TECHNO ECONOMIC VIABILITY STUDY

NAME OF THE ACCOUNT : M/s. OM SHANTI RICE MILL

BRANCH : Dhanbad
STATE : Jharkhand

DISCLAIMER

Green & Co. has prepared this TEV Report, in their capacity as technical and financial consultant for
Bank of Baroda for financing the project.

The objective of this report is to provide comprehensive information on the project to potential lenders
to facilitate their evaluation of the financing opportunity.

Site visit and Interaction with management personnel & others have been made by the consultant to the
extent possible within limitations and constraints. This TEV report is not and should not be construed as
a recommendation by the consultant that any recipient of the report should participate in the financing.

The information contained in this TEV study has been provided by the consultant, the project sponsors
or has been collated from publicly available sources or other sources that the consultant deems reliable.
Any statements contained herein characterizing the financing and the project is a statement of opinion
and should not be construed to be representations or warranties.

This TEV report has been prepared solely for the benefit of financing bank to whom it is
distributed.

TEV Study M/s. Om Shanti Rice Mill

Introduction :

Bank of Baroda, Dhanbad Branch (Jharkhand) has engaged the services of ours for carrying out a
Techno Economic Viability Study of the project of M/S. OM SHANTI RICE MILL for setting up of a
modern parboiled rice mill at Plot No.2280, 2327, 2329, 2328, 2296 & 2279, Mauza- Golkunda, Khata
No-73, Purulia-2, West Bengal, Pin-723126.

We have studied the various aspects of project report prepared by the firm and the matter was discussed
in details with the officials and promoters responsible for implementation of the project. We also
discussed the modalities of various parameters given to us by the firm. We have also compared the data
submitted by the promoters of the firm with similar type of rice mill which are running in nearby
districts.

Based on the information /data & documents furnished by the firm and also market information
available before us we hereby furnish our report.

Background of the firm and it’s Promoter Directors :

M/s OM SHANTI RICE MILL is a Partnership firm and was incorporated under Indian Partnership Act,
1932 on 08.11.2017and having its Registered office – at Jaluka House, Shastri Nagar (West), LRD
More, P.S.-Bank More, Dhanbad, Jharkhand-826001. The firm has been promoted by Mr. Ashok Kumar
Jaluka, Mr. Shekhar Jaluka, Mr. Nitesh Jaluka, Mr. Piyush Jaluka, Mrs. Reena Jaluka & Mr. Ashish
Jaluka all being family members. The firm was established with the main object of setting up of rice
mill.

The promoters are from well known business family. The partner’s based on their rich experience and
after detail study of paddy production and looking at prospect of food processing units they have
decided to establish a modern automatic rice mill at Plot No.2280, 2327, 2329, 2328, 2296 & 2279,
Mauza- Golkunda, Khata No-73, Purulia-2, West Bengal, Pin-723126 with installed capacity of paddy
processing 38400 MT per annum (8 TPH).

TEV Study M/s. Om Shanti Rice Mill

The descriptions, names & address of the Promoters / Partners are as under:
1) MR. ASHOK KUMAR JALUKA

Father’s Name Late Mali Ram Jaluka

Age/ Date of birth 58 Years
Residential Address Jaluka House, Shastri Nagar (West), LRD More, P.S.-Bank More,
Dhanbad, Jharkhand-826001.
Functional responsibilities in the unit Partners

Educational Qualification Graduate

PAN Card No. ABOPJ1014A
Adhaar Card No. 2526 0429 8097
Experience Having 35 years experience in trading & 5 years in industry

2) MR. SHEKHAR JALUKA

Father’s Name Mr. Ashok Kumar Jaluka

Age/ Date of birth 35 Years
Residential Address Jaluka House, Shastri Nagar (West), LRD More, P.S.-Bank More,
Dhanbad, Jharkhand-826001.
Functional responsibilities in the unit Partners

Educational Qualification Graduate

PAN Card No. ADUPJ4189Q
Adhaar Card No. 8434 2069 2243
Experience Having 18 years experience in trading.

3) MR. NITESH JALUKA

Father’s Name Mr. Ashok Kumar Jaluka

Age/ Date of birth 31 Years
Residential Address Jaluka House, Shastri Nagar (West), LRD More, P.S.-Bank More,
Dhanbad, Jharkhand-826001.
Functional responsibilities in the unit Partners

Educational Qualification B.E.

PAN Card No. AFIPJ0195G
Adhaar Card No. 9638 3568 5012
Experience Having 9 years experience in Service of Infosys Pune & Com
Nugent Kolkata

TEV Study M/s. Om Shanti Rice Mill

4) MR. PIYUSH JALUKA

Father’s Name Mr. Rajesh Kumar Jaluka

Age/ Date of birth 22 Years
Residential Address Jaluka House, Shastri Nagar (West), LRD More, P.S.-Bank More,
Dhanbad, Jharkhand-826001.
Functional responsibilities in the unit Partners

Educational Qualification BBA

PAN Card No. BGFPJ7337H
Adhaar Card No. 4072 3649 7436
Experience Having 12 years experience in Service.

5) MRS. REENA JALUKA

Husband’s Name Mr. Rajesh Kumar Jaluka

Age/ Date of birth 44 Years
Residential Address Jaluka House, Shastri Nagar (West), LRD More, P.S.-Bank More,
Dhanbad, Jharkhand-826001.
Functional responsibilities in the unit Partners

Educational Qualification Graduate

PAN Card No. ACAPJ8823E
Adhaar Card No. 4649 6049 7453
Experience Having 12 years experience in trading.

6) MR. ASHISH JALUKA

Father’s Name Late Suresh Kumar Jaluka

Age/ Date of birth 36 Years
Residential Address P.O.-Jharia, Near Little Star School, Amtal,
Dhanbad, Jharkhand- 828111
Functional responsibilities in the unit Partners

Educational Qualification Graduate

PAN Card No. AGUPJ3760C
Adhaar Card No. 5464 0642 6126
Experience Having 18 years experience in trading.

TEV Study M/s. Om Shanti Rice Mill

Financial Assistance Required from Bank for the Proposed Rice Mill:
Limit – Requested :

a. Term Loan : Rs. 700.00 lacs

b. Working Capital : Rs. 350.00 lacs
Total Limit : Rs.1050.00 lacs

Tenure of Proposed Term Loan :-

Total time period for implementation of the project has been considered about 9 months starting from
2nd quarter of F.Y. of 2018-19. We have assumed that the entire project will be implemented by end of
4th quarter of F.Y. 2018-19 and commercial operation will start from 1st quarter of F.Y. 2019-20. The
entire loan has been proposed to be repaid in 23 quarterly installments. The Repayment of the term loan
will start from 3rd quarter of 2019-20. The door to door repayment of the loan considered 7 years.

Schedule of disbursement of Fresh Term Loan :

Sl. Particulars Date of Disbursement Amount

No. (Rs in lacs)
1. 1st Disbursement nd
2 quarter of 2018-19 Rs.250.00 lacs
2. 2nd Disbursement 3rd quarter of 2018-19 Rs.250.00 lacs
3. 3rd Disbursement th
4 quarter of 2018-19 Rs.200.00 lacs
Total -- Rs.700.00 lacs

TEV Study M/s. Om Shanti Rice Mill

Proposed Repayment Period of Fresh Term Loan :
a) Tern Loan (New) :

This loan will be repaid in 23 quarterly installments (Ballooning Method) starting from 3rd
quarter of 2019-20. Total period of loan 84 months including 15 months gestation period.
Schedule of installment payment as given below:
(Rs in lacs)

Year Opening Installment Closing Balance Interest

Balance
2018-19 0.00 700.00 29.86
2019-20 700.00 50.00 650.00 67.03
2020-21 650.00 100.00 550.00 58.50
2021-22 550.00 116.00 434.00 47.96
2022-23 434.00 128.00 306.00 36.08
2023-24 306.00 136.00 170.00 23.21
2024-25 170.00 136.00 34.00 9.95
2025-26 34.00 34.00 0.00 0.41
Total Interest 273.00

** Bank may consider charging of installment on monthly basis.

The Project and Its Present Status :

The Om Shanti Rice Mill has decided to establish a rice mill with a processing capacity of 38400
MTPA. The partners and their family members has already purchased land in the own name for this
purpose. The land owners will give the land on lease to the firm for construction of the rice mill. The
firm to start construction of factory building only after receiving of all the statutory clearance and
approval of loan from bank. The factory will be implemented by March’ 2019 and commercial
production is expected to start from April’ 2019.

TEV Study M/s. Om Shanti Rice Mill

Details cost of the project & Means of Finance:
A) Project Cost
(Rs in lacs)
Sl. No Particulars Considered Considered by Us
by the
Total Cost Margin Bank Finance
Company
1) Land & Site Development 109.23 109.23 100% 0.00

2) Factory Shed & Building 206.02 200.02 30% 140.01

3) Plant & Machinery 603.78 603.79 25% 452.84
4) Cost of Electrification 118.71 118.71 25% 89.03
5) Furniture & Fixture 26.43 26.43 25% 19.82
6) Contingencies 20.13 18.98 100% 0.00
7) Pre-operative Expenses 33.71 49.86 100% 0.00
8) Margin on Working Capital 113.71 126.98 100% 0.00
9) Security Deposit 18.00 18.00 100% 0.00
Total Project Cost 1249.72 1272.00 - 701.71

The difference in project cost is mainly due to following factors:-

a) While working out the project cost contingencies was considered Rs.20.13 lacs. We have worked
out the same at Rs.18.98 lacs. Detailed worksheet given separately in this report.

b) Margin on working capital was considered Rs.113.71 lacs. We have computed the same
Rs.126.98 lacs under 2nd Method of Lending. Detailed working given in the report.

c) There has been some increase in preoperative expenses primarily due to interest during
implementation period. Calculation of interest during pre-operating period has also been given in
our report.

To arrive at the aforesaid estimated capital cost of the project following factors have been considered :

a) Land & Site Development : The factory will be constructed in the land owned by the Promoters/
family members in their personal name at Plot No.2280, 2327, 2329, 2328, 2296 & 2279, Mauza-
Golkunda, Khata No-73, Purulia-2, West Bengal, Pin-723126. The land is purchased in the name of
Mrs. Reena Jaluka, Mr. Shekhar Jaluka, Mr. Nitesh Jaluka & Mr. Piyush Jaluka and it has been given on
lease to the firm for setting up this unit. All sort of infrastructural facilities are available at site. The cost
of the land is Rs.109.23 lacs. We have considered 100% margin against the land cost.

TEV Study M/s. Om Shanti Rice Mill

b) Building & Civil Construction : The total cost of factory shed & building has been considered at
Rs.200.02 lacs (inclusive of GST @ Rs.18%). While working out the permissible bank finance we have
proposed a margin of 30% against the said cost. Detailed working of building & civil work cost has been
shown separately in this report.

c) Plant & Machinery : The cost of plant & machinery has been worked out on the basis of quotations
received from the suppliers. The aggregate cost of plant & machinery has been worked out at Rs.603.79
lacs. We have considered a margin of 25% of the said cost. Details of plant & machinery cost is also
given separately in this report.

d) Electrification : Cost of electrification has been considered at Rs.118.71 lacs which include GST
also at the applicable rate. We have considered a margin of 25% of the said cost. Detailed break up &
cost of electrification given separately in this report.

e) Other Misc. Assets/Furniture & Fixture : Cost of other misc. fixed assets/furniture & fixture has
been considered at Rs.26.43 lacs. We have considered a margin of 25% of the said cost. Details of other
misc. assets cost is also given separately in this report.

f) Contingencies : The overall contingencies cost has been estimated at Rs.18.98 lacs. Details of
contingencies cost is also given separately in this report.

g) Preliminary & Pre-operative Expenses : A provision of Rs.49.86 lacs has been kept under these
head. Detailed break-up has been attached with this report.

h) Security Deposit : The security deposit of Rs.18.00 lacs has been consider for giving security to
Damodar Valley Corporation (DVC) and various others statutory bodies.

i) Margin Money for Working Capital : Detailed working of working capital requirement has been
shown separately in this report.

The cost of the project as has been worked out appears reasonable.

TEV Study M/s. Om Shanti Rice Mill

B) Means of Finance
(Rs in lacs)

Sl No. Particulars Considered by the Considered by

Firm Us
1) Term Loan 800.00 700.00

2) Promoter's contribution 449.72 572.00

Total 1739.10 1272.00

Project Debt Equity 1.79 1.22

 Banker before considering sanction of this proposal should ensure about source of
promoter’s contribution.

 The company on implementation of the project will be entitled for capital subsidy from
State Govt. But as they will get it only after implementation of the project we have ignored
that fact of subsidy. The viability of the unit will improve further in case they received the
subsidy.

TEV Study M/s. Om Shanti Rice Mill

Implementation Schedule :
The implementation schedule for proposed parboiled rice manufacturing unit at Plot No.2280, 2327,
2329, 2328, 2296 & 2279, Mauza- Golkunda, Khata No-73, Purulia-2, West Bengal, Pin-723126
depicted in the Table below.

Table – Implementation Schedule

Activity Commencement Completion

Acquisition of Land Already acquired

Site Development Already Started August’ 18
Civil Work July’ 18 December’ 18
Power & Electrical line To be applied for By November’ 18
Plant & Machinery
Placement of Order August’ 18
Erection/Commissioning of Plant & Machinery January’19 February’ 19
Trial Run February/March, 19
Commercial Operation April, 19 -

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TEV Study M/s. Om Shanti Rice Mill

Details of Capacity Assessment, Capacity Utilization & Sales Realization :

 Assessment of Capacity of the Plant :

Proposed Capacity
Installed Capacity 8 MT/hr
No of Shift in a Day 2 Shift
Hrs/Shift of operation 8 Hr
Processing Capacity per Day in MT 128 MT
No of Working Days 300
Annual Processing Capacity of the plant 38400 MT

 Capacity Utilization & Sales Realization : (Rs in lacs)

Particulars 19-20 20-21 21-22 22-23 23-24 24-25 25-26

Annual Processing Capacity for the year (in MT) 38400 38400 38400 38400 38400 38400 38400

Capacity Utilization 60% 65% 70% 75% 75% 75% 75%

Processing during the Yr (in MT) 23040 24960 26880 28800 28800 28800 28800

Production Loss 20% 4608 4992 5376 5760 5760 5760 5760
Husk & Dry Loss

Actual Production (in M.T) 18432 19968 21504 23040 23040 23040 23040

Details of Item wise Production ( in M.T)

Rice (67% of paddy) 84% 15437 16723 18010 19296 19296 19296 19296
Broken Rice (6% of paddy) 8% 1382 1498 1613 1728 1728 1728 1728
Bran (7% of paddy) 9% 1613 1747 1882 2016 2016 2016 2016

Sales Value of Production (Per MT)

Rice 23500 3627.65 3929.95 4232.26 4534.56 4534.56 4534.56 4534.56
Broken Rice 16000 221.18 239.62 258.05 276.48 276.48 276.48 276.48
Bran 15000 241.92 262.08 282.24 302.40 302.40 302.40 302.40

Total Sales Value of Production 4090.75 4431.65 4772.54 5113.44 5113.44 5113.44 5113.44

Add : Opening Stock of FG 0.00 79.54 86.17 92.80 99.43 99.43 99.43
Less : Closing Stock of FG 79.54 86.17 92.80 99.43 99.43 99.43 99.43

Gross Sales Value 4011.21 4425.02 4765.92 5106.81 5113.44 5113.44 5113.44

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TEV Study M/s. Om Shanti Rice Mill

Details of Raw Material Cost:
(Rs. In Lacs)

Particulars 19-20 20-21 21-22 22-23 23-24 24-25 25-26

Production (in MT) 23040 24960 26880 28800 28800 28800 28800

Consumption of RM (Paddy) (in MT) 23040 24960 26880 28800 28800 28800 28800

Purchase Price of paddy in Rs 15000 15000 15000 15000 15000 15000 15000

Purchase Cost of Raw Material 3456.00 3744.00 4032.00 4320.00 4320.00 4320.00 4320.00

Raw Materials :
India has the largest paddy output in the world and is also the fourth largest exporter of rice in the world.
In India, Paddy fields are a common sight throughout India Paddy is cultivated twice a year in most
parts of India, the two seasons being known as Rabi and Kharif respectively. The former cultivation is
dependent on irrigation, while the latter depends on Monsoon. The paddy cultivation plays a major role
in socio-cultural life of rural India. There are basic commercial product rice, bran oil, broken rice are
obtained directly from paddy. Rice is the main product of a paddy processing unit. The rice is the main
food product of India’s entire population.

As states like West Bengal, Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Punjab
are major producers of paddy the availability of raw materials should not be a problem for the firm.

Technical aspects /Manufacturing Process :

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TEV Study M/s. Om Shanti Rice Mill

 13

TEV Study M/s. Om Shanti Rice Mill

The Proposed Infrastructures :
a) Location -

The proposed rice mill will be located at Plot No.2280, 2327, 2329, 2328, 2296 & 2279, Mauza-
Golkunda, Khata No-73, Purulia-2, West Bengal. The place is most conveniently located having
all the infrastructural facilities.

Following are some of the locational advantages of the site :

 Nearness to source of Raw Materials i.e. Paddy
 Convenient transportation
 Adequate sources of water supply
 Availability of adequate power supply.

b) Power-

The unit will apply for the 600 KVA bulk industrial power connections to West Bengal State
Electricity Board (WBSEB). In the cost of the project Rs.18.00 lacs has been considered as
security deposit for this purpose.

c) Water -

Water is one of the essential compositions for the process of food processing units. The company
will be setting up the required bore well to meet its water requirements.

d) Manpower -

The total requirement of the manpower and their cost of the operation have been given in the
manpower Chart shown separately in this report. Required technician and labour force will be
available locally.

Statutory clearance / Agreement/ Licenses etc. :

Pollution control & Statutory licenses :
As it is a rice mill it is treated as Green Industry for pollution purpose. However the Bank to ensure that
the Company has obtained NOC from State Pollution Control Board & other statutory licenses from the
respective authority. The company is also to obtain necessary registration from GST authority.

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TEV Study M/s. Om Shanti Rice Mill

Basic Assumptions : -
1. While examining the cost of the project we have seen that the civil construction cost more or less
has been worked out as per PWD rate. They have also considered GST on building materials and
labour charges. Cost of plant & machinery has been worked out on the basis of quotations
received from leading rice mill machinery manufacturer.
2. Project work is yet to start. The company is in the process of obtaining various statutory
clearances and also bank finance.
3. Cost of power & fuel- Detailed working in respect of consumption of power and fuel at various
level of capacity utilization has been shown in separate page of this report.

4. The cost of paddy varies in between Rs.12000/- to Rs.19000/- per MT depending on season. So
for arriving the purchase cost we have taken average purchase cost of raw materials @ 15,000/-
per MT.
The selling price of rice the main product also vary from Rs.22,000/- MT to Rs.29,000/- MT
depending upon quality of paddy and season. We have considered the selling cost at rs.23,500/-
per MT. Similarly the selling price of broken rice and bran considered at Rs.16,000/- &
Rs.15,000/- per MT.
5. Break up of production of rice, broken rice & rice bran has been shown separately in this report.
6. Detailed workings salary & Wages payable to production & administrative staff has been
attached separately with this report.
7. Other manufacturing expenses have been considered @ 0.50% of sales.
8. Repairs & maintenance cost has been considered @ 0.50% on gross block of FA with an increase
of 10% from next year & onwards.
9. Selling, general & administrative expenses have also been considered @ 1.00% of sales.

10. It is an agricultural processing unit and as such as per Bank’s guideline the interest rate should be
1% above MCLR i.e. at present 9.40%. However considering upward trend in interest rate we
have considered interest @ 9.75%. Interest on term loan during project implementation period
considered in the cost of the project as pre-operative expenses.

11. Detailed workings of depreciation calculation have been given in separate pages in this report.

12. Provision for Income Tax has been made @ 30.90%.

13. Detailed workings for computation of working capital limit have also been given separately in
this report.
14. The firm will have to raise necessary capital from the partners to finance the promoter’s
contribution for this project.

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TEV Study M/s. Om Shanti Rice Mill

Strength, Weakness, Opportunity & Threats (SWOT) :
Strengths

 The promoters are seasoned businessman and have experience of running rice mill.

 The advantage for setting up this unit in Purulia-2 is the availability of raw materials, power,
supply of labour and surface of transport facility.

 Human resources are cheap and abundant in Purulia-2, West Bengal.

Weaknesses

 The raw material of the unit is seasonally cultivated and is price volatile.

 The project is capital intensive and also requires high level of working capital funds.

Opportunities

 The rice is the main food product of our country’s entire population. So there is no dearth of
demand.

 Paddy is plenty available in West Bengal & its neighboring states.

Threats

 The cultivation of paddy in the area by large depends on nature. Any nature calamity can affect
the cultivation of paddy.

Comments on TEV:-
Considering reasonability of the project cost estimate & the envisaged pattern of financing,
reasonableness of the projected profitability, cash flow & the adequacy for discharging repayment
obligation pertaining to the financial assistance from bank we feel the project may be considered
Techno-Economically viable at a financing pattern shown in this report.

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TEV Study M/s. Om Shanti Rice Mill

Usage of water Breakup
OM SHANTI RICE MILL is setting up a Rice Mill at plot nos. 2270, 2271, 2272, 2273, 2274, 2275, 2279, 2280,
2296, 2327, 2328, 2329, Mouza Golkunda, Barakar Road, Purulia II, P.S. Purulia(M), P.O. Mamurjore Dist. Purulia,
Pin code – 723126, West Bengal. We believe in efficient and conservative usage of water.

Total Water usage per day is approximately 12 KLD.

Usage of water for domestic Purpose: .9 KLD

Usage of water for milling rice: 0.1 KLD

Usage of water for parboiling Rice: 11 KLD

We are planning to save water by using Water recycle system. In which Water used for parboiling rice will be
reused to approximately 90 %. And only 10% fresh water will be added in each batch. This will result in saving
water and energy. Also, waste water will be treated in an effluent treatment plant and will be discharged in a
pond so that this water can recharge ground water.

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TEV Study M/s. Om Shanti Rice Mill