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Parboil Rice PDF
Parboil Rice PDF
Table of Contents
EXECUTIVE SUMMARY .........................................................................................................................................3
1. INTRODUCTION ..............................................................................................................................................4
ANNEX A ................................................................................................................................................................... 19
ANNEX B ................................................................................................................................................................... 20
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
Executive Summary
Rice is the most important staple food for a large part of the world population. According to FAO
Statistics of 2006, Rice is the grain with the second highest worldwide production, after maize. Its annual
yield worldwide is approximately 535 million tons. Fifty countries produce rice, with China and India
supporting 50% of total production. Southeast Asian countries separately support an annual production
rate of 23 million metric tons of which they export very little.
Pakistan already enjoys huge brand recognition and customer franchise in international rice markets,
both in basmati and non-basmati categories. Sindh produces about 30% of total rice production in
Pakistan and is the main producer of non basmati rice. Non-Basmati varieties of Sindh, namely IRRI-6
and IRRI-9 are in great demand internationally mainly from Africa and Far East Asia. Rice processing
facility in one of the rice producing areas of Sindh with the capability of producing parboil rice is a
perfect recipe for a viable agribusiness venture.
This pre-feasibility study aims at providing critical information on business viability of putting up a
Parboil Rice Processing Plant in Sindh. Among other things, nature of the opportunity; ideal location for
setting up the facility; estimated costs; potential returns; availability of human resource etc. are
presented in an objective manner. The information contained in this paper provides a sound base for
interested investors to build upon it a more detailed and comprehensive Business Plan.
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1. Introduction
Parboiled rice is rice that has been boiled in the husk. Parboiling makes rice easier to process by hand,
improves its nutritional profile, and changes its texture. Polishing rice by hand, that is, removing
the bran layer is easier if the rice has been parboiled. It is, however, somewhat more difficult to process
mechanically. The bran of parboiled rice is somewhat oily, and tends to clog machinery. Most parboiled
rice is milled in the same way as white rice
Parboiling rice drives nutrients, especially thiamine, from the bran into the grain, so that parboiled white
rice is 80% nutritionally similar to brown rice. Because of this, parboiling was adopted by North
American rice growers in the early 20th century.
The starches in parboiled rice become gelatinized, making it harder and glassier than other rice.
Parboiled rice takes more time to cook, and the cooked rice is firmer and less sticky. In North America,
parboiled rice is generally partially or fully precooked by the processor.
Parboiling is a hydrothermal treatment of paddy In other words parboiling means precooking of rice
within the husk. Paddy is first hydrated, then heated to cook the rice and finally dried.
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
2. Market Analysis
Rice is the most widely consumed staple food at the global level and is an excellent source of compound
carbohydrates. Pakistan is the 11th largest producer and 4th largest rice exporter. Pakistan produced 6.22
million tons of rice over an area of around 5 million acres. Rice exports remained the second largest
foreign exchange earner for the country after cotton. Sindh province produces about 1.461 million tons
from an area of 0.544 million hectors with an average yield of 2.686 tonnes rice per hector. The main
varieties of rice grown in Sindh are Basmati, Irri6 and Irri9. The fine type variety has different names in
Sindh such as Roosi, GM Basmati, Kernel, Supper, Dubai or Basmati-2000. D-98 Basmati Rice from
Sindh, is also known to the world as ‘Sindhi Basmati’.
Nature has blessed Sindh with ideal weather and soil conditions to produce multiple crops in huge
volumes. Sindh is the major producer of non basmati rice in Pakistan and produces 30% of country’s
total rice production. Being the main production base of non-basmati rice Sindh is the most logical
choice for setting up a parboiled rice facility.
Major Rice growing areas in Sindh are Larkana, Shikarpur, Qambar, Shadadkot, Badin, Thatta and
Jacobabad. Like in all other agriculture produce Sindh has a unique advantage of early harvest and hence
the rice processing facilities in Sindh always have the advantage of receiving early crop.
The below charts show area wise rice cultivation and production pattern in Sindh:
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
4.6% Hyderabad
Jamshoro
Nawabshah
12.7% Shikarpur
17.3%
Kamber-Shahdatkot
Larkana
7.9% Thatta
16.1% Jacobabad
Badin
12.7% Nawabshah
17.3%
Shikarpur
Kamber-Shahdatkot
7.9% Larkana
16.1% Thatta
Jacobabad
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
The recent exports of rice from Pakistan are almost US $2.0 billion dollars which is around 10% of total
exports of Pakistan. The domestic demand of rice in Pakistan is 2.2 million tonnes which makes 4 million
ton of rice available for exports. Africa is the major rice importer of the world with a total import of 1.4
million tonnes per annum. Irri6 rice of Sindh widely been exported to African countries. Pakistan exports
80 per cent super basmati rice to European Union. The average price of Irri6 is Rs. 32,000 per ton in
Pakistan and export price is US$625 per metric ton. The export price of Parboiled rice is US$ 1,150 per
metric ton.
After Thailand, Vietnam and USA Pakistan was the 4th largest exporter of rice in the world in 2009. The
total rice export of Pakistan in year 2009 stood 3.2 million tons. In the recent past, Pakistan has been
successfully producing rice substantially in excess to the local demand. This strong production capability
significantly contributed towards Pakistan’s ability to increase its share in the world market. Another
very important world trend supporting Pakistan’s ability to increase its export market share in rice was
the decision of major rice producing countries like India and China to restrict their exports to fulfill their
huge domestic demand.
As rice exports crossed $2 billion mark this year, the sector established itself as the country’s second
largest export earner for the country. Rice export shows a 260 per cent growth in value over the last six
years or an annual growth rate of 25 per cent since 2002-2003.
The global conditions whereby major rice consuming countries are building their rice stocks and the fact
that Pakistan’s main competitors are not actively supplying offer a unique opportunity to Pakistani
exporters to quickly increase their share of the international markets. Rice Export Association of
Pakistan is optimistic that export of the commodity would exceed to $3 billion by 2013.
China, one of the world's biggest rice markets can be exploited by aggressive and intelligent marketing
efforts. Another huge potential market is South Africa where Pakistan has paltry share of only 3 per cent
out of the total market of 10 million tons. Iran is another market for rice which must be thoroughly
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
exploited through all available channels. Russia imports 700,000 tonnes rice annually and Pakistani rice
has a lot of potential for rice export to this country.
Following charts show the major buyers and sellers in the world rice market.
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
3. The Project
Human beings cannot consume paddy in its raw form. It needs to by suitably processed for obtaining
rice. Rice milling is the process, which helps in removal of hulls and barns from paddy grains to produce
polished rice. Rice forms the basic primary processed product obtained from paddy and this is further
processed for obtaining various secondary and tertiary products.
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
7. Whitening: Removing all or part of the bran layer and germ from brown Rice.
8. Polishing: Improving the appearance of milled rice by removing the remaining bran particles and by
Polishing the exterior of the milled kernel.
9. Length Grading: Separating small and large broken from head rice.
10. Blending: Mixing head rice with predetermined amount of broken, as required by the customer.
11. Weighing and Bagging: Preparing the milled rice for transport to the Customer
PRODUCTION PROCESS
Any of the above mentioned rice production centers of Sindh would be ideal for the proposed venture.
The cost of land associated for rice cultivation and production will be at the cost of Rs. 5,000,000/acre.
Both unskilled and skilled workforce would be required for the proposed venture. Sindh has sufficient
supply of both types of workforce and rice processing is already an established industry and therefore,
finding experienced workforce for any new setup would be very easy.
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
Equity Project
Internal Rate of Return (IRR) 73% 55%
Modified Internal Rate of Return (MIRR) 35% 27%
Payback Period (yrs) 1.95 2.25
Net Present Value (NPV) @ 25% & 19% 71,907,494 105,619,298
PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
Looking at the current market trends lending of up to 50% could be available on these projects. A list of
financial institutions willing to facilitate such projects in given in Annexure B.
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
INCOME STATEMENT
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 121,586,384 156,408,867 176,984,190 199,226,024 223,249,581
Cost of goods sold (72,398,157) (97,713,514) (110,841,798) (125,147,410) (140,729,912)
Gross Profit 49,188,227 58,695,352 66,142,392 74,078,614 82,519,669
General administration & selling expenses
Administration expense (2,224,800) (2,441,410) (2,679,109) (2,939,951) (3,226,188)
Rental expense - - -
- -
Utilities expense (736,000) (809,600) (979,616) (1,303,869) (1,908,994)
Travelling & Comm. expense (phone, fax,
(280,800) (308,139) (338,140) (371,062) (407,189)
etc.)
Office vehicles running expense (123,473) (135,820) (149,402) (164,342) (180,776)
Office expenses (stationary, etc.) (43,200) (47,406) (52,022) (57,086) (62,644)
Promotional expense (121,586) (156,409) (176,984) (199,226) (223,250)
Insurance expense (324,783) (288,189) (251,595) (215,001) (178,407)
Professional fees (legal, audit, etc.) (121,586) (156,409) (176,984) (199,226) (223,250)
Depreciation expense (3,851,060) (3,851,060) (3,851,060) (3,851,060) (3,851,060)
Amortization expense (522,518) (522,518) (522,518) (522,518) (522,518)
Dividend - - -
- -
Balance carried forward 25,885,504 60,082,192 101,612,608 150,799,020 207,973,689
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
BALANCE SHEET
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current assets
Cash & Bank 2,000,000 4,174,675 30,767,850 60,626,961 97,860,481 138,626,928
Accounts receivable - 9,993,401 11,424,462 13,701,085 15,460,694 17,362,011
Finished goods inventory - 17,242,243 19,613,052 22,177,835 24,950,065 27,944,072
Equipment spare part inventory 46,089 71,421 92,961 120,364 155,138 199,161
Raw material inventory 7,875,000 12,203,297 15,883,700 20,566,043 26,507,665 34,029,564
Pre-paid insurance 324,783 288,189 251,595 215,001 178,407 208,097
Total Current Assets 10,245,872 43,973,226 78,033,619 117,407,288 165,112,449 218,369,833
Fixed assets
Land 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Building/Infrastructure 16,200,000 15,390,000 14,580,000 13,770,000 12,960,000 12,150,000
Machinery & equipment 28,362,500 25,526,250 22,690,000 19,853,750 17,017,500 14,181,250
Furniture & fixtures 320,000 288,000 256,000 224,000 192,000 160,000
Office vehicles 823,150 658,520 493,890 329,260 164,630 1,325,691
Office equipment 81,800 73,620 65,440 57,260 49,080 40,900
Total Fixed Assets 50,787,450 46,936,390 43,085,330 39,234,270 35,383,210 32,857,841
Intangible assets
Pre-operation costs 2,562,591 2,050,073 1,537,555 1,025,036 512,518 -
Legal, licensing, & training costs 100,000 90,000 80,000 70,000 60,000 50,000
Total Intangible Assets 2,662,591 2,140,073 1,617,555 1,095,036 572,518 50,000
TOTAL ASSETS 63,695,913 93,049,689 122,736,504 157,736,595 201,068,177 251,277,675
Liabilities & Shareholders'
Equity
Current liabilities
Accounts payable - 6,245,242 8,376,626 9,704,094 11,214,450 12,940,196
Total Current Liabilities - 6,245,242 8,376,626 9,704,094 11,214,450 12,940,196
Other liabilities
Deferred tax - 2,836,250 2,836,250 2,836,250 2,836,250 2,836,250
Long term debt 36,168,373 30,555,153 23,913,897 16,056,103 8,690,918 -
Total Long Term Liabilities 36,168,373 33,391,403 26,750,147 18,892,353 11,527,168 2,836,250
Shareholders' equity
Paid-up capital 27,527,539 27,527,539 27,527,539 27,527,539 27,527,539 27,527,539
Retained earnings - 25,885,504 60,082,192 101,612,608 150,799,020 207,973,689
Total Equity 27,527,539 53,413,043 87,609,731 129,140,148 178,326,559 235,501,229
TOTAL CAPITAL AND
63,695,913 93,049,689 122,736,504 157,736,595 201,068,177 251,277,675
LIABILITIES
Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
Annex A
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
Annex B
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PRE-FEASIBILITY, PARBOIL RICE PROCESSING VENTURE IN SINDH 2010
Important Contacts
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