TAMIL NADU RURAL TRANSFORMATION PROJECT

Category of Loan: MICRO (INR 5 to INR 15 Lakhs)

Business Plan for establishing a dairy farm
Introduction
 Mrs. AAA of BB Village in Coimbatore district own 3 acres of agricultural lands and
growing Fodder and Groundnut.

 She has two cross bred cows and supplying the surplus milk to CC Milk Cooperative
Society for the past 3 years
 She has attended on campus training programs on Dairy Farming, Feed and fodder
cultivation, Breeding and disease management conducted by Veterinary University
Training and Research Centre, Coimbatore

 She has availed a Term loan of Rs. 100000/- with ABC Bank in BB Village and
purchased the two milch cattle

 The loan repayment is regular till date

 The present request is for term loan of Rs.11.00 lakhs under TNRTP matching grant
Programme for the purpose of establishing a small dairy (5+5) unit

About the Product

 India is leading in production of milk and dairy is one of the major subsidiary activities
of most of the farmers. Despite of highest production in the world, there is always a
demand supply miss match for milk and milk products..

 Tamilnadu ranks 8th in milk production. Most of the rural people especially women
make their livelihood by rearing milch animals and by supplying milk to the Co-
operatives.

 Keeping this in view and to improve the rural economy and to enhance the personal
income of the stake holders in rural areas, Government of Tamilnadu has increased
the procurement price of a litre of cow’s milk from Rs. 28 to Rs. 32 and buffalo milk
Rs.35 to Rs.41.
Enterprise and Entrepreneur Profile
1. Profile of the Entrepreneur:
Name Ms.AAA
Spouse Name
Age 45
Education 10th Standard
Aadhaar Card No 86XXXX111111
Address
Phone No +91 1111111111
Mobile NO +91 1111111111
Email ID [email protected]
Number of years of experience in business Three
Trainings attended (no. and hours) Participated in the on campus
training on dairy farming and
workshop on control of Mastitis
organized by VUTRC, Coimbatore
Spouse’s occupation Agriculture
If Special category NA

2. Enterprise Profile:
Name of the Enterprise M/S ABC dairy Farm
Legal Form of Enterprise Nil
Registration Number Nil
Registration Date Nil
Registered with Whom Nil
GST No ( If available ) Not Applied
Udyam Registration number Not Applied

3.Bank Linkage Details:

Whether the enterprise has separate bank account Yes

If any bank credit availed Yes
Name of the bank and Branch ABC Bank
Nature of the bank facility Term loan facility
Limit Sanctioned Rs.100000/-
Balance outstanding as on date NIL

4. Enterprise Nature:
Type of Enterprise Farm Sector- Agri. Allied activity
Product to be produced Milk Production
Service to be offered:  Sale of Milk
Present Demand  The area is offering good demand for milk.
 The entire milk produced in the village is fully
absorbed by the local milk cooperative society
as well as by private dairy companies
 Due to the increase in the procurement price
of the Milk, dairying is the preferred activity in
Current Supply the village and there is considerable increase
in the production and supply of milk.

5.Technical Feasibility:

a.Location
Brief on Location – Whether well The village is easily approachable and well
connected to market by road etc., connected by road
b.Land 
Extent of Land, sq.ft. Panchayat  Own 3.00 acres agricultural land with adequate
approval, own/leased water source
c.Building  The floor space per adult animal is 70 Sq.Ft
Approved plan from local body, Sq,ft, Calf require 20 Sq.Ft.
whether sufficient for the proposed 700 Sq.ft cattle shed will be constructed
activity Building plan and approval will be obtained
from the Village Panchayat administration
d.Power 
Whether required power connection is  SEB power supply is available.
available 
e.Water Adequate water is available.
Whether adequate water is available.
f.Approval 
Pollution control Board/GST/FSSAI NA
approvals or any other approval is
required. Present Status
 g. Materials Needed Raw-materials
Quantity / Cost / Availability / Delivery  Good looking, high yielding, healthy
Time to be discussed. HF/Jersy cows can be purchased from
a. Raw materials dairy farms in Karur, Coimbatore, Erode
b. Equipment and Trichy
Technology  Fodder cultivation has been already taken
up in 2.00 acres to fulfil the green fodder
requirement
 Veterinary Centre in the village is extending
animal health care and breeding services
 The Milk Cooperative society in the village
is functioning effectively and promptly
serving the members.
 Paddy, Groundnut and Maize grown in and
around the area will fulfil the dry fodder
requirement
 Concentrate Feed- viz: Ground Oil Cake,
Rice Bran, Cotton seed are easily available
in the whole sale market and shandies
nearby the village
 Adequate water supply from borewell is
ensured for cultivation of fodder crop
 The equipment’s required for milking,
watering, feeding can be easily purchased
from towns located nearby the village
 Technology:
The applicant has undergone necessary
training required for dairy farming and
capable of adopting new technology
h. Cost of capital assets. As per Annexure A.
i. Cost of working capital for one The working capital requirement is arrived at
operating cycle Rs.1.75 lakhs as per Annexure C.
OR
25% of projected annual sales turnover The assessment has been done as per holding
if necessary levels detailed in annexure C.
 j. Skills Requirements: 
skilled labour available / Not available The promoter is well experienced in the line of
If not available: whether people can be activity for more than 3 years.
trained? If so, training period and Agricultural labourers with adequate
training facility? experience in dairy farming are easily available
Production Process:
Production Plan/cycle 
(operating cycle may be one-day  / The operating cycle is assumed at one crop
week / month or one year as per the season as detailed in Annexure C.
activity selected):
6.Commercial Feasibility:
a. Marketing strategy : Due to the increase in the procurement price
: of the Milk, dairying is one of the preferred
activity in the village.
 The milk produced in the village is fully
absorbed by the local milk cooperative
society.
 Besides, M/S Hudson Agro, Aroma Milk,
Suguna Dairy are also procuring milk from
this area
b. Pricing & Discounts :  Procurement price for the milk has been hiked
by the Government very recently, Private
companies are also offering best price for milk,
based on Fat and SNF content
c. Market promotion strategies:  Tie-up Arrangement with Milk Coop society
d. Physical and digital connectivity: Adequate training will be given to the beneficiary
on digital payment channels-POS, QR Code,
Credit card, Debit Card, Paytm and Google Pay.
e. Risks and risk mitigation planned: Risk assessment details as per Annexure E.
7.Environment Assessment:
Category of the enterprise proposed: White/Green / Orange / Red
To be entered as per the requirement – Orange Category Type of Code 2024
Environment Environment Greening Support needed
Issue Guidelines or Measures
identified mitigation identified
measures (for green, Implement Implement
Integrated orange and red the the greening
(Please tick) categories) mitigation measures
measures
 Water To ensure NA NA
Exploitation of  Wood adequate
local resources  Electricity measures for
(water and Proper disposal
energy) of Smoke and
waste water
 Dust/air pollutants To ensure NA NA
Waste  Disposal of waste adequate
generation and water measures for
disposal Proper disposal
of Smoke and
waste water
Worker and  Safety measures / Fire NA NA
Community gadgets extinguishers to
safety be fixed in
sensitive places
in the unit. Full
fire protection
dresses and
gloves for
workers

Whether the activity proposed is in the negative list: No.

 8.Financial Viability
Cost of the project and Means of the project:
a. Cost of the Project: (Rs in lakhs)
I. Fixed capital-Cost of all the equipment’s /machinery 9.25
/construction(excluding land cost) As per Annexure-A
ii. Working capital ( As per scale of Finance fixed by SLTC 1.75
As per Annexure- C
iii. Pre-operative expenses **From Own Source
Total cost of the project (i + ii + iii) 11.00

b. Means of the project:

Loan from financial Institution / Bank (90%): 9.90
Margin money -Borrower’s contribution (10%): 1.10
Total means of the project ( i + ii ) 11.00

c. Matching grant from the project** 3.30

** The preliminary expenses viz: transportation cost of animals- Rs.10000, Interest
during holiday period - Rs.36300/-, Insurance premium Rs.25000/- Miscellaneous
expenses- Rs.25000, totaling to Rs.0.96 lakh will be met by the borrower from his own
source. Hence not included in the project cost. The borrower has sufficient source to
meet the preliminary expenses.
Whether the entrepreneur has the sufficient means to Yes. Applicant has 3.5 lakhs
bring in the margin money and has enough buffer to Term deposit with bank
manage any cost escalations

**Matching Grant is @30% of the total cost of the project (excluding pre-operative
expenses, land cost, lease). As Matching Grant will be kept in a “Subsidy Reserve Fund”
account of the bank as a back-ended grant, it is not shown under the Means of the project.
The matching grant to be adjusted as below:
(Rs in Lakhs)
Loan initially disbursed by the Bank - 9.90
Less 30% matching grant - 3.30

Balance principal amount to be repaid by Borrower - 6.60

Upon completion of minimum period of 18 months and upon repayment of principal
amount of Rs.6.60 lakhs and the interest portion, the matching grant of Rs.3.30 lakhs can
be adjusted to the loan account of the borrower and the loan account can be closed.
Repayment capacity

 Loan amount Rs.660000/- is repayable in 60 months @ 11% after holiday period of 6

months.
 Monthly instalment - principal amount is Rs.17368/-.
 Last instalment – Rs.17384/-.
 Though the repayment is fixed for 60 months, upon prompt repayment of 38
instalments, the loan will be closed on the 44th month itself with matching grant amount
of Rs.330000/- which is eligible for the project.
 50% of net profit and depreciation is taken for DSCR Calculation for the first year, since
six months operation in I Year.
Debt Service Coverage Ratio:
DSCR to be calculated for the entire repayment period and average DSCR to be
considered.

DSCR = Profit after Tax (Net Profit) + Depreciation + Interest

Principal + Interest.
The basic presumptions and profitability projections are as per Annexure B.
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
(6 Months)
Net profit after tax 32160 198398 329524 458430 577201
Depreciation 22500 45000 45000 45000 45000
Interest* 36300 60182 37256 14330 159
Cash surplus (A) 90960 303580 411780 517760 622360
Principal Repayment 0 208416 208416 208416 34752
Interest 36300 60182 37256 14330 159
Repayment obligation(B) 36300 268598 245672 222746 34911
DSCR A/B 2.51 1.13 1.68 2.32 17.83
Average DSCR 5.09

 Details of interest calculation and repayment are available in Annexure D.

 The average DSCR at 5.09:1 is above the required DSCR of 2:1 as per MGP
guidelines. The repayment capacity of the borrower is comfortable.

Recommendation:
 As the proposal is viable and complies with the guidelines in respect of Matching Grant
Programme, we may recommend the proposal to the concerned Bank
 ANNEXURE – A

Cost of the Capital Assets

Capital Nos Price per unit (Rs) Total Cost (Rs)

1.Cow 10 70000 700000
2.Shed @70 Sq.ft per animal 700 Sq.ft 250 175000
3 Equipment Cost 10 1000 10000
4 Cost of chaff cutter
1 40000 40000
(power operated)
Total 925000
 ANNEXURE – B

Basis & Presumptions

 Type of Animal – Cow - Holestein Friesien/Jersy
 No. of Animals - 10
 No. of animals/batch - 5
 Cost of Animal - Rs.50000 per animal
 Cost of culled animal- Rs.5000
 Transportation Cost/Animal- Rs.1000
 Average Milk Yield (litre/day) 15
 Floor space (sqft) per adult animal 50
 Floor space (sqft) per Calf-20
 Cost of construction per sqft - Rs. 250
 Cost of chaff cutter (power operated)- Rs. 40000
 Cost of equipment per animal- Rs.1000
 Insurance premium (% per annum) 5% of the cost of the animal
 Veterinary aid/animal/ year - Rs.750
 Breeding Service @ Rs.750 per Animal
 Quantity of Concentrate feed in one bag(Kgs)-50
 Cost of concentrate feed - Rs.25/Kg
 Cost of dry fodder - Rs.4/kg
 Cost of cultivation of green fodder- Rs.3/Kg
 Labour Charge@ Rs.1500 per animal/month
 Cost of electricity and water/animal - Rs.250 per animal per month
 Margin (%) 10
 Rate of interest (%) 11
 Repayment period (years) 5
 Selling price of milk/litre (Rs./litre) 32
 Sale price of gunny bags (Rs.per bag) 20
 Sale of Manure@ Rs.1000 per animal
 Lactation days 270
 Dry days 150
 Depreciation on buildings @ 10%/annum
 Depreciation on equipment’s @ 20%/annum
Lactation Chart
Lactation Chart Per animal
I BATCH II BATCH
Year Dry Dry
Lactation Days Lactation Days
Days Days
I 240 120 120 0
II 270 90 210 150
III 270 90 210 150
IV 210 150 270 90
V 210 150 270 90

BATCH I BATCH II
Year Sequence Days Cycle Year Sequence Days Cycle
Y1 L 240 C1 Y1 L 120 C1
Y1 D 120 C1 Y2 L 150 C1
Y2 D 30 C1 Y2 D 150 C1
Y2 L 270 C2 Y2 L 60 C2
Y2 D 60 C2 Y3 L 210 C2
Y3 D 90 C2 Y3 D 150 C2
Y3 L 270 C3 Y4 L 270 C3
Y4 D 150 C3 Y4 D 90 C3
Y4 L 210 C4 Y5 D 60 C3
Y5 L 60 C4 Y5 L 270 C4
Y5 D 150 C4 Y5 D 30 C4
Y5 L 150 C5 Y6 D 120 C4
Feeding Schedule
Lactation period Dry Period
Quantity Cost Feed cost/ Quantity Cost Feed cost/
Type of Feed
(Kg)/ Cow Per Kg day/cow (Kg)/cow Per Kg day/cow
(A) (B) ( Ax B) ( A) (B) (A x B)
Concentrate Feed 5 25 125 2 25 50
Green Fodder 25 3 75 20 3 60
Dry Fodder 4 4 16 5 4 20
Total 216 130
 PROFITABILITY PROJECTIONS
Amount in Rs.
Particulars Year
I II III IV V
Lactation Days - I Batch
(No. of Lactation daysx5) 1200 1350 1350 1050 1050
Lactation Days - II Batch
(No. of Lactation daysx5) 600 1050 1050 1350 1350
Total Lactation Days (A) 1800 2400 2400 2400 2400
Dry Days- I Batch (No. of Dry daysx5) 600 450 450 750 750
Dry Days- II Batch (No. of Dry daysx5) 0 750 750 450 450
Total Dry Days ( B) 600 1200 1200 1200 1200
Cost of Milk per Litre (C) 32 35 39 43 47
Yield per Animal(D) 15 15 15 15 15
Sale of Milk (A x C x D) 864000 1260000 1404000 1548000 1692000
Sale of gunny bags 3420 5580 5580 5760 5760
Sale of Manure@ Rs.1000 per Animal 8000 10000 10000 10000 10000
Total Benefit 875420 1275580 1419580 1563760 1707760
Cost of Production
Cost of Feed /Day (Lactation) …… E 216 227 238 250 262
Total cost of feed during Lactation days
(A x E)….. F 388800 544800 571200 600000 628800
Cost of Feed/Day (Dry)……..G 130 136 143 150 158
Total cost of feed during Dry days(BXG)….H 78000 163200 171600 180000 189600
Total Cost of feed (F+H) 466800 708000 742800 780000 818400
Cost of Veterinary care 18000 18000 18000 18000 18000
Cost of Electricity 30000 30000 30000 30000 30000
Cost of Labour 180000 180000 180000 180000 180000
Cost of insurance 25000 25000 25000 25000 25000
Total cost 719800 961000 995800 1033000 1071400
Gross Profit ----- I 155620 314580 423780 530760 636360
Admin& selling expenses ……J 10000 11000 12000 13000 14000
Operating profit before depreciation.
Interest, Tax (I-J) ……. K 145620 303580 411780 517760 622360
Depreciation ( L ) 45000 45000 45000 45000 45000
Interest on loan(M) 36300 60182 37256 14330 159
Taxes(N) 0 0 0 0 0
Profit after tax{K-(L+M+N)} 64320 198398 329524 458430 577201
Cash Surplus= Profit after tax+
Depreciation-Withdrawal 109320 243398 374524 503430 622201
 ANNEXURE –C

Working Capital Requirement

SL.NO Product Item of No. of Average Cost( Rs) Working

Description Expenditure Days requirement capital
(Kg per Cow Requirement
per day) ( Rs)
One acre
One green fodder
Green Fodder 10000/acre 20000
Season per Season per
5 animals
Dry Fodder 90 5 4 18000
Concentrate 30 2 35 21000
1 Raw Material Veterinary
15 Lumpsum 1000/animal 10000
Services
Breeding
15 Lumpsum 1000/animal 10000
Service
Water &
60 Lumpsum 500/animal 5000
Electricity
Labour Charges 30 Lumpsum 3000/animal 30000
Green Fodder 0 20 3 600
Work in
2 Dry Fodder 1 5 4 200
Progress
Concentrate 1 2 35 700
Yield @ 12
Finished
3 Milk Yield 1 litres per 28 3360
Goods
day/cow
Sundry Yield per cow
4 Milk Sold 14 28 47040
Debtors @ 12 litres/cow
Total 175900
Rounded 175000
 ANNEXURE D

Loan Amount – Rs.990000/- Interest Rate - 11%

Repayment period – 60 months after a holiday period of 6 months
Net repayment period – 54 months
Date Particulars Debit Credit Balance Net Interest Interest Principal
Loan on Net Per annum repayment
Loan*
01.09.2021 To loan 990000 990000 660000 0
1 By repayment 0 990000 660000 6050
2 0 990000 660000 6050
3 0 990000 660000 6050
4 0 990000 660000 6050
5 0 990000 660000 6050
6 0 990000 660000 6050 36300 0
7 17368 972632 642632 5891
8 17368 955264 625264 5732
9 17368 937896 607896 5572
10 17368 920528 590528 5413
11 17368 903160 573160 5254
12 17368 885792 555792 5095
13 17368 868424 538424 4936
14 17368 851056 521056 4776
15 17368 833688 503688 4617
16 17368 816320 486320 4458
17 17368 798952 468952 4299
18 17368 781584 451584 4140 60182 208416
19 17368 764216 434216 3980
20 17368 746848 416848 3821
21 17368 729480 399480 3662
22 17368 712112 382112 3503
23 17368 694744 364744 3343
24 17368 677376 347376 3184
25 17368 660008 330008 3025
26 17368 642640 312640 2866
27 17368 625272 295272 2707
28 17368 607904 277904 2547
29 17368 590536 260536 2388
30 17368 573168 243168 2229 37256 208416
31 17368 555800 225800 2070
32 17368 538432 208432 1911
33 17368 521064 191064 1751
34 17368 503696 173696 1592
35 17368 486328 156328 1433
36 17368 468960 138960 1274
37 17368 451592 121592 1115
38 17368 434224 104224 955
39 17368 416856 86856 796
40 17368 399488 69488 637
41 17368 382120 52120 478
42 17368 364752 34752 319 14330 208416
43 17368 347384 17384 159
44 17384 330000 0 0 159 34752
45 Grant @30% 330000 0 330000
990000 990000 148227 990000
 ANNEXURE – E
Risk assessment for the entrepreneur / enterprise
CREDIT RISK:
a. Whether the borrower is a permanent resident of the area as
per KYC Document Yes
b. No Negative references about the entrepreneur during oral
enquiry Yes
c. In case of SHG Members, the applicant should have
completed one-cycle of loan with full repayment Yes
d. No Previous record of overdue in the loans of the
entrepreneur Yes
OPERATIONAL RISK
e. No major risks for systems failure (e.g. IT servers kept in risk
areas like flood prone or earthquake prone areas) in the
proposed business Yes
f. No major risks for human failure (e.g. chances for monitoring
lapse due to remote or decentralized operations) resulting in
frauds Yes
BUSINESS RISK:
g. The entrepreneur has the adequate experience in the Line of
activity selected Yes
h. The selected activity has enough scope or market Yes
i. The entrepreneur has a plan to manage the Competition in the
industry /sector Yes
j. The business will be commenced on time as per the plan (Is
there any risk for time lapse due to construction or approval
from Govt.) Yes
FINANCIAL RISK:
k. The entrepreneur can maintain the profit margin assumed Yes
l. The payment terms of the clients (credit for 15 / 30 /60 days)
are manageable to the entrepreneur NA
ENVIRONMENT RISK
m. The selected activity is not in the Negative list Yes
i. I have reviewed all the risk factors and find “No major risk” in the proposal.
ii. I find the following risk as a significant risk and the entrepreneur has the following plan
to manage that risk. – No significant risk.

Date: Name and Signature of OSF