Prabhat Dairy JMSB Consulting George Emery Jonathan Suprovici Eliane Roy Cinzia Ruberto

Transcription

1 Prabhat Dairy JMSB Consulting George Emery Jonathan Suprovici Eliane Roy Cinzia Ruberto

2 Mandate What actions should Prabhat undertake to maintain and grow its market position? Fierce competition Tier 1 vs. 2 & 3 Farmers Logistics

3 The major player in Tier 2 & 3 in B2B & B2C Manage the supply chain Utilize existing capacity Branding and marketing Solidify agreements with farmers, rising milk & fodder pricing Forward integration with Kirana s and selling points Ramp up production on Polypack and Value-Added products Increase HR team to manage additional production Repackaging two brands that sit outside Prabhat label Consistent Kirana branding and product portfolio Restructure Prabhat to dominate Tier 2 & 3 sectors

4 Analysis

5 Urban mkt. in India is perfect for expansion Rising annual income Urban spend 187 Rs Total spend 20% Prabhat can use its existing structure to capitalize on this

6 Competition is fierce in Tier 1 Cooperatives (Amul, Mothers Milk) MNC s (Danone, Nestle), private firms 40% move to Urban areas (predominately Tier 2 & 3) Prabhat has a first mover advantage in Tier 2 & 3 Prabhat can be the major player in Tier 2 & 3 with SC adjustments

7 Prabhat s supply chain needs adjustments Milk supply Collection and manufacturing Distribution and sales Marketing and branding

8 Prabhat s supply chain needs adjustments Milk supply Collection and manufacturing Distribution and sales Marketing and branding

9 Prabhat s supply chain needs adjustments Milk supply Collection and manufacturing Distribution and sales Marketing and branding - Fodder and feed - Rising milk prices - Unutilized capacity - Pushing the Prabhat brands - Gain exclusivity - Utilize the Prabhat name Addressing the supply chain will allow Prabhat to grow and expand

10 A need to strengthen tie with Farmers Cooperative model has strong bonds Fodder and feed prices are rising No long term agreements in place Milk prices expected to rise 7-8% It will be key for Prabhat to improve agreements for growth

11 Capacity and product expansion Polypack 50% capacity Value Added 20% capacity Ghee, Curd, Flavored milk, Ice cream

12 Financials

13 Investment Capabilities REVENUE CASH ON HAND LTD RATIO BORROWING CAPACITY 117B Rs 11,7B Rs 4.5M Rs (7% of assets) 15.6B Rs (30% of assets) 27.3B Rs to invest

14 Unused Capacity 28% of revenue = 32.8B Rs MILK 32.8B Rs = 50% capacity 32.8B Rs opporunity VALUE ADDED 72% of revenue = 84.3 B Rs 84.3B Rs = 20% capacity 421B Rs opporunity 117B Rs to 572B Rs sales (488%)

15 Alternatives

16 Strategic Assessment Strategy Low-cost 70% B2B - 30% B2C Operational efficiency Supply issues with farmers Idle capacity Branding & distribution issues Core competency Market High competition Tiers 1 v. Tiers 2 & 3 Rising milk prices

17 Strategic Assessment Strategy Low-cost 70% B2B - 30% B2C Operational efficiency Supply volume with farmers Idle capacity Branding & distribution issues Core competency Market High competition Tiers 1 v. Tiers 2 & 3 Rising milk prices Prabhat needs to adapt its strategy to attract B2C

18 Options to expand Tiers 1 v. Tiers 2 & 3 Criteria Tiers 1 Tiers 2 & 3 Competition Brand recognition Distribution Value-added products competition National Coop & MNC Strong attachment to existing brands Easier High competition First mover advantage No big player Favors regional coop Limited competition

19 Options to expand Tiers 1 v. Tiers 2 & 3 Criteria Tiers 1 Tiers 2 & 3 Competition Brand recognition Distribution Value-added products competition National Coop & MNC Strong attachment to existing brands Easier High competition First mover advantage No big player Favors regional coop Limited competition Tiers 2 & 3 requires forward integration investment

20 Implementation

21 Implementation at a Glance Improve Supply Chain Negotiate Agreements with farmers Plan for Purchasing Kirana s 5000 Open new Kirana Utilizing capacity Increase polypack milk production Increase value added milk production Hire additional production staff Branding & marketing Hire a marketing coordinator Repackage all products to Prabhat Brand Introduce POS programs Branded milk refrigerators

22 Agreements with Farmers Nurture relationships with farmers Incentives if able to provide certain yield Assist with mechanization & planning for improving yield

23 Purchasing Kirana s Hire team to negotiate agreements Hire existing owner as manager Take control of Kirana s dairy mix exclusivity Introduce branded refrigerated equipment Gaining greater control of the entire supply chain

24 Products Available in Kirana s Polypack Milk Powdered Milk Condensed milk Ghee Curd Flavored milk Ice cream Full range of products available at Kirana

25 Location of Kirana s Focus on Tier 2 & 3 cities in Maharashatar state Look for expansion in Gujarat & Madhya Pradesh

26 Prabhat Structure Sarang Nirmal Chairman & MD Vivek Nirmal Join MD B2B Division B2C Division Raw materials division Kirana Division Marketing Operations manager Operations Manager Marketing Coordinator Gaining greater control of the entire supply chain

27 Branding Initiatives Rebranding to Prabhat Remove Flava & Milk Magic brands Rebrand to Prabhat Leverage 20 years of experiencde Promotion Instore POS initiatives Branded refrigerators Pricing Bundle pricing to encourage purchasing Milk & value added products Increase number of Prabhat dairy products being purchased

28 Financial Model MILK VALUE ADDED TOTAL SALES OPERATING EXPENSE KIRANA KIRANA COST KIRANA EMPLOYEE MARKETING OTHER COST PROFIT

29 Questions?