Milk being collected at Nayakanahatti milk collection center
Milk being loaded on to the collection van
The milk collection van
Project Financials
Project Details
Transportation is a critical infrastructure need in rural areas. Transportation facilities are required for two primary purposes. One is to transport people as people need to move from the smaller dispersed villages to the larger economically active villages and town centers for finding work(labour), reaching markets for selling and buying goods and for accessing services such as health. The other need for transportation is to transport goods into and out of the villages. Due to the dispersed nature of the villages, low volumes from each of the villages, inability of the villagers to do the large investments for transportation vehicles and lack of financing for such investments, there is a shortage of transportation vehicles serving smaller and remote villages.
This project is to invest in a goods transportation vehicle to transport milk and goods. In the district of Chitradurga and in it, in the taluk’s of Challakere and Molkalmuru there are ‘milk routes’ in which milk is collected from various villages and delivered to the closest chilling station. Two routes in these taluks are open for sale, that is, the existing person doing the transportation wants to come out of the business. The reasons for this are multiple. The main reasons are the following:
The milk cooperative in Karnataka (Karnataka Milk Federation-KMF), which is the buyer of the milk, gives a minimum rate for transporting the milk. KMF makes a 15 days delayed payment which reduces the attraction for a commercial player
The business has a risk in that, the vehicle has to be run on all days of the year. The loss from a day’s absence needs to be borne by the transporter. To ensure that there is no absenteeism, old poorly maintained vehicles cannot be used.
The milk has to be delivered to the chilling center on time. Late delivery could mean rejection of the entire load. This means a disciplined transportation service, which is not easy for most people
The roads in the route are not very good. Due to this, commercial players are not ready to put their new vehicles on this route.
The route for which the vehicle will be put is the Gaursamudra-Nayakanahatti-B G Kere route. The total distance of this route is 134 km. The route covers the following villages-Gaursamudra, Chikhalli, Ullarthi, Karikere, Mirabayanahalli, Paramsagara, Talaku, Timapanahalli, Gajunahalli, Nayakanahatti, Mallurhatti, Kamadalgudi, Salahalli, Chikamalahole, Abbanehalli and B G Kere. The vehicle needs to do two trips in a single day. One in the morning which starts at 6.00AM and ends at the chilling station at 10.20AM and the other in the evening from 6.00PM to 10.20PM. The total amount of milk collected in one trip is around 500 liters. KMF, the buyer pays for the transportation at the rate of Rs. 5.8 per km.
To improve the utilization of the vehicle, the vehicle will also be used when it is free to transport goods to and fro from Nayakanahatti village to the main cities of Davengere, Challakere and Chitradurga. The vehicle will require two people, one driver and one helper
Due to the fact that transporting milk is not commercially very attractive, the difficult nature of the business, and the extent of financing required, there is a gap which S3IDF will help to fill. S3IDF’s SPV will initially invest in the project. The SPV will get a bank loan for the vehicle from the local regional bank, Pragathi Gramin bank.
Project Size Details
The vehicle which will be bought is a TATA 407. This has a capacity of around 5.5 tons. The price of the vehicle is around Rs. 5,35,000 with registration. A deposit of Rs. 35,000 needs to be paid to KMF, which is refundable.
Project Impact Details
The transportation vehicle will benefit atleast 15 households in each village where it goes for milk collection. Therefore in total the project will benefit directly 240 households. With an average of 5 per household, the project will benefit 1200 people. Another impact of this project is that it will give continuous employment to two people, the driver and helper of the vehicle. Doing this project has the potential to have multiple benefits. Once S3IDF understands the dynamics of this project, we can encourage more people to get into the dairy industry by assisting further investments in the dairy industry, investments from transportation to chilling units to a dairy.
This project is to invest in a goods transportation vehicle to transport milk and goods. In the district of Chitradurga and in it, in the taluk’s of Challakere and Molkalmuru there are ‘milk routes’ in which milk is collected from various villages and delivered to the closest chilling station. Two routes in these taluks are open for sale, that is, the existing person doing the transportation wants to come out of the business. The reasons for this are multiple. The main reasons are the following:
The milk cooperative in Karnataka (Karnataka Milk Federation-KMF), which is the buyer of the milk, gives a minimum rate for transporting the milk. KMF makes a 15 days delayed payment which reduces the attraction for a commercial player
The business has a risk in that, the vehicle has to be run on all days of the year. The loss from a day’s absence needs to be borne by the transporter. To ensure that there is no absenteeism, old poorly maintained vehicles cannot be used.
The milk has to be delivered to the chilling center on time. Late delivery could mean rejection of the entire load. This means a disciplined transportation service, which is not easy for most people
The roads in the route are not very good. Due to this, commercial players are not ready to put their new vehicles on this route.
The route for which the vehicle will be put is the Gaursamudra-Nayakanahatti-B G Kere route. The total distance of this route is 134 km. The route covers the following villages-Gaursamudra, Chikhalli, Ullarthi, Karikere, Mirabayanahalli, Paramsagara, Talaku, Timapanahalli, Gajunahalli, Nayakanahatti, Mallurhatti, Kamadalgudi, Salahalli, Chikamalahole, Abbanehalli and B G Kere. The vehicle needs to do two trips in a single day. One in the morning which starts at 6.00AM and ends at the chilling station at 10.20AM and the other in the evening from 6.00PM to 10.20PM. The total amount of milk collected in one trip is around 500 liters. KMF, the buyer pays for the transportation at the rate of Rs. 5.8 per km.
To improve the utilization of the vehicle, the vehicle will also be used when it is free to transport goods to and fro from Nayakanahatti village to the main cities of Davengere, Challakere and Chitradurga. The vehicle will require two people, one driver and one helper
Due to the fact that transporting milk is not commercially very attractive, the difficult nature of the business, and the extent of financing required, there is a gap which S3IDF will help to fill. S3IDF’s SPV will initially invest in the project. The SPV will get a bank loan for the vehicle from the local regional bank, Pragathi Gramin bank.
Project Size Details
The vehicle which will be bought is a TATA 407. This has a capacity of around 5.5 tons. The price of the vehicle is around Rs. 5,35,000 with registration. A deposit of Rs. 35,000 needs to be paid to KMF, which is refundable.
Project Impact Details
The transportation vehicle will benefit atleast 15 households in each village where it goes for milk collection. Therefore in total the project will benefit directly 240 households. With an average of 5 per household, the project will benefit 1200 people. Another impact of this project is that it will give continuous employment to two people, the driver and helper of the vehicle. Doing this project has the potential to have multiple benefits. Once S3IDF understands the dynamics of this project, we can encourage more people to get into the dairy industry by assisting further investments in the dairy industry, investments from transportation to chilling units to a dairy.
