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
SCHOOL OF RURAL MANAGEMENT (SRM)
KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY
KIIT UNIVERSITY,
BHUBANESWAR, ORRISA, INDIA
2009

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 co-
operation during our research work and for treating us as members of their research team.
Anoop Narayan Date: 15-09-2009
Shiv Shakti Kumar Place: Bhubaneswar

S.No. Particulars Page No.
TABLE OF CONTENT
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 Project Implementation Strategy……………...…………………4-5
1.3.2 Scope of the study …………….…………………………………5
1.3.3 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 Sample size…………………………………………………….……8
2.2.2 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 Water……………………………………………………………………15
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 registration…………………………………………………………26-27
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 finance………………………………………………………………32
6.8 Terms loan repayment…………………………………………………………33
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 empowerment…………………………………………………………38
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 finance…………………………………………………………………32
Table 12: Terms loan repayment……………………………………………………………33
Table 13: Projected profitability……………………………………………………………33-34
Table 14: Break even analysis………………………………………………………………34
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/ month……………………………18
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 Minister’s 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

Title: To make plan for establishing a small pulse processing unit.
Executive summary
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
SOCIETY FOR RURAL INDUSTRIALIZATION (SRI), RANCHI, JHARKHAND Page 1
1.1 Background:
CHAPTER 1. INTRODUCTION
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
state’s 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

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.

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

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

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.

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 India’s middle and low
class segment will hold the key to success or failure of the processed food market in India. Of the
country’s 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 industry’s output in volume terms
and 50% in value terms.

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.

2.1. Location
CHAPTER 2. METHODOLOGY
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 informant’s working place.

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.

3.1 The Pulse Milling Process
CHAPTER 3. TECHNICAL ANALYSIS (Production 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 %.

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.

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

3.5 Flow chart of black gram processing (wet method)
Chaffs, dirt, etc
Mixture of husk, small
Broken and powder
Fig 1: Flow chart
Whole Black Gram
Cleaning
Grading
Soaking
Mix with Red Soil
Conditioning
Dehusking and Splitting
Separation and Grading
Dehusked and Spilt pulses
Husk
Bagging

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.

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.

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.

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.
CHAPTER 4. MARKET ANALYSIS
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 Demand (kg/month)
Uppar Bazaar 1400
Gondlipokhar 820
Tatisilway 1050
Johna 600
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.

Graph No. 1: Market Demand of black gram kg/ month
Table No. 2: Demand supply relationship
Market Demand (kg/month) Supply (kg/month)
Uppar Bazaar 1400 460
Gondlipokhar 820 500
Tatisilway 1050 800
Johna 600 400
Source: Market survey

Graph No. 2: Demand Supply Relationship of Black gram
Demand-Supply Relationship

4.3 Marketing channel
4.3.1 Existing marketing channel:

4.3.2 Proposed marketing channel:
Fig No. 2: Existing and new market channel

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

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.

5.1 Classification of enterprises
CHAPTER 5. LEGAL COMPLIANCE FOR COMPANY FORMATION
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 plant and machinery
(excluding land & buildings) and further classified into:
i. Micro Enterprises - investment up to Rs.25 lakhs.
ii. Small Enterprises - investment above Rs.25 lakhs & up to Rs. 5 crore
iii. Medium Enterprises - investment above Rs. 5crore & up to Rs.10 crore.
Service enterprises have been defined in terms of their investment in equipment
(excluding land & buildings) and further classified into:
i. Micro Enterprises – investment up to Rs.10 lakhs.
ii. Small Enterprises – investment above Rs.10 lakhs & up to Rs.2 crore.
iii. Medium Enterprises–investment 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 Minister’s Employment Generation Programme (PMEGP) by merging the two
schemes namely Prime Minister’s 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

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
Beneficiary’s contribution
(of project cost)
Rate of Subsidy
(of project cost)
Area (location of project/unit) Urban Rural
General categories 10% 15% 25%
Special (including SC / ST /
OBC /Minorities/Women, Ex-
servicemen, Physically
handicapped, NER, Hill and
Border areas etc.
5% 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

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.

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 owner’s 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.

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 Tax-
deferment 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.

6.1 Basis and Presumption:
CHAPTER.6 FINANCIAL ANALYSIS
i. The unit will work for 6 month (150 Days) per annum on single shift basis.
ii. The unit is expected to run 60 % of its full capacity in the first year and 75 % in the 2nd
year.
iii. The unit can achieve its full capacity utilization during the 3rd
year of operation.
iv. The unit would construct its own building.
v. Cost of machinery and equipments are based on market price.
vi. Interest on loan is calculated @ 12 % per annum and complete repayment in 5 years.
FINANCIAL ANALYSIS
A.
6.2 Fixed Cost
Land and Building Amount (in Rs.)
1. Land (300 m2
) 10,000
2. Building (166 feet2
@ Rs.904/ feet2
) 1,50,000
Total 1,60,000
Table 4: Fixed Cost (Land Building)
B. Machineries and Equipments Amount
1. Pulse dehusking machine 27,288
2. Pulse cleaner cum grader (1 hp) 42,036
3. Extra sieves (10) 600
Total 69,924
Table 5: Machineries and equipments
C. Erection and electrification @10% of machinery cost 6992
D. Furniture and Fixture 5,000
E. Pre-operative Expenses ( Training expenses, deposits
with elec. Departments , registration, NOC from
Pollution Control Board)
12,000
Table 6: Fixed cost

 Total Fixed Cost = A+B+C+D+E
=Rs. 2, 53,916
S.No
6.3 Working Capitals for six month
Particulars Units Rate (in
Rs)
Amount (in Rs)
1 Skilled Worker 1 4,500 27,000
2 Labour 4 3,000 72,000
3 Power 1 HP 3 Hp 10,000
4 Water 167/mth. 1,000
5 Oil 30 lit 67/Lit. 2,010
6 Other Contingent Expenses@ 10% on
land, Building & Machinery
22,992
7 Urd ( Black Gram) 21.6(T) 14/Kg 302400
8 Gunny Bags 216 12 each 2592
9. Transports 10,000
Total - 4,49,994
10. Sales Tax @ 4 % 25,048
Total 4,75,042
Table 7: Working capital for 6 months
 Total working Capital = Rs 4,75,042
 Working Capital for 2 months = Rs 1,58,347

Particulars
6.4 Project Cost
Amounts (in Rs)
Fixed Cost 2,53,916
Working Capital for 2 months 1,58,347
Total 4,12,263
Table 8: Project Cost
 Total Capital Investment = Rs. 4,12,263
6.5 Cost of Production for 6 Months
S.No Particulars Amounts (in Rs)
1. Working Capital 4,75,042
2. Depreciation on Building@ 5 % 7500
3. Depreciation on Machinery@ 10 % 6992
4. Depreciation on Furniture@ 20 % 1000
5. Interest on Loan @ 12 % 31,200
Total 5,21,734
Table 9: Cost of production for 6 months
6.6
S.No
Sales proceed
Particulars Qty (T) Rate/Kg Amounts (in RS)
1. Urd Dal (80% Recovery) 17 35 595000
2. Broken (3 % Recovery) 0.6 12 7200
3. Husk ( 16 % Recovery) 3 8 24000
Total - - 626200
Table 10: Sales

 Net Profit = Sales - cost of Production
= 626200- 5, 21,734
= Rs. 1, 04,466
 Net Profit Ratio =
Sales
Net Profit x 100
=
626200
104466 x 100
= 16.68 %
 Rate Of Return On Investment =
Capital Investment
Net Profit x 100
=
4, 12,263
104466 x 100
= 25.34 %
Particulars
6.7 Means of Finance
Amounts (in RS)
Subsidy @ 25 % of Project cost 1,03,065
Composite Loan (63.94%) 2,60,000
Own Investment 49,198
Total 4,12,263
Table 11: Means of finance

Particulars
6.8 Term loan Repayments
1st
year 2nd
year 3rd
year 4th
year 5th
year
Outstanding Loan 2,60,000 2,60,000 1,95,000 1,30,000 65,000
Interest @ 12 % per annum 31,200 31,200 23,400 15,600 7,800
Repayment - 65,000 65,000 65,000 65,000
Table 12: Loan repayments
S.No
6.9 Projected Profitability:
Particulars 1st
year 2nd
year 3rd
year 4th
year
1. Capacity Utilization 60 % 75 % 100 % 100 %
2. Sales Realization 6,26,200 7,82,750 10,43,667 10,43,667
3. Raw Materials & Packaging Materials 3,04,992 3,81,240 5,08,320 5,08,320
4. Utilities 13,010 16,262 21,683 21,683
5. Other Contingent Expenses@ 10% on land,
Building & Machinery
22,992 22,992 22,992 22,992
6. Salaries 99,000 99,000 99,000 99,000
7. Transports 10,000 12,000 16, 000 16, 000
8. Depreciation on Building@ 5 % 7500 7124 6769 6430
9. Depreciation on Machinery@ 10 % 6992 6292 5662 5096
10. Depreciation on Furniture@ 20 % 1000 800 640 512
11. Interest on Loan @ 12 % 31,200 31,200 23,400 15,600

12. Sales Tax @ 4 % 25,048 31,310 41,747 41,747
13. Total Cost 521734 609496 748634 740834
14. Profit (Sales Realization- Total Cost) 1,04,466 1,73,254 2,95,033 3,02,833
15. Profit After Tax 79,418 1,41,944 2,53,286 2,61,086
16. Cash Accrual (Profit + Dep.) 94,910 1,57,436 2,68,778 2,76,578
Table 13: Projected profitability
No
6.10 Break Even Analysis
Particulars Amounts (in Rs)
A. Sales 6,26,200
B. Variable Cost 4,75,042
C. Fixed Cost 2,53,916
D. Break Even Point 14 month
Table 14: Break even analysis
NPV at 25 % discount rate = - 412263 + 94910 (PVF1, 0.25) + 157436 (PVF2, 0.25) +
268778 (PVF3, 0.25) + 276578 (PVF4, 0.25)
6.11 Net Present Value (NPV)
= - 412263 + 427698
= 15, 435

Cost of project is Rs 4, 12,263
6.12 INTERNAL RATE OF RETURN (IRR)
Year Cash Accruals PVF, 25% PVF, 30 %
1 94,910 75,928 72,986
2 1,57,436 1,00,759 93,202
3 2,68,778 1,37,614 1,22,294
4 2,76,578 1,13,397 96,802
Total 4,27,698 3,85,284
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
42414
15435
= 25 % + 1.8 %
= 26.8 %
6.13 Debt service coverage ratio (DSCR) = cash accrual + interest / interest +
repayment
1st
yr 2nd
yr 3rd
yr 4th
yr 5th
yr
Cash accrual 94910 157436 268778 276578 284378
Interest 31200 31200 23400 15600 7800
Repayment 0 65000 65000 65000 65000
DSCR 4.04 1.96 3.30 3.62 4.01
Average DSCR 3.38
Table 16: Debt service coverage ratio (DSCR)

Sensitivity analysis:
6.14 RISK ANALYSIS
It is a way of analyzing change in the project’s NPV (or IRR) for a given change in one of the
variables. It indicates how sensitive a project’s 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 OPTIMISTIC
Year Cash Accruals PVF, 25% Cash Accruals PVF, 25%
1 34795 27836 155025 124020
2 82292 52667 232580 148851
3 168586 86316 368971 188913
4 176353 72305 376771 154476
Total 239124 616260
Table 17: NPV analysis when sales variation is 10%
When variable cost(raw materials, salaries, utilities, transports) variation is taken as 10%
1 46585 37268 143235 114588
2 100335 64214 214537 137304
3 197763 101255 339793 173974
4 206343 84600 346813 142193
Total 287337 568059
Table 18: NPV analysis when variable cost variation is 10%

When fixed cost (land) variation is taken as 5%,
1 92986 74389 96834 77467
2 155512 99528 159360 101990
3 266854 136630 270702 138600
4 274654 112608 278502 114186
Total 423155 432243
Table 19: NPV analysis when fixed cost variation is 5%
NPV analysis at different assumption
Particulars Pessimistic Planned Optimistic
NPV when sales
variation is 10%
(-)1,73,139 15,435 2,03,997
NPV when variable
cost variation is 10%
(-) 1,24,926 15,435 1,55,796
NPV when fixed cost
variation is 5%
10,892 15,435 19,980
Table 20: NPV analysis at different assumptions
The above table shows the project’s NPV when each variable is set to its pessimistic, planned
and optimistic values. The most critical variables are sales revenue.

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.
CHAPTER.7 BENEFITS FOR THE SOCIETY
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

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. Name of Pulse Milling Industry
1. Mesars Gaurav Trading, Bano Manzil, Ranchi
2. Mesars Motika Dal Kutai Kendra, Namkum
3. Mesars Ambarzi Food Products Private Limited, Namkum
4. Mesars Jai Jharkhand Udyog, Kamre, Ranchi
5. Mesars J. K. Dal mill, Pandra Basti, Ranchi
6. Mesars Savitri Udyog, Ranchi
7. Mesars Koushal Flour Mill, Khadghada, Ranchi
8. Mesars Kamla Dal Mill, Kamre, Ranchi
9. Mesars Shraddha Industrial, Ranchi
10. Mesars Rani Sati Mill, Kamre, Ranchi
11. Mesars Tulsayan Traders, Ranchi
12. Mesars Vinayak Industry, Kamre, Ranchi
13. Mesars Durga Dal Mill, Pandra Basti, Ranchi
14. 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 to
generate income.

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.
CHAPTER 8: SUMMARY
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 owner’s
contribution is 11%, subsidy for industry (women owned) is 25% and rest is taken as composite

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.

REFERENCES
1. Annual reports of SRI
2. Food processing report of SRI
3. Jharkhand industrial policy, Government of Jharkhand, 2001
4. Website of NABARD:
5. Website of department of industries, Government of Jharkhand
www.nabard.org
6. Website of MSME
www.jharkhandindustry.in
7. Website of ICAR:
www.smallindustryindia.com
8.
www.icar.org.in
9.
www.gvtindia.org
10.
www.niir.org
11.
agricoop.nic.in
12. Pandey I. M. Financial management
agmarknet.nic.in

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

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

Annexure 3
Sensitivity analysis for variation in fixed cost at 5 %
Fixed cost variation by 5 %
Pessimi
stic
plann
ed
Optimi
stic
pessimi
stic
plann
ed
optimi
stic
pessimi
stic
planne
d
optimi
stic
pessimi
stic
planne
d
optimi
stic
sales 62620
0
6262
00
62620
0
78275
0
7827
50
78275
0
10436
67
10436
67
10436
67
10436
67
10436
67
10436
67
var.
cost
48325
0
4832
50
48325
0
57101
2
5710
12
57101
2
71015
0
71015
0
71015
0
70235
0
70235
0
70235
0
fixe
d
cost
40408 3848
4
36560 40408 3848
4
36560 40408 38484 36560 40408 38484 36560
total
exp.
52365
8
5217
34
51981
0
61142
0
6094
96
60757
2
75055
8
74863
4
74671
0
74275
8
74083
4
73891
0
PBT 10254
2
1044
66
10639
0
17133
0
1732
54
17517
8
29310
9
29503
3
29695
7
30090
9
30283
3
30475
7
Tax 25048 2504
8
25048 31,310 31,3
10
31,31
0
41747 41747 41747 41747 41747 41747
PAT 77494 7941
8
81342 14002
0
1419
44
14386
8
25136
2
25328
6
25521
0
25916
2
26108
6
26301
0
Cash
accr
ual
92986 9491
0
96834 15551
2
1574
36
15936
0
26685
4
26877
8
27070
2
27465
4
27657
8
27850
2

Annexure 4
Questionnaire for Market Survey
1. Name of Market Place:
Date:
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

Annexure5

Annexure 6

Establishment of a pulse processing industry

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