ACKNOWLEDGEMENTS

NABARD Consultancy Services (NABCONS), a subsidiary of National Bank for

Agriculture and Rural Development, Mumbai gratefully acknowledge the assistance
and co-operation received from the various agencies contacted by the study team in
Dhule and Mumbai in Maharashtra, Ahmedabad in Gujarat, Shimla, Baddi, Una,
Hamirpur, Sunder Nagar, Mandi, Palampur and Kangra in Himachal Pradesh.
The help extended by the Director of Industries, Shimla, All India Starch Manufacturers
Association, Mumbai, All India Maize Development Association, New Delhi and
various suppliers of plant and machinery, who had very kindly furnished the required
information, is highly acknowledged.
Our acknowledgements are due to all the Deputy Directors, Agriculture in the districts
of Una, Hamirpur, Mandi and Kangra and their staff members in making necessary
arrangement for the study and pleasant stay of the team during the visits.
Nabcons is highly grateful to the officials of Directorate of Agriculture, Government of
Himachal Pradesh, Shimla, especially Dr. J.C. Rana, Director Agriculture and Dr. J.K.
Alag, Deputy Director (Agriculture, Shimla) for entrusting this assignment to nabcons.
The help and the co-operation extended by the following officials of NABARD in this
connection are highly acknowledged.
Chief General Managers of, Himachal Pradesh Regional Office, Shimla. General
Manager and Officer In Charge, Jammu and Kashmir Regional Office, Jammu Chief
General Manager, Rajasthan Regional Office, Jaipur. Shri S.R. Desai, Deputy General
Manager, NABARD Regional Office, Gujarat. District Development Managers at
Dhule, Maharashtra and Una, Himachal Pradesh.
STUDY TEAM AND REPORT PREPARATION
1. Dr. B.R.Premi, Manager, NABARD
2. Shri. Somainder Singh, Manager, NABARD
3. V. Esakkimuthu, Assistant Manager, NABARD
REVIEW BY Dr. E.V. Naidu, General Manager, Nabcons

CONTENTS
Chapter
1
2
3
4
5
6
7
8
9
10
11
12
13

Subject
Introduction
An overview of Indian maize
Status of maize processing
Status of corn starch industry
Status of marketing of maize products in India
Critical factors for setting up a maize processing plant
Infrastructure facilities and industry development
SWOT analysis
Feasibility of maize processing in Himachal Pradesh
Potential assessment for maize processing
Social and economic impact of the project
Incentives available for maize processing units
Suggested action plan

Annexure
Annexure No
I

Content
District wise, Area, production and productivity of maize in H.P

II

List of major starch manufacturers in India

III
IV

Major consultants / suppliers of technology of wet milling of maize in

District wise, group wise details of units in medium & large scale sec

Va

Techno - Economic parameters of a model wet milling unit

Vb

Project outlay

Vc

Details of plant & machinery and miscellaneous fixed assets

Vd

Assessment of working capital requirement

Ve

Income & Expenditure statement

Vf

Calculation of IRR, BCR & NPW

Vg

Assessment of man power requirement

VI

Break even analysis

VII

Repayment schedule

VIII a

Risk variables analysis

VIII b

Risk analysis results

VIII c

Risk variables report

IX

Details of incentives available to industrial units in H.P

1.

INTRODUCTION

1.1. Background
Maize (Zea mays) is one of the important Kharif crops of Himachal Pradesh. The major area
under maize is rain fed and there is no substitute for this crop during rainy season. The
quality of maize grown in the state is very good. It is an important crop of the state both as
staple food as well as for feed. The farmers are compelled to sell their produce to the traders
at throw away prices due to lack of local demand and excess production. The trends in
production, consumption and marketing of this crop have drawn the attention of the State
Government for finding out the value addition locally. They planned to promote processing of
this crop in to value added products. Some efforts were also made to set up a processing
plant in the state but the same could not materialized.
Keeping this in view, the Himachal Pradesh State Directorate of Agriculture, Shimla assigned
NABARD Consultancy Service a study to assess the feasibility of maize processing in the
State
with
the
following
objectives.
(1)
To
assess
the
production
and
marketable
surplus
of
maize.
(2)
To
identify
the
suitable
technology.
(3)
To assess the techno-economic feasibility and location for setting up processing
unit.
The broad terms of reference for the study were as under:

1.2

Terms of Reference
1.
2.

3.

To assess the district wise production and marketable surplus of maize in the State.
To survey the existing resources / institutions / organisation and various linkages existing
in various parts of the area.
To identify / recommend possible products of maize based on the quality.

4.

To identify / recommend suitable technologies for processing of maize and suggest

suitable locations for setting up such units, keeping in view the forward and backward
linkages including marketing.

5.

To assess the financial implications and suggest means of finance and financing pattern.

6.

To assess techno - economic feasibility and financial viability of the project for securing
financial assistance from different sources such as loans from banks and financial
institutions and grant from Ministry of Food Processing Industries, GoI and other
agencies.

7.

Identify the agencies and suggest strategies for implementation of the project.

The study was completed in two phases. The first phase of the study was conducted in
Maharashtra to identify suitable technology for processing of maize to value added products.
The technology followed by the existing units in the state were studied. Phase II of the study
was taken up in Himachal Pradesh to assess the marketable surplus of maize and also
ascertain the feasibility of setting up of maize processing unit(s)

1.4

Methodology
The primary data were collected from the existing units, traders of maize products, farmers,
consultants, suppliers of plant and machinery, units consuming maize products as raw
material and various officials of State Govt. Departments of Agriculture, Himachal Pradesh
Krishi Vishvavidyalaya, Industries and Pollution Control Board and some professionals who
have worked in this sector. The study was completed in two phases.
Phase I- The study covered the existing maize processing units at Dhule (Maharashtra),
Ahmedabad (Gujarat) and units consuming maize products at Baddi, Himachal Pradesh.
Phase II- Covered field study in four major maize producing districts in Himachal Pradesh,
namely Una, Hamirpur, Mandi and Kangra.
The owners of the existing maize processing units in Gujarat and Maharashtra and farmers in
Himachal Pradesh were interviewed individually and also group discussions were held with
farmers wherever possible. In addition, discussions were held with the Indian Starch
Manufacturing Association, Mumbai and Indian Maize Development Association, New Delhi
to know the common issues connected with the maize processing industry.
The secondary data were collected from various Departments of State Government in H P,
like Director of Agriculture, Director Industries and State Pollution Control Board.

1.5

Reference Year
The year 2002-03 was taken as reference year for the study. However, some data/information
pertain to 2003-04. Vital and important inferences were made based on the latest
information/data.

1.6

Data Analysis
Data were analysed using Lotus 123/ Excel work sheets. Other methods and procedures
followed in the study were discussed in the respective chapters.

1.7

2.

Limitations of the Study

Data availability from the secondary sources was sometimes not consistent with actual
field level data and from other sources.

The information collected from the owners of the units and farmers is based on personal
interviews and hence may not be comparable with the official records/ books of accounts.

AN OVER VIEW OF INDIAN MAIZE (Zea mays)

Maize (Zea mays) is classified into dent, flint, waxy, sweet and pop corn categories. Dent
corn (Zea mays var. indentata) also known as field corn, containing both hard and soft starch,
becomes indented at maturity. Flint corn (Zea mays var. indurata) having hard, horny,
rounded or short and flat kernels; with the soft and starchy endosperm is enclosed by hard
outer layer. Both of these varieties are used for industrial purposes. Popcorn (Zea mays var.
everta) has small pointed and rounded kernels with very hard endosperm which on exposure
to dry heat popped or evereted by the expulsion of the contained moisture and forming a

white starchy mass many times the size of the original kernel. Sweet corn (Zea saccharata or
Zea rugosa) is distinguished by kernels containing a high percentage of sugar in the milk
stage and therefore suitable for table use.

Indian maize has white, red, purple, brown or multicoloured kernels and is characteristically
dent corn. The dent corn is useful for starch processing by wet milling method. The area and
production details of this cereal crop is given as under:

2.1

Production of Maize
The total area under maize cultivation in the world is 139 million hectares with a production of
598 million MT ( mMT ). USA is the world's largest producer and exporter of maize with an out
put of 240 mMT from an area of 29 million hectares. Other major producers are China (125
mMT), European Union (39 mMT), Brazil (37 mMT), Mexico (19 mMT), Argentina (14 mMT)
and India (11 mMT).
Among all cereals, maize occupies the fifth largest in area, fourth largest in output and third
largest in yield. India is the tenth largest producer with a production of 11.10 mMT from an
area of 6.6 million ha. The average yield in India is 1.77 MT/ha which is very low as against 7
MT/ha in temperate areas of developed economies and 3.8 MT/ha of global average.
Maize is cultivated in almost all states in the country. Bihar is the leading producer in India
followed by Rajasthan, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Karnataka and
Himachal Pradesh. The crop is grown both in Kharif and Rabi seasons in India with a share of
85 per cent and 15 per cent, respectively.
In Himachal Pradesh, it is grown only in Kharif season, mainly under rain fed conditions. The
total production of maize for the last three years in Himachal Pradesh is presented in
Annexure I. The data indicate that maize is a major Kharif crop in Himachal Pradesh
cultivated in an area of 3.0 lakh ha, which is over 70 per cent of the total cultivated area of
4.30 lakh ha. The average annual production in the state is over 6.0 lakh MT, which is more
than 80 per cent of total Kharif production of 7.78 lakh MT of food grains. As per a rough
estimate based on a farm gate price of Rs.4/kg, the produce of the State is worth Rs.240
crore per year.
Analysis of time series data for the last 10 years, reveal that there was not much variation in
the area under maize, but the production had suddenly declined during 2002-03 to 4.79 lakh
MT from 7.68 lakh MT due to severe draught. Further, the CAGR indicates that there was no
growth in the area and production of maize in the State due to stabilised cropping pattern.
There was marginal increase in area and production in Bilaspur district. Though not very

significant, a negative CAGR had been observed in all other districts, indicating that no further
expansion in area is possible in these districts. The major share of production comes from
Mandi, Kangra, Chamba and Sirmaur districts. The average yield of maize in Himachal
Pradesh is 2.0- 2.5 MT / ha. Sirmour district has the highest productivity of 2.3 MT / ha
followed by Mandi with 2 MT / ha. The productivity level of other districts range between 1.52.0 MT / ha, indicating thereby the scope to improve the productivity by adopting improved
agronomic practices.

2.2

Utilisation pattern of maize

The major share of maize produced in the developed countries is either utilised for production
of ethanol or production of feed for livestock. Globally maize accounts for 15 per cent of the
world's proteins and 19 per cent of the calories derived from food crops.
Maize produced in India is utilised for human consumption (33%), starch production (9%),
poultry feed (46.5%), brewery (0.5%) and animal feed (11%). There are no precise data
available on the utilisation pattern in Himachal Pradesh. However, the discussions with
farmers and policy makers indicate that only 20 per cent of maize is utilised for human and
animal consumption in the state. The remaining 80 per cent is supplied to the processing
factories especially poultry and animal feed plants located in other states.

2.3

Assessment of Market Surplus of Maize

The market surplus in respect of food grains in India as compared to other crops is quite low
between 5-10 per cent. But the consumption of maize in Himachal Pradesh for food has
declined over a period of time. The use of maize in daily diet has been replaced by wheat and
rice. The shift in consumption pattern is attributed to the increase in purchasing power of the
local people and prevalent public distribution system of Government. The district- wise
market surplus of maize arrived at by discussions with farmers and Agriculture Department
officials is given as under:
Table.1. Estimation of market surplus of maize in Himachal Pradesh
Assessment year 2002-03

S.No.

District

1
2
3
4
Total

Una
Hamirpur
Mandi
Kangra

Production
(MT)
39,155
72,840
131,273
117,950
361,218

Market
Surplus (%)
60
60
75
60

Surplus
(MT)
23,493
43,704
98,454
70,770
236,421

For the assessment year 2002-03, there was a market surplus of 2.36 lakh MT in 4 major
maize producing districts in the state, even despite of low production during this year due to
drought. Keeping in view the market surplus of 65 to 70 per cent, the average annual surplus
for the state works out to 4.0 lakh MT per annum.

2.4

Marketing of Maize in Himachal Pradesh

The marketing of food grains in the state is not strictly regulated. There are no operating food
grain markets in the state. As there are no notified markets, farmers sell the crop to the local
traders. In districts like Una, Kangra and Hamirpur, traders from adjoining states collect maize

from the farmers directly. These traders offer very low prices and also cheat farmers in
weighment. The maize purchased from the farmers in Himachal Pradesh is supplied to animal
and poultry feed units in adjoining states, like Punjab and Haryana. The starch units of Punjab
and Uttar Pradesh also procure raw material from this state directly from the farmers and
traders.
Himachal Pradesh supplies nearly 4.0-5.0 lakh MT of maize to other states every year after
meeting its own requirement of food and feed.

2.5

Farm Gate Price of Maize

The market price of Indian Maize fluctuate between Rs 350/- per quintal to Rs. 750/- per
quintal in different states and different seasons. The price is generally high for Rabi season
maize than Kharif season maize. The price fluctuation is due to seasonality of production
creating a demand and supply gap during off season. In order to reduce the demand supply
gap, maize is also imported from other countries.

In Himachal Pradesh, the price fluctuation is not very wide. The price generally hovers
around Rs.350/- per quintal to Rs.500/- per quintal during peak and lean seasons,
respectively. The farmers in Una and Hamirpur districts get relatively higher price than Mandi
and Kangra districts. The main reason for this is that it is easier to transport the produce from
Una and Hamirpur to Punjab than from Mandi and Kangra. The district-wise farm gate prices
at which the traders purchase maize are given in the Table below:
Table.2. Changes in farm gate price of maize in Himachal Pradesh

2.6

S.No

District

1
2
3
4

Una
Hamirpur
Mandi
Kangra

Farm gate price (Rs./Qtl.)

Peak period
Lean period
Average
(Jan-Mar)
(Sep-Dec)
450
500
425
400
450
425
300
400
350
400
450
425

Problems in Maize Production in Himachal Pradesh

The maize crop in the state have some inherent problems, which limit its cultivation and

production. The important factors being

Rising income levels leading to a shift of consumer preference from coarse cereals
(maize) to fine grains (wheat and rice).

Increased monkey menace during the recent years compelling the farmers to switch
over to some other crops like paddy, vegetables etc., especially in irrigated areas.

Lack of systematic/ regulated marketing.

Negligible processing facilities.

Dependency on rain fed conditions.

Least preference by farmers in view of lower returns.

Unfavorable weather conditions like untimely rainfall and thunder storms causing
lodging of the crop.

Temperate climate of Himachal Pradesh does not favour its cultivation during Rabi
Season.

The above problems, though difficult to overcome, can be reduced considerably by

combined efforts of farmers, policy makers and Government departments through a
combination of developmental and policy measures. Spring season cultivation with irrigation
could be tried. Newer single cross hybrids should be tried.

3.

STATUS OF MAIZE PROCESSING

Maize is one of the staple foods of poor families. Traditionally, the grain is converted into flour
in mills for making bread. Immature cobs are roasted and eaten all over the country. It is an
important raw material for animal and poultry feed and corn flakes manufacturing units. But
the quantity of maize utilised by these units is limited as the existing units are of small scale
nature. They make only a few products having limited demand. Hence, an alternative large
scale unit which can process a large quantity of maize to different value added products is
required to be set up.

3.1

Methods of Maize Processing

Maize is usually processed by two distinct processes, namely wet milling and dry milling. Dry
milling produces grits, corn flour and minimum amount of corn meal. The technology has
been standardised by Central Food Technological Research Institute (CFTRI), Mysore. The
technical know how is available with CFTRI on price. The service for turn key project is also
available with the institute. Dry milling units have a crushing capacity of 10 MT/day with a
project cost of Rs.20 lakh. Such units can be set up any where in the state depending upon
the availability of raw material, power and suitable land.

3.1.1

Dry Milling
The maize kernels are screened, tempered with hot water/steam to loosen the germ and
bran. Then it is degerminated to remove the germ. The husk is separated by means of
aspirators. The degermed maize is dried to a moisture content of 15-15.5 per cent followed by
sifting. It then is subjected to milling to produce grits, meal and flour. The germs separated is

dried and passed through an expeller to produce the corn oil. The different products that
result from dry milling are as under :

S. No.
1
2
3
4
5
6

Product
Grits
Coarse meal
Germ
Fine meal
Flour
Hominy feed

Share (%)
40
20
14
10
5
10

CFTRI has developed a mini mill for dry milling of maize. The grits is the main product of dry
milling process, which is used as porridge by boiling domestically. The processing units use
grits for manufacture of products like ready-to-eat snacks (corn flakes), wall paper paste and
manufacture of glucose by direct hydrolysis. The process flow of dry milling is as under:
Cleaning => Conditioning => Degerminating => Drying & Cooling => Grading & Grinding =>
Sifting & Classifying => Purifying => Drying => Packaging
1.2

Wet Milling
Maize is generally processed to manufacture corn starch by wet milling method the world
over. The by-products of starch manufacture, like corn oil, corn steep liquor, gluten etc. are
the important value added products.

The grain is unloaded from the trucks directly in receiving area or stored in silos. The material
is fed to the cleaning section by a feed conveyor. The cleaning section is housed in 3 floors,
where the material is screened for debris such as sand, stones and any other foreign
particles. The clean material is then sent to steeping section. It is received in a tank where it
is washed with hot water first and subsequently steeped in water containing sulfur-dioxide @
o
0.2 per cent for 70 hrs at 52 C. Steeping softens the kernels and also removes some
solubles. Sulphur dioxide act as preservative. The steep water produced in this process is
then concentrated and fortified with vitamins, minerals to produce corn steep liquor. It is then
subjected to primary and secondary grinding, wherein the germ and husk are separated. The
degermed maize is passed through a fibre washing section where the fibre (husk) is
separated by pressure washing. Now the mixture consists of gluten and starch. The gluten is
separated from starch by centrifugal separation. The starch slurry is then passed through a
12 stage hydroclone washing system, wherein the starch is washed and concentrated
simultaneously. Starch slurry usually has a moisture content of 42 per cent. The starch slurry

thus obtained is diverted to various production lines for manufacture of liquid glucose and
modified starches such as dextrose, dextrose mono hydrate etc. The wet starch is then dried
by hot air by passing through a drier. The dry starch has a moisture content of 11-12 per
cent.
The slurry containing gluten is passed through a rotary vacuum filter in which a portion of the
moisture is removed followed by drying in a hot air drier. The dried gluten thus obtained has
a moisture content of 12 per cent. The gluten is mainly used for poultry feed.
The average recovery of various products and co-products of maize during the wet milling are
Starch

3.1.3

- 60-62 %

Gluten -

8-9 %

Germ

6-7 %

Husk

22-24 %

Manufacture of Corn Flakes

The corn flakes is one of the important value added products manufactured out of yellow and
white maize. It is generally eaten as a breakfast cereal but the demand for this product is
limited to hotels and big cities. It is a product of dry milling, which is manufactured by flaking
of the major grain after extraction of germ. The flaked grain is either roasted for manufacture
of corn flakes, breakfast cereal or fried to manufacture corn flakes served as snack foods.
The raw flakes are also used for manufacture of beer. There are only a few companies like
Mohan Meakin, Gaziabad and Kellogs, whose brands of corn flakes are very popular in Indian
market. A brief process flow of corn flakes is given as under:
Receiving => Cleaning & Polishing => Milling => Bran => Cooking under pressure =>
flavouring => Agitation (lump breaking) => Drying => Sweating => Flaking => Roasting/
Frying => Grading => Packing
The corn grains after cleaning and polishing are milled to remove the germ and bran. Germ
is utilised for extraction of corn oil. The bran is cooked under pressure in rotary steam cooker
and mixed with flavouring material. The cooking is completed when the material turns out to a
uniform translucent colour. The cooked material is carried to an agitator or lump breaker and
finally dried in drier to moisture level of about 15 per cent to 20 per cent. The dried material is
kept in tempering tanks for few hours to permit the residual moisture to become equally
distributed, which is known as sweating. This is very essential to have uniform pressing for
the flakes. The tempered material is next passed though a heavy duty flaking machine. The
flakes are then immediately transferred to gas fired rotary ovens for roasting. While rotating,
the flakes are continuously carried forward until they are dropped into conveyer. The roasted
flakes are subjected to inspection, preferably on conveyers or tables. Then properly roasted
flakes are graded and transferred to the packing bins immediately because flakes are
hygroscopic. They are then packed in water resistant polythene packages or food grade
waxed paper packages.
A corn flakes unit of 300 MT per annum will require an investment of Rs.50 lakh. The plant
and machinery is available in India. As the demand for this product in the state is limited, the
units may have to market their products mainly outside the state.

3.2

Limiting Factors for Maize Processing in Himachal Pradesh

Non availability of regular supply of required quantity of water in some districts.

Consumption of maize as a staple food by local population and limited preference for
processed products.
No organised marketing or bulk procurement and consequent lack of bulk purchase
scope for the industry.

Availability of maize in only one season.

Slow growth of demand for starch in the state

High transportation cost both for raw materials and finished goods due to hilly terrain
makes it less competitive.

4.
4.1

Poor rail connectivity

STATUS OF CORN STARCH INDUSTRY

World Scenario
There has been a positive trend during the past two decade in the wet milling industry. Corn
has been the major source of starch (83%) followed by potato (6%), Cassava (6%), wheat
(4%) and rice (1%). Maize is utilised mainly for ethanol production in the developed countries
like US and EU, whereas in the rest of the world, it is either used as a staple human food or
manufacture of starch and its derivatives.

The global production of starch from all sources was 48.5 mMT in the year 2000. US with the
largest starch industry contributes 51 per cent followed by EU (17%) and the rest by others.
During the same period 39.4 mMT of starch was derived from maize, whereas potato and
wheat contributed 2.6 and 4.1 mMT, respectively.
The world demand for starch products is growing at an annual rate of 4 per cent. The demand
for starch syrups is higher than dry starches in developed countries, whereas in developing
countries, the situation is reverse. Due to the steady growing demand, the total world output
of dry starches and syrups were estimated to reach 71 mMT and 37 mMT, respectively by
2010.
EU is the major exporter of both native and modified starches, followed by US and Thailand.
The largest starch consumers are US, EU, China and India. The world per capita demand for
starch is 8.4 kg/annum, whereas India's per capita demand is 0.4 kg/annum.

4.2

Indian Scenario
The wet milling industry in India is limited to certain pockets such as Gujarat, Maharashtra,
Madhya Pradesh, Punjab, Karnataka and Chattisgarh. There are about 17 wet milling units
with a crushing capacity of about 3400 MT of maize/day. The state-wise number of wet milling
units and the installed capacity is given in the Table.3. below:
Table.3. Wet Milling units in India

S.
No.
1
2
3
4
5
6

Name of the State

Gujarat
Maharashtra
Madhya Pradesh
Karnataka
Punjab
Chhatisgarh
Total

No. of
units

Installed capacity
(MT of maize/day)

6
5
3
1
1
1
17

1,350
1,050
450
300
100
150
3,400

The list of major starch producers in India is given in (Annexure II b). Gujarat is the largest
producer of starch, having six units with a total crushing capacity of 1350 MT of maize per
day, followed by Maharashtra with 5 units and capacity of 1050 MT and Madhya Pradesh
with 3 units and capacity of 450 MT maize. (Fig.1.)

The average processing capacity of the units in India is 200 MT of maize / day. There are
plants with as high crushing capacity as 400 MT/day. However, there is no plant in the

country with crushing capacity of less than 100 MT/ day. The selection of technology is very
important as regards to the viability of the unit is concerned. A unit in Buland Sahar, Uttar
Pradesh has been reported to have been closed due to improper selection of technology.

4.3

Status of Maize Processing in Himachal Pradesh

Himachal Pradesh has no starch producing unit. There are few animal and poultry feed units
in Kangra and Una districts. A mini dry mill with CFTRI technology is proposed to be set up in
the Industrial area of Mandi District in near future.

5.

STATUS OF MARKETING OF MAIZE PRODUCTS IN

INDIA
The starch is the main product of a maize processing unit, which is consumed in various other
industries like food, pharmaceuticals, textiles, paper, hotels and restaurants, etc. The other
products include Gluten, Germ, Fibre (husk) and Corn Steep Liquor. Gluten has great
demand in animal feed industry because of its high protein content (70%). Germ is expressed
to extract germ oil which is a low cholesterol containing edible oil. Fibre, mainly the husk, is
used by animal feed manufacturers. It has demand in wet form itself for animal feed. Corn
Steep Liquor is one of the substrates for culture media for manufacturing of antibiotics and
other microbial production systems.

In India, Mumbai, Delhi, Ahmedabad and Kolkata are the major markets for processed maize
products. Other important markets include Bhopal, Hyderabad, Chandigarh, Lucknow,
Bangalore etc. Most of the starch manufacturers of Gujarat, Maharashtra, Punjab, etc., have
their marketing offices in Mumbai. Hence, Ahmedabad and Mumbai are the major trading
centres for corn starch in India.
Maize processors directly market their products to the consumers like pharmaceutical
industries, hotels, textiles, paper industries, etc. and through traders as well. Most of them
have their marketing offices in metros and big cities for direct sale. They also sell through
trading agencies as well. These traders restrict marketing of the products of one or a few
companies and prefer to procure different maize products from a single supplier. Therefore, it
is advisable for a maize processor to have processing facilities for starch and its derivatives
like liquid glucose, dextrose monohydrate, etc. Also, different industries require different types
of starch and the processor should be able to meet their demand to compete in the market.
Starch and Gluten have good export potential as well. India exports these products to Sri
Lanka, South East Asian countries, Bangladesh and South Africa.

The consumption of starch in Himachal is very limited because of slow industrial development
and its requirement for food and hotel industry is met from other states. Nearly 25
pharmaceutical units have been set up at Baddi in Solan district and each of them consumes
nearly 4-5 MT of starch per annum, which comes to nearly 200 MT of starch requirement per
year. Further, Dabur India has set up a manufacturing unit of Glucose from Dextrose Mono
Hydrate (DMH). The DMH is obtained from maize starch through a series of process including
Liquefaction, Incubation, Filtration, Ion Exchange, Evaporation, Crystallization and Drying.
Currently, this unit purchases about 20 MT of DMH per day from maize processing units of
Gujarat and Punjab. Its annual requirement of this product is 2000 MT. A down stream DMH
manufacturing unit can be set up easily attached to a starch manufacturing unit. Similarly,
Liquid Glucose (LG) also has good demand in India and a LG manufacturing unit can also be
set up along with a starch manufacturing unit from maize. In addition, there are a few textile
manufacturing units located in the state which require low grade starch. This demand is being
met from Ahmedabad and Mumbai. The procurement price of such units goes up due to the
addition of transportation cost of Rs.2.0 to Rs.2.5 per kg of starch. Further, if the starch units
are set up in the state, they will get exemption from excise duty and sales tax to the tune of
about 18-20 per cent. Hence the maize processing unit if set up in the State will not face any
difficulty in marketing the main product, the starch.
The husk can be sold locally, but the unit may face difficulty in selling corn steep liquor as
there is no unit in the state which produce antibiotics and microbial products. Corn oil can be
marketed outside the state as there is good demand for it.

6.
6.1

CRITICAL FACTORS IN SETTING UP A MAIZE

PROCESSING PLANT

Raw material

The viability of a maize processing plant depends upon the availability and uninterrupted supply of
raw material to the unit. On an average, a unit with a crushing capacity of 100 MT/ day will require
about 30000 MT of maize per year (assuming 300 days of operation of the plant). Hence, the
availability of raw material is one of the important consideration in deciding the location of maize
processing unit. Keeping in view the cropping pattern, consumption of the maize by local population
and market surplus as indicated in Table.1 in the preceding chapters, it should not be a problem for a
unit of above capacity to procure the raw material during Kharif season. The plant will be able to
procure major portion of its raw material requirement with in the radius of 200 km. The state produces
mainly yellow dent corn which is most suitable for wet milling for manufacture of starch and other by-

products .
In Himachal Pradesh maize is mainly a Kharif crop. The harvesting is done in the month of
September- October. As mentioned earlier, the farmers sell major portion of their produce
immediately after harvesting. The remaining portion is released to the market depending upon
the demand and market trends till February to March. As the traders procure maize from the
farmers, the unit will be able to source the raw material from traders for another 2-3 months.
Hence, there will be difficulty in procuring local maize for about 3-4 months during June to
September. This can be overcome if the units procure maize in bulk during the Kharif and
store in silos for the lean months. The possibility of obtaining it from adjoining states like
Punjab and Haryana is also available. States like Bihar and Punjab produce winter maize.
The maize is generally packed in gunny bags in bulk. The most common mode of
transportation is by lorries.

6.2

Land
Land requirement of starch manufacturing unit is very high, as it requires large area to set up
plant and machinery and effluent treatment plant. There should be enough land for disposal
of treated waste water. A unit with crushing capacity of 100MT/day should have at least 10
acres of land. However, if available at reasonable price, the unit may acquire upto 15 acre of
land to meet future expansion requirements. In our model, we have assumed 10 acre of land
for assessment of viability. As per the Industrial Policy Guidelines and Incentive Rules- 1999,
the land is also allotted by State Government to the units on lease basis. The details of the
terms and conditions for allotment of land is presented in Annexure IX.

6.3

Water
The water requirement for the wet milling industry is relatively large with an average use of 4
cum per MT of crushing per day. For a wet milling unit of 100 MT capacity, therefore about 4
lakh litre of water/ day is required. The site where wet milling units are set up should have a
good source of water, preferably a perennial river. As the unit also generate high amount of
sewage water, which require to be disposed off properly. In case the water is to be sourced
from ground, the water table should be high and the areas should fall in white category of
unrestricted use.

6.4

Power
The average power requirement is about 170-250 units per day per MT of maize crushing.
The milling unit requires uninterrupted power supply and hence a DG set is required as
standby arrangement. Himachal Pradesh is reported to be surplus in power and there should
not be any problem in respect of power supply. The power tariff in the state is also very
reasonable, which help in viability of the unit.

6.5

Steam
The steam requirement is 1 ton / MT of maize crushing. The units manufacturing starch by
wet milling in states like Maharashtra and Gujarat, use coal for production of steam.
However, coal as a source of energy for boilers is not permitted in Himachal Pradesh. Hence,
oil fired boilers need to be installed. This may raise the cost of operation of the unit to some
extent.

6.6

Technology
The technology is indigenous except for starch-gluten separation and starch washing unit
which is imported through companies like Alfa Laval. The entire plant can be fabricated by the
fabricators at Ahmedabad and few other parts of the country. There are a number of suppliers

for setting up of the plant on turnkey basis. Some of which are listed in Annexure III. A view
of a maize wet milling unit is given in Fig.2. below:

Courtesy: The Kisan Sahakari Starch Mfg. Society Ltd. Dhule, Maharashtra
Starch is usually manufactured from maize by a process known as wet milling. The wet
milling process is a complex process, which involves a series of operations, by which the corn
is separated into three parts, the outer hull or bran, the germ (the source of most of the corn
oil) and the endosperm (the source of gluten and starch). The critical operations which
have a direct bearing on the quality of the final product are

Raw material selection and cleaning - Good quality yellow dent corn without various
impurities will increase the quality of the final product.
Steeping - Germination of maize and the microbial growth are controlled by steeping.
Hydroclone washing - The simultaneous washing and concentration of starch to the desired
moisture and solid level increases the quality and marketability of the finished product.

The different steps involved in the wet milling are presented below.
6.6.1

Receiving

The corn is transported to the unit in trucks in gunny bags and offloaded in receiving area or
in silos. The receiving area should be designed in such a manner that there is enough space
for smooth movement of expected number of vehicles. The grain is fed to the belt conveyor
which takes the maize grains to cleaning section.

6.6.2

Cleaning

The grain contain various impurities like cobs, stones, metal parts, dust, other foreign matter etc. These
unwanted materials are removed in cleaning section. The grain is passed over perforated metals sheets,
air blowers, electromagnets to remove the impurities.
6.6.3

Steeping

The grain is fed into large steep tanks with hot water at 52 C and steeped for 70 hr.
Generally, RCC steep tanks are used by the existing units in India. However, steep tanks can
also be fabricated by stainless steel but it increase the capital cost. The RCC tanks should be
designed in such a manner that it withstand the gravitational force, as well as the weight of
the material. Steeping mixture containing sulfur dioxide (SO 2) @ 0.2 per cent concentration in
hot water is added in the steeping tanks to prevent germination and bacteria. The steeping
conditions the grain for later steps by softening of the maize kernels and loosen the bonds
between germ, husk and endosperm. During the soaking process, nutrients are absorbed into
the water and this water is later evaporated to concentrate the nutrients to get corn steep
liquor or condensed corn fermented extractives.
6.6.4

Grinding

The grinding process is completed in 2 stages. The grinders are made of stainless steel with
adjustable RPM with or with out pneumatic settings. There are a number of manufacturers of
grinding machines in India. In first stage, the steeped maize grains are ground coarsely to
loosen the husk and germ. The second stage grinding, known as fine grinding, help in
detaching the germ from the grain.

6.6.5

Germ Separation ( Degermination )

The pasty mix obtained after fine grinding is pumped to water filled settling troughs, known as
germ separators or degerminators. It is a 3 stage process where the slurry containing soluble
husk, gluten and starch are separated from germ. The lighter density rubbery germ float on
the top and is skimmed off. The germ is passed to germ drier which is finally sent to oil
extraction unit. The germ contains 45 per cent oil and the rest is crude fibre and moisture.
The starch manufacturers generally prefer to sell germ rather than own oil extraction unit.
6.6.6

Fibre Washing Section

The slurry of husk, starch and gluten is ground for better recovery of starch. The fibre
washing is a 6 stage process which is carried out by DSM box. The husk is separated from
the soluble starch and gluten slurry by a counter current flow system. The husk is sent to
either drying section or used as animal feed in wet form. The husk is mainly carbohydrate
which also contains 8 per cent protein.

6.6.7

Thickening
The slurry of starch and protein is passed through a centrifugal concentrator to get the
concentrated slurry. This machine is also called as milk stream thickener.

6.6.8

Primary separation

The thickened slurry is passed through a high speed centrifuge to separate the heavier starch
from the lighter protein (Gluten).
6.6.9

Gluten thickening
The protein slurry is passed through a centrifuge to get concentrated slurry of gluten. The
gluten contains 65 per cent protein and is a good source of protein for the animals and is
used in animal feed preparation.

6.6.10 Rotary vacuum filter

The thickened gluten slurry is further concentrated to get gluten cake with 40 per cent solids
through a rotary vacuum filter. The cake is further dried by hot air and / or sun to bring down
the final moisture content to 12 per cent.
6.6.11 Hydroclone system

The starch slurry received from the primary separation is passed through a multi stage
hydroclone system ( Fig.3 ) which concentrate the starch slurry to 42 per cent solid level. Alfa

Laval is the main company supplying this system in India for starch units
6.6.12 Drying
0

The concentrated starch slurry is then dried by hot air application (175 C) to 11-12 per cent
moisture content level.
The main product of wet-milling of maize is starch. Besides, it produces four major coproducts for the feed industry namely the steep water, husk (hulls or bran), germ and gluten.
These co-products represent about 25-30 per cent of the processed maize. The starch is raw
material for various ancillary industries like dextrose monohydrate, dextrins, saccharin etc.
For manufacture of further derivatives of starch, ancillary units need to be attached with
starch manufacturing units.
The wet milling has developed into an industry that seeks optimum use and maximum value
from each constituent of the maize kernel. In addition to starch and the various other
products, and edible corn oil, the industry has become an important source of well-defined
specialised ingredients used in feed formulation industry.

6.7

Effluent Treatment Plant

Effluent treatment plant is an essential component of a starch industry. It should be set up as
per the norms of State Pollution Control Board. It has been made mandatory to set up a ETP
in all starch manufacturing units.

7.

INFRASTRUCTURE FACILITIES AND INDUSTRIAL

DEVELOPMENT IN H.P.

7.1

Industrial Development in the State

The entire State is industrially backward, except some development on the periphery of the
State. The State has been classified basically into two categories, namely Industrially
developing areas and Industrially backward areas. The development blocks of Paonta
Sahib and Nahan in the district Sirmour and Nalagarh, Dharampur & Solan in the district
Solan, excluding backward panchayats as notified by the Government of HP from time to
time, would fall in the category of industrially developing areas. The rest of the State,
including backward panchayats in the industrially developing areas referred to above falls in
the category of industrially backward areas. Tribal areas of the State, as notified from time
to time have been treated as tax free industrial zones. This offers vast potential and
incentives for new entrants to set up various industries in the State. In addition, the State has,
by and large, clean environment and cool weather congenial for many industries.
The industrial growth in the state has been mainly under small scale sector. It has about 196
medium and large scale units with a total investment of about Rs.2378 crore and 30,176
small scale units with an investment of about Rs. 710 crore. The district-wise data on the
number of units in medium and large scale sector are given in Annexure - IV. It can be seen
from the data that the district Solan is a fairly developed district in the state with respect of
number of units. The reasons for the same is its proximity to industrially forward States like
Punjab and Haryana and also nearness to important markets like Chandigarh, New Delhi etc.
Sirmaur and Una are another two districts where there is some industrial growth quite
obviously due to the same reasons specified above. Steel and steel products, chemical and
chemical products, food products and electronics are some of the major industries of the
state. Among the food products, fruit and vegetable based units dominate the list. Processing
of food grains especially maize is negligible, rather nil.

7.2

Infrastructure Facilities
The infrastructure facilities available in the state are given below in a nutshell:

7.2.1

Railways
Himachal Pradesh being comprised of mainly hilly areas, railways network is very limited.
There is only 200 km of narrow gauge rail network between Shimla and Kalka and Joginder
Nagar to Pathankot. A Broad gauge line connecting Nangal-Talwara passing through Una
district is under construction.

7.2.2

Roads
The road network is fairly good in the state with 23,544 km of roads connecting all the district
headquarters and subdivisions as well as blocks. Three national highways (No.20,21 &22)
pass across the state.

7.2.3

Telecommunication
Whole of State has been provided with electronic exchanges and OFC network of nearly
about 6000 Km. The State has the latest state of the art telecom network and excellent
connectivity.

7.2.4

Air Links
Himachal Pradesh is approachable by air from New Delhi/ Chandigarh. There are 3 smaller
airports in the state at Shimla, Kullu and Dharmasala. Various domestic air lines operate
regular flights from Delhi.

7.2.5

Power
Himachal Pradesh has number of hydel power units and is surplus in power. It supplies
electricity to other states as well. All indutries are provided required quantity of electricity by
State Electricity Board at reasonable rates.

8.
8.1

SWOT ANALYSIS

Strengths

Corn production in the country has been growing steadily over the past five years. The
anticipated production of maize during the year 2004-05 is estimated to be in the range
of 9-10 mMT.

GoIs initiative to increase the area of cultivation and production of maize during the X
five year plan period and its inclusion under the technology mission give impetus to maize
production in the State. Directorate of maize has set a target to raise the output of maize
to 18 mMT by the end of the tenth plan period mainly through increase in yield to 23-24 q
/ ha.

Starch manufacturing from maize generates about 1 MT of by-products for every 2 MT

of starch produced and these by-products are worth more per MT than maize itself
making the starch manufacture an economic venture.

Strong raw material base with total production of 6.0-7.0 lakh MT and 4.0-4.5 lakh MT of
market surplus.

Maize is becoming one of the cash crops for farmers, as a major part of it is usually
sold for market. Further, there is no substitute for it particularly in rain fed condition and
so the farmers will continue to grow maize.

Agro processing is one of the thrust areas for the Government of Himachal Pradesh. A
special package of incentives is available for the processing units set up in Himachal
Pradesh.

It will be the first maize processing plant in Himachal Pradesh, hence, shall not face any
difficulty in marketing its products.

The maize starch is a preferred product compared to its substitutes like potato starch
and tapioca starch.

8.2

The productivity of maize is high which can still be raised. Higher the productivity, lesser
will be the cost of production.

Weaknesses

Seasonal availability of maize in Himachal Pradesh. Since only Kharif crop is cultivated ,
the local raw material will not be available in other seasons. To run the plant during
summer and rainy season maize grain has be procured from other states or buffer stocks
to be maintained by the processing units.

8.3

Competition for maize procurement by the poultry feed industry would limit the raw
material availability.
No organised market/ single place for bulk procurement. Maize has to be procured from
individual farmers or through middle men/traders which may hamper the regular
availability or may cause price fluctuations.

Opportunities

Backward linkage with farmers ( contract farming type arrangement ) is possible as

maize has become one of the cash crops in the state.
Demand for starch is high from varied users like food, pharmaceuticals, textiles, paper,
packaging etc.

Great export demand for corn gluten as a poultry feed in South East Asian countries.

Substantial subsidies from the Govt. in the form of land , subsidised power, water etc.

8.4

The demand is likely to increase to 186 lakh MT by 2011-2012

Corn starch is identified as one of the ingredients for manufacture of biodegradable

plastic. The demand for corn starch is expected to increase in future.
Corn starch is a substrate for manufacture of alcohol, which has been identified as an
environment friendly fuel.

Threats

Maize is produced in HP only in Kharif season and mainly grown under rain fed
conditions.

Stiff competition from other producers within the country.

The strengths and opportunities of maize processing in Himachal Pradesh outweigh

weaknesses and threat.

9.
9.1

FEASIBILITY OF MAIZE PROCESSING IN HIMACHAL

PRADESH
Technical Feasibility
The maize can be processed in to variety of products like grits, germ and flour by dry milling
and other products especially corn flakes at small scale level. Such units can be set up any
where in the state where maize is a major Kharif crop. The technology for such units is
available locally. But, in view of the high market surplus of maize grain in the state, large
scale units may be required to be set up to manufacture value added products. The
technology of maize processing is readily available in India, especially in States like Gujarat,
Maharashtra, Madhya Pradesh, Karnataka, Punjab and Uttar Pradesh, which can be
transferred easily to H.P. However, as discussed in the preceding chapters, there are some
limiting factors for wet milling, the most suitable method to utilise the large surplus production
of maize. Keeping in view the limiting factors, some ideal locations for setting up of a wet
milling unit in Himachal Pradesh are identified as under:

9.1.1

Baddi in Solan district

Baddi is one of the most developed growth centres for industrial development in Himachal
Pradesh. It is the most approachable location from Chandigarh. It is easily approachable from
all the maize growing districts of Himachal and also from major cities of Punjab and Haryana.
The infrastructure is fairly well developed at this location. The units set up at Baddi can
procure raw material from all of the maize growing districts of the state. The land is available
but high cost may be a limiting factor. Sufficient ground water is available, which can be
exploited for processing unit. There is ready market for starch in Baddi itself and being close
to Chandigarh and other important cities there should not be any problem in marketing of the
products.

9.1.2. Takarala in Una District

Due to close proximity to Punjab and Haryana, the Una district is in an advantageous
location. This centre is also well connected to all maize growing districts and also to the
potential markets like Chandigarh, New Delhi etc. Takarla in Amb Block has been identified
as one of the suitable locations for setting up of maize processing units. There will not be any
problem in acquiring the required area of land. Ground water is sufficiently available which
can be exploited easily for the unit. There will not be any problem of sewage water disposal.
The unit can procure raw material from all maize growing districts of Himachal Pradesh during
Kharif season, as the entire maize sold in the state passes through Una. During Rabi season,
the units can procure raw materials from the adjacent states like Punjab, Haryana, etc. This is
the only location in Himachal Pradesh where broad gauge railway connection is available at
Una.
9.1.3

Bhambla in Mandi District

Bhambla is a centrally located place for all the districts producing maize. The place is situated
in the border area of Mandi, Hamirpur and Una districts. It has been identified as a growth

centre for industrial development by the Government of Himachal Pradesh. The place is well
connected to procure raw material from Mandi, Hamirpur, Kangra, Chamba etc. Some of the
maize sales occurring in Una district may not come to this place, as the competition from
Punjab traders will be stiff there. However the site selection in Bhambla may have to be made
carefully as the requisite land area and water may not be available at one place.
9.1.4

Balh Valley, Dist Mandi

Balh valley is another ideal location. It is located on NH21 (Chandigarh - Manali) between
Sunder Nagar and Mandi. This is a plain maize growing area. Some area of maize cultivation
is irrigated. The raw material can be procured locally during Kharif season while from other
districts/states could be procured during lean season. There may be difficulty in getting a
contiguous plot of land, but sufficient quantity of water is available. There will not be any
problem for sewage disposal.

9.1.5

Mataur, Dist. Kangra

Kangra is one of the major maize growing districts of Himachal Pradesh. The district is also
adjacent to other major growing districts like Chamba, Mandi and Hamirpur. The cultivation in
the district is only under rain fed conditions. The district is connected with Punjab by narrow
gauge railway line and by national highway. Mataur has been identified as an ideal location
for setting up maize processing units. The raw material can be procured from Chamba and
adjoining areas of Punjab. Sufficient land is available but the high cost is a limiting factor.
Both, ground and surface waters are available in plenty.

9.2

Financial Viability
The economics of a minimum viable unit are given in Annexure V (a) to V (g). Various
techno-economic parameters for the model maize processing unit are assumed keeping in
view the existing situation and market conditions. The techno-economic parameters assumed
are given in Annexure V (a). Even though, the MSP for procurement of maize for this year is
Rs 525 / quintal, we have assumed an average price of Rs.500/- per quintal in consideration
of the situation prevailing in H.P, field data collected and also the variations in MSP
announced year to year. A unit is considered viable if its IRR works out to greater than 15 per
cent at 15 per cent discounting factor. Further, the unit is considered as bankable if its DSCR
is greater than 1.5.

9.2.1

Installed capacity
A plant of 100 MT of wet milling maize crushing capacity per day is considered as a minimum
viable unit. A unit of this capacity will produce the following products.

Particulars
Maize (raw material)
Finished products
Starch
Germ
Gluten
Husk
Total

Installed capacity
MTPD
TPA
100
30,000
60
10
5
15

18,000
3,000
1,500
4,500
27,000

The plant will function 3 shift per day and 8 hour per shift. Keeping in view, the nature of
activity the capacity utilisation of 50%, 70% and 90%, during first, second and third year
onwards can be achieved easily.
9.2.2

Project Cost
The project cost for setting up of a 100 MT wet milling of maize per day has been assessed at
Rs. 14.32 crore is given in Annexure V (b-d) and summarised as under:

S. No.
1
2
3
4
5
6

9.2.3

Particulars
Land and land development
Building and civil work
Plant and machinery
Misc. Fixed assets
Preoperative expenses
Margin money for W.C.
Total

Amount (Rs lakh)

320.00
250.00
769.65
34.25
27.48
30.63
1432.01

Remarks

Annexure V (c)
Annexure V (c)
Annexure V (b)

Working Capital Requirement

The working capital requirement of the unit will be very high and is estimated at Annexure
V(d). As the raw material is seasonal in nature, there will be high inventories. The farmers
will be required to be paid immediately, hence, the creditors of one week are assumed.
Starch is marketed through traders and it takes one month to realise the sale proceeds.
Keeping, this in view a debtors of 30 day period is assumed. The working capital requirement
of the unit is estimated at Rs. 2.64 crore, Rs. 3.69 crore and Rs. 4.74 crore, during the first,
second and third years, respectively.

9.2.4. Financial Viability

The cash flow statement of the unit is given in Annexure V(e) and the financial indicators at
Annexure V (f). The financial indicators are as under

Financial indicator
NPW
IRR
BCR
DSCR

Estimated
Rs. 912.64
34.21%
1.1
1.63

Requirements
Should be +ve
15%
Should be > 1.0
Should be > 1.5

All the financial indicators meet the requirement, hence a wet milling unit of 100 TPD of
maize crushing capacity in Himachal Pradesh will be a viable unit as well as bankable.
9.2.5

Sensitivity and Risk Analysis

Keeping all variables constant, the critical factors like number of shifts per day and installed
capacity were subjected to sensitivity analysis. The results are given as under:

Critical Factors

IRR (%)

DSCR

BEP, %
(at 90% capacity)

Shifts per day

3
34.21
2
16.26
1
-2.40
Installed capacity (MTPD)
100
34.21
76
15.10
50
-0.55

1.63
0.99
0.35

40
57
110

1.63
0.96
0.33

40
61
122

It can be observed from the above sensitivity analysis that the wet milling unit should run
round the year at 3 shifts per day basis. The project will be viable even at 2 shift per day of
operation but it will not be bankable. If unit operate at 1 shift per day only, it will be unviable.
The installed capacity of a wet milling unit of 76 MT corn/day is viable; but the plant and
machinery are designed for 50 MTPD and 100 MTPD only, hence, minimum 100 MTPD of
maize crushing capacity unit is considered as viable unit.
9.2.6

Break Even Analysis

The break even analysis is given in Annexure VI. A wet milling unit of 100 MTPD maize
crushing capacity will break even at 40 per cent of capacity utilisation during first year of
operation.

9.2.7

Repayment period
The repayment period of a maize wet milling unit is given in Annexure VII. The bank loan can
be repaid with in a period of 8 years including 1 year grace period.

9.2.8

Risk Analysis

9.2.8.1 Subjective Risk Analysis

Raw material procurement risk during off season

Risk of natural calamity like drought etc.

Marketing of starch and other by products

9.2.8.2 Objective Risk Analysis

We have assumed a very conservative capacity utilisation of 50%, 70% and 90% during first
3 years. The project has been subjected to objective risk analysis as per the risk variables
table as per Annexure VIII (a). Simulations have been carried out over 200 iterations and the
results are enumerated in the risk analysis table as per the Annexure VIII (b & c). It can be
seen from the risk analysis that all the parameters i.e. IRR, BCR, NPV and DSCR are not
influenced much. The probability of negative outcome in respect of IRR is 2%, which
indicate that the risk of project becoming unviable is quite low. The sensitivity analysis in
absolute terms has been carried out and the results are found to be satisfactory. It can be
concluded from the above that the project is not sensitive to identified risk variables.
9.3

Financing Arrangement
The project can be financed by institutions like Commercial Banks, term lending institutions
like IDBI, ICICI Bank, etc. NABARD may also extend its co-finance jointly with other banks.
The bank loan @75 per cent of project cost can be extended by the bank. The margin money
as per the Reserve Bank of India/ NABARD guidelines will be required to be brought in by the

beneficiaries. At present, the margin money requirement for such projects is 25 per cent of
project cost. Various incentives and subsidies are available for the industry, which are
described in Chapter 12. The economics have been worked out with out considering the
subsidies and hence the viability will improve further when such incentives are tapped. The
subsidy/ incentives from Central/ State Government available to the unit are mostly routed
through the financing banks which can be adjusted against the last installment of repayment
as back-ended subsidy. NABARD provides refinance assistance to the eligible banks for
extending loans to such units. Since the project cost of wet milling process is quite high,
consortium arrangement of financing will be an alternative.
The unit requires high quantum of working capital and hence the bank may be required to
sanction separate working capital limit to the unit.

10. POTENTIAL ASSESSMENT FOR MAIZE

PROCESSING
Maize is one of the important Kharif crops of Himachal grown over an area of 3.0 lakh ha with annual
production of 6.0 lakh MT and market surplus of 4.0 lakh MT per annum. At present, the processing
of maize to value added products is negligible. It was one of the staple foods for the local people but its
consumption has declined over a period of time. Increased income levels and the PDS support available
for rice and wheat by Government of India have led to the reduction of consumption of maize by local
people and thereby leaving a huge market surplus. This surplus is tapped at cheaper rates by the
neighbouring states, as stated earlier. This potential can be tapped locally for processing in to value
added products in the state itself. Though, there is a huge potential, it may not be possible to process
the entire surplus maize to value added products with in H.P immediately as market development
would take time. Keeping these factors in view, the following processing potential is suggested as
feasible
for
the
state
to
plan.

Particulars
Market surplus
(lakh MT)
Processing (%)
Raw material (MT)
Wet milling - units
of capacity 30,000
MT/ annum
Other units - 500
MT/annum

2005-06
4

2006-07
4

2007-08
4

2008-09
4

10
40,000
1

15
60,000
1

25
100,000
1E+1N=2

35
140,000
2E+1N=3

20

20 E + 40 N
= 60

60 E + 20 N =
80

80 E + 20 N
= 100

E = Existing, N = New
In view of the above potential, the investment requirement for the next 4 year is given as under:

Investment
requirement (Rs crore)
Wet milling
@Rs.14.32 crore/unit
Other units
@Rs.50 lakh/unit

2005-06
14.32
10.00

2006-07
0.00
20.00

2007-08

2008-09 Total

14.32

14.32

42.96

10.00

10.00

50.00

Total

24.32

20.00

24.32

24.32

92.96

In a period of 4 years, 3 wet milling units can come up easily with an investment of Rs. 42.96 crore for
which suitable locations are suggested in the report. Small scale units for manufacture of corn flakes,
poultry and animal feed units, dry milling units for manufacture of grits and other products can be set
up in all maize growing areas which will require an investment of Rs. 50 crore.

11.

SOCIAL AND ECONOMIC IMPACT OF THE PROJECT

11.1 Environmental Issues

In order to bring down the cost of production, the units in Maharashtra and Gujarat use coal
fired boilers for steam generation. Himachal Pradesh State Pollution Control Board (HPPCB)
does not permit the installation of coal based boilers. Hence, the companies will require to
install oil fired boilers for the units.
The starch manufacture by wet milling process uses sulphur dioxide (SO 2) as preservative
during the steeping process. The three main pollutants which are released into the
atmosphere during the wet milling process are volatile organic compounds, sulphur dioxide
(SO2) and particulate matter. The SO2 is released during the process of initial steeping
process and evaporation. The emission levels of these pollutants by maize processing
industry are usually quite low.
However, to mitigate the hazardous pollutants, an Effluent Treatment Plant (ETP) is made
mandatory for maize processing industry by the Government of India.. The treated water can
be utilised for agricultural purposes within the permitted BOD level of 30 PPM. Financial
support in the form of capital subsidy is also available from Ministry of Environment and
Forests, Government of India for the purpose.

11.2 Economic Impact

Maize wet milling unit will have positive economic impact, as it will utilise its own raw material
to produce value added product. It will reduce the dependence on other states for import of
starch and other maize products. The farmers of the State will be benefited as there will be a
ready market for their main Kharif season crop. The units importing starch from other states
will get their raw material with in state at a lower rates.

11.3 Employment opportunities

The wet milling unit will create both direct and indirect employment opportunities. The
manpower requirement of the unit is given in Annexure V (g). The unit will create
employment opportunities for around 70 skilled and unskilled workers directly. The chain go
on increasing down the line in procurement and marketing. The indirect employment
opportunities around the unit is estimated as under:

S.

Particulars

No.
1
2
3
4

Procurement and transport of raw

material
Handling and transport of finished
goods
Marketing of finished goods
Business opportunities around the
unit
Total

Man
days/Day
30
30
200
20
280

It can be observed from the above Table that the indirect employment generation is four
times of the direct employment opportunities.

12.
12.1.

INCENTIVES FOR MAIZE PROCESSING UNITS

Schemes of Ministry of Food Processing Industries, GOI.

12.1.1 Grant Assistance for Capital Investment

The Ministry of Food Processing Industries is the nodal agency for development of processed
food sector in the country. The ministry has been operating several plan schemes for the
th
development of food processing industry since the inception of 8 Five Year Plan. The
schemes envisage higher quantum of financial assistance to difficult areas including
Himachal Pradesh. Grant assistance @25 per cent of the capital equipments and technical
civil work upto Rs.50 lakh in general areas and 33.33 per cent upto Rs.75 lakh in difficult
areas including Himachal Pradesh is available from the MFPI to units under private, public
and joint sectors. Maize processing is one of the eligible activities for support from Ministry of
Food Processing Industries.

12.1.2.Scheme for strengthening of backward linkages in food

processing industries
The objective of the scheme is to increase capacity utilisation of fruits & vegetables
processing as well as grain and coarse grain, by ensuring regular supply of raw materials
through contract farming, ensure remunerative price to farmers by creating direct linkage
between farmer and processor; provide high quality seeds / fertilisers /pesticides and planting
materials to farmers along with technical know-how etc. through the processor.
Under this scheme, Joint / Assisted / Private Sector / NGOs / Cooperatives / PSUs are
eligible for grant in the form of reimbursement upto 10 per cent of the total purchases made
by processors in a given year, limited to Rs. 10 lakh per year for a maximum period of five
years.
The processing companies would be required to supply high quality seeds / fertilisers /
pesticides and technology to contracted farmers, along with necessary extension work at
reasonable charge. The group of contracted farmers should not be less than 25 in number.

12.2 Incentives to Industrial Units in Himachal Pradesh

Various incentives are being given to the industrial units in H.P as per the Industrial Policy Guidelines
and incentive Rules - 1999, Department of industries, Government of Himachal Pradesh ( Annexure
IX ). The package of incentives available to the fruit, vegetable and maize processing industries
consuming atleast 60 per cent of their total consumption from local produce per annum and located in
industrially backward areas (except produce of breweries, distilleries, non-fruit/ vegetable wineries and
bottling plant both for country liquor and Indian Made foreign liquor), are eligible for the following
incentives.

Land/shed shall be allotted on out of turn basis at a nominal price /rent to be determined
by the Government from time to time. While considering allotment, such unit(s) shall get
precedence even over units in priority sector.
GST exemption for a period of 10 years will be admissible to new industrial units.

The GST on the raw material, processing and packaging material except timber, shale
and limestone used by the existing and new industrial unit(s) for captive manufacturing
within the State shall be leviable at a concessional rate of 1 per cent upto 31-03-2009.

Central Sales Tax at a concessional rate of 1 per cent shall be leviable on the goods
manufactured by new & existing industrial units upto 31-03-2009.

Such new industrial unit(s) shall be exempted from the payment of electricity duty for a
period of 10 years. No electricity duty shall be charged on the power generated from
D.G.set/ hydel plant.

Such new industrial unit(s) shall be exempted from the payment of State excise duty for
a period of 7 years.

Period of these concessions will be to new industrial unit(s) from the date of
commencement of commercial production or from the date of notification issued in this
regard, whichever is later. In case of existing unit(s), these concessions, as eligible,
would be available from the appointed day or the date of notification, whichever is later.

Such new industrial unit(s) shall be eligible for a subsidy of 10 per cent in the rate of
interest on term loan for a period of 6 years subject to a ceiling of Rs.10.00 lakh p.a.,
provided that the unit pays a minimum of 6 per cent interest after availing the interest
subsidy. In case the rate of interest after a subsidy of 10 per cent falls below 6 per cent,
the rate of subsidy shall be reduced accordingly. This subsidy shall not be admissible on
defaulted/rescheduled installment(s) and the period of default shall be counted for
determining the period of eligibility.

Such new industrial unit(s) will be entitled to an investment subsidy @ 25 per cent on
cost of plant and machinery installed subject to a ceiling of Rs. 25.00 lakh. The
sanction/disbursement shall be governed by erstwhile C.I.S. Manual.

Any new industrial unit(s) except breweries, distilleries, non-fruit/vegetable based

wineries and bottling plants (both for Country Liquor and Indian Made Foreign Liquor) in
the tribal areas of the State, as notified from time to time, shall be exempted from
payment of any State taxes and duties (excluding levies in the shape of cess, fees,
royalties etc.) for a period of 10 years from the date of commencement of commercial
production or the date of notification by the concerned department(s), whichever is later.
As regards other incentives, unit(s) in these areas shall be treated at par with the unit(s)
in industrially backward areas.

The Government may also grant project specific special package to any new medium
and large scale industrial unit proposed to be set up in the State which has potential for
substantial employment generation, both direct and indirect, ancillarisation etc. on case to
case basis, in the public interest.

13.

SUGGESTED ACTION PLAN

The following action plan is identified by the study to promote maize processing in Himachal
Pradesh.

1.

The study report may be given wide publicity by the State Government through Industries
Department. The report may be circulated to the entrepreneurs and they may be invited
to explore the possibility of setting up maize processing unit in Himachal Pradesh
(Deptt. of Agriculture/ Industries, HP)

2.

The findings of the study may be discussed among bankers, officials from
Government Departments including Director of Industries, Research Institutes and
entrepreneurs in a workshop to draw a time bound action plan for future.
(Deptt. of Agriculture/ NABARD/ SLBC, HP)

3.

In order to promote contract farming to ensure supply of maize to the proposed unit,
the state government may consider to amend the State Agriculture Produce Marketing
Act to allow contract farming as legal practice as suggested by Government of India.
(Deptt. of Agriculture, HP/ HPMB)

4.

State Government may consider providing land to the entrepreneurs at concessional

rate, either on lease basis or freehold, as land cost is prohibitive in setting up of such
units.
(Deptt. of Industries, HP)

5.

As maize starch is used by other industrial units, like pharmaceutical, textile etc., a
comprehensive development plan to promote such units along with maize processing unit
need to be drawn by State Government.
(Deptt. of Industries, HP)

6.

Identification of suitable Rabi season varieties or for extended Kharif season

varieties is needed to extend the cropping season. for Himachal Pradesh.

(HPKV Palampur / Deptt. of Agriculture)

7.

The maize processing units require large land area and the high cost of land may act
as a limiting factor. The lease rental charged by State Government ranged between
Rs.400 per sq.mtr. to Rs.1000 per sq. mtr. at different locations identified for setting up of
the maize processing unit. The State Government may consider providing land at a
concessional lease rental at an uniform rate in all locations in Himachal Pradesh for
maize processing units.
(Deptt. of Industries, HP)

DISCLAIMER
The views expressed
in this report are advisory
in nature. Nabcons and NABARD assume
no financial liability to any one using
the report for any purpose.

( B.R.Premi)
Manager

( Somainder Singh )
Manager

( V. Esakkimuthu)
Assistant Manager

Annexure -I
District-wise area production and productivity of maize in H.P.
Area ('000 ha), Production ('000 MT) and Productivity (q/Ha)

S.

District

Particulars 1993-94 1994- 2000-01 2001-02 2002-03 CAGR Average

95
No.
(%)
1 Bilaspur A
24.730
26.571 26.169 26.739 0.211
26.212
P
52.758
58.992 68.662 38.768 2.081
47.817
PR
21.334
22.202 26.238 14.499 1.865
18.283
2 Chamba A
28.857
24.583 27.875 28.665 -0.569
27.602
P
94.106
61.721 82.352 56.269 -3.929
74.394
PR
32.611
25.107 29.543 19.630 -3.379
26.900
3 Hamirpur A
32.604
30.834 32.328 30.151 -0.290
31.708
P
60.873
63.176 72.840 46.147 1.191
55.342
PR
18.670
20.489 22.532 15.305 1.486
17.446
4 Kangra
A
58.018
57.804 58.858 58.685 0.242
57.813

5 Kinnaur

6 Kullu

7 Mandi

8 Shimla

9 Sirmour

10 Solan

11 Una

12 Lauhal
Spiti
State Total

P
PR
A
P
PR
A
P
PR
A
P
PR
A
P
PR
A
P
PR
A
P
PR
A
P
PR
A

98.841
17.036
0.470
1.001
21.298
15.877
31.257
19.687
54.536
128.194
23.506
20.305
47.281
23.285
25.682
57.632
22.441
25.739
54.726
21.262
27.691
43.039
15.543
0.041

P
PR
A
P
PR

0.087
21.220
314.550
669.795
21.294

106.317 113.217 68.040 -0.149

18.393 19.236 11.594 -0.390
0.383
0.387
0.338 -3.604
0.878
0.987
0.545 -3.605
22.924 25.504 16.124 -0.001
16.669 16.738 16.862 0.256
53.213 54.340 16.260 -0.134
31.923 32.465
9.643 -0.389
48.487 48.758 48.681 -0.593
135.122 151.635 101.153 -0.453
27.868 31.100 20.779 0.141
16.017 15.224 13.642 -4.002
32.736 40.408 20.495 -5.042
20.438 26.542 15.023 -1.084
24.026 23.398 23.062 -0.933
69.547 69.392 53.665 1.062
28.947 29.657 23.270 2.014
24.421 24.406 23.778 -0.613
49.620 57.521 38.634 -1.059
20.319 23.568 16.248 -0.449
28.219 27.372 26.372 -1.599
52.233 56.737 39.155 -0.496
18.510 20.728 14.847 1.121
0.038
0.042
0.049
12.348
0.087
0.107
0.079 -3.344
22.895 25.476 16.122 10.272
298.052 301.555 297.024 -0.628
683.642 768.198 479.210 -0.624
22.937 25.475 16.134 0.004

92.753
16.040
0.408
0.863
21.152
16.513
37.829
23.008
48.862
129.715
26.591
17.524
37.927
21.546
24.630
64.425
26.209
24.425
51.440
21.055
29.397
52.620
17.926
0.086
0.135
19.300
305.180
645.258
21.144

A :- Area, P:- Production, PR:- Productivity

Source: Director Agriculture, Shimla, H.P.

Annexure II
List of major starch manufacturing units in India

Address
Telephone
Fax
E-mail & Website Capacit
S. Name of
the unit
y (MT
corn/da
No
y)
.
Existing Units
1 Maize
P.O. Kathwada Maize +91-79+ 91- sales@maizeproducts.
400
Poducts Products, Ahmedabad ,
79com
Gujarat - 382430
2871581

2 Saahil
NR. Shailesh Park,
organics B/H L.D. Engg. Hostel
Polytechnic,
Ahmedabad, Gujarat380015
3 Anil
Anil Road, Post Box
Products No.10009, Ahmedabad
Gujarat - 380 025
4 Riddhi Viramgaon,
Siddhi Ahmedabad, Gujarat
starch
5 Kashyap Vapi, Ahmedabad,
sweetner Gujarat
s
6 Ambuja Heemat Nagar,
proteins Ahmedabad, Gujarat
Ltd
7 The
Mumbai-Agra Road,
Kisan
(Bladi-Nyahalod Fata),
Sahakari Deopur, Dhule,
Starch
Maharashtra - 424005
Mfg,
(MS)
Soc. Ltd.
8 Universa Jay Palace, Hawai
l starch Mahal, Maharana
Chemical Pratap Sinh Marg,
Allied
Dadanagar, Dodaicha,
Ltd.
Maharashtra - 425
498, India
9 sahayadri Sangli, Maharashtra
starch
10 Yaswant Sirola, Maharashtra
starch
11 Tirupathi Indore, Madhya
starch
Pradesh
12 Rajaram Mhow Neemuch Road,
Brothers Mandsaur, Madhya
Pradesh - 458 001

+91-766304572

+91-79220322
ext.252

287323
2
+ 91saahil@ad1.vsnl.net.in
76http://www.saahil.com
/
630710
8
+91-79- darshan@anilproducts.
com
220073
1

200

300

100

100

250

+91-256270235

+91md@kisan-starch.com
256www.kisan-starch.com
271232

200

bapusheb@hotmail.co
m
www.universalstarch.c
om

400

244235,
244236

200
200
200
(7422)
(7422)
221135/36/4 223294
3/

150

440
13 Kashyap
sweetner
s
14 Riddhi
Siddhi
starch

Ratlam, Madhya
Pradesh

100

Gogak, Near Balgaon,

Karnataka

300

15 Devji
Agro Pvt
Ltd
16 Sukhjeet
starch
and
chemical
Ltd
17 Rajaram
Maize
Products

Kolapur, Maharashtra

Sarai road, Phagwara,

Punjab-144001

50

260216

100

Komal Niwas, Kailash (7744)

Nagar, Rajnandgaon
225207,
Chhatisgarh - 491 441 224825,
501013,
503213,
223561
18 Santosh 71,New cloth Market, 91-79starch
Ahmedabad-380007
products
2141933
Ltd
19 Jaychand Mhatre pen building,B 91-22ra Agro wing,II floor,senapati
Industrie bapat
24362210/
s Pvt.Ltd marg,Dadar(west),Mu
mbai-400028
24363418
Subtotal
Proposed units
1 DSQ
Origin Agro Starch,
Diversificati
Biotech Kadhur, Tamil Nadu
on from
tapioca
starch to
maize starch
2 Basant Sangli, Maharashtra
New unit
Dada
Patil
Makka
Prakariya
Karkhan
a Ltd.

150

91-79-

100

216087
4
91-22-

100

243059
69
3600

Annexure - III
Major consultants/ Supplier of Technology of Wet Milling of maize in India

S.
No

Consultant/
Suppliers (Name

Telephon
e (Office)

Fax/e-mail

Type of
service
offered

& Address)
1

National Research
Development
Corporation (A
Government of
India
Entreprise),20-22,
Zamroodhpur
Community
Centre, Kailash
Colony Extension,
New Delhi - 110
048
www.nrdcindia.co
m
M/s Halani &
Associate, 4-A,
Morlidhar
Society, Odhav,
Ahmedabad 382415
M/s Geeli
Machinery Works,
3/A, Mona Estate,
Opp. Anil Starch
Mills, Anil Road,
Ahmedabad -380
025
M/s Shirke
Structurals Pvt.
Ltd.

26419904, 26231877, 6460506, 6478010

26417821,
26480767,
26432627
info@nrdcindia.com

Turn key
projects

22870474

d_halani@yahoo.com

Consultant

22201602

22203992

Manu. &
Exporters of
Starch
machineries
and spares

22865409
(R)
info@geelidewatering.com

Constructio
n of Maize
silo and
Tower cabin

72-76, Mundhwa,

Pune - 411 036.

M/s J.M.
Engineers/ Engi
Fab Industries
Plot No. 143
Phase I, Behind
New Post Office,
GIDC, Batha,
Ahmedabad - 382
445
Alfa Laval (India)
Ltd.

25833674

56382270
(Mumbai)

Manu.
Starch
machinery

dilip.gaikwad@alfalaval.com

Turnkey
project and
suppliers of

Mumbai-Pune
Road, Dapoli
Pune - 411 012

Mr. Dilip
Gaikwad

27127721
&
27127711
(Pune)

nitin.gaikwad@alfalaval.com

Homepage:

centrifugal
separators
and
hydroclone
washing
systems for
starch units

www.alfalaval.com

Mr. Nitin
Gaikwad
SPECTRUM
Engineering Pvt.
Ltd.

02652642641/
2642643

E-Mail:- spectoms@ad1.vsnl.net.in
Internet://www.vigorsoft.com/spect
oms

Makarpura Station 2644592/

Road, Maneja,
Vadodara 390013, 2332633
Gujarat

Decon System

Tel

27121641

10, Sargam,
Rambaug Col

27120792
27121641

E Mail - deconsys@pn3.vsnl.net.in

Paud Road, Pune411 038

Water Treatment
and Effluent
Treatment (I) Pvt.
Ltd. B-115, 1st
Floor, Sonal
Palace, Phadk
Raod
Dombili (E),
Thane
Maharashtra - 421
201

Suppliers of
Feed
milling
plants &
equipments,
Material
handing &
Storage
Systems,
etc.
Suppliers of
bulk
material
handlng
systems and
equipments
Manufactur
er of water
treatment
and effluent
treatment
plant

Annexure

-IV

District-wise group-wise details of units in Medium & Large Scale Sector

Total No./ Group

Solan

1. Food Products

17

--

--

27

2. Beverages

--

--

--

3.
Textile/Spinning

21

--

--

--

--

23

4. Chemical &
Chemical
Products

20

--

--

--

28

5. Engineering

11

--

--

--

--

--

--

11

6. Non Metallic
Mineral Products

--

--

--

--

--

--

7. Electronics

23

--

--

--

--

29

8. Steel & Steel

Products

21

--

--

--

--

32

9. Paper & Paper

Products

11

--

--

--

18

10. Cement

--

--

--

--

11. Leather &

Leather Products

--

--

--

--

--

--

12. Ceramic

--

--

--

--

--

--

13. Plastic
Products

--

--

--

--

--

142

31

196

Total

Sirmour Kangra

Una

Shimla Bilaspur Mandi/ Total

Kullu

Annexure - V (a)

Unit for manufacture of maize starch by wet milling method

Techno-economic Parameters
S.No. Particulars Assumptions 1 Project cost
1432.008 2 Cost of land per acre (Rs. lakh) 30.000 3 Installed capacity (Raw material)
TPD
100
No. of working days 300
Working hours/day 24
Installed capacity (MT corn /annum)
30000 4 Recovery
i Starch 60.00% ii Gluten (protein) 5.00% iii Germ 10.00% iv Husk
15.00%
5 Capacity utilisation Yr1 Yr2
Yr3

50%
70%
90%
(Rs/Kg)

(Rs/MT) 6 Cost of maize 5.00 1000

5000
Procurement expenses
0.50%

Rs./ MT

7 Consumables (Sulphur, packing material, chemicals etc.) 350.00

realisation (Rs./Kg)

8 Price

(Rs./MT)
i Starch 10.00 10000 ii Gluten (protein) 12.00 12000 iii Germ 14.00 14000 iv Husk 4.00 4000 9
Power Consumption
i Power load (KVA) 800.00 ii Power factor 0.80 iii Lakh units /year
46.08 iv Cost of power (Rs/unit) 3.50 10 Steam consumption
i Steam requirement (MT/Hr) 4
ii Cost per MT 500.00 iii Cost of Steam (Rs. lakh/ year) 144.00
11 Interest on term loan
12% 12 Interest on W.C. 14%
13 Depreciation on Civil Works 5% Plant and
Machinery 10% Misc. fixed assets 5%
14 Wage rate 100
15 Insurance of fixed
assets 2.50%
16 Selling expenses - Commission 0.50% Selling expenses - Freight
0.50% 17 Repayment period 8 Years Grace period 1 18 Income tax 30%
Annexure - V (b)

Unit for manufacture of maize starch by wet milling method

Project Outlay
( Rs. in lakh ) Sr.No. Particulars Rate/qty. Amount Remarks
1
Land (acre) 10 300.00 Land development 20.00 Lump sum amount
Sub Total 320.00 2
Building and Civil Structures 250.00 Steeping tanks 4 Nos. of 100 MT capacity each, Silo storage,
unit and office buildings etc.
3 Plant and machinery 769.65
4 Misc. fixed Assets 34.25
5 Prelim & Pre-operative expenses 2% 27.48
6 Margin money for working capital
30.63
Total project cost 1432.01
Margin Money 25% 358.00
Bank loan 1074.01

Annexure V ( c )

Unit for manufacture of maize starch by wet milling method

Details of Plant
and Machinery
Rs. in lakh S.No. Particulars Number Rate Total value
1 S.S.
Coarse Grinder (36 inches dia, 700 RPM, 50-250 MT/day) 2 5.5 11 2
Degerminator/Separator (3 stage) 3 5 15 3 Fine Grinder (36 inches dia, 700 RPM, 50-250
MT/day) 1 7 7 4 DSM box for fibre washing (6 stage) 6 2.5 15 5 Centrifugal Separators
(separation of protein and starch) 1 80 80 6 Hydro clone starch washing (12 stage) 1 80 80 7
Gluten thickner 1 80 80 7 Hydrolic press for gluten 2 10 20 8 Gluten drier 1 15 15 9 Starch
pulveriser & Drier 1 50 50 10 Germ drier 1 20 20 11 Boiler oil fired (8 tonne steam/Hr) 1 40
40 12 Effluent treatment plant 1 200 200 13 D.G. set (500 KVA) 1 25 25 14 Miscelleneous
equipments LS 75
15 Erection & Commissioning 5% 36.65
Grand total
769.65

Annexure - V ( d )

Unit for manufacture of maize starch by wet milling method

Assessment of
Working Capital Requirement
( Rs. in lakh ) S.No. Particulars Period (days) Yr1 Yr2
Yr3
1 Raw material stock 30 75.00 105.00 135.00 2 Work in process 4 12.95 18.06
23.17 3 Finished goods 30 97.09 135.44 173.80 4 Debtors 30 97.09 135.44 173.80 Total
current assets 282.12 393.95 505.77 5 Creditors (current liabilities) 7 17.50 24.50 31.50
6 Working capital gap 264.62 369.45 474.27
7 Margin money for W.C. 25%
66.1558 92.36212 118.5684
8 Bank loan 198.47 277.09 355.71

Annexure - V ( e )
Unit for manufacture of maize starch by wet milling method
Income
and Expenditure Statement
( Rs. in lakh )
Sr.No Particulars Yr1 Yr2
Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10 I INCOME
1 Installed capacity (MT)

Maize (raw material) 30000 30000 30000 30000 30000 30000 30000 30000 30000
30000 Starch 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 Gluten
(protein) 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 Germ 3000 3000 3000
3000 3000 3000 3000 3000 3000 3000 Husk 4500 4500 4500 4500 4500 4500 4500 4500
4500 4500 Total 27000 27000 27000 27000 27000 27000 27000 27000 27000 27000 2
Capacity utilisation (%) 50% 70% 90% 90% 90% 90% 90% 90% 90% 90% 3 Products (MT)
Maize (raw material) 15000 21000 27000 27000 27000 27000 27000 27000
27000 27000 Starch 9000.00 12600.00 16200.00 16200.00 16200.00 16200.00 16200.00
16200.00 16200.00 16200.00 Gluten (protein) 750.00 1050.00 1350.00 1350.00 1350.00
1350.00 1350.00 1350.00 1350.00 1350.00 Germ 1500.00 2100.00 2700.00 2700.00
2700.00 2700.00 2700.00 2700.00 2700.00 2700.00 Husk 2250.00 3150.00 4050.00
4050.00 4050.00 4050.00 4050.00 4050.00 4050.00 4050.00 Total 13500 18900 24300
24300 24300 24300 24300 24300 24300 24300 4 INCOME
Starch 900 1260
1620 1620 1620 1620 1620 1620 1620 1620 Gluten (protein) 90 126 162 162 162 162 162
162 162 162 Germ 210 294 378 378 378 378 378 378 378 378 Husk 90 126 162 162 162
162 162 162 162 162 3 Income per annum (Rs.Lakh) 1290.000 1806.000 2322.000 2322.000
2322.000 2322.000 2322.000 2322.000 2322.000 2322.000 II EXPENDITURE
1
Raw material 750 1050 1350 1350 1350 1350 1350 1350 1350 1350 2 Procurement expenses
3.75 5.25 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75 3 Consumables 52.50 73.50 94.50 94.50
94.50 94.50 94.50 94.50 94.50 94.50 4 Power 80.64 112.90 145.15 145.15 145.15 145.15
145.15 145.15 145.15 145.15 5 Steam cost 72.00 100.80 129.60 129.60 129.60 129.60
129.60 129.60 129.60 129.60 6 Wages 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00
12.00 12.00 7 Insurance of building, plant and machinery and stocks 23.25 21.23 19.39 17.71
16.20 14.82 13.57 12.43 11.39 10.45 8 Repair and maintenance (building and P&M) 0.00
2.00 4.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 9 Administrative Expenditure
Salary 32.28 32.28 32.28 32.28 32.28 32.28 32.28 32.28 32.28 32.28 Printing & Stationery
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 T.A. & Conveyance 10.00
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 Misc Expenses (Staff welfare,
office maintnence, books/ magzines etc.) 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00
15.00 15.00 Sub-total 67.28 67.28 67.28 67.28 67.28 67.28 67.28 67.28 67.28 67.28
10 Selling & Distribution expenses
Commission on sales 6.45 9.03
11.61 11.61 11.61 11.61 11.61 11.61 11.61 11.61 Frieght 6.45 9.03 11.61 11.61 11.61 11.61
11.61 11.61 11.61 11.61 Sub-total 12.90 18.06 23.22 23.22 23.22 23.22 23.22 23.22 23.22
23.22
B Total Expenditure 1074.32 1463.01 1851.89 1852.22 1850.70
1849.32 1848.07 1846.93 1845.90 1844.95
C Gross Surplus (
PBDIT ) 215.675 342.988 470.113 469.783 471.300 472.678 473.930 475.069 476.104
477.047
D Depreciation 12.500 11.875 11.281 10.717 10.181 9.672 9.189
8.729 8.293 7.878
E Interest on Term Loan 128.881 128.881 110.469 92.058
73.646 55.235 36.823 18.412 0.000 0.000 Interest on W.C. 27.785 38.792 49.799 49.799
49.799 49.799 49.799 49.799 49.799 49.799 Total interest 156.666 167.673 160.268
141.856 123.445 105.033 86.622 68.210 49.799 49.799 F Profit after Depreciation and
Interest 46.509 163.440 298.563 317.210 337.674 357.972 378.120 398.129 418.013 419.370
G Tax 0.000 49.032 89.569 95.163 101.302 107.392 113.436 119.439 125.404
125.811
H Profit after Depreciation, Interest and Tax 46.509 114.408 208.994
222.047 236.372 250.581 264.684 278.691 292.609 293.559
I
Surplus available for Repayment 215.675 293.956 380.544 374.620 369.998 365.286
360.494 355.630 350.701 351.236
J Debt Service Coverage Ratio
Coverage Available 215.675 293.956 380.544 374.620 369.998 365.286 360.494 355.630
350.701 351.236 Debt 128.881 282.310 263.899 245.487 227.076 208.664 190.252 171.841
0.000 0.000 Value 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 0.000 0.000 DSCR

1.673 1.041 1.442 1.526 1.629 1.751 1.895 2.070 0.000 0.000 K Average DSCR 1.628

Annexure - V (f)

Unit for manufacture of maize starch by wet milling method

Calculation of Depreciation ( WDV )
( Rs. in Lakh ) Sr. No. Particulars
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1
Civil Structures 250.000 237.500 225.625 214.344 203.627 193.445 183.773 174.584
165.855 157.562
2 Depreciation 12.500 11.875 11.281 10.717 10.181 9.672
9.189 8.729 8.293 7.878
3 Depreciated cost 237.500 225.625 214.344 203.627
193.445 183.773 174.584 165.855 157.562 149.684
1 Plant & Machinery
769.650 692.685 623.417 561.075 504.967 454.471 409.024 368.121 331.309 298.178
2 Depreciation 76.965 69.269 62.342 56.107 50.497 45.447 40.902 36.812 33.131
29.818
3 Depreciated cost 692.685 623.417 561.075 504.967 454.471 409.024
368.121 331.309 298.178 268.360
1 Miscelleneous fixed assets 30.630 29.099
27.644 26.261 24.948 23.701 22.516 21.390 20.321 19.305
2 Depreciation
1.532 1.455 1.382 1.313 1.247 1.185 1.126 1.070 1.016 0.965
3 Depreciated
cost 29.099 27.644 26.261 24.948 23.701 22.516 21.390 20.321 19.305 18.339
436.384

Annexure - V(g)
Unit for manufacture of maize starch by wet milling method
Assessment of
manpower requirement
S.No. Type of manpower Number of persons Salary
(Rs./month)/ wages (Rs./ day Total A Managerial
(i) Managing Director 1 30000 360000
(ii) Administrative officer 1 25000 300000 (iii) Plant Manager 3 17000 612000 (iv)
Procurement manager 1 15000 180000 (v) Marketing manager 1 15000 180000 B Permanent/
skilled staff
(i) Clerk/typist 2 7500 180000 (ii) Attendent 2 4500 108000 (iii) Plant
operator/ electrician 4 5000 240000 (iv) Section incharges 10 4500 540000 (v) Store keeper 3
3000 108000 (vi) Boiler operator 4 4500 216000 (vii) Drivers 2 4000 96000 (viii) Security
guards 3 3000 108000
Sub-total 3228000 C Unskilled casual labour 40 100
1200000

Annexure - VI
Unit for manufacture of maize starch by wet milling method
( Rs. In Lakh ) Break Even Analysis
Sr. No. Particulars Year 1
Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1 Installed
Capacity ( tonnes ) 27000 27000 27000 27000 27000 27000 27000 27000 27000 27000
2 Capacity Utilised ( tonnes ) 13500 18900 24300 24300 24300 24300 24300 24300
24300 24300
3 Sales Revenue 1290.00 1806.00 2322.00 2322.00 2322.00
2322.00 2322.00 2322.00 2322.00 2322.00 4 Variable Cost
Raw material
750.00 1050.00 1350.00 1350.00 1350.00 1350.00 1350.00 1350.00 1350.00 1350.00
Procurement expenses 3.75 5.25 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75 Consumables
52.50 73.50 94.50 94.50 94.50 94.50 94.50 94.50 94.50 94.50 Power 80.64 112.90 145.15
145.15 145.15 145.15 145.15 145.15 145.15 145.15 Steam cost 72.00 100.80 129.60 129.60
129.60 129.60 129.60 129.60 129.60 129.60 Wages 12.00 12.00 12.00 12.00 12.00 12.00
12.00 12.00 12.00 12.00 Selling & Distribution expenses 12.90 18.06 23.22 23.22 23.22
23.22 23.22 23.22 23.22 23.22 5 Total Variable Cost 983.79 1372.51 1761.22 1761.22
1761.22 1761.22 1761.22 1761.22 1761.22 1761.22
6 Fixed Cost
Insurance of building, plant and machinery and stocks 23.25 21.23 19.39 17.71 16.20 14.82
13.57 12.43 11.39 10.45 Repair and maintenance (building and P&M) 0.00 2.00 4.00 6.00
6.00 6.00 6.00 6.00 6.00 6.00 Administrative Expenditure 67.28 67.28 67.28 67.28 67.28
67.28 67.28 67.28 67.28 67.28 Total interest 156.67 167.67 160.27 141.86 123.44 105.03
86.62 68.21 49.80 49.80
7 Total Fixed Cost 247.20 258.18 250.93 232.85
212.92 193.13 173.47 153.92 134.47 133.53
Sales Revenue per MT 0.10
0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 Variable Cost per MT 0.07 0.07 0.07 0.07 0.07
0.07 0.07 0.07 0.07 0.07 Contribution per Unit 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
0.02
Break Even Point ( MT ) 10898.44 11256.40 10873.61 10090.06
9226.51 8368.98 7516.89 6669.74 5827.04 5786.20
Break Even Point ( % )
40% 42% 40% 37% 34% 31% 28% 25% 22% 21%
BEP ( Sales Revenue )
1041.406 1075.611 1039.034 964.162 881.644 799.702 718.281 637.330 556.806 552.904
Margin of Safety 19.27% 40.44% 55.25% 58.48% 62.03% 65.56% 69.07%
72.55% 76.02% 76.19%

Annexure - VII
Unit for manufacture of maize starch by wet milling method
Schedule
( Rs. In Lakh ) Rate of Interest 12.00%
Bank Loan O/S at the

Repayment
Years

Surplus available Payment of Repayment Total Outgo Bank Loan O/S at the Surplus
available Equal Instalments
Beginning of the year
for Repayment Interest of Principal End of the year after Repayment 1 1074.006 215.675
128.881 0.000 128.881 1074.006 86.795 153.429 2 1074.006 293.956 128.881 153.429
282.310 920.577 11.646 3 920.577 380.544 110.469 153.429 263.899 767.147 116.645 4
767.147 374.620 92.058 153.429 245.487 613.718 129.133 5 613.718 369.998 73.646
153.429 227.076 460.288 142.922 6 460.288 365.286 55.235 153.429 208.664 306.859
156.622 7 306.859 360.494 36.823 153.429 190.252 153.429 170.242 8 153.429 355.630
18.412 153.429 171.841 0.000 183.789

Annexure VIII (b)

RISK ANALYSIS RESULTS Wet milling of maize
Average DSCR IRR BCR
Expected value 1.425 28.38% 1.066 Standard deviation 0.399 11.90% 0.058 Minimum 0.540
2.18% 0.943 Maximum 2.565 64.52% 1.247 Coefficient of variation 0.280 0.419 0.055
Probability of negative outcome 0.0% 0.0% 0.0%

Annexure VIII (c)

Wet Milling of Maize
Risk Variable Report

Risk Variable No. 1

Cost of maize
Probability distribution:
MIN
MEAN
Range:
4
5
Standard deviation:
Degree of skewness:

NORMAL
MAX
6
0.333
0%

Risk Variable No. 2

Cost of power (Rs/unit)
Probability distribution:
MIN

Range:
3.5
Standard deviation:
Degree of skewness:

NORMAL
MEAN
4

0.167
0%

Risk Variable No. 3

Cost of steam per MT
Probability distribution:
MIN

Range:
500
Standard deviation:
Degree of skewness:

MAX
4.5

NORMAL
MEAN
650

MAX
800

50
0%

Risk Variable No. 4

Price of starch
Probability distribution:
MIN
8

Range:
Standard deviation:
Degree of skewness:

NORMAL
MEAN
10

MAX
12

0.667
0%

Annexure - IX

Details of Incentives available to Industrial Units in H.P

(Extract from Industrial Policy Guidelines and Incentive Rules -1999,
Department of Industries, Government of Himachal Pradesh)
1. General Rules

All existing and new industrial units subject to fulfillment of such requirements as may
be specified by the Directorate of Industries from time to time.

Industrial units located in industrially developing areas and industrially backward areas
shall be eligible for incentives and concessions only if it employs atleast sixty five percent
and eighty percent of its total manpower employment from amongst the bonafide
Himachalis, respectively. However, in the self -employed ventures where the owner is
running the unit without employing any manpower, employment condition shall not be
applicable.

The unit should be registered under the registration scheme of Government of India in
case of Village Industry, tiny, SSSBE, Small and Ancillary unit and acknowledged/
registered by the Director of Industries in case of unit in medium and large scale sector.

3.

The incentives are provided under the discretionary powers of the State Government.

Allotment of Land

Land/shed in industrial areas/estates developed/ acquired and transferred to the

Department of Industries shall be allotted by the Department of Industries on lease
hold/rental basis for the establishment of industrial unit(s) at subsidised premium/rent in
industrially backward areas and reasonable premium/ rent in industrially developing
areas, to be fixed by a committee consisting of Secretary Industries to the Government of
H.P., Director of Industries & M.D.,HPSIDC. Adequate land appropriately located may be
set apart for development of social infrastructure and public utilities such as banks, post
offices, educational institutions, medical institutions, recreational facilities, shops etc on
commercial basis. For the purpose of industrial housing for workers, land can be provided
at concessional rate. A separate set of guidelines shall be issued by the Government for
allotment of land for these purposes. Land in industrial areas shall be allotted on lease
hold basis by the Director of Industries, or any other officer authorised by him/her, for a
period of 95 years subject to a maximum area of 10,000 sq.meters and in case of area
exceeding 10,000 sq.meters, the same shall be allotted with the prior approval of the
Secretary (Industries) to the government of Himachal Pradesh. 30% of the premium of
land shall be payable at the time of allotment and balance in 5 equal annual instalments.
The interest chargeable on delayed payment would be 18% or as fixed by the
Government from time to time. However, if any party intends to make the entire payment
in lump sum it may be accepted by commuting the instalments but the terms and
conditions of the allotment shall remain the same.

The application for allotment of plot(s)/ shed(s) for industrial purposes shall be made to
the concerned General Manager, District Industries Centre/ member Secretary, Single
Window Agency on a prescribed form along with earnest money in the shape of a bank
draft. The earnest money shall be equivalent to 10% of the premium of land in the case of
plot and Rs.10,000 in case of built up shed, which shall be refundable within three months
in the event of non allotment of plot/shed.

The land/shed for industrial purposes shall be allotted by a committee constituted for the
purpose on first come first serve basis unless the committee for reasons to be recorded in
writing decides otherwise. However, land for units in priority sector may be allotted on out
of turn basis. The plot/shed will be provisionally allotted for a period of two years and
possession handed over to the applicant after entering into an agreement to lease
out/rent out. The allottee shall take steps to set up the unit within the stipulated period of
2 years before a regular lease deed/rent deed is entered into between the Department
and the allottee.

In case an allottee fails to take effective steps for the setting up of the unit within
stipulated period, the provisional allotment shall be canceled and the possession of
plot/shed shall be resumed. The earnest money along with premium /rent paid by
allottee shall be forfeited. The Director of Industries may, however, if satisfied extend
period of the provisional allotment on the merits of each case.

Any plot resumed in industrial areas of Paonta Sahib, Kala Amb, Chambaghat, Baddi
and Barotiwala shall be re-allotted through open auction/inviting bids from general public
for industrial purposes.

Sales Tax Concessions

the
the
the
the

4.

Village Industries/Tiny units: New Village industries with fixed capital investment upto
Rs.10 lakh and financed wholly by HPKVIB/ KVIC shall be exempted from payment of
sales tax for a period of 8 years in industrially backward areas and in priority sector, and
for a period of 5 years for units in industrially developing areas. In respect of other new
village industries and tiny units, sales tax shall be leviable at a concessional rate of 25%
of the applicable rate on the sale of products upto Rs.60.00 lakh per annum for a period
of 8 years in industrially backward areas & in priority sector; and up to sales turn over of
Rs. 45 lakh per annum for a period of 5 years in industrially developing areas. This
concession will not be admissible to the produce of breweries/distilleries, non
fruit/vegetable based wineries and bottling plants (both for Country Liquor and Indian
Made Foreign Liquor).

Units in SSI/Medium and Large Sector. In case of units in SSI/medium and large
sectors, deferment of General Sales Tax for a period of 8 years on the goods other than
produce of breweries, distilleries, non-fruit/vegetable based wineries and bottling plants
(both for Country Liquor and Indian Made Foreign Liquor) manufactured by the new
industrial units set up in the industrially backward areas and in priority sector; and for a
period of 5 years for units in industrially developing areas subject to furnishing of
security/bank guarantee to the satisfaction of the Excise & Taxation Department of
Government of Himachal Pradesh. The tax deferment during first 8 years or 5 years as
the case may be shall become due for payment after a period of 5 years from its
collection. This means that the tax collected in the first year shall be payable in the 6th
year, second year in the 7th year and so on.

The eligible existing units shall have an option either to opt for the General Sales Tax
Concessions as provided in above for the unexpired period and subject to their continuing
eligibility under the previously applicable rules or to continue to avail these concessions
as per those rules. Such an option shall have to be exercised by the 31st July, 1999
failing which they shall be covered by the previously applicable rules.

The GST on the raw material, processing and packaging material except timber, shale
and limestone used by the existing and new industrial unit(s) for captive manufacturing
within the State shall be leviable at a concessional rate of 1% upto 31-03-2009.

Central Sales tax at a concessional rate of 1% shall be leviable on the goods

manufactured by new and existing industrial units except produce of breweries,
distilleries, non-fruit/vegetable wineries and bottling plant (both for country liquor and
Indian Made Foreign Liquor) upto 31-03-2009.

Period of these concessions in case of new industrial unit(s) shall commence from the
date of commencement of commercial production or from the date of notification issued
by the Department of Excise & Taxation in this regard, whichever is later. In case of
existing unit(s), these concessions would be available from the appointed day or from the
date of notification, whichever is later.

Power Concessions

New industrial unit(s) in priority sector shall be exempted from payment of electricity
duty for a period of 8 years in the industrially backward areas and for 5 years in
industrially developing areas. Period of this concession will commence from the date of
commencement of commercial production or from the date of notification of Department
of MPP and Power, whichever is later. The existing unit(s) availing this incentive shall
continue to avail the same under the previous rules for the unexpired period of its/their
eligibility.

The existing eligible units availing power tariff freeze subject to their continuing eligibility
under the previously applicable rules shall continue to avail the concession as per those
rules.

No electricity duty will be charged from any industrial unit, new or existing, on the power
generated from its captive power generation set(s)/ hydel plant(s).

The industrial units employing atleast 50 workers may be permitted on case to case
basis to build residential complexes for industrial workers within the campus. The rate of
power tariff to such residential complexes both new and existing shall be as applicable to
domestic consumers

5.

Interest Subsidy
Subsidy in the rate of interest on term loan taken by tiny and SSI units from financial
institution(s) shall be given @ 4% subject to a ceiling of Rs.2.00 lakh per unit per year for
priority sector units set up in industrially backward areas for a period of 6 years provided
that the unit pays a minimum of 8% interest after availing interest subsidy. In case rate of
interest after subsidy falls below 8%, the rate of subsidy shall be reduced accordingly.
This concession shall also be admissible on term loan taken from financial institution for
expansion/ diversification. The subsidy shall be disbursed through the concerned financial
institution. This subsidy shall not be admissible on defaulted/rescheduled installment(s)
and the period of default shall be counted for determining the period of eligibility.
The existing unit(s), availing this incentive irrespective of their status, shall have an option
either to opt for this concession under these rules for the unexpired period and subject to
their continuing eligibility under the previously applicable rules or to continue to avail this
concession as per those rules. Such an option shall have to be exercised by 31st July,
1999 failing which they shall be covered by the previously applicable rules.

6.

Capital Investment Subsidy

Tiny units in priority sector and coming into commercial production after the appointed date in
industrially backward areas shall be given a capital investment subsidy @ 10% of fixed capital
investment subject to a ceiling of Rs.2.5 lakh per unit. This subsidy will be admissible on the
creation of new assets only. The sanction/ disbursement shall be governed by the erstwhile
C.I.S. Manual.

7.

Price Preference
The products of tiny/SSI units manufactured in H.P. may be given a price preference of upto
15% in the process of finalisation of rate contract(s) in respect of purchases affected by the
Government Departments, Semi-Government Organisations, Corporations and Boards. For
large and medium industries, the price preference may be upto 3%.

8.

Subsidy on the cost of preparation of feasibility report

New industrial unit(s) in tiny and small scale sector will be eligible for subsidy on the cost of
preparation of feasibility report @ 50% of its cost subject to a ceiling of Rs.10,000/- in case of
tiny unit(s) and Rs.20,000/- for SSI unit(s).

9.

Facility for
control devices

quality,

productivity,

technical

upgradation

&

Pollution

Government may provide common effluent treatment plant(s)/ pollution control devices and
common testing facilities in Industrial Areas/ Estates/ Growth Centres or in a cluster of
industries as a part of infrastructure.
10.

Special Package of Incentives to Fruit, Vegetable and Maize Based units

The fruit, vegetable and maize based units consuming atleast 60% of their total consumption
from local produce per annum and located in industrially backward areas (except produce of
breweries, distilleries, non-fruit/ vegetable wineries and bottling plant both for country liquor
and Indian Made foreign liquor), shall be eligible for the following incentives.
Land/shed shall be allotted on out of turn basis at a nominal price /rent to be determined
by the Government from time to time. While considering allotment, such unit(s) shall get
precedence even over units in priority sector.
GST exemption for a period of 10 years will be admissible to new industrial units.
The GST on the raw material, processing and packaging material except timber, shale
and limestone used by the existing and new industrial unit(s) for captive manufacturing
within the State shall be leviable at a concessional rate of 1% upto 31-03-2009.

Central Sales Tax at a concessional rate of 1% shall be leviable on the goods

manufactured by new & existing industrial units upto 31-03-2009.

Such new industrial unit(s) shall be exempted from the payment of electricity duty for a
period of 10 years. No electricity duty shall be charged on the power generated from
D.G.set/ hydel plant.

 Such new industrial unit(s) shall be exempted from the payment of State excise duty for a
period of 7 years.
Period of these concessions as provided in Rule 8.2 to 8.6 above will be available to new
industrial unit(s) from the date of commencement of commercial production or from the
date of notification issued in this regard, whichever is later. In case of existing unit(s),
these concessions, as eligible, would be available from the appointed day or the date of
notification, whichever is later.
Such new industrial unit(s) shall be eligible for a subsidy of 10% in the rate of interest on
term loan for a period of 6 years subject to a ceiling of Rs.10.00 lakh p.a., provided that
the unit pays a minimum of 6% interest after availing the interest subsidy. In case the rate
of interest after a subsidy of 10% falls below 6%, the rate of subsidy shall be reduced
accordingly. This subsidy shall not be admissible on defaulted/rescheduled installment(s)
and the period of default shall be counted for determining the period of eligibility.
Such new industrial unit(s) will be entitled to an investment subsidy @ 25% on cost of
plant and machinery installed subject to a ceiling of Rs. 25.00 lakh. The
sanction/disbursement shall be governed by erstwhile C.I.S. Manual.
The incentives of price preference and subsidy on the cost of preparation of feasibility
report as provided under rule 7.5 and 7.6 shall also be available to such unit(s).

11

The existing units under this category, unless specifically provided otherwise, shall
continue to be governed by the previously applicable rules.

Incentives Available to Units in Tax Free Zone

Any new industrial unit(s) except breweries, distilleries, non-fruit/vegetable based wineries
and bottling plants (both for Country Liquor and Indian Made Foreign Liquor) in the tribal
areas of the State, as notified from time to time, shall be exempted from payment of any State
taxes and duties (excluding levies in the shape of cess, fees, royalties etc.) for a period of 10
years from the date of commencement of commercial production or the date of notification by
the concerned department(s), whichever is later. As regards other incentives, unit(s) in these
areas shall be treated at par with the unit(s) in industrially backward areas.
Note:- The quantum & duration of package of incentives, concessions & facilities to various
categories of units are given in Annexure-II to V to these Rules.

12.

Project Specific Special Package :

Notwithstanding anything contained thereinbefore, the Government may grant project specific
special package to any new medium and large industrial unit proposed to be set up in the
State which has potential for substantial employment generation, both direct and indirect,
ancillarisation etc. on case to case basis, in the public interest.