Samridhi proposal-Jan

About Samridhi

Samridhi is a registered for-profit company and is an associate company of Sanchetna Financial Services

(Sanchetna), a microfinance institution working in the rural areas across five districts surrounding the

city of Lucknow in Uttar Pradesh, India. Samridhi’s objective is to promote sustainable employment

opportunities for the rural and semi-urban poor, primarily by filling the gaps of local value chains in a

way that unlocks greater potential for community-based economic activities. Employment platforms

include dairy farming and vegetable vending; Samridhi plans to pilot test and launch the dairy initiative

in late summer 2011, with the vegetable vending platform to follow in early 2012. Samridhi is also

seeking to set up Farmer Facilitation Centers for better availability of farm inputs for the marginal

farmers. This profile describes the dairy initiative in greater detail.

Executive Summary

For a long time, it was regarded that rural development is the primary pre condition for growth of a

developing country. This understanding is going through a change, with rapid urbanization becoming the

trend of the day. However, this has had adverse implications for the agricultural sector. With the fast

diminishing land holdings, the predominantly agricultural dependant population is struggling to meet

their ends. Agriculture has been losing its capacity to engage a large workforce. In such a scenario, any

livelihood solution to the rural population should be one which is labor intensive and has a capacity to

absorb people who are otherwise unemployed or underemployed.

While looking to make an intervention in the field of livelihood solutions, the promoters of Sanchetna

researched about the Dairy sector. Dairy sector is the single largest contributor of agricultural sector to

India’s Gross Domestic Product, with its annual value exceeding Rs. 11790 crores in the year 20041. India

has emerged as the largest milk producer in the world with about 108 Mn Ton milk production in the

years 20062.

Despite this, Indian agriculture is essentially a ‘crop-livestock production system’, where crop residues

are fed to the milch animals. Besides this, dairy farmers utilise family labour available in their own

household for milk production activities. This very passive nature of livestock-rearing helps Indian

dairying industry retain its cost-competitiveness vis-à-vis many other leading countries like New Zealand

or Australia. However, this also gives way to low milk productivity of milch cattle & low quality of milk

with regards to the internationally accepted standards. E.g. Productivity of cattle in India is 987

Kg/lactation whereas global average is 2084 Kgs/lactation3. Other factors for lower productivity can be

1 Smallholder dairy development - Lessons learned in Asia... From FAO Directory

2 Animal Husbandry Department, Government of India

3 Smallholder dairy development - Lessons learned in Asia...From FAO Directory

summarized as poorer quality of cattle and also lack of extension services in the field of animal health

and up-keep. At the same time, meaningful intervention in this field can take care of providing livelihood

solutions to about 75% of rural households who own two or more cattle4.

Genesis of Samridhi

In order to offer financial services to a vast section of society, predominantly rural, which is outside the

ambit of organized players, a group of like-minded young professionals having had exposure to different

sectors started a company in the name of Sanchetna Financial Services Pvt Ltd in mid-2008. After

working closely with rural populace for about a year, the promoters realized that financial services alone

will not make sufficient & long-lasting impact on the livelihoods of these people unless these are

clubbed with other business support services.

Thus, to support various elements of the eco-system around a host of livelihood activities being

practiced in the rural areas, the promoters set up Samridhi Agri Products Pvt Ltd. Equipped with the

valuable insights gained from the close relationship of the former company with rural people, and given

the past work experience of some of the promoters, Dairying was chosen as the activity where Samridhi

sought to make interventions. While considering dairying as an industry, several support services are

assumed to go hand in hand, like availability of high-yielding varieties of milch cattle, provision of

nutritional cattle feed, institutionalization of milk procurement from villages, timely payment to milk-

pourers, artificial insemination, veterinary services, cattle insurance, milk processing, packaging and

marketing.

Promoting dairying not only touches the economic aspects of the lives of rural populace, but also

promotes gender and social equity: 58% of the total workers engaged in the dairying sub-sector are

women. The participation of women in other activities, including agriculture, is low compared to that in

animal husbandry, particularly dairying. Further, the majority of dairy workers belong to socially and

economically disadvantaged communities: Scheduled Tribes (STs), Scheduled Castes (SCs) and Other

Backward Castes (OBCs) together constitute about 69% of the persons employed in dairy sector.

Target Geography

Samridhi had first piloted the dairy model in Deva block of Barabanki district of Uttar Pradesh. The team

is currently piloting the new model in the same block and would later expand to other blocks.

Barabanki district is marked as ‘A’ category district that is the socio economic parameters are below the

parameters set on national average grounds. Deva Block is a rural block, where agriculture, animal

husbandry, and bee keeping are the main economic practice. The main crops grown are wheat, paddy

and maize. Menthol oil is a vastly grown cash crop in the region. The average income for a farmer or a

dairy producer is very low and there are many villages with a large number of people below poverty line.

4 Smallholder dairy development - Lessons learned in Asia...From FAO Directory

About the Region – Uttar Pradesh

Uttar Pradesh, located in north India, is the most populous state in the country accounting for 16.4% of

the country’s population, and is also the world’s most populous sub-national entity5. Lucknow is the

capital city of Uttar Pradesh. The per capita income of the state is among the lowest in India. Uttar

Pradesh, along with Bihar and Orissa, lags behind in social indicators such as medical facilities, birth rate,

death rate, infant mortality rate, literacy, unemployment, etc.6

Majority of the population is dependent on farming as its main occupation. Poverty estimates provided

by the Planning Commission reveal that Uttar Pradesh has 59 million people who are below poverty line.

Government schemes and market reforms have failed to percolate down to the rural economy in UP. As

per the multi-dimensional poverty index (MPI)7, Uttar Pradesh has over 134 million people (21% of

5 http://www.tourismofindia.info/uttar-pradesh-tourism/

6 Website of the Govt. Of UP - http://upgov.nic.in/upinfo/up_eco.html

7 The Multidimensional Poverty Index (MPI), an Oxford poverty and human development initiative, complements

income poverty measures by reflecting the deprivations that a poor person faces all at once with respect to

education, health and living standard

India’s poor) who are multi-dimensionally poor. Even microfinance, which has penetrated large parts of

India, has frustratingly low penetration in Uttar Pradesh. Total outreach of microfinance in the state is

around 1.2 million8 (compared to the total covered, 23 million, in India).

Current Operations

Having started its operations towards the end of 2009, Samridhi started with milk procurement from

April’10. Samridhi currently procures about 1000 LPD from 13 villages. Milk procurement is faced with

the factor of seasonality, which is much more prominent in case of buffaloes. Therefore Samridhi has

made special efforts to procure cow milk even by putting a differential pricing strategy that gives weight

to SNF (as compared to fat) which makes it more equitable for cow milk.

Samridhi has set-up one model unit which comprises 10 - 12 villages having a capacity to pour about

2000 LPD. Each of these units is given one Bulk Milk Cooler (BMC) and is manned by one BMC In-Charge

and three-four employees who will look after milk collection from villages.

As on date, Samridhi serves 150 farmers across 10 villages and buys milk from them at better than

market rates. Regular milk sales allow these people to move from subsistence to earning a market-based

income. Typically, these women already own 1-3 cows and sell milk to a middleman every day. However,

they are constantly subjected to delayed and below-the-market payments for their produce. Through

the dairy initiative, Samridhi works with these women and gives them accurate and timely payments.

Samridhi’s rates are higher than that given by the middlemen or even the state dairy cooperative.

Samridhi serves the population that did not have any control over the pricing or payments of their

commodity and consequently was getting disillusioned from dairy as a business. However, the team felt

that this model was not impacting the lives of the ultra poor or the poorest of the poor.

Samridhi thus developed a new model to effectively serve multiple layers of the poor.

The New Model

Samridhi works with two different client segments in the dairy initiative:

1. Ultra Poor (“UP”) Households (under $1.25 / day)

8 Microfinance map of India – source: Sa-dhan

These are small, rural farmers who are among the poorest groups in India and have little to no assets. At

present, they cobble together odd jobs, such as manual labour or field work, to earn an income. They

seek steady income to stabilize their lives and address their basic necessities. Samridhi will develop

robust selection criteria to ensure that only ultra poor women are given access to stable employment as

they do not have any other sources of employment.

The basic premise of the model is to make UP families part of the milk production cycle and to make use

of the reproductive assets to reproduce as many similar nature assets as possible. This will allow

Samridhi to reach out to as many such families as possible. This will in turn make sure that Samridhi has

a large number of milk producers having their own productive assets. While the cattle is owned by the

organization, the client gets a fixed payment and portion of milk as remuneration for the same. The

subsequent offspring of the cattle is owned by the client.

Under this model, Samridhi provides each of their clients with one or more cows with total productivity

of 8 Litres per day or three to five goats with total productive capacity of 5-6 Litres for milk production.

In case of cow, the client rears the cow on her own and meets all related expenses. As long as she

provides milk worth Rs. 16,580 every year, she gets a fixed wage of Rs. 650 per month. Any milk above

this minimum requirement belongs to the client and she can decide whom to sell this milk to and at

what price. Taking a particular example of 8 Liters milk being available the client can end up making Rs.

650 as fixed wage and Rs. 1700 by selling the milk to Samridhi collection center. Another benefit for the

clients will be from the offspring of the cow which will be their asset; Samridhi will not have any

ownership over them. This way the family could end up owning about four cows within a span of 10

years.

When the cattle is dry and does not provide any milk, Samridhi still pays them Rs. 650 every month.

After the cow gives birth, the client gets to own the calf. Until the she-calf starts giving milk, the original

cattle will remain with the client, and thereafter be taken back by the company and allotted to another

client.

The table below shows one year timeline of milk generation from a 2 year old cow.

Assumptions

1. Total production starts from 8 Litres per day, and goes on decreasing with time.

2. The figures taken here are an average over a year. However, as cow productivity declines,

Samridhi’s share also declines with it.

3. A cow is assumed to be in lactation for nine months in a year. For the three months over the dry

period, Samidhi still pays an amount of Rs.650 per month to each client.

4. The table given here assumes the worst case scenario with respect to offsprings. In the first

year, we assume a male calf, and in the second year a female calf that will hold a value only in

the third year.

Month

Value of

total

production

Samirdhi's

share

Client's

share

Samridhi's

Margin

Total

Samridhi

Benefit

Fixed

wages

Cattle

to

client

Total

client

benefit

Year 1 32025 16585 15440 4575 21160 7800 1000 24240

Year 2 32025 16585 15440 4575 21160 7800 0 23240

Year 3 32025 16585 15440 4575 21160 7800 11000 34240

Apart from cow, Samridhi also provides goats to some of the clients. As a livelihood option the

reproduction cycle of goats is shorter at 5 months. Moreover, goats generally give birth to twins and the

price of male kid is the same as that of a female kid. However, due to the social stigma attached to

rearing goats, not many clients are willing to rear goats as livelihoods.

As goats are rarely reared for milk, Samridhi has entered into an agreement with The Goat Trust

foundation to source goats. The Trust will also train para-vets in the project area who will take care of

the preliminary ailments to the goats in the villages. As these people will not be on the pay-rolls of

Samridhi, they will provide their services to other cattle owners in the village as well.

Under this programme, Samridhi provides three to five goats with a total productivity of 5 Litres to each

client. In the first batch, Samridhi is procuring goats of Sirohi breed through The Goat Trust, but going

forward, local breeds will be procured as well. Given that a goat reproduces twice in a year, Samridhi

lets the original goat be with the client and takes two female goats that it produces over a span of three

years. In case the goat produces a male goat, it is kept by the client, who may also sell the same to

Samridhi under buy-back guarantee scheme @165/Kg body weight.

For Goats, the timeline of productivity is given below.

Assumptions

1. Average total production stands at 5 Litres per day.

2. A goat is assumed to be in lactation for eight months in a year. For the four months over the dry

period, Samidhi still pays an amount of Rs.600 per month to each client.

3. The table given here assumes the worst case scenario with respect to offsprings. For each goat,

in each year, we assume two male kids and one female kid. Out of these, Samridhi takes back

one female kid in the first year, and one in the third year.

Month

Value of

total

production

Samirdhi's

share

Client's

share

Samridhi's

Margin

Fixed

wages

Cattle

to

client

Cattle to

Samridhi

Total

Samridhi

Benefit

Total

client

benefit

Year 1 25620 17934 7686 3660 12000 15000 7500 29094 34686

Year 2 25620 17934 7686 3660 12000 22500 0 21594 42186

Year 3 25620 17934 7686 3660 12000 15000 7500 29094 34686

Client Advantage-

The main advantage to the client is that within 2 years time, the client actually gets to own milk giving

cattle that will be completely out of Samridhi’s dominion. The average cost of rearing the cattle should

average out to be around Rs.500 per month. For this, they get a fixed payment of Rs.650, and market

rate for the milk produced over and above the agreed upon limit.

Below is a graphical representation of the value chain:

Once the cattle has been handed over to the client, she immediately becomes solely responsible for the

rearing of the cattle. Everything from feeding the cattle to attending to its illnesses is taken care of by

the client. The cattle is as good as the client’s own asset. The client has to ensure that the animal

remains healthy and physically stable. At the time of returning the animal, Samridhi expects it to be in

the same condition as it were at the time of assigning to the client.

Samridhi’s role, however, does not end once the cattle is assigned and handed over.

The grid below explains the division of responsibilities between different players:

Activity Samridhi Client

Cattle Purchase Samridhi purchases and gives it to the client

Client receives cattle from

Samridhi

Cattle Maintenance No involvement Maintains on her own

1. Samridhi selects the

clients based on Poverty Indicators

2. Client selects the

cattle

3. Samridhi procures the

cattle and hands it over to the client

4. Women clients rear the cattle

5. Samridhi collects milk and makes payment to

the client

Milk Selling Collects milk from the clients and sells it ahead Gives milk to Samridhi

Risk Mitigation Cattle insurance in Samridhi's name No involvement

Calving

Keeps the original animal after calf starts giving

milk Owns the calf

Veterinary Services Makes services available to the client Pays for services

Since rearing of the cow/goat is a low skilled job and requires only 1/2-1 hour of work in a day, the

income is more lucrative than other livelihood options. More importantly, it supplements the income

generated by the male member of the family and helps them move out of extreme poverty.

To measure the income levels and change in quality of life brought by this programme, Samridhi

conducts surveys to calculate certain indices:

• For potential clients, the company first conducts a survey in the targeted villages, where we

calculate the Progress Out of Poverty Index, which takes into account the incomes, expenditure,

the housing index, the education levels etc. This is our primary measure of the impact that our

services will generate.

• The clients reside in ‘kachha’ houses made of mud or thatches, and on an average have 4-6

children who are not going to school, and working as farm labour instead. Their average

monthly income is Rs.1500 to 2000.

• Ideally, the PPI score for our clients is less than 18. This indicates that the households are ultra

poor with minimal assets, and large families to support.

• The combined household and asset index comes to below 10. This implies that the clients reside

in ‘kachha’ houses, seldom have access to private source of water, and have no toilet and

sanitary facilities at all.

2. Poor Households (earning between $2 - $3 / day)

More than 40% of Indian farming households, roughly two thirds of which own less than 1 hectare of

land, are engaged in milk production as they can engage in this activity with relative ease to improve

their livelihoods basket. Regular milk sales allow them to move from subsistence to earning a market-

based income. Typically, these women already own 1-3 cows and sell milk to a middleman every day. As

described above, however, they are constantly subject to delayed and below-the-market payments for

their work.

Through the dairy initiative, Samridhi works with these women and gives them accurate and timely

payments. Samridhi’s rates are higher than that given by the middlemen or state dairy cooperative.

Another benefit of working with Samridhi is that the women are paid predictable amounts on a weekly

basis, which directly alleviates the current problem of erratic and/or substandard payments.

Apart from cattle, Samridhi also provides extension services to these women. Keeping that in mind,

Samridhi has also tied up with organizations which have expertise in providing veterinary services such

as artificial insemination, vaccination and de

feed with an objective of maintaining the yield of the cattle. With

ultra poor households as possible, the original asset will be transferred to another family as soon as it

bears a subsequent productive asset.

Samridhi benefits two distinct client groups, one as employees and one as su

While the financial returns are important to ensure scalability, Samridhi has a strong focus on the social

objectives and tracks the social metrics

1. Economic Objective: To provide members/ clients with a source of income by facilitating better

services at lower prices. Besides giving them a direct source of income, Samridhi also aims to

impart the necessary skills to increase their production, by using resources in the most efficient

manner.

2. Social Objective- To empower the impoverished sector, n

them a sense of independence and knowledge, that will facilitate community participation and

decision making. This holds especially true in the case of gender roles, since this additional

income is directed towards the w

the woman heading the household. Thus, in a way, we are creating employment opportunities

for women in villages who otherwise do not have a fixed means of earning. This bears an

important social role in villages. Creating income for them leads to a feeling of empowerment

among women and gives them discretion in decision making.

Support Services-

as artificial insemination, vaccination and de-worming of cattle. Samridhi will also provide quality cattle

objective of maintaining the yield of the cattle. With the objective of reaching as many


bears a subsequent productive asset.

Samridhi benefits two distinct client groups, one as employees and one as suppliers:


objectives and tracks the social metrics

Economic Objective: To provide members/ clients with a source of income by facilitating better

rvices at lower prices. Besides giving them a direct source of income, Samridhi also aims to


To empower the impoverished sector, not only economically, but by giving



income is directed towards the women of the household. The cattle are issued in the name of



role in villages. Creating income for them leads to a feeling of empowerment

among women and gives them discretion in decision making.

worming of cattle. Samridhi will also provide quality cattle

the objective of reaching as many



Economic Objective: To provide members/ clients with a source of income by facilitating better

rvices at lower prices. Besides giving them a direct source of income, Samridhi also aims to


ot only economically, but by giving



omen of the household. The cattle are issued in the name of



role in villages. Creating income for them leads to a feeling of empowerment

As mentioned above it is essential to provide supporting environment to the activity of cattle reari

a livelihood option. Following is the bucket of facilities that Samridhi will be providing as a part of

implementation of the project.

1. Cattle Insurance- The cattle will be insured before being handed out to the client. For this

purpose, Samridhi has tied collaboration with TATA AIG, which will be providing cattle insurance

to us. In case of animal death, the client does not bear any additional expenses. The client will

not be held responsible, and the claim for the cattle will be given to the comp

2. Network of Para-vets- For regular check up on the animal, we will train a woman from each

village to provide basic veterinary services in that particular village. Thus we create the concept

of ‘Pashu Sakhi’. The Pashu Sakhi will be trained free of cos

medicines to heal basic ailments. She can charge a fixed percentage on these medicines while

selling them to the clients when they approach her. Thus, it provides a channel of income for the

Pashu Sakhi.

3. Cattle Feed- Samridhi also provides cattle feed to its clients at less than market price. The cattle

feed is delivered at their doorstep. Thus they save money on the cost of the item, as well as

travel and time costs.

4. De Worming Tablets and Vaccination

milk, we provide de worming tablets. The client does not need to pay for these. They are told

about the importance of these tablets, and how they are supposed to be consumed by the

cattle.

5. Artificial Insemination- Samridhi

expenses will be borne by the client, the provision of the vet and other facilities will be

provided, so that the client does not have to spend more time and cost on searching for these

facilities. A safe and healthy practice of AI is assured by Samridhi, and the calves thus generated

will be an asset of the client.

Key Competition

Competitive Advantage

As mentioned above it is essential to provide supporting environment to the activity of cattle reari


The cattle will be insured before being handed out to the client. For this

has tied collaboration with TATA AIG, which will be providing cattle insurance


not be held responsible, and the claim for the cattle will be given to the company.

For regular check up on the animal, we will train a woman from each


of ‘Pashu Sakhi’. The Pashu Sakhi will be trained free of cost, and be provided with basic



also provides cattle feed to its clients at less than market price. The cattle


De Worming Tablets and Vaccination- As a subsidiary service to clients from whom we collect



Samridhi will assist the clients for practices like AI. Although the



. A safe and healthy practice of AI is assured by Samridhi, and the calves thus generated

will be an asset of the client.

As mentioned above it is essential to provide supporting environment to the activity of cattle rearing as


The cattle will be insured before being handed out to the client. For this

has tied collaboration with TATA AIG, which will be providing cattle insurance


any.

For regular check up on the animal, we will train a woman from each


t, and be provided with basic



also provides cattle feed to its clients at less than market price. The cattle


to clients from whom we collect



will assist the clients for practices like AI. Although the



. A safe and healthy practice of AI is assured by Samridhi, and the calves thus generated

The procurement volume in the region has a seasonal pattern with many small dairies operating only

during the flush season. Since none of these dairies have so far focussed on either giving good rates to

the farmers or provided any extension services to improve the cattle productivity, this trend is likely to

continue in the years to come.

The long marriage season during the lean season also ensures that the most of the milk is purchased by

the dudhias at very attractive prices. The state dairy cooperative (Parag) is the only player in the market

with a reasonable presence in areas surrounding Lucknow. The drawback with the state cooperative is

that it mostly covers villages which are situated on the main roads, which leaves out a large chunk of the

villages where organized players such as Samridhi plan to reach.

Having a symbiotic relationship with Sanchetna, which is already providing the farmers with capital and

insurance services, Samridhi provides the services of veterinary doctors to the farmers. The company is

in the process of setting up a system wherein the farmers will be provided with cattle feeds at

affordable rates.

The promoters put a lot of emphasis on direct & regular touch with the milk producers, economic

empowerment of milk producers, transparency, customer service & professionalism. These all will help

us gain an edge over the competition.

The following is a snapshot of the Samridhi’s positioning vis-a-vis other market players:

State Milk Co-

Operative

Private Players Milk Men

(Dudhias)

Samridhi

Outreach Villages on the

connecting roads

Towns Interior Villages Interior Villages

Milk Rate Basis FAT and CLR FAT Only (Favours

Buffalo Milk)

No Scientific Basis FAT and CLR

(about Rs. 1/Ltr

more than that of

Co-op)

Payment Monthly Basis Monthly Basis Erratic Weekly

Point of Contact Co-ordinator Milk Middleman Farmer Farmer

Financial

Assistance

Not Available Not Available Available Available

Cattle Insurance Not Available Not Available Not Available Available

Veterinary

Services

Available but

erratic

Not Available Not Available Available

Financial Analysis

The business model of Samridhi is based on the margin between procurement price of milk from the

rural areas and selling price to the milk company.

While coming to procuring milk from the villagers there will be two different set of producers

1. Population already having one or more milch animal

2. Population living below poverty line not having cattle who will be provided with cattle to be

reared for a period of three yea

the member whereas the offspring of the cattle will be owned by the member whereas the

original asset will belong to Samridhi. During this period the member will be paid Rs. 500/month

(hiked by inflation YOY) as fixed wages.

Other assumptions are as follows

1. Price of milk will be determined on the basis of FAT and SNF

2. Margin between procurement and selling price is Rs. 3/Liter

3. Fixed cost of maintaining Bulk Milk Cooler for one month including

utilities is INR 70,000

4. In case of Samridhi’s cattle being reared by members 2.82 LPD/Member will be poured to

Samridhi for which there will be no other payment other than fixed wages to the clients

Income Year 1

Milk Sold - Samridhi Portion 5956800

Milk Sold - Client Portion 2803200

Grant Income 500000

Total Income 9260000

Field Staff reaches Village

Collection Center

Milk is collected, sample is

tested for Fat and CNR content


rural areas and selling price to the milk company.

procuring milk from the villagers there will be two different set of producers

Population already having one or more milch animal

Population living below poverty line not having cattle who will be provided with cattle to be

reared for a period of three years over that period the milk will be shared between Samridhi and



by inflation YOY) as fixed wages.

Price of milk will be determined on the basis of FAT and SNF

Margin between procurement and selling price is Rs. 3/Liter

Fixed cost of maintaining Bulk Milk Cooler for one month including salaries, transportation and

In case of Samridhi’s cattle being reared by members 2.82 LPD/Member will be poured to


Year 1 Year 2 Year 3 Year 4 Year 5

5956800 5956800 5956800 5956800 5956800

2803200 8935200 27331200 50983200 78139200

500000 0 0 0

9260000 14892000 33288000 56940000 84096000

collected,

tested for Fat

Milk collection van transports the collected

milk to BMC at Saddipur

Milk stored and chilled in

the BMC before being

transported to Dairy

Milk collection van transports all the milk to our partner

Dairy where it is processed

and packaged


procuring milk from the villagers there will be two different set of producers

Population living below poverty line not having cattle who will be provided with cattle to be

rs over that period the milk will be shared between Samridhi and



salaries, transportation and

In case of Samridhi’s cattle being reared by members 2.82 LPD/Member will be poured to


Year 5

5956800

78139200

0

84096000

Milk collection van transports all the milk to our partner

Dairy where it is processed

and packaged

Expenses

Milk Bought 2394400 7632150 23345400 43548150 66743900

Salaries 834000 834000 834000 834000 834000

Admin Expenses 252000 252000 252000 252000 252000

Training Expenses 300000 80000 0 120000 0

Interest Expenses 900000 72000 54000 36000 180000

Depreciation 30000 30000 30000 30000 30000

Total Expenses 4710400 8900150 24515400 44820150 68039900

PBT 4549600 5991850 8772600 12119850 16056100

Income Tax 1501368 1977311 2894958 3999551 5298513

PAT 3048232 4014540 5877642 8120300 10757587

Assets Year 1 Year 2 Year 3 Year 4 Year 5

Cash and Equivalents 2078232 5972772 11730413 19730710 30368294

Livestock 7200000 7200000 7200000 7200000 7200000

BMC 270000 240000 210000 180000 150000

Total Assets 9548232 13412772 19140413 27110710 37718294

Liabilities

Equity 9548232 13412772 19140413 27110710 37718294

Total Liabilities 9548232 13412772 19140413 27110710 37718294

Cash Flow

Inflow Year 1 Year 2 Year 3 Year 4 Year 5

Opening Balance 0 2078232 5972772 11730413 19730710

Capital Infusion 80,00,000 0 0 0 0

Milk Sold 9260000 14892000 33288000 56940000 84096000

Total Inflow 17260000 16970232 39260772 68670413 103826710

Cash Outflow

Milk Bought 2394400 7632150 23345400 43548150 66743900

Salaries 834000 834000 834000 834000 834000

Training Expenses 300000 80000 0 120000 0

Rent and other utilities 252000 252000 252000 252000 252000

Livestock 7200000 0 0 0 0

BMC 300000 0 0 0 0

Interest Expenses 900000 72000 54000 36000 180000

Loan Repayment 1500000 150000 150001 150002 150003

Income Tax 1501368 1977311 2894958 3999551 5298513

Total Outflow 15181768 10997461 27530359 48939703 73458416

Closing Balance 2078232 5972772 11730413 19730710 30368294

Capital Requirement

As captured in the financial statements above total capital requirement is INR 80,00,000 in order to

reach about 400 clients in 20 villages. We shall be able to scale up it even further subject to access to

further capital.

Risk Mitigation:

Currently, Insurance Companies do not have an extensive network in the rural hinterlands. These often

rely on NGOs, insurance agents etc. to meet their regulatory requirement of rural portfolio. Lack of

awareness among the rural people makes it difficult for them to benefit from insurance products. While

it is our endeavour to enable milk producers to maximise profits from cattle rearing, it might backfire

and push them back to below-poverty levels, if their cattle are not properly insured. Thus, like any other

business, risk mitigation has to be provided. Currently, Samridhi is providing cattle insurance by offering

through TATA-AIG, a general insurance company. The non-members of Samridhi are also offered this

service, albeit at a slightly higher price. Moreover, veterinary services at affordable prices & other

business-support services would also reduce business risk for the producers.

Risk/

Challenge

Factor

Source and Impact Way to Mitigate

Procurement

Risk

• It is difficult to procure cattle in

large numbers, more so when it is

important to take care of the

breed.

• The result could be slow

scalability of the project.

Samridhi will tie up with the necessary

service providers to provide Artificial

Insemination for the goats, thus also

catering for breed enhancement.

Quality Risk • Since we are procuring the goats

from Rajasthan, it is possible that

the supplier does not provide

genuine breed.

• The result could be low

productivity of goats.

Goats are purchased on agreement with

the supplier, which will clearly state that

the payment to the supplier will be

made only after the goat delivers the

pre-stated amount of milk.

Risk on part of

the Member’s

Upkeep

• Since the cost of the original cattle

is not borne by the members, they

might not take proper care of the

animal.

• The result could be deteriorating

The formation of Village Committees will

ensure continuous monitoring.

Moreover, the Village Supervisor will be

making daily visits to each household

and recording the health status of the

health of the cattle, as well as low

productivity.

animal with a camera. The body weight

of the animal will be measured at

regular intervals and if fallen below a

particular level, the cattle will be taken

back by the company. All of this will be

communicated to the client beforehand

in the agreement. Also, since a major

part of the milk will be owned by the

client, he has a positive incentive to

maintain the cattle well.

Risk from

Competition

• The client might report lesser

milk, and sell it elsewhere to other

parties in milk business.

• The result could be a substantial

decrease in the company’s

revenues.

The initial agreement will stipulate the

amount of milk expected by the

company. In case the shortfall reaches a

particular amount, the company will

take the cattle back from the client.

Also, there is day to day monitoring

done by the Village Supervisor.

Reproductive

Risk

• There could be time distortions in

delivery of goat kids, since it

depends on a number of external

factors that may not be in control

of the goat rearer.

• This could result in slower

scalability.

Samridhi will arrange for Artificial

Insemination for the goats, thus making

the whole procedure scientific. Also the

para vets will record regularly and keep

a check on the time of goat’s heat

period, so that the AI can be done at

appropriate time.

Risk from

Imitation

• It is possible that another

organization could imitate the

model, and thus join the same

area as a competitor.

• The potential clients may shift

towards the competitor, thus

causing a decline in our revenues.

Since we have already tapped the

targeted area, it is difficult to another

party to enter the same geographical

area. Also Samridhi has established an

expertise in its management personnel

as well as partnerships.

Cattle

Mortality

• Since the first batch of goats are

being procured from another

state, there is a risk attached to

their adaptability to the

environment in U.P

We have our Community Manager

trained in basic veterinary services, and

goat management. He makes weekly

visits to the cattle rearers’ houses, and

ensures that they are being fed properly,

• Furthermore, extreme weather

conditions can cause a fatal

environment for goats

and gives them the required treatment

and medical services. We are also

training a member from each village to

conduct these services.

Key Values of Samridhi

• Transparency:

Information related to acceptable quality parameters and the pricing based on these are made

available to milk producers. Not only the producers can witness the tests being done on the milk

they bring in daily right in their villages, they have also been given a sheet to arrive at the price

by themselves by knowing the test results. This gives them an assurance about the fair

treatment accorded to them.

• Direct & Regular Touch with the Producers:

Due to the insufficient procurement levels, many dairy plants have no option but to run their

plants below their installed capacities. This is because of their negligible presence in the place of

production i.e. at the villages. Many promoters of Samridhi not only have a degree in rural

management from a premier institute, but also have worked in the rural areas at the field level.

The orientation of the promoters has influenced Samridhi to find a direction, where it wants to

position itself as a company very close to milk producers, which benefits the shareholders by

ensuring long-term welfare of the milk producers. Our systems are being developed keeping in

mind the regular touch with the milk producers. Barring a few cooperatives in some states,

private companies normally tend to ignore this crucial part of dairy business and ultimately have

to depend upon middlemen for procurement.

• Professionalism:

Milk being a highly perishable commodity, its handling, processing & marketing requires a great

deal of domain knowledge. Samridhi acknowledges this fact and places a lot of emphasis on

bringing in professionalism into the business. Farmer-wise, village-wise data regarding

procurement is recorded & archived. This data follows a flow to the management team on a

daily basis and thus the management stays in touch with procurement levels. In making

strategies and framing guidelines / instructions, the management weighs all merits & demerits

of the proposed changes based on the incentives and dis-incentives for the parties involved.

• Expected Outcomes

Each dairy unit of Samridhi is expected to create 120 jobs at scale. Most of these jobs are taken

by people who don’t have any other predictable stream of income. Upaya expects that these

jobs will eventually lead to more stable life circumstances and higher quality of life and access to

other services. Samridhi is diligent about monitoring and reporting on multiple social indicators.

It is important for the team to ensure a tangible improvement in the lives of the ultra poor

women. Close monitoring of the below indicators also provides valuable input to the business

itself, and allows for course correction if outcomes are not aligned with expectations.

Based on initial lessons from pilot activity in the field, below are the outcomes and probable changes

over a period of one year:

Metric Pre-intervention Post-intervention Measured via

Residence • Stay in a kaccha9

house

• Women live in

pucca10 housing

Household Index

Household assets

• Household asset

value <$100

• Increased income

lead to

household’s buying

needed assets such

as fridge, electric

fan, etc.

• Household asset

value of over $300

Household Asset

Index

Grameen PPI

score

• Average score of

customers around

25

• Average score

increases to 35

Grameen PPI™11

Children’s

education

• Women not

sending their kids

to school for the

lack of money

• 75% of the women

sending their kids

to either

government or

private schools

Household Cash Flow

9 Short-lived structure made of natural materials such as mud, grass, bamboo, thatch or sticks

10 A more stable house that has fixed walls made up of material like stones, cement concrete, timber, etc. but roof

is made up of the material like un-burnt bricks, bamboo, grass, thatch, etc.

11 The Grameen Foundation Progress out of Poverty Index™ (PPI) is designed to measure the poverty levels of

households and to track changes in poverty levels over time.

Financial inclusion

• Don’t have bank

accounts and

don’t save

• Active bank

accounts with

regular savings

Samridhi metrics

Number of meals

• Average 1.5

meals/day

• Eat 2.5 meals/day

on average

• Customers note

increase in variety

of food

Samridhi metrics

Partnerships:

Partner Services Offered Arrangement

Sanchetna

Financial

Services Private

Limited

1. Providing customized loan products to

meet the requirements of the clientele in

the area of operation

2. Information sharing about the possible

areas of intervention

Identical set of promoters

UPAYA Social

Ventures

1. Bridge capital investment

2. Technical support on the business

planning

Capital Investment

The Goat Trust 1. Sourcing of milch cattle

2. Training of Para-vets

3. Breed enhancement of goat population in

the area of intervention

Memorandum of Understanding

Dewashish Milk

Foods Pvt. Ltd.

1. Purchasing milk from Samridhi

2. Providing support in chilling milk

Memorandum of Understanding

Core Team

The core team at Samridhi has a solid track record in the dairy industry, as well as in microfinance and

other poverty-alleviating interventions that work directly with very poor and marginalized populations.

Two of Samridhi’s promoters have earlier worked for Amul – India’s largest milk cooperative. They

understand the entire value chain of milk production from the source to consumption and have added

significant insights in the construction of the business model. Samridhi will leverage their experience

while expanding the company’s operations. All team members are passionate about this space and have

completed their graduate degrees from one of India’s premier institutes for economic development.

Samridhi’s close association with Sanchetna is beneficial to

development, Sanchetna is diversifying to livelihood financing. One of its major focus areas is dairy

farming and the organization has already started a cattle loan. Making these loans available to

employees who wish to expand beyond existing cattle assets will help Samridhi get scale in milk

production. In fact, Samridhi expects each ultra poor household to qualify for Sanchetna loans once they

feel ready to manage additional cattle assets. Given Sanchetna’s s

these communities, Samridhi also benefits from this association in villages around Lucknow. Likewise,

Sanchetna benefits from heightened risk mitigation on its loans, knowing that Samridhi is providing

value chain linkages to its borrowers to increase their chances of earning a steady income.

Management Profile:

Lokesh Kumar Singh

Lokesh is a Chemical Engineer from HBTI, Kanpur and holds a diploma in rural management from IRMA.

He has got over seven years of experience in different fields. He worked in SKS Microfinance Pvt. Ltd.

(India’s largest NBFC-MFI) for over 3 years where he headed the expansion between 2004 and 2007 in

12 states including UP, MP, Rajasthan & Bihar. During this time, he built and managed

over Rs. 200 Crores with 100% repayment rate. During this period he recruited and managed over 1200

employees.

Having been associated with Samridhi since inception gives him insights into managing the overall

operations of Samridhi. He looks after the functions of procurement as well as new initiatives which has

Sr. Manageer - Procurement

Niraj Pareek

Executive - Procurement

Sunil Ray

BMC In-charge

Field Associate Procurement

Cattle Owners

ile expanding the company’s operations. All team members are passionate about this space and have


Samridhi’s close association with Sanchetna is beneficial to both the organizations. In its next phase of



ho wish to expand beyond existing cattle assets will help Samridhi get scale in milk


feel ready to manage additional cattle assets. Given Sanchetna’s strong and positive brand awareness in



ages to its borrowers to increase their chances of earning a steady income.


experience in different fields. He worked in SKS Microfinance Pvt. Ltd.

MFI) for over 3 years where he headed the expansion between 2004 and 2007 in

12 states including UP, MP, Rajasthan & Bihar. During this time, he built and managed



looks after the functions of procurement as well as new initiatives which has

CEO - Lokesh Kr. Singh

Procurement

Niraj Pareek

Procurement

charge

Field Associate -Procurement

Cattle Owners

Manager - New Initiatives

Garima Siwach

Executive - Business Development

Dharmendra Kumar Ray

Village Committee

Lift-UP Clients

Para-vets

ile expanding the company’s operations. All team members are passionate about this space and have


both the organizations. In its next phase of



ho wish to expand beyond existing cattle assets will help Samridhi get scale in milk


trong and positive brand awareness in



ages to its borrowers to increase their chances of earning a steady income.


experience in different fields. He worked in SKS Microfinance Pvt. Ltd.

MFI) for over 3 years where he headed the expansion between 2004 and 2007 in

a loan portfolio of



looks after the functions of procurement as well as new initiatives which has

mandate to enhance the procurement as well as other interventions to meet the requirements of

customers of Samridhi.

Niraj Pareek

Niraj is an alumnus of the Accenture-XLRI HR Academy (first batch) and has over five years of

experience. He worked in the Accenture India Delivery Centre at Bangalore for over two years in the HR

Team. As part of their recruitment team, he was involved in recruiting over 24,000 employees in two

years. Prior to Sanchetna, he had a stint with a UP based MFI, where he managed their Varanasi and

Dehra Dun regions.

Niraj Pareek was instrumental in spreading the operations of Samridhi to different geographies.

Currently he looks after the function of procurement which includes starting new centers, maintaining

chilling facilities, looking for prospective buyers of the chilled milk as well as co-ordination with Business

Development team so as to enhance the procurement.

Garima Siwach

Garima is in-charge of new initiatives for Samridhi. Currently she is looking after the initiative for

livelihood creation through providing cattle to below poverty line population in target area of

Samridhi. Garima is a Post Graduate in Economics from The University of Mumbai. She has worked on

several research projects such as ‘Self Serving Biases Created by the Reservation Policy in India’,

‘Banking Sector Reforms in India’, ‘Health and Education infrastructure in developing countries’ and

‘Land Rights and Land Reforms, from the gender perspective’.

Board Members

Member Qualification Current Occupation Prior Experience

Lokesh Kumar Singh B.Tech.

PGDRM (IRMA)

Founder – Samridhi

Agri Products

Over 7 years in social sector including

3 years with SKS handling operations

in 11 states

Niraj Pareek PG Certificate from

XLRI

Director – Samridhi

Agri Products

Over 5 years including 2 years with

Accenture in HR Team

Sachita Shenoy MBA - University of

Chicago

Executive Director

UPAYA Social Ventures

Management Consultant – PWC

Director – SPM at UNITUS

Chris Turillo MBA – University of

Chicago

Co Founder – Medha Director – SKS Foundation USA

Intern – Sequioa India

Prabhat Singh Bisht B. Tech. – Pantnagar Management

Consultant

Sr. Manager - NDDB

Date post:	19-May-2015
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