Radical thoughts

On Integration Distribution, Transportation and Warehousing

Sneha Kochar snehkochar@gmail.com

In City Cold storage stations services for dairy, meat , fish and frozen food

In city- refrigeration solution to ensure the significant reduction on operational cost and supply management for the client and their customers focusing on general trade One in city cold station can cater 50-500 mom & pop shops in particular area, it can also deliver to the modern trade departmental stores and online grocery. The proposal is to reduce the cost on refrigeration, maintenance, inventory and credit management for the clients and also ideal for general trade, a grocer dealing with storage issue and constrained products choices Attractive cross-selling proposition, providing end-to-end services

snehkochar@gmail.com

Chill Out- In City Refrigeration

Objectives- to make difference and change things for better Make an appealing offer to customer Positioning- Stand out in the market Great potential for extra turnover Adequate profit potential Fits managements business goals A quickly feasible plan Creates its own internal support

What requires? Primary study -product movement analysis Per ton consumption for mapped area Product wise sales Pricing analysis Logistic costs Customized Service offerings and benefits for customers and consumers Huge saving on cost and focus on resolving consumer pain points

snehkochar@gmail.com

Chill Out- In City Refrigeration

Unique distribution platform with value services
A sales team go to market for taking and filing orders Easy access to market with the tie up with multi product FMCG distributor offer a proposition to take over for only dairy products servicing Revenue sharing arrangement with logistic co. for lead generation Same outlet is serviced by many distributors for same products

Salesmen Distributor

Logistics

Dairy Products

Ambient

Chilled

Frozen

Fresh
Milk Curd Yoghurt lassi

Milk Powder Ghee

Butter Cheese shrikhand

Ice cream Paneer

snehkochar@gmail.com

Chill Out- In City Refrigeration System

City Cold storage (Refrigeration) stations services for the dairy products, meat and frozen food The proposal is to reduce the cost of refrigeration, maintenance, inventory and credit management for the clients and also to deal with current delivery model, storage issues and provide multiple choices of products to the space constrained grocers Opportunity Estimated 12 mn mom & pop stores in India (Source: PWC retail report 2012) Assuming Mumbai has 1% share, i.e 1 Lac general trade stores There is an untapped opportunity due to the shift in general trade model the typical mom & pop shops are delivering on call, lesser and lesser people walking into store for picking up regular supplies Regular food products, dairy (Milk, dahi, butter, cheese, paneer, ice creams larger packs) occupies a lot of space and needs a regular monitoring, stock reporting and return management, which is an additional work to the grocer and the company A single window managing entire chain, a viable distribution platform, customers can achieve better management with huge cost saving advantage Gives attractive cross selling opportunity, to manage entire supply chain right from logistics to distribution network, what it means an additional revenue? Kelvin forward and reverse services Model
Contract Manufacturer / Supplier (2 or more brands)
Full truck load each time

Target customers Mother dairy, Danone, Amul, Britannia, Dynamix, Parag Milk and others.

Mom & Pop shops

Channel returns Departmental Stores

Return Management

Reefer Station
Managing Inventories, credits and Customer returns

Online Grocery selling platforms

snehkochar@gmail.com

Chill Out- In City Refrigeration System Product Features

Model For clients this can ensure smooth operations, reduce cost and seamless delivery systems One In city cold station can serve minimum100 500 stores, these cold storage can manage better inventory, quick turnaround time, credit systems and ensure availability of the regular products on time How it will work?
Shops and vendors will be provided rate cards with products lists, they can place an order every day as per regular needs, delivery can be formulized in a 2-3 delivery systems depending on demand

Client Advantage - Significant cost saving for dairy companies not require to setup individual refrigeration systems for each store for sales and visibility Not require to track returns of perishable goods with shorter shelf life cycle Reduction in cost for maintaining inventory and repairs as well as operations Transportation cost saving Few days reduction in stock processing time Few days reduction in Days of Sales Outstanding, thus annual operating costs saving One stop services, a combination of cold storage and transport program Outsourcing for entire service skipping distributor, right from managing reefer systems and logistics services including credit management reconciliation, triage and testing, stocking and restocking, Easy maintenance on inventory, cost reduction on individual refrigeration installation and maintenance Online inventory tracking and accuracy, stocking and on time delivery management along with credit management Customers can realize maximum savings by having their orders combined to build a full truckload can add additional savings of 1520% cost Trouble-free management of returns Multiple choices of products, get liberty for pushing higher margin complimentary brands Saving on space and electricity cost Ease on operation, regular updated rate cards

For Customers

Win- win for vendors

snehkochar@gmail.com

Chill Out- In City Refrigeration System Model

People Approx 500-700 500-700 Avg Sale Per Month 150 200 150000 150000
The primary research is based on local vendors dialogues , sales comprises milk, dahi, butter, paneer, basic family pack ice cream and cheese

Grocer

Serving

Shop Sq Ft

3-5 Lower Parel Apartments 3-5 Navi Mumbai Apartments

Mumbai Each area has more than 100 grocers Doesnt require high maintenance cold storage its a common refrigeration facility focusing on quick turnaround products Sales on avg of 1500 packets/ month 1ltr(if cold storage available vendor can increase on pillow pouch milk sales currently pillow pouch majorly selling through milk booths), Minimum 500 dahi / month of 400 gms Per 100 grocer average estimated sales is 1.5 cr per month 10 stations can bring minimum 150 cr sales per year! Typical cost is rental, cold storage building, management, operation & maintenance, technology and manpower around 12% of the Income Revenue inflow - end to end supply chain management, distributors margins, service charges for refrigeration and ontime delivery system, returns and inventory management also value add through credit management system on behalf of companies , which typically saves huge cost and fasten up the processes for companies. Challenges Skip over distributors could be a major hurdle, to create an exact attractive structure, tailor made to each company, mapping the right targets and selling the proposition with significant cost saving advantage could be a challenge The model is new and has equal chances for failure, it is easily replicable by existing distributors once they see it success

snehkochar@gmail.com

INCOME STATEMENT
INR Lacs

2014 E Revenue
General Trade MRT Online Distributor Growth (%) Gross Revenue Revenue share Other income Net Revenue Operating Expenses 8400 48 12 360
50%

2015 E
12600 72 18 540 13230.5 1323 662 1985

2016 E
25200 144 36 1080
100%

2017 E

Based on the 2 areas sales on the sign up

35280 202 50 1512
40%

of1000 General Trades Income from Distributors sharing @2% and other value services charged at @10% Referral fees and other income, business referral income is at 5%

8820 882 441 1323

26461 2646 1323 3969

37044 3704 1852 5557

Elec & Fuel Rent Manpower

Admin/Approvals Maintenance Exp Selling And Marketing Expenses Tech & Others Total Operating Expenses EBITDA EBITDA (%)
11%

265 16 24 6 13 13 12 349 974

11%

397 16 24 6 20 20 12 494 1490

794 16 24 6 40 40 12 931 3038

11% 12%

1111 16 24 6 56 56 12 1281 4276

Assumed no new clients added

snehkochar@gmail.com

ASSUMPTIONS
REVENUE ENROLLED NETWORK AREAS GENERAL TRADE MRT ONLINE DISTRIBUTOR IN NUMBERS 2 1000 4 2 ADMIN/APPROVALS 3 MAINTAINANCE EXP AVG SALES PER GENERAL TRADE AVG SALES PER MRT AVG SALES PER ONLINE AVG SALES PER DISTRIBUTOR 0.7 1 0.5 10 INR Lac/ PM INR Lac/ PM INR Lac/ PM INR Lac/ PM TECH & OTHERS MANPOWER 10 EACH AREA AVG SALARY PER PERSON Inflation Effective Tax Rate 1 IN Lacs/AREA 2 IN Lacs/PM 10000 INR 10.00% P.a 33.30% Selling and Marketing Expenses 1% OF THE SALES 1.00% OF THE SALES 3 IN Lacs/AREA COSTS FUEL & ELECTRICITY 20% OF THE SALES

SQ FT AREA A AREA B

RENT INR Rs 270 45000 270 20000

TARGET CUSTOMERS AMUL MOTHER DAIRY NESTLE DANON DYNAMIX BRITANNIA GOWARDHAN CHITLE, GOKUL, VARNA, CAVIN KARE, HERITAGE

notes
DELAY IN PRODUCTS REACH EXCELLENT NETWOK MOSTLY MISSING FROM THE GT MOSTLY MISSING FROM THE GT MOSTLY MISSING FROM THE GT MOSTLY MISSING FROM THE GT MOSTLY MISSING FROM THE GT

Capex Assumptions EQUIPMENTS AUTOS AND DELIVERY VANS Depreciation Rate % of Capex Funded by Secured Loan Secured Loan Interest Rate Annual Repayment in 10 IN Lacs/AREA 2 IN Lacs/AREA 15% 80% 11.50%

MOSTLY MISSING FROM THE GT

4 Years snehkochar@gmail.com