1.1.

Overview
Bangladesh is one of the world's top rice-consuming countries. The per capita rice
consumption stood at 196.6 kilograms in FY2016 and 196.3 kilograms in FY2017 (The
University of Arkansas, 2017). Rice is the most important cereal and staple food which
provide more than 70 percent of the total calorie intake in Bangladesh (Zaman, Mishima,
Hisano, & Gergely, 2001). Bangladesh has three seasons of rice production namely Aus
(summer), Aman (winter) and Boro (spring). The aggregated production of Aus (2.6 million
MT), Aman (13.2 million MT) and Boro (18.7 million MT) paddies has been estimated to be
34.5 million metric tons (MT) in FY2016 by using total 11.77 million hectares (HA) of land
(Lagos & Hossain, 2016) which is more than 75 percent of total cropped land (BARC, 2011).

However, after harvesting paddy from the crops field, it needs to be processed for
consumption. There are three stages of rice processing which includes parboiling, drying, and
milling. This process can be conducted both at home and at the rice mill. The small scale
paddy processing is conducted at home for the non-commercial purpose, precisely for the
family consumption. Dheki1 is the main instrument to process paddy after it is parboiled and
dried. Another way of small scale paddy processing is conducted in the village rice mill2 or
small husking mill for the family consumption. Small rice husking machine can also be the
main instrument to process paddy after it is parboiled and dried at home. The large scale of
paddy processing is mainly conducted by the rice mill which is known as a commercial
milling3 center. Generally, two types of commercial mills are available in Bangladesh:
modern or automated rice mill and husking or traditional rice mill. Modern or automatic rice
mills holds out roughly all activities through a mechanical process, including categorization of
rocks & unfilled grains, grain marinating, boiling, drying, milling, polishing & bagging. On
the other hand, traditional commercial mills or Husking mill is the oldest processing method
of paddy. They are often made of wood with few metal components and are often driven by a
single power source through a system of transmissions (Islam, 2014). This study mainly
focuses on commercial milling system of Bangladesh.

Figure 1: Rice Production and Consumption Trend in Bangladesh

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To meet up the objective, this study discusses the recent scenario of rice processing industry
of Bangladesh, along with the capital required and the rules and regulations to follow to
establish and run a rice mill. This study also accentuates other factors like production process,
by- products, seasonal impact and marketing channels. Along with these, this study analyzes
the primary survey data collected from different rice mills. Finally, the problems & prospects
to establish and run a commercial rice mill have also been talked about. However, for a
significant discussion, this study used both primary and secondary data. Secondary data has
been collected from different sources.

In the last two decades, consumption and production of rice increased significantly (Table 1).
At the same time, the commercial rice mills have also increased. Some traditional or husking
mill owners have replaced their mills from husking to modern system. Despite many
problems, the firm owners are making a considerable profit which is influencing people to
invest in this business. However, the main objective of this study is to provide a complete
picture of the commercial rice milling system

1.2. Objective and scope of the project

The purpose of this feasibility study is to establish the need for setting up a rice processing
plant to avail more than 6.18% growth per annum in the sector. Rice is staple food and itis a
growing market and enjoys such comparatively good profitability that it attracts new entrants
from many related industries. This fortunate situation is never-the-less producing some
extremely sharp competition within different rice grades and to become a successful player in
the future, a rice processing plant must ensure cost savings at all levels and implement smart
decision making from a strategic and technological point of view. The competition between
retailer/ wholesaler/ suppliers will become even fiercer in the future, which in turn will drive
development of low cost production.

Rice is the most important food crop of the developing world. It is the staple food of about
half the world’s population. Roughly, 1.60 billion of the world‟s poor depend on rice as
producers or as consumers. On average, rice accounts for nearly half of the food expenses of
poor people and a fifth of their total household expenses. It is well established that the rapid
productive growth of rice resulting from the use of improved varieties, fertilizers, and
irrigation (popularly known as the Green Revolution) increased production and led to a long-
term decline in rice prices. This has been the major factor helping to reduce poverty in Asia
over the past several decades. If the industry does not able to bring product differentiation, to
penetrate its products into new markets and to oblige compliance issues, there may have
change to fall in relative maturity stage later. But that has far reaching effects because of
industry‟s potentialities.

Expansion this is probably of most interest to investors. Industries that have survived the
pioneering stage often offer good opportunities, for the demand for their products and services
are growing more rapidly than the economy as a whole. Growth is rapid but orderly, an
appealing characteristic to investors.

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2.1. Overview
Khan Rice Processing Plant is a renowned, fast growing, leading, well-established
manufacturing industry in Bangladesh. Started its journey in the year 2016 by establish its
foremost project in the name Khan Rice Processing Plant consisting of 96 MT Rice
processing plant in Bangladesh. After vary successful operation of 3 years under dynamic
leadership of Mr. Manikuzzaman Khan, Owner of the company, it‟s began to expand by
adding a fresh Rice Processing Plant namely Khan Rice Processing Plant.

Khan Rice Processing Plant is located in the home district of (birth place) of Mr.
Manikuzzaman Khan at Bipprobelghoria, Noldanga, Natore, under Rajshahi Division,
Bangladesh, 260 kilometer from Hazrat Shahzalal International Airport. This unit was
established in such secluded area because of Mr. Manikuzzaman Khan‟s social commitment
throughout the poor and unemployed community of his neighborhood. By generating such
huge employment in that region he successfully upgrades social economic condition of the
poor and unemployment community.

With interest in rice processing Khan Rice Processing Plant is a brand to trust in
entrepreneurship in Bangladesh. With Operating office and plant at Bipprobelghoria,
Noldanga, Natore, Bangladesh brings forth the experience required to study, analyze, design,
implement and operate a business conglomerate to its optimum level.

Corporate governance is a set of institutional and market-base mechanisms that encourage

controllers of the organization is three-way process involving the board of directors, top
management and the employees. At the core of corporate governance is empowerment at all
level- shareholders, the board and top management. The law applicable to the company is the
land law of Bangladesh.

2.2. Business values

Business values are what support the vision, shape the culture and reflect what the company
values. They are the essence of the company‟s identity- the principles, beliefs or philosophy of
values. Many companies focus mostly on the technical competencies but often forget what is
the underlying competencies that make their companies run smoothly-core values.
Establishing strong business values provides both internal and external advantages to the
company. The business values of Khan Rice Processing Plant are as follows:

 Quality
 Customer Focus
 Fairness
 Transparency
 Continuous Improvement
 Innovation

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2.3. Organization structure
Khan Rice Processing Plant is a sole proprietorship company has registered under the land
law. The registered address of the company is at at Bipprobelghoria, Noldanga, Natore,
Bnagladesh. The plant address is at Plant address at at Bipprobelghoria, Noldanga, Natore,
Bnagladesh. The main entrepreneur is Mr. Manikuzzaman Khan. Lead by the Owner Mr.
Manikuzzaman Khan, General Manager, Production Manager and Sales Manager is structured
to complement our strategy, and reflect our focus on rice processing plant manufacturing and
marketing in entire Bangladesh.

They work together to ensure the Company‟s business units are performing well alongside one
another and contributing to the overall success of the company.

2.4. Management structure

The paramount duty of the owner is to select a General Manager and other senior management
staff in the proper and ethical operation of the organization. The management would identify
and periodically update the qualities and characteristics necessary for an effective General
Manager of the company. With these principles in mind, the Management will periodically
monitor and review the development and progression of potential internal.

Mr. Manikuzzaman Khan sets Khan Rice Processing Plant‟s overall direction and leads the
“KRPP” Management team. He has completed his graduation and after his graduation he has
gained vast experience in manufacturing, sales and marketing in various fields. In 2016 he
started his own business. During the period he gained enough experience and practical
knowledge in this sector. He is focused on building on Khan Rice Processing Plant‟s
strengths and securing future growth for the Company. Since the incorporation and a wealth of
experience in this sector and management Mr. Manikuzzaman Khan has unique role in the
Khan Rice Processing Plant.

2.5. List of the Key personnel’s

The list of the directors and shareholding patterns of the Khan Rice Processing Plant are as
follows;

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Bio-data of Owner

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2.6. Corporate Social Responsibility

Strategy
Khan Rice Processing Plant believes that corporate social responsibility is a fundamental part
of development; this is why we have made it an integral part of who we are and what we do.

In the long term, creating value is only possible if we adopt sustainable social and
environmental actions.

The company has made the strategic choice to link creating value to improving the quality of
life of its employees and the community it operates in.

This approach has long been an intrinsic part of the company, which has always been attentive
to the social, economic and environmental impact of its operations and is explicitly set out in
its mission statement.

Guiding principle
For Khan Rice Processing Plant less is more is a fundamental business approach.

It means looking for the most innovative, creative and original solutions-when planning
activities, as well as when designing and making plans to improve ourselves-to add “more” in
terms of values, products and services “with less” in terms of, for instance, electrical or water
consumption, generation of gases that affect the climate, price/costs and any kind of negative
impact.

It implies seeking maximum efficiency and optimization, paying increasing attention to the
needs and concerns of our clients, consumers and communities.

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3.1. Overview
Bangladesh is one of the world's most densely populated countries, with its people
crammed into a delta of rivers that empties into the Bay of Bengal.

Bangladesh emerged as an independent and sovereign country in 1971 following a nine month
war of liberation. It is one of the largest deltas of the world with a total area of 147,570 sq.
km. With a unique communal harmony, Bangladesh has a population of about 152.51 million,
making it one of the densely populated countries of the world. The majority (over 88%) of the
people are Muslim. Over 98% of the people speak in Bangla. English, however, is widely
spoken. The country is covered with a network of rivers and canals forming a maze of
interconnecting channels. Being an active partner, Bangladesh plays vital role in the
international and regional forum, particularly in the UN, Commonwealth and South Asian
Association of Regional Cooperation (SAARC).

Bangladesh‟s economic performance in 2011-12 has earned global admiration. The GDP
growth in the financial year 2015-2016 is 7.02% and we strongly believe the targeted GDP
growth 7.20% percent shall achieved in the fiscal year 2016-2017. Donor agencies have of
late projected Bangladesh's economic growth at below 6.0 percent this year, attributing the
low growth prospect to weak external and domestic demand, weak infrastructure, and
domestic investment constraints. The macro economy is under serious strains due to large
government subsidy, and mounting budget deficits. Power and energy shortage despite recent
improvements, lack of accountability in administration, regulatory inefficiency, stagnant
investment, and political gridlock have become serious impediments to the country‟s
economic growth.

The challenges for the government will be to properly address these problems. The agriculture
sector may grow well this year based on good crop sector growth, but structural impediments
and the ongoing political unrest may pull down growth in industry and services sectors.
Central bank‟s monetary policy stance has been eased to some extent to encourage private
sector credit growth but access to credit is still limited because of its high cost. Collection of
public revenue has increased but remained below target. NBR‟s tax effort should be
intensified to bridge the revenue gap and achieve the annual revenue target. Likewise, ADP
implementation should be enhanced significantly so that the ADP projects that remained
unimplemented in the first half of the fiscal can be completed in the remaining six months of
the year without, of course, sacrificing the quality of the projects. Exports are recovering well
but export growth is likely to remain weak amid the Euro zone financial crisis, slow economic
growth in USA, and the uncertainty over the continuation of the GSP facilities in the US and
EU markets. Government should take up the GSP issue with all seriousness. Inward
remittances have increased and the inflow of foreign aid has also gone up in the first half of
the current fiscal, but new aid commitment has fallen sharply. FDI inflows have increased, but
only marginally. The appreciation trend of the Taka has continued on the strength of higher
remittance, increased aid flow, and decline in import. Trade deficit has narrowed down, and
the deficits in the current account and the overall balance of payments have turned into
surplus.

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Bangladesh Bank‟s reserve position has improved significantly. There is, however, no reason
to be complacent. The surplus in balance of payments may be wiped out if export growth
remains low but development imports pick up to meet the needs of the economy. The point-to-
point inflation has been on a downward trend since January, 2012 but the general and the food
inflation rates have of late started increasing mainly because of a rise in prices of some food
items. The point-to-point non-food inflation has, however, maintained the downward trend.
This paper contends that prolonged disruptions of economic activity caused by political
violence, blockades and shutdowns may destabilize the economy, pull down the GDP growth
rate, push the inflation rate in the coming days, and prevent reaching the inflation target of 7.5
percent this year.

3.2. General information

Official Name : The People's Republic of Bangladesh

Political system : Parliamentary democracy

Capital name : Dhaka

Time zone : GMT + 6 hours

Major cities : Dhaka, Chittagong, Khulna, Rajshahi, Sylhet, Barisal, Rangpur

Principal rivers : Padma, Meghna, Jamuna, Brahmaputra, Teesta, Surma and

Karnaphuli. (total 310 rivers including tributaries)

Principal industries : Readymade garments, pharmaceuticals, cements, garment

accessories, chemicals, fertilizers, newsprint, leather and
leather goods, paper, sugar, jute, ship building, etc.

Principal exports : Readymade garments, frozen foods (shrimps), leather, leather

products, jute, jute products, tea, ceramic, textile
fabrics, home textile, chemical product, light engineering
products including bi-cycle, etc.

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3.3. Geography
Location : Between 200 34' and 260 38' north latitude and between 880 01'
and 920 41' east longitude.
Boundary : North : India
West : India
South : Bay of Bengal
East : India and Myanmar
Area : 56,977 sq. miles or 147,570 sq. km.
Territorial water : 12 nautical miles Territorial Sea, 200 nautical miles Economic
Zone
Main seasons : Summer (March-May), rainy season (June-September) and
winter (December-February)

Climate variations : Season Temperature Rainfall Relative

maximum minimum humidity
: Pre
32.60C 22.40C 453 mm 74%
monsoon
: Monsoon 31.50C 25.50C 1,733 mm 86%
: Post
30.50C 21.40C 210 mm 80%
monsoon
: Winter 26.50C 13.90C 44 mm 73%
: Annual 30.40C 21.20C 203 mm 78%
:
Principal seasonal Paddy, jute, wheat, tobacco, pulses, oil seeds, spices, vegetables,
crops and fruits jack-fruit, banana, mango, coconut, pineapple etc.

Natural resources : Natural gas, coal, lime, white clay, granite, glass sand

3.4. National demographics

Total population (million) : 152.51

Male (million) : 76.35

Female (million) : 76.16

Annual growth rate : 1.37%

Sex ratio (males per 100 females) : 100.3

Density (per sq km) : 1,015

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3.5. Economy Overview
GDP total : US$195.08 billion (at current prices 2014-2015)
GDP per capita : US$1,466.00 (at current prices 2015-16)
GDP growth rate (%) : 7.05 (at constant prices 2015-16)
Total exports : US$58.38 billion (2015-16)
Total imports : US$42.92 billion (2015-16)
FDI Inflows : US$2.23 billion (2015-2016)
International reserves : US$ 30.14 billion (June 2016)
Currency : BDT (1 US$ = BDT 78.40) (average 2015-16)

3.6. Ports
Sea ports
Sea ports : Chittagong and Mongla
Inland river ports : Dhaka, Chandpur, Barisal, Khulna, Baghabari, Sharishabari,
Narayanganj, Bhairab Bazar, Ashuganj

Airports
International airports : Dhaka, Chittagong and Sylhet
Domestic airports : Chittagong, Jessore, Sylhet, Cox's Bazar, Syedpur, Rajshahi and
Barisal

Land ports : Benapole, Teknaf, Banglabandha, Sonamasjid, Hilli, Darshana,

Birol, Burimari, Tamabil, Haluaghat, Akhaura, Bibirbazar and
Bhomra

3.7. Communications
Radio stations : Dhaka, Chittagong, Rajshahi, Khulna, Rangpur, Sylhet,
Rangamati, Comilla and Thakurgaon, broadcasting programmes
(in addition to Bengali): in English, Hindi, Urdu, Arabic and
Nepali.
Television stations : Dhaka, Chittagong.
Relay stations : Chittagong, Sylhet, Khulna, Natore, Mymensingh, Rangpur,
Noakhali, Satkhira, Cox's Bazar, Rangamati and Thakurgaon.
Television channels : Terrestrial: BTV
Satellite: BTV World, Channel-I, NTV, ATN Bangla, Bangla
Vision, Boishakhi TV, Islamic TV, Desh TV, ETV, My TV,
Diganta TV, RTV.
Daily Newspaper : Daily ProthomAlo, Daily Ittefaq, Daily KalerKontha, Daily
Janokantho, Daily Jugantor, Daily BhorerKagoj, Daily Star,
Daily Independent, Daily Financial Express, Daily News Today
etc.

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4.1. Overview
Global production forecast upgraded by 2.1 million tonnes. With harvests of main paddy crops
drawing to a close in northern-hemisphere producers, 1 FAO has raised its October forecast of
world paddy production in 2017 by 2.1 million tonnes to 756.7 million tonnes (502.2 million
tonnes, milled basis). Evidence of greater plantings and favourable yield outcomes also
boosted the outlook for Pakistan, the Philippines and Sierra Leone. These changes more than
offset various downward revisions, the largest of which concerning Bangladesh, as
Government assessments of the country‟s main (Boro) harvest pointed to larger than earlier
anticipated damages to April flash floods.

The outlook is less favourable elsewhere in the continent, especially for South Asian
producers that experienced a series of weather setbacks. The largest absolute output fall is
expected to concern Bangladesh, following losses incurred to three rounds of floods since
April. Output in the country is put at five-year low of 50.8 million tonnes (33.9 million tonnes,
milled basis), 2 % below the already subdued 2016 outcome.

Global Rice Market Summary

2015-16 2016-17 2017-18 2017-18

est. f‟cast. var.
Million Tonnes, Milled Eq. %

Production 491 501.2 502.2 0.2

Supply 703.8 712 718.4 0.9
Utilization 492.5 497.9 503.5 1.1
Food use 395.6 400.9 406.7 1.4
Feed use 18.2 17.8 17.5 -1.7
Other uses 78.7 79.2 79.4 0.1
Trade 41.5 46.2 45.8 -0.7
Ending stocks 167.1 168.61 70.5 1.1

The outlook is more subdued elsewhere, especially for South Asian producers that
experienced a series of weather setbacks. This was namely the case of Bangladesh, Nepal
and Sri Lanka and, to a lesser extent, India.

Afghanistan, the Democratic People‟s Republic of Korea, the Republic of Korea, Japan,
Turkey and Viet Nam are all similarly set to face production declines this season. Following a
1.2 million tonne upward revision, world trade in rice in calendar 2017 is now expectedto
stage an 11% annual rebound to an all-time record of 46.2 million tonnes.

Bangladesh would account for much of Asia‟s import revision and the region‟s expected
import increase, seeing deliveries climb by 2.1 million tonnes year-on-year, in the aftermath
of output losses to multiple floods and spikes in local quotations.

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Production in Asia is now forecast to fall 550,000 tonnes below the 2016 bumper harvest to
452.5 million tonnes. At the revised level of 756.7 million tonnes, global paddy production
would surpass the 2016 alltime high by a small margin of 0.2%. From a regional perspective,
the comparatively stable outlook mirrors prospects of only modest output growth in Asia,
where uneven rainfall patterns look set to temper area expansions promoted by continued state
assistance and positive margins. Put together, countries in Asia are seen producing 684.2
million tonnes in 2017, up 1.4 million tonnes from the 2016 record. The largest absolute
expansions in the region are expected to take place in China (Mainland), Indonesia, the
Philippines and Thailand, but Cambodia, the Islamic Republic of Iran, Iraq, the Lao People‟s
Democratic Republic, Malaysia, Myanmar, Pakistan and Timor Leste are all set to gather
larger crops.

The rice milling or processing sector in Bangladesh is undergoing a revolution. In recent

years, significant numbers of people are not using Dheki for the paddy processing. This place
has been occupied by the machines. However, in recent years, per capita income of people in
Bangladesh has increased significantly. Due to rise in the income levels, people now prefer
processed rice, which is less costly, looks glossy, takes less time to cook, is free from stones &
dead rice, and has longer shelf life. To match with the demand of the people, new automatic
rice mills are being set up at a mounting rate, increasing competition for thousands of small
and medium husking mills. Automatic rice mills may have an impact on the performance of
the rice selling system. On the other hand, many husking mills are withdrawing which is
decreasing the market share for the small millers. Over the previous decade, several hundred
automatic and semi-automatic rice mills have been found in different rice producing regions
of Bangladesh. Naogaon, Chapainawabganj, Dinajpur, Kushtia and Noapara of Jessore are
some districts that have involved investment in establishing large automatic rice mills. More
investments are coming up for placing new auto rice mills (The Daily Star, 2011).

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In 2005, around 500 automatic and semi-automatic rice mills together with 17000 husking
mills have been in operations which are also involved in parboiling, drying and crushing
paddy bought from farmers. Of these mills, more than 350 operators have their own brand rice
in the market. Bangladesh Auto, semi-auto and Husking Mills Association has around 17,000
members. These mills process and market at least 60 percent or three crore tons of the five
crore tons of paddy produced a year in the country. The farmer keeps the rest of the
production for their own consumption according to analyst and millers. In a year, the market
for milling and processing of rice stands at around Taka 50,000 crore (The Daily Star, 2015).
According to the provisional data by the Bangladesh Bureau of Statistics (BBS), it has been
reported that in FY15, the production of milled rice reached a record high of around 34.708
million tons, a little up from approximately 34.41 million tons in FY14 (Rice Outlook, 2015).

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4.2. Present Scenario of the Rice Processing Industry:
Due to rise in income levels, people now prefer processed rice,which is less costly, looks
glossy, takes less time to cook, is freefrom stones & dead rice, and has longer shelf life. To
match with thedemand of the people, the rice-processing sector in Bangladesh isundergoing a
change. New automatic rice mills are being set up at agrowing rate. Over the last decade,
several hundred automatic andsemi-automatic rice mills commenced, in various rice
producingzones. Naogaon, Chapainawabganj, Dinajpur, Kushtia and Noaparaof Jessore are
some districts that have attracted investment to setup big automatic rice mills. The demand for
automated rice millsbecoming larger because it ensures better quality. Presently, there
are approximately 16,400 chatals, 420 semi-automatic rice mills andless than 400 fully
automatic rice mills operating in Bangladesh. In2005, there were only 200 semi-automatic and
automatic rice mills.Automated rice mills and semi-automated rice mills can processfive times
more rice than traditional rice processing mill at a certaintime that acts as a motivation for the
investment in the automatedrice mills.

The rice milling or processing sector in Bangladesh is undergoing a revolution. In recent

years, significant numbers of people are not using Dheki for the paddy processing. This place
has been occupied by the machines. However, in recent years, per capita income of people in
Bangladesh has increased significantly. Due to rise in the income levels, people now prefer
processed rice, which is less costly, looks glossy, takes less time to cook, is free from stones &
dead rice, and has longer shelf life. To match with the demand of the people, new automatic
rice mills are being set up at a mounting rate, increasing competition for thousands of small
and medium husking mills. Automatic rice mills may have an impact on the performance of
the rice selling system. On the other hand, many husking mills are withdrawing which is
decreasing the market share for the small millers. Over the previous decade, several hundred
automatic and semi- automatic rice mills have been found in different rice producing regions
of Bangladesh. Naogaon, Chapainawabganj, Dinajpur, Kushtia and Noapara of Jessore are
some districts that have involved investment in establishing large automatic rice mills. More
investments are coming up for placing new auto rice mills (The Daily Star, 2011). In 2005,
around 500 automatic and semi-automatic rice mills together with 17000 husking mills have
been in operations which are also involved in parboiling, drying and crushing paddy bought
from farmers. Of these mills, more than 350 operators have their own brand rice in the market.
Bangladesh Auto, semi-auto and Husking Mills Association has around 17,000 members.
These mills process and market at least 60 percent or three crore tons of the five crore tons of
paddy produced a year in the country. The farmer keeps the rest of the production for their
own consumption according to analyst and millers. In a year, the market for milling and
processing of rice stands at around Taka 50,000 crore (The Daily Star, 2015). According to
the provisional data by the Bangladesh Bureau of Statistics (BBS), it has been reported that in
FY15, the production of milled rice reached a record high of around 34.708 million tons, a
little up from approximately 34.41 million tons in FY14 (Rice Outlook, 2015).

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4.3. Legal Issues:
Before setting up a rice mill, the entrepreneur needs to acquire necessary approval or licenses
which are required as per regulations from the relevant authorities relating to a range of Acts
and rules made thereunder which gives the clearance of establishing the rice mill.

a) License from Ministry of Land Office: The initial steps require a permit for
establishing the industry.

b) Local Chairman Trade License: Trade license is required before starting any business.

c) Ministry of Food License (Upazila Food Controller, District Food Controller): Rice
mill set up requires a license to be acquired for manufacturing rice or food items.

d) Approval from Ministry of Power: The electricity or power supply is very important in
the manufacturing of rice especially for the auto rice mills. The ministry of power
needs to be informed about the quantity and the power supply required. The ministry
would provide the approval and power supply as required.

e) Ministry of Environment and Forests Approval: Rice mill emits husks while
manufacturing of the rice which has proven to have created a health hazard for the
local people living near the mills. So, an environmental certificate has to be collected
which requires following some rules or precautions to be taken that can reduce the
impact. It gives the approval to the mill owners to mill the rice.

f) Fire Service: The mill has to meet up the requirement of safety measures for fire
hazard by taking necessary steps or buying fire extinguishing equipment, etc.

g) Ministry of Labor and Employment: Millers have to abide by all the rules or laws of
labors.

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4.4. Production Process:
The modern rice milling facility comes in various configurations, and the milling components
vary in design and performance. A modern rice mill has three basic stages- the husking stage,
the whitening-polishing stage, and the grading, blending, and packaging stage. In modern rice
mills, many adjustments (e.g. rubber roll clearance, separator bed inclination, feed rates) are
automated for maximum efficiency and ease of operation. The whitener-polishers are
provided with gauges that sense the current load on the motor drives which gives an indication
of the operating pressure on the grain. This provides a more objective means of setting milling
pressures on the grain (Rice Knowledge Bank, 2017). However, Table-3 signifies the modern
rice milling processes.

Table 3: The Modern Rice Milling Process

Stage Function

Pre-cleaning Removing all impurities and unfilled grains from the paddy.
Husking Removing the husk from the paddy.
Husk Aspiration Separating the husk from the brown rice/unhusked paddy.
Paddy separation Separating the unhusked paddy from the brown rice.
De-stoning Separating small stones from the brown rice.
Whitening Removing all or part of the bran layer and germ from the brown rice.
Improving the appearance of milled rice by removing remaining bran
Polishing
particles and by polishing the exterior of the milled kernel.

Sifting Separating small impurities or chips from the milled rice.

Length grading Separating small and large broken from the head rice.
Mix head rice with a predetermined amount of broken, as required by the
Blending
customers.
Weighing and
Preparing milled rice for transport to the customer.
bagging

Source: Rice Knowledge Bank

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The production process of a modern rice mill follows different shapes. The flow diagram
below (Figure-2) represents the configuration and flow in a typical modern rice mill.

Figure 2: Auto Rice Milling Flow Chart

Source: Rice Knowledge Bank

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According to the Rice Knowledge Bank the description of the flow of materials and processes
are given below:

a) paddy is dumped in the intake pit feeding the pre-cleaner A - straw, chaff and empty
grains are removed
b) pre-cleaned paddy moves to the rubber roll husker: B - husk removed by the aspirator
c) mixture of brown rice and unhusked paddy moves to the separator 4 - unhusked paddy
is separated and returned to the rubber roll husker 5 - brown rice moves to the de-
stoner
C - small stones, mud balls etc. removed by de-stoner
6 - de-stoned, brown rice moves to the 1st stage (abrasive) whitener 7 - partially milled
rice moves to the 2nd stage (friction) whitener
D - Coarse (from 1st whitener) and fine (from 2nd whitener) bran removed from the
rice grain during the whitening process
8 - milled rice moves to the sifter
E - Small broken/brewer‟s rice removed by the sifter
9a - (for simple rice mill) ungraded, milled rice moves to bagging station
9b - (for more sophisticated mill) milled rice moves to the polisher1 10 - Polished rice,
will move to length grader
11 - Head rice moves to head rice bin 12 - Broken rice move to broken rice bin
13 - Pre-selected amount of head rice and broken rice move to blending station 14 -
Custom-made blend of head rice and broken rice moves to bagging station 15 -
Bagged Rice moves to the market

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4.5. Production process of Husking Mills:
The production process of a husking mill also follows different stages like automatic rice mill
and most of the works of a husking mill is conducted manually. The Figure-3 shows the flow
diagram of a typical husking mill.

Figure 3: Husking Mill Flow Chart

After harvesting, the crops are brought for threshing to separate the grains from the straws. It
can be done through machines or manually by farmers. Next step is cleaning. Cleaning grains
after harvesting is important as it removes unwanted materials from the grains. It is important
to dry rice grains as soon as possible after cleaning (ideally within 24 hours) (RKB). Farmers
dry grains manually under the sun in the chatal or open field. Then, farmers boil rice grain.
Then again the farmers dry the boiled grains under the sun. The last process includes milling,
sorting (de-stoning) and packaging of the milled rice

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4.6. Marketing Channel:
Marketing channel or distribution channel is described as a set of interdependent groups that
help to transfer the ownership of goods or services from the producer to the consumers.
Agricultural products move from farmers to ultimate customers through various market
intermediaries that operate in the marketing system and marketing efficiency.

The marketing channels of the rice mills are delineated in Figure 4. Generally, four groups are
involved in the channel for milled rice- producers, aratdar/bazaar, mill, wholesalers /retailers.
Paddy producer sell their paddy to nearby bazaar or hat. Then local aratdar purchases the
paddy from bazaar or hat. Sometimes local aratdar also buy paddy from the producers and sell
it to the millers. The rice millers can also buy paddy directly from producers. Then millers
process the paddy, after processing they sell it to wholesalers or retailers and sometimes
directly to consumers. The retailers buy rice from wholesalers or directly from the mill and
sell it to final consumers.

4.7. Government policies:

Many government policies are into effect to support rice industry and contribute to its growth.
The regulations in domestic rice industry support farmers and rice manufacturer in terms of
paddy prices and rice release mechanism (CRISIL Research, 2016).

The Government of Bangladesh (GoB) adopted the Seventh Five Year Plan (7FYP/SFYP
2016- 2020), accepted by the end of 2015, focuses on raising rural income and generating
employment opportunities for rural people by developing the crop sub-sector. The 7FYP aims
to diversify climate resilient agricultural production with increased commercialization and
income improvement through technological innovations and usage, and connecting the
farming community with markets, both nationally and internationally (FAO, 2016).
The Government of Bangladesh (GoB) is directly assisting farmers by enhancing the use of
inputs, increasing credit facilities and guaranteeing support prices through public
procurement. The government is helping by increasing fertilizer's subsidies, increasing credit
provision to smallholder farmers, continual price stabilization, and domestic procurement,
promoting food and agricultural diversification, etc. (FAO, 2016). This might have a positive
impact on the price of paddy which will make the price cheaper for the millers.

Although the Government of Bangladesh (GOB) is providing subsidies for various inputs such
as seed and fertilizer (20 kg of urea, 10 kg of Di-Ammonium Phosphate, and 10 kg of Muriate
of Potash) to incentivize farmers to grow more Aus rice, many farmers prefer to grow jute
because of higher profit margins (Lagos & Hossain, 2016). This might lower the amount of
paddy supplied to the millers.

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During the natural calamity, like flood, the paddy prices rise, making it expensive for the
millers which again increase the price of the rice. Thus, it has a negative impact on millers as
well as on the consumers. In times of the flood in 2016, the Ministry of Agriculture reported
0.75 million hectares (HA) of waterlogged cropland and damaged cropland of 1.6 million
hectares (HA). Later in the season, the Aman rice crop has been recovered through replanting,
but the Aus rice affected by flooding has been destroyed. The government of Bangladesh
supported farmers by spending BDT 421 million ($5.32 million) in an agriculture
rehabilitation and incentive program for the Kharif-2 (autumn) and Robi (winter) season. The
government distributed rice seed, rice seedlings, and fertilizer to 0.75 million lower-income
farmers in order to make up for lost crop and to boost production (Hossain & K.Singh, 2016).
This incentive from the government is very much needed as shortage of paddy will cause a
rise in the price of the paddy.

Additionally, the imposing tariff on imported rice also supports the millers of Bangladesh. The
tariff has been raised and other taxes have been added to stop cheaper Indian rice imports that
generally constitute the largest share of the import market. The GOB imposed a 20 percent
import tariff, on December 8 (2015), on husked (brown) rice, fortified rice kernels, and other
semi-milled or wholly milled rice to prevent less expensive imports from competing with
domestic rice (Lagos & Hossain, 2016).

As of June 2, 2016, the tariffs have been increased by GOB amounting from 10 to 25 percent
and 10 percent regulatory duty on rice imports has been removed. The GOB also imposed a
value added tax (VAT) of 15-percent in addition to an advance income tax (AIT) of five
percent, and an additional advanced trade VAT (ATV) of four percent. Rice imports have
been lowered to0.22 MMT for the marketing year (MY) 2015/16 based on the latest customs
data (Hossain & K.Singh, 2016). On its annual budget for FY 2016/17, GOB imposed 25
percent import tariffs on husked (brown) rice, fortified ice kernels, and other semi-milled or
wholly milled rice to protect domestic rice producers. Slowed imports likely will result in
lower ending stocks (Hossain, Bangladesh: Grain and Feed Annual, 2017).

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4.8 Economic analysis:
The dataset used for this analysis has been collected from the primary survey of Emerging
Credit Rating Ltd. This survey was conducted by the rating department for the purpose of
rating in the fiscal year 2016. This study has taken the best 50 samples from the total of 76
rice mills which has been selected on the basis of available information. The samples have
been collected from five Divisions of Bangladesh which are- Chittagong, Dhaka, Khulna,
Rajshahi, Rangpur (Figure-5). However, all firms are locally owned and 84 percent of them
are solely owned and rest of them comprises partnership business and private limited company
(Figure-6). The size of the firms is divided into four categories such as Micro, Small, Medium
and Large (Figure-7). This classification has been made on the basis of the number of
employees4. However, this study has considered contingency table, summary statistics and
Benefit Cost Ratio (BCR) to analyze the Rice Mill Industry.

Figure 5: Distribution of Firms by Division

2%
16%
22%

8%

52%

Chittagong Dhaka Khulna Rajshahi Rangpur

Figure 6: Distribution of Firms by Types of the Organization

10%
6%

84%

Sole Ownership Partnership PrivateLtd.

22 | P a g e
Figure 7: Distribution of Firms by size of the organization;

Large
Medium
4% Micro
18%
38%

Small
40%

The contingency tables5 (Table 9 to 12) of the firms represent the relationship between total
cost, total revenue, total current asset, total fixed asset, total production, total capacity of
production, total insurance amount, total mortgage amount and total loan amount with the size
of the organizations, division, types of the organization and total capacity utilization of
machines which analyzes and compares the results for one variable with the result of another
variable. However, to generate the contingency table, this study has divided the values of total
cost, total revenue, total current asset, total fixed asset, total production, total capacity of
production, total insurance amount, total mortgage amount and total loan amount into four
quartiles6.

Table 9 of the appendix provides a picture of organizations‟ size (Micro, Small, Medium,
Large) by the total cost, total revenue, total current asset, total fixed asset, total production,
total capacity, total insurance, total mortgage and total loan. The table represents the positive
relationship with the firms' size and the different range of the particular variables7. As per the
range of different variables, except for the total fixed asset and total mortgage amount,
maximum micro firms are located in first and second quartile (Q1 and Q2) which is around 70
percent and rest of the firms are situated in third and fourth quartile (Q3 and Q4) Similarly,
small firms are located in every quartile of the variables but most of them are situated in first
to the third quartile except total insurance amount. On the other hand, around 70 percent of the
medium firms are falling in the third and fourth quarter where all large firms are situated in
the fourth quarter of the variables. So the table provides a clear picture of the positive
relationship between two variables suggesting that a change in the size of the firm, from micro
to large, leading to change in the position from lower quarter to upper quarter.

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Table 10 shows the relationship between Divisions (Chittagong, Dhaka, Khulna, Rajshahi, and
Rangpur) and particular variables like assets, loans, production, capacity, revenues, cost, etc.
The table demonstrates that on average more than 65 percent firms in Dhaka Division and 55
percent firms in Rajshahi Division are located in third and fourth quartile. On the other hand,
in Rangpur Division more than 60 percent firms are situated in first two quartiles except for
total production, the total capacity of production and total insurance amount suggesting that
the capacity and production is high with low cost and loan even though insurance cost is high.
But in Khulna Division, firms are scattered in different quartiles. So it can be concluded from
the table that, maximum firms of the Dhaka and Rajshahi Divisions are belonging to the upper
quartile which signifies that the mills in these two Divisions have the highest range of costs,
revenues, production capacity, assets, and loans.

24 | P a g e
4.9. Problems and Prospects:
Prospects:
Bangladesh is the world‟s sixth largest producer of rice (CRI, 2014). The demand of rice is
inelastic in nature as it is the basic food grain of Bangladesh (Alam, 2010-2011). The demand
does not change significantly with price and low sales uncertainties as all rice products are
saleable:

 Stone-feed
 Rice-plain
 Bran-Oil
 Tush-Mill
 Broken Rice-poor people buys them and also used as feed

Moreover, auto rice mills are entitled to rice allotment or incentives from the government
(Bangladesh Grain and Feed Annual, 2013) and even banks provide financial support to the
mills through overdraft limit, working capital limit, etc (IFIC Bank & ICB, 2017). Demand for
rice increases with the population the income is fixed with low leverage risk. All these and
other factors make rice mill industry an area of possibilities and future investments. Other
factors that can enhance the possibilities for this industry include:

 Reducing middlemen‟s cost: Removing intermediary or middlemen‟s commission

cost.
 Low monitoring cost and low cost of labor: Machine intensive mills can reduce the
cost of labor mainly for husking mills.
 Export permission: It could be an opportunity for the manufacturers as there are
surplus productions of rice.
 A good relationship with the suppliers: This means that supply chain management is
flexible and strong.
 Converting to auto rice mill: Automation of the production process to ensure market
survival and continuing credibility.
 Climate: For auto rice mills, the climate factors are omitted in the rice processing.
 Experience: The vast experience of the proprietor can create a strong presence in the
local area to maintain the fixed market share.
 Labor advantage: Labor or technician availability according to area or location.
 Good marketing strategy: Small packaging makes storage easier for consumers. So
they would buy in small quantities as storage is easy and buy again when needed.

25 | P a g e
Problems:
Generally, there is always the threat of intense competition which might create a problem for
the small firms. Moreover, the difference in the mill types can be a problem. For instance, the
process of husking rice mills is lengthy and labor intensive. Even the drying process takes
longer time compared to the automated rice mills. Other factors which can raise a problem
include:

 Technology: Technology can be a threat as labor is reduced every time specialized

machinery are improved or developed.
 By-products not produced by all mills: Husking mill does not have bran.
 Government incentives and tax: There is a lack of incentives for the millers and tax
rate which could have helped boost this industry.
 The price of paddy: Price volatility of paddy due to damage of crops, lower production
of rice, import impact, etc.
 Environmental hazard: „Tush' in the air creates breathing problem for people in that
area. For instance, a similar case happened in Dinajpur. „Environment Clearance
Certificate' is required for production.
 Syndicate: Political syndicate influencing distributional cost
 Climate issue: When there is flood it might destroy the paddy which is a risk for the
rice millers as it might raise the price of the paddy.
 Management and maintenance problem: There might be management issue if the goal
of the managers is not aligned with the firm's goals. Moreover, there can also be a
maintenance issue if the technician is not skilled or trained to operate the machines.
 Farmers switching to other grains: Farmers switching to more profitable crops like
maize, potato, jute, pulses and oilseeds might increase the price for paddy.

The rice mill owners have been interviewed and they informed that their frequency of load
shedding is quite a lot and there are also shortages of labor supply which have a negative
impact on the production. Selling in due is another problem of marketing and distribution.
Besides, setting price floor and ceiling by the government while purchasing paddy from the
farmers and selling rice to the wholesalers and distributors, with deposit 4000-5000 tons of
rice per year to the government warehouse will reduce the revenue generated from sales.
Furthermore, the recent damage in the Haor region is creating negative vibes among the rice
manufacturers. The rice manufacturers are skeptical about the price of paddy which they fear
will rise in the future due to the current loss of paddy in Haor.

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4.10. Rice Mills in Bangladesh

List of rice mills/companies;

a) RASHID GROUP
b) MAJUMDAR GROUP
c) ERFAN GROUP
d) ACI
e) PRAN
f) RANGS
g) CITY GROUP
h) TK GROUP
i) NABIL GROUP
j) KAZI
k) SHAHEB BABU
l)

27 | P a g e
5.1. Overview
Rice cultivation has always been robust in Asian subcontinent, thanks to its low-lying areas
and rain-fed weather. Bangladesh has not been an exception, it is currently the fourth largest
rice producer followed by India, China and Indonesia. There used to be a time when the
picture of a village woman operating dheki ( a wooden device for husking paddy to make rice)
carried the connotation of economic prosperity. Over the time, rice producers adopted new
technology and moved to automated rice mills from traditional ones.

High yield varieties of seed, application of fertilizer, and irrigation have increased yields,
although these inputs also raise the cost of production. The cultivation of rice in Bangladesh
varies according to seasonal changes in the water supply. The largest harvest is aman which is
planted in July/August and harvested in November/December. It accounts for more than half
of the annual production. The crop is sown in the spring through the broadcast method,
matures during the summer rains, and is harvested in the fall. The higher yielding method
involves planting the seeds in special beds and transplanting during the summer monsoon. The
second harvest is aus, involving traditional strains but more often 1 including high yielding,
dwarf varieties. The crop is planted in March/ April, benefits from April and May rains,
matures during in the summer rain, and is harvested during the summer in June/July.

Bangladesh has made notable progress in sustaining respectable growth in rice production,
and this growth in production has originated mostly from the shift from low-yielding
traditional to high yielding modern varieties when irrigation facilities were developed. Paddy
cultivation area rose 3.4% year-on-year to 57.74 lakh hectares during Aman season, exceeding
its initial target of 56 lakh hectares in 2017. The Department of Agricultural Extension (DAE)
targeted cultivating 1.40 crore tonnes of rice in the Aman season this year. The monsoon-
based crop accounted for 40% of the 3.38 crore tonnes of rice produced in fiscal 2016-17.

28 | P a g e
The government of Bangladesh (GOB) procures grain for its public food distribution system
(PFDS). According to the Ministry of Food, as of March 21, 2017 rice stocks in the PFDS
system are estimated at 550,660 MT, which is approximately 47% lower than last year. The
Ministry of Food (MOF) states that as of March 21, 2017, the government had procured
424,458 MT of rice, which is 85% of the target for FY 2016/17. GOB distributes rice to the
poor through various programs and from July 1, 2016 to March 16, 2017 total distribution was
1.1 MMT, which is up 56% year on year. An additional 0.3 MMT of wheat was also
distributed through the PFDS system.

In a recent data of Bangladesh Bureau of Statistics (BBS), it has been reflected that rice
consumption dropped 11% in 5 years (2011-2016). Each person now consumes 367 gram of
rice daily, down from 416 gram in 2010.Partially, the downtrend pattern ascribes to the
spiraling rice price in the market, driven by the flash floods and depleting stocks. Despite
having a record-hit import from India, the price of coarse rice is soaring beyond limit; increase
of BDT5-6 within a week, for instance.

It is proposed to set up a process rice and related products 28800MT per year (8 hours, 2 shift
and 300 days in a year) capacity. This is an economically viable sized factory, although the
market demand justifies a larger capacity, it is suggested that the sponsors interested to work
with a smaller capacity till such time that they are able to think larger unit in future.

The technical assessment of the viability for setting upa 28800 MT per year per year (8 hours
shift and 300 days in a year) capacity manufacturing factory depends on several major factors.
These are discussed below;

29 | P a g e
5.2. Location preference
The said Rice processing plant will be situated at Bipprobelghoria, Noldanga, Natore,
Bangladesh (260 km away from the capital city Dhaka) has been chosen by the entrepreneur
for setting up the factory, the major reasons being the very well communication with capital
city and industrial area.

5.3. Specialized manpower

The factory will require skilled, semi-skilled, technically qualified and experienced
professionals in the area of production, quality control and management. These will include
procurement, processing experts, accounting and finance experts, etc. The presence of a large
number of rice processing plant in this area ensures the availability of a constant supply of
trained and experienced personnel.

5.4. Raw materials

The raw material of rice processing plant is paddy. Bangladesh is self-sufficient of paddy
production. Harvesting of the 2018 aman paddy crop, which accounts for about 40 percent of
the annual output, started in early November and is expected to finalize in January. Production
prospects are favourable reflecting an above average area planted, supported by remunerative
producer prices at planting time and expectations of bumper yields following beneficial
weather conditions. The 2018 boro and minor aus paddy crops were harvested earlier during
the year and official estimates indicate record outputs reflecting the high level of plantings due
to strong domestic prices and bumper yields due to favourable weather conditions. Overall,
the 2018 aggregate paddy output is forecast at a record of 53.6 million tonnes.

The 2018 maize output, harvested in August, is estimated at 3.2 million tonnes, 6 percent
above the previous year‟s record level. The bumper output reflects a record area planted due
to increasing demand in the feed sector and above average yields following the adoption of
new hybrid seed varieties and favourable weather conditions.

The 2018 winter wheat crop, harvested in April, is estimated at 1.3 million tonnes, slightly
below the five-year average due to a contraction in plantings as farmers preferred to shift to
more remunerative crops as paddy.

30 | P a g e
5.5. Utilities
Power
The approximate power consumption of the project is 500kW/h. The project already gets the
permission from the Rural Electrification board. Moreover the organization has purchased one
number of 500 KVA diesel generators as backup power supply. The project will also set up a
sub-station with transformer; HT and LT switch gear, PFI plant and other necessary things.

Water
The organization will set up a deep tube well for ensuring the necessary water supply for the
project. The project will ensure necessary facilities for water supply as well as overhead tank
and water reservoir.

Store and spare

The project need store to keep the raw materials, spares and consumable which will ensure the
operation of the project smoothly.

Repair and maintenance:

The machineries & equipment‟s and the civil structure and the furniture will need repair and
maintenance as and when required.

31 | P a g e
5.6. The Manufacturing Process
Generally, husking mills are labor intensive. So the husking mills require more labors
compared to the automatic rice mill. On an average 30 workers are required for husking mill
and their average wage rate per day is TK.500. The wage rate of husking mill is very much
similar to the automatic rice mill and their wage rate also varies according to the location of
the mill, their demands, and availability of workers. On the other hand, utility cost of husking
mill is lower than the automatic rice mill due to the lower amount of production and mainly
for the manual operating system;

32 | P a g e
5.7. Quality control
Khan Rice Processing Plant has always considered quality to be one of the main tenets of its
business. Quality, not only in terms of the product but also in terms of organization, people
and processes; in short, the Quality of the Company.

Indeed, Khan Rice Processing Plant will adopt quality management systems in the
structuring of its various management level, production process and its products making to
comply with international quality management standards (ISO 9001), as testified by the
certifications it has obtained.

5.8. Pollution control and waste management

The harmful and hazardous wastage will be created from the project. These are the residues
coming out during operation and these need proper treatment. For this purpose the project will
set up the necessary steps to reduce the pollution control and waste management. Effluent
Treatment Plant (ETP) will be set up if required.

5.9. Health and safety

Khan Rice Processing Plant protects the Health and the Safety of its employees, suppliers
and visitors, so as to reduce work-related injury and diseases.

The coordination and development of Health and Safety policies and objectives for the
workplace is entrusted to a corporate structure made up of highly qualified personnel who also
have access to advice from well-known consulting firms.

In compliance with regulation, the Health of employees is protected by constant monitoring of

the workplace, ensuring that Safety standards at the machines and plants are implemented,
organizing training programs and encouraging awareness.

In addition, after a risk assessment has been conducted, periodic Health checks and special
Health risk protocols are carried out. A great deal of attention is also paid to personal
protective equipment (PPE), constantly checking its efficiency and continually improving its
efficacy to guarantee ever higher levels of protection and comfort.

Constant monitoring of accident rate trends highlights a situation of continuous improvement

at Group level, both in terms of frequency and severity.

Khan Rice Processing Plant is highly committed to conducting research into new
technologies, plants and machines and to training employees to adopt a consistent approach
towards the prevention and reduction of risks.

33 | P a g e
Regarding fire Safety, special emergency and evacuation plans have been put in place and
each site has a fire prevention team trained to reduce the consequences of any event.

There is a consolidated internal procedure of holding regular meetings on Safety, also

attended by trade union leaders with the aim of involving all social parties.

Health and Safety training programs are organized in all the Group‟s subsidiaries: each
category of employee is trained to be aware of the risks and prevention and protection
methods available and on the job training is provided for each specific job.

Dialogue and spreading of the Safety culture are developed and strengthened through the
participation and involvement of all.

Khan Rice Processing Plant will comply with OHSAS 18001:2007 certification in all its
plants; undertaking to adopt a continued and programmed approach to improve the standard of
Health and Safety.

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5.10. Environmental statement
Khan Rice Processing Plant is committed to achieving exemplary environmental
performance, both in the operations and actions at Khan Rice Processing Plant facilities, and
through the demands we place on our suppliers.

Khan Rice Processing Plant:

 Will comply with all relevant local and national environmental legislation and
regulations.

 Continues to improve its environmental operations, including waste management,

energy management, water management and the management of hazardous substances
and other emissions.

 Ensures its employees are properly trained and aware of their responsibilities and how
they can have a positive influence on the company‟s environmental performance.

Khan Rice Processing Plant supplier partners are expected to:

 Demonstrate a commitment to continued development and improvement

in environmental practices of all facilities and operations, including continuous efforts
to adopt best practices in reduction of greenhouse gas emissions.

 Operate and source our materials from sustainably managed suppliers.

 Demonstrate with suppliers a commitment to conservation of important bio-diverse

natural habitats.

 Maintain healthy and safe work environments that apply industry best practices and
meet all local legal requirements.

Khan Rice Processing Plant operates an environmental management system that incorporates
targets and objectives. Khan Rice Processing Plant will regularly review the adequacy of its
policy, management system, objectives and targets. Khan Rice Processing Plant will commit
to regularly communicate its policies to its employees and supplier partners, as well as support
necessary education and training programs to help facilitate compliance with this policy.

35 | P a g e
5.11. Technical requirements and their availability
Land
The company has purchased necessary land for the project at at Bipprobelghoria, Noldanga,
Natore, Bangladesh in favour of the company. The project site is around260 kilometers from
Dhaka city and well connected with the main road and the good communication. The land
development has completed by the company.

Building and Construction

The necessary building for factory, office, warehouse, generator and substation house, labour
shade, boundary wall and necessary infrastructure already completed and ready to use. The
construction works including, sales office, office building, day care center, etc. The total cost
of the building and civil works has been estimated at BDT 21.07 million.

Machineries and Equipment’s

Modern and complete machineries for rice processing plant of 28800 MT production capacity
per year will be purchased. There are a number of suppliers or their agents in Bangladesh. It is
estimated that a plant of the capacity specified above would cost BDT53.28million.

Furniture’s & Fixtures

This will include office and factory furniture‟s and fixtures as well as office and factory
equipment‟s like chair, table, computers, printers, fax, telephone sets, internet connection,
UPS, Photocopiers, operational software‟s etc. It is estimated this will cost BDT2.33million.

36 | P a g e
5.12. SWOT Analysis
A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses,
opportunities, and threats involved in a project or in a business venture. A SWOT analysis can
be carried out for a product, place, industry or person. It involves specifying the objective of
the business venture or project and identifying the internal and external factors that are
favorable and unfavorable to achieve that objective.

Given the changed scenario described above, the following sections focus on SWOT
(strengths & weaknesses and opportunities & threats) analysis of the auto rice processing mills
in Bangladesh.

Strength
The promoters of the company are highly educated and experience in business management,
technical and operational affairs. All of them are financially sound and have the ability of
equity participation against their respective shareholdings in the company. This project enjoys
a good communication network with all infrastructural facilities being available. This is
enable the project will be an efficient unit to the same industry. Moreover the following will
be treated as strengths of the project;

 The promoters are well versed and experiences to run industries.

 Ideal production capacity.
 Availability of good quality of raw materials and suppliers.
 Low labor cost, availability of workers.
 Adequate supply of labor force of both sexes.
 Low cost of captive power generation using gas as fuel

37 | P a g e
Weakness:
The cope with the market competitors the project should produce high volume of production
which required adequate financial support. It involves good bit of risks at the initial stage.

 Equipment‟s and technology require to be properly selected to attain international

standard and to combat competitors. Unless it judiciously done, it may hamper attain.
 Efficient marketing channel is difficult to be established initially. So quality and price
advantage should be the tool to combat this factor.
 Power supply is erratic.
 Bank interest rate is still high enough, particularly of private sector bank, for
investment of export oriented high value project.
 Cost of doing business is high because of under table money.
 Political unrest and natural calamities.

Opportunity:
 Large domestic and international market.
 Large pool of trained manpower in agriculture.
 Abundance of raw materials for farm inputs e.g. fertilizers from petro chemical
industry.
 Development and availability of improved planting materials.
 Improved telecommunication systems
 Industry is growing

Threat:
 Inconsistencies in policies.
 Frequent change of government.
 Climate change.
 Land degradation.
 Pests and diseases.
 Religious and ethnic conflicts.
 Growing terrorism, or its false/amplified propaganda, is also a big threat.
 The poor political culture and violence is one of the most important threats.
 Country risk

38 | P a g e
5.13. Marketing
Given the volatility of rice prices during the past few years in Bangladesh and on international
markets, and the negative impacts on both poor farmers and consumers, there has been much
concern over the efficient functioning of the marketing system. The key structural aspects of
the rice market involve the number and concentration of the agents, the ease of entry into the
business and the functions performed by relatively small establishments at various levels of
the marketing chain. Several agents are involved in the rice market. Farias (small itinerant
paddy traders, who normally buy from farmers and sell to beparis) and beparis (large itinerant
paddy wholesalers) are primary level market participants, while paikers (rice wholesalers) and
aratdars (rice commission agents) are terminal market operators. Millers are secondary market
agents that operate between paddy beparis on one side and pikers and aratdars on the other. In
1986, the BBS enumerated the total number of agents involved in rice trading and processing
at 107,657. Of this, 59,067 were paddy-processing establishments of various capacities and
technologies. According to 1992 estimates1 there were 11,948 beparis and 2,200 aratdars,
who dominate the terminal markets.

Even though the market structure is such that the number of traders and millers is relatively
small compared to the number of farmers and consumers, entry requirements at different
levels of the chain are relatively easy to meet, so that most evidence on Bangladesh‟s rice
market has shown no visible sign of any serious imperfection.

In the past few years, however, there are indications of rapid technological change in the rice
marketing chain, especially in terms of milling. New automatic rice mills, operating on a
larger scale, have been rapidly expanding. Automatic rice processing mills perform nearly all
activities through mechanical methods, including sorting of stones and empty grains, grain
soaking, boiling, drying, milling, polishing and bagging. These mills obtain finance primarily
from private banks (which accept the paddy/rice as collateral), and sell much of their rice
under brand names. While some market participants have indicated that the number of
automatic mills has increased enormously, there are no good analyses available that indicate
the quantitative extent of the change. These new mills may have impacts on employment and
market concentration that have yet to be studied. For example, the question has emerged if the
need of the automatic mills to buy larger quantities is putting upward pressure on paddy
prices.

Moreover, many studies have investigated market integration in Bangladesh, but they have
dealt mainly with integration of markets within the country. Most of these studies have found
that domestic rice markets are well integrated. However, given increased volatility of
international grain markets, India‟s recent export restrictions and the important role of private
traders in securing rice imports, it is also important to further assess the integration of
domestic and international markets.

Thus, this study should provide an improved understanding of domestic rice marketing,
including its relationship with international markets, in order to provide better information to
policy makers.

39 | P a g e
6.0. Overview
The basic purpose of a financial feasibility study is to determine if a project will be viable for
an organization or business. Finding the best answer will depend on commissioning the
appropriate level of analysis for the project. The three types of financial feasibility studies,
from lowest to highest complexity, are forecast, compilation and examination. A financial
forecast may only include a basic cash flow analysis and can be completed by a consultant or
management company.

Financial ratios have great contributions to business owners. Financial Ratios are the turning
points in a feasibility study. Financial ratios are determining factors in the decision making for
feasibility studies. Whether a project is feasible or not, financial ratios can answer it.

6.1. Cost of BMRE and Means of Finance:

Amount in BDT
SL # Project Component Equity Debt Total

1 Land & Land Development 22,025,096 - 22,025,096

2 Civil Work 21,065,945 - 21,065,945
3 Machineries & Equipment’s 17,151,226 36,125,086 53,276,312
4 Furniture's & Fixtures 2,332,252 - 2,332,252
5 Vehicles 2,070,000 18,630,000 20,700,000
6 Preliminary Expenses 1,925,873 - 1,925,873

Fixed cost of the Project 66,570,392 54,755,086 121,325,478

Means of Finance
SL # Particulars Amount in BDT

A. Bank
A.1 Fixed Cost 45.13% 54,755,086
Total Bank 54,755,086

B. Sponsor's
B.1 Fixed Cost 54.87% 66,570,392
Total Sponsor's 66,570,392

Total (Loan + Equity) 100.00% 121,325,478

40 | P a g e
6.2. LIST OF IMPORTABLE MACHINERY

SL Particulars Qty Unit Price Total Price Total in BDT

Boiler 4 ton Auto Mode with all

1 1 7,405,690 7,405,690 7,405,690
accessories

Parboiling Section 3 stage SS

2 1 7,830,288 7,830,288 7,830,288
with all accessories

Dryer 48 ton with all

1 6,431,920 6,431,920 6,431,920
accessories

Double Husker 1 1,830,277 1,830,277 1,830,277

Paddy Cleaner 1 865,240 865,240 865,240

Whitener 3 Nose 1 4,320,388 4,320,388 4,320,388

Mega Grader 1 765,290 765,290 765,290

Silky Polisher 2 Nose 1 1,832,765 1,832,765 1,832,765

Weightier and Scaling 1 3,122,986 3,122,986 3,122,986

Duty, C&F, Transportation,

Insurarnce Installation & L/S 1,720,242 1,720,242 1,720,242
Commissioning

Total 36,125,086 36,125,086

41 | P a g e
6.3. LIST OF VEHICLES

Amount in BDT

SL Particulars Unit Unit Price Total

1 Truck, 20 Ton Each 4 4,250,000 17,000,000

2 Tructor Lorry, 8 Ton each 2 1,850,000 3,700,000

Total 3,700,000

42 | P a g e
6.4. CAPACITY & CAPACITY UTILIZATION

Amount in BDT
SL Product Item Unit Volume Rate Sales

Rice Processing [Own] MT 14,400

Fine Rice 66% 9,504 45,000 427,680,000
Broken Rice 8% 1,152 20,000 23,040,000
Rice Bran 3% 432 18,000 7,776,000
Cattle Feed 2% 288 18,000 5,184,000
Rice Husk 5% 720 4,000 2,880,000
466,560,000

Rice Processing [Service] MT 14,400 2,000 28,800,000

Total 26,496 495,360,000

CAPACITY UTILIZATION

SL Year Utilization %

1 1 st 50.00%
2 2 nd 55.00%
3 3 rd 60.00%
4 4 th 65.00%
5 5 th 70.00%

Conditions:
1 Eight hours per shift
2 Two shifts per day
3 300 working days in a year

43 | P a g e
6.5. SALES CAPACITY & ESTIMATED SALES

Amount in
BDT

SL
Product Year - 1 Year - 2 Year - 3 Year - 4 Year - 5
#
50.00% 55.00% 60.00% 65.00% 70.00%

Rice
233,280,000 256,608,000 279,936,000 303,264,000 326,592,000
Processing
[Own]

Rice
14,400,000 15,840,000 17,280,000 18,720,000 20,160,000
Processing
[Service]

Total 247,680,000 272,448,000 297,216,000 321,984,000 346,752,000

44 | P a g e
6.6. EARNING FORECAST

Amount in BDT
Particulars Year - 1 Year - 2 Year - 3 Year - 4 Year - 5

Net Sales Revenue 247,680,000 272,448,000 297,216,000 321,984,000 346,752,000

Less: Cost of Goods Sold 215,763,308 236,230,898 256,738,658 277,261,206 297,826,640

Gross Profit 31,916,692 36,217,102 40,477,342 44,722,794 48,925,360

Less: Administrative Exp 4,844,743 5,318,140 5,769,180 6,150,392 6,564,545

Less: Financial Expenses 11,129,641 10,184,420 9,054,226 7,345,283 6,178,430

Net Operating Profit 15,942,308 20,714,541 25,653,936 31,227,119 36,182,385

Contribution to WPF 797,115 1,035,727 1,282,697 1,561,356 1,809,119

Net Profit 15,145,193 19,678,814 24,371,239 29,665,763 34,373,265

Income Tax [25%] 3,786,298 4,919,704 6,092,810 7,416,441 8,593,316

Profit Carried Forward 11,358,895 14,759,111 18,278,429 22,249,322 25,779,949

Increase in retained
earnings 11,358,895 14,759,111 18,278,429 22,249,322 25,779,949

Opening retained Earnings - 11,358,895 26,118,005 44,396,435 66,645,757

Closing retained
Earnings 11,358,895 26,118,005 44,396,435 66,645,757 92,425,706

45 | P a g e
6.7. BALANCE SHEET

Amount in BDT
Particulars Year - 1 Year - 2 Year - 3 Year - 4 Year - 5
NET ASSETS :
Non-Current Assets
115,112,553 108,899,627 102,686,702 96,473,777 90,260,851
Tangible Fixed Assets
-Property, Plant &
Equipment (At cost less 115,112,553 108,899,627 102,686,702 96,473,777 90,260,851
accumulated
depreciation)

Current Assets 63,526,369 77,763,177 94,086,268 109,787,176 133,414,252

Inventories 48,600,000 53,460,000 58,320,000 63,180,000 68,040,000
Accounts Receivables 10,320,000 11,352,000 12,384,000 13,416,000 14,448,000
Advances & Deposits 3,948,581 3,948,581 3,948,581 3,948,581 3,948,581
Cash & cash
657,788 9,002,596 19,433,687 29,242,595 46,977,671
equivalent

Current Liabilities 52,333,594 56,363,735 60,206,597 60,846,297 67,432,290

Liabilities for
Expenses 4,820,180 5,061,189 5,314,248 5,579,961 5,858,959
Short Term Loan 38,880,000 40,095,000 40,824,000 37,908,000 40,824,000
Accounts Payables 4,050,000 4,455,000 4,860,000 5,265,000 5,670,000
Contribution to EPF 797,115 1,832,842 3,115,539 4,676,895 6,486,014
Income Tax Reserve 3,786,298 4,919,704 6,092,810 7,416,441 8,593,316

Net Current Assets 11,192,775 21,399,442 33,879,670 48,940,879 65,981,962

Total 126,305,328 130,299,069 136,566,372 145,414,656 156,242,813

FINANCED BY
Owners' Equity 75,176,002 89,935,112 108,213,542 130,462,864 156,242,813
Capital Account 63,817,107 63,817,107 63,817,107 63,817,107 63,817,107
RE as per P&L
Account 11,358,895 26,118,005 44,396,435 66,645,757 92,425,706

Long Term Loan 51,129,326 40,363,956 28,352,831 14,951,792 0

Total 126,305,328 130,299,069 136,566,372 145,414,656 156,242,813

46 | P a g e
6.8. CASH FLOW STATEMENT
Amount in BDT
Particulars Year - 1 Year - 2 Year - 3 Year - 4 Year - 5
Cash flow from
operating activities
Net profit 11,358,895 14,759,111 18,278,429 22,249,322 25,779,949
Adjustment for
depreciation 6,212,925 6,212,925 6,212,925 6,212,925 6,212,925
Increase/ decrease in
inventory (48,600,000) (4,860,000) (4,860,000) (4,860,000) (4,860,000)
Increase/decrease in
A/R (10,320,000) (1,032,000) (1,032,000) (1,032,000) (1,032,000)
Increase/ decrease in
advances (3,948,581) - - - -
Increase/ decrease in
other investment - - - - -
Increase/ decrease in
liabilities for expenses 4,820,180 241,009 253,059 265,712 278,998
Increase/decrease in
A/P 4,050,000 405,000 405,000 405,000 405,000
Increase/decrease in
EPF 797,115 1,035,727 1,282,697 1,561,356 1,809,119
Increase/ decrease in
income tax reserve 3,786,298 1,133,405 1,173,106 1,323,631 1,176,876
Net cash flow from
operating activities (31,843,167) 17,895,177 21,713,217 26,125,947 29,770,867
Cash flow from
investing activities
Purchase of fixed
assets (121,325,478) - - - -
Sale of fixed assets - - - - -
Other investment - - - - -
Net cash flow from
investing activities (121,325,478) - - - -
Cash flow from
financing activities
Share capital 63,817,107 - - - -
Received/payment
from loan 51,129,326 (10,765,370) (12,011,126) (13,401,039) (14,951,792)
Sponsors investment - - - - -
Received from S. Term
Loan 38,880,000 1,215,000 729,000 (2,916,000) 2,916,000
Net cash flow from
financing activities 153,826,433 (9,550,370) (11,282,126) (16,317,039) (12,035,792)

Incr. /decr. in cash 657,788 8,344,808 10,431,091 9,808,908 17,735,075

Opening cash balance - 657,788 9,002,596 19,433,687 29,242,595

Closing cash balance 657,788 9,002,596 19,433,687 29,242,595 46,977,671

47 | P a g e
6.9. FIXED ASSETS SCHEDULE

Amount in BDT
Straight line
1ST YEAR method
Particulars COST DEPRECIATION W. D
Op. Bal Add Cl. Bal In % Op. Bal Charged Cl. Bal End of Year
Land 22,025,096 - 22,025,096 0.0% - - - 22,025,096
Civil work 21,065,945 - 21,065,945 5.0% - ,053,297 1,053,297 20,012,648
Machineries 53,276,312 - 53,276,312 5.0% - 2,663,816 2,663,816 50,612,496
Furniture 2,332,252 - 2,332,252 10.0% - 233,225 233,225 2,099,027
Vehicle 20,700,000 - 20,700,000 10.0% - 2,070,000 2,070,000 18,630,000
Pre-oper. 1,925,873 - 1,925,873 10.0% - 192,587 192,587 1,733,286
Total 121,325,478 121,325,478 - 6,212,925 6,212,925 115,112,553

2ND YEAR
Particulars COST DEPRECIATION W. D
Op. Bal Add Cl. Bal In % Op. Bal Charged Cl. Bal End of Year
Land 22,025,096 - 22,025,096 0.0% - - - 22,025,096
Civil work 21,065,945 - 21,065,945 5.0% 1,053,297 1,053,297 2,106,595 18,959,351
Machineries 53,276,312 - 53,276,312 5.0% 2,663,816 2,663,816 5,327,631 47,948,681
Furniture 2,332,252 - 2,332,252 10.0% 233,225 233,225 466,450 1,865,802
Vehicle 20,700,000 - 20,700,000 10.0% 2,070,000 2,070,000 4,140,000 16,560,000
Pre-oper. 1,925,873 - 1,925,873 10.0% 192,587 192,587 385,175 1,540,698
Total 121,325,478 121,325,478 6,212,925 6,212,925 12,425,851 108,899,627

3RD YEAR
Particulars COST DEPRECIATION W. D
Op. Bal Add Cl. Bal In % Op. Bal Charged Cl. Bal End of Year
Land 22,025,096 - 22,025,096 0.0% - - - 22,025,096
Civil work 21,065,945 - 21,065,945 5.0% 2,106,595 1,053,297 3,159,892 17,906,053
Machineries 53,276,312 - 53,276,312 5.0% 5,327,631 2,663,816 7,991,447 45,284,865
Furniture 2,332,252 - 2,332,252 10.0% 466,450 233,225 699,676 1,632,576
Vehicle 20,700,000 - 20,700,000 10.0% 4,140,000 2,070,000 6,210,000 14,490,000
Pre-oper. 1,925,873 - 1,925,873 10.0% 385,175 192,587 577,762 1,348,111
Total 121,325,478 121,325,478 12,425,851 6,212,925 18,638,776 102,686,702

48 | P a g e
4TH YEAR
Particulars COST DEPRECIATION W. D
Op. Bal Add Cl. Bal In % Op. Bal Charged Cl. Bal End of Year

Land 22,025,096 - 22,025,096 0.0% - - - 22,025,096

Civil work 21,065,945 - 21,065,945 5.0% 3,159,892 1,053,297 4,213,189 16,852,756

Machineries 53,276,312 - 53,276,312 5.0% 7,991,447 2,663,816 10,655,262 42,621,050

Furniture 2,332,252 - 2,332,252 10.0% 699,676 233,225 932,901 1,399,351

Vehicle 20,700,000 - 20,700,000 10.0% 6,210,000 2,070,000 8,280,000 12,420,000

Pre-
operating 1,925,873 - 1,925,873 10.0% 577,762 192,587 770,349 1,155,524

Total 121,325,478 121,325,478 18,638,776 6,212,925 24,851,701 96,473,777

5TH YEAR
Particulars COST DEPRECIATION W. D
Op. Bal Add Cl. Bal In % Op. Bal Charged Cl. Bal End of Year

Land 22,025,096 - 22,025,096 0.0% - - - 22,025,096

Civil work 21,065,945 - 21,065,945 5.0% 4,213,189 1,053,297 5,266,486 15,799,459

Machineries 53,276,312 - 53,276,312 5.0% 10,655,262 2,663,816 13,319,078 39,957,234

Furniture 2,332,252 - 2,332,252 10.0% 932,901 233,225 1,166,126 1,166,126

Vehicle 20,700,000 - 20,700,000 10.0% 8,280,000 2,070,000 10,350,000 10,350,000

Pre-
operating 1,925,873 - 1,925,873 10.0% 770,349 192,587 962,937 962,937

Total 121,325,478 121,325,478 24,851,701 6,212,925 31,064,627 90,260,851

Basis of allocation, 90% Factory, 10% Admin

49 | P a g e
6.10. REPAYMENT SCHEDULE

Loan Information
Principal Amount 54,755,086
Date of creation DD/MM/YY
Maturity Date DD/MM/YY
Tenor (Year) 5
Payment in a year 12
Interest rate (yearly) 11.00%
Monthly I/R 0.92%
Grace period (months) 12
Interest during grace period 6,023,059
Outstanding [DD/MM/YYYY] 60,778,145
Installment Size 1,321,464

Year Principal Interest Installment

Year - 1 9,648,819 6,208,750 15,857,570
Year - 2 10,765,370 5,092,200 15,857,570
Year - 3 12,011,126 3,846,444 15,857,570
Year - 4 13,401,039 2,456,531 15,857,570
Year - 5 14,951,792 905,778 15,857,570
Total 60,778,145 18,509,704 79,287,849

50 | P a g e
SL # Date Outstanding Principal Interest Installment
60,778,145
1 1st 60,013,814 764,331 557,133 1,321,464
2 2nd 59,242,477 771,338 550,127 1,321,464
3 3rd 58,464,069 778,408 543,056 1,321,464
4 4th 57,678,525 785,544 535,921 1,321,464
5 5th 56,885,781 792,744 528,720 1,321,464
6 6th 56,085,770 800,011 521,453 1,321,464
7 7th 55,278,425 807,345 514,120 1,321,464
8 8th 54,463,680 814,745 506,719 1,321,464
9 9th 53,641,466 822,214 499,250 1,321,464
10 10th 52,811,715 829,751 491,713 1,321,464
11 11th 51,974,359 837,357 484,107 1,321,464
12 12th 51,129,326 845,033 476,432 1,321,464
13 13th 50,276,547 852,779 468,685 1,321,464
14 14th 49,415,952 860,596 460,868 1,321,464
15 15th 48,547,467 868,485 452,980 1,321,464
16 16th 47,671,021 876,446 445,018 1,321,464
17 17th 46,786,541 884,480 436,984 1,321,464
18 18th 45,893,954 892,588 428,877 1,321,464
19 19th 44,993,184 900,770 420,695 1,321,464
20 20th 44,084,158 909,027 412,438 1,321,464
21 17th 43,166,798 917,359 404,105 1,321,464
22 18th 42,241,030 925,769 395,696 1,321,464
23 19th 41,306,775 934,255 387,209 1,321,464
24 20th 40,363,956 942,819 378,645 1,321,464
25 17th 39,412,495 951,461 370,003 1,321,464
26 18th 38,452,312 960,183 361,281 1,321,464
27 19th 37,483,328 968,985 352,480 1,321,464
28 20th 36,505,461 977,867 343,597 1,321,464
29 17th 35,518,630 986,831 334,633 1,321,464
30 18th 34,522,753 995,877 325,587 1,321,464
31 19th 33,517,748 1,005,006 316,459 1,321,464
32 20th 32,503,530 1,014,218 307,246 1,321,464
33 17th 31,480,014 1,023,515 297,949 1,321,464
34 18th 30,447,117 1,032,897 288,567 1,321,464
35 19th 29,404,751 1,042,366 279,099 1,321,464
36 20th 28,352,831 1,051,921 269,544 1,321,464

51 | P a g e
37 17th 27,291,268 1,061,563 259,901 1,321,464

38 18th 26,219,973 1,071,294 250,170 1,321,464

39 19th 25,138,859 1,081,114 240,350 1,321,464

40 20th 24,047,834 1,091,025 230,440 1,321,464

41 17th 22,946,809 1,101,026 220,438 1,321,464

42 18th 21,835,690 1,111,118 210,346 1,321,464

43 19th 20,714,387 1,121,304 200,160 1,321,464

44 20th 19,582,804 1,131,582 189,882 1,321,464

45 17th 18,440,849 1,141,955 179,509 1,321,464

46 18th 17,288,426 1,152,423 169,041 1,321,464

47 19th 16,125,439 1,162,987 158,477 1,321,464

48 20th 14,951,792 1,173,648 147,817 1,321,464

49 17th 13,767,386 1,184,406 137,058 1,321,464

50 18th 12,572,123 1,195,263 126,201 1,321,464

51 19th 11,365,903 1,206,220 115,244 1,321,464

52 20th 10,148,626 1,217,277 104,187 1,321,464

53 17th 8,920,191 1,228,435 93,029 1,321,464

54 18th 7,680,495 1,239,696 81,768 1,321,464

55 19th 6,429,436 1,251,060 70,405 1,321,464

56 20th 5,166,908 1,262,528 58,936 1,321,464

57 17th 3,892,807 1,274,101 47,363 1,321,464

58 18th 2,607,027 1,285,780 35,684 1,321,464

59 19th 1,309,461 1,297,566 23,898 1,321,464

60 20th 0 1,309,461 12,003 1,321,464

52 | P a g e
6.11. COST OF GOODS SOLD

Amount in
BDT
This is made up as
follows: YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5

Opening stock - 48,600,000 53,460,000 58,320,000 63,180,000

Add: Purchase 243,000,000 218,700,000 238,140,000 257,580,000 277,020,000
Less: Closing Stocks 48,600,000 53,460,000 58,320,000 63,180,000 68,040,000
Raw Materials Consumed 194,400,000 213,840,000 233,280,000 252,720,000 272,160,000
Manufacturing expenses 15,771,675 16,799,265 17,867,025 18,949,573 20,075,007
Depreciation 5,591,633 5,591,633 5,591,633 5,591,633 5,591,633
Total manufacturing cost 215,763,308 236,230,898 256,738,658 277,261,206 297,826,640
Cost of Goods Sold 215,763,308 236,230,898 256,738,658 277,261,206 297,826,640

6.12. MANUFACTURING EXPENSES

Amount in
BDT
This is made up as
follows: YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5

Direct Labour 3,861,000 4,054,050 4,256,753 4,469,590 4,693,070

Electricity Bills 4,950,000 5,445,000 5,940,000 6,435,000 6,930,000
Packing materials 864,219 907,430 952,801 1,000,442 1,050,464
Other Utilities 510,690 536,225 563,036 591,188 620,747
Conveyance 312,211 343,432 377,775 415,553 457,108
Entertainment 366,430 403,073 443,380 487,718 536,490
Printing and Stationery 1,212,398 1,333,638 1,467,002 1,613,702 1,775,072
Cleaning and Others 155,310 170,841 187,925 206,718 227,389
Insurance 2,877,814 2,877,814 2,877,814 2,877,814 2,877,814
Plant and Machinery repair 475,103 522,613 574,875 603,618.36 633,799
Others 186,500 205,150 225,665 248,232 273,055
Total 15,771,675 16,799,265 17,867,025 18,949,573 20,075,007

53 | P a g e
6.13. ADMINISTRATIVE EXPENSES
Amount in
BDT
This is made up as
follows: YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5

Salary & Wages 2,294,500 2,523,950 2,776,345 3,053,980 3,359,377

Travel & conveyance 388,190 407,600 427,979 449,378 471,847

Printing & Stationery 355,310 373,076 391,729 411,316 431,882

Fuel & Gas 350,000 367,500 385,875 405,169 425,427

Postage 130,120 136,626 143,457 150,630 158,162

Repair & Maintenance 210,378 220,897 231,942 243,539 255,716

Entertainment 110,387 115,906 121,702 127,787 134,176

Depreciation 621,293 621,293 621,293 621,293 621,293

Audit Fees 50,000 200,000 300,000 300,000 300,000

Telephone, Telex & Fax 178,275 187,189 196,548 206,376 216,694

Other 156,290 164,105 172,310 180,925 189,971

Total 4,844,743 5,318,140 5,769,180 6,150,392 6,564,545

6.14. FINANCIAL EXPENSES

Amount in BDT
This is made up as
follows: YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5

Interest on (TL) 6,208,750 5,092,200 3,846,444 2,456,531 905,778

Interest on WC Loan 4,665,600 4,811,400 4,898,880 4,548,960 4,898,880

Bank Charges & Others 255,291 280,820 308,902 339,792 373,772

Total 11,129,641 10,184,420 9,054,226 7,345,283 6,178,430

54 | P a g e
7.15. SALARIES AND WAGES (1ST YEAR)

Direct Wages Amount in BDT

SL
# Particulars Nos. Per month Per year

1 Production Manager 1 30,000 390,000

2 Milling Foreman 1 25,000 325,000
3 Drayer Perboiling operator 1 16,000 208,000
4 Milling Operator 1 16,000 208,000
5 Helper 3 12,000 468,000
6 Electrical Foreman 1 12,000 156,000
7 Packing Operator 1 10,000 130,000
8 Truck/ Lorry Driver 4 15,000 780,000
9 Truck/ Lorry Helper 4 8,000 416,000
10 Daily Labour 10 6,000 780,000

Total 27 3,861,000

Administrative and Marketing Amount in BDT

SL
# Particulars Nos. Per month Per year

1 Manager [Sales & Marketing] 1 35,000 455,000

2 Sales Officer 3 15,000 585,000
3 Purchase Officer 2 15,000 390,000
4 Accountant 1 20,000 260,000
5 Office Executive 1 10,000 130,000
6 Peon 1 8,000 104,000
7 Security Guard 3 7,500 292,500
8 Cleanner 1 6,000 78,000

Total 13 2,294,500

55 | P a g e
6.16. SENSITIVITY ANALYSIS

ON THE BASIS OF 5% DECREASE OF SALES REVENUE

Amount in BDT
Particulars YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5

Net Sales Revenue

235,296,000 258,825,600 282,355,200 305,884,800 329,414,400
Cost of Goods Sold
215,763,308 236,230,898 256,738,658 277,261,206 297,826,640
Gross Profit
19,532,692 22,594,702 25,616,542 28,623,594 31,587,760
Administrative Exp.
4,844,743 5,318,140 5,769,180 6,150,392 6,564,545
Financial Expenses
11,129,641 10,184,420 9,054,226 7,345,283 6,178,430
Net Operating Profit
3,558,308 7,092,141 10,793,136 15,127,919 18,844,785
Contribution to WPF
177,915 354,607 539,657 756,396 942,239
Net Profit
3,380,393 6,737,534 10,253,479 14,371,523 17,902,545
Income Tax Reserve
845,098 1,684,384 2,563,370 3,592,881 4,475,636
Profit Carried
Forward 2,535,295 5,053,151 7,690,109 10,778,642 13,426,909
Increase in RE
2,535,295 5,053,151 7,690,109 10,778,642 13,426,909
Opening RE -
2,535,295 5,053,151 7,690,109 10,778,642
Closing RE
2,535,295 7,588,445 12,743,260 18,468,752 24,205,552

56 | P a g e
6.16.1. BREAK EVEN ANALYSIS
ON THE BASIS OF 5% DECREASE OF SALES REVENUE

A Sales revenue in the 3rd year 282,355,200

B Total cost in the 3rd year [including Production, Administrative & Financial expenses]
Amount in BDT
SL Particulars Fixed Cost Variable Cost Total Cost
1 Raw materials - 233,280,000 233,280,000
2 Packing materials 952,801 - 952,801
3 Factory wages 425,675 3,831,077 4,256,753
4 Utilities 650,304 5,852,732 6,503,036
5 Salaries 2,776,345 - 2,776,345
6 Depreciation 6,212,925 - 6,212,925
7 Interest on Term Loan 3,846,444 - 3,846,444
8 Interest on Short Term Loan - 4,898,880 4,898,880
9 Travel and conveyance 241,726 564,028 805,755
10 Entertainment 395,557 169,525 565,082
11 Printing and Stationery 1,486,985 371,746 1,858,731
12 Cleaning and Others 131,548 56,378 187,925
13 Insurance 2,877,814 - 2,877,814
14 Plant and Machinery repair 517,387 57,487 574,875
15 Fuel & Gas 154,350 231,525 385,875
16 Postage 100,420 43,037 143,457
17 Audit Fees 300,000 - 300,000
18 Telephone, Telex & Fax 137,584 58,964 196,548
19 Repair & Maintenance 115,971 115,971 231,942
20 Other 318,380 79,595 397,975
Total 21,642,216 249,610,946 271,253,162

1 Contribution [Sales - Variable Cost] 32,744,254

2 PV Ratio [Contribution/ Sales] 11.60%
3 Break Even Point [Fixed Cost/P/V Ratio] 186,621,822 66.09%

57 | P a g e
6.16.2. PAY BACK PERIOD
ON THE BASIS OF 5% DECREASE OF SALES REVENUE

Salvage
Year Project cost Net profit Depreciation Net cash flow
value
0 121,325,478 2,535,295 6,212,925 - (121,325,478)
1 - 5,053,151 6,212,925 - 11,266,076
2 - 7,690,109 6,212,925 - 13,903,034
3 - 10,778,642 6,212,925 - 16,991,568
4 - 13,426,909 6,212,925 - 19,639,834
5 - 13,426,909 6,212,925 - 19,639,834
6 - 13,426,909 62,129 - 13,489,038
7 - 13,426,909 62,129 - 13,489,038
8 - 13,426,909 62,129 - 13,489,038
9 - 13,426,909 62,129 - 13,489,038
10 - 13,426,909 62,129 60,932,119 74,421,157

Cumulative
SALVAGE VALUE In BDT Year CFAT
CFAT
Land lease 100% 22,025,096 1 11,266,076 11,266,076
Civil work 10% 2,106,595 2 13,903,034 25,169,110
Machinery 5% 2,663,816 3 16,991,568 42,160,678
Furn & Fix 5% 116,613 4 19,639,834 61,800,513
Inventory 50% 34,020,000 5 19,639,834 81,440,347
Total 60,932,119 6 13,489,038 94,929,385
7 13,489,038 108,418,424
8 13,489,038 121,907,462
9 13,489,038 135,396,500
10 74,421,157 209,817,657

7.66 Years

58 | P a g e
6.16.3. INTERNAL RATE OF RETURN (IRR)
ON THE BASIS OF 5% DECREASE OF SALES REVENUE

YEAR CFAT 9.00% 10.00%

Dis. Factor Dis. Cash Flow Dis. Factor Dis. Cash Flow

0 (121,325,478) 1.0000 (121,325,478) 1.0000 (121,325,478)

1 11,266,076 0.9174 10,335,850 0.9091 9,396,227

2 13,903,034 0.8417 11,701,906 0.8264 9,670,997

3 16,991,568 0.7722 13,120,608 0.7513 9,857,707

4 19,639,834 0.7084 13,913,354 0.6830 9,503,008

5 19,639,834 0.6499 12,764,545 0.6209 7,925,778

6 13,489,038 0.5963 8,043,073 0.5645 4,540,105

7 13,489,038 0.5470 7,378,966 0.5132 3,786,576

8 13,489,038 0.5019 6,769,693 0.4665 3,158,112

9 13,489,038 0.4604 6,210,728 0.4241 2,633,955

10 74,421,157 0.4224 31,436,301 0.3855 12,120,055

Total 88,492,179 349,545 (48,732,959)

IRR 9.05%

59 | P a g e
6.16.4. RATIO ANALYSIS
ON THE BASIS OF 5% DECREASE OF SALES REVENUE

A) Debt Service Coverage Ratio

Income Year-1 Year-2 Year-3 Year-4 Year-5
Net profit after tax 2,535,295 5,053,151 7,690,109 10,778,642 13,426,909
Depreciation 6,212,925 6,212,925 6,212,925 6,212,925 6,212,925
Interest on Term
6,208,750 5,092,200 3,846,444 2,456,531 905,778
Loan
Interest on S. T.
4,665,600 4,811,400 4,898,880 4,548,960 4,898,880
Loan
Total 19,622,571 21,169,676 22,648,359 23,997,059 25,444,493

Liabilities Year-1 Year-2 Year-3 Year-4 Year-5

Interest on Term
Loan 6,208,750 5,092,200 3,846,444 2,456,531 905,778
Interest on S. T.
Loan 4,665,600 4,811,400 4,898,880 4,548,960 4,898,880
Total
10,874,350 9,903,600 8,745,324 7,005,491 5,804,658

DSCR [Times] 1.80 2.14 2.59 3.43 4.38

B) FIXED ASSETS COVERAGE RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Total Fixed assets 115,112,553 108,899,627 102,686,702 96,473,777 90,260,851
Long term liabilities 51,129,326 40,363,956 28,352,831 14,951,792 0
FACR [Times] 2.25 2.70 3.62 6.45 -

C) RETURN ON ASSETS
Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Net profit after tax 2,535,295 5,053,151 7,690,109 10,778,642 13,426,909
Total Fixed assets 115,112,553 108,899,627 102,686,702 96,473,777 90,260,851
ROA [Times] 45.40 21.55 13.35 8.95 6.72

60 | P a g e
D) CURRENT
RATIO
Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Current Assets
63,526,369 77,763,177 94,086,268 109,787,176 133,414,252
Current Liabilities
52,333,594 56,363,735 60,206,597 60,846,297 67,432,290

ROA [Times]
1.21 1.38 1.56 1.80 1.98

6.16.4. RATIO ANALYSIS

ON THE BASIS OF 5% DECREASE OF SALES REVENUE

E) GROSS PROFIT RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Sales
235,296,000 258,825,600 282,355,200 305,884,800 329,414,400
Revenue
Gross Profit 19,532,692 22,594,702 25,616,542 28,623,594 31,587,760

GP Ratio 8.30% 8.73% 9.07% 9.36% 9.59%

F) NET PROFIT RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Sales
258,825,600 282,355,200 305,884,800 329,414,400
Revenue 235,296,000
Net Profit 2,535,295
5,053,151 7,690,109 10,778,642 13,426,909
NP Ratio 1.08% 1.95% 2.72% 3.52% 4.08%

61 | P a g e
6.17.1. SENSITIVITY ANALYSIS

ON THE BASIS OF 5% INCREASE OF COST OF GOODS SOLD

Amount in
BDT
Particulars YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5

Net Sales Revenue

247,680,000 272,448,000 297,216,000 321,984,000 346,752,000
Cost of Goods Sold
226,551,473 248,042,443 269,575,591 291,124,266 312,717,972
Gross Profit
21,128,527 24,405,557 27,640,409 30,859,734 34,034,028
Administrative Exp.
4,844,743 5,318,140 5,769,180 6,150,392 6,564,545
Financial Expenses
11,129,641 10,184,420 9,054,226 7,345,283 6,178,430
Net Operating Profit
5,154,143 8,902,996 12,817,003 17,364,059 21,291,053
Contribution to WPF
257,707 445,150 640,850 868,203 1,064,553
Net Profit
4,896,436 8,457,847 12,176,153 16,495,856 20,226,500
Income Tax Reserve
1,224,109 2,114,462 3,044,038 4,123,964 5,056,625
Profit Carried
Forward 3,672,327 6,343,385 9,132,114 12,371,892 15,169,875
Increase in RE
3,672,327 6,343,385 9,132,114 12,371,892 15,169,875
Opening RE -
3,672,327 6,343,385 9,132,114 12,371,892
Closing RE
3,672,327 10,015,712 15,475,499 21,504,006 27,541,767

62 | P a g e
6.17.2. BREAK EVEN ANALYSIS
ON THE BASIS OF 5% INCREASE OF COST OF GOODS SOLD

A Sales revenue in the 3rd year 297,216,000

B Total cost in the 3rd year [including Production, Administrative & Financial expenses]
Amount in BDT
SL Particulars Fixed Cost Variable Cost Total Cost
1 Raw materials - 244,944,000 244,944,000
2 Factory rent 1,000,442 - 1,000,442
3 Factory wages 446,959 4,022,631 4,469,590
4 Utilities 682,819 6,145,369 6,828,188
5 Salaries 2,776,345 - 2,776,345
6 Depreciation 6,492,507 - 6,492,507
7 Interest on Term Loan 3,846,444 - 3,846,444
8 Interest on Short Term Loan - 4,898,880 4,898,880
9 Travel and conveyance 247,393 577,250 824,644
10 Entertainment 411,076 176,175 587,251
11 Printing and Stationery 1,545,665 386,416 1,932,081
12 Cleaning and Others 138,125 59,196 197,321
13 Insurance 3,021,705 - 3,021,705
14 Plant and Machinery repair 543,257 60,362 603,618
15 Fuel & Gas 154,350 231,525 385,875
16 Postage 100,420 43,037 143,457
17 Audit Fees 300,000 - 300,000
18 Telephone, Telex & Fax 137,584 58,964 196,548
19 Repair & Maintenance 115,971 115,971 231,942
20 Other 327,406 81,852 409,258
Total 22,288,466 261,801,629 284,090,095

1 Contribution [Sales - Variable Cost] 35,414,371

2 PV Ratio [Contribution/ Sales] 11.92%
3 Break Even Point [Fixed Cost/P/V Ratio] 187,056,513 62.94%

6.17.2. PAY BACK PERIOD

63 | P a g e
 ON THE BASIS OF 5% INCREASE OF COST OF GOODS SOLD

Salvage
Year Project cost Net profit Depreciation Net cash flow
value
0 121,325,478 3,672,327 6,212,925 - (121,325,478)
1 - 6,343,385 6,212,925 - 12,556,310
2 - 9,132,114 6,212,925 - 15,345,040
3 - 12,371,892 6,212,925 - 18,584,817
4 - 15,169,875 6,212,925 - 21,382,800
5 - 15,169,875 6,212,925 - 21,382,800
6 - 15,169,875 62,129 - 15,232,004
7 - 15,169,875 62,129 - 15,232,004
8 - 15,169,875 62,129 - 15,232,004
9 - 15,169,875 62,129 - 15,232,004
10 - 15,169,875 62,129 60,932,119 76,164,123

Cumulative
SALVAGE VALUE In BDT Year CFAT
CFAT
Land lease 100% 22,025,096 1 12,556,310 12,556,310
Civil work 10% 2,106,595 2 15,345,040 27,901,350
Machinery 5% 2,663,816 3 18,584,817 46,486,167
Furn & Fix 5% 116,613 4 21,382,800 67,868,968
Inventory 50% 34,020,000 5 21,382,800 89,251,768
Total 60,932,119 6 15,232,004 104,483,772
7 15,232,004 119,715,777
8 15,232,004 134,947,781
9 15,232,004 150,179,785
10 76,164,123 226,343,908

7.03 Years

6.17.3. INTERNAL RATE OF RETURN (IRR)

64 | P a g e
 ON THE BASIS OF 5% INCREASE OF COST OF GOODS SOLD

YEAR CFAT 10.00% 11.00%

Dis. Factor Dis. Cash Flow Dis. Factor Dis. Cash Flow

0 (121,325,478) 1.0000 (121,325,478) 1.0000 (121,325,478)

1 12,556,310 0.9091 11,414,828 0.9009 10,283,628

2 15,345,040 0.8264 12,681,851 0.8116 10,292,875

3 18,584,817 0.7513 13,963,048 0.7312 10,209,661

4 21,382,800 0.6830 14,604,740 0.6587 9,620,595

5 21,382,800 0.6209 13,277,037 0.5935 7,879,275

6 15,232,004 0.5645 8,598,069 0.5346 4,596,879

7 15,232,004 0.5132 7,816,427 0.4817 3,764,848

8 15,232,004 0.4665 7,105,842 0.4339 3,083,413

9 15,232,004 0.4241 6,459,857 0.3909 2,525,318

10 76,164,123 0.3855 29,364,567 0.3522 10,341,745

Total 105,018,430 3,960,788 (48,727,242)

IRR 10.62%

6.17.4. RATIO ANALYSIS

ON THE BASIS OF 5% INCREASE OF COST OF GOODS SOLD

A) Debt Service Coverage Ratio

65 | P a g e
Income Year-1 Year-2 Year-3 Year-4 Year-5
Net profit after tax 3,672,327 6,343,385 9,132,114 12,371,892 15,169,875
Depreciation 6,212,925 6,212,925 6,212,925 6,212,925 6,212,925
Interest on Term
6,208,750 5,092,200 3,846,444 2,456,531 905,778
Loan
Interest on S. T.
Loan 4,665,600 4,811,400 4,898,880 4,548,960 4,898,880
Total 20,759,603 22,459,911 24,090,364 25,590,308 27,187,458

Liabilities Year-1 Year-2 Year-3 Year-4 Year-5

Interest on Term
Loan 6,208,750 5,092,200 3,846,444 2,456,531 905,778
Interest on S. T.
Loan 4,665,600 4,811,400 4,898,880 4,548,960 4,898,880
Total 10,874,350 9,903,600 8,745,324 7,005,491 5,804,658

DSCR [Times] 1.91 2.27 2.75 3.65 4.68

B) FIXED ASSETS COVERAGE RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Total Fixed assets 115,112,553 108,899,627 102,686,702 96,473,777 90,260,851
Long term liabilities 51,129,326 40,363,956 28,352,831 14,951,792 0
FACR [Times] 2.25 2.70 3.62 6.45

C) RETURN ON ASSETS
Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Net profit after tax
3,672,327 6,343,385 9,132,114 12,371,892 15,169,875
Total Fixed assets
115,112,553 108,899,627 102,686,702 96,473,777 90,260,851
ROA [Times]
31.35 17.17 11.24 7.80 5.95

D) CURRENT RATIO
Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Current Assets
63,526,369 77,763,177 94,086,268 109,787,176 133,414,252
Current Liabilities
52,333,594 56,363,735 60,206,597 60,846,297 67,432,290

66 | P a g e
ROA [Times]
1.21 1.38 1.56 1.80 1.98

E) GROSS PROFIT RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Sales Revenue 247,680,000
272,448,000 297,216,000 321,984,000 346,752,000
Gross Profit 21,128,527
24,405,557 27,640,409 30,859,734 34,034,028
GP Ratio 8.53% 8.96% 9.30% 9.58% 9.82%

F) NET PROFIT RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5
Sales Revenue 247,680,000
272,448,000 297,216,000 321,984,000 346,752,000
Net Profit 3,672,327
6,343,385 9,132,114 12,371,892 15,169,875
NP Ratio 1.48% 2.33% 3.07% 3.84% 4.37%

6.18. BREAK EVEN ANALYSIS

A Sales revenue in the 3rd year 297,216,000

B Total cost in the 3rd year [including Production, Administrative & Financial expenses]

67 | P a g e
 Amount in BDT
SL Particulars Fixed Cost Variable Cost Total Cost
1 Raw materials - 233,280,000 233,280,000
2 Packing materials - 952,801 952,801
3 Factory wages 425,675 3,831,077 4,256,753
4 Utilities 2,601,214 3,901,821 6,503,036
5 Salaries 2,776,345 - 2,776,345
6 Depreciation 6,212,925 - 6,212,925
7 Interest on Term Loan 3,846,444 - 3,846,444
8 Interest on Short Term Loan - 4,898,880 4,898,880
9 Travel and conveyance 805,755 - 805,755
10 Entertainment 565,082 - 565,082
11 Printing and Stationery 1,858,731 - 1,858,731
12 Cleaning and Others 150,340 37,585 187,925
13 Insurance 2,877,814 - 2,877,814
14 Plant and Machinery repair 172,462 402,412 574,875
15 Fuel & Gas 347,288 38,588 385,875
16 Postage 129,112 14,346 143,457
17 Audit Fees 300,000 - 300,000
18 Telephone, Telex & Fax 176,893 19,655 196,548
19 Repair & Maintenance 208,748 23,194 231,942
20 Other 318,380 79,595 397,975

Total 23,773,208 247,479,955 271,253,162

1 Contribution [Sales - Variable Cost] 49,736,045

2 PV Ratio [Contribution/ Sales] 16.73%
3 Break Even Point [Fixed Cost/P/V Ratio] 142,065,531 47.80%

6.19. PAY BACK PERIOD

Salvage
Year Project cost Net profit Depreciation Net cash flow
value
0 121,325,478 - - - (121,325,478)

68 | P a g e
 1 - 11,358,895 6,212,925 - 17,571,820
2 - 14,759,111 6,212,925 - 20,972,036
3 - 18,278,429 6,212,925 - 24,491,354
4 - 22,249,322 6,212,925 - 28,462,248
5 - 25,779,949 6,212,925 - 31,992,874
6 - 25,779,949 62,129 - 25,842,078
7 - 25,779,949 62,129 - 25,842,078
8 - 25,779,949 62,129 - 25,842,078
9 - 25,779,949 62,129 - 25,842,078
10 - 25,779,949 62,129 60,932,119 86,774,197

SALVAGE VALUE Year CFAT Cumulative CFAT

Land 100% 22,025,096 1 17,571,820 17,571,820
Civil work 10% 2,106,595 2 20,972,036 38,543,856
Machinery 5% 2,663,816 3 24,491,354 63,035,211
Furn & Fix 5% 116,613 4 28,462,248 91,497,458
Inventory 50% 34,020,000 5 31,992,874 123,490,333
Total 60,932,119 6 25,842,078 149,332,411
7 25,842,078 175,174,489
8 25,842,078 201,016,568
9 25,842,078 226,858,646
10 86,774,197 313,632,843

4.93 Years

6.20. INTERNAL RATE OF RETURN (IRR)

YEAR CFAT 17.00% 18.00%

Dis. Factor Dis. Cash Flow Dis. Factor Dis. Cash Flow

0
69 | P a g e
 (121,325,478) 1.0000 (121,325,478) 1.0000 (121,325,478)

1 17,571,820 0.8547 15,018,650 0.8475 12,727,669

2 20,972,036 0.7305 15,320,357 0.7182 11,002,842

3 24,491,354 0.6244 15,291,681 0.6086 9,306,989

4 28,462,248 0.5337 15,188,880 0.5158 7,834,255

5 31,992,874 0.4561 14,592,307 0.4371 6,378,432

6 25,842,078 0.3898 10,074,239 0.3704 3,731,816

7 25,842,078 0.3332 8,610,461 0.3139 2,703,039

8 25,842,078 0.2848 7,359,368 0.2660 1,957,873

9 25,842,078 0.2434 6,290,058 0.2255 1,418,132

10 86,774,197 0.2080 18,052,277 0.1911 3,449,149

Total 192,307,365 4,472,800 (60,815,283)

IRR 17.84%

6.21. RATIO ANALYSIS

A) Debt Service Coverage Ratio

Income Year-1 Year-2 Year-3 Year-4 Year-5

Net profit after tax 11,358,895 14,759,111 18,278,429 22,249,322 25,779,949

Depreciation 6,212,925 6,212,925 6,212,925 6,212,925 6,212,925

Interest on Term

70 | P a g e
Loan 6,208,750 5,092,200 3,846,444 2,456,531 905,778
Interest on S. T.
Loan 4,665,600 4,811,400 4,898,880 4,548,960 4,898,880
Total 28,446,171 30,875,636 33,236,679 35,467,739 37,797,533

Liabilities Year-1 Year-2 Year-3 Year-4 Year-5

Interest on Term
Loan 6,208,750 5,092,200 3,846,444 2,456,531 905,778
Interest on S. T.
Loan 4,665,600 4,811,400 4,898,880 4,548,960 4,898,880
Total 10,874,350 9,903,600 8,745,324 7,005,491 5,804,658

DSCR [Times] 2.62 3.12 3.80 5.06 6.51

B) FIXED ASSETS COVERAGE RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5

Total Fixed assets 115,112,553 108,899,627 102,686,702 96,473,777 90,260,851

Long term liabilities 51,129,326 40,363,956 28,352,831 14,951,792 0

FACR [Times] 2.25 2.70 3.62 6.45 -

C) RETURN ON ASSETS
Particulars Year-1 Year-2 Year-3 Year-4 Year-5

Net profit after tax 11,358,895 14,759,111 18,278,429 22,249,322 25,779,949

Total Fixed assets 115,112,553 108,899,627 102,686,702 96,473,777 90,260,851

ROA [Times] 10.13 7.38 5.62 4.34 3.50

D) CURRENT RATIO
Particulars Year-1 Year-2 Year-3 Year-4 Year-5

Current Assets 63,526,369 77,763,177 94,086,268 109,787,176 133,414,252

Current Liabilities 52,333,594 56,363,735 60,206,597 60,846,297 67,432,290

ROA [Times] 1.21 1.38 1.56 1.80 1.98

71 | P a g e
E) GROSS PROFIT RATIO
Particulars Year-1 Year-2 Year-3 Year-4 Year-5

Sales Revenue 247,680,000 272,448,000 297,216,000 321,984,000 346,752,000

Gross Profit 31,916,692 36,217,102 40,477,342 44,722,794 48,925,360

GP Ratio 12.89% 13.29% 13.62% 13.89% 14.11%

F) NET PROFIT RATIO

Particulars Year-1 Year-2 Year-3 Year-4 Year-5

Sales Revenue 247,680,000 272,448,000 297,216,000 321,984,000 346,752,000

Net Profit 11,358,895 14,759,111 18,278,429 22,249,322 25,779,949

NP Ratio 4.59% 5.42% 6.15% 6.91% 7.43%

6.22. ECONOMIC ASPECT

1) The Project will contribute an amount of BDT 557.29 million to the Gross Domestic
Product [GDP] of the Country, which is shown as under;

Particulars Amount in BDT

Net Sales [3rd year] 297,216,000
Manufacturing Expenses

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 Raw materials 233,280,000
Factory wages 4,256,753
Utilities 6,503,036
Plant and Machinery repair 574,875
Sub Total 244,614,663
Operational Expenses
Salaries 2,776,345
Travel and conveyance 805,755
Entertainment 565,082
Printing and Stationery 1,858,731
Cleaning and Others 187,925
Insurance 2,877,814
Fuel & Gas 385,875
Postage 143,457
Audit Fees 300,000
Telephone, Telex & Fax 196,548
Repair & Maintenance 231,942
Other 397,975
Sub Total 10,727,448
Financial Expenses 9,054,226
Sub Total 9,054,226
Grand Total 264,396,338

Contribution to GDP 32,819,662

2) Direct employment generation will be 40 persons. Most of employees will be

skilled and unskilled. From this point of view the project will help to improve the
distribution of income. Besides, additional employment opportunities will be
created for production, supply and distribution of raw materials and product.

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Conclusion:
The demand for rice will always be there. As demand grows, the need to boost the production
and milling process also grows. Increased business efficiency and productivity can be traced
to the automation of the processes. As per the analysis of this study it is evident that the
revenue, cost, assets, loans and production capacity will increase with firm size and types of
organization. These factors will vary in Division wise though maximum range has been seen
in Dhaka and Rajshahi division. According to the data, small and medium firms have more
cash in hand and bank compared to micro and large firms on average. The net profit on
average is highest for medium firms. Even the average wages are higher for small and
medium firms suggesting that they are mostly husking mills. Although, this analysis is based
on primary survey of 50 samples with disproportionate number of each firm type, it can give
an insight of the revenue, cost, assets, loans and production capacity of different rice mills.

However, in comparison to traditional mills modern mills are efficient and less time
consuming though modern mills consume more energy. Different machineries of different
brands for different stages of rice processing are available. The modern machineries are able
to produce twice the output than traditional ones. Even the wage cost is lower in automated
mills as the rice manufacturing process is full machine based.

Even if the analysis suggest that the rice manufacturing is having a profit margin, while
setting up a rice mill, it is very important to be aware of the seasonal impact and impact of
other issues as well including tariffs, policies, and so on which might create challenges in the
production process. There are pros and cons to be considered before taking any rational
decisions. The government can play an important role in this agricultural sector by supporting
the farmers and millers to face and overcome these challenges.

Unfortunately, the recent flash flood, rainfall, disease attacks on standing paddy and depleting
stocks are creating a challenging situation for the agricultural sector. The damage of Boro
paddy caused by the flood in the haor region in the northeast and recent rainfalls came as a
blow to the market. There is a shortage of paddy which might increase the price thus affecting
the poor people (Parvez, 2017). The government needs to take initiative to help and support
the farmers and the local millers to cope with the situation and stabilize the market.

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