Establishment of A Pulse Processing Industry

PROJECT TITLE: ESTABLISHMENT OF A PULSE PROCESSING INDUSTRY
MTS-I
Date of submission: September 16, 2009
HOST ORGANIZATION: SOCIETY FOR RURAL INDUSTRIALIZATION, RANCHI REPORTING OFFICER: MR. DIPANKAR SENGUPTA FACULTY GUIDE: PROF. NANDINI SEN
SUBMITTED BY: ANOOP NARAYAN SHIV SHAKTI KUMAR
KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY KIIT UNIVERSITY, BHUBANESWAR, ORRISA, INDIA 2009
SCHOOL OF RURAL MANAGEMENT (SRM)
ACKNOWLEDGEMENT
It gives us immense pleasure when work comes to an end successfully. Our acknowledgements are many times more than what we are expressing. We shall ever remain thankfully indebted to all those known and unknown personalities, who have directly and indirectly encouraged us to achieve our goal and enlightened us with the touch of their knowledge and constant encouragement. We are grateful to the Dr. L.K. Vaswani, Pro- Vice Chancellor, SOM & SRM, KIIT University for having provided us the opportunity to take up this project. With immense pleasure, we express our profound sense of reverence and gratitude to Prof. Nandini Sen our faculty guide along with A.V.R. Acharyulu, MRM Coordinator for providing us with an opportunity to work with Society of Rural Industrialization, Ranchi, Jharkhand. We find ourself in difficult situation to express our gratitude and indebtedness in limited words to members of Society of Rural Industrialization, who cooperated with us and gave us an opportunity to work on the project. We consider ourselves extremely fortunate for expressing our deep sense of gratitude and indebtedness to our esteemed Major Advisor Dr. A. K. Basu (Chairman, Society for Rural Industrialization, Ranchi) and Mr. Dipankar Sengupta (CEO and Reporting Officer, SRI, Ranchi) for his keen interest in the planning and preparation of this entire project work. We are very thankful to Mr. Samrat Sengupta who guided us throughout the fieldwork and provided us with necessary facilities which helped us in timely completion of our assignment. Our special thanks are due to Mr. D. Pariya, Mr. Asit Sarkar, Mr. Hemant Surin (Field staff, Jarga Village) SRI, and Mr. Ramanand Gope (field staff, Jarga Village) SRI for their kind cooperation during our research work and for treating us as members of their research team.
Anoop Narayan Shiv Shakti Kumar
Date: 15-09-2009 Place: Bhubaneswar
TABLE OF CONTENT S.No. Particulars Page No.

Chapter 1: Introduction........1-7 1.1 Background.1-2 1.2 About Organization (SRI)...3-4 1.3 Overview of the project...4 1.3.1 1.3.2 1.3.3 Project Implementation Strategy...4-5 Scope of the study .5 Limitation of the study...5
1.4 Objective..5 1.5 Literature review......6-7
Chapter 2: Methodology.......................8-9 2.1 Location...8 2.2 Sample design..8 2.2.1 2.2.2 Sample size.8 Survey Design ...8 2.2.2.1 Collection of primary data.8 2.2.2.2 Collection of secondary data..9 2.3 Tools adopted for data analysis...9
Chapter 3: Technical analysis..10-16 3.1 The pulse milling process..10 3.1.1 Procedure for pulse milling...11
3.2 Products..11 3.3 Machineries......11 3.3.1 Hand operated pulse dehusking machine....11 3.3.2 Pulse cleaner cum grader.........11
3.4 Plant Capacity...12 3.5 Flow chart of black gram processing.13 3.6 Descriptions of various unit operations.14
3.6.1 Cleaning.14 3.6.2 Grading..14 3.6.3 Soaking...14 3.6.4 Conditioning...14 3.6.5 Dehusking and splitting..14 3.7 Utilities..15 3.7.1 Power...15 3.7.2 Water15 3.8 Location of the industry.15 3.8.1 Availability of water.15 3.8.2 Availability of electricity..15 3.8.3 Availability of transport facility...15 3.8.4 Availability of raw materials....16 3.8.5 Availability of skilled and unskilled labor....16 3.8.6 Nearness to the market...16
Chapter 4: Market Analysis.....17-23 4.1 Major Competitors.17 4.2 Market potential.17 4.2.1 Demand.17 4.3 Marketing channel.20 4.3.1 Existing marketing channel.20 4.3.2 Proposed marketing channel...21 4.4 Marketing strategy......22 4.4.1 Customer....22 4.4.2 Consumer behaviour..22 4.5 Competitors Analysis......22 4.6 Marketing constraints......23
Chapter 5: Legal compliance for company formation.24-28 5.1 Classification of enterprises.24 5.2 Legal benefits for micro- enterprise.24-25 5.3 Bank finance....26 5.3.1 Rate of interest and repayment schedule...26
5.4 Proposed beneficiaries under KVIC..26 5.5 Process of registration26-27 5.6 Commercial tax reforms...27
5.6.1 Subsidy/ incentive on VAT.27 5.6.2 Central Sales Tax (CST)..28 5.6.3 Others..28
Chapter 6: Financial Analysis......29-37 6.1 Basis and presumptions..29 6.2 Fixed cost...29 6.3 Working Capital.30 6.4 Project cost.31 6.5 Cost of production..31 6.6 Sales proceed..31 6.7 Means of finance32 6.8 Terms loan repayment33 6.9 Projected profitability.33-34 6.10 Break even analysis..34 6.11 Net Present Value.34 6.12 Internal Rate of Return.35 6.13 Debt service coverage ratio..35 6.14 Risk analysis..36-37
Chapter 7: Benefits for the society.38-39 7.1 Source of income....38 7.2 Employment creation.38 7.3 Benefit to local traders and retailers ..38 7.4 SHG empowerment38 7.5 Scope of small pulse processing industry .........38-39
Chapter 8: Summary.. .....40-41
REFERENCES..42
ANNEXURE
ANNEXURE 1: Sensitivity analysis for sales variation at 10%..................................................43 ANNEXURE 2: Sensitivity analysis for variation in variable cost at 10%.................................44 ANNEXURE 3: Sensitivity analysis for variation in fixed cost at 10%.....................................45 ANNEXURE 4: Questionnaire for market survey..........................46 ANNEXURE 5: Quotation 1 of machines..................47 ANNEXURE 6: Quotation 2 of machines......................47
List of Tables
Table 1: Market Demand of black gram kg/ month....17 Table 2: Demand supply relationship 18 Table 3: Rate of Subsidy for different Category ....25 Table 4, 5, 6: Fixed Cost.29 Table 7: Working Capital..30 Table 8: Project cost.31 Table 9: Cost of production..31 Table 10: Sales proceed.31 Table 11: Means of finance32 Table 12: Terms loan repayment33 Table 13: Projected profitability33-34 Table 14: Break even analysis34 Table 15: Internal Rate of Return..35 Table 16: Debt service coverage ratio...35 Table 17: NPV analysis when sales variation is 10%...........................................................36 Table 18: NPV analysis when variable cost variation is 10%..............................................36 Table 19: NPV analysis when fixed cost variation is 5%......................................................37 Table 20: NPV analysis at different assumptions..37 Table 21: List of pulse processing industry in Ranchi...39
List of Graphs
Graph No.1: Market Demand of black gram kg/ month18 Graph No. 2: Demand Supply Relationship of Black gram...19
List of Figures
Figure 1: Flow chart of black gram processing .13 Figure 2: Existing marketing channel ...20 Figure 3: Proposed marketing channel .....21
ABBREVIATIONS USED
SRI: Society for Rural Industrialization GDP: Gross Domestic Product NGO: Non Governmental Organisation KVIC: Khadi and Village Industries Commission MSME: Micro, Small and Medium Enterprises NABARD: National Bank for Agriculture and Rural Development SHG: Self Help Group PMEGP: Prime Ministers Employment Generation Programme KVIB: Khadi and Village Industries Board DIC: District Industries Centre SIDBI: Small Industries Development Bank of India PVF: Present Value Factor NAFED: National Agricultural Cooperative Marketing Federation of India Limited
Executive summary
Title: To make plan for establishing a small pulse processing unit. Organization: Society For Rural Industrialization, Ranchi, Jharkhnd. Reporting Officer: Mr. Dipankar Sengupta Faculty Guide: Prof. Nandini Sen Students Name: Anoop Narayan, Shiv Shakti Kumar Objectives: To plan for establishing a small pulse processing unit in Jarga village, Angara Block, Ranchi, Jharkhand. Methodology: For establishing a small pulse processing unit, we covered various aspects like market, farmer survey, technical, financial and legal aspects. Total sample size for market study is thirty two retail shops, five large wholesalers, eight small wholesalers. A questionnaire, semi structured interview and website of different agency is used for the data collection. The analysis done for technology, market, financial and risk by using various tools. Total sample size for farmer survey is 233 farmers, to know the availability of raw materials for the processing unit. To know the technical aspects of pulse processing, some websites and four processing units were visited in the Ranchi district. To know about the legal aspects of establishing small enterprises some governmental websites was used. Findings and Analysis Technical analysis: There are two machines available in the market for the small pulse processing unit in which one is manually operated and other is operated with the help of motor of 2 Hp. The motor operated machine has high cost as compare to manually operated machine. So, we selected manually operated machine for our proposed industry.
There are 2 methods of pulse processing. The proposed pulse processing unit is based on wet processing method because dry processing method requires more investment. The capacity of the plant will be 36 tonnes at 100% capacity. One skilled worker and four labors will be required for running this unit. The industry planned to start at 60% capacity in the 1st year with 21.6 tonnes. The production at 100% capacity will be reached from 3rd year onwards. The total time required for implementation of this project is estimated at twelve months. Market analysis: The proposed industry is planning to sell the products in Tatisilway, Gondalipokhar, Johna and Uppar bazaar market. Total monthly demand in these markets is 3870 kg. The proposed industry plans to give high margin to wholesaler in comparison to competitors low cost of production and higher margin in distribution are the two marketing strategies by which the proposed industry can be penetrate in the market. Legal analysis: The proposed industry will be established in the rural area. Under KVIC norms, they will give subsidy of 25% on cost of investment of the project if any industry will be established in rural area. Financial analysis: A two month working capital is sufficient for running of industry. The unit would construct its own building and the total project cost is Rs. 4, 12,263. The Internal Rate of Return is 28.6% and unit will attain the break-even in fourteen months. The debt service coverage ratio is 3.38. The most critical variables are sales revenue i.e. sales volume and selling price as in the risk analysis (sensitivity analysis) for the industry. Benefits for the society: The proposed unit will create a new employment opportunity in Jarga village. It will become additional source of income for the small and marginal farmers. The proposed unit will be run by the SHG members in two shifts of four hours each and also it will provide benefit to the local traders and retailers. On the basis of above aspects we can say that the proposed unit is viable in rural area.
ABSTRACT
ESTABLISHMENT OF MICRO PULSE PROCESSING UNIT IN JARGA VILLAGE, ANGARA BLOCK, RANCHI
by Anoop Narayan & Shiv Shakti Kumar School of Rural Management Kalinga Institute of Industrial Technology (KIIT) University Bhubaneswar, India Year-2009
Faculty Guide
Prof. Nandini Sen
Micro scale pulse processing unit is one of the alternative sources of income in rural area because there is no pulse processing unit is available in the block level. Due to lack of value addition technology for the farmers, they are not able to get right price for their produce. So that, there are large scope of micro pulse processing unit in a block level and it will create an additional source of income for small and marginal farmer. The main objective of this project is to make a plan for the establishment of micro pulse processing unit in Jarga village, Angara block, Ranchi. For establishing a small pulse processing unit, there are requirement of various aspects like technical, market, farmer survey, financial and legal aspects. There are two machines available in the market for the small pulse processing unit in which one is manually operated and other is operated with the help of motor of 2 Hp. The motor operated machine has high cost as compare to manually operated machine. So, we selected manually operated machine for our proposed industry. There are 2 methods of pulse processing. The proposed pulse processing unit is based on wet processing method because dry processing method requires more investment. The capacity of the plant will be 36 tonnes at 100% capacity. One skilled worker and four labors will be required for running this unit. The industry planned to start at 60% capacity in the 1st year with 21.6 tonnes. The production at 100% capacity will be reached from 3rd year onwards. The total time required for implementation of this project is estimated at twelve months. The proposed industry is planning to sell the products in Tatisilway, Gondalipokhar, Johna and Uppar bazaar market. Total monthly demand in these markets is 3870 kg. The proposed industry plans to give high margin to wholesaler in comparison to competitors low cost of production and
higher margin in distribution are the two marketing strategies by which the proposed industry can be penetrate in the market. The proposed industry will be established in the rural area. Under KVIC norms, they will give subsidy of 25% on cost of investment of the project if any industry will be established in rural area. A two month working capital is sufficient for running of industry. The unit would construct its own building and the total project cost is Rs. 4, 12,263. The Internal Rate of Return is 28.6% and unit will attain the break-even in fourteen months. The debt service coverage ratio is 3.38. The most critical variables are sales revenue i.e. sales volume and selling price as in the risk analysis (sensitivity analysis) for the industry. Establishment of the proposed pulse processing unit will become a one of the source of income and create new employment opportunity for the small and marginal farmers in a Jarga village. The proposed processing unit will give Rs 4-6 more to the farmers as compared to local traders. This unit will be run by SHG members and create awareness among rural people, which will empower the SHG.
A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT
CHAPTER 1. INTRODUCTION 1.1 Background: Jharkhand is a one of the most backward state in eastern India. This state comprises of four divisions and 22 districts and is spread over an area of 79,714 sq. km. About 40 percent of the states population is socio-economically deprived and over 50 percent are below the poverty line and need priority attention. Most of the workforce in the state is engaged in agriculture, wage labor, livelihood based on forest produce, animal husbandry, household industry, mining and quarrying. About 78% population of Jharkhand live in the villages with the prevailing constraints both of illiteracy (66 %) and poverty (70 %). The State is facing two major problems- poverty, and low rate of economic growth. Land and forest are the main natural endowment from which the farmers derive their sustenance and social status. Rural economy of Jharkhand is based primarily on rain-fed paddy cultivation along with wheat and pulse cultivation. Pulses and oil seeds are produced in medium upland. In Jharkhand out of 29.5 lakh farmers, 15.2 lakh belong to marginal category and 7.32 lakh belong to small category. Most of the marginal farmers have a land holding of less than 1 hectare and are rainfall dependent for agriculture purpose. Another big problem is that undulating and fragmented land is not suitable for the cultivation of crops and creates problem for managing agriculture activities. And another big problem is that they direct sell their produce to the small local traders at a very low price. They are not able to add value to their produce. For additional income they are migrating to urban areas. So, there is a marginal shift of working force from agriculture to non-agriculture sector due to marginal land holdings in Jharkhand. The location of this project was Jarga village which comes under Angara block of Ranchi district and has a similar scenario as described across Jharkhand elsewhere. Most of the farmers of Jarga village are marginal, the major cultivated crop is rice and the second most cultivated crop is pulse and among pulses, the farmers of Jarga village are cultivated Black gram (urd dal) and small quantities of pigeon pea. About 54 % population of Jarga village is totally dependent on agriculture and 30 % population depends on agriculture along with daily wage and 16 % populations are in service or own businesses. Total area of Jarga village is 766.23 hectare, out of which 206.18 hectare is a cultivated area and in local language they called it a Don land. This 22land is mainly used for paddy cultivation due to availability of water. About 75.80 hectare
SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND
Page 1
land is a medium cultivated land (Tanr) and mainly used for cultivation of vegetables, pulses like black gram and pigeon pea, 60.40 hectare of land comes under uncultivated land (Parti), 31.94 hectare of land is homestead land (Bari), 391.91 hectors of land comes under reserve forest. Almost all the farmers of Jarga village cultivate black gram in small quantity and sell their produce in a local markets at a very low price. They sell their produce to small traders at the rate of 12-14 per kg in a local markets named Gondlipokhar and Johna markets. The current price of processed black gram in market is Rs 40-44 which is much higher than what the farmers get from small traders. The lack of value addition in their produce is one of the major reasons for the distress sales. So they are not getting right price of their produce. So that only land based agriculture is not sufficient source of income for them to overcome this situation. Small-scale pulse processing industries is one of the routes that the marginal farmers family can easily take up to increase their income. In Ranchi, there is no pulse processing unit at village level so there is a scope for the small pulse processing unit at village level due to easy and cheap availability of raw materials. This pulse processing unit will help farmers get a right price of their produce. Farmer can directly sell their produce to the dal mill and eliminate small traders activities. It will help generate employment and income source for the marginal farmers and the SHG of women also benefited by this processing unit because this unit will be run by SHG. In Jarga village, there is sufficient availability of raw materials for running the small pulse processing unit. From this pulse processing unit, it is projected that farmers will get about Rs 4-6 more per kg and assured for their sell of price. Looking at the importance of pulse processing and the current market price and demand of pulse, SRI (Society for Rural Industrialization) is planning to establish pulse processing industry at micro-level at Jarga, in Angara block of Ranchi district in Jharkhand with an aim to provide nutritious pulses to customers at low cost by maintaining a standard quality and promoting economic activities among the members of Self-Help Group and developing women entrepreneurship in rural areas. For this the researcher prepared a bankable report this project and undertook a different analysis like market analysis, technical analysis, competitor analysis etc to measure the feasibility of project.
Page 2
1.2 About Organization (SRI) In 1977, four academics at Birla Institute of Technology (Ranchi) started Rural Project Consultants, RUPCON, as a platform for bringing in Science & Technology in rural development. On the request of Bihar government, SRI as a Society was registered in 1984 with Rural Project Consultants (RUPCON) & Institute for Rural Industrialization (IRI) later named as Society for Rural Industrialization (SRI). The Society has three major activities: Research and Consultancy: The research in various branches of science and technology aims to develop products, processes and systems adaptable and manageable by villagers. Consultancy services on technical subjects, planning and organization building are offered to governments, industries, NGOs, field level groups and villagers. Training: Training on skill formation is exclusively for village youths. Training of trainers and management training are offered to other organizations including the government. The skill training includes courses on communication, personality building and enterprise management. SRI offers short training courses on programme management for various National schemes for functionaries of NGO and Government. Extension & Promotion: The work is conducted through both in-house and network mode. RTP facilitate field verification of technologies and thus creates a replicable field model. Tested technologies are spread through NGO network. The main tasks before SRI set are: To innovate in the field of science and technology. To work with and for the marginalized people aiming at giving them the dignity of human life. To re-examine, modify, invent products, processes and systems so that millions in the vast countryside can use them. Relevance of technology innovation at SRI emerges from continuous interaction with various village groups, with NGOs in many States of India and from study of and linkages with
Page 3
knowledge sources. In order to render the innovations relevant to the people implementation is undertaken through the following routes: Community based organizations like WSHG, Farmers club, Village Planning Group Youth leaders group, for specific tasks of income generation. Adolescent girls provide community health service and in the process learn health & hygiene issues. Whole village/sub village to overcome poverty and access common services like drinking water, connectivity, electricity etc. The process adopted by SRI invariably goes through a chain of steps: Identification of Problem, Conceptualization, Module preparation, Action Research, before opening up for large scale multiplication by NGOs and governments. 1.3 Overview of the project: This proposed is focus on the welfare of the rural people of Jarga village and nearby village because most of the framers are small and marginal and socio-economic condition of women are not good and the main aim behind this proposed project are: To promote rural pulse processing unit as enterprise so rural youths and women can replicate it. To promote economic activities among the members of Self-Help Group and developing women entrepreneurship in rural areas. To create an alternative source of income for small and marginal farmers and to get right price for their produce. 1.3.1 Project implementation strategy The local technology centre (SRI) is equipped with training inputs to put village resources to best use, thereby creating sustainable employment opportunities for the women SHG. They are planning to provide training to work on pulse processing machines. SRI is planning to set a pulse processing unit at small scale, which will be run by the SHG members. The women plan to work in two shifts of four hours. This will help the rural women
Page 4
manage their homes as well as to earn money in spare time, which will help them to come out of the oppression of poverty. For the replication of this industry, SHG women will be trained by SRI. In the training, they will be educated on all aspects of establishing and running with the whole picture of running an industry. SRI will train SHG members in terms of: Procedure for setting an industry. Legal compliance for setting an industry. Operational aspects of the business. How to process the pulses at commercial scale. Preparation of bankable project. Feasibility of the industry.
Over and above this, SRI will guide them in replicating their knowledge, they have gained in training. Guidance will be much more emphasized on registration of the industry, preparation of bankable projects, issuing loans from the bank, making them aware of the benefits given by the state and central government and linkage to the markets. 1.3.2 Scope of study The study mainly looks into the legal procedure for registration of small and micro pulse processing unit, preparation of bankable project report, plan sustainability of industry for the society. 1.3.3 Limitation of the study The shopkeepers were unwilling to reveal the exact data about the sale real income etc. One of the primary limitations of the study was that there was a busy schedule for shopkeepers. So it is not possible for them to spare much time for discussion. All the prices taken for calculation of cost of production were from wholesale market and may be vary with time.
1.4 Objective of the project To plan for establishing a small pulse processing unit in Jarga, Angara Block, Ranchi.
Page 5
1.5 Literature Review A report written on Post Harvest Technology for Employment Generation in Rural Sector in India by Nawab Ali, 2001 showed that to increase productivity in agriculture, diversification and modernization of agriculture is required. For employment generation in rural area selective mechanization of agriculture and appropriate post-harvest management and value addition of agriculture produce leads to employment generation in the rural sector and minimization of losses of the agriculture produce.
A report by Devinder Sharma, 2005 reported that a study undertaken by the Union Ministry of Agriculture demonstrated that farm incomes had fallen in the past five years. Farmers were producing more only to find no buyers. And when they eventually got buyers, they were paid half of what they deserve. Hence there was a need to come up the strategies that provide a stable and assured income to the farm sector and the best alternative for that is value addition of agriculture produce through food processing, which can fetch higher prices. To overcome this problem the Central Ministry of Food Processing Industries, is all geared up for developing a strong and vibrant food processing sector; with a view to add value to the farm produce, increase shelf life, create increased job opportunities and income in rural areas, and create surplus for exports and stimulating demand for processed food. Several Infrastructure Development Programs Viz., Food Park, packaging centre, integrated cold chain facilities, value added centers, irradiation facility, are also being undertaken in this regard. A report on food processing industry in India by Amitabh Sen, said that Indias middle and low class segment will hold the key to success or failure of the processed food market in India. Of the countrys total population of one billion, the middle class segments account to about 350-370 million. Though a majority of families in this segment have non-working housewives or can afford hired domestic help and thus prepare foods of their taste in their own small processing industry, the profile of the middle class is changing steadily and hired domestic help is becoming costlier. According to India Info-line Research Team / Mumbai, the overall food processing industry has achieved a growth rate of 8% in FY07 with an estimated figure of Rs. 3,584 bn. However, the unorganized, small players account for more than 70% of the industrys output in volume terms and 50% in value terms.
Page 6
According to literature review given, post harvest management and value addition of agriculture produce leads to employment generation in the rural sector. Farmers are not getting the right price for their produce. So the best alternative for getting right price for their produce is value addition of agriculture produce through food processing, which can fetch higher prices.
Page 7
CHAPTER 2. METHODOLOGY 2.1. Location The project implementation area was Jarga village which comes under Angara block of Ranchi district. It is about 35 km away from Ranchi city. This area is mostly populated by tribal people. The people in this area are mostly dependent upon agriculture and forest for their livelihood. 2.2. Sample Design 2.2.1. Sample Size The researchers collected data of 233 farmers for black gram production in the village and surveyed thirty two retail shops, five large wholesalers, eight small wholesalers, and 25 farmers for market study. They surveyed eight retail shops in Tatisilway market, eight retail shops, three large wholesalers and six small wholesalers in Gondalipokhar market, eight retail shops, one large wholesaler and two small wholesalers in Johna market. They also visited four pulse processing units in Ranchi and nearby market and Krishi Bazar Prangan in Pandra market. 2.2.2. Survey Design Both, primary and secondary data were collected during the study. Details of each process are given below. 2.2.2.1. Collection of Primary Data Questionnaire A questionnaire was prepared to collect data for establishment of pulse processing unit in the study area. Questions were asked orally because respondents had no time to fill it up and some respondents of small shops were illiterate and the instrument was modified according to their requirement. Questionnaire consisted of more open ended questions than closed ended. Interview with key informants Several interviews were held with key informants from Jarga, Gondalipokhar, Tatisilway and Pandra for the specific requirement for the project. The key informants selected were resourceful persons from specific location and in depth interviews were held at informants working place.
Page 8
2.2.2.2 Collection of Secondary Data The most valuable secondary sources of information were collected from the annual report of SRI, Krishi Bazaar Prangan, website of NABARD, Ministry of industry, Department of industry, KVIC and MSME. 2.3. Tools adopted for Data Analysis 1. Questionnaire- The market survey was based on structured and semi-structured questionnaire. This market survey was participatory in nature. 2. Excel sheet- Excel sheet was used to compile and analyze data like Internal Rate Return, Net Present Value, Risk factor.
Page 9
CHAPTER 3. TECHNICAL ANALYSIS (Production Process) 3.1 The Pulse Milling Process In India most of the pulses are consumed in dehusked and split form. Thus processing of pulses assumes a lot of importance. Pulses processing industry helps in processing raw grain legumes/ pulses into edible form. Processing activity is undertaken at 3 different levels. They are: i. Primary processing: Primary processing activities consist of production of cleaned, graded and packaged pulses. ii. Secondary processing: Under secondary processing activities such as dehusking, splitting, polishing, turmeric/ spices/ salt coating and powdered besan and packaged dal are done. iii. Tertiary processing: These activities mostly consist of preparation of roasted, fried dal and other associated dal products. Basic processes in dal milling are cleaning, grading, conditioning, drying, dehusking, splitting, separation, polishing and bagging. Major variation is involved in dehusking process only. Dals like Arahar, Urd, Moong and Lentil are difficult to dehusk. As a result repeated operations by dehusking rollers are required. Repeated soaking, drying, tempering is done to loosen portions of husk sticking after rolling operations. Sometimes Linseed oil or mustard oil is also used during milling operation to better dehusking and impart shine to the milled dal. The removal of the outer layer of husk and splitting the grain into two equal halves is known as milling of pulses. To facilitate dehusking and splitting of pulses alternate wetting and drying method is used. In India, traditional milling methods are used to produce dehusked split pulses. Loosening of husk by conditioning is insufficient in traditional methods. To obtain complete dehusking of the grains a large number of abrasive forces is applied resulting in losses in the form of broken and powder. Yield of split & dehusked pulses in traditional mills is only 75 % to 80 %.
Page 10
3.1.1 Procedure for pulse milling Basically two types of conventional pulses milling methods are commonly used in India. They are: Wet milling operations Dry milling operations
3.2 Products: Based on availability of raw materials in that area, SRI has chosen Black gram (Urd) processing in the processing unit. Due to small scale processing unit, it will go through primary processing by wet milling process.
3.3 Machineries 3.3.1 Hand operated pulse dehusking machine The capacity of the machine is 25-30 kg pulses/hr. The machine consists of an inverted emery coated cone fixed to a vertical shaft. The shaft can be raised or lowered by a clearance adjustment screw with a wheel and a check nut. The emery cone is enclosed in a steel wire mesh segmented cone strengthen by radial frames fixed on the main frame of the machine concentric to emery cone, provide with an opening at the top to feed the grains through a conical hopper having micro system for smooth flow of pulses into the machine. Segmented inverted cone of wire mesh is covered with a cone made of mild steel sheet. Just below the inverted cone, another cone made of mild steel sheet is provided which is connected to a discharge outlet at the bottom of discharges the mill stream through the same in bag or container placed under it. The main frame is supported on four supports made of mild steel angle section. The shaft is operated through bevel gears manually by a handle and rpm of machine is 60 to 70. It can process about 30- 60 kg of pulses per hour. It requires additional arrangement of cleaning and grading. 3.3.2 Pulse cleaner cum grader (1 hp) This machine consists of different size of sieves for cleaning and grading having 1 hp motor. It helps in removal of dust, chaff, dirt, grits, etc. from the pulses and to segregate the grain legumes of desired shape and size.
Page 11
3.4 Plant capacity (at 100%) No. of working days: 150 days per year No. of shift: 8 hrs (1 shift) Total production of black gram: 36 tonnes Recovery of Urd dal: 80 % Recovery of broken dal: 3 % Recovery of husk: 16 % The production is planned to be started at 60% capacity in the 1st year. The production at 100% capacity is planned to be started in 3rd year onwards
Page 12
3.5 Flow chart of black gram processing (wet method)
Whole Black Gram
Chaffs, dirt, etc
Cleaning
Grading
Soaking
Mix with Red Soil
Conditioning
Mixture of husk, small Broken and powder
Dehusking and Splitting
Separation and Grading
Husk
Dehusked and Spilt pulses
Bagging Fig 1: Flow chart

Page 13
3.6 Description of various Unit Operations 3.6.1 Cleaning Cleaning helps in removal of foreign materials like dust, chaff, dirt, grits, etc. from the pulses. 3.6.2 Grading Grading is done to segregate the grain legumes of desired shape and size. It is done using a reel or rotative screen type cleaner and sieve. 3.6.3 Soaking Soaking of pulses in water helps loosen the binding action of the gum between seed coat and cotyledons. Increasing the moisture helps soften the seed coat. Soaking time varies from 6 to 14 hrs. 3.6.4 Conditioning Pulses are conditioned by alternate soaking/ wetting, drying and tempering. Moisture (3.5%) is added to the pulses after sun drying for a certain period and tempering is done for about eight hours. The grain is dried in the sun again. Until all pulses are sufficiently conditioned the whole process of alternate wetting and drying is continued for two to four days. Pulses are finally dried to about 10 to 12% moisture content prior to dehusking and splitting. 3.6.5 Dehusking and Splitting This is done either by using disc shelters or roller machines. A disc shelter used for wet processing works on the principle of attrition and is useful for removing the husk and splitting the cotyledons simultaneously. Dehusked split pulses are separated by sieving and the husk is aspirated off. Un-split dehusked pulses and tail pulses are again dehusked and milled in a similar way. For complete dehusking and splitting the whole process is repeated two to three times.
Page 14
3.7 Utilities 3.7.1 Power The total connected load for the aforementioned unit will be in the tune of 2.00 Hp or 1.49 kW. In addition to its power requirement to the tune of 1.00 Hp will be required for general lightening. Thus the total power requirements for the model project will to the tune of 3.00 Hp. Accordingly a suitable power connection of 5 KVA is required. 3.7.2 Water The total water requirement of the unit will be 200 liters per day. Water is mostly required for soaking and for moisture treatment of the grain pulses. 3.8 Location of the industry The site selected to set the pulse processing unit is located in Jarga village in Angara block, Ranchi district, Jharkhand. It is 35 km away from Ranchi. The site has been selected keeping following points in the mind. 3.8.1. Availability of water Water source (River) is at 300 meters away from the selected site. Water remains in the river throughout the year. Because of nearness of the site with source of water, water is easily available for the industry. 3.8.2. Availability of electricity The site has electricity. Electricity of 440volt is available in proposed site, only repair and maintenance will be required for the industry. Therefore, the electricity will be easily available for industry. 3.8.3. Availability of transport facility: The site is well connected to the main market (Ranchi, Gondlipokhar, Angara, Tatisilwai and Johna) by means of road and good transport facility is always available.
Page 15
3.8.4. Availability of raw materials In this area both upland and lowland are used for the agriculture purpose. In upland, farmer mainly cultivate black gram (Urd dal). Therefore, Raw materials are easily available from the Jarga and other nearby villages. 3.8.5. Availability of skilled and unskilled labor Though the site for setting up the industry is located in the tribal village, the chances of getting labors (unskilled) are more. Labors from the village Jarga and other nearby villages can be easily available. 3.8.6. Nearness to the market: The market of the manufactured food products are found in Angara block, Tatisilwai, Johna and Gondhlipokhar which are 20 km, 14 km, and 25 km from the production unit.
Page 16
CHAPTER 4. MARKET ANALYSIS The proposed industry is planning to sell the products in rural and semi-urban market. For that market survey has been done. Market of Tatisilwey, Gondhlipokhar, Johna and Angara were surveyed. 4.1. Major competitors: The proposed industry is expected to compete with local competitors having their processing unit in Ranchi. Major competitors are as follows: Motika Dal Kutai Kendra, Namkum Ambarzi Food Product Private Ltd, Namkum Swastik Udyog, Namkum Koushal Flour Mill, Ranchi J.K Dal Mill, Ranchi
4.2 Market Potential Black Gram is cultivated throughout the country and they are consumed only after cooking them. The most common use is preparation of curry, popularly known as "Dal". It is prepared in most of the households as well as restaurants, dhabas, canteens, hostels and even during social ceremonies. Black gram is mostly used for preparation of various types of dishes like idli, dosa and vada.
4.2.1 Demand Table No. 1: Market Demand of black gram kg/ month Market Uppar Bazaar Gondlipokhar Tatisilway Johna Source: Market survey The demand for black gram is high in Uppar bazaar market because it is a whole sale market of Ranchi and many retail shops and restaurants buy the black gram for their uses.
Page 17
Demand (kg/month) 1400 820 1050 600
Graph No. 1: Market Demand of black gram kg/ month Table No. 2: Demand supply relationship Market Uppar Bazaar Gondlipokhar Tatisilway Johna Source: Market survey Demand (kg/month) 1400 820 1050 600 Supply (kg/month) 460 500 800 400
Page 18
Demand-Supply Relationship
Graph No. 2: Demand Supply Relationship of Black gram
Page 19
4.3 Marketing channel 4.3.1 Existing marketing channel:
Page 20
4.3.2 Proposed marketing channel:
Fig No. 2: Existing and new market channel

Page 21
4.4 Marketing Strategy: 4.4.1. Customer: Customers that have been targeted for the proposed product are middle class and the main customer for our product were small hawkers and restaurants those who are selling idli, dosa, vada, etc. Rural as well as urban population market also has been targeted for the proposed products. 4.4.2. Consumer behavior: The market survey revealed that the identified consumer class were always seeking for low cost good quality products. In case of black gram, consumers wanted the products to be clean, wholesome, with uniform shape and size, and free from impurities with low price. The proposed industry is expected to produce good quality with low price. Therefore, penetration in market is not be very difficult to attract consumers towards our product given the prevailing market conditions.
4.5 Competitor analysis: 1. Location of industry: The proposed industry has competitive advantage over locally situated industries. The other competitors plants are situated in Ranchi and Namkum therefore the supply of products in the specified market is uneven. 2. Supply: Since proposed industry is situated in the vicinity of specified market, the product can be supplied on basis of demand of local markets and can be directly supplied to retail shops and local hawker (idli, dosa). In case of competitor, the retailers would be required to bring product the product from Ranchi. Thus, the proposed industry stands to gain as it can supply is produce directly to retailers and thus save on transportation cost. 3. Margin to intermediaries: The proposed industry is planning to give higher margins than competitors to the hawkers and retailers on their products than competitors because there is no involvement of middlemen. 4. Availability for labor and hawkers: Cheap labor and hawkers are easily available in Jarga area. Therefore, regular production and selling of products is not very difficult. 5. Low cost of raw materials: The processing unit is going to be established in the local area where availability of raw material is easily available. As the proposed unit can
Page 22
assure its farmers higher prices for their produce than others. Whereas competitor have to purchase raw material from wholesalers. 4.6 Marketing Constraints Unstable Price: Generally, the market price of black gram is highly fluctuating and varies between Rs 40 to Rs 48. Big Competitors There are many big competitors in the market who are well known in the market from a long time and have a good relationship with wholesalers and retailers. Big competitors have good market penetration in Ranchi. Limited Products The pulse processing unit of Jarga village has only one product (i.e. Black garm) whereas competitors have a many products of pulses.
Page 23
CHAPTER 5. LEGAL COMPLIANCE FOR COMPANY FORMATION 5.1 Classification of enterprises Accordance the provision of micro, small and medium enterprises development (MSMED) Act, 2006, the micro, small and medium enterprises (MSME) are classified into two classes:Enterprises have been classified broadly into: (i) Enterprises engaged in the Manufacture / production of Goods pertaining to any industry (ii) Enterprises engaged in providing / rendering of services. Manufacturing enterprises have been defined in terms of investment in (excluding land & buildings) and further classified into: i. ii. iii. Micro Enterprises - investment up to Rs.25 lakhs. Small Enterprises - investment above Rs.25 lakhs & up to Rs. 5 crore Medium Enterprises - investment above Rs. 5crore & up to Rs.10 crore. in terms of their investment in equipment plant and machinery
Service enterprises have been defined
(excluding land & buildings) and further classified into: i. ii. iii. Micro Enterprises investment up to Rs.10 lakhs. Small Enterprises investment above Rs.10 lakhs & up to Rs.2 crore. Medium Enterprisesinvestment above Rs. 2 crore & up to Rs.5 crore
5.2 Legal Benefits for Micro- enterprise Government of India has approved the introduction of a new credit linked subsidy programme called Prime Ministers Employment Generation Programme (PMEGP) by merging the two schemes namely Prime Ministers Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) for generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas. PMEGP will be a central sector scheme to be administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME). The Scheme
Page 24
will be implemented by Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME as the single nodal agency at the National level. At the State level, the Scheme will be implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) and banks. The Government subsidy under the Scheme will be routed by KVIC through the identified Banks for eventual distribution to the beneficiaries / entrepreneurs in their Bank accounts. The Implementing Agencies, namely KVIC, KVIBs and DICs will associate reputed Non Government Organization (NGOs)/reputed autonomous institutions/Self Help Groups (SHGs)/ National Small Industries Corporation (NSIC) / Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj institutions and other relevant bodies in the implementation of the Scheme, especially in the area of identification of beneficiaries, of area specific viable projects, and providing training in entrepreneurship development. Levels of funding under PMEGP
Categories of beneficiaries under PMEGP Area (location of project/unit) General categories Special (including SC / ST / OBC /Minorities/Women, Exservicemen, Physically handicapped, NER, Hill and Border areas etc. Beneficiarys contribution (of project cost) 10% 5% Rate of Subsidy (of project cost) Urban Rural 15% 25% 25% 35%
Note: (1) The maximum cost of the project/unit admissible under manufacturing sector is Rs. 25 lakh. (2) The maximum cost of the project/unit admissible under business/service sector is Rs. 10 lakh. (3) The balance amount of the total project cost will be provided by Banks as term loan.
Table 3. Rate of Subsidy for different Category Source: www.smallindustryindia.com
Page 25
5.3 Bank Finance 1. The Bank will sanction 90% of the project cost in case of General Category of beneficiary/institution and 95% in case of special category of the beneficiary/institution, and disburse full amount suitably for setting up of the project. 2. Bank will finance Capital Expenditure in the form of Term Loan and Working Capital in the form of cash credit. Project can also be financed by the Bank in the form of Composite Loan consisting of Capital Expenditure and Working Capital. The amount of Bank Credit will be ranging between 60-75% of the total project cost after deducting 15-35% of margin money (subsidy). 3. Though Banks will claim Margin Money (subsidy) on the basis of projections of Capital Expenditure in the project report and sanction thereof, Margin Money (subsidy) on the actual availment of Capital Expenditure only will be retained and excess, if any, will be refunded to KVIC, immediately after the project is ready for commencement of production. 5.3.1 Rate of interest and repayment schedule Normal rate of interest 12 % shall be charged. Repayment schedule may range between 3 to 7 years after an initial moratorium. 5.4 Proposed beneficiaries under KVIC: Institutions registered under Societies Registration Act, 1860; or any individual can take benefit from the PMEGP scheme through KVIC. There is no restriction for a NGO to start an enterprise or support an enterprise. From KVIC, registration is not compulsory but if registration will be done then it is good for industry in future aspects. 5.5 Process of registration First one has to collect loan application form from either KVIC, KVIB; then detail project report should be submitted. Project should be selected and sanction from district task force.
Page 26
They will send the loan form and bankable project to bank for loan sanctioning. After loan sanctioning they will provide subsidy. The Bank will sanction 90% of the project cost in case of General Category of beneficiary/institution and 95% in case of special category of the beneficiary/institution, and disburse full amount suitably for setting up of the project. Bank will finance Capital Expenditure in the form of Term Loan and Working Capital in the form of cash credit. Project can also be financed by the Bank in the form of Composite Loan consisting of Capital Expenditure and Working Capital. The amount of Bank Credit will be ranging between 60-75% of the total project cost after deducting 15-35% of margin money (subsidy). Once the project is sanctioned and before the first installment of the Bank Finance is released to the beneficiary, Bank will inform the State/Regional Office of the KVIC/KVIBs/State DICs, as the case may be, for arranging EDP training to the beneficiary, if he/she has not already undergone such training. After the successful completion of EDP training arranged by the KVIC/KVIBs/State DICs, the beneficiary will deposit with the bank, the owners contribution. Thereafter, the bank will release first installment of the Bank Finance to the beneficiary.
5.6 Commercial tax reforms: 5.6.1 Subsidy / Incentive on VAT: This facility will be available to Small / large / medium industries. The new Units will avail 80% reimbursement against the admitted VAT amount deposited in the account of the Government, for a period of ten years.
Up to a turnover limit of Rs.30 lakhs per annum S.C / S.T. / Women / Handicapped category entrepreneurs who run small and tiny industries will avail 100% subsidy of the deposited amount in the account of Government in the form of VAT for a period of ten years.
Page 27
5.6.2 Central Sales Tax (CST): Only 1% CST will be payable on the items produced by the registered small and medium units. 5.6.3 Others New Industrial Units as well as existing units which have not availed any facility of Taxdeferment or Tax free purchases or Tax free sales under any notification announced earlier, shall be allowed to opt for set off, of Jharkhand sales Tax paid on the purchases of raw materials within the State of Jharkhand only against Sales Tax payable either JST or CST on the sale, excluding stock transfer or consignment sale outside the state, of finished products made out from such raw materials subject to a limitation of six months or the same financial year from the date of purchase of such raw materials. Liability will start from the first day of sale. There is provision for two rates of concessional sales tax on purchases of raw material and other inputs. These are 2% and 3%. Both these rates will be reduced to 2% in view of the provision for set off. Jharkhand Sales Tax Registration Certificate would be required to be renewed every five years. Jharkhand sales tax will not be charged on purchase of raw material and sale of finished goods from 100% exporting units. Application fields for Sales Tax registration shall be disposed off within a period of 15 days of filing such application.
Page 28
CHAPTER.6 FINANCIAL ANALYSIS 6.1 Basis and Presumption: i. ii. iii. iv. v. vi. The unit will work for 6 month (150 Days) per annum on single shift basis. The unit is expected to run 60 % of its full capacity in the first year and 75 % in the 2nd year. The unit can achieve its full capacity utilization during the 3rd year of operation. The unit would construct its own building. Cost of machinery and equipments are based on market price. Interest on loan is calculated @ 12 % per annum and complete repayment in 5 years. FINANCIAL ANALYSIS
6.2 Fixed Cost

A. Land and Building 1. 2. Land (300 m2) Building (166 feet2 @ Rs.904/ feet2) Total Table 4: Fixed Cost (Land Building) B. Machineries and Equipments 1. 2. 3. Pulse dehusking machine Pulse cleaner cum grader (1 hp) Extra sieves (10) Total Table 5: Machineries and equipments C. D. E. Erection and electrification @10% of machinery cost Furniture and Fixture Pre-operative Expenses ( Training expenses, deposits with elec. Departments , registration, NOC from Pollution Control Board) Table 6: Fixed cost
Page 29
Amount (in Rs.) 10,000 1,50,000 1,60,000
Amount 27,288 42,036 600 69,924
6992 5,000 12,000
Total Fixed Cost = A+B+C+D+E =Rs. 2, 53,916
6.3 Working Capitals for six month

S.No Particulars Units Rate (in Rs) 1 2 3 4 5 6 Skilled Worker Labour Power 1 HP Water Oil Other Contingent Expenses@ 10% on land, Building & Machinery 7 8 9. Urd ( Black Gram) Gunny Bags Transports Total 10. Sales Tax @ 4 % Total Table 7: Working capital for 6 months Total working Capital = Rs 4,75,042 21.6(T) 216 14/Kg 12 each 302400 2592 10,000 4,49,994 25,048 4,75,042 30 lit 1 4 3 Hp 167/mth. 67/Lit. 4,500 3,000 27,000 72,000 10,000 1,000 2,010 22,992 Amount (in Rs)
Working Capital for 2 months = Rs 1,58,347

Page 30
6.4 Project Cost

Particulars Fixed Cost Working Capital for 2 months Total Table 8: Project Cost Total Capital Investment = Rs. 4,12,263 Amounts (in Rs) 2,53,916 1,58,347 4,12,263
6.5 Cost of Production for 6 Months
S.No 1. 2. 3. 4. 5.
Particulars Working Capital Depreciation on Building@ 5 % Depreciation on Machinery@ 10 % Depreciation on Furniture@ 20 % Interest on Loan @ 12 % Total
Amounts (in Rs) 4,75,042 7500 6992 1000 31,200 5,21,734
Table 9: Cost of production for 6 months
6.6 Sales proceed

S.No 1. 2. 3. Particulars Urd Dal (80% Recovery) Broken (3 % Recovery) Husk ( 16 % Recovery) Total Table 10: Sales Qty (T) 17 0.6 3 Rate/Kg 35 12 8 Amounts (in RS) 595000 7200 24000 626200
Page 31
Net Profit = Sales - cost of Production = 626200- 5, 21,734 = Rs. 1, 04,466
Net Profit Ratio = Net Profit x 100 Sales = 104466 x 100 626200 = 16.68 %
Rate Of Return On Investment
= Net Profit x 100 Capital Investment
= 104466 x 100 4, 12,263 = 25.34 %
6.7 Means of Finance

Particulars Subsidy @ 25 % of Project cost Composite Loan (63.94%) Own Investment Total Table 11: Means of finance Amounts (in RS) 1,03,065 2,60,000 49,198 4,12,263
Page 32
6.8 Term loan Repayments

Particulars Outstanding Loan Interest @ 12 % per annum Repayment Table 12: Loan repayments 1st year 2,60,000 31,200 2nd year 2,60,000 31,200 65,000 3rd year 1,95,000 23,400 65,000 4th year 1,30,000 15,600 65,000 5th year 65,000 7,800 65,000
6.9 Projected Profitability:

S.No 1. 2. 3. 4. 5. Particulars Capacity Utilization Sales Realization Raw Materials & Packaging Materials Utilities Other Contingent Expenses@ 10% on land, Building & Machinery 6. 7. 8. 9. 10. 11. Salaries Transports Depreciation on Building@ 5 % Depreciation on Machinery@ 10 % Depreciation on Furniture@ 20 % Interest on Loan @ 12 % 99,000 10,000 7500 6992 1000 31,200 99,000 12,000 7124 6292 800 31,200 99,000 16, 000 6769 5662 640 23,400 99,000 16, 000 6430 5096 512 15,600 1st year 60 % 6,26,200 3,04,992 13,010 22,992 2nd year 75 % 7,82,750 3,81,240 16,262 22,992 3rd year 100 % 10,43,667 5,08,320 21,683 22,992 4th year 100 % 10,43,667 5,08,320 21,683 22,992
Page 33
12. 13. 14. 15. 16.
Sales Tax @ 4 % Total Cost Profit (Sales Realization- Total Cost) Profit After Tax Cash Accrual (Profit + Dep.) Table 13: Projected profitability
25,048 521734 1,04,466 79,418 94,910
31,310 609496 1,73,254 1,41,944 1,57,436
41,747 748634 2,95,033 2,53,286 2,68,778
41,747 740834 3,02,833 2,61,086 2,76,578
6.10 Break Even Analysis

No A. B. C. D. Particulars Sales Variable Cost Fixed Cost Break Even Point Amounts (in Rs) 6,26,200 4,75,042 2,53,916 14 month
Table 14: Break even analysis
6.11 Net Present Value (NPV)

NPV at 25 % discount rate = - 412263 + 94910 (PVF1, 0.25) + 157436 (PVF2, 268778 (PVF3, 0.25) + 276578 (PVF4, 0.25) = - 412263 + 427698 = 15, 435 0.25) +
Page 34
6.12 INTERNAL RATE OF RETURN (IRR) Cost of project is Rs 4, 12,263

Year 1 2 3 4 Total Table 15: NPV at different rate NPV at 25 % discount rate = - 412263 + 427698 = 15, 435 NPV at 30 % discount rate = - 412263 + 3, 85,284 = - 26,979 At 30 %, NPV is negative, (NPV < 0), so it is rejected at 30 % Therefore, IRR = 25 % + (30 % - 25 %) x (427698 412263) (427698 385284) = 25 % + 5 % x 15435 42414 = 25 % + 1.8 % = 26.8 % Cash Accruals 94,910 1,57,436 2,68,778 2,76,578 PVF, 25% 75,928 1,00,759 1,37,614 1,13,397 4,27,698 PVF, 30 % 72,986 93,202 1,22,294 96,802 3,85,284
6.13 Debt service coverage ratio (DSCR) = cash accrual + interest / interest +
repayment Cash accrual Interest Repayment DSCR Average DSCR Table 16: Debt service coverage ratio (DSCR)
1st yr 94910 31200 0 4.04 3.38
2nd yr 157436 31200 65000 1.96
3rd yr 268778 23400 65000 3.30
4th yr 276578 15600 65000 3.62
5th yr 284378 7800 65000 4.01
Page 35
6.14 RISK ANALYSIS

Sensitivity analysis: It is a way of analyzing change in the projects NPV (or IRR) for a given change in one of the variables. It indicates how sensitive a projects NPV (or IRR) is to changes in particular variables. The more the sensitive the NPV, the more critical is variable.
When sales variation is taken as 10% PESSISMISTIC Year 1 2 3 4 Cash Accruals 34795 82292 168586 176353 Total PVF, 25% 27836 52667 86316 72305 239124 OPTIMISTIC Cash Accruals 155025 232580 368971 376771 PVF, 25% 124020 148851 188913 154476 616260
Table 17: NPV analysis when sales variation is 10%
When variable cost(raw materials, salaries, utilities, transports) variation is taken as 10% PESSISMISTIC Year 1 2 3 4 Cash Accruals 46585 100335 197763 206343 Total PVF, 25% 37268 64214 101255 84600 287337 OPTIMISTIC Cash Accruals 143235 214537 339793 346813 PVF, 25% 114588 137304 173974 142193 568059
Table 18: NPV analysis when variable cost variation is 10%
Page 36
When fixed cost (land) variation is taken as 5%, PESSISMISTIC Year 1 2 3 4 Cash Accruals 92986 155512 266854 274654 Total PVF, 25% 74389 99528 136630 112608 423155 OPTIMISTIC Cash Accruals 96834 159360 270702 278502 PVF, 25% 77467 101990 138600 114186 432243
Table 19: NPV analysis when fixed cost variation is 5% NPV analysis at different assumption
Particulars NPV when sales variation is 10% NPV when variable cost variation is 10% NPV when fixed cost variation is 5%
Pessimistic (-)1,73,139
Planned 15,435
Optimistic 2,03,997
(-) 1,24,926
15,435
1,55,796
10,892
15,435
19,980
Table 20: NPV analysis at different assumptions The above table shows the projects NPV when each variable is set to its pessimistic, planned and optimistic values. The most critical variables are sales revenue.
Page 37
CHAPTER.7 BENEFITS FOR THE SOCIETY 7.1 Source of income: After the establishment of the proposed pulse processing unit, it will become a one of the source of income for the small and marginal farmers. There is no any pulse processing unit in the village and nearby village, so the farmers sell their produce in a local market at a very low price. The proposed processing unit will give Rs 4-6 more as compared to local traders. The farmers of nearby village of Jarga can also sell their produce to the processing unit. They can also get the benefit and help in reduction in the migration to big cities like Delhi and Kolkata.
7.2 Employment Creation: The proposed unit will create a new employment opportunity in a Jarga village. This unit will be run by SHG members and create awareness among rural people especially SHG, motivating them to choose entrepreneurship as a career thus supporting them to establish their micro- enterprise and become self reliant. It will help to make rural women (tribal+ non-tribal), economically self-dependent by earning regular income.
7.3 Local traders and retailers will be benefited: Local traders and retailers of nearby markets can directly purchase the processed dal from the processing unit and sell it at a good price, the small idli and dosa hawkers too can purchase the urd dal form the proposed pulse unit at cheap price for their business.
7.4 SHG Empowerments: The proposed pulse processing unit is by the SHG members. This will help the rural women manage their homes as well as to earn money in spare time, which will help them to come out from the oppression of poverty. The SHG members will be trained by SRI. Guidance will be provided on various aspects like registration of the industry, preparation of bankable projects, issuing loans from the bank, making entrepreneurs aware of the benefits given by the state and central government and linkage to the markets.
7.5 Scope of Pulse Processing Industry There is no any pulse processing unit in the rural area of Ranchi. It is commonly found that farmers sell small quantities of their produce in nearby market whenever they need money. They
Page 38
sell their produce to the middleman only at Rs. 12 to 14. After that middleman collect the produce and sell it to the wholesalers for further processing in dal mill. Major pulse processing industries in Ranchi and nearby areas are as follows: Table 21: List of pulse processing industry in Ranchi S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Name of Pulse Milling Industry Mesars Gaurav Trading, Bano Manzil, Ranchi Mesars Motika Dal Kutai Kendra, Namkum Mesars Ambarzi Food Products Private Limited, Namkum Mesars Jai Jharkhand Udyog, Kamre, Ranchi Mesars J. K. Dal mill, Pandra Basti, Ranchi Mesars Savitri Udyog, Ranchi Mesars Koushal Flour Mill, Khadghada, Ranchi Mesars Kamla Dal Mill, Kamre, Ranchi Mesars Shraddha Industrial, Ranchi Mesars Rani Sati Mill, Kamre, Ranchi Mesars Tulsayan Traders, Ranchi Mesars Vinayak Industry, Kamre, Ranchi Mesars Durga Dal Mill, Pandra Basti, Ranchi Mesars Swastik Udyog, Niche Chutiya, Namkum
Source: Krishi Utapadan Bazaar Samiti, Krishi Prangan, Ranchi From the above table it can be noticed that only 3 of them are in Namkum. So, it can be easily predicted that there will be a great scope for processing unit in these areas. Besides increasing the non-farm skills of rural people, the project will also allow them generate income. to
Page 39
CHAPTER 8: SUMMARY The objective of this project is to establish a pulse processing unit in Jarga, Angara block, Ranchi, for the employment and income generation in nearby area. Based on availability of raw materials (i.e. Urd Dal), SRI has chosen Urd dal, to manufacture Urd dal in the industry. Black gram is more in demand in rural as well as in semi-urban market especially in restaurants. Average monthly demand (according to our market survey) of black gram in Tatisilway and Gondlipokhar, Johna and Uppar Bazaar are 1050 kg/month, 820 kg/month, 600 kg/month and 1400 kg/ month respectively. The proposed industry is planning to sell the products in rural and semi-urban market. The production is planned at 60% capacity in the 1st year. The production at 100% capacity is planned from the 3rd year onwards. The quantity of products to be manufactured daily, are planned according to market demand and the capacity utilized for production. At 60% capacity utilization, there is target to produce 6000 kg/month. The proposed industry aims to compete with local players in the market who have their processing unit in Ranchi city, and not within the block area. The proposed industry has competitive advantages over locally situated industries. The proposed industry is planning to give more margin than its competitors to hawkers, distributors and retailers. Major suppliers of the raw material are Jarga village and nearby village. Pricing done for each product, is based on the margin given to the wholesaler and production cost per unit of the product to be manufactured. The proposed industry plans to give higher margins to wholesalers in comparison to competitors. Lower cost of production and higher margins in the distribution are the two strategies suggested for market penetration in the semi-urban markets. In Jarga village nearly all the farmers are growing black gram. For the requirement of raw materials they will supply black gram to the processing unit and they will gain Rs. 4-6 more. To fulfill the requirement of raw materials, at least 90 farmers will sell their produce and will be benefitted. Installed plant capacity of the unit is 36 tonns per annum at the rate of 100% capacity. When land and building are taken on rent the total project cost is Rs 412263. Out of this total owners contribution is 11%, subsidy for industry (women owned) is 25% and rest is taken as composite
Page 40
loan. The internal rate of return is 26.8 %. The net present value is Rs 15,435. The debt service coverage ratio is 3.38. The most critical variables are sales revenue i.e. sales volume and selling price as in the risk analysis (sensitivity analysis) for the industry. The total time required for implementation of project is estimated at twelve months. SRI is planned to set up a small scale pulse processing unit. It is envisaged that WSHG members will be trained to run and manage the industry. This will help the rural women to manage their homes as well as to earn money in spare time, and farmers will get good price for their products which will help them to come out from the oppression of poverty.
Page 41
REFERENCES
1. 2. 3. 4. 5. Annual reports of SRI Food processing report of SRI Jharkhand industrial policy, Government of Jharkhand, 2001 Website of NABARD: www.nabard.org Website of department of industries, Government of Jharkhand
www.jharkhandindustry.in
6. 7. 8. 9.
10. 11.
Website of MSME www.smallindustryindia.com Website of ICAR: www.icar.org.in

www.gvtindia.org www.niir.org agricoop.nic.in
agmarknet.nic.in Pandey I. M. Financial management
12.
Page 42
Annexure 1 Sensitivity analysis for sales variation at 10%

1st yr
Pessimi stic plann ed Optimi stic
2nd yr
pessimi stic
sales revenue variation by 10% 3rd yr

Plann ed optimi stic pessimi stic planne d optimi stic
4th yr
pessimi stic planne d optimi stic
sale s var. cost fixe d cost total exp. PBT
56358 0 48325 0 38484
6262 00 4832 50 3848 4 5217 34 1044 66 2504 8 7941 8 9491 0
68882 0 48325 0 38484
70447 5 57101 2 38484
7827 50 5710 12 3848 4 6094 96 1732 54 3131 0
86102 5 57101 2 38484
93930 0 71015 0 38484
10436 67 71015 0 38484
11480 34 71015 0 38484
93930 0 70235 0 38484
10436 67 70235 0 38484
11480 34 70235 0 38484
52173 4 41846
52173 4 16708 6 27553
60949 6 94979
60949 6 25152 9 34441
74863 4 19066 6 37572
74863 4 29503 3 41747
74863 4 39940 0 45921
74083 4 19843 3 37572
74083 4 30283 3 41747
74083 4 40720 0 45921
tax
22543
28179
PAT 19303
Cash accr ual
34795
13953 3 15502 5
66800 82292
1419 44 1574 36
21708 8 23258 0
15309 4 16858 6
25328 6 26877 8
35347 9 36897 1
16086 1 17635 3
26108 6 27657 8
36127 9 37677 1
Page 43
Annexure 2 Sensitivity analysis for variation in variable cost at 10%

Variable cost variation by 10% 3rd yr
plann ed optimi stic pessimi stic planne d optimi stic
1st yr
2nd yr
pessimi stic
4th yr
sales var. cost fixe d cost total exp. PBT
62620 0 53157 5 38484
6262 00 4832 50 3848 4 5217 34 1044 66 2504 8 7941 8 9491 0
62620 0 43492 5 38484
78275 0 62811 3 38484
7827 50 5710 12 3848 4 6094 96 1732 54 31,3 10
78275 0 51391 1 38484
10436 67 78116 5 38484
10436 67 71015 0 38484
10436 67 63913 5 38484
10436 67 77258 5 38484
10436 67 70235 0 38484
10436 67 63211 5 38484
57005 9 56141
47340 9 15279 1 25048
66659 7 11615 3 31,310
55239 5 23035 5 31,31 0 19904 5 21453 7
81964 9 22401 8 41747
74863 67761 4 9 29503 36604 8 3 41747 41747
81106 9 23259 8 41747
74083 67059 4 9 30283 37306 8 3 41747 41747
Tax
25048
PAT
Cash accr ual
31093 46585
12774 3 14323 5
84843 10033 5
1419 44 1574 36
18227 1 19776 3
25328 6 26877 8
32430 1 33979 3
19085 1 20634 3
26108 6 27657 8
33132 1 34681 3
Page 44
Annexure 3 Sensitivity analysis for variation in fixed cost at 5 %
1st yr
2nd yr
pessimi stic
Fixed cost variation by 5 % 3rd yr

plann ed optimi stic pessimi stic planne d optimi stic
4th yr
sales var. cost fixe d cost total exp. PBT
62620 0 48325 0 40408
6262 00 4832 50 3848 4 5217 34 1044 66 2504 8 7941 8 9491 0
62620 0 48325 0 36560
78275 0 57101 2 40408
7827 50 5710 12 3848 4 6094 96 1732 54 31,3 10
78275 0 57101 2 36560
10436 67 71015 0 40408
10436 67 71015 0 38484
10436 67 71015 0 36560
10436 67 70235 0 40408
10436 67 70235 0 38484
10436 67 70235 0 36560
52365 8 10254 2 25048
51981 0 10639 0 25048
61142 0 17133 0 31,310
60757 2 17517 8 31,31 0 14386 8 15936 0
75055 8 29310 9 41747
74863 74671 4 0 29503 29695 7 3 41747 41747
74275 8 30090 9 41747
74083 73891 4 0 30283 30475 7 3 41747 41747
Tax
PAT
Cash accr ual
77494 92986
81342 96834
14002 0 15551 2
1419 44 1574 36
25136 2 26685 4
25328 6 26877 8
25521 0 27070 2
25916 2 27465 4
26108 6 27657 8
26301 0 27850 2
Page 45
Annexure 4
Questionnaire for Market Survey

Date: 1. Name of Market Place: 2. Type of Shop: 3. Size of Shop a) Wholesalers b) Big Shop c) Medium Shop d) Small Shop
4. How much you sell black gram per month
5. From where, you purchases black gram (Urd Dal) i. ii. iii. 6. How you bring the products (black gram)
7. What types of attributes customers seeking before purchase the black gram. a) Price b) Free from impurities c) Shape and size d) Others (specific).
8. Other than the general customers, who are the potential/regular customers for the black gram
Page 46
Annexure5
Page 47
Annexure 6
Page 48
Page 49

Establishment of A Pulse Processing Industry

Uploaded by

Copyright:

Available Formats

You might also like

Establishment of A Pulse Processing Industry

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Establishment of A Pulse Processing Industry

Uploaded by

Copyright:

Available Formats

PROJECT TITLE: ESTABLISHMENT OF A PULSE PROCESSING INDUSTRY

SUBMITTED BY: ANOOP NARAYAN SHIV SHAKTI KUMAR

SCHOOL OF RURAL MANAGEMENT (SRM)

Anoop Narayan Shiv Shakti Kumar

Date: 15-09-2009 Place: Bhubaneswar

TABLE OF CONTENT S.No. Particulars Page No.

1.4 Objective..5 1.5 Literature review......6-7

Chapter 8: Summary.. .....40-41

Prof. Nandini Sen

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

3.5 Flow chart of black gram processing (wet method)

Whole Black Gram

Chaffs, dirt, etc

Mix with Red Soil

Mixture of husk, small Broken and powder

Dehusking and Splitting

Separation and Grading

Dehusked and Spilt pulses

Bagging Fig 1: Flow chart

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

Demand (kg/month) 1400 820 1050 600

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

Graph No. 2: Demand Supply Relationship of Black gram

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

4.3 Marketing channel 4.3.1 Existing marketing channel:

SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT

4.3.2 Proposed marketing channel:

Fig No. 2: Existing and new market channel

A REPORT ON ESTABLISHMENT OF PULSE PROCESSING UNIT