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1.1 The Indian dairy industry is contributing significantly to the country's economy, besides improving the
health standard by increasing the nutritional value of the food. India occupies first position in the world
having a total bovine population of 288 million compared to the world's total bovine population of 1420
million. As per 1992 livestock census, the country has about 62.90 million breedable cows and 42.46
million breedable buffaloes. There has been a major improvement in milk production which increased
from 17 million tones in 1951 to 74.7 million tonnes during 1998-99 and the growth was maximum
between 1980 and 1990. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Maharashtra, Gujarat,
Andhra Pradesh, Haryana, Tamil Nadu and Bihar contributed to the extent of 85 percent of the total milk
production in the country. Today, India is number one producer of milk in the world. The present per
capita availability of milk is 212 gms as against the ICMR recommendation of 250 gms.?

1.2 Recognizing the importance of the sector, the notable programmes taken up by GOI are key village
schemes, intensive cattle development projects, crossbreeding projects through bilateral assistance,
operation flood programme and technology mission on Dairy Development. In 1970 under the aegis of
National Dairy Development Board, "Operation Flood" programme was launched to modernize the dairy
sector and flood the 4 metro cities with milk from dairy cooperatives. By the end of September, 1999,
82000 village milk producers cooperatives were organised through 102 lakh farmers and with an average
rural milk procurement of 13.13 million liters per day.?

1.3 Having made a significant strides in production and processing, our country is topping the Globe as
the highest milk producer. Now it is the time to upgrade the quality of milk by increasing the efficiency of
procurement as well as the testing of milk for quality. In India the milk pricing is based on the fat
percentage and to some extent Solid Not Fat (SNF) in milk. The determination of fat is based on the
butyrometer method which is one of the oldest technology adopted by the Milk Collection Centres/Milk
Cooperative Societies. Since 1980's many of the societies have been using Milko testers for testing the
fat percentage in milk as this is a rapid method compared to former one. Of late Milk Collection
Centres/Cooperative Societies are installing automatic milk collection stations (PC based milk collection
stations, smart automatic milk collection stations and automatic milk collection stations) which measure
the weight of milk, fat contents and gives a print out of payment slip to farmers in each shift. The systems
also facilitates storing 10 days/monthly/yearly data and printing of cummulative summary of shift as and
when needed. The state of art equipment is able to perform 120 to 150 operations in an hour.?

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The financial assistance is extended for purchase of Automatic Milk Collection Stations with the following
objectives.?

1.??????To increase the efficiency and accuracy of fat testing in milk?

2.??????To reduce the staff of the society/collection centre through automation.?
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  Automatic Milk Coollection Stations were introduced by the Milk Cooperative Union of
KAIRA, Baroda and Mehsana districts in cooperative sector and Dynamix Dairy, Heritage Foods and
Nestle in private sector. The scheme has potential to finance in almost all the operation flood districts
where the societies/milk collection centres are procuring more than 350 to 400 litres of milk per day.?
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a  Milk Cooperative Societies of the Cooperative Milk Union or Milk Collection Centre of
private dairies.?
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1.??? 
Automatic Milk Collection Station is a specially designed integrated unit which is a
combination of several units i.e. Milk Weighing System, Electronic Milk Testing, Personal Computer with
printer and battery.?

2.???
 The capacity of Automatic Milk Collection Stations is to analyse 120 to 150 samples per
hour.?
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3.???
 The broad specifications are as under:?
a) Fat measurements : 0 - 13% b) Measuring capacity : 120 to 150 operations per hour. c) Power
supply : AC 220 to 240 watts 5O HZ ?
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   : The equipment is supplied by various agencies which are as follows:
Kamadhenu
Ahmedabad, Gujarat DODIA Himmatnagar, Gujarat PROMPT Baroda, Gujarat OPTEL Anand, Gujarat
CAPITAL Electronics Anand, Gujarat REIL Jaipur, Rajashtan?
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5.  The sequence of operations require insertion of smart card/identity number, pouring of
milk in a weighing container, collection of milk samples at the time of pouring, meaurement of fat content
and calculation of payment and printing of payment slip. ?
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1.??????Saving in quantity of sample milk?
2.??????Saving of chemicals and detergents?
3.??????Saving of expenditure on glassware?
4.??????Saving in stationery and time?
5.??????Saving in expenditure on staff.?
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  Since the process is simple, no technical collaboration is envisaged for the
project, however the Milk Unions/Private Dairy Plants would be providing guidance to the
societies/collection centres in purchase and installation of Automatic Milk Collection Stations and also
training of manpower in operations and maintenance. ?
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 The capital cost varies with the specifications and also the manfacturers. However,
based on the information furnished by the manufacturers, an average unit cost of Rs.1.15 lakhs including
the cost of battery has been considered. The detailed unit cost is given in Annexure I. ?
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Based on the various techno economic parameters furnished in Annexure I, the economics of the project
has been worked out and presented in Annexure II. The items of income include saving in expenditure on
staff, stationery, chemicals and detergents and glassware and also income from saving of sample milk,
while the items of expenditure are the repairs and maintenance of the Automatic Milk Collection Stations.?

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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 and presented in Annexure III. For the model
under consideration, the BCR is 1.434:1 NPW is Rs. 47800 and IRR is 47%. The entire bank loan can be
repayable in seven years without any grace period. Hence repayment has been fixed at 7 years for the
model project.(Annexure IV)?

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Automatic Milk Collection Stations would be considered for refinance support by National Bank. Therefore
all participating banks may consider financing this activity subject to their technical feasibility, financial
viability and bankability.?

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  : The Milk Cooperative society or Milk collection centre should normally meet 25% of
the project cost either out of their own resources or through subsidy.?

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: Interest rate will be as determined by the financing bank.?

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 As stipulated by the RBI.?

a Ú   : The financing bank may ensure that the society takes adequate insurance cover for the
asset.?

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Depends upon the gross surplus generated, it may be upto 7 years without any
grace period.?

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The special terms and conditions of the project are given in Annexure V?

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i)? Cost of Automatic Milk Collection Unit (Rs.)? 115000?

ii)? Margin Money / Subsidy (Rs.)? 30000?

iii)? Bank loan (Rs.)? 85000?

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i)? Volume of milk procured (lts/day)? 400?

ii)? No. of milk samples / day? 200?

iii)? Quantity of Sample Milk Saved (ml per sample)? 10?

iv)? Sale of sample milk @ 10ml/sample (lts/month)? 60?

v)? Sale price of sample milk (Rs./litre)? 9.00?

vi)? Savings in expenditure on staff (Rs./month)? 1500?

vii)? Saving in stationery (Rs. / month)? 200?

viii)? Saving in expenditure on glassware? 0.05?

(@ Rs./sample/day)?

ix)? Savinb on chemicals & detergents? 0.10?

(@ Rs./sample/day)?

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i)? Repairs & Maintenance (Rs./month)? 200?

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i)? Depreciation on AMCU (%)? 10?

ii)? Interest rate (%)? 13.5?

iii)? Repayment period (years)? 7?

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1? Capital Cost? 1.150? ?? ?? ?? ?? ?? ??

2? Recurring Cost? 0.024? 0.024? 0.024? 0.024? 0.024? 0.024? 0.024?

3? Total Cost? 1.174? 0.024? 0.024? 0.024? 0.024? 0.024? 0.024?

4? Benefits? 0.379? 0.379? 0.379? 0.379? 0.379? 0.379? 0.379?

5? Depreciated Value? -? -? -? -? -? -? 0.345?

of AMCS?

6? Total Benefits? 0.379? 0.379? 0.379? 0.379? 0.379? 0.379? 0.724?

7? Net Benefits? -0.795? 0.379? 0.379? 0.379? 0.379? 0.379? 1.069?

8? DF @ 15%? 0.870? 0.756? 0.658? 0.572? 0.497? 0.432? 0.376?

9? PWC? @15% 1.021? 0.018? 0.016? 0.014? 0.012? 0.010?

DF?

10? PWB @ 15% DF? 0.330? 0.287? 0.249? 0.217? 0.189? 0.164? 0.143?

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#? 0.850? 0.750? 0.355? 0.115? 0.10? 0.215? 0.140? 1.654?

##? 0.750? 0.650? 0.355? 0.114? 0.10? 0.214? 0.141? 1.660?

###? 0.650? 0.540? 0.355? 0.098? 0.11? 0.208? 0.147? 1.708?

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? 0.540? 0.430? 0.350? 0.081? 0.11? 0.191? 0.164? 1.860?

? 0.430? 0.290? 0.350? 0.065? 0.14? 0.205? 0.150? 1.733?

#? 0.290? 0.150? 0.350? 0.044? 0.14? 0.184? 0.171? 1.930?

##? 0.150? 0.000? 0.350? 0.023? 0.15? 0.173? 0.182? 2.053?

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The bank should ensure that:-?

1.??????The Milk Union/Dairy will identify the milk societies/collection centres whose milk collection is above
400 litres per
day for financing Automatic Milk Collection Units.?
2.?????The Union/Dairy will guide the society/collection centre for the purchase and installation of Automatic
Milk
Collection unit.?
3.??????The Milk Union/Dairy will train the secretary/worker of the Milk Cooperative Society/Collection Centre
in the
operation and maintenance of the Automatic Milk Collection Unit?
4.??????The Union/Dairy will arrange to supply the required stationery and diluents to the milk cooperative
society/collection
centre.?
5.??????The Milk Society/Collection Centre will enter into an annual service contract with the supplying firm
from second
year onwards.?
6.??????The milk society/collection centre will insure the Automatic Milk Collection Unit with the insurance
companies,
provided the insurance coverage is available.?
7.??????The Union/Dairy will provide tie up arrangement for the repayment of bank loan.?
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