On

Rice Milling
Industry
FOR

Proposed At.+P.O- Nehra, P.S.- Manigachhi, Dist.- Darbhanga, Bihar.

Proprietor`s Name :- Mr. Amit Kumar Sahni

CONSULTANT:
C.N. Upadhyay
TECHNO CONSULTANCY BUREAU
Near Giriji Truck Stand, Sakmapul,
Mirzapur, Dist. – Darbhanga
Mobile No.-9431253326, 9308579851,
 Project At A Glance

1. Project : Rice Milling

2. Name of the Unit : M/S AMIT RICE MILL.
Proposed At.+P.O.- Nehra, P.S.-Manigachhi,
Dist.-Darbhanga, Bihar
3. Promoter’s Name : Mr. Amit Kumar Sahni
4. Raw Material : Paddy
5. Land Own : 14 Kattha
6. Total Capital Investment : 163.00 Lacs
7. Promoter’s contribution : 63.50 Lacs
8. Term Loan : 59.00 Lacs
9. Working Capital Loan : 40.50 Lacs
10. Power : 125 Kva

FINANCIAL PARAMETERS
Promoters' Contribution (%) 51.84%
Promoters' Contribution by Equity (%) 100.00%
Debt-Equity Ratio (DER) 0.93
Debt-Equity Ratio (Considering 0.93
Interest Free Unsecured Loans as
Quasi Equity)
Maximum DSCR 3.15
Minimum DSCR 1.62
Avg. DSCR 2.31
BEP 45.93%
Cash BEP 37.00%
ROCE % 37.45%
Cost of capital 10.97%
IRR (Before Tax) 27.50%
IRR (After Tax) 22.20%
NPV (before tax) 134.01
NPV (after tax) 82.27
Profitability Index (before tax) 2.23
Profitability Index (after tax) 1.75
Capital Cost 109.00
No. of Employees 20
Capital Cost per Employee 5.45

FY2016 FY2017 FY2018 FY2019 FY2020

Production Capacity 70.00% 75.00% 80.00% 85.00% 90.00%
Utilisation
Total Income 534.17 587.43 626.66 665.90 705.13
Gross Sales 534.17 587.43 626.66 665.90 705.13
Net Sales 534.17 587.43 626.66 665.90 705.13
Gross Profit 34.82 39.51 42.81 46.40 49.97
Operating Profit 8.93 16.19 21.87 27.65 33.26
Interest 13.20 12.16 11.13 10.11 9.09
Depreciation 12.69 11.16 9.81 8.64 7.62
Profit after Tax (PAT) 6.17 11.18 15.11 19.10 22.98
Gross Cash Accruals 18.86 22.34 24.92 27.74 30.60
Net Worth 69.67 74.50 83.26 96.01 112.64
INTRODUCTION
This Report deals with the technical & Financial aspect of RICE MILLING INDUSTRY
proposed to be set up by a entrepreneurs who have good capability to operate this unit

CONSTITUTION OF THE UNIT

The unit is proposed to be established in the name and style of M/S AMIT RICE MILL
as a Proprietorship concern of Mr. Amit Kumar Sahni
The Promoter is an honest dependable laborious, energetic and quite fit for bringing big
success to this particular unit.

PRODUCT:

Rice is the staple food for 65% of the population in India. It is the largest
consumed calorie source among the food grains. With a per capita availability of 73.8
kg it meets 31% of the total calorie requirement of the population.India is the second
largest producer of rice in the world next to China. The all India area, production, and
yield of rice in the year 2001-02 was 44.62 million hectares, 93.08 million tonnes and
2086 kg/ ha respectively. In India paddy occupies the first place both in area and
production. The crop occupies about 37 % of the total cropped area and 44% (2001-02
position ) of total production of food grains in India. West Bengal is the leading
producer of paddy in the country. It accounts for 16.39% of the total production, and the
other leading states are Uttar Pradesh (13.38%), Andhra Pradesh (12.24%), Punjab
(9.47%), Orissa (7.68%) and Tamil Nadu (7.38%); the remaining states account for
33.45% of the production. India is also one of the leading exporters of rice in the world
market. India's export of rice stood at 23.89 lakh MT in 1997-98. The corresponding
value of foreign exchange earned was to the tune of Rs. 3371.00 crore in 1997-98.
Indian Basmati Rice has been a favorite among international rice buyers. Following
liberalization of international trade after World Trade Agreement, Indian rice will
become highly competitive and has been identified as one of the major commodities for
export. This provides us with ample opportunity for development of rice based value-
added products for earning more foreign exchange. Apart from rice milling, processing
of rice bran for oil extraction is also an important agro processing activity for value
addition, income and employment generation.

Many of the rice processing units are of the traditional huller type and are inefficient.
Modern rice mills are having high capacity and are capital intensive, although efficient.
Small modern rice mills have been developed and are available in the market but the
lack of information is a bottleneck in its adoption by the prospective entrepreneur. The
present model will go a long way in bridging the information gap.

DESCRIPTION OF RICE MILLING OPERATION:

Paddy in its raw form cannot be consumed by human beings. It needs to be suitably
processed for obtaining rice. Rice milling is the process which helps in removal of hulls
and barns from paddy grains to produce polished rice. Rice forms the basic primary
processed product obtained from paddy and this is further processed for obtaining
various secondary and tertiary products.

The basic rice milling processes consist of:

PROCESS DEFINITION

1. Pre Cleaning : Removing all impurities and unfilled grains from paddy

2. De-stoning : Separating small stones from paddy

3. Parboiling (Optional) : Helps in improving the nutritional quality by gelatinization of

starch inside the rice grain. It improves the milling recovery percent during deshelling
and polishing / whitening operation 4. Husking : Removing husk from paddy

5. Husk Aspiration : Separating the husk from brown rice/ unhusked paddy

6. Paddy Separation : Separating the unhusked paddy from brown rice

7. Whitening : Removing all or part of the bran layer and germ from brown rice
8. Polishing : Improving the appearance of milled rice by removing the remaining bran
particles and by polishing the exterior of the milled kernel

9. Length Grading : Separating small and large brokens from head rice

10. Blending : Mixing head rice with predetermined amount of brokens, as required by
the customer

11. Weighing and bagging : Preparing the milled rice for transport to the customer

The flow diagram of the various unit operations are as follows:

STATUS OF RICE MILLING UNITS IN INDIA:

Rice milling is the oldest and the largest agro processing industry of the country. At
present it has a turn over of more than 25,500/
25,500/- crore per annum. It processes about 85
million tonnes of paddy per year and provides staple food grain and other valuable
valuabl
products required by over 60% of the population. Paddy grain is milled either in raw
condition or after par-boiling, mostly by single hullers of which over 82,000 are
registered in the country. Apart from it there are also a large number of unregistered
single hulling units in the country. A good number (60 %) of these are also linked with
par-boiling units and sun -drying yards. Most of the tiny hullers of about 250-300 kg/hr
capacities are employed for custom milling of paddy. Apart from it double hulling units
number over 2,600 units, underrun disc shellers cum cone polishers numbering 5,000
units and rubber roll shellers cum friction polishers numbering over 10,000 units are
also present in the country. Further over the years there has been a steady growth of
improved rice mills in the country. Most of these have capacities ranging from 2 tonnes
/hr to 10 tonnes/ hr.

NEED FOR IMPROVED RICE MILLS:

The recovery of whole grains in a traditional rice mill using steel hullers for dehusking is
around 52-54%. There is excessive loss in the form of coarse and fine brokens. Further
loss of large portion of endosperm layers during the dehusking operation further
accentuates the problem. Against it, the recovery percent of whole grains in modern
rice mills using rubber roll shellers for dehusking operation is around 62-64%. The
whole grain recovery percent further increases to 66-68% in case of milling of parboiled
paddy. Thus it can be seen that there is an overall improvement of recovery of whole
grains by about 10-14% if one uses rubber roll shellers for rice milling operations. The
conversion ratio ( i.e. recovery % of various final product and byproduct for every 100
kg feed of raw paddy) for these improved rice mills are can be as follows:

1. Percent of milled rice : 62-68%

2. Percent of rice bran : 4-5%

3. Percent of rice husk : 25%

4. Percent of germ wastages : 2%-8%

It has been observed that dehusking using rubber roll shellers reduces the risk of
breaking the grain because husk is pulled off almost at once and pressure is applied by
means of resilient surfaces across the width of the grain, where kernels, generally are
much more uniform than they are by length. Moreover, the process does not remove
the internal epidermis of the husk. Thus the deshelled grains with their silver skin
envelope are protected against scratches and keep longer and better while the silver
skin and the germ increases the quantity of bran which is produced while whitening.
The improved rice mills have a better husk and rice bran aspiration system. The same
prevents mixing of fine brokens with rice bran. Therefore the quality of rice bran
obtained is better.

It has also been observed that the location of rice mills are confined to a few selected
production centres. Their development as a village level agro processing unit is yet to
take a proper shape. In the absence of village level rice milling unit, the farmers have to
travel great distances for milling the rice. This leads to increased transportation and
handling losses. Thus there is a need to develop improved rice mills as a village level
agro processing unit for bringing about technical upgradation and development of the
sector. Value addition and generation of gainful and sustainable employment
opportunities are the other possible benefits arising out of this agro processing industry.

The Central Govt. is also providing a big boost towards the development of this
industry. It has since repealed w.e.f. May 27, 1998 the Rice Milling Industry
(Regulation) Act, 1958 and Rice Milling Industry (Regulation and licensing) Rules ,
1959. Further, rice milling sector which was earlier reserved for the small scale sector,
have now been dereserved. As such, no license/ permission is now required for setting
up a rice mill.
BASIS AND PRESUMPTIONS

a) The unit will work for 300 days per annum on single shift basis.

b) The unit can achieve its 90% capacity utilization during the 5th year of operation.

c) The wages for skilled workers are taken as per prevailing rates in this type of
industry.

d) Interest rate for total capital investment is calculated @ 12.15 % per annum.

e) Costs of machinery and equipment are based on average prices of machinery

manufacturers.

PRODUCTION CAPACITY PER ANNUM

Name of Product Rice Bran Husk

Production per hour (units or MTs) 1.34 0.13 0.53
No of hours per shift 8 8 8
No of shifts per day 1 1 1
Production per day (units or MTs) 11 1 4
No of working days per year 300 300 300
Production per annum (units or MTs) 3216 312 1272
COST OF PROJECT Total
Cost
(Rs.
lakh)

Land 0.00
Buildings 52.50
Plant and Machinery
- Indigenous 35.00
Misc. Fixed Assets 19.00
Pre-operative Expenses 2.50
Margin Money for Working Capital 13.50

TOTAL COST 122.50

MEANS OF FINANCE Total

(Rs.
lakh)
Equity
Proprietor's Capital 63.50

Total Equity/ Quasi-Equity 63.50

Debt
Term Loan from Bank 59.00

Total Debt 59.00

TOTAL FINANCE 122.50

CURRENT PROPOSAL:-
FACILITIES PROPOSED (RS. IN LACS)
TERM LOAN 59.00
CASH CREDIT 40.50
TOTAL FUND BASED 99.50
 Cost of Land

(a) Own

Civil Structures (Estimate Attached)

(Amt. Rs.)
S.No. Item Total Cost
1 Raw paddy godown- RCC framed superstructure with 10'' thick brick
walls, IPS flooring with damp proof treatment with 1.62 kg DPC
/sq.m of floor area and base of the side walls, roofing consisting of
ACC sheets affixed with J hooks, bolts and other accessories to
steel truss made of MS angle of desired section

2 Cleaning Shed - Similar to the raw paddy godown

3 Milling shed -RCC framed superstructure with brick walls , IPS
flooring and roofing consisting of ACC sheets affixed with J Hooks
and nuts to steel trusses made of MS angle of desired section and
strength bearing capacity.

4 Finished product or Milled rice storage shed

5 Machine shed - with masonry structure with ACC sheet roofing on
lean truss
6 Auxiliary structures
a Office unit
b Labor quarters
c Machine Room for auxiliary machines like blowers/ generator set
etc.

d Bore well and water connections

e Sanitary and plumbing charges
f Miscellaneous charges
7 Total for Civil Construction Cost Quotation Attached 52.50,000.00
(i) Pre-operative Expenses
(a) Establishment 1.00
(b) Traveling expenses 0.50
(c) Misc. expenses 1.00

Total Pre-operative Expenses 2.50

TECHNOLOGY:

It is better to use rubber roll shellers for dehusking of paddy in the unit for better
performance.

PLANT AND MACHINERY AND ELECTRICALS:

The details of the nature and type of plant and machinery, their capacity, power
consumption, level of automation varies upon the market needs, nature and type of the
end products and the investment capacity of the entrepreneur. Whenever paddy is
required to be parboiled prior to deshelling, a parboiling unit with steam boilers has to
be installed by the milling unit. The same will increase the P&M cost.
COST OF PLANT & MACHINERY

S. ITEM QUANTITY RATE AMOUNT IN

NO RS.
1. TQLZ100 CLEANER WITH MOTOR 1 190000 1,90,000.00
& BLOWER
2. TQSX100 DESTONER WITH 1 150000 1,50,000.00
MOTOR & BLOWER
3. MLGT51 RICE HULLER WITH 1 250000 2,50,000.00
MOTOR & BLOWER
4. MGCZ 115X12 PADDY 1 180000 1,80,000.00
SEPARATOR WITH MOTOR
5. WHITENER MNSL 25 VERTICAL 2 485000 9,70,000.00
POLISHER WITH MOTOR &
BLOWER
6. SILKY WATER POLISHER MPGT 1 591000 5,90,000.00
40WITH MOTOR & BLOWER
7 MMJP 112X4 RICE GRADER WITH 1 170000 1,70,000.00
MOTOR
8. VERTICAL BUCKET ELEVATOR
CAPACITY: 6TPH 01
HEIGHT: 24’
GEARED MOTOR RATING: 1HP
BOX SIZE: 8”X7”
MATERIAL OF CONSTN.
10/14SWG MS
9. VERTICAL BUCKET ELEVATOR
CAPACITY: 4TPH 08
HEIGHT: 24’
GEARED MOTOR RATING: 1HP 10,00,000.00
BOX SIZE: 7”X7”
MATERIAL OF CONSTN.
10/14SWG MS
10. MS CYCLONE
DIA: 920MM 03
GEARED MOTOR:
1HP/38RPM
COUPLING 150MM
11. RICE BRAN CENTRIFUGAL
SEPARATOR 01
CAPACITY: 0.5TPH
MOTOR RATING: 2HP
TOTAL 35,00,000.00
 MISC. FIXED ASSETS
(Rs. lakh)
S.
No.
1 D.G. Set 12.00
3 Electricals 7.00
4 0.00
5 0.00
6 0.00
7 0.00

Total Cost of MFAs 19.00

WORKING CAPITAL REQUIREMENT

PER ANNUM
Raw Material Cost at Installed Capacity
Particulars of Raw Material Percentage of Process Qty. of RM Purchase
RM required Loss reqd. (Units rate per
w.r.t. percentage or MTs) unit or
production MT (Rs.)
Paddy ( Rice) 67.00% 33.00% 3216.00 13500.00
Paddy ( Bran) 6.50% 93.50% 312.00 13500.00
Paddy (Husk) 26.50% 73.50% 1272.00 13500.00
TOTAL COST OF RAW MATERIAL 4800 MT 648.00
(RS. LAKH)

Consumable Spares at Installed Capacity

Particulars of Consumable Spares Qty. reqd. Purchase Total Cost
(Units or rate per (Rs. lakh)
MTs) unit or
MT (Rs.)
Plastic bag 100000.00 15.00 15.00

Total Cost of Consumable Spares (Rs. 15.00

lakh)
Power & Fuel Expenses at Installed Capacity
(a) Power Cost Calculations
Total Power Load 10.00 KW
No. of working hours per day 7
No. of working days per annum 300
Load Factor 8.00
Total units consumption per annum 168000

Ratio of Power to be obtained from SEB 100.00%

Power from SEB
No. of units purchased 168000
Rate per unit (Rs.) 5.35
Total Cost (Rs. lakh) 8.99

(b) Fuel Cost for D.G. Set

Diesel reqd. per hour (ltrs.) 20.00

No. of working hours per day 1
No. of working days per annum 300
Total consumption per annum (ltrs.) 6000
Rate per litre of Diesel 60.00
Total cost of Diesel 3.60

(c) Other utilities ( Water)

Quantity reqd. per hour (kgs/ ltrs.) 500.00
No. of working hours per day 8
No. of working days per annum 300
Total consumption per annum (kgs/ ltrs.) 1200000
Rate per kg/ litre 0.01
Total cost 0.12

Total Power & Fuel Cost 12.71

Factory Salaries & Wages
(a) Fixed & Semi-variable
No. Per Amount (Rs.)
month
(Rs.)
Production Manager 1 20000 20000.00
Supervisor 1 12000 12000.00
Skilled Workers 3 10000 30000.00
Semi-skilled Workers 2 8000 16000.00
Un-skilled Workers 1 6000 6000.00

Total 8 84000.00

Percentage Fringe Benefits

Fringe Benefits Amount (Rs.) 0.00
Monthly Factory Salaries & Wages (Rs.) 84000.00
Annual Factory Salaries & Wages (Rs. lakh) 10.08

(b) Variable
No. Per Amount (Rs.)
month
(Rs.)
Production Manager 0.00
Supervisor 0.00
Skilled Workers 2 10000 20000.00
Semi-skilled Workers 4 8000 32000.00
Un-skilled Workers 6 6000 36000.00

Total 12 88000.00

Percentage Fringe Benefits

Fringe Benefits Amount (Rs.) 0.00
Monthly Factory Salaries & Wages (Rs.) 88000.00
Annual Factory Salaries & Wages (Rs. lakh) 10.56

Total Annual Factory Salaries & Wages (Rs.

20.64
lakh)

Variable Component of Factory Salaries &

Wages (%) 51.16%
Other Manufacturing Expenses at Installed Capacity
Product
Rice Bran Husk Total
Production (units or MTs) 3216 312 1272
Rate per unit or MT (Rs.) 100.00 100.00 100.00
Other Manufacturing Expenses (Rs. lakh) 3.22 0.31 1.27 4.80

Other Variable Expenses at Installed

Capacity
Product
Rice Bran Husk Total
Production (units or MTs) 3216 312 1272
Rate per unit or MT (Rs.) 100.00 100.00 100.00
Other Variable Expenses (Rs. lakh) 3.22 0.31 1.27 4.80

WORKING CAPITAL
Computation of Margin Money for WC for taking in Project
Cost is User Defined.
Year from which MM for WC will be used for Project Cost
Calculations is first year of operation.
Method of Assessment of Working Capital Requirement is
User Defined.

computation of Stock in Process and Finished Goods are

to be done in Profitability Statement for arriving at proper
values of cost of production and cost of sales as per RBI
definition.
The unit will avail working capital limit from Bank

(a) User-defined Assessment of

Working Capital
FY2016 FY2017 FY2018 FY2019 FY2020
User-defined Margin Money for WC 13.50 13.50 13.50 13.50 13.50
Bank Borrowing for WC 40.50 40.50 40.50 40.50 40.50
Sundry Creditors 0.00 0.00
(b) Inventory holding periods for First or Second No. of Months
Method of Lending
Raw Material 0.75
Consumable Stores & Spares 0.75
Stock in Process 0.08
Finished Goods 0.25
Export Receivables
Receivables other than Exports 0.25

(c) Sundry Creditors for Nayak Committee Method/ No. of Months

First or Second Method of Lending
Sundry Creditors

Rate of Interest on Bank Borrowing for Working Capital 12.15%

COST OF PRODUCTION/ SALES Absolute

Amount at
100%
Installed
Capacity
Raw Material Consumed (Rs. lakh) 648.00
Percentage CENVAT Credit available on Indigenous Raw
Material
Consumable Stores & Spares (Rs. lakh) 15.00
Power, Fuel & Other Utilities (Rs. lakh) 12.71
Factory Salaries & Wages (Rs. lakh) 20.64

Other Manufacturing Expenses 4.80

Other Variable Expenses 4.80

Repairs & Maintenance On Gross

Value of
Assets
(a) Percentage on Building 3.00%
(a) Percentage on Plant & Machinery 5.00%
(a) Percentage on Misc. Fixed Assets 5.00%

Percentage
of Annual
Net Sales
& Job
Income
Selling, Packing & Distribution Expenses 1.00%
Administrative & Misc. Expenses 1.00%

Variable Component of Power, Fuel & Other Utilities (%) 75.00%

Variable Component of Factory Salaries & Wages (%) 51.16%
Variable Component of Selling, Packing & Distribution 75.00%
Expenses (%)

Corporate/ Income Tax Rate 30.00%

Surcharge rate, if applicable
Education cess 3.00%
Benefit u/s 80IA of Income Tax Act (%)
No. of initial years for which 100% tax exemption is available 0

Dividend or drawings (as percentage of equity capital/ Percentage

partners' capital/ proprietor's capital)
FY2016 0.00%
FY2017 10.00%
FY2018 10.00%
FY2019 10.00%
FY2020 10.00%

Depreciation on Depreciation Depreciation Rates to be applied in

Rates as per projections (irrespective of method of
Income Tax Act depreciation)
(WDV Method)
Building 10.00% 10.00%
Plant & machinery 15.00% 15.00%
MFA 10.00% 10.00%

Production Capacity Utilisation

(Percentage)
FY2015 70.00%
FY2016 75.00%
FY2017 80.00%
FY2018 85.00%
FY2019 90.00%
Sales at Installed Capacity
Product I Rice
(a) Gross Domestic Sales
Percentage Domestic Sales 100.00%
Quantity for domestic sales 3216
Selling rate per unit or MT (Rs.) (Including Excise 22000.00
Duty)
Gross Domestic Sales at installed capacity (Rs. lakh) 707.52

Product II Bran
(a) Gross Domestic Sales
Percentage Domestic Sales 100.00%
Quantity for domestic sales 312
Selling rate per unit or MT (Rs.) (Including Excise 12500.00
Duty)
Gross Domestic Sales at installed capacity (Rs. lakh) 39.00

Product III Husk

(a) Gross Domestic Sales
Percentage Domestic Sales 100.00%
Quantity for domestic sales 1272
Selling rate per unit or MT (Rs.) (Including Excise 3000.00
Duty)
Gross Domestic Sales at installed capacity (Rs. lakh) 38.16

Product Gross Domestic Sales Percentage to total

Gross Domestic
Sales

Rice 707.52 0.90

Bran 39.00 0.05
Husk 38.16 0.05

Total Sales 784.68 1.00