T.E.V.

Report
M/S M.B. AGRO MILLS

Name of the Firm M/S M.B. AGRO MILLS

Type of Constitution Partnership Firm

Date of Partnership 17/11/2017

Nature of Industry Food Processing Industry

Promoters Sh. Anil Mittal (Partner)

Sh. Amit Mittal (Partner)

Smt Asha Mittal (Partner)

Smt Sarita Devi (Partner)

Smt Renu Mittal (Partner)

Factory Address Malpuri, Sitarganj, U.S. Nagar 262405, U.K.

Activity Manufacturing of Rice, Rice Bran, and Husk.

Optimum Level of Capacity Utilization 80%

Cost of Project 2426.66 lacs

Particulars Amount

Land & Site Development Lease Hold

Building (Factory & Office) 409.39

Plant & Machinery 800.62

Margin Money for Working Capital 1206.66

Electricity Security 10.00

TOTAL 2426.66

Means of Finance Rs 2426.66 (In Lacs)

Particulars AMOUNT

Promoter’s Capital 426.66

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 Unsecured Loans/Subsidy 400.00

Working Capital Loan/ CC Limit 800.00

Term Loan - I 617.35

Term Loan - II 182.65

TOTAL 2426.66

D.S.C.R. 4.50

1. Introduction
Rice is the seed of the grass species Oryza sativa (Asian rice) or Oryza glaberrima (African
rice). As a cereal grain, it is the most widely consumed staple food for a large part of the
world's human population, especially in Asia. It is the agricultural commodity with the third-
highest worldwide production (rice, 741.5 million tonnes in 2014), after sugarcane (1.9 billion
tonnes) and maize (1.0 billion tonnes).
Since sizable portions of sugarcane and maize crops are used for purposes other than
human consumption, rice is the most important grain with regard to human nutrition and
caloric intake, providing more than one-fifth of the calories consumed worldwide by humans.
There are many varieties of rice and culinary preferences tend to vary regionally.
Rice, a monocot, is normally grown as an annual plant, although in tropical areas it can
survive as a perennial and can produce a ratoon crop for up to 30 years.[3] Rice cultivation
is well-suited to countries and regions with low labor costs and high rainfall, as it is labor-
intensive to cultivate and requires ample water. However, rice can be grown practically
anywhere, even on a steep hill or mountain area with the use of water-controlling terrace
systems. Although its parent species are native to Asia and certain parts of Africa, centuries
of trade and exportation have made it commonplace in many cultures worldwide.
The traditional method for cultivating rice is flooding the fields while, or after, setting the
young seedlings. This simple method requires sound planning and servicing of the water
damming and channeling, but reduces the growth of less robust weed and pest plants that
have no submerged growth state, and deters vermin. While flooding is not mandatory for the
cultivation of rice, all other methods of irrigation require higher effort in weed and pest
control during growth periods and a different approach for fertilizing the soil.
The name wild rice is usually used for species of the genera Zizania and Porteresia, both
wild and domesticated, although the term may also be used for primitive or uncultivated
varieties of Oryza.
The Rice milling is the process that helps in removal of hulls and bran’s from paddy grains to
produce polished rice. Rice is rich in genetic diversity with thousands of varieties grown
throughout the world. Rice has been one of man's most important foods. Today, this unique

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grain helps sustain two-thirds of the world's population. It is life for thousands of millions of
people. It is deeply embedded in the cultural heritage of their societies. About four-fifths of
the world's rice are produced by small-scale farmers and are consumed locally.
Rice milling is the oldest and the largest agro processing industry of the country. It has a
turnover of more than Rs.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. Paddy grain is milled either in raw condition or after par-boiling,
mostly by single hullers of which over 82,000 are registered in the country. Apart from it there
are also a large number of unregistered single hulling units in the country. A good number
(60%) of these are also linked with par-boiling units and sun -drying yards. Most of the tiny
hullers of about 250-300 kg/hr capacities are employed for custom milling of paddy. Apart
from it double hulling unit’s number over 2,600 units, under run disc shellers cum cone
polishers numbering 5,000 units and rubber roll shellers cum friction polishers numbering
over 10,000 units are also present in the country. Further over the years there has been a
steady growth of improved rice mills in the country. Most of these have capacities ranging
from 2 tonnes / hr to 10 tonnes/ hr.

The world production of rice has increased at a faster rate than world population over the last
three decades despite the fact that rice is produced by mainly small, marginal that too tenant
farmers. Rice price at, world level has shown a declining trend over last fifty years. But, in
Asian countries, over the years, the price of rice has increased with inter-year fluctuations
and intra seasonality. Asian consumers depend more on rice for their dietary caloric intake
than consumers in other continents (Chand, 1998). China is the world’s largest producer and
the largest consumer of rice. Thailand is the largest exporter of rice and Philippines is the
largest importer of rice in the world. In this chapter an analysis of growth trends in world rice
prices during 1994-95 to 2008-09 has been made. It is interesting to note that the annual
average growth rate in yield of rice during the 1980s to 1990s was 3.19 per cent and it has
declined to 1.34 per cent during the subsequent decade. However, it has showed signs of
marginal increase by 1.61 per cent during 2000-09. Looking to the trends in compound
annual growth rate, it revealed that in the decade of first reform period i, e. from 1991-00, the
compound annual growth rate was 1.87 per cent and it has decreased to 0.64 per cent
during 2001-10. The world price of rice showed continues increasing trend from 1991-2010
and during 2005 to 2007, and the world price of rice almost got doubled when compared to
1990-91 prices. Rice milled exports from India has reached a high level during 1995 to 1998.
Again from 2001-09, it showed signs of increase. From1991to 1994 and from 1998-2001, a
slackness in the rice milled exports was noticed. India started to implement some limited
policy reforms in the 1980s, and sharply accelerated the reform process in the early 1990s.
As a result of foreign trade liberalization, exports of rice started increasing from the mid
nineties. The tariff rates were reduced sharply over the decade from a weighted average of
72.5per cent in 1991- 58 92 to 24.6 in 1996-97, but rose again in the late nineties to 35.1per
cent in 2001- 02. This may be due to lack of proper rice policies that resulted in imposing a
heavy burden on poor consumers necessitating the government to adopt food distribution
programmes. Keeping this in view a study has been under taken for the period from 1990-91
to 2001-10 to see whether there was any systematic relationship between the movement of
production and rice price. In this context, it is reasonable to examine the issue of
strengthening linkages between the Indian domestic market and world markets. It would
therefore be interesting to see any relationship between the movement of export and import,
international prices on impact of trade liberalization of rice sector. The present chapter has
been divided into four parts. The first part deals with recording of facts on the global rice
economy. The second part analyses the trend in rice consumption in major rice growing
countries and the third part examines the trends in rice production and the factors
contributing to the recent deceleration in the growth of rice production and its impact on

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prices. Third part is devoted to the analysis of movement in value of India’s rice exports.
Fourth relates to analysis of movement in value of major rice importing countries. Fifth the
examination of competitiveness of rice milled exports and direction of exports and imports.
Sixth part examines impact of trade liberalization export and import prices of rice and its
trade flows. The last part is devoted to suggesting perspective fruitful rice policies.

2. Uses of rice and other products

Rice is a staple food and used by many ways as under.

 Staple food: Rice is used as a staple food by more than 60 percent of World
population. Cooking of rice is a most popular way of eating. There are many ways of
domestic use like khichdi, pulav, kheer, zeera rice, idli, dosa etc.
 Starch: Rice starch is used in making ice-cream, custard powder, puddings, gel,
distillation of potable alcohol, etc.

 Rice bran: It is used in confectionery products like bread, snacks, cookies and
biscuits. The defatted bran is also used as cattle feed, organic fertilizer (compost),
medicinal purpose and in wax making.

 Rice bran oil: Rice bran oil is used as edible oil, in soap and fatty acids
manufacturing. It is also used in cosmetics, synthetic fibres, plasticisers, detergents
and emulsifiers.

 Flaked rice: It is made from parboiled rice and used in many preparations.

 Puffed rice: It is made from paddy and used as whole for eating.

 Parched rice: It is made from parboiled rice and is easily digestible. In India, about 4-
5 percent of total supplies of rice are used as parched rice.

 Rice husk: It is used as a fuel, in board and paper manufacturing, packing and
building materials and as an insulator. It is also used for compost making and
chemical derivatives.

3. Importance of Rice
Rice has shaped the culture, diets and economic of thousand of millions of peoples. For
more than half of the humanity “rice is life”. Considering its importance position, the
United Nation designated year 2004 as the “International Year of rice. Importance of
rice is as follows:

a. Rice is an important staple food crop for more than 60 per cent of the world people. In
2008, more than 430 million metric tons of rice was consumed worldwide, according to
the USDA.

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 b. Ready to eat products eg. Popped and puffed rice, instant or rice flakes, canned rice
and fermented products are produced.

c. Rice straw is used as cattle feed, used for thatching roof and in cottage industry for
preparation of hats, mats, ropes, sound absorbents, straw board and used as litter
material.

d. Rice husk is used as animal feed, for paper making and as fuel source.

e. Rice bran is used in cattle and poultry feed, defatted bran, which is rich in protein,
can be used in the preparation of biscuits and as cattle feed.

f. Rice bran oil is used in soap industry. Refined oil can be used as a cooling medium
like cotton seed oil / corn oil. Rice bran wax, a byproduct of rice bran oil is used in
industries.

4. Rice Growing Region in India

Rice is grown under so diverse soil and climatic conditions that it is said that there is
hardly any type of soil in which it cannot be grown including alkaline and acidic soils.
Rice crop has also got wide physical adaptability. Therefore, it is grown from below sea-
level (Kuttanad area of Kerala) upto an elevation of 2000 metres in Jammu & Kashmir,
hills of Uttarakhand, Himachal Pradesh and North-Eastern Hills (NEH) areas. The rice
growing areas in the country can be broadly grouped into five regions as discussed
below:

i. North-Eastern Region: This region comprises of Assam and North eastern

states. In Assam rice is grown in the Basin of Brahmaputra River. This region
receives very heavy rainfall and rice is grown under rain fed condition.
ii. Eastern Region: This region comprises of Bihar, Chhattisgarh, Jharkhand,
Madhya Pradesh, Orissa, Eastern Uttar Pradesh and West Bengal. In this region
rice is grown in the basins of Ganga and Mahanadi rivers and has the highest
intensity of rice cultivation in the country. This region receives heavy rainfall and
rice is grown mainly under rain fed conditions.
iii. Northern Region: This region comprises of Haryana, Punjab, Western Uttar
Pradesh, Uttrakhand, Himachal Pradesh and Jammu & Kashmir. The region
experiences low winter temperature and single crop of rice from May-July to
September-December is grown.
iv. Western Region: This region comprises of Gujarat, Maharashtra and Rajasthan.
Rice is largely grown under rain fed condition during June-August to October -
December.
v. Southern Region: This region comprises of Andhra Pradesh, Karnataka, Kerala
and Tamil Nadu. Rice is mainly grown in deltaic tracts of Godavari, Krishna and
Cauvery Rivers and the non-deltaic rain fed area of Tamil Nadu and Andhra
Pradesh. Rice is grown under irrigated condition in deltaic tracts.

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5. The Firm
The promoters entered into a partnership agreement on 17.11.2017 to establish a firm in
the name and style of M/S M.B. Agro Mills. The partners of the firm and their shares as
per partnership deed are as under:

Sr. No. Name Share

1. Sh. Anil Mittal 23%
2. Sh. Amit Mittal 23%
3. Smt. Asha Mittal 18%
4. Smt. Renu Mittal 18%
5. Smt. Sarita Devi 18%

The office of the firm is located at Malpuri, Sitarganj, U.S. Nagar, U.K.

BACKGROUND OF THE FIRM/PARTNERS

Mr. Anil Kumar and Mr. Amit Mittal and all other partners are family members and permanent
residents of Sitarganj. The promoters of the firm are enjoying good reputation in the society
as the promoters are involved in various social activities at Sitarganj and to be counted
renowned/leading business man of the area. The promoters of the firm are running various
rice mills, flour mills in the area of Sitarganj, Rudrapur and Haldwani. The promoters are
running their firms in the name of M/s Anil Kumar Amit Kumar, M/s Shivam Traders which
are rice mills at Sitarganj. M/s Mahavir Roller Flour Mills Pvt ltd, M/s M. B. Rice Mill, M/s
Surya Polypet Pvt Ltd, M/s Bhagwati Stone Industries which are engaged in manufacturing
of flour, rice, bottles and stone crushing activities respectively. All the firms/companies are
dealing with us whose accounts are satisfactory.

a. BACKGROUND OF THE COMPANY

M/s M.B. Agro Mills was incorporated on 17th Nov 2017 with partners:-
1. Sh. Anil Mittal (23%)
2. Sh. Amit Mittal (23%)
3. Smt. Asha Mittal (18%)
4. Smt. Renu Mittal (18%)
5. Smt. Sarita Devi (18%).

The firm has been established for setting up of new unit of rice mill with an installed
capacity of 10 MT per hr and 48000 MT per annum at Malpuri, Sitarganj, . The proposed

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Cost for project is estimated at 2426.66 lacs. The promoters of the firm have proposed to
contribute `426.66 lacs towards the total cost of project, i.e. 17.58% and rupee term loan
of `800.00 lacs along with working capital limit of `800.00 lacs.
The basic products of the Company are rice, rice bran, and husk. The unit procures paddy
from open market in Sitarganj, U.S Nagar, U.K and adjoining areas. Encouraged by
success of running similar industry and also looking at the bright prospect of rice industry
in this Region, the new project has been undertaken. The promoters have more than a
decade’s of experience in the food processing industry.
The company is in consultation with the various reputed machinery suppliers.

6. Promoters
The firm was established as partnership firm on 17.11.2017 and the partners of the firm
are as under:
1. Sh. Anil Mittal (23%)
2. Sh. Amit Mittal (23%)
3. Smt. Asha Mittal (18%)
4. Smt. Renu Mittal (18%)
5. Smt. Sarita Devi (18%).

Name of the Sh.Anil Sh.Amit Smt.Asha Smt.Renu Smt.Sarita

partners: Mittal Mittal Mittal Mittal Devi

Net - - 7.12 crores 1.64 crores 0.66 crores

Worth:-

7. Rice Mills in Sitarganj

Because the area around this town is very fertile and suitable for growing rice, one can
find many rice mills in this town. Following are few of them:

 Ram Shyam Industries

 Anil Kumar Amit Kumar
 G R Rice Mill
 Jn Agro Ind.
 Mr Ind.
 Shakti Ind.
 Shyama Ind.
 Grover Rice Mill
 Tirupati Seeds Pvt. Ltd.
 Bansal Rice Mill

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 Dn Agro Products
 Guru Kripa Rice Mill
 Hanuman Ind.
 Durga Ind.
 Goyal Ind.
 Jp Ind.
 Rama Foods
 Haryana Industries
 Swastik Rice Mill
 Shankar Rice Mill
 Narayan Rice Mill
 Kisan Rice Mill
Big Industries in Sitarganj
However, Sitarganj also have few big industries. For instances, Karam industries in
Sitarganj is spread over an area of 17 acres. The company specializes in plastic molding,
shoe molding and large harness manufacturing. They also deal in eye and ear protection
equipments.
ANG Industries is another big manufacturing unit in sitarganj. In fact, this plant is
amongst the largest and the most modern heavy fabrication and trailer manufacturing
facilities in India. It has six bays , 10 overhead gantry cranes, a fully automated H-Beam
line, plastic cutting machines, seven nozzle flame cutting machine etc, a beam
assembling machine etc.
Talbros automotive components ltd is the third big company in Sitarganj. It is one of the
largest gasket manufacturing companies in India here they produce different types of
gasket such as cylinder head gaskets, secondary gaskets, new technology gaskets, hot
gaskets etc.

Other manufacturing companies in Sitarganj

Following are some other medium scale companies in Sitarganj, which deals in different
commodities:
 La Opala: Glass Ware
 Moraceae Pharmaceuticals (P) Ltd: Pharmaceuticals Products
 M/S Tara Feeds Ltd: Cattle Feeds
 M/S Rackitt Benckiser India: FMCG
 Packaging India Ltd: Flexible Packing
 Ravi Packaging: Packing Material
 Alpala India: Plastic Bottle
 Aaron Mutual Craft (P) Ltd; Helmet

8. Associate & Allied Concerns

There are six associate concerns of the firm which are M/s Murari Lal Baiz Nath (M.B. Rice
Mill), M/s Anil Kumar Amit Kumar, M/s Shivam Traders which are rice mills at Sittarganj. M/s

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Mahavir Roller Flour Mills Pvt ltd (flour mill), M/s Surya Polypet Pvt Ltd (Manufacturing of
plastic bottles), M/s Bhagwati Stone Industries (Stone crusher).

9. Technical Feasibility

TECHNICAL FEASIBILITY REPORT

M/s M.B Agro Mills, Malpuri, Sitarganj, U.S. Nagar, U.K.

A. INTRODUCTION –

Rice mill in India is a sunrise sector that has gained prominence in recent years.
Availability of raw materials, changing lifestyles and relaxation in policies has given a
considerable push to the industry’s growth. This sector is among the few that serves as a
vital link between the agriculture and industrial segments of the economy. Strengthening
this link is of critical importance to improve the value of agricultural produce. It ensures
remunerative prices to farmers and at the same time create favorable demand of packed
flour in India. A thrust to the paddy processing sector implies significant development of
the agriculture sector and ensures value addition to it.

India is the second biggest rice producing country in the world after China. Itcontributes
about 20 percent of the world output of rice. Paddy being the major cereal crop of
Indiacovers an area of more than 42.8 million hectares, the largest under any single crop
(FAO, 1995). It has been stated by the Department of Agriculture, Government of India
that in 1985-86 production of paddy was of the order of 96 million tonnes which was
increased to 115 million tonnes in 1995-96 and is expected to increase to 130 million
tonnes by year 2000. It is grown in almost all the provinces of the country but more than
86 percent of the total production accounts for the States of Andhra Pradesh, West
Bengal, Tamil Nadu, Uttar Pradesh, Bihar, Orissa, Madhya Pradesh, Punjab and Assam.
Rice production, processing and marketing constitute the biggest industry in the country.
Indian rice milling industry is the oldest and largest agro-based industry. The annual
production of paddy was estimated at over 521 million tonnes, mostly in developing
countries and the amount is rising at an average rate of 3 percent per annum (FAO, 1995).
It was, however, the serious food crisis in the early sixties which highlighted the need for
a proper policy towards the industry. This led to joint study of the industry by the
Government of India and the Ford Foundation of India. The study pointed out that the
overall supply of rice could be augmented substantially with additional yield obtained
through modernization of the existing rice processing techniques. A number of studies

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were also undertaken and came out with the same findings. As a result, the policy of
modernization of rice mills in India has since then been pursued by the Government of
India and various States within it. Thus, the industry has become fairly modernized and
more important in the economy of the country. However, it is still believed that this has
not been successfully implemented in most part of the country. Thus, with higher priority
being given to paddy production programmes and the changing pattern of demand for
rice, the milling industry has to adopt itself to the developing nation.

Rice milling in India is carried out in small and medium size rice mills. Most of the small
size mills are huller mills. Other various types are Battery of Huller mills, Huller-cum-
Sheller mills, Sheller mills and modern mills. The numbers of rice mills of different types
existing in country are as follows:

Types of Rice Mills Number of Rice Mills

Huller Mills 78309

Sheller Mills 4586

Huller-cum-Sheller Mills 10384

Modern Mills 31068

Huller mills have the advantage of being cheap and simple to operate but are very
inefficient in converting paddy into rice. The rice recovery in huller type will be 60-68
percent with 10-25 percent broken whereas 68-72 percent recovery with 5-7 percent
broken in modern type. It is a noticeable fact that the modern mills give the highest yield
of rice with least broken and better quality of by-products. Normally the huller mills yield
bran having lowest oil content as it contains appreciable amount of husk and broken rice.
But the oil content in bran from Sheller and modern mills are far better in this respect.

LEGISLATIVE MEASURES:-

The Rice Milling Industry (Regulation and Licensing) Act now in force provides that:

a. The new rice mills to be set up will undertake dehusking of paddy separately by
rubber roll Sheller or centrifugal dehusker and shall have paddy separators and
cleaners in addition to the polisher;

b. All the existing mills excepting single hullers shall be modernized; and

c. Promotional efforts in the form of technical assistance, concessional finance, subsidy

for modernization, extension programmers, training, research and development etc.

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B. PROJECT & HIGH LIGHTS –

a. OVERVIEW OF THE PROJECT -

They have Leasehold Land and developed it from their own resources. The civil
construction work of building is in progress with estimated cost of Rs.409.39 Lacs.
Plant & Machinery is estimated to cost Rs. 800.62 Lacs. Some of these machines are
being imported and others are being bought from Indian market. The orders of these
machines are not finalized till now.
Firm is having its administrative office at Malpuri, Sitarganj, U.S. Nagar, U.K.
However the civil construction of plant and other buildings are in full swing at site.
The project has been envisaged by the partners of the firm with a view to take full
advantage of new industrial policy, their experience in the field in the same area and
makes use of locational advantages. They have hired the services of a consultant
Agarwal Associates & Engineers near Kaladungi Chouraha, Haldwani(Nainital)
Uttaranchal, who are having vast experience in the field, to get suitable advice for
setting up the project. Some of the machines which are likely to give better quality
of products and are highly efficient are being imported. Other machines are being
ordered to reputed Indian suppliers.

They have planned to establish a rice mill (Capacity 10 MT/per hr)) at Malpuri,
Sitarganj, U.S. Nagar, U.K. The partners are already in rice, flour, stone crusher,
plastic bottle business in the same area, for a long time, thus they have pre-
knowledge of the business and the market of the surrounding area.

b. PROPOSED MANUFACTURING UNIT --

The proposed manufacturing unit is being set up at Malpuri, Sitarganj, U.S. Nagar,
U.K. The (Rated Capacity 10 MT/per hr). Some of the important process machines
which are likely to give better quality products, higher efficiency, longer life and
lesser maintenance are proposed to be imported from reputed international suppliers.
Other machines which are having proven record are being purchased from reputed
Indian suppliers. Utility equipments for the plant are also being purchased from
Indian suppliers. The civil work for the unit is in progress at above site. For this they
have got the building designed from a consultant.

c. LOCATIONAL ADVANTAGES –

i. Infrastructure - is the facility entrepreneurs seek from government.

Uttarakhand is one of the few states in country where electrical power is in
abundance. Another industrial requirement is water availability, which
again is not a problem here. The place is also well connected by rail and
road to other parts of nation.
ii. The place where the unit is proposed to be set up has many industries, thus
common industrial infrastructure of the area is available.

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 iii. The place has record good industry and labour relations.
iv. It is near paddy producing belt hence easy availability of raw material at
reasonable will be there.

C. PRESENT STATUS OF PROJECT –

1. The promoters have signed lease agreement of the land for setting up a rice mill
at Malpuri, Pilibhit road, Sitarganj, Udham Singh Nagar- 262405.
2. Civil Construction of plant building was found in progress. The estimated cost of
the building is Rs.409.39 Lacs. The main plant is being constructed on RCC
structure, as per design of consultant.
3. Boundary wall work is in progress on the plot.
4. Temporary Electrical Supply for construction work has not be obtained because
there are proper arrangements for electricity supply. However process for
obtaining Electrical supply from State Electricity Board for running the plant is
being initiated by the promoters.
5. Quotations from Indian and International suppliers of the machines have
been received. Finalization of Machines and ordering them is to take place
shortly. Plant & Machinery is estimated to cost Rs. 800.62 Lacs.
6. The land is under lease agreement.

D. TECHNICAL DETAILS –

a. PRODUCTION CAPACITY –
The promoters have planned to establish a Rice mill (Capacity 10 MT/per hr) at Malpuri,
Sitarganj, U.S.Nagar, U.K. They have hired a technical consultant Agarwal Associates &
Engineers near Kaladungi Chouraha, Haldwani(Nainital) Uttaranchal, for suitable
consultancy technical matters.
Percentage of production planned is –

RICE MILL

RICE 68-72%

RICE BRAN 8-12%

HUSK 20%
100%

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b. PRODUCTION PROCESS –

The flow chart of the production process is being given below, which is self-
explanatory:-
MODERN RICE MIILLING PROCESS

Modern rice milling processes consist of:

Stage Function
Pre- removing all impurities and unfilled grains from the paddy
cleaning
Husking removing the husk from the paddy
Husk separating the husk from the brown rice/unhusked paddy
aspiration
Paddy separating the unhusked paddy from the brown rice
separation
De- separating small stones from the brown rice
stoning
Whitening removing all or part of the branlayer and germ from the brown rice
Polishing improving the appearance of milled rice by removing remaining ran particles and by polishing
the exterior of the milled kernel
Sifting separating small impurities or chips from the milled rice
Length separating small and large brokens from the head rice
grading
Blending mix head rice with predetermined amount of brokens, as required by the customer
Weighing preparing milled rice for transport to the customer
and
bagging

E. TYPE OF PRODUCTS TO BE PRODUCED –

They have planned to produce 10 MT/per hr. As per their past experience and market
survey for marketing the products, percentage of production planned are –
RICE MILL

RICE 68-72%

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 RICE BRAN 8-12%

HUSK 20%
100%

F. UTILITY REQUIREMENT& AVAILABILITY –

Since power availability in the area is good thus for the backup facility the promoters
intend to purchase DG Set. More over the process of rice mill is not such that it cannot
withstand power interruptions. The total connected motor load is 600 KVA. The
process requires steam, so boiler is required. Air requirement of the unit shall be met by
its air compressor. Small water requirement will be met by in house submersible pump.

G. RAW MATERIAL —

The main raw material required for manufacturing will be paddy. Since the proposed
plant lies near paddy production belt i.e. Punjab, Haryana, Uttar Pradesh, etc therefore
raw material availability will not be a problem, as claimed by the promoters. Uttar
Pradesh is one of the biggest producers of wheat in our country. Paddy is produced in
Uttarakhand and in surrounding areas and also brought in mandis from nearby areas. The
production of paddy is increasing year over year as more land is coming under cultivation
and better quality of seeds are being sown. The production of paddy during the current
year is expected to be all time high. The party intends to buy paddy from the dealers of
paddy in Sitarganj as well as directly from the farmers. It was informed that no long term
tie up for purchase of paddy is required. No problem is foreseen in procurement of raw
material.  The basic raw material for the firm is (paddy). The area is one of the most
paddy growing areas in India and there are number of rice mills in this area working
satisfactorily.

H. LIST OF MACHINERY & EQUIPMENTS—

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The firm shall be installing the plant of capacity of 48000 MT per annum for rice mill.
Following is the list of machinery proposed to be installed at M/S M.B. Agro Mills –

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I. SPARES AND MAINTENANCE –

It was informed that sufficient emergency spares of the plant shall be taken care of while
ordering machines. During maintenance, only scheduled replacement of worn out parts
will be required.

J. MARKETING STRATEGY –

Since the produce is a daily consumable item and it is consumed as staple food in India,
in various forms, the requirement of products will continue to grow. Since purchasing
power of urban Indians have increased, both husband and wife in most of the families
have started having job, they do not get time to get wheat cleaned and grinded, and thus
people are opting to purchase ready packed rice from market. The requirement of ready
rice is increasing day by day. Also people are either taking food in hotels or are using
ready-made food. The consumption of bakery products is also increasing. All the above
factors are contributing to increased consumption of packed rice. The promoters are
already in the business and thus are aware of marketing channels; therefore marketing
should not be a problem from the very first day of production. The main product of the
firm shall be rice. In addition to rice, the firm shall be producing rice bran, husk. The
manufacturing plants of reputed units like, Karam industries in Sitarganj are spread over
an area of 17 acres. The company specializes in plastic molding, shoe molding and large
harness manufacturing. They also deal in eye and ear protection equipments.
ANG Industries is another big manufacturing unit in sitarganj. In fact, this plant is
amongst the largest and the most modern heavy fabrication and trailer manufacturing
facilities in India. It has six bays, 10 overhead gantry cranes, a fully automated H-Beam
line, plastic cutting machines, seven nozzle flame cutting machine etc, a beam
assembling machine etc.
Talbros automotive components ltd is the third big company in Sitarganj. It is one of the
largest gasket manufacturing companies in India here they produce different types of
gasket such as cylinder head gaskets, secondary gaskets, new technology gaskets, hot
gaskets etc are situated in the nearby areas.

K. FINDINGS & COMMENTS –

a. SAFETY ASPECT OF THE PLANT –

The promoters were advised to get the services of a properly trained Safety Officer.
The Safety Officer will be responsible for safe operation and maintenance of the
plant.

16
b. HRD & LABOUR RELATION –

Promoters were suggested to hire a good HRD executive for selection of staff
and for sorting out any unforeseen circumstance at the later stage.

L. TECHNICAL SUPPORT –

The suppliers of the machines shall remain in the plant for some time and will train the
staff on operation and maintenance of the machines. Moreover the promoters have hired
the services of a consultant from Jaipur for any technical support required at any time.
Since the promoters are already in the business for some years and there are several
industries in the area, thus obtaining technical support will not be a problem. The supplier
will remain in plant and shall hand over the unit after operating it at the rated capacity.

M. TRAINING OF STAFF –

As mentioned above the suppliers of the machines shall remain in the plant for some time
and will get the staff trained on operation and maintenance of the machines.

COMMENCEMENT OF PRODUCTION - During our visit to the site, we

found that the construction work was underway and was in full swing. However, the
construction work shall be completed by May-June 2018 and production shall start from
October 2018. Any change in the cost due to delay in project should be met out by the
promoter’s from their own margin.

N. Capacity-

The proposed installed capacity of the plant is 48000 MT per annum for rice mill.

CAPACITY UTILISATION

Year Capacity Utilisation

1 st 60%
2 nd 75%
3 rd 75%
4 th 75%
5 th 80%
6 th 80%

17
7 th 80%
8 th 80%

R. Utilities-

Water and Power are the only utilities required by this unit.

 Water: Water is required by workers for drinking and other purposes. The firm
will install a deep tube well as water is required during the construction of
building. The capacity of the existing tube well is sufficient for the proposed unit.

 Electric Power: The firm shall be requiring power load of 600KVA. For the
backup facility the promoters are intended to purchase a DG SET of 250 KVA. It
was explained that getting power connection is not a problem in this area and the
firm shall apply to concern department in due course. As per the information
made available to us the firm has applied for the electricity connection and has
paid security of Rs.10.00 lacs. It was also informed by the partners that position
of power supply in the area is very good, so they shall not be requiring generator.

 Raw Material: Paddy is available in uttarakhand as well as in nearby area. As per

the availability of paddy from various sources, no issue will arise for the raw
material.
 Transportation: Sitarganj is very well connected by rail and road and good
facilities of transportation are available.

S. N.OC & Sanctions-

It is a partnership firm and the firm is registered with Registrar of Firms. The firm is
registered with Directorate of Industries as Manufacturing unit, Classified as Small
Manufacturing Unit under the purview of the MSME since the investment in plant and
machinery is more than ` 25 lacs & below ` 500.00 lacs to be classified as Priority Sector
advance under MSME. (Food & Agro based Industries covered under MSME vide
circular no BCC: BR: 109:483 dated 20.09.2017). The firm has been registered with
Department of Goods & Service tax and the registration number is
05ABHFM3461F1ZG. The map of the building being constructed has been approved by
the local authority. As informed, the firm has applied to pollution control department for

18
N.O.C. and shall apply for sanction of requisite power load in due course. The permanent
account no. allotted by Income Tax Department is ABHFM3461F.

10. Cost of Project And Means Of Finance-

The total cost of project is Rs. 2426.66 lacs

COST OF PROJECT

Amount
Particulars
(Rs. in Lacs)

Land On Leased
409.3
Building 9
800.6
Plant & Machinery 2
10.0
Electricity Security 0
1,206.6
Working Capital Requirement 6

2,426.6
Total 6

MEANS OF FINANCE

Amount
Particulars
(Rs. in Lacs)

Partner's Capital 426.66

400.0
Unsecured Loans / Subsidy 0
617.3
Term Loan - I 5
Term Loan - II, Initially LC After one year will be converted to 182.6
TL 5
800.0
Working Capital Loan/ CC Limit 0

19
 2,426.6
Total 6

Note - Until subsidy is not granted by the government unsecured loan will not be repaid. Capital
Investment subsidy taken under Central Capital Investment Incentive (CCIIAC) Scheme @ 30%
on Eligible Plant & Machinery.

11. Land
The factory land is under lease agreement. The details are as under:
Lease deed in favour of M/s M.B. Agro Mills will be executed by the owners of the land
after conversion of land u/s 143 and before disbursement of the credit facilities.

12. Building
The map of the building has been approved by the local authority. As per the estimate
prepared by civil engineer, Agarwal Associates and Engineer the cost of construction is
Rs 409.39 lacs. The details of estimate are as under:

20
21
22
23
24
25
13. LAYOUT PLAN-

Lay Out plan of proposed construction of industrial building:-

Lay out plan is as under:-

26
14. Term Loan
The project is proposed to be financed by promoter’s capital of Rs.426.66 lacs,
term loan(1)of Rs 617.25. lacs and term loan (2) of Rs 182.65 lacs and cash credit of
Rs.800.00 lacs.

DETAIL OF INTEREST & INSTALMENTS ON TERM LOAN

Term Loan - I 617.35 Lakhs
Rate of Intt 8.40%
Loan
Disbursed Jun-18
Production will start from Oct-18 Expected
Repayment will start
from Apr-19
Repayment Loan Period 6.17 Years
(6 Years 2 Month)
Instalments Amount 8.34 Monthly
Interest will be served on monthly basis

Principal
Interest
Principal Repayment Balance Instalment Total
Interest for the
Repayment Amount Instalment Amount for the Repayment
year
Schedule year

May-18                
2018-2019 May-18 617.35 - 617.35 4.32
Jun-18 617.35 - 617.35 4.32
Jul-18 617.35 - 617.35 4.32
Aug-18 617.35 - 617.35 4.32
Sep-18 617.35 - 617.35 4.32
Oct-18 617.35 - 617.35 4.32
Nov-18 617.35 - 617.35 4.32
Dec-18 617.35 - 617.35 4.32
Jan-19 617.35 - 617.35 4.32
Feb-19 617.35 - 617.35 4.32
Mar-19 617.35 - 617.35 4.32 47.54 - 47.54
Apr-19 617.35 8.34 609.01 4.32
May-19 609.01 8.34 600.66 4.26
Jun-19 600.66 8.34 592.32 4.20
Jul-19 592.32 8.34 583.98 4.15
Aug-19 583.98 8.34 575.64 4.09
Sep-19 575.64 8.34 567.29 4.03
Oct-19 567.29 8.34 558.95 3.97

27
Nov-19 558.95 8.34 550.61 3.91
Dec-19 550.61 8.34 542.27 3.85
Jan-20 542.27 8.34 533.92 3.80
Feb-20 533.92 8.34 525.58 3.74
Mar-20 525.58 8.34 517.24 3.68 48.00 100.11 148.11
Apr-20 517.24 8.34 508.90 3.62
May-20 508.90 8.34 500.55 3.56
Jun-20 500.55 8.34 492.21 3.50
Jul-20 492.21 8.34 483.87 3.45
Aug-20 483.87 8.34 475.53 3.39
Sep-20 475.53 8.34 467.18 3.33
Oct-20 467.18 8.34 458.84 3.27
Nov-20 458.84 8.34 450.50 3.21
Dec-20 450.50 8.34 442.16 3.15
Jan-21 442.16 8.34 433.81 3.10
Feb-21 433.81 8.34 425.47 3.04
Mar-21 425.47 8.34 417.13 2.98 39.59 100.11 139.70
Apr-21 417.13 8.34 408.79 2.92
May-21 408.79 8.34 400.44 2.86
Jun-21 400.44 8.34 392.10 2.80
Jul-21 392.10 8.34 383.76 2.74
Aug-21 383.76 8.34 375.42 2.69
Sep-21 375.42 8.34 367.07 2.63
Oct-21 367.07 8.34 358.73 2.57
Nov-21 358.73 8.34 350.39 2.51
Dec-21 350.39 8.34 342.04 2.45
Jan-22 342.04 8.34 333.70 2.39
Feb-22 333.70 8.34 325.36 2.34
Mar-22 325.36 8.34 317.02 2.28 31.18 100.11 131.30
Apr-22 317.02 8.34 308.67 2.22
May-22 308.67 8.34 300.33 2.16
Jun-22 300.33 8.34 291.99 2.10
Jul-22 291.99 8.34 283.65 2.04
Aug-22 283.65 8.34 275.30 1.99
Sep-22 275.30 8.34 266.96 1.93
Oct-22 266.96 8.34 258.62 1.87
Nov-22 258.62 8.34 250.28 1.81
Dec-22 250.28 8.34 241.93 1.75
Jan-23 241.93 8.34 233.59 1.69
Feb-23 233.59 8.34 225.25 1.64
Mar-23 225.25 8.34 216.91 1.58 22.78 100.11 122.89
Apr-23 216.91 8.34 208.56 1.52
May-23 208.56 8.34 200.22 1.46

28
 Jun-23 200.22 8.34 191.88 1.40
Jul-23 191.88 8.34 183.54 1.34
Aug-23 183.54 8.34 175.19 1.28
Sep-23 175.19 8.34 166.85 1.23
Oct-23 166.85 8.34 158.51 1.17
Nov-23 158.51 8.34 150.17 1.11
Dec-23 150.17 8.34 141.82 1.05
Jan-24 141.82 8.34 133.48 0.99
Feb-24 133.48 8.34 125.14 0.93
Mar-24 125.14 8.34 116.80 0.88 14.37 100.11 114.48
Apr-24 116.80 8.34 108.45 0.82
May-24 108.45 8.34 100.11 0.76
Jun-24 100.11 8.34 91.77 0.70
Jul-24 91.77 8.34 83.43 0.64
Aug-24 83.43 8.34 75.08 0.58
Sep-24 75.08 8.34 66.74 0.53
Oct-24 66.74 8.34 58.40 0.47
Nov-24 58.40 8.34 50.05 0.41
Dec-24 50.05 8.34 41.71 0.35
Jan-25 41.71 8.34 33.37 0.29
Feb-25 33.37 8.34 25.03 0.23
Mar-25 25.03 8.34 16.68 0.18 5.96 100.11 106.07
Apr-25 16.68 8.34 8.34 0.12
May-25 8.34 8.34 (0.00) 0.06 0.18 16.69 16.86

CALCULATION OF INTEREST ON WORKING CAPITAL

Interest
Utilization Working
Year       @
Assumed Capital
8.40%

1st 90% 800.00 60.48

2nd 90% 800.00 67.20
3rd 90% 800.00 67.20 (%) of CC
800.00 67.20 Limit
4th 90%
availed
5th 90% 800.00 67.20
during the
6th 100% 800.00 67.20 year
7th 100% 800.00 67.20
8th 100% 800.00 67.20

DETAIL OF INTEREST & INSTALMENTS ON TERM LOAN

29
Initially bank will issue LC of Rs 182.65 for 2 Years, which will be converted to Term Loan after Two Years
Term Loan -
II 182.65 Lakhs
Rate of Intt 8.40%
Loan
Disbursed Apr-20

Repayment will start from Apr-20

Repayment Loan Period 5.00 Years
Instalments Amount 3.04 Lakhs Monthly
Interest will be served on monthly basis

Principal
Principal Repayment Balance Interest for Instalment Total
Interest
Repayment Amount Instalment Amount the year for the Repayment
Schedule year

Apr-20       182.65 - - - -
Apr-
2020-2021 20 182.65 3.04 179.61 1.28
May-
20 179.61 3.04 176.56 1.26
Jun-
20 176.56 3.04 173.52 1.24
Jul-
20 173.52 3.04 170.47 1.21
Aug-
20 170.47 3.04 167.43 1.19
Sep-
20 167.43 3.04 164.39 1.17
Oct-
20 164.39 3.04 161.34 1.15
Nov-
20 161.34 3.04 158.30 1.13
Dec-
20 158.30 3.04 155.25 1.11
Jan-
21 155.25 3.04 152.21 1.09
Feb-
21 152.21 3.04 149.16 1.07
Mar-
21 149.16 3.04 146.12 1.04 13.94 36.53 50.47
Apr-
21 146.12 3.04 143.08 1.02
May-
21 143.08 3.04 140.03 1.00
Jun-
21 140.03 3.04 136.99 0.98
Jul-
21 136.99 3.04 133.94 0.96
Aug- 133.94 3.04 0.94

30
 21 130.90
Sep-
21 130.90 3.04 127.86 0.92
Oct-
21 127.86 3.04 124.81 0.89
Nov-
21 124.81 3.04 121.77 0.87
Dec-
21 121.77 3.04 118.72 0.85
Jan-
22 118.72 3.04 115.68 0.83
Feb-
22 115.68 3.04 112.63 0.81
Mar-
22 112.63 3.04 109.59 0.79 10.87 36.53 47.40
Apr-
22 109.59 3.04 106.55 0.77
May-
22 106.55 3.04 103.50 0.75
Jun-
22 103.50 3.04 100.46 0.72
Jul-
22 100.46 3.04 97.41 0.70
Aug-
22 97.41 3.04 94.37 0.68
Sep-
22 94.37 3.04 91.33 0.66
Oct-
22 91.33 3.04 88.28 0.64
Nov-
22 88.28 3.04 85.24 0.62
Dec-
22 85.24 3.04 82.19 0.60
Jan-
23 82.19 3.04 79.15 0.58
Feb-
23 79.15 3.04 76.10 0.55
Mar-
23 76.10 3.04 73.06 0.53 7.80 36.53 44.33
Apr-
23 73.06 3.04 70.02 0.51
May-
23 70.02 3.04 66.97 0.49
Jun-
23 66.97 3.04 63.93 0.47
Jul-
23 63.93 3.04 60.88 0.45
Aug-
23 60.88 3.04 57.84 0.43
Sep-
23 57.84 3.04 54.80 0.40
Oct-
23 54.80 3.04 51.75 0.38
Nov-
23 51.75 3.04 48.71 0.36

31
 Dec-
23 48.71 3.04 45.66 0.34
Jan-
24 45.66 3.04 42.62 0.32
Feb-
24 42.62 3.04 39.57 0.30
Mar-
24 39.57 3.04 36.53 0.28 4.73 36.53 41.26
Apr-
24 36.53 3.04 33.49 0.26
May-
24 33.49 3.04 30.44 0.23
Jun-
24 30.44 3.04 27.40 0.21
Jul-
24 27.40 3.04 24.35 0.19
Aug-
24 24.35 3.04 21.31 0.17
Sep-
24 21.31 3.04 18.27 0.15
Oct-
24 18.27 3.04 15.22 0.13
Nov-
24 15.22 3.04 12.18 0.11
Dec-
24 12.18 3.04 9.13 0.09
Jan-
25 9.13 3.04 6.09 0.06
Feb-
25 6.09 3.04 3.04 0.04
Mar-
25 3.04 3.04 0.00 0.02 1.66 36.53 38.19

Hence, as per the details provided indicates that the bank loan applied by the
concerned party is well within the permissible limit.

15. Implementation Schedule

The project is already under implementation. The Lease deed in favour of M/s M.B. Agro
Mills will be executed by the owners of the land after conversion of land u/s 143 and
before disbursement of the credit facilities. The commercial production is likely to start
from October 2018.

During our visit to the site, we found that the construction work was
underway and was in full swing. However, the construction work was likely
to get complete till June 2018. Any change in the cost due to delay in
project should be met out by the promoter’s from their own margin.

32
16. Sales
The plant is proposed to operate for 16 hours per day and working days in a year has been
taken as 300. The main product of the firm is rice which shall be 68-72% of the total
production. Rice bran is a byproduct in rice mills which shall be 20% of total production.
The other byproduct is husk which shall be 8-12% of the total production.

17. Raw Material

The proposed installed capacity of the plant is 48000 Mt per annum for rice mill and. The
plant shall be operating at 60% capacity in the 1st year of commercial production. The
cost of raw material to be consumed is calculated below.

RAW MATERIAL REQUIREMENT (AT 100% CAPACITY)

Raw
Capacity
S. No. Particulars UOM Material
Utilisation
Required

1 Paddy 100% MT 48,000.00

48,000.00

RAW MATERIAL COST (AT 100% CAPACITY)

Value
S. No. Particulars UOM Quantity Rate (Rs.) (Rs. In
Lacs)

1 Paddy MT 48,000.00 14,750 7,080.00

48,000.00 7,080.00

33
RAW MATERIAL CONSUMPTION AT VARIOUS LEVEL OF PRODUCTION

Cost of
Raw Raw
Material Material
Year Capacity Utilisation
consumed Consumed
at 100% (Rs. In
Lacs)

1 st 60% 7,080.00 4,248.00

2 nd 75% 7,257.00 5,442.75

3 rd 75% 7,438.43 5,578.82

4 th 75% 7,624.39 5,718.29

5 th 80% 7,815.00 6,252.00

6 th 80% 8,010.37 6,408.30

7 th 80% 8,210.63 6,568.50

8 th 80% 8,415.90 6,732.72

Rate increased by 2.50 Annually

18. Power & Fuel

The total power load required by the plant is 700KVA which shall be adequate for the
plant. The firm shall take necessary power connection in due course. Although there is
satisfactory power supply position, the promoters have planned to purchase a DG set of
250 KVA for backup facility. The calculation of expenditure under this head is shown
below:

POWER & FUEL

Power
Consumption 700 KVA

Power &
Power & Fuel
Capacity Fuel
Year     consumed
Utilisation consumed at
(Rs. In Lacs)
100%

1 st 60%

34
 144.00 86.40

2 nd 75% 144.00 108.00

3 rd 75% 144.00 108.00

4 th 75% 144.00 108.00

5 th 80% 144.00 115.20

6 th 80% 144.00 115.20

7 th 80% 144.00 115.20

8 th 80% 144.00 115.20

19. Salary & Wages

The firm shall be employing staff of 10 persons. The expenditure on account of salary
and wages has been projected below:

SALARY &
WAGES

Amount
Type of Employee Requirement Rate  
(Rs.)

Production
Incharge 1 10,000 10,000

Skilled 2 7,500 15,000

Semi - skilled 2 5,000 10,000

Unskilled 5 4,500 22,500

 

57,500

Per Month 57,500

Annually 690,000
(Increment in salary has been taken @ 5% every
year).

Wages has been assumed @ 8 Rs Per Quantal

Annually Full Capacity
Year 1 60% 3840000 2304000
Year 2 75% 4032000 3024000

35
 Year 3 75% 4233600 3175200
Year 4 75% 4445280 3333960
Year 5 80% 4667544 3734035
Year 6 80% 4900921 3920737
Year 7 80% 5145967 4116774
Year 8 80% 5403266 4322612
(Increment in wages has been taken @ 5% every
year).

SALARY &
WAGES
Year1 Year 2 Year3 Year4 Year5 Year6 Year 7 Year 8

690,000 724,500 760,725 798,761 838,699 880,634 924,666 970,899

2,304,000 3,024,000 3,175,200 3,333,960 3,734,035 3,920,737 4,116,774 4,322,612

2,994,000 3,748,500 3,935,925 4,132,721 4,572,735 4,801,371 5,041,440 5,293,512

20. Lease Rental

Lease deed in favour of M/s M.B. Agro Mills will be executed by the owners of the
land after conversion of land u/s 143 and before disbursement of the credit facilities.

21. Repair & Maintenance

REPAIR & MAINTENANCE has been assumed to Rs. 250000/- in the first year and an
annual increase of 10% has been considered thereafter.

Particulars 1 st 2 nd 3 rd 4 th 5 th 6 th 7th 8th

2.5 2.7 3.0 3.3 3.6 4.0 4.4 4.8
Repair & Maintenance
0 5 3 3 6 3 3 7

36
22. Selling Expenses
SELLING & ADMINISTRATIVE EXPENSES has been assumed @ 2.25% of the sales.

Particulars 1 st 2 nd 3 rd 4 th 5 th 6 th 7th 8th

95.2 134.4 140.6 145.6 157.7 164.8 169.0 173.2
Selling & Administrative Exp
3 4 7 6 4 9 1 3

23. Depreciation
Depreciation @ 10.00% on building and @ 15.00% on plant & machinery and on
other assets has been calculated. The details are provided as follows:

CALCULATION OF DEPRECIATION AS PER INCOME TAX ACT

Written Down Value Method

Year   1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th

Building 409.39 388.92 350.02 315.02 283.52 255.17 229.65 206.69

Dep @ 10% 20.47 38.89 35.00 31.50 28.35 25.52 22.97 20.67

388.92 350.02 315.02 283.52 255.17 229.65 206.69 186.02

Plant &
Machinery WDV 800.62 740.57 629.48 535.06 454.80 436.58 421.10 407.93

Dep @ 15% 60.05 111.09 94.42 80.26 68.22 65.49 63.16 61.19

740.57 629.48 535.06 454.80 386.58 371.10 357.93 346.74

Total Assets Gross Block 1,210.00 1,129.49 979.51 850.08 738.32 691.75 650.75 614.62
Total
Depreciation   80.52 149.98 129.43 111.76 96.57 91.00 86.13 81.86

Net Block   1,129.49 979.51 850.08 738.32 641.75 600.75 564.62 532.76

Note: If there would be any change in the rate of interest charged by the bank then it will
affect the profitability ratio of the firm.

37
24. Working Capital
Keeping in view the scope, manufacturing capacity of the proposed plant, and various
other factors as discussed in the foregoing paragraphs, projections of the party have been
accepted. In view of the nature of industry, the period of holdings of various stocks are
reasonable, hence has been accepted.
The working capital requirement for the upcoming project at various capacity utilization
% has been calculated as follows:

WORKING CAPITAL REQUIREMENT

Equivalent Bank
Particulars   Amount Margin
to Days Finance

Current Assets

Raw Material (Taken at Capacity) 60% 30 349.15 25% 261.86

As per
Finished Goods Detail 625.61 25% 469.20

Debtors 20 231.90 25% 173.93

1,206.66 904.99

Current Liabilities
Sundry Creditors - -
- -

Working Capital 1,206.66 904.99

Working Capital Loan Applied 800.00

(Cash Credit Facility with sublimit of Book
Debts)

Margin of Working Capital 406.66

38
25. Statement of Affairs
The projected balance sheet of the party is provided as follows:

BALANCE SHEET
1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th
Particulars
31.03.2019 31.03.2020 31.03.2021 31.03.2022 31.03.2023 31.03.2024 31.03.2025 31.03.2026

Assets

Non- Current Assets

1,210.0
Total Fixed Assets 1,210.00 1,210.00 1,210.00 1,210.00 1,210.00 1,210.00 0 1,210.00
745.3
Less: Depreciation till date 80.52 230.49 359.92 471.68 568.25 659.26 9 827.24
464.6
Net Fixed Assets 1,129.49 979.51 850.08 738.32 641.75 550.75 2 382.76

Security with Electricity 10.0

Deptt 10.00 10.00 10.00 10.00 10.00 10.00 0 10.00
474.6
Total Non- Current Assets 1,139.49 989.51 860.08 748.32 651.75 560.75 2 392.76

Current Assets
537.9
Raw Material 349.15 366.61 384.94 404.19 444.60 489.06 7 591.77
1,364.2
Finished Goods 625.61 890.21 1,040.06 1,131.45 1,298.51 1,330.97 4 1,398.35
166.9
Stores & Spairs 131.99 134.63 137.32 144.19 151.40 158.97 2 175.26
261.1
Receivables 231.90 236.54 241.27 246.10 251.02 256.04 6 266.38
17.7
Other Current Assets 11.14 10.00 10.50 11.03 11.58 12.16 6 24.65
3.2
Cash and Bank Balances 5.00 2.00 2.20 2.42 2.66 2.93 2 3.54
2,351.2
Total Current Assets 1,354.79 1,639.99 1,816.29 1,939.37 2,159.77 2,250.13 8 2,459.96

2,825.8
Total Assets 2,494.28 2,629.50 2,676.38 2,687.69 2,811.52 2,810.87 9 2,852.72

Liabilities

Capital A/c
558.4 654.0 1,174.8
Capital 426.66 492.41 6 1 780.86 965.07 1 1,409.44
(5.00 (5.0 (10.0 (10.0
Drawing - ) 0) 0) (10.00) (10.00) 0) (10.00)

Addition - - - - - - - -
100.5 136.8 244.6
Profit & Loss A/c 65.75 71.05 5 4 194.21 219.74 3 265.64
1,409.4
492.41 558.46 654.01 780.86 965.07 1,174.81 4 1,665.07
223.1
Subsidy Reserve - 223.10 223.10 223.10 223.10 223.10 0 223.10

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 176.9
Unsecured Loans 400.00 176.90 176.90 176.90 176.90 176.90 0 176.90
(0.0
Term Loan- I 517.24 417.13 317.02 216.91 116.80 16.68 0) -
0.0
Term Loan- II - - 109.59 73.06 36.53 0.00 0 -

Current Liabilities & Provisions

800.0
Working Capital Loan 800.00 800.00 800.00 800.00 800.00 800.00 0 800.00
Term Loan I, due within a 16.6
year 100.11 100.11 100.11 100.11 100.11 100.11 9 -
Term Loan II, due within a
year - - 36.53 36.53 36.53 36.53 - -

Letter of Credit 182.65 182.65 - - - - - -

16.1
Other Liabilities 1.87 10.00 11.00 12.10 13.31 14.64 1 2.72
183.6
Sundry Creditors - 161.15 248.12 268.13 343.18 268.10 7 (15.07)
2,825.8
Total 2,494.28 2,629.50 2,676.38 2,687.69 2,811.52 2,810.87 9 2,852.72

- - - - - - - -
2.3
Current Ratio 1.25 1.31 1.52 1.59 1.67 1.85 1 3.12

Note: Cash and Bank balance as shown above will be utilised to acquire latest technologies, to replace old machines with new
versions, to add further infrastructure etc.

1,003.9 1,609.9
Drawing Power 9 1,100.13 1,166.61 1,243.35 1,351.77 1,475.21 7 1,835.13
1,509.4 1,016.4
Total Outside Liabilities 6 1,671.04 1,622.37 1,506.84 1,446.45 1,236.06 6 787.64
984.8 1,809.4
Tangible Networth/ 2 958.46 1,054.01 1,180.86 1,365.07 1,574.81 4 2,065.07
(Quasi Capital)
1.5 1.5 1.2 0.5
TOL/TNW (Quasi Capital) 3 1.74 4 8 1.06 0.78 6 0.38

26. Debt Service Coverage Ratio Statement

The calculations are as follows:

COMPUTATION OF DEBT SERVICE COVERAGE RATIOS

Particulars 1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th

146.2 221.0 229.9 248.6 290.7 310.7 330.7 347.5

Net Profits after Tax 6 3 8 1 8 5 6 0
47.5 48.0 53.5 42.0 30.5 19.1 7.6 0.1
Interest on Term Loan 4 0 3 5 7 0 2 8
193.8 269.0 283.5 290.6 321.3 329.8 338.3 347.6
Total (A) 0 3 1 6 6 4 8 7
Term Loan Repayment - 100.11 136.64 136.64 136.64 136.64 136.64 16.69

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 53.5 42.0 30.5 19.1 7.6 0.1
Interest on Term Loan 47.54 48.00 3 5 7 0 2 8
190.1 178.6 167.2 155.7 144.2 16.8
Total (B) 47.54 148.11 7 9 2 4 6 6
Debt Service Coverage 1.4 1.6 1.9 2.1 2.3 20.6
Ratio (DSCR) (A / B) 4.08 1.82 9 3 2 2 5 2

Average DSCR 4.50

Gross Profit Ratio 9% 8% 8% 8% 8% 8% 8% 8%
Net Profit Ratio 2% 1% 2% 2% 3% 3% 4% 4%

27. S.W.O.T. Analysis

STRENGTH:

 The plant is situated near paddy growing belt and having good network of paddy growers.
 There is a abundant availability of raw materials in proposed area of district and neighbor
places.
 The functional infrastructure unit is situated near paddy growing belt and having good
vast domestic market.

WEAKNESS:

 Low availability of adequate infrastructural facilities.

 Tough Competition from existing rice mills.
 Lack of adequate quality control & testing methods.
 Insufficient supply chain due to a large number of intermediaries.
 Seasonality of raw material.

OPPORTUNITIES:

 Large crop and material base offering a vast potential for agro processing
activities.
 Rising income levels and changing consumption patterns.
 Favorable demographic profile and changing lifestyles.
 Opening of global markets.

THREAT:

 Affordability and preferences of fresh food.

 High inventory carrying cost.
 High packaging cost.
 Natural Calamity.
 Purchase price of paddy is taken on the basis of minimum support price fixed by
the government hence sales could vary accordingly. Therefore it shall affect the
profitability of the firm.

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VIABILITY

The project is technically seems to be viable. The technology & machines, promoters
want to go for, are already in use in India and are giving good results. Other inputs to the
plant are already available; hence in my view the project is technically viable. On careful
study we have come to conclusion that the Machine which promoters have planned to
purchase will fulfill the requirement of the proposed plant.

Conclusions
Based upon the information, analysis, explanations and assumptions and subject to our
observations in the foregoing paragraphs, we are of the opinion that the project is
technically feasible and economically viable.

For Ravi Kumar Srivastava & Associates.

Chartered Accountants

Partner
Place: Lucknow
Date: 22/06/2018

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