Submitted to the State Bank of India In Partial fulfillment of the Master of Finance and Control Programme (2009-11)


MFC, Utkal University

Roll No. 09MFC022 Exam Roll No. 33706V93013
UNDER THE GUIDANCE OF Shri. Mihir Kumar Sahoo
Assistant General Manager (SME II) State Bank of India Local Head Office Bhubaneswar

Dr. Anil Kumar Swain
Faculty, MFC Utkal University Bhubaneswar












Development and Scope for Credit Growth in Rice Mills in Bargarh – Attabira Belt” is an authentic piece of work done by me under the guidance of Mr. Mihir Kumar Sahoo, AGM, SMEII, State Bank of India and Dr. Anil Kumar Swain, Master of Finance and Control (MFC), Utkal University for the partial fulfillment of the requirement for the degree of Mater of Finance and Control (MFC), Utkal University, Bhubaneswar. This piece of research is my genuine work and has not been published anywhere at any time to the best of my knowledge.

Place: Bhubaneswar Date: MISRA ANANYA



This project is not the culmination of hard work of just one person but is the result of a lot of help from a lot of people. The gratitude cannot be expressed in words, either written or oral but here I make an attempt to acknowledge those who have helped me in the successful completion of this project. At the outset, I would like to extend my sincere gratitude and reverence to the esteemed organization, STATE BANK OF INDIA and its management for providing me with the opportunity to pursue my summer project. I would like to thank Mr. Mihir Kumar Sahoo, AGM, SME-II, State Bank of India who mentored me on the project and made sure that everything from the little details to the big picture was taken care of. His mastery of the subject ensured that I was able to tackle even the complex of areas and this helped broaden the scope & significance of my project. I am also thankful to Mr. A.B. Behera, Manager, SME-II, L.H.O., State Bank of India, Mr. R.T. Pattnaik, Chief Manager, Mfg. T&S, L.H.O., State Bank of India, Mr. Manoj Biswal, Commercial Branch, Bargarh for helping me in completion of this project. The staffs of State Bank of India, LHO, Bhubaneswar were also extremely helpful at every stage of the project. I would like to mention my faculty guide Dr. Anil Kumar Swain who went out of his way to help me in my project. His support & knowledge was instrumental in the success of the project. I am also thankful to my other faculty members, parents and my friends for their continuous support and encouragement. Last but not the least to Mr. Umesh Kumar Aggarwal, Mr. Ravi Mittal and Mr. Prayash Hota, without whose help it would have been difficult to complete the project.

Place : Bhubaneswar
(Ananya Misra)



This project is based on the study of Cluster Development of the Rice Mill Cluster of Bargarh – Attabira belt and the Scope for Credit Growth in the Cluster for State Bank of India. An insight view of the project will encompass – the objective of the study, the purpose and scope of the study, the various methods used for collecting data and their sources, further specifying the limitations of the study and drawing inferences from the learning so far. A general idea about cluster is done, followed by a thorough study on the Rice Mill Cluster of Bargarh – Attabira belt. An analysis has been done to determine the Scope available for State Bank of India for Credit Growth in the cluster. Cluster Development has emerged during the last decade as one of the most innovative and effective ways for small firm development among industry developed and developing countries. From the international experience, it is well established now that Micro, Small and Medium Enterprises (MSME) gain competitiveness by forming strong relations with other firms. They also gain from linkages with service institutions in clusters of enterprises based on groups of related products. The enterprises together are better able than firms considered individually to grow rapidly, upgrade their skills, improve their productivity and technology, develop product niches and gain access to distant markets. The scope of the study is limited to the Rice Mill Cluster of Bargarh district in the state of Orissa. The diagnostic study report of the cluster has been conducted with an objective to find out present status of Rice Milling Industries, level of technology used, marketing network, availability of institutional support with regard to credit, capacity building etc. and to identify the problems being faced by them which hinders the process of development/ growth of the cluster. More emphasis will be given for promotion of both domestic and export marketing, technology up gradation, Institutional Capacity Building, quality improvement etc. The project also tries to evaluate the scope for credit growth in the cluster for State Bank of India. It is done by analyzing the Aggregative Risk Score of various Rice Mills and getting the Borrowers Rating as given by the State Bank of India.




Figure 4.15: Various Sources of Loan Figure 4.10: Type of Unit Figure 4. Figure 4.5: Chart Showing Trend of Value of the Exports done in the Past Three Years.19: Position of Working Capital in Rice Mills Figure 4.6: Manufacturing Process of Raw Rice/ Parboiled Rice. Figure 4. Figure 4.2: World’s Main Importers of Rice (all types).20: Labour Requirement of Rice Mills Figure 4.22: Custom Milling Procedure in the Rice Milling Cluster of Bargarh District 7 .9: Growth of Rice Mill Cluster in Bargarh District.8: Recovery of Product & By Product from Rice Milling.11: Annual Turnover of Rice Mill.13: Initial Investment made in Rice Mills Figure 4. Figure 4. Figure 4.7: Process for Super Quality/ Export Quality Rice. Figure 4.16: Various Types of Loan Figure 4.17: Loan Amount Taken by Various Rice Mills Figure 4. Figure 4.18: Working Capital Requirement of Rice Mills Figure 4. (average from 1996-2006).( average from 1996-2006). Figure 4.4: Chart Showing the Trend of Quantity Exports for the Past Three Years.3: World’s Main Exporters of Rice (all types).1: Distribution of World Paddy Rice Production (average from 1999-2007). Figure 4.21: Types of labour available Figure 4.12: Net Profit of Rice Mills Figure 4.• • • • • • • • • • • • • • • • • • • • • • Figure 4.14: Various Sources of Finance Figure 4.

5: Ananlysis CHAPTER .3: Paddy Cultivation in Orissa Table 4.1: Rice Production in Three Largest Producing States in India Table 4.I 8 .4: Land Pattern in Bargarh and the Land Utilization Pattern Table 4.2: Indian Rice Exports Table 4.LIST OF TABLES • • • • • Table 4.

1 INTRODUCTION Agriculture is the main stake of India. Agriculture and allied sector like forestry. India Ranks second world wide in farm output. logging and fishing accounted for 17% of the GDP in 2009 and employed 5% of the total work force.1. 9 . Respite a steady decline of its share in the GDP agriculture is spice the largest economic sector and plays a significant role in the overall socio-economic development of India. Agriculture is the back bone of our country.

sorting and packaging which enhance life of food products. consumption. with 10 . The Food Processing Industry provides vital linkages and synergies between Industry and Agriculture. Food Processing involves any type of value addition to agricultural and horticultural produce as also meat processing and includes processes such as grading. Industrial sector although does not employ majority of the population it employs 14% of the total work force which is only one third of what agricultural sector employees. India ranks 16th in the world in terms of nominal factory output. export and growth prospects.At the same time industrial sector of India is also booming. but it accounts for 28% of the GDP of India. The Food Processing Industry is not far behind in India. The Government has accorded it a high priority. The Food Processing Industry in India is one of the largest in terms of production.

The organized market accounts for 55% of the market for bread. coconuts. The Indian Food Industry is highly competitive with many foreign players in the market. It is the third largest producer of tobacco. sugar.8% in 2005-06 to 7% in 2008.000 crore and is growing annually at 14%. Post liberalization Indian companies faced stiff competition from foreign companies and also from cheaper Chinese imports. The food processing industry which relates the industry and the agriculture sector of the country is valued at Rs. Competitive pricing. and black pepper.a. 1. India is the second largest producer rice in the world after China and Andhra Pradesh is the second largest rice producing state in India with West Bengal being the largest. technology.5% p. Although IT industries in India are growing fast but at the same time the small scale industries are also developing. 11 . cotton. The share of India’s IT industry to the country’s GDP increased from 4. bread production is growing at 7. It is the second largest producer of wheat.000 rice hullers and 2.fiscal reliefs and incentives. revamping management focusing on designing new products and relying on low labour cost and technology. application of modern agricultural practices and provision for agricultural credit and subsidies since the Green Revolution in India have increased the field per unit area of all crops since 1950 The economic reforms brought foreign competition. India is the largest producer of milk. 3. But the Indian industrial sector handled the change by squeezing costs. tea. rice. to encourage commercialization and value addition to agricultural produce.000 crore by 2015 in the food processing industry.50. led to privatization of some public sector industries and led to an expansion in the production of fast moving consumer goods. turmeric.20. silk. for minimizing pre/post harvest. cashew nuts. India accounts for 10% of the world fruit production. Apart from this. ginger. generating employment and increasing exports. There are over 91. Due to the special emphasis placed on agriculture in the five year plans and steady improvements in irrigation. aggressive advertising campaigns and efficient packaging are the strategies used by firms to gain market share. expansions. peanuts and inland fish.the government has recognized an investment opportunity of about Rs.

There are about 43. enabling better credit flow and sustenance of environment issues more effectively and sustainably.000 modernized rice mills. branded flour (atta) market is likely to grow at 16% p. For the next 3 to 5 years. Developing clusters is not only a means to improve the competitiveness but also for alleviation of poverty. generation of sustainable employment. both industrial sector and agricultural sector play a vital role in the overall economic development of India. The popularity of branded rice is rice is rising among the urban population. To back both the sectors food processing industry in India is rising and will contribute majorly to the GDP in the near future. If agriculture provides employment opportunities industry provides GDP growth.a. fostering innovation. In this relatively short time. 12 . institutions and service providers in clusters is now considered an important a resource as much or even more potent than finance.000 small flour mills engaged in primary milling. There are huge growth prospects for the Food Processing Industry. 820 large flour mills and 11. Thus. The web of interrelationships among enterprises. Cluster development has been undertaken in more than 50 countries across the world and at least 20 diverse independent initiatives are in progress or planning in India alone. knowledge and skills. born only around 1990’s. small and medium enterprise development. There is a surge in exports of India basmati and nonbasmati rice backed by rising international demand.2 Rationale of the Study Cluster development is a relatively new art and science. infusing technology.60. 1. the subject has gained immense popularity among the policy makers as a very important tool for micro. technology.000 pulse mills.

Thus. 1. To study the development of the Rice Mill Cluster of Bargarh District in Orissa. All the aspects that are necessary for development of cluster have been considered. skill and finance. this project will act as a learning device for finance students. Primary sources 13 . it’s constituent and other various aspects of it. the present study has been undertaken with the following specific objectives:• • • • To define cluster.4.The rice mill cluster of Bargarh is one of the oldest clusters of Orissa and one of the most developed clusters of the country in terms of technology. The study also includes the procedure for rating a rice mill for the purpose of credit appraisal. 1.1 Scope of the Study The study covers various aspects of clusters and the process of development of the cluster. knowledge.2 Sources of Data The project includes data that has been collected both from primary and secondary sources.4 Research Methodology The study has been done about the development of cluster in Bargarh District and the Scope for Credit Growth for State Bank of India in the cluster. 1. by collecting information about them and having a thorough study on the topic through questionnaire and journals. 1. To study the Rice Mill Cluster of Bargarh District in Orissa. To make a study on the scope of credit growth for State Bank of India in the Rice Mill Cluster of Bargarh District in Orissa.4.3 Objectives of the Study In view of the above backdrop.

circulars. Limitations of the study Time was a limiting factor in this study. newspapers. DIC. They are the employees of State Bank of India. 14 . The area of study considered was quite vast field of study and lack of sufficient time was also a constraint. Bargarh and Block Office. annual reports of certain rice mills.Primary source includes first hand data from the people in the practical field visit. Number of rice mills in Bargarh being very large and spread in different parts of the district it was not possible to interrogate the owners of each and every rice mill. books. The study required personal interrogation with the rice mill owners. The method of collection of such data includes personal interaction and interview through unstructured questionnaire.5. commercial branch. Bargarh and Rice Mill owners. The rice mill owners were non-cooperating and did not provide much of their financial data. 1. Secondary sources Valuable information was collected from secondary sources like magazines. journals. Bargarh. and internet websites.

The bank traces its ancestry back through the Imperial Bank of India to the founding in 1806 of the Bank of Calcutta. 15 . It has a market share among Indian commercial banks of about 20% in deposits and advances.1 Introduction State Bank of India (SBI) is the largest bank in India. with Reserve Bank of India taking a 60% stake. has the largest branch network in India. it is a regional banking behemoth. and renamed it the State Bank of India. the Government took over the stake held by the Reserve Bank of India.II State Bank of India 2. including products aimed at NRIs. The State Bank Group. making it the oldest commercial bank in the Indian Subcontinent.CHAPTER . In 2008. with over 16000 branches. The Government of India nationalized the Imperial Bank of India in 1955. With an asset base of $250 billion and $195 billion in deposits approximately. and SBI accounts for almost one-fifth of the nation’s loans. SBI provides a range of banking products through its vast network in India and overseas.

more than 9000 ATMs across India. Dubai. State Bank of India has presence in Dubai International Financial Centre. London. Los Angeles. It is the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating and various other rankings. United Arab Emirates (www. Dhaka. Osaka. 1840) and the Bank of Madras (incorporated on 1 July. a right they retained until the formation of the Reserve Bank of India. Hong Kong.State Bank of India has electronically networked all its branches under Core Banking System (CBS). namely. Bahrain and Singapore and representative offices in Bhutan and Cape Town. Muscat. 2.sbi. Frankfurt. The Bank of Bengal and two other Presidency banks. Sydney and Tokyo.ae). the Bank of Bombay (incorporated on 15 April. New York. later renamed the Bank of Bengal. The bank has one of the largest ATM networks in the region. These three banks received the exclusive right to issue paper currency in 1861 with the Paper Currency Act. when the Bank of Calcutta. and Male in the Maldives. These managers took the retirement allowances and then went on to become the senior managers at new private sector banks. All three Presidency Banks were incorporated as joint stock companies.2 History The roots of the State Bank of India rest in the first decade of 19 th century. and were the result of the royal charters. It has offshore banking units in the Bahamas. 1843). The State Bank of India 29th most reputable company in the world according to Forbes. 1806. The Presidency banks 16 . was established on 2 June. The bank has 52 branches. SBI has tried to reduce it’s over staffing through computerization of operations and Golden handshake schemes that led to a flight of its best and brightest managers. agencies or offices in 32 countries. Johannesburg. It has branches of the parent in Colombo.

enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries. There has been a proposal to merge all the associate banks into SBI to create a ‘mega bank’ and streamline operations. On 30 April. in 1985.amalgamated on 27 January. State Bank of Saurashtra. On September 13. one of its Associate Banks. emphasizing the development of rural India. and the reorganized banking entity took as its name Imperial Bank of India. State Bank of Travancore. The Government of India recently acquired the Reserve Bank of India’s stake in SBI so as to remove any conflict of interest because the RBI is the country’s banking regulatory authority. 2008. SBI has acquired local banks in rescues. acquired a controlling interest in the Imperial Bank of India. already had an extensive network in Kerala. which reduced the number of state banks from seven to six. 1955 the Imperial Bank of India became the State Bank of India. it acquired Bank of Cochin in Kerala. the Reserve Bank of India. In 1959 the Government passed the State Bank of India (Subsidiary Banks) Act. which is India’s central bank. The Imperial Bank of India continued to remain a joint stock company. SBI was the acquirer as its affiliate. which had 120 branches.3 Associate Banks There are six associate banks that fall under SBI. The first step along these lines occurred in September 2008 when State Bank of Saurashtra merged with State Bank of India. the government integrated these banks into State Bank of India to expand its rural outreach. 1921. SBI Mutual Fund (A Trust) 17 . • • • • • • State Bank of Indore State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore Group of Companies: • • SBI Capital Markets Ltd. Pursuant to the provisions of the State Bank of India Act (1955). and together these six banks constitute the State Bank Group. In tune with the first Five Year Plan. For instance. merged with State Bank of India. 2.

7. No. 11. 13. Bhattacharya (MD & CC & RO) Shri R. SBI DFHI Ltd. SBI Canada • • 2.5 Vision of the Bank: The main vision of the bank was to retain its position in the country as a pioneer in development banking and to maximize shareholder’s value through high sustained earnings per share.K. Rajiv Kumar Shri Arun Ramanathan Smt. Ltd.) Vasantha Bharucha Dr. Ashok Jhunjhunwala Shri Dileep C. 6. 2. 5. Sundaram Dr. Deva Nand Balodhi Prof. shareholder and employee satisfaction and to play a lenders role in expanding and diversifying banking to become the premiere Indian Financial Service Group. Sridharan {MD & GE(A&S)} Dr. 10. 8.4 Mission of the Bank: The main aim of the bank was committed to excellence in customer. Ltd. Name of Director Shri O.(Mrs. 12. Salahuddin Ansari Dr. Shyamala Gopinath 2.P. SBI Life Insurance Co. Bhatt (Chairman) Shri S.7 Products and Services: 18 . 3. Mohd.6 Board of Directors: Sl. Ltd. 9. SBI Cards and Payment Services Pvt. – Banc assurance (Life Insurance) SBI Funds Management Pvt. Ltd. Choksi Shri S.• • • • SBI Factors and Commercial Services Pvt. Venkatachalam Shri D. 2. 4. 2. 1.

Personal banking: SBI offers a wide range of services in the Personal Banking Segment which are indeed below: • • • • • • • SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits SBI Housing Loan SBI Car Loan SBI Educational Loan Loan Against Mortgage of Property Loan Against shares And Debentures Rent Plus Scheme Medi-Plus Scheme • • • 2.SBI has products and services customized with a significant global footprint to suit the banking needs of individuals. 1. NRI Services: NRI’s can open the following types of accounts with SBI: • • • • • • • NRE Rupee Accounts Savings Accounts Current Accounts Term Deposits (Interest Paid Out quarterly) Special Term Deposits (Interest Compounded Quarterly) Non-Resident (Ordinary) Account NRO A/c’s – Rupee Accounts for Crediting Income in India 19 .

Agriculture / Rural banking: State Bank of India Caters to the needs of agriculturists and landless agricultural labourers through a network of 6600 rural and semi-urban branches. Advances are given for very small activity covering poorest of the poor to hi-tech activities involving large fund outlays. SBI is the leader in agri finance in the country with a portfolio of Rs. Euro.• • Foreign Currency Non Resident Accounts Fixed Deposits in Pound Sterling. • Produce Marketing Loan Scheme Loan Against Warehouse Receipts/Cold Storage Receipts Kisan Credit Card Scheme Agricultural Term Loans Land Development Schemes Minor Irrigation Schemes Farm Mechanization Schemes Financing of Combine Harvesters Kisan Gold Card Scheme Land Purchase Scheme Krishi Plus Scheme Arthias Plus Scheme • • • • • • • • • • • 20 . There are 972 specialized branches which have been set up in different parts of the country exclusively for the development of agriculture through credit deployment. Bank has also agri specialists in various disciplines to handle projects and guide farmers in their agri ventures. 18.000 crores in agri advances to around 50 lakhs farmers. Canadian Dollar and Australian Dollar Resident Foreign Currency Accounts • 3. US Dollar. To give special focus to agriculture lending Bank has set up agri business unit.

merchant banking. The network is augmented by a cluster of Overseas and NRI branches within India and correspondent links with over 522 banks. Bank’s Joint Ventures and Subsidiaries abroad further underline the Bank’s international presence.• • • • • Dairy Plus Scheme Broiler Plus Scheme Finance to Horticulture Agri Business Heads Lead Bank Scheme 4. the world over. loan syndications. The services include corporate lending. The services include: • • • Corporate Lending Loan Syndications Merchant Banking 21 . handling Letters of Credit and Guarantees. Indian banks and corporate are able to avail single window Euro services from the Bank’s Frankfurt branch. Paris and Frankfurt. short-term financing. collection of clean and documentary credits and remittances. foreign entities and banks through a network of 84 offices/braches in 32 countries. The bank has created a niche for itself in the Euro land with branches located in Antwerp. non-resident Indians. International Banking: International Banking Services of State Bank of India are delivered for the benefit of its Indian customers. Bank’s Joint Ventures and Subsidiaries abroad further underline the Bank’s international presence.

• • • • • • Correspondent Banking Offshore Banking Handling Letters Of Credit and Guarantees Short-Term Financing Collection of Clean and Documentary Credits Remittances 5. Corporate Banking: SBI is a one shop providing financial products / services of a wide range for large. 99 branches in industrial estates and more than 400 branches with SIB divisions. • • • • • • • Working Capital Financing Term Loans Deferred Payment Guarantees Corporate Loans Export Credit Strategic Business Units Pricing 6. SME: State Bank of India has been playing a vital role in the development of small scale industries since 1956. 22 . The bank finances Small Business activities which are of special significance to a large number of people as many of these activities can be started with relatively lower investment and with no special skills on the part of the entrepreneurs. medium and small customers both domestic and international. The bank has financed over 8 lakh SSI units in the country. It has 55 specialized SSI branches.

• • • • • • • • • • • • • • • • • • • • • • • • Commodity Backed Warehouse Receipt Financing Surabhi Deposit Scheme Code of Banks Commitment to Micro and Small Enterprise Traders Easy Loan Scheme SSI Loans Business Current Accounts Open Term Loan Retail Trade Doctor Plus Dental Doctor Plus SBI Shoppe Cyber Plus SME Credit Plus Small Business Credit Card SME Petro Credit Dal Mill Plus Paryatan Plus Transport Operators Auto Loan Charter for SSI Artisan Credit Card Rice Mill Plus School Plus Swarojgar Credit Card 23 .

They are: • • • • • • • • • • • • • Domestic Treasury SBI Vishwa Yatra Foreign Travel Card Broking Services ATM Services Demat Services Internet Banking Mobile Banking E-Pay E-Rail Safe Deposit Locker Gift Cheques Micro Codes Foreign Inward Remittances 8. No wonder that out of 9315 branches in India. The large network of SBI branches provides easy access to the common man to deposit the following Government dues and pension payments. Government Business: State Bank of India’s linkage with Government business is widespread. about 7000 branches are conducting Government Business.7. 24 . Services: SBI offers various services to its customers.


3.1 Meaning of cluster


A cluster is a concentration of economic enterprises, producing a typical product or service or a complementary range of products or services within a geographical area. A cluster of MSME is identified by the ‘product or service’ the micro or small enterprises produce and the ‘place’ where the enterprises are located.

3.2 Concept of cluster

United Nations Industrial Development Organization (UNIDO) cluster development programme, in India, has worked on some assumptions to estimate the number of MSME clusters. An industrial cluster is considered to be one that has 100 or more registered enterprises. As against this, even the presence of 50 handicraft enterprises is considered to be significant for handicraft cluster. In case of a handloom cluster, there should at least be 500 handlooms in a given location.

3.3 Constituent of a cluster

A cluster consists of not only the economic enterprises that actually produce the product or service that defines the cluster but also the raw material providers, sub-contractors, buyers, exporters, machinery suppliers and the various support institutions, regulatory agencies, consultants, common facilities, transporters and all other service providers that facilitate the production directly or indirectly in the cluster. Besides there are various interest groups such as business associations, self help groups, co-operatives and NGO are that may promote business interests of various groups of enterprises in the cluster. All these entities are called cluster stakeholders.

3.4 Types of clusters

The various types of clusters can be classified as:

a) Artisan cluster:


An artisan cluster is characterized by the predominance of household based enterprises. Such enterprises use personal skills of the artisans to production, rather than electrically driven machinery. They are run by the family labour both in production and management of the enterprise. They produce handicraft or handloom products.

b) Industrial cluster:

An industrial cluster may have some household enterprises but is characterized by predominance of small and medium industrial enterprises with hired labourers.

c) Natural cluster:

A cluster evolved in the past due to local availability of raw material, skill or demand. Most of the clusters known in India are natural clusters. Such clusters may have been in existence for several decades and at times for centuries.

d) Induced cluster:

Induced clusters come up at a location due to specific investment policy or public provision of specialized infrastructure. These measures can lead to the creation of new clusters in that particular new area.

e) Vertical cluster:

A vertical cluster consists of one or a few large enterprises and a large number of other small supplier enterprises.

f) Horizontal cluster:

A horizontal cluster consists of a large number of small and medium sized enterprises that may produce and market directly while competing with one another. They may have other supplier firms in the same cluster.

g) Exporting clusters:

These are the clusters that have a primary market abroad are called as exporting clusters

h) Dynamic clusters:

Dynamic clusters demonstrate a high degree of vibrancy and high growth in the recent past.


Creation of cluster

There are essentially two components to cluster creation; the first is cluster creation, the second is cluster up gradation. Some experts claim that “any effort to build clusters from scratch is doomed to failure”. Some of the key elements for successful up gradation strategies are: • Active stewardship from a full time cluster development agent (CDA) or equivalent profession. The time commitment could be 3-5 years or more, before an initiative becomes sustainable.


first on a one to one basis. • Activities should involve a broad range of related firms. Upgrading will change cluster dynamics. the presence of several local training institutes had led to the development of a trained workforce. As in case of Pune food clusters response to challenging food quality standards that initially appeared to threaten the cluster’s very survival. In some cases. In the case of Ludhiana hosiery cluster. benefiting certain sorts of firm. Demanding Regulatory Standards and also a network of supporting institutions that extend beyond the tight geographical focus. • Activities over time to build trust. This means a hard look at what the cluster produces. • Securing a comprehensive policy package. financial contribution can help secure ownership. and for whom. 29 .• Existence of one or more dynamic business associations. • A demand led approach to insertion into global value chains. • Responding to external challenges can enhance collective action. Activities will likely be holistic in scope. and after that across the cluster as a whole. • Accepting the ‘tremendous heterogeneity’ in how different clusters and firms react. It does not only concentrate on ‘how’ it produces. not just those that imitate each other and compete solely on price. • Securing buy-in from a critical mass of SME’s participation will not be forthcoming unless the gains are tangible.

The members of the cluster get the advantage of easy availability of raw material. Thus it helps in the providing skilled labourers to the units. which help in the development of each and every business unit of the cluster.  Abundant clients attracted by the cluster tradition: A cluster attracts a lot of clients. Creation of cluster gives them many advantages of cheaper rate of transportation. This gives an opportunity to the local labourers to develop their knowledge and working skill. availability of raw materials comes first.  Customized business development services: Clustering helps in the overall development of all the business enterprises in the area. the clients are attracted for their own advantage and profit.  A skilled local labour force: The creation of a cluster attracts local labour. Business units in a particular cluster usually prefer the local labour rather than migrant labour as the local labourers understand the place and environment well. The source of their raw material is near and approachable. As many business units come under one regulation so the clients get a fair deal if they trade with a business unit established in a cluster. As the business units are well regulated and profitable in a cluster.6 Advantages of cluster The various advantages of having a cluster are:  Proximity to Raw Materials: The conditions under which a concentration of economic enterprises is declared a cluster. the business development services are customized in mature. Any business development service implemented in the cluster covers each and every unit. 30 . Clustering helps in developing each and every business established in the cluster.3. Thus.

 Vibrant competition among entrepreneurs: Creation of cluster groups the various business units functioning in a particular area. many unregistered organizations also get the undue advantage of getting into the cluster.7 Disadvantages of cluster The various disadvantages of having a cluster are:  Unregistered members: When a cluster is created it has to take into consideration all the business units producing similar type of product in that area. This makes them avoid investment in acquiring modern and updated technology. It brings them under one rule and regulation. and leaves less scope for monopoly among the business units. This enhances competition among the business units to increase their profits. 31 .  Unsmooth flow of funds: Clustering also facilitates unsmooth flow of funds. Thus. It spurs innovation among the business units and also increases efficiency. 3.  Lack of modernization & up gradation of technology: The manufacturers who are the members of the cluster do not seem interested in acquiring modern technology and high skill. Thus clustering helps in development and overall growth of the business units. Being the member of a cluster the manufacturers get a lot of benefits for running their business profitably.

This is a major drawback for the development of a cluster. Usually there is less scope in a cluster for a smaller unit to grow and there remains a lot of opportunity for the bigger unit to expand their units. 32 .  Lack of trust: There is not much co-ordination between smaller and bigger units in the cluster. Illiterate labourers: The labourers working in the industry are illiterate and are not skilled to work with modern and updated technology. As the industries are also not much modernized so the labourers remain illiterate about the work they do. So there is lack of co-ordination between the smaller and the bigger units.

1 History of Rice 33 .CHAPTER – IV 4.

Rice could be taken to many parts of the world due to its versatility. are the most popular cultivated rice. in the Asian areas rice has spread and is now grown on all continents except Antarctica.C. alcoholic beverages and special foods for religious ceremonies. its cultivation spread throughout Sri Lanka. Rice spread throughout Southern Europe and to some of North Africa. It was then passed onto Greece and areas of the Mediterranean. Being able to grow in this wide spectrum of climates is the reason rice is one of the most widely eaten foods of the world. For millions of people rice is 3/4 their total diet. From Europe rice was brought to the New World.Rice has fed more people over a longer period of time than any other crop. From Portugal it was brought into Brazil and from Spain to Central and South America. People have used rice to make snacks. Beginning in China and the surrounding areas. As far back as 2500 B. Oryza sativa and oryza glaberrima. From an early history. As a nutrition source. and India. Rice. It is able to grow in the desert conditions of Saudi Arabia. in the wetland deltas of Southeast Asia in the flooded rice plains which we are most familiar with. main courses. a member of the family Poaceae. is one of the three leading crops in the world and has a variety of uses. 34 . rice has been documented in the history books as a source of food and for tradition as well. desserts. rice is abundant in carbohydrates while being low in nitrogenous matter and fat.

35 . The Kings too were fond of rice varieties as rice is an important part of the Mahaprasad that is offered to Lord Jagannath every day. where the initial survey in the early decades of the 20th century had recorded 150 varieties. 00. Wild rice. scientists are working on a technique to maximize year-round production of the crop on a given plot of land in order to increase yields for rice eating populous. Even today there are huge stretches of land across Orissa that grow rice for the daily offering to the deity. The similarity between the name Orissa and the Greek name for rice “Oryza” has led many to speculate that the name of the State derives its name from the crop known as Oryza Sativa. Indonesia and Sri Lanka. History of Rice in Orissa: Rice has been the principal food crop of Orissa much before the 14th century AD. The farmers of Orissa both worshipped and loved the crop and never failed to improve on its practice that led to the enormous diversity of rice varieties observed in Orissa since ancient times. When WangTa-Yuan. Thanks to the maritime skills of the Oriya’s. wild varieties are found in the Jeypore tract. Besides these cultivated varieties.000 recorded varieties of rice. and also the Bhitarkanika coastal area where a wild variety grows abundantly in tidal mud flats based upon which many flood and salinity resistant varieties have been developed.In looking towards the future. It is during the course of such business and plundering that popular variety of rice from those lands may have been imported into the state to be later acclimatized and adapted as per local conditions. the locals traveled by indigenously built decorated wooden ships called boita’s to far off Burma. It is thus no wonder that Orissa once had 50. was tamed by the tribal’s inhabiting the Jeypore tract of Orissa which is considered to be one of the secondary centers of origin of rice.000 as record keeping was never the farmers forte. it is known. The actual number could have been more than 1. the Chinese writer of the 14th century visited the State it was being grown in abundance.

Seed selection was based not just on yield but also on such other criteria as food habit. certain varieties are grown purely for festive use and are used as offerings to God called “bhoga”. 4. aroma. acidity and jaundice are conditions some native rice varieties of Orissa can address. sweets. traditions and cultural practices. stale rice in water. and nutritional values. was partaken while mourning for the dead perhaps for its anti depressant qualities. size of the panicles. colour. resistance to salinity. rice milk. annual production was around 519 million tons and by the end of the century it had reached 594 million 36 . At the beginning of the 1990s. time taken to yield. but also with rich history. Thus rice in Orissa is associated not only with food. puffed rice. a variety of black rice. long stem ensures the rice survives a flood and the hay can be used for thatched houses as well as cow fodder. are some of the favourite rice preparations of the Oriya’s. kalakrushna. for ritualistic use. beaten rice. malnutrition. indigestion. asthma. certain rice varieties of Orissa can compare with the famous Basmati for its scent and taste. a variety called Sarai can grow even in scanty rainfall. arthritis. draught resistance. keeping qualities. small grained rice does not break but long grained rice fetches more price in the market. rice pudding. large panicles mean more grain per panicle. nutrition for the mother while weaning. rice cakes. size of the grains. length of the stem. taste. Rice was also selected and cultivated for medicinal value. puffed paddy.2 International scenario: Rice is the second largest produced cereal in the world. resistance to pests and disease. beverage rice.

By the end of the year 2008.s. Brazil is the most important non-Asian producer. it has now begun to seriously affect some countries such as China where rice areas have declined as a consequence of water scarcity and competition from more profitable crops (oleaginous). which account for more than one-third of global population (52. Despite this trend. Production is geographically concentrated in Western and Easter Asia with more than 90 percent of world output. almost exclusively due to increasing production in Western and Eastern Asia.3% over the 1999-2003 period). China and India. followed by the United States. World production has shown a significant and very steady growth. supply over half of the world's rice. Figure 4.tons. However. except in Japan.a pakistan Source: UNCTAD Secretariat from the Food and Agriculture Organization of the United Nations (FAO) data Growth has not been homogeneous in this group of countries. World production however totaled 647 million tonnes of milled rice in the year 2007. the world rice production had reached 661 million tones.1 : Distribution of the world paddy rice production (average 1999-2007) india china indonesia vietnam thailand japan brazil u. Traditionally. The decrease in Asian production at the end of the 1990s did not get enough attention as it was considered to be a temporary abnormality. production in Asian increases. Volume and value of import and export: 37 . Italy ranks first in Europe. rice still plays a vital role in all the countries in the region.

Besides the traditional main exporters (Thailand. a relatively important but still limited part of rice traded worldwide comes from developed countries in Mediterranean Europe and the United States. the Philippines. Vietnam. The values correspond to imports of different types of rice (paddy. which corresponds to only 5-6 percent of world production. Each color represents an importer Brazil country (either a (. in thousands of dollars. accounting for 35 percent of the world's rice imports and about 75 percent of total exports.2: World's main importers of rice (all types). There are two major forces behind this: new food habits in developed countries and new market niches in developing countries. India and Pakistan). have vulnerable economies. broken). there are uncertainties about this projection because importers.87 Figure 4. normallym t) to lowerlow middle income countries. European Union (3. Japan (. Bangladesh. Nigeria.63 m t) However. in millions of tons m t) m t) Indonesia (1. white. average from 1996 to 2006.1 It is projected that the global market will increase 3 percent per year over the mid to long term. Iraq and Brazil.93 Iran Bangladesh (.5 Source: UNCTAD Secretariat from the Food and Agriculture Organization of the United Nations (FAO) data 38 . It makes the international rice market one of the smallest in the world compared to other grain markets such as wheat (113 million tons) and corn (80 million tons). The map below shows the main importers and their suppliers. (. The major importers are Indonesia. Russian federation The Middle East is the leading import and export region. t) brown.International rice trade is estimated between 25 and 27 million tons per year.97 m or a group).

although it lags far behind the countries like USA. Taiwan. Haryana. UK.basmati varieties are produced in other states. Bihar. Orissa. Haryana. Few fully automatic plants imported from world renowned manufacturers from countries Japan and also colour sortex machine imported from USA. exports. Germany.41 Figure 4.13 Thailand (7.3: World's main exporters of rice (all types). Uttaranchal. Japan and Taiwan have 39 . 04 India (3. India has received patent for its basmati variety of rice. Depending on the regional food habits the rice mills produce raw rice and parboiled rice mills in eastern India producing mainly the parboiled variety. Karnataka and Kerala. UK.basmati rice produced in the country constitutes both the aromatic and non-aromatic varieties. quality and technology.91 Source: UNCTAD Secretariat from the Food and Agriculture Organization of the United Nations (FAO) data 4. Rice milling industry in India has undergone different phases of technological transformations related to parboiling and drying systems and has developed reasonably good rice mill machine manufacturing base. Haryana heads the list and is followed by Punjab. Punjab.86 Pakistan (2. A few benchmarking rice clusters of the country have been developed in these two states which are in production. west Bengal. In respect to exports of fine quality of basmati rice from the country. in millions of tons China (1. average from 1996 to 2006. Assam. Uttaranchal and Uttar Pradesh while the non.United States (3. The basmati varieties of rice are mainly produced in Punjab.3 National scenario: In India rice milling units are mostly concentrated in the paddy producing states like Uttar Pradesh.17 m t) Vietnam (3. Andhra Pradesh. Japan. The non . etc.

etc. Kalady (Kerala).14 11.2: Indian Rice Exports (Qty in MTs and value Rs. Rudrapur (Uttaranchal).79 (Source: Ministry of Agriculture) The quantum of rice exported from India during the past few years was as given in the following table and the trend is represented graphically in the figure below.been installed by few mills of Karnal (Haryana). Vijayawada (Andhra Pradesh) clusters have installed colour sortex machine and silky polishing machine.9 Orissa 6.82 10.13 INDIA 83.36 2007 – 08 7.15 102.44 10.66 11.12 93.86 Punjab 10.70 2008 – 09 7.80 112.1: Rice production in three largest producing states in India (In mn. further some of the rice mills in Sambalpur-Bargarh (Orissa).65 10. Production of paddy in three largest producing states in India during the past four years is given below: Table 4. MT) STATE 2004 – 05 2005 – 06 2006 – 07 6. Table 4.88 10. In lakhs) 2005 – 06 Qty Non-basmati rice Basmati rice Total (Source: APEDA) Value 2921601 317816 1166562 304309 4088163 622125 2006 – 07 Qty 3702191 1045714 4747905 Value 424307 279280 703587 2007 – 08 Qty 5285916 1183355 6469271 Value 740979 434458 1175437 40 .13 91.16 11.19 Uttar Pradesh 9. Burdwan and Bolepur (Orissa).56 6.56 11.

Figure 4.4: Chart Showing the Trend of Quantity Exports for the past three years: (Source: APEDA) Figure 4.5: Chart Showing Trend of Value of the Exports done in the past three years 41 .

Singapore. Nepal.53 2. Belgium.(Source: APEDA) The major countries importing basmati rice from India include UK. USA. France. although few rice mills are producing parboiled rice. Djibouti. Netherlands. Saudi Arabia. South Africa. Rice produced by the mills in the state caters to both domestic and export market. Canada. Raw rice is the major product of these mills. being one of the major paddy producers in the economy.5 TPH to 40 TPH. with an average paddy throughout capacity of 2. 4. Only few rice mills are producing aromatic variety of rice.30 2. PRODUCTION MT (000t) 11290 11261 10237 10289 9699 in YIELD in Kg/Hect. Bhutan. Germany. Table 4.3: Paddy Cultivation in Orissa YEAR AREA IN Hect.30 2. Italy. (t/ha) 2. Some of the modern rice mills have incorporated colour sortex machine and silky polishing machine for producing superior quality rice. Iran. with an estimated 940 rice mills of various capacities operating in the state. Gabon. For non-basmati rice.4 State scenario Orissa. Maldives. 42 .60 2. Ivory Coast.80 lakh tonnes (11.28 mn. These mills have an aggregated annual paddy throughout capacity of around 112. tonnes).5 TPH or 40 TPH per unit based on 2 shift operation (16 hrs. Table below shows paddy cultivation in the state of Orissa in the past 5 years. UAE etc. Kuwait. Saudi Arabia etc. Malaysia. The capacity in terms of paddy throughout varies between 1. /day).17 (000 ha) 2008 4460 2007 4444 2006 4450 2005 4479 2004 4472 (Source: International Rice Research Institute) The above figure shows that eventually with time the paddy cultivation in the state of Orissa has increased with time. the major importers from India are Bangladesh.

Technology analysis: Two types of rice are produced by milling of paddy in the rice mills.4.5 .1. They are: Raw Rice  Parboiled Rice Manufacturing of parboiled rice from paddy involves the following major steps: Cleaning of paddy using paddy cleaner and destoner (Paddy Cleaner) Parboiling of cleaned paddy in parboiling plant (Parboiling Plant) Mechanical drying of parboiled paddy using steam (Paddy Drier Plant) Milling of parboiled and dried paddy using Sheller type machine (Sheller Machine) Separation of husk using sieve cleaning of rice (Rubber roll husk in mill plant) Polishing of rice using parling cones (Polished Rice) Separation of rice bran using sieve (Paddy Separation in Mill Plant ) Separation of broken rice using sieve 43 . Technology and Value Chain Analysis: 4.5.

Weighing and packing of rice and by-products Figure 4.6: The following flow chart shows manufacturing process of Raw Rice / Parboiled Rice: FLOW CHART FOR RAW RICE / PARBOILED RICE MANUFACTURE Paddy For Parboiled Rice Cleaning For Raw Rice Drying For Raw / Parboiled Rice Soaking Open Steaming Parboiling (Atmos. / Pressure) Sun Drying Mechanical Drying Shelling Unit Husk Seperator Cleaning Dehusking Husk Unshelled Paddy Paddy Seperator Brown Rice Polishing Unit Bran Separator Bran Rice Grader Whole Rice Broken Rice & Impurities Weighment & Packing Weighment & Packing 44 .

7: The following flow chart shows the process for super quality / export quality rice: Process Flow Chart for Super Quality / Export Quality Rice Rice produced by com mon rice mill Silky Unit Destoning Unit Colour Sorting Machine Grading W eighment and Packing While whole rice is the main product during the milling process. rice bran. It contains vegetable oil as a valuable constituent. For a milling unit.Figure 4. the main product is rice and byproducts are rice bran. Rice bran is a fine powder obtained during polishing of the brown rice when the outer coating on rice is removed as rice bran.5. Husk is the last byproduct and accounts for about 27% of the total quantity. Rice husk is the outer shell of rice and it is a fibrous material containing good amount of silica. rice husk & broken rice are obtained as by products during the process. Broken rice is the second byproduct and accounts for about 1% of the paddy quantity. rice is the main product accounting 68% of the quantity in use and taken for human consumption.2. Rice bran a byproduct of the industry accounts for about 4% of the paddy quantity. Utilization of byproducts of rice milling Industry: The growth of rice milling industry is largely dependent upon useful commercialiasation of its byproducts. Out of the four product and byproduct. 4. 45 . broken rice and rice husk.

5. 4. Rice husk is generally reused in the rice mill as fuel in the boiler. Raw rice bran consists of 12-18% oil. 46 . Rice bran is obtained from the outer layers of the brown rice during milling. plasticizers & tocoferol. broken rice is as good as whole rice. The poor quality of broken rice is due to admixture with grit. Besides at the time of frying there is less degradation of oil. aleuron layer.3. • Rice husk: Rice husk is another byproduct of the rice milling industry. It is more economical as compared to other cooking oil. If nutrition is concerned. Rice bran oil is also used in soap manufacturing. The final selling of rice is done by the government agencies. Broken rice is fit for human consumption of the down trodden at a lower price. and germ and part of endosperm. protective coatings. The role of the rice miller is to process the paddy and return the contracted amount of rice to the agencies. whereas parboiled bran contains 20-28% oil. It is used for extraction of edible oil in solvent extraction plant. It is also used as a cattle feed. Bran oil contains low linolenic acid and high tocoferol. hence it has distinct advantage over other vegetable oils. the rice millers get profit out of the byproducts and from excess milling of rice. stones and clay particles. It has low economic value as compared to whole rice.• Rice bran: Rice bran has a variety of uses. Value chain analysis: As there is custom milling prevailing in this cluster. • Broken rice: Broken rice is another byproduct of rice milling industry. Various government agencies provide paddy to the rice millers at a certain rate. It also contains high fat & protein. minerals & many other useful chemicals. vitamins. Rice bran consists of pericarp. Rice bran is a potential source of vegetable oil.

Bargarh is located at 21.6.33ºN 83. In custom milling process. Thus. The rate at which they sell their by-product varies from miller to miller. Furnace) Broken Rice (3%) (Used for Cattle/Poultry Feed. The amount of rice that can be milled from 100 kg of rice depends upon the quality of rice. It is the administrative head quarters of Bargarh district. It has an average elevation of 171 meters (561 feet). etc. India.62ºE. If the rice miller can process more than 63% of rice. also baragarh. the agencies contract with the rice millers to deliver to the agency 63kg of rice for every lot of 100 kg of rice. The amount of rice processed from 100 kg of rice varies for different qualities of paddy.Figure 4. 4. Human Consumption. 47 . Gasifier . By selling the excess rice and by-product the rice millers make substantial profit. The Bargarh district is one of the 14 most stable zones in the world. in Bargarh district cluster the profit made by the rice miller depends upon the quality of paddy and the by-products. is a city & a municipality in bargarh district in the state of Orissa. Bargarh District Profile Bargarh.) It is stated by the government that from 100 kg of paddy 63kg of rice can be milled.8: The recovery of product and by-product from rice milling is as given below: Paddy Processing / Milling Rice (63%) By-Products (27%) Refraction (10%) Bran (5%) (Used for Solvent Extraction of Oil) Husk (19%) (Used as Fuel in Boiler. he can take possession of the excess rice after fulfilling the government’s custom milling contract.

With commissioning of Hirakud dam project. a green revolution started after 1960. paddy production in kharif IN HECTARES 584 122 39 12 28 1 317 2. Attabira block is known as the rice bowl of Orissa because of its exemplary paddy production. sugar & thread factories.09% 351 183 89 76 204 40 87 77 145 83 22. (Area in ‘000 hec. cultivable land Forest area Misc.00 MT per annum which is the largest in Orissa. higher than the national average of 59. Cultivable waste Current fallow Other fallow Net area sown Percentage of forest area of district to state B.4: The following table will give an idea regarding the land in Bargarh and the land utilization pattern. with cement. with 57% of the males & 43% of females literate.000. Recently abundance of diamond has been reported in the southern & western parts of this district.As of 2001 India census. Bargarh is an industrial city. Table 4. Bargarh has an average literacy rate of 72%. But the economies of Bargarh district are largely dependent on agricultural productions. Bargarh had a population of 63. Males constitute 52% of the population & females 48%.5%.28 qntl/hec Source: centre for environmental studies.651. This is possible due to the availability of irrigation water throughout the year & the fertile nature of the land around this place. Production of paddy in the district of Bargarh is about 6. land put to nonagricultural use. tree. permanent pasture. barren & uncultivable land. 00. official website of Bargarh 48 . agricultural land high land medium land low land Paddy area High land Medium land Low land Irrigated area in kharif Irrigated area in rabi Approx.) PARTICULARS OF THE AREA A.

2. Rice mill cluster in Bargarh 4.7. 489. One is availability of Raw material and secondly the assured market for the Finished Goods produced.7. These mills are of various capacities ranging from 2 tons/hr to 10 tons/hr. Thus the Rice Mills are nowadays prospering through Government Policy. The introduction of Custom Milling have helped Rice Milling Industry in both this aspect as the paddy is provided by Government which is milled into Rice by the Rice Millers and is delivered back to the Government for a consideration of fix milling charges. the rice mills are mainly spread around Bargarh. The Government has introduced "Custom Milling” which means milling of paddy. At present the consortium has 28 members having seed money with an amount of Rs. Age of the cluster The Bargarh and adjoining areas has a paddy growing area traditionally. Thus the milling activity started in the area almost 50 years ago. Looking to the raw material requirement availability and the ready market and rice being the staple food for the state’s population. rice milling became a natural choice for traders keen on investing. has been sanctioned Rs. Board of management has been formed with 7 directors. the success of any Industry depends primarily into two factors. In fact. Ltd. Since then the number of units have grown to 85 units as estimated presently. A consortium has been formed with the name & style of Bargarh Rice Mill Consortium Pvt. Nature of the cluster As mentioned in the preceding paragraph.). government of Orissa 49 . paddy which in turn enjoys regular water supply from Hirakud dam located in the cluster proximity. 4. Ltd. 14 lakhs. In all there are about 85 rice mills in the region up to 2007-08. the number of milling units increased from 42 to 85 during the period 2001-2007.1. due to the ongoing purchase support from FCI. M/s BRMC Pvt. The growth of the units in the cluster can also be attributed to the influence of the neighboring rice mills in Chhattisgarh with similar paddy cultivating areas. i. into rice in his rice mill on payment of milling charges in cash or in kind.e. Ltd.7. the older units usually being that of low capacities while the comparatively new units of higher capacities reflect the growing investment in the sector. As such the cluster is a naturally evolved cluster having proximity of raw material.4. (BRMC Pvt. not belonging to the miller.89 lakhs by government of India.

the units are located in various blocks and villages of Bargarh district and some rice mills are located in Bargarh town itself.7. 75000 /. The study revealed that: There are around 83 rice mills in Bargarh district. The graph below shows the growth of rice mill cluster in Bargarh district. Cluster details To know the cluster details a study was done in Bargarh district. As various investment opportunities are available in Bargarh district in rice milling sector the number of rice mills doubled itself to 83 by the end of the year 2009. Figure 4.3. Sasan.and self investment for solvent extraction plant with testing laboratory under common facility centre (CFC).during 1953 in the cluster. 4. There were 27 rice mills in the year 2001-02 which doubled in the year 2003-04. The processing and milling capacity ranges from 2 MT/hr to 8 MT/hr.9: Growth of Rice Mill Cluster in Bargarh District Year 200102 200203 200304 200405 200506 200607 200708 200809 200910 50 . The first rice mill namely M/s Hanuman Rice Mill. near Sambalpur came up with an investment of Rs.

of rice 27 mills 45 53 58 67 68 74 79 83 Figure 4. of unit Micro 1 Small 4 Medium 4 Large 2 The rice mill cluster of Bargarh consists mainly of small and medium enterprises.11. Figure 4.10.No.: Type of Unit Type of unit No. Only 18% of the rice mills surveyed are large units and 9% are micro units.: Annual Turnover of Rice Mills 51 .

Figure 4.1 crore 1 crore .5 crore 5 crore & above No.13.: Initial Investment made in Rice Mills 52 . 27% of the rice mills give an annual turnover of Rs. of units 5 1 2 3 46% of the rice mills in the cluster give an annual turnover up to Rs. 50 lakhs.5 crore 5 crore & above Sales 10 1 0 0 91% of the mills in the cluster get a net profit of up to Rs. 50 lakhs per annum.12.1 crore 1 crore . 50 lakhs per annum and only 9% of the rice mills get a net profit more than Rs.Annual turnover up to 50 lakhs 50 lakhs . Figure 4.: Net Profit of Rice Mills Net profit up to 50 lakhs 50 lakhs . 5 crore and above.

50 lakh.: Various Sources of Finance 53 . 2 crore.14. 36% of the rice mills in the cluster had initial investment of up to Rs.1 crore 1 crore .Initial Investment made up to 50 lakhs 50 lakhs . while 9% of the owners have fully contributed towards the initial investment without taking any kind of loan. Figure 4.5 55% of the rice mills surveyed have initially invested an average of Rs.1 54.5 crore Amount 36. 27% of the rice mill owners have contributed 33% and 25% towards the initial investment.4 9. Owner’s contribution Around 36% of the rice mill owners have contributed 50% of the initial investment.

All the rice mills in the rice mill cluster of Bargarh have taken various bank loans from various financial institutions.: Various Sources of Loan Banks No. Figure 4. of units 54 .Sources of Finance Bank Loan Own Capital Government Subsidy Friends & Relatives No. Taken any loan for business Bank loan is the most preferred source of finance for the rice mill owners. of Units 9 7 0 1 Bank loan is the most preferred source of finance for the rice mill owners. While some go for their own capital.15. very few take help from friends and relatives for financing their projects.

S. United Bank of India. of Units Cash Credit 10 Term Loan 8 Bank Guarantee 8 38% of the rice mill owners have a cash credit. Figure 4.United Bank of India 3 Punjab National Bank 2 State Bank of India 5 O.F. term loan and bank guarantee account and only 31% of the rice mill owners have a cash credit account. Punjab National Bank and Orissa State Financial Corporation follow next.1 crore No.C 2 Private Loan 3 State Bank of India is the most preferred bank among the rice mill owners in Bargarh for bank loans.16. Figure 4. of Units 1 8 55 .: Loan Amount Taken by Various Rice Mills Loan Amount up to 50 lakhs 50 lakhs .17.: Various Types of Loan Type of Loan No.

50 lakhs – Rs.: Working Capital Requirement of Rice Mills Working Capital Requirement No.18.5 crore 2 5 crore & above 0 73% of the rice mills surveyed have taken a loan amount ranging between Rs. Figure 4. Figure 4. of Units 10 . 50 lakhs.5 crore 1 5 crore & above 0 The working capital requirement per annum comes around 50 lakhs to 1 crore in majority of the rice mills surveyed. 1 crore. of Units up to 50 lakhs 2 50 lakhs . 5 crore. 1 crore and only 18% of the rice mills have taken a loan more than Rs. Small rice mill units manage there working capital requirement within Rs.1 crore 8 1 crore . Not only has a single rice mill taken a loan more than Rs.: Position of Working Capital in Rice Mills Position of Working Capital Standard 56 No.1 crore .19.

of Units 11 0 As the rice mills are not large scale units. Figure 4.: Labour Requirement of Rice Mills Labour Requirement 10 .21.40 labour 40 . the labour requirement in these mills are not high.: Types of Labour Available No.20 labour 20 .50 labour Figure 4.20. of Units 4 2 4 1 Types of Labour Local Migrant No.Below Standard Manageable Poor 1 0 0 The position of working capital requirement is standard in maximum rice mills. The maximum labour required is 4o labourers in a unit.30 labour 30 . All the labourers working in these mills are 57 .

Workshops should be organized for up gradation and development of technology not only for mill owners but also for the labourers. Problems Faced & Intervention Proposed: The major problems faced by the cluster are: • Labour problem: The labourers working in the rice mills are from Bargarh and from nearby areas. So the labour requirement is fulfilled by the local labourers. which goes waste due to insufficiency of space in the RMC yard. 2/kg rice by the government of Orissa is also responsible for creating labour problem in the cluster.local labourers. By working 15 days month. Suggestion: Various institutes should be established for the development of skilled labourer. The major problem is that the labourers available are unskilled and are not capable of handling new and updated machinery. Migrant labourers are not employed as the work is not highly technical and expertise in work is not required. the labourers can live a satisfactory life for a month as the basic cereals are available to them at a cheap rate by the government. More RMC godown is needed to keep the surplus amount of paddy. Many opportunities are available for up gradation of technology but the non-availability of skilled labourers is restricting the rice mill owners from updating their technology. The rice mill owners don’t require migrant and expert labourer. Some rice mill owners provide them with housing facility as well. The farmers are unable to sell their surplus rice to the rice miller and face heavy loss. There are no migrant labourers. 4. The availability of Rs. • Shortage of government infrastructure: The RMC yards do not have space and infrastructure to keep the paddy secured for long time. 58 .8. This does not provide the labourers a chance to improve their skills and competitiveness.

There is shortage of FCI godowns. Storage problem of excess rice will be solved. ‘Rural godown scheme’ of government of India should be activated in this area. This will help them not to close down there unit for the time there storing house is not empty. • High investment Low income: To provide with fine quality rice the rice mill owners are using various modern technology. Provision should be made by the government such that the FCI godowns provide space to the rice mill owners to store the excess processed rice before it is returned to the government. The government should provide them with funds or should negotiate with nationalized banks to provide them easy loans with cheaper rates. The rice mill owners are making high investment in their mills to give the 59 . The government should take steps to provide a common storage facility to the rice mill owners in the cluster. The rice mill owners do not have sufficient godown space to store the rice & have to close down the factory till the government agencies have collected the processed rice and space has been made in the godowns for storage of new processed rice. the whole lot of rice is not transferred to the FCI godown because of shortage of space. After the paddy is processed into rice. All the rice mill owners will store there processed rice after one lot of rice processing is over. Suggestions: The rice mill owners should individually be provided with finance to build their own storage facility.

The government agencies supply paddy to the rice mills according to the capacity of the rice mills. The rice mill owners have to process the paddy into fine quality rice and return to the government agencies. Suggestions: To provide fine quality rice the rice mill owners invest heavily to update their technology and machinery. the rice mill owners get low profit as compared to the investment made.finest quality rice. Due to custom milling the rice mill owners are not able to get the satisfactory profit as they have to sell the rice to the govt. For every 100 kg of paddy the rice mill owners have to provide the agencies 68 kg of rice. Due to custom milling of rice by the government. The farmers produce the raw materials and supply them to the government agencies. But after processing only 63 kg or 64 kg of rice comes out. Various institutes can be established to educate the farmers about the development of paddy as the farmers are the first stakeholders of the Bargarh rice mill cluster. • Shortage of quality raw material: Raw material i. To compensate this loss NABARD should provide the mill owners with various lending facility through the commercial bank such that the investment can be made at a cheaper rate. As the quality of paddy provided by the farmers is not good and poor ultimately the rice mill owners have to pay the price. at the rate fixed by the government. Suggestions: The farmers should be provided proper knowledge about various fertilizers and new technology available in the market so as to make them use in producing good and high quality paddy. paddy is supplied to various government agencies by the farmers.e. With high quality paddy 68 kg of rice per 100kg of paddy can be processed. But according to the contract the rice mill owners have to return 68 kg of rice which leads to around 3 to 4 kg of loss of rice per quintal. • Lack of active associations: 60 .

Some of the mill owners who have the modern facilities have reported better price appreciation even with the existing paddy variety. • Low technology level: Though some of the mills of the area have modern facilities such as SORTEX and SILKY.  Formation of consortia and other types of groups in the cluster to improve its social capital  Interaction of the association with other rice miller associations for information exchange etc.The existing association at Bargarh had been dormant for quite some time and only due to the pilot level activities that were initiated during the study phase. the lack of facilities of re-use of the boiler heat and some technical gaps in the milling technology itself have led to low output. These vehicles of growth need to be strengthened for the long term growth of the cluster.  Entrepreneurship and motivation programmes for the rice millers.  The meetings of the SPV formation should be properly co-ordinate. high percentage of broken rice and other related issues. They have got into the mode of commonly planning some activities and thus they need to be further strengthened to take up the developmental activities in the cluster. Suggestions: 61 . The low technology levels in boilers. some energisation of the association has taken place. Suggestions:  Place one secretarial staff (NDA) with the association to help in daily activities. the poor quality paddy and custom milling by the government has deterred most of the mill owners to go for technology up gradation in their mills.

& additional 2500 MT is allocated for additional 1 MT capacity & maximum up to 5000 MT Paddy allocated on one miller.9.It is proposed to enable the mill owners adopt better technologies in their mills. Custom milling policy Formation of Custom Milling Commiittee: This committee is chaired by District Dy. Agreement: Agreement with Rice Millers is made with various terms & conditions and Bank Guarantee/ security etc. Paddy Allotment: 2500 MT paddy is allotted to Rice Millers having 1 MT cap. APEDA and other sectoral technology institutions etc. 62 .  Interactive seminars/ workshops with institutions such as CRRI. riding over the availability of better quality paddy from the farmers and thus the following are proposed for improving the technology level in the mills:  Exposure visit to other rice milling clusters/ technical institutions etc.  Visit and interaction of various machinery suppliers and other technical input providers to the cluster. monitor and control the allotment of paddy to millers for milling & reviewing the progress of custom Milling of paddy operations. This committee meets at least once in a week to regulate.  Technical audit by suitable consultants to help the mills understand their technical up gradation needs. 4. to cull out best practices of rice milling. Commissioner & District Heads of procuring agencies as members & DFSC is Member Secretary.

of Orissa or any firm. in order to fulfill its commitment to serve the poor segments of the society. Storage capacity. Mode of procurem. Role of BCPA & maintenance of purchase B/C etc. Inspection of Mandis. The rice collected from FCI and other agencies are stored at godowns owned 63 . The corporation seeks to engage either on its own or as the agent of Govt. its storage at storage centers of Marketing Federation (MARKFED).10. The corporation makes efforts to new approaches to expand its horizon of activities with changing needs. Materials. The description of procuring agencies for paddy is as below: OSCSC: OSCSC Ltd.ent. transport. purchase. formation of Mandi Level Committees for determining current price of food grains. 1956. technical as well as managerial services. The other controlled areas include Packaging. Purchases rice from FCI and other agencies like PACS. processing. It also provides assistance. farmers education. OSCSC Ltd.27% January -27% February -26% The bag used for delivery of levy rice is made in 50 kg gunny bags with stitching specifications to maintain. custom milling by registered millers and receipt of Custom Milled Rice (CMR) at receiving centers of CG State Civil Supplies Corporation (CSCSC) and Food Corporation of India (FCI).20% December . distribution and sale of essential commodities like food grains and sugar. was established on 3rd September. company. 1980 as a fully owned state government company under Companies Act. Billing cum Payment agent Mandis & their allocations. procurement agencies. Procuring Agencies: Paddy Procurement and Milling is the complete computerization of food grain supply Chain from purchase of paddy from farmers at Minimum Support Price (MSP) through Primary Agriculture Cooperative Societies (PACS). . 4. develop. Sampling & Cleaning . Control Room. and NAFED etc. MARKFED.Time Schedule for Milling: Entire paddy allocated to Rice Millers is liable to be milled well before 28-02-11as below: October & November . counsel and finance production. resources. bags filling. Transportation. CC Limit. The corporation also procures paddy from various parts of the state through its decentralized procurement operations and get the same milled and receive the custom milled rice (CMR) from the custom miller. advice and services for capital and credit means. The corporation maintains a no profit no loss status. Labour. Staff Deployment. corporation or institution to promote. storage.

Cuttack and on the advice of State Government to avoid any possibility of distress sale of paddy.or hired by OSCSC Ltd. NAFED was setup with the object to promote Co-operative marketing of Agricultural Produce to benefit the farmers. NAFED also procures paddy directly from the farmers as it is a state government agency. After custom milling of rice the rice millers return the custom milled rice to FCI for a certain charge. The stored rice is handed over to storage agents. Agricultural farmers are the main members of NAFED. FCI then stores the rice in its godown till it is supplied to retailers or for other government schemes. Further. FCI started its paddy purchase in Orissa for KMS 2001-02 and it has expanded its operations since then. who have the authority to say in the form of members of the General Body in the working of NAFED. in accordance with the guidelines issued by the FS & CW Department from time to time. FCI: FCI. NAFED is registered under the Multi State Co-operative Societies Act. The state has participated in the procurement operation of direct purchase of paddy through the Orissa State Civil Supplies Corporation and other state agencies. this stock is issued to the retailers as per allotment made by concerned Block/NAC authority. PACS: Primary Agricultural Cooperative Societies are also involved in the paddy procurement business of the state government as a state government agency. as per the allotment made by the collectors of districts. FCI started intervening in the market by purchasing paddy directly from the farmers since Kharif Marketing Season 2001-02. It will purchase paddy directly from the farmers as per quality specifications laid down by the Government of India. NAFED: National Agricultural Cooperative Marketing Federation of India Ltd. MARKFED: The Orissa State Co-operative Marketing Federation (MARKFED) procures paddy directly from the farmers in the state as a state government agency. Presence of Supporting Institutions: 64 . Orissa Region was purchasing only levy rice since 1982-83 to meet the requirement of food grains under various schemes of Government of Orissa as per directives of Hon’ble High Court. It directly purchases paddy from the farmers as per the specifications laid down by the government of India in accordance with the guidelines issued by the FS & CW Department. The paddy procured is as per quality specifications laid down by the Government of India and in accordance with the guidelines issued by the FS & CW Department from time to time. Orissa. It procures paddy directly from farmers in accordance with the Decentralized Procurement Scheme. It procures paddy from the farmers in accordance with the Decentralized Procurement Scheme. But major target is put on FCI. (NAFED) was established on 2nd October 1958.10.1. The basic function of FCI in Orissa is to procure paddy from the farmers and supply the paddy to the rice millers for custom milling. 4.

 DIC: It is a promotional agency and the path finder for setting of SSI units. Business Development Service (BDS) Providers: The following are the basic BDS providers:  Farmers  Packing material suppliers  Transporters  Labour contractors  Chartered Accountants  Export Consultants The R&D and other institutes like ICAR. which in turn informs the farmer about seeds suitable for their local soils. are in existence but rarely approached by the industry except a few organized units who 65 . OUAT. standard certificate agencies. Ministry of Agriculture: Ministry of Agriculture declares minimum support price of different food grain including paddy and rice.10. Besides above project profiles.  NABARD: It is an agricultural development bank providing infrastructural assistances as well as conducts training and awareness programmes for benefit of the farmers. it fixes the maximum target of purchasing paddy for the rice millers through specific market yard. schemes and survey reports are being prepared by DIC. 4.  Agriculture Department of Orissa: The Deputy Director of Agriculture provides seeds to the farmers. It produces new variety of paddy suitable to local climatic condition. CRRI.  OUAT: Orissa University of Agricultural Technology has a branch at Chiplima.2. They also have an agricultural laboratory at Sambalpur.  Civil Supply Department: It plays a major role in this cluster. APEDA. CDP etc. Sambalpur. Cuttack: It is an international level rice research centre.  CRRI.

4. the Govt.11. Figure 4. 25 per Qtl. If the distance from the godown to the rice mill is more than 8 km then the rice miller will be paid 35 paisa for each extra kilometer.: The charts below show the Custom Milling Procedure in the Rice Milling Cluster of Bargarh district: Farmers (paddy) FCI Godown and Undertaken Godown 66 Government .have been benefited. procuring agencies are purchasing paddy from open market and getting it milled from the rice shellers as per terms and conditions & agreement and the rice procured out of it is fed to the central pool mainly through FCI. There is a need to make the industry aware of various services available and provided by these institutions. In CMR milling contract the milling charges are given @ Rs. to the millers which include transportation and loading and unloading of gunny bags.22. Marketing & Sales: Against custom milled rice.

The farmers are the main stakeholders of the cluster. They produce the paddy and the various government organizations / agencies purchase the paddy from the farmers at the minimum support price. FCI Godown and Government Undertaken Godown OSCSC FCI NAFED MARKFED PACS Rice Miller (paddy is delivered to the rice millers according to the contract made with the various agencies) 67 . The paddy collected by there agencies are stored in the FCI godowns or any other government godown.

After the rice miller gets delivery of paddy it then custom mills the paddy into fine rice. A rice miller may get paddy from one or more agency in accordance to the contract made by the rice miller with the agencies. The custom milled rice is again stored in the FCI godown or government undertaken godown by the agencies. Custom Milled Rice OSCSC FCI NAFED MARKFED PACS \ FCI Godown and Government Undertaken Godown Sale by Government / Retail Sale of Rice 68 .Custom Milling of Paddy Custom Milled Rice The various government agencies deliver the contracted quantity of paddy to the respective rice millers for custom milling of paddy.

The customer milled rice is stored in the FCI godown and other Government undertaken godowns.The various government agencies collect the custom milled rice from the rice millers as per the scheduled date. It is then collected by the government agencies or government officials for selling as per terms and conditions mentioned by the central government or used for retail selling. 69 .

CHAPTER – V 70 .

Threat Strong competition from Asian Countries. Human resource / skill 5. Opportunity Tremendous national market is there. Markets Strength • Market support available under levy/custom milling rice policy. Business environment This analysis identifies the strong and weak areas as well as opportunities and threats envisaged in the cluster. Market 2. 1. • Institutional support is available. • Most suitable climatic environment Weakness All rice mills depend upon the custom milling policy. 2. Technology 3.5. • All the units having sortex machine may be clubbed off for common brand and export.1 SWOT ANALYSIS The SWOT analysis of the cluster is made on the following parameter: 1. Technology • Low cost fabricated machines • Technological infrastructure available. standard and nonprofessional machinery leads to high cost and may retard 71 . Parameter No. Input availability 4. •High • There is potential production/autom for productivity atic plant are very • Cost reduction costly and are and quality mostly imported enhancement by which is beyond use of the reach of SSI appropriate sector technology/QMS Traditional technology. Sl.

This may lead to closure of the unit or shift of the unit to other states. • Formation of consortium and making common brand for easy export. Business Ability of export environment segment to grow and meet international challenges • Large domestic / international market available. . Skills Traditional operators available 5. Controlled minimum support price (MSP) of paddy at compulsion of custom milling policy. No skill up Increased gradation training technical and managerial awareness and training may lead to productivity. •Locally fabricated plant is unstandardised and low productive. Inputs availability Local resource •Entrepreneur not aware of sources of low cost imported automatic plants and appropriate processing techniques. quality and efficiency growth. 72 . Heavy taxes or Tremendous controlled trade has growth potential lead to closure/shift with institutional of events. 4. • Available institutional support may be exploited. the industry both at domestic and international market. • Potential for non exporting unit to export. Skill base needs up gradation to adopt latest technology and management systems Imposition of taxes in comparison to neighboring states may taper down the industry. support Imposition of high taxes as compared to other neighboring states.3. .

1958. 73 .] An Act to regulate the rice-milling industry in the interests of the general public.  a rice mill (whether established before or after such commencement) in which rice-milling operations are not carried on for a continuous period of one year at any time after the commencement of the Rice-Milling Industry (Regulation) Amendment Act. Some of the important features of the Act are given below: • It extends to the whole of India except the State of Jammu and Kashmir. • Definition of a rice mill according to the Act:  defunct rice mill: a defunct rice mill is defined according to the Act as:  A rice mill in existence at the commencement of this Act but in which rice-milling operations have not been carried on for a continuous period of one year prior to such commencement.2.5. 21 OF 1958 [18th May. RICE MILLING POLICIES: RICE-MILLING INDUSTRY (REGULATION) ACT 1958 ACT NO. 1968.

managing director or managing agent.milling operations at the commencement of this Act. managing director or managing agent shall be deemed to be the owner of the rice mill. • New rice-mill: The term new rice mill is defined as:  a rice mill other than an existing rice mill or a defunct rice mill • Owner: The term owner in accordance with a rice mill is defined as:  The person who. or the authority which. with the aid of power. such manager. existing rice mill: an existing rice mill is defined according to the Act as:  A rice mill carrying on rice. • Rice Mill: The term rice mill is defined according to the Act as: 74 . and where the said affairs are entrusted to a manager. has the ultimate control over the affairs of the rice mill.  Polishing rice. Some of the important terms used in rice milling industry as defined by the act are: • Milling-rice: The term milling rice is define as:  Recovering rice or any product thereof from paddy.

rice-milling operation is carried on. the mill is to re-commence its rice-milling operation and some of the other conditions include improvements to existing machinery.  If. it may. and any owner of a defunct rice mill may make a like application for the grant of a permit for recommencing rice-milling operation in such mill. • In granting a permit whether for the establishment of a new rice mill or for recommencing rice-milling operation in a defunct rice mill. the Central Government shall give preference to:  A Government company or a corporation owned or controlled by the Government over every other applicant. The plant and machinery with which. • Grant of permits in respect of new or defunct rice mills: The Act states certain rules regarding the permission of any grant in respect of rice mills. 75 . as the case may be. on receipt of any such application for the grant of a permit. including the precincts thereof. in which or in any part of which. obtain maximum production and improve quality. as may be necessary to eliminate waste. subject to the provisions of sub-section (4) and sub-section (5). replacement of existing machinery and use of improved methods of rice-milling. the Central Government is of opinion that it is necessary so to do for ensuring adequate supply of rice.  Any person or authority may make an application to the Central Government for the grant of a permit for the establishment of a new rice mill. grant the permit specifying therein the period within which the mill is to be established or. and the premises.

 Any owner of an existing rice mill or of a new rice mill may make an application to the licensing officer for the grant of a license for carrying on rice-milling operation in that rice mill. if any. replacement of existing machinery and use of improved methods of rice-milling.  Every application under sub-section (1) shall be made in the prescribed form and shall contain the particulars regarding the location of the rice mill. 76 . • Grant of licenses: There are certain rules stated by the Act regarding granting of licenses to the rice mills. obtain maximum production and improve quality. notwithstanding that such other applicant has applied for the grant of a permit for re-commencing rice-milling operation in a defunct rice mill.milling. to a farmers' co-operative society over every other applicant not being a Government company or a corporation owned or controlled by the Government. on payment of such fees and on the deposit of such sum. replacement of existing machinery and use of improved methods of rice. the licensing officer shall grant the license on conditions including such as to improvements to existing machinery. as may be prescribed.  A license granted shall be valid for the period specified therein and may be renewed from time to time for such period and on payment of such fees and on conditions including such as improvements to existing machinery. as security for the due performance of the conditions as may be prescribed. as may be necessary to eliminate waste.  On receipt of any such application for the grant of a license. as may be necessary to eliminate waste. the size and type thereof and such other particulars as may be prescribed. obtain maximum production and improve quality and conditions relating to the polishing of rice.

• No owner of a rice mill:  In respect of which the license has been revoked or suspended shall carry on ricemilling operation in that mill after the revocation or.  Shall.  Shall.• No person or authority shall. after the commencement of this Act. after the commencement of this Act. • No owner of a rice mill shall. 77 . • Returns: Certain rules regarding the returns of the rice mills are stated by the Act:  Every owner of a rice mill shall furnish to the Central Government such returns relating to the affairs of the rice mill and in such forms as may be prescribed. during the period for which the license has been suspended. affect any expansion of the rice mill except with the previous permission of the Central Government. as the case may be. carry on rice-milling operation except under and in accordance with a license granted under section 6. change the location of the whole or any part of the rice mill. after the commencement of this Act. establish any new rice mill except under and in accordance with a permit granted under section 5. without the previous permission of the Central Government.

he shall be punishable with imprisonment for a term which may extend to one year. They are: If the person committing an offence under this Act is a company. as well as the company. at the time the offence was committed was in charge of. secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.• Penalties: The rules regarding penalties as stated in the Act are:  If any person contravenes or attempts to contravene or abets the contravention of any of the provisions of section 8 or sub-section (2) of section 18. manager. where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of. every person who. or with both. such director. or with fine which may extend to ten thousand rupees. with an additional fine which may extend to five hundred rupees for every day during which such contravention continues after conviction for the first such contravention. Offences by companies: The Act also provides certain regulations to control the offences made by a rice mill. and in the case of a continuing contravention. 78 . or is attributable to. secretary or other officer of the company. any neglect on the part of any director. and was responsible to. shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. manager. the company for the conduct of the business of the company.

1: The Table below shows the analysis done: 79 . The rating is done on the basis of a certain score. shall continue to be in force for such period as may be allowed under the proviso to sub-section (2) of section 8 for the licensing of such rice mill under the provisions of this Act. there is in force in any State to which this Act extends any law or order relating to the regulation or control of rice mills in that State.3. permit or license granted in respect of any existing rice mill. immediately before the commencement of this Act. any certificate of registration. A unit with a high score gets a higher rating as compared to a unit with a lower score. an analysis was done on four Rice Mills. under any such law or order hereby repealed and in force immediately before the commencement of this Act. These rates determine the Risk Level and Comfort Level of a unit for repayment of loan.Repeal and savings: The rules stated in the Act regarding repeals and savings are:  If. 5. The analysis contained calculation for determining the Borrower Rating of a unit.  Notwithstanding such repeal. ANALYSIS To know the scope for credit growth in Rice Mills in Bargarh District. Table 5. that law or order shall stand repealed.

5 80 93 100 120 .A (ix) Future Prospects (FP) (projected ratios) Total score out of 135 20 16 18 12 16 135 122.Maximum (A) Financial risk (FR) Weighted Score (a)*(b) Parameters (c) M/s Maa Rajesh Samaleswari Rice and Udyog Poha Mills M/s Godavari Shree Rice Mill Lingaraj Feeds Ltd. 15 13.A N.A N. (g) (f) (d) (e) (i) TOL/TNW 25 20 20 25 20 (ii) Current ratio 20 20 16 20 20 (iii) Return on capital employed (ROCE) (%) 20 20 18 16 18 (iv) PBDIT/Intt.5 6 6 13 (v) PAT/Operating income 10 8 10 0 8 (vi) Inventory/ Net Sales + Receivables/Gross sales Group risk 20 20 0 16 20 (vii) 5 5 5 5 5 (viii ) Forex risk 5 N.A N.

The Aggregative Risk Score is 94. SB-1 category units have virtually zero risk and are absolutely safe to grant credit. CHAPTER – VI 81 . While Godavari Rice Mill’s Borrower Rating is SB-2. has a Borrower Rating of SB-4. Rajesh Rice & Poha Mill has a Borrower Rating of SB-5 and M/s Shree Lingaraj Feeds Ltd. As all the Rice Mills analyzed are coming between SB-1 to SB-5 category. SB-2 category units have lowest risk and are highly safe for granting credit.The above analysis shows that M/s Samaleswari Udyog has the highest Borrower Rating of SB1. The Aggregative Risk Score being 91. it is clearly determined that there is a huge Scope for Credit Growth in Rice Mills in Bargarh District for State Bank of India. SB-5 and SB-4 category units are also low risk units and are moderately safe for banks to grant credit.

F. Some Rice Millers also get financing from O.C. The existing association at Bargarh had been dormant for quite some time. The major findings of my study are:  The number of Rice Mills in Bargarh District has doubled from 27 rice mills in 2001-02 to 53 in 2003-04. 82 .  There is lack of active associations.S. 50 lakhs per annum. which again rose to 83 by the end of the year 2009.6. 50 lakhs to Rs.  46% of Rice Mills in the cluster have an annual turnover of up to Rs.1. Modern machineries like SILKY and SORTEX machines are absent.  State Bank of India is the most preferred bank for credit loan by the Rice Millers.  The working capital requirement of the Rice Mills range between Rs.  The paddy provided for custom milling is of low quality.  Labour requirement in the cluster is a major problem for the Rice Millers. 1 crore. Findings The study on Cluster Development and Scope for Credit Growth in Rice Mills in Bargarh – Attabira belt included various data analysis and survey.  The technology used is not updated and modernized. 50 lakhs per annum.  Bank loan is a major source of finance in the Rice Mill cluster of Bargarh District.  The Rice Mills get a net profit of up to Rs.  There is shortage of government storage facilities for storage of paddy and custom milled rice.

The Borrower rating is done on the basis of the Aggregative Risk Score.  The Rice Mill owners should individually be provided with financing opportunity to build their own storage facilities.  There should be interactive seminars/ workshops with institutions such as CRRI. to cull out best practices of Rice Milling.  The Rice Mills in the cluster come between SB-1 to SB-5 category in the Borrower Rating done by the State Bank of India. The Score is calculated by summing up Financial Risk. State Bank of India has 83 .  There should be exposure visit to other rice milling clusters. there is a huge scope for State Bank of India to increase its credit growth.  With a major number of Rice Mills coming between SB-1 to SB-5 category. APEDA etc. such that they do not face problem to store the custom milled rice. Suggestions:  Various institutes should be established for the development of skilled labourers.  Workshops should be organized to upgrade the labourers.2.  Government should take steps to provide a Common Storage Facility to the Rice Mill owners of the cluster.  There should be formation of consortia and other types of groups in the cluster to improve its social capital. Management Risk and Business and Industrial Risk.  NABARD and various other government financial institutions should provide the Rice Mill owners with easy loan facility such that they can invest heavily and get a better income.  Various institutes should be established to educate the farmers about the development of paddy. The Rice Mill owners are making high investment but are getting a low income due to custom milling procedure. 6.

50 lakhs to Rs. 100 crore.an opportunity to increase its customer base by decreasing its interest rate and providing easy loan proceedings. 1 crore turnover of each Rice Mill. The various areas where financing is required are:  Up gradation of technology  Maintenance of machinery  Working capital requirement  Initial investment for commencement of business  Renovation of Rice Mills and construction of storage facilities. With more Rice Mills coming up each year and with the availability of opportunities for technological development and more social associations coming up for the upliftment of the Rice Mills. there lie various opportunities for the financial institutions to provide finance in various areas of the Rice Milling business. 84 . The various financial institutions established in the Rice Mill cluster of Bargrah have an open opportunity to increase their Credit Appraisal position and Savings Deposit. With the value of cluster being approximately Rs. Conclusion: There has been existence of Rice Mill in the Bargarh District since 50 years. With around 83 Rice Mill in the cluster and around Rs. 100 crore. The number of Rice Mills in Bargarh has been three fold in a decade. The Rice Mill cluster of Bargarh is developing fast and various opportunities are opening up for growth of Rice Mills both in social and financial field. the value of the cluster stands around Rs.3. there lies an opportunity for the for the overall development of the cluster. 6.

Cluster Development Executive. Department of Food. and various Rice Mills opening up in the cluster.N. March. 2008. 3. “Diagnostic Study Report on Rice Milling Cluster Ganjam District.The State Bank of India is the pioneer bank in the Rice Mill Cluster of Bargarh. “Food Processing (FP) Industry Review and Exposure Setting”. Bargarh. 2010. All Orissa Rice Millers Association. “Diagnostic Study Report of Rice Milling Industry at Karnal (Haryana)”. to increase its customer base. Punjab National Bank. Credit Risk Management Department. January. 7. “Rice Milling Cluster of Bargarh”... B. The other major financial institutions in the cluster are United Bank of India. Orissa State Financial corporation to name a few. UNIDO. Kapur. September. Ananth. Foundation for MSME Clusters. 2009. Orissa”. 8.2)”. the door has opened for State Bank of India. With the up gradation of technology and development of Rice Mils. General Review Study of Small and Medium Enterprise (SME) Clusters in India. Nayak. 85 . around 32 Rice Mills take service from State Bank of India. State Bank of India needs to liberalize its loan proceedings and decrease its interest rate and introduce new schemes. 9. 6. giving more facilities than the ‘Rice Mill Plus’ scheme which is the only active scheme for Rice Mills. Small Industries Service Institute. “SME Clusters & Responsible Competitiveness in Developing Countries”. “Getting to Know Clusters”.. Out of 83 Rice Mills in the cluster. “A Collection of Selected Representations sent to Government during 2008-09 KMS and some Useful and Important Information/Government Letters (Volume . increase the number of credit appraisal and increase its savings deposit. State Bank of India has a huge scope to expand its customer base. 2010 5. Ayyagari. APITCO Ltd. Civil Supplies and Consumer Protection. With a number of Rice Mills coming between SB-1 to SB-2 category of the Borrowers Rating by the State Bank of India. 4. 2.2006. BIBLIOGRAPHY 1. B. Hyderabad.

Journal of Assam University. www.org 20.oscsc. www.info 13.com 14.org..bargarh. www. 86 . Nayak. www. P.rice-trade.in 21. www.idrc.fao. www. www.fci.nic.com 17.com 12.nafed-india.smeclusters. www.10. www.ceorissa.in 22.wikipedia.unctad.mofpi.living-farms. 11.nic.ca 25.statebankofindia.in 23. “Problems and Prospects of Rice Mill Modernization – A Case Study”.org 24.org 16. www. www. www. www.vlex.org 18. www.org 15.in 19. www.

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