot of space, several dairy farmers have now shifted to silage, which refers to green fodder preserved under anaerobic conditions. Silage provides benefits similar to that of fodder but is needed in lesser quantities. Feeding your animal silage, lowers the area needed for fodder cultivation and frees up the land, which can be used to generate income through cultivation of grain/horticulture crops.
- Best practices in animal management: Good farm management practices that improve animal productivity are shown.
Figure 3: Best Dairy management practices
How much investment is required for a dairy farm?
A dairy farm requires investment towards land, construction of shed, milking equipment and purchase of animals.Land and animals are the two largest investment heads.
- Land: The land is needed for the cattle shed and milking operations and also for growing fodder. Minimum 2-3 acres of land would be required for a 20 animal farm.
- Animal: The cost of animal depends on its age, milk yield, breed etc. As per NABARD’s dairy entrepreneurship development scheme (DEDS), the cost of 10 animals of desi cows is INR 6 lakh.
- Civil construction: Shed for animals to provide them protection from heat/rain etc. and storage room for feed and housing for labour if needed
- Equipment:Milking machines, chaff cutter, tipper for cutting the crop.
As such, the investment in animals should be about INR 12 lakhs for a 20 cow dairy farm. Assuming that investment in animals is about 50% of the cost of the farm (excluding land), the investment in the dairy farm with 20 animals should be about INR 25 lakh.
Why is dairy farming an attractive opportunity?
The Indian dairy market is expected to continue grow at a rate of over 15%, over the next five years, mostlydue to a growth in the consumption of value added products such as cheese, curd, flavoured milk etc. Anticipating the growth, Indian dairy companies have planned significant investments in capacity expansion as given below in table 2.
|Table 2: Capacity expansion plans of Indian Dairy majors|
|Company||Capital expenditure plans||Brand||Budget(INR crore)|
|Heritage Foods Ltd.||Addition in the existing capacities in curd and whey products segment||Heritage||70 – 75(for FY18)|
|Gujarat Cooperative Milk Marketing Federation Ltd (GCMMFL)||Additional capacities in cheese and chocolates||Amul||3000(Upto 2020)|
|Kwality Ltd.||Additional capacities in value-added product categories like Cheese, Paneer, UHT Milk, Flavoured Milk and Table Butter||Dairy Best||520(forFY18 and up to mid FY19)|
|Parag Milk Foods Ltd.||Expansion and modernization of existing plants and improvement in marketing and distribution infrastructure||Go, Gowardhan, Topp Up||64.5(for FY18)|
|Prabhat Dairy Ltd.||Upgradation of plant and machinery||Prabhat||40|
|Source: Indian Dairy Industry – driven by value added products, a report by CARE Ratings|
Also, there have been a number of acquisitions in the dairy sector by large private equity companies, and multinationals who are acquiring local dairy companies to strengthen their operations in India.
|Table 3:Acquisitions in the dairy sector|
|Acquired Company||Investing Company||Year|
|Kwality Limited||KKR India(a private equity firm)||2016|
|Tirumala Milk||Lactalis , a France based multinational dairy corporation||2014|
|Creamline Dairy||Godrej Agrovet Limited||2015|
|Dairy business of Reliance Retail||Heritage foods||2017|
|Source:Indian Dairy Industry – driven by value added products, a report by CARE Ratings and FineTrain research|
In order to meet the demand growth of the dairy industry, a strong and sustainable dairy farming sector needs to be developed. Dairy farming is currently dominated by a small farmer who has two animals and uses dairy income to supplement his/her agriculture income. Given the bright prospects of dairy sector and lack of professionally run dairy farms, there is an opportunity for entrepreneurs who can set up dairy farms with scientific feed management practices. These farms can also forward integrate into manufacturing of milk based products.
How can we help?
We can help you set up a dairy farm or a milk product business through a number of services including:
- Market feasibility assessment
- Development of project proposal for loans/credits
- Technical consultation
- Project execution support
Call us/reach us
Call us: 800 888 4932
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 Source: India’s milk production in 2015-16,
 Source: Indian Dairy Industry-driven by value added products-by Care Ratings, June 30, 2017
 Source: http://indianexpress.com/article/india/india-news- india/global-dairy- price-recovery- to-benefit- indian-
 Source: http://indianexpress.com/article/india/india-news- india/why-milk- prices-have- fallen-by- rs-10litre- for-