INSTANT VENDING OF

MANGO SHAKE
1.0 INTRODUCTION
Natural fruit juices are becoming popular and many people prefer it. Except for 2½-3 months
during winter season, cold drinks, ice-cream, fruit juices, syrups etc. are consumed round the
year by people of all age groups. With growing population and improving standards of living
people are willing to pay for such products and they are no more "luxury" items. But fruits
are available only during respective seasons which last for 3-4 months. With the advent of
technology, fruit juice concentrates, pastes, squashes, pre-mixes etc. are available during off-
season as well and thus milk shakes or fruit juices can be easily consumed any time of the
year. Vending machines are becoming popular in our country and this note suggests such
machine for mango shake.

2.0 PRODUCT
Mango is a fruit which is perhaps the most popular amongst all Indian fruits. But it is
available only from March to May every year. Hence, premix made of pure alphonso mango
powder and milk powder can be used to offer cold mango shake with the help of a vending
machine. People would prefer it as the vending process is hygienic. Alfanso mangoes are
cultivated in Maharashtra and a suitable location in that state shall be ideal.

2.1 Compliance with PFA Act and FPO is mandatory.

3.0 MARKET POTENTIAL

3.1 Demand and Supply
Vending machines are becoming popular in India as they are neat and clean, quality of
inputs and quantity of output is adjustable and the operations are hygienic. Tea and coffee is
regularly served by such machines at many places and apple juice and lemon mix are also
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 popular. On the same lines, vending of good quality mango shake is contemplated. Mango
juice is popular throughout the country and is liked by most of the people. Tropical climate
compels people to look for cold drinks, juices or milk shakes. The most important aspect
would be strategic location and good quality as well as consistency.

3.2 Marketing Strategy

The location has to be amidst shopping or commercial complexes, on major traffic junctions
or busy market area. Pre-mix has to contain pure alphonso juice and milk powder and no
compromise can be made about quality. Many consumers would prefer vending machines
compared to improperly maintained fruit juice centres and unhygienic conditions prevailing
in many of them.

4.0 VENDING PROCESS

Automatic vending machines are available. Preparation of pre-mix is crucial. Pure alphonso
mango powder and milk powder without any additives (except water) must be used and same
good quality has to be maintained. Water level, temperature, dispensing rate etc. are
adjustable and once adjusted, they work automatically unless some changes are made. The
machine can be easily dismantled, cleaned and assembled within few minutes. Different
capacity canisters and water tanks are available.

5.0 COST OF THE PROJECT AND MEANS OF FINANCING

There is no need of land or building but while selecting location, utmost care has to be taken
to ensure that it is in upmarket area with many people frequenting it, full of commercial
complexes or office area. A suitable location has to be selected and permission from the local
authorities and owner of the building has to be taken. Bank would be hesitant to provide
working capital and hence the promoter must arrange for own working capital of around Rs.
10,000/-. The total cost would be Rs.1.30 lacs as detailed below.

Item Qty. Price (Rs.)

Vending Machine 1 90,000
Display Table 1 10,000
P&P Expenses -- 20,000
Working Capital -- 10,000
Total 1,30,000
Means of Financing
Promoters' Contribution 40,000
Term Loan from Bank/FI 90,000
Total 1,30,000
Debt Equity Ratio 2.25 : 1
Promoters' Contribution 30%

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 Financial assistance in the form of grant is available from the Ministry of Food Processing
Industries, Govt. of India, towards expenditure on technical civil works and plant and
machinery for eligible projects subject to certain terms and conditions.

6.0 PROJECTED PROFITABILITY

6.1 Sales Income
It is assumed that the stall would work for 350 days and 75 glasses will be sold every day
during first year and 100 glasses in the second year. In view of competition from existing
products and allied products, selling price could be Rs.8/- per glass for dispensation of 100
mls. Thus, annual income in first year would be Rs. 1,20,000/- which would go upto Rs.
2,10,000/- in second year.

6.2 Raw Material

Pre-mix of alphonso mango powder and milk powder and disposable glasses and pure
drinking water are the raw materials. Total cost would be Rs. 3.25 per glass.

6.3 Other Expenses

There will be other expenses like rent of the space, maintenance of vending machine,
depreciation @ Rs.12, 000/- per year and conveyance. A lump sum provision of Rs. 3,500/- is
made towards them.

6.4 Interest
Interest @ 12% is computed on term loan of Rs. 90,000/- which would be repaid in 3 years
including a moratorium period of 6 months.

6.5 Projected Profitability Statement

(Rs. in lacs)
No Particulars 1st Year 2nd Year
[A] Sales Income 2.10 2.80
[B] Operating Costs
Raw Materials 0.73 1.14
Operating Expenses 0.30 0.36
Profit before Interest & Depreciation 1.07 1.30
Interest on Term Loan 0.08 0.06
Depreciation 0.12 0.12
Profit before Tax 0.87 1.12
Income-tax @ 20% -- --
Profit after Tax 0.87 1.12
Cash Accruals 0.99 1.24
Repayment of Term Loan 0.16 0.32

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7.0 [A] Debt Service Coverage Ratio (DSCR)
(Rs. in lacs)
Particulars 1st Yr 2nd Yr 3rd Yr
Cash Accruals 0.99 1.24 1.23
Interest on TL 0.08 0.06 0.05
Total [A] 1.07 1.30 1.28
Interest on TL 0.08 0.06 0.05
Repayment of TL 0.18 0.36 0.36
Total [B] 0.26 0.42 0.41
DSCR [A] ÷ [B] 4.11 3.09 3.12
Average DSCR ------------------- 3.44 ------------------

[B] Internal Rate of Return (IRR)

Cost of the project is Rs. 1.30 lacs.
(Rs. in lacs)
Year Cash 24% 28% 32%
Accruals
1 0.99 0.42 0.37 0.33
2 1.24 1.00 0.97 0.94
3 1.23 0.80 0.75 0.71
3.46 2.22 2.09 1.98

The IRR is around 40%.

Some of the machinery suppliers are

1. De laval Pvt. Ltd., A 3, Abhimanshree Soc., Pshan Rd., Pune- 411008.
Tel No. 25675881/882/886
2. Food and Biotech Engg. (I)Pvt Ltd., 291, Sector 37, Faridabad-121002.
Tel No. 2272011/2278058.

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