DAL MILL

Business Plan

NOVEMBER 19, 2019

BHUMIKANYA FARMER AGRO PRODUCER COMPANY LIMITED
Village Gomewadi, Taluka - Atpadi, Dist - Sangli
Contents
1. Project at Glance ...................................................................................................................... 2
2. Introduction ............................................................................................................................. 2
2.1. District Profile .................................................................................................................. 2
2.1.1. Administrative Profile............................................................................................... 2
2.1.2. Socio-economic Profile ............................................................................................. 2
2.1.3. Agriculture Profile .................................................................................................... 3
3. Market Analysis ....................................................................................................................... 4
3.1. Industry background ......................................................................................................... 4
3.2. Market Potential ............................................................................................................... 4
4. Business Model........................................................................................................................ 5
4.1. FPC details ....................................................................................................................... 5
4.2. Process flow .................................................................................................................... 6
5. Financial model ....................................................................................................................... 8
5.1. Project cost ....................................................................................................................... 8
5.2. Assumptions ..................................................................................................................... 9
5.3. Profit & Loss .................................................................................................................. 11
5.4. Balance Sheet ................................................................................................................. 12
5.5. Cash Flow....................................................................................................................... 13
6. Financial Ratios ..................................................................................................................... 14
7. Annexure ............................................................................................................................... 16
1. Project at Glance
Pulses are low fat, high-fiber source of protein and are an important part of the dietary component
of Indian families, especially so for vegetarian families. Several varieties of pulses are available
in India. However, tur, chana, urad, moong and masoor account for over 80% of the total
production in the country. Production of pulses in India is sufficiently high which supply the
essential raw material for dal mills. Dals mills add value to the raw produce and thereby larger part
of the price realization from across the value chain can be captured by the farmers.
The farmer interest group plans to organize themselves into a farmer producer company to
aggregate their produce and jointly undertake the business of converting raw pulses into polished
dal. This entails setting up the dal mill machinery, procuring raw pulses from adjoining areas,
processing it to produce polished dal and selling it off in nearby wholesale markets at a higher
price as compared to raw pulses.

2. Introduction
2.1. District Profile
2.1.1. Administrative Profile
Sangli district is in western region of Maharashtra. It shares its borders with Satara, Solapur,
Kolhapur and Ratnagiri districts of Maharashtra along with Bijapur and Belgaum districts of
Karnataka. The district is divided into 10 talukas with geographical area of 8600 sq. km1. The
district is well connected to major markets with the district headquarters 230 km away from Pune
and 370 km away from Mumbai. The district has a good road network of 11,975 km but relatively
poor rail network of only 174 km2. The nearest national airport is located at Kolhapur,
approximately 50 km away from Sangli.
2.1.2. Socio-economic Profile
The total population of the district is 28 lakhs; with 25% of population residing in urban centers.
Close to 53% of the working population is dependent on agriculture as a livelihood. Average
landholding size in Sangli is 1.25 Ha, lower than average of 1.44 Ha3 for the state of Maharashtra.
Net Domestic Product (NDP) per capita of the district is INR 47 thousand which is lower than
average of INR 55 thousand for Maharashtra4.
Industrial activity in the district is dominated by agro based industry. Major exportable items in
the district are Turmeric, Raisins and Grapes. A food park is being planned on 305-acre plot at

1
District Profile, Census of India 2011
2
District Socio Economic Review, 2018
3
http://krishi.maharashtra.gov.in/Site/Upload/Pdf/Publications/Argi.pdf
4
https://www.undp.org/content/dam/india/docs/human-development/MHDR%20English-2012.pdf
Mane Rajuri near Sangli city which is a strategic location for processing of grapes, turmeric,
mangos, pomegranates, citrus and custard apples. Currently, there are close to 500 existing
manufacturing units of food products in the district. Moreover, major large-scale industries in the
district include sugar industries, textile mills etc.5
2.1.3. Agriculture Profile
Sangli district is part of the Deccan plateau and falls under hot and semi-arid agro climatic zone6.
The district comes under rain shadow region of the Sahyadri mountain7. Average annual rainfall
in the district is 692 mm with average 49 rainy days in a year. Temperatures in Sangli range from
around 22 degree Celsius to 30 degree Celsius over the year, with the highest temperature in the
month of May. Temperature level increases from west to east and rainfall decreases from west to
east in the district.
Soil in the central part of the district is predominantly black soil which is conducive to the growth
of majority crops. However, low rainfall in eastern part of the district restricts cropping pattern to
hardy crops, mostly in the absence of irrigation facilities in that part of the district including Jath
and Kavthe Mahakal talukas. Majority area in the district is under Jowar cultivation in both Kharif
and Rabbi seasons. However, Sugarcane production is the highest in the district. Farmers from
Sangli district also cultivate turmeric on a large scale, given its high productivity and the favorable
agro-climate.
The following table shows important data on crops for reference year 2016- 17 whereas data on
livestock is for the year 2013- 14.8
Table 1 Key Indicators
Name of the Area under cultivation
Production Yield
Crop/ Livestock (Lakh Ha.)/ Animals
(number) (’00 MT/ year) for (Kg/Ha.) for crops
crops / (‘000 MT/
year) for milk (Kg/ day) for milk
Jowar 2.71 1237 524
Sugarcane 0.55 59400 84
Bajra 0.42 60 248
Wheat 0.28 286 1516
Maize 0.17 1118 2338
In- milk Bovine 300000 526.8 4.73
Animals

5
District MSME Profile
6
District Agriculture Contingency Plan
7
Shodhganga
8
NDDB Dairy digest
Total area under cultivation in the district is 8 lakh Ha. Irrigation in the district is limited to only
21% of the area under cultivation. Forest area in the district is 47 thousand Ha.

3. Market Analysis
3.1. Industry background
The dal milling industry in India is a major agro processing industry. It processes more than 75%
of the pulses produced in the country. Majority of pulses production takes place in the states of
Madhya Pradesh, Rajasthan and Maharashtra. Dal mills are generally concentrated in pulses
producing areas such as Indore, Jalgaon, Akola and Nagpur, or in and near by major consumption
centers such as Kolkata, Chennai, Mumbai, Hyderabad and Delhi.
Apart from being the staple food for people, pulses have found applications in the food processing
industry. Pulses flour is considered to be healthier as compared to wheat flour and has been
replacing the latter in making snacks and confectionary items to produce healthier food options for
health-conscious consumers. Similarly, pulses are also being increasingly used in the ready to eat
and snack food industry. There are over 1000 units (small and medium) at present engaged in
processing of various pulses in different parts of the country. Some of the major players in the
pulses market in India are National Agricultural Cooperative Marketing Federation of India
(Nafed), Tata’s-Sampann and Mahindra-NuPro.
3.2. Market Potential
The global pulses market reached a volume of 102.7 Million Tons in 2018, registering a CAGR of
5.7% during the year 2011-2018. Indian pulses market reached a volume of 24.2 Million Tons in
2018. 9 While India is the largest producer of pulses in the world, it is also the largest consumer.
A significant share of the Indian population are vegetarians and pulses represent the main source
of proteins in their diets. Pulses are not only used for making curry but are also used for making
various food items and snacks in Indian homes. As a result of increasing urbanization and busy
lifestyles, healthy ready-to-eat snack foods are becoming increasingly popular with consumers in
the country.
With a huge domestic demand of pulses, India needs to import significant quantities of pulses. The
market potential for processing pulses is huge with the ever-growing demand for pulses combined
with a rapidly increasing population. Cleaning, grading, sorting and polishing of pulses to convert
them in to processed dal adds significant value in terms of price realization for the farmers.
Combining the huge demand for pulses with the potential value realization from processing of
pulses, a dal mill presents a lucrative business opportunity for farmers to aggregate their produce,
process the same and to generate higher returns for farmers.

9
IMARC research pulses report
4. Business Model
4.1. FPC details
Farmers from Gomewadi village in Atpadi block in Sangli district of Maharashtra are interested
to form a Farmer Producer Company namely- Bhumikanya Farmer Producer Company Ltd. The
company proposes dal mill as a feasible business activity.
Vision -
The vision of the Farmer Producer Company is to become a role model farmer organization by
utilizing the true potential of the farming community in their sphere of influence.
Mission –
FPO intends to leverage the agricultural and allied activities carried out by the member farmers as
well as other farmers in the geography. They intend to effect improvements along each stage of
the agricultural cycle from pre-cultivation, cultivation and post-harvest through aggregation and
thereby entailing advantage of economies of scale and scope as the operations of the FPO mature.
This will lead to better prize realization for the agriculture produce and supplementary incomes
from allied activities.
Organization structure –

Board of
Directors

CEO Admin

Operations
manager

Operators

The management structure of the FPC will include mechanisms to ensure that each member farmer
has a say in operations as well as the operations are professionally managed for efficiency and
effectiveness.
The Board of Directors will consist of elected representatives from the member farmers to ensure
decision making is done based on consensus and reflects the priorities of all members. Operations
will be managed professionally by the Chief Executive Officer (CEO, who will be responsible to
the Board of Directors and eventually the member farmers).

4.2. Process flow

Farmers bring raw dal to the
processing facility

Raw dal is cleaned to remove

any husk, chaff, dirt etc.

Cleaned dal is graded

according to size and quality

It is subjected to the pitting

process

Pitted dal is treated with

linseed oil

Pitted dal is subjected to

alternate wetting and drying

Dehusking and splitting

Polishing

Packaging and sale

Farmers will bring raw dal from their farms to the processing facility. Raw dal is cleaned which
helps in removing the husk, dust, etc. from the pulses. The cleaned pulses will then be graded in
to three grades based on quality of the seed inside the dal mil.
It is then subjected to pitting process. The pitting process rubs open the top surface of the dal and
creates abrasions for the oil to enter the seed. Some seeds get de-husked in this process. The pitted
dal is the treated with linseed oil. Oil absorbed into the seed facilitates loosening of the top cover
and splitting of the cotyledons. Pulses treated with oil are allowed to settle for 8 to 10 hours so that
the oil diffuses.
Pulses are then conditioned by alternate soaking/wetting. 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 de-husking and splitting.
For de-husking of conditioned pulses, coated emery rollers are used. About 50% of the pulses are
de-husked in one pass through the rollers. The de-husked split pulses will be separated by sieving.
Un-split pulses and tail pulses are again de-husked and milled in a similar way. For complete de-
husking and splitting, the whole process will be repeated two to three times. The split and de-
husked pulses are polished with small quantity of oil.
The polished dal will be packed into gunny bags and sold in the nearby wholesale markets.
5. Financial model
5.1. Project cost

Particulars Amount

PROJECT COST
[A] Investment in Plant & Machineries
- Dal Mill (Capacity 500 Kg/Hrs) 620,000
Purchase Cost of Machines 620,000

[B] Factory Shed

- Area (in Sq Ft) 1,100
- Construction Rate Per Sq Ft 500 550,000

Total Investment in Long term uses 1,170,000

[C ] Working Capital 125,000

Total Project Cost 1,295,000

MEANS OF FINANCE Percentage

A] Debt Finance
- Term Loan 1,063,700 91%
- Working Capital finance from Bankers - 0%
-Non Fund Base Limit (LC/BG)

Sub Total [A] 1,063,700

B] Own Contribution
- For Long Term Investments 106,300 9%
- For Working Capital 125,000 100%

Sub Total [B] 231,300

Grand Total [ A + B ] 1,295,000
5.2. Assumptions
A. Cost of Goods sold (per kg)

S. No Particulars Tur Gram

1 Purchase Price 45 40

B. Allied costs
Sr No Particulars Remuneration No. of units No of Labor Annual costs
1 Unskilled Labour 350 180 days 2 108,000
2 Admin Staff 8000 12 months 1 96,000

C. Sales turnover
Sr No Particulars Tur Gram
1 Procurement per year (kgs) 270,000 270,000
Output (kgs)
2 Processed dal 189,000 189,000
3 Husk 81,000 81,000
Sale price per kg
4 Processed dal 65 55
5 Husk 14 14
Sales Per Year 13,419,000 11,529,000
Total annual sales 24,948,000

D. Capacity utilization
Quantity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
(Tons)
Capacity
utilization 70% 75% 80% 85% 90% 95% 100%
Tur
132,300 141,750 151,200 160,650 170,100 179,550 189,000
Gram
132,300 141,750 151,200 160,650 170,100 179,550 189,000
Husk 113,400 121,500 129,600 137,700 145,800 153,900 162,000
E. Working capital requirement

Particulars No of Days outstanding Amount

a) Investment in Inventories 10 478,455
b) Receivable from debtors 30 1,435,364
Less:
i) Payable to Creditors 38 1,789,366

Net Investment in Working Capital 124,453

Approximate requirement limited to 125,000

F. Gross profit analysis

Sr No Particulars Tur Gram
1 Input Raw Material in Kg 100 100
2 Purchase price per kg 44 40
3 Purchase Cost 44,000 40,000
4 Packaging Charges 7 7
5 Transport Cost 40 40
Total Cost 44,470 40,470

7 Output Per 100 KG

Processed Dal (in KG) 70 70
Broken Dal & Husk (in KG) 30 30

8 Revenue
Processed Dal 45,500 38,500
Broken Dal & Husk 4,200 4,200
9 Total Revenue 49,700 42,700
10 Gross Profit 5230 2230
11 Gross Profit Ratio 11.49 5.79
12 Sales Mix Percentage 50% 50%
13 Weighted Average Gross Profit 5.75 2.90
Average Gross Profit 4.32
5.3. Profit & Loss
PROJECTIONS
Particulars
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Revenue
Sales 17,463,600 19,085,220 20,764,719 22,503,765 24,304,066 26,167,377 28,095,500

Total 17,463,600 19,085,220 20,764,719 22,503,765 24,304,066 26,167,377 28,095,500

Cost of Goods Sold

Opening Stock - 478,455 522,883 568,896 616,541 665,865 716,914
Add: Variable Cost 17,187,334 18,304,846 19,913,349 21,578,869 23,303,046 25,087,557 26,934,128

Sub Total 17,187,334 18,783,301 20,436,231 22,147,766 23,919,587 25,753,422 27,651,043

Less: Closing Stock 478,455 522,883 568,896 616,541 665,865 716,914 769,740
Cost of Goods Sold 16,708,879 18,260,418 19,867,335 21,531,224 23,253,722 25,036,508 26,881,303

Gross Profit 754,721 824,802 897,384 972,540 1,050,344 1,130,870 1,214,197

Indirect Expenses
Labour Charges 108,000 113,400 119,070 125,024 131,275 137,838 144,730
Staff Salary 96,000 100,800 105,840 111,132 116,689 122,523 128,649
Electricity Expenses 35,000 36,750 38,588 40,517 42,543 44,670 46,903
Repairs & Maintained 25,000 26,250 27,563 28,941 30,388 31,907 33,502
Audit Fees 15,000 15,750 16,538 17,364 18,233 19,144 20,101
Communication Expenses 20,000 21,000 22,050 23,153 24,310 25,526 26,802
Printing & Stationery 10,000 10,500 11,025 11,576 12,155 12,763 13,401
Local Conveyance 20,000 21,000 22,050 23,153 24,310 25,526 26,802
Professional Fees 25,000 26,250 27,563 28,941 30,388 31,907 33,502
Travelling Expenses 10,000 10,500 11,025 11,576 12,155 12,763 13,401
Staff & Labour Welfare 20,000 21,000 22,050 23,153 24,310 25,526 26,802
Factory Rent 60,000 63,000 66,150 69,458 72,930 76,577 80,406

Total Indirect Costs 444,000 466,200 489,510 513,986 539,685 566,669 595,002

PBIDT (Operating Profit) 310,721 358,602 407,874 458,555 510,659 564,201 619,195

PBDT 310,721 358,602 407,874 458,555 510,659 564,201 619,195

Depreciation 148,000 128,550 111,743 97,209 84,632 73,742 64,304
Book Profit 162,721 230,052 296,132 361,346 426,027 490,459 554,891
Income Tax* - - - - - 147,138 166,467
Profit after tax 162,721 230,052 296,132 361,346 426,027 343,322 388,423
Less : Appropriation
Profit After Appropriations 162,721 230,052 296,132 361,346 426,027 343,322 388,423
5.4. Balance Sheet
PROJECTIONS
Particulars
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Owners Funds
Opening Bal. / Addition 231,300 394,021 624,072 920,204 1,281,550 1,707,577 2,050,899
Add: Profit 162,721 230,052 296,132 361,346 426,027 343,322 388,423
Less : Drawing - - - - - - -
Closing Balance 394,021 624,072 920,204 1,281,550 1,707,577 2,050,899 2,439,322

Secured Loans
- Term Loan (New Machine) 981,877 818,231 654,585 490,938 327,292 163,646 -
- Cash Credit - - - - - - -
981,877 818,231 654,585 490,938 327,292 163,646 -

Current Liabilities
Sundry Creditors 1,789,366 1,905,710 2,073,171 2,246,567 2,426,070 2,611,855 2,804,101

1,789,366 1,905,710 2,073,171 2,246,567 2,426,070 2,611,855 2,804,101

Total 3,165,264 3,348,013 3,647,959 4,019,056 4,460,940 4,826,400 5,243,423

Fixed Assets
Opening WDV / Addition 1,170,000 1,022,000 893,450 781,708 684,499 599,867 526,125
Less : Depreciation 148,000 128,550 111,743 97,209 84,632 73,742 64,304
Closing WDV 1,022,000 893,450 781,708 684,499 599,867 526,125 461,821

Other Non Current Asset - 40,000 140,000 329,000 493,500 740,250

Current Assets
Sundry Debtors 1,435,364 1,568,648 1,706,689 1,849,624 1,997,594 2,150,743 2,309,219
Inventory 478,455 522,883 568,896 616,541 665,865 716,914 769,740
Cash & Bank Balances 229,445 313,032 400,666 503,391 576,114 412,617 330,593
Farmers Advaces - 50,000 150,000 225,000 292,500 526,500 631,800
2,143,264 2,454,563 2,826,252 3,194,557 3,532,073 3,806,775 4,041,352

Total 3,165,264 3,348,013 3,647,959 4,019,056 4,460,940 4,826,400 5,243,423

5.5. Cash Flow
Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Cash Flow from Operating Activity
Profit after Appropriations 162,721 230,052 296,132 361,346 426,027 343,322 388,423
Add: - Depreciation 148,000 128,550 111,743 97,209 84,632 73,742 64,304
Add: - Interest on Loans - - - - - - -
Add: - Income Tax - - - - - 147,138 166,467
310,721 358,602 407,874 458,555 510,659 564,201 619,195
Less: - Income Tax - - - - - 147,138 166,467
Operating Cash flow
before chane in working
capital 310,721 358,602 407,874 458,555 510,659 417,063 452,728
Add/Less Change in
Working capital (124,453) (111,368) (116,594) (92,184) (85,290) (252,414) (124,355)
Net Cash Flow From
Operating Activity 186,268 247,234 291,280 366,371 425,369 164,649 328,372

Cash Flow from Investing Activity

Factory Shed (1,170,000) - - - - - -

Non Current Assets - - (40,000) (100,000) (189,000) (164,500) (246,750)

Investing Activity (1,170,000) - (40,000) (100,000) (189,000) (164,500) (246,750)

Cash Flow from Financing

Increase/Decrease in Activity
Capital 231,300 - - - - - -
Increase/Decrease in Loans
- Term Loan (new) 981,877 (163,646) (163,646) (163,646) (163,646) (163,646) (163,646)
Financing Activity 1,213,177 (163,646) (163,646) (163,646) (163,646) (163,646) (163,646)

Net Cash Flow 229,445 83,588 87,634 102,725 72,723 (163,497) (82,024)
Opening Cash & Cash
Equivalent 229,445 313,032 400,666 503,391 576,114 412,617

Equivalent 229,445 313,032 400,666 503,391 576,114 412,617 330,593

6. Financial Ratios
Year Reference Cash Flow DF @ 10% DCF
0 Cash Outflow (1,295,000) 1 (1,295,000)
1 Cash flow after tax 310,721 0.909090909 282,473
2 Cash flow after tax 358,602 0.826446281 296,365
3 Cash flow after tax 407,874 0.751314801 306,442
4 Cash flow after tax 458,555 0.683013455 313,199
5 Cash flow after tax 510,659 0.620921323 317,079
6 Cash flow after tax 417,063 0.56447393 235,421
7 Cash flow after tax 452,728 0.513158118 232,321
Terminal Value 0.513158118 -
Net Present Value / Value of the Business 1,983,301
IRR 23.61%
Payback Period in Years 4.31

Sr No Particulars Amount
a] Fixed Cost
Labour Charges 108,000
Staff Salary 96,000
Electricity Expenses 35,000
Repairs & Maintained 25,000
Audit Fees 15,000
Communication Expenses 20,000
Printing & Stationery 10,000
Local Conveyance 20,000
Professional Fees 25,000
Travelling Expenses 10,000
Staff & Labour Welfare 20,000
Factory Rent 60,000

b] Total Fixed Cost 444,000

c] GP Ratio 4.32%
EBIT 162,721 230,052 296,132 361,346 426,027 490,459 554,891
Capital Employed
Owner Capital 394,021 624,072 920,204 1,281,550 1,707,577 2,050,899 2,439,322
Bank Finance 981,877 818,231 654,585 490,938 327,292 163,646 -
1,375,898 1,442,303 1,574,789 1,772,489 2,034,869 2,214,545 2,439,322
ROCE 11.83 15.95 18.80 20.39 20.94 22.15 22.75
7. Annexure
Sr. Title Details
No.
1 Name of company BHUIKANYA FARMER AGRO PRODUCER COMPANY
LIMITED
2 Address of company At Post. Gomewadi, Tal. Atpadi, Dist. Singli
3 CIN of company
4 Details of BoD Name Age
Sunetra Jagganath Kulkarni 35
Archana Vasant Jagtap 39
Manisha Umesh Deshpande 40
Kavita Appaso Jagtap 36
Nisha Nilesh Deshpande 37
5 Details of chairman Ms. Sunetra Kulkarni
She has experience of more than 10 years in farming and
allied industries.