Download - 38230942 Report on Auto Rice Husking Mill in Bangladesh

7/30/2019 38230942 Report on Auto Rice Husking Mill in Bangladesh

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IUBAT INTERNATIONAL UNIVERSITY OFBUSINESS AGRICULTURE AND

TECHNOLOGY


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Welcome

To

Presentation

OfFeasibility Study Report


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Group No : 08

Project NameFeasibility ReportOn

Auto Rice Husking Mill in BangladeshProject Members

Md. Shahin Manjurul Alam ID # 07207013

Md. Rasedul Alam ID # 07207023


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Auto Rice Husking Mill


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Context

Project Summary

Management Aspects

Project Timetable and Status

Marketing AspectsTechnical Aspects

Financing Aspects

Taxation Aspects

Financial AspectsSocial Aspects


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Project Summary

IntroductionThe study provides information regarding

investment opportunity for setting up a rice husking

and polishing unit in Bangladesh, especially in thearea of Netrokona, Dinajpur, Bogra, Rajshahi andJamalpur districts. Where is grown on a largeirrigated area in Bangladesh. The objective of thisdocument is to provide information aboutinvestment opportunity for setting up a Rice Husking& Polishing Unit.


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Project Summary

Vision statement

We will strive to provide our customers with the

largest selection of rice varieties and rice-related

products available at a competitive price and in a

friendly and timely manner. In addition, our

customers will always be treated with the utmostintegrity, honesty and fairness.


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Project SummaryMission statement

Always comes up to the expectations of customers.It makes a concerted effort to give the best quality.

The achievement of excellence of standards that wehave set up for irreproachable quality of rice is madepossible through constant vigilance of the entireprocess from procurement to marketing. We offer

traceability, end-to-end controlled process byconducting checks and monitoring every stage.


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Project SummaryExecutive Summary

Rice Milling is an important activity in rural areasboth for self sustenance as well as source ofsubsidiary income to small farmers & agricultural

laborers. The bye product i.e. rice-husk can be alsoused for producing rice-bran oil if the volume islarge as well as for domestic fuel. Rice Milling can bealso undertaken on commercial basis for producing

rice from paddy & sell it on a profit.


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Project Timetable and Status

Project Duration 2 years

Phasing of the project Beginning from 2010 to 2012

a) General Project Planning 1 Month

b) Incorporation 1 Month

c) Preparation of Engineering Specification 1 Month

d) Building Construction 1 Year

e) Selection of Machinery Supplier 1 Month

f) Arrival of Machinery3 Month

g) Installation of Machinery 1 Month

h) Trial Run 15 days

J) Start of selling Operation 1 Month


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Management during the pre-operation period.

Management during the operation period.

Labor

Particulars Nos.Monthly Salary

(BDT.)

Total Monthly

Salary (BDT.)

Skilled Worker 2 3600 6400

Semi-skilled Workers 2 3000 6000

Helpers 4 2000 8000

TOTAL 20400

Management Aspects


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Marketing Aspects

DemandRice production systems make a vital contribution to thereduction of hunger and poverty in Bangladesh. Totalrice production in Bangladesh was 10.32 million tons inthe year 1975-76 when the country's population was

only 79.90 millions and cultivated rice area was 10.32million ha (BBS and DAE, 2007). However, the country isproducing 34.28 million tons rice in the year of 2008-09,where Boro rice contributed more than 55% (18.5million tons). From the analysis of the last few years

data we found that its contribution in total riceproduction follows an increasing trend. Recently, therate is increasing rapidly due to adoption of highyielding rice varieties, including modern rice cultivationtechnologies, improvement irrigation facilities andapplications of fertilizer and pesticides.


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Marketing Aspects

Figure: Rice Production in Bangladesh (2008-09)


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Boro T. Aman

Aus


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Marketing Aspects

MARKET POTENTIALAccording to buying power of the rice consumers, themarket for rice can be broadly categorized into three majorgroups. Lower income group, includes people with incomelevel of less than BDT 3,000 per month. The majority of this

segment is looking for purchasing cheap rice. This segmentis the major market of broken rice and Irri rice. The price ofbroken rice is almost equivalent to the wheat prices.Middle income group, includes middle and upper incomehouseholds in the urban areas with monthly income of BDT5000-10,000. This segment purchases good quality rice

(polished rice as well as semi-polished rice) Upper incomegroup includes the upper income segment of the society;they prefer to buy high quality branded rice. The hotels andrestaurants also purchase polished and semi polished ricefor their different dishes.


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Technical AspectsProducts

ApplicationsWhat come out during milling operation are husk, milled rice or edibleportion, bran and the broken rice. Depending upon the type of rice mill,the by-products come out in mixed or separated form. Milling is usuallydone when paddy is dry (around 14% moisture content). Wet soft grainsare powered and very dry brittle grains would break.Availability of technical know-how and Compliances

BITAC, Dhaka, has successfully developed the technical know-how.Compliance under the BSTI Act is compulsory.Manufacturing ProcessQuality rice from BITAC Hi-Tech Modern Rice Mill undergoes 8production processes before hitting the shop floor. The process includesCleaning, Hulling, Whitening & Polishing, Grading, Optical Sorting,Blending & Packaging (Most varieties of rice requires boiling, cooling &drying along with 8 processes mentioned earlier). The QualityAssurance between each process ensures that only the finest quality ofrice reaches the middlemen who in turn offer the same to theconsumers. The rice is manufactured using German technologyacquired from Buhler group, who offer the best rice milling solutions tilldate.


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Technical AspectsModern rice milling processes consist of:

Pre Cleaning: Removing all impurities and unfilled grains from paddy

De-stoning: Separating small stones from paddyParboiling (Optional): Helps in improving the nutritional quality bygelatinization of starch inside the rice grain. It improves the milling recoverypercent during dishelming and polishing / whitening operation

Husking: Removing husk from paddy.

Husk Aspiration: Separating the husk from brown rice/ unhusked paddy.Paddy Separation: Separating the unhusked paddy from brown rice.Whitening: Removing all or part of the bran layer and germ from brown rice

Polishing: Improving the appearance of milled rice by removing the remaining

bran particles and by polishing the exterior of the milled kernel.Length Grading: Separating small and large broken from head rice

Blending: Mixing head rice with predetermined amount of broken, as requiredby the customer

Weighing and bagging: Preparing the milled rice for transport to the Customer


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Technical Aspects


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Technical Aspects1 - paddy is dumped in the intake pit feeding the pre-cleaner2 - pre-cleaned paddy moves to the rubber roll husker:

3 - mixture of brown rice and unhusked paddy moves to the separator4 - unhusked paddy is separated and returned to the rubber roll husker5 brown rice moves to the destoner6 - de-stoned, brown rice moves to the 1st stage (abrasive) whitener7 - partially milled rice moves to the 2nd stage (friction) whitener8 milled rice moves to the sifter9a - (for simple rice mill) upgraded, milled rice moves to bagging station

9b (for more sophisticated mill) milled rice moves to the polisher10 - Polished rice, will move to length grader11 - Head rice moves to head rice bin12 Brokens moves to brokens bin13 Pre-selected amount of head rice and brokens move to blending station14 Custom-made blend of head rice and brokens moves to bagging station

15 Bagged Rice moves to the marketA straw, chaff and empty grains are removedB - husk removed by the aspiratorC small stones, mud balls etc. removed by de-stonerD - Coarse (from 1st whitener) and fine (from 2nd whitener) bran removedfrom the rice grain during the whitening processE - Small brokens/brewers rice removed by the sifter


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Technical Aspects

Plant & MachineryThe details of plant and machinery for the ricemilling unit are as follows:

Paddy cleanerRubber Roll Paddy ShellersPaddy SeparatorsBlowers, Husk and Barn Aspirators Paddy PolishersRice grader/ aspiratorBucket Elevators


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Technical Aspects

Civil construction:The various construction requirement of animproved rice milling unit are as follows:1. Raw paddy warehouse.

2. Cleaning unit3. Drier and necessary supporting structures suchas, boiler /blower system etc.

4. Milling section5. Finished product stores

6. Machine rooms7. Auxiliary structures such as office watch and

ward etc.


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Technical AspectsRaw materials

Paddy is the only raw material required. Theinput-output ratio is 100:80 and to that extent, thequantum of paddy would go up. Thus even at 100%utilization, the requirement will not be more than 750tones per year. Looking to the total production ofpaddy in Netrokona, Dinajpur, Bagura, Rajshahi andJamalpur districts, supplies should not be a problem.But it is advisable to have long term supplyarrangements in place.

UtilitiesTotal power requirement will be 30 HP whereas

water requirements are not much. Annualexpenditure under this head at 100% activity level

could be BDT. 90, 000/-.


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Taxation AspectsAgro Based Industry Taxation Rate - 3.20%

In order to entice investors, the government has put in place anextensive programe of incentives, which include:

Tax-holidays. Tax-exemption and duty-free importation of capital machinery

and spare parts for 100% export-oriented industries. Capital, profit and dividend repatriation facilities. Hundred percent foreign equity allowed. Exemption of income tax unto three years for expatriate

employees. Term loans and working capital loans from local banks allowed. Reinvestment of repairable dividends treated as new investment. Double-taxation avoidance, as per bilateral agreements already

concluded. Tax exemption on the interest payable on foreign loans and onroyalties and technical know-how fees.

Open exchange controls.


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Financing Aspects

Project Economics BDT.Bank 40%

27,918,606

Equity 60% 41,877,908Total Financing 100% 69,796,514


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Financial Aspects

DETAILS OF THE PROPOSED PROJECT1. Land and Building

Land admeasuring to about 200 sq.mtrs. With built-up area of 80sq.mtrs. will be adequate. The respective cost would be BDT. 0.60 lacand BDT. 2.10 lacs.

2. Plant and Machinery

A detailed list is already furnished. The total cost under this head istaken at Rs. 2.30 lacs.

3. Miscellaneous AssetsA provision of BDT.50,000/- is adequate.

4. Preliminary & Pre-operative ExpensesExpenses like registration and legal fees, administrative and othercharges, interest during implementation etc. are taken at BDT.40,000/-.

5. Working Capital RequirementCapacity utilization in the first year is assumed to be 60% and at thatlevel, total working capital needs are likely to be BDT. 5.40 lacscomprising of bank loan of Rs.3.80 lacs and margin of BDT. 1.60 lacsas worked out hereunder:


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Financial Aspects

Particulars Period Margin Total Bank Promoters

Shock of RMs Month 30% 1 0.7 0.3Stock of Finished

Goods Month 25% 1.4 1.05 0.35

Receivables 1 Month 25% 2.75 2.05 0.7Other Expenses 1 Month 100% 0.25 -- 0.25

Total 5.4 3.8 1.6

(BD. in lacs)


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Financial AspectsCost of the Project and Means of Financing (BDT. in lacs)

Item Amount

Land and Building 2.7

Plant and Machinery 2.3

Miscellaneous Assets 0.5

P&P Expenses 0.4

Contingencies @ 10% on Building and 0.5Plant & Machinery

Working Capital Margin 1.6

Total 8

Means of Finance

Promoters' Contribution 2.4

Loan from Bank/FI 5.6

Total 8

Debt Equity Ratio 2.33 : 1

Promoters' Contribution 30%

Financial Aspects


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Financial AspectsPROFITABILITY CALCULATIONS1. Production Capacity and Build-up

The processing capacity is taken at 600 tonnes per year on two shift working. As explained earlier,processing of 600 tonnes would, on an average, yield 480 tonnes of edible paddy or rice with 80% recovery.Hence, capacity utilisation in the first year is taken at 60% whereas second year onwards, it is assumed to be70%.2. Sales Revenue at 100

Product Qty. (Tones) Selling Price/Ton Sales ValueRice 480 25,000 120

Husk/Bran, etc. 90 3,500 3.15

Total 123.5Selling price of rice would vary depending upon the quality of inputs. Product-mix may vary and hence an averageselling price of BDT 25,000/- per ton is assumed. Similarly, price of husk and bran is also taken at BDT. 3,500/- whichwould fluctuate in line with quality of inputs, processing techniques etc. as explained earlier.

3. Raw Materials Required at 100%Different qualities of paddy is grown in the state and the mill would process suitable good paddy from

time to time. The annual requirement at 100% capacity shall be 600 tonnes. Considering average price of BDT.13,750/- per ton, the yearly cost would be BDT. 82.50 lacs.4. Utilities

The annual expenditure under this head at 100% activity level is estimated to be BDT. 60,000/-.5. Interest

Interest on term loan of BDT. 9.60 lacs is calculated @ 12% assuming repayment in 4 years including amoratorium period of 1 year. Interest on bank assistance for working capital is computed @ 14% per annum.6. Depreciation

It is computed on WDV basis and rates assumed are 10% on building and 20% on machinery andmiscellaneous assets.

(BDT. in lacs)

Financial Aspects


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(BDT. in lacs)Financial AspectsNo. Particulars 1st Year 2nd YearA Installed Capacity --600 Tonnes--

Capacity Utilization 60% 70%Sales Realization 33.30 38.85

B Cost of ProductionRaw Materials 24.30 28.35Utilities 0.36 0.42Salaries 1.37 1.55Stores & Spares 0.18 0.21Repairs & Maintenance 0.21 0.30Selling Expenses @ 10% 3.33 3.88Administrative Expenses 0.30 0.39Total 30.05 35.10

C Profit before Interest & Depreciation 3.25 3.75Interest on Term Loan 0.60 0.45Interest on Working Capital 0.53 0.62Depreciation 0.71 0.59

Net Profit 1.41 2.09Income-tax @ 20% 0.28 0.42Profit after Tax 1.13 1.67Cash Accruals 1.84 2.26Repayment of Term Loan -- 1.65


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Financial Aspects

BREAK-EVEN ANALYSIS (BDT. in lacs)

No. Particulars Amount

[A] Sales 33.3

[B] Variable Costs

Raw Materials 24.3

Utilities (70%) 0.25

Salaries (60%) 0.82

Stores & Spares 0.18

Selling Expenses (80%) 2.66

Admn Expenses (50%) 0.15

Interest on WC 0.53 28.89

[C] Contribution [A] - [B] 4.41

[D] Fixed Cost 2.5

[E] Break-Even Point [D] [C] 57%


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Financial Aspects

LEVERAGESFinancial Leverage

= EBIT/EBT

= 2.54 1.41

= 1.80

Operating Leverage

= Contribution/EBT

= 4.41 1.41

= 3.13

Degree of Total Leverage= FL/OL

= 1.80 3.13

= 0.58

Fi i l A t


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Financial Aspects(BDT. in lacs)Debt Service Coverage Ratio (DSCR)

Particulars 1st Yr 2nd Yr 3rd Yr 4th YrCash Accruals 1.84 2.26 2.45 2.67Interest on TL 0.6 0.45 0.23 0.11Total [A] 2.44 2.71 2.68 2.78Interest on TL 0.6 0.45 0.23 0.11Repayment of TL -- 1.85 1.85 1.9Total [B] 0.6 2.3 2.08 2.01DSCR [A] [B] 4.07 1.18 1.29 1.39Average DSCR

Internal Rate of Return (IRR)Cost of the project is BDT. 8.00 lacs.

(BDT. in lacs)Year Cash Accruals 16% 18% 20%

1 1.84 1.59 1.56 1.532 2.26 1.68 1.62 1.573 2.45 1.57 1.49 1.424 2.68 1.48 1.38 1.295 2.89 1.38 1.26 1.166 3.14 1.29 1.16 1.05

15.26 8.99 8.47 8.02The IRR is around 20%.

S i l A t


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SocialAspectsObjectives:

The main objective of the PROJECT is to strengthen the national agriculturaltechnology system to increase the agricultural productivity and add value to the

selected commodities and improve market linkage.

Agricultural Extension.The main focus of this component is to strengthen and introduce a

decentralized pluralistic extension system. Emphasis would be given on making thesystem more efficient, demand-driven, knowledge-based and responsive to thechanging need of farmers in the context of increasing commercialization of

agriculture. Planning and funding of the public extension programs would bedecentralized up to the Upazila level. This system may be referred as `One Station`service where the users will get necessary advisory services on crop, livestock andfisheries sub-sectors.Development of Value Chain.

The main focus of this component is to promote the development of valuechain of a few selected high value commodities (e.g. fruits, vegetables, poultry, milk,fish) based on comparative advantage, farmers preference and market demand. Morespecifically, the component would finance: (i) stronger farmer market linkagethrough- (a) promotion of contract farming, (b) improved low cost post-harvestmanagement practices, and (c) introduction of higher sanitary and phyto-sanitarystandards for the national and export markets; and (ii) institutional efficiencyenhancing measures through-(a) institutional strengthening of Hortex Foundationand other dedicated agencies dealing with high value agriculture, and (b) developcapacity of farmers, agri-business staff and public officials in commercial

farming including export procedures.


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THANKYOU

ALLFOR STAYING WITH US

Download - 38230942 Report on Auto Rice Husking Mill in Bangladesh

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