1. RICE MILL
Introduction:
Rice is the staple food for 65% of the population in India. India is the second largest producer of rice in
the world next to China. In India paddy occupies the first place both in area and production. The India's
rice production reached to a record high of 104.32 million tonnes in 2011-2012 crop year. It is
fundamentally a kharif crop in India. It demands temperature of around 25 degree Celsius and above
and rainfall of more than 100 cm. Rice grows on a variety of soils like silts, loams and gravels. It can also
tolerate alkaline as well as acid soils. However, clayey loam is well suited to the raising of this crop. In
some of the states like West Bengal, Assam, Orissa and Bihar, two crops of rice are raised in a year. This
provides us with ample opportunity for development of rice based value-added products for earning
more foreign exchange. Apart from rice milling, processing of rice bran for oil extraction is also an
important agro processing activity for value addition, income and employment generation. Many of the
rice processing units are of the traditional huller type and are inefficient. Modern rice mills are having
high capacity and are capital intensive, although efficient. Small modern rice mills have been developed
and are available in the market but the lack of information is a bottleneck in its adoption by the
prospective entrepreneur. The present model will go a long way in bridging the information gap.
Status of Rice Milling Units in India
Rice milling is the oldest and the largest agro processing industry of the country. At present it has a turn
over of more than 25,500/- crore per annum. It processes about 85 million tonnes of paddy per year and
provides staple food grain and other valuable products required by over 60% of the population.
2. The basic rice milling processes consist of:
1. Pre Cleaning : Removing all impurities and unfilled grains from paddy
2. De-stoning : Separating small stones from paddy
3. Parboiling (Optional) : Helps in improving the nutritional quality by gelatinization of starch
inside the rice grain. It improves the milling recovery percent during deshelling and polishing /
whitening operation 4. Husking : Removing husk from paddy
5. Husk Aspiration : Separating the husk from brown rice/ unhusked paddy
6. Paddy Separation : Separating the unhusked paddy from brown rice
7. Whitening : Removing all or part of the bran layer and germ from brown rice
8. Polishing : Improving the appearance of milled rice by removing the remaining bran particles
and by polishing the exterior of the milled kernel
9. Length Grading : Separating small and large brokens from head rice
10. Blending : Mixing head rice with predetermined amount of brokens, as required by the
customer
11. Weighing and bagging : Preparing the milled rice for transport to the customer
Investment components of an improved rice mill:
The land requirement for establishing an improved rice milling unit will depend upon
1. Whether the unit will be using a parboiling unit for pre-treatment of paddy before
commencement of milling operation or it will be directly milling raw paddy.
2. Whether a single pass or a multipass milling unit is to be installed.
Generally 2.00 to 2.50 acre of land is required for establishing an improved rice milling unit having an
installed processing capacity of 2 MT/ hr; operating for single shift / day of 8 hr duration; 300 days per
annum; i.e. 4800 MT /annum. The tentative cost of land and land development charges for the model
project has been considered at Rs. 5.00 Lakh.
3. Civil construction:
The various construction requirement of an improved rice milling unit are as follows:
1. Raw paddy godown
2. Cleaning unit
3. Drier and necessary supporting structures such as, boiler /blower system etc.
4. Milling section
5. Finished product stores
6. Machine rooms
7. Auxiliary structures such as office, watch and ward etc.
Project Cost
S.No. Description
Cost
(Rs in Crores)
1 Land & Site Development 1.42
2 Buildings & Civil works 2.02
3 Plant & Machinery – Indigenous 1.19
4 Plant & Machinery – Imported 1.60
5 Electrical Infrastructure 0.15
6 Electricity Deposits 0.06
7 Furniture & Fixtures 0.05
8 Preliminary Expenses 0.08
9 Pre-operative Expenses 0.55
10 Contingency @5% 0.24
11 Margin Money for Working capital 1.32
Total Project Cost 8.69
4. Means of Finance
S.No. Sources of Funds
Cost
(Rs in Crores)
1 Share Capital - Equity 4.69
2 Term Loan from Bank 4.00
Total 8.69
Key Financial indicators
The returns are adequate enough to repay the term loan in 7 years. The key financial
indicators are tabulated below.
S No Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
1 Sales 14.98 18.38 19.25 19.29 19.29 19.29 19.29
2 Total Expenditure 13.06 15.71 16.69 17.02 17.05 17.06 17.09
3 PBIDT 1.93 2.66 2.56 2.27 2.24 2.23 2.20
4 PBT 1.30 1.39 1.32 1.11 1.16 1.25 1.32
5 PAT 1.05 1.04 0.96 0.80 0.82 0.86 0.89
6 Cash Accruals 1.16 1.27 1.20 1.03 1.05 1.09 1.13
7 BEP @ Installed capacity 24.11% 30.57% 35.83% 37.07% 34.67% 31.32% 28.14%
8 BEP @ Operating capacity 34.44% 38.21% 42.15% 43.61% 40.79% 36.85% 33.11%
9 Debt Equity Ratio 0.68 0.57 0.44 0.30 0.14 0.00 0.00
10 DSCR (Gross) 2.33 1.93 1.75 1.48 1.42 1.36 1.71
11 Average DSCR 1.68
12 DSCR (Net) 3.28 2.92 2.33 1.75 1.57 1.43 1.76
13 Average DSCR 2.28
14 IRR (%) 15.48%
