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IUBAT – INTERNATIONAL UNIVERSITY OF BUSINESS AGRICULTURE AND TECHNOLOGY

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To Presentation Of Feasibility Study Report

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Feasibility Report
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Project Name

Auto Rice Husking Mill in Bangladesh Project Members Md. Shahin Manjurul Alam Md. Rasedul Alam ID # 07207013 ID # 07207023

Auto Rice Husking Mill .

Context •Project Summary •Management Aspects •Project Timetable and Status •Marketing Aspects •Technical Aspects •Financing Aspects •Taxation Aspects •Financial Aspects •Social Aspects .

Bogra. Where is grown on a large irrigated area in Bangladesh. Rajshahi and Jamalpur districts. especially in the area of Netrokona. The objective of this document is to provide information about investment opportunity for setting up a Rice Husking & Polishing Unit.Project Summary Introduction The study provides information regarding investment opportunity for setting up a rice husking and polishing unit in Bangladesh. Dinajpur. .

our customers will always be treated with the utmost integrity. In addition. honesty and fairness.Project Summary Vision statement We will strive to provide our customers with the largest selection of rice varieties and rice-related products available at a competitive price and in a friendly and timely manner. .

Project Summary Mission statement Always comes up to the expectations of customers. It makes a concerted effort to give the best quality. . The achievement of excellence of standards that we have set up for irreproachable quality of rice is made possible through constant vigilance of the entire process from procurement to marketing. end-to-end controlled process by conducting checks and monitoring every stage. We offer traceability.

Project Summary Executive Summary Rice Milling is an important activity in rural areas both for self sustenance as well as source of subsidiary income to small farmers & agricultural laborers. The bye product i.e. . rice-husk can be also used for producing rice-bran oil if the volume is large as well as for domestic fuel. Rice Milling can be also undertaken on commercial basis for producing rice from paddy & sell it on a profit.

Project Timetable and Status Project Duration Phasing of the project a) General Project Planning b) Incorporation c) Preparation of Engineering Specification d) Building Construction e) Selection of Machinery Supplier f) Arrival of Machinery g) Installation of Machinery h) Trial Run J) Start of selling Operation 2 years Beginning from 2010 to 2012 1 Month 1 Month 1 Month 1 Year 1 Month 3 Month 1 Month 15 days 1 Month .

) 3600 3000 2000 TOTAL Total Monthly Particulars Skilled Worker Semi-skilled Workers Helpers Nos.Management Aspects • Management during the pre-operation period. • Labor Monthly Salary (BDT. 2 2 4 Salary (BDT. • Management during the operation period.) 6400 6000 8000 20400 .

90 millions and cultivated rice area was 10.32 million tons in the year 1975-76 when the country's population was only 79. Recently.28 million tons rice in the year of 2008-09. However. including modern rice cultivation technologies.32 million ha (BBS and DAE. improvement irrigation facilities and applications of fertilizer and pesticides. .5 million tons).Marketing Aspects Demand Rice production systems make a vital contribution to the reduction of hunger and poverty in Bangladesh. the country is producing 34. From the analysis of the last few years’ data we found that its contribution in total rice production follows an increasing trend. Total rice production in Bangladesh was 10. 2007). the rate is increasing rapidly due to adoption of high yielding rice varieties. where Boro rice contributed more than 55% (18.

Marketing Aspects Figure: Rice Production in Bangladesh (2008-09) .

Boro T. Aman Aus .

the market for rice can be broadly categorized into three major groups. The price of broken rice is almost equivalent to the wheat prices. includes middle and upper income households in the urban areas with monthly income of BDT 5000-10. This segment purchases good quality rice (polished rice as well as semi-polished rice) Upper income group includes the upper income segment of the society. Middle income group. The hotels and restaurants also purchase polished and semi polished rice for their different dishes. Lower income group.Marketing Aspects MARKET POTENTIAL According to buying power of the rice consumers.000. . This segment is the major market of broken rice and Irri rice.000 per month. includes people with income level of less than BDT 3. The majority of this segment is looking for purchasing cheap rice. they prefer to buy high quality branded rice.

Grading. Hulling. the by-products come out in mixed or separated form. has successfully developed the technical know-how.Products Technical Aspects Applications What come out during milling operation are husk. Dhaka. Compliance under the BSTI Act is compulsory. The process includes Cleaning. Wet soft grains are powered and very dry brittle grains would break. Availability of technical know-how and Compliances BITAC. who offer the best rice milling solutions till date. Blending & Packaging (Most varieties of rice requires boiling. bran and the broken rice. . The rice is manufactured using German technology acquired from Buhler group. Depending upon the type of rice mill. milled rice or edible portion. Manufacturing Process Quality rice from BITAC Hi-Tech Modern Rice Mill undergoes 8 production processes before hitting the shop floor. The Quality Assurance between each process ensures that only the finest quality of rice reaches the middlemen who in turn offer the same to the consumers. Milling is usually done when paddy is dry (around 14% moisture content). Optical Sorting. Whitening & Polishing. cooling & drying along with 8 processes mentioned earlier).

Husk Aspiration: Separating the husk from brown rice/ unhusked paddy. Paddy Separation: Separating the unhusked paddy from brown rice. It improves the milling recovery percent during dishelming and polishing / whitening operation Husking: Removing husk from paddy. Whitening: Removing all or part of the bran layer and germ from brown rice Polishing: Improving the appearance of milled rice by removing the remaining bran particles and by polishing the exterior of the milled kernel. as required by the customer Weighing and bagging: Preparing the milled rice for transport to the Customer .Technical Aspects Modern rice milling processes consist of: Pre Cleaning: Removing all impurities and unfilled grains from paddy De-stoning: Separating small stones from paddy Parboiling (Optional): Helps in improving the nutritional quality by gelatinization of starch inside the rice grain. Length Grading: Separating small and large broken from head rice Blending: Mixing head rice with predetermined amount of broken.

De-cleaning Parboiling Husking Paddy Separation Whitening Bagging .

Technical Aspects .

(for simple rice mill) upgraded. milled rice moves to bagging station 9b – (for more sophisticated mill) milled rice moves to the polisher 10 .Head rice moves to head rice bin 12 – Brokens moves to brokens bin 13 – Pre-selected amount of head rice and brokens move to blending station 14 – Custom-made blend of head rice and brokens moves to bagging station 15 – Bagged Rice moves to the market A – straw. mud balls etc.paddy is dumped in the intake pit feeding the pre-cleaner 2 .Coarse (from 1st whitener) and fine (from 2nd whitener) bran removed from the rice grain during the whitening process E .Small brokens/brewer’s rice removed by the sifter . will move to length grader 11 . brown rice moves to the 1st stage (abrasive) whitener 7 .mixture of brown rice and unhusked paddy moves to the separator 4 .de-stoned.husk removed by the aspirator C – small stones. chaff and empty grains are removed B .Polished rice.unhusked paddy is separated and returned to the rubber roll husker 5 – brown rice moves to the destoner 6 .pre-cleaned paddy moves to the rubber roll husker: 3 . removed by de-stoner D .partially milled rice moves to the 2nd stage (friction) whitener 8 – milled rice moves to the sifter 9a .Technical Aspects 1 .

Husk and Barn Aspirators • Paddy Polishers •Rice grader/ aspirator •Bucket Elevators .Technical Aspects Plant & Machinery The details of plant and machinery for the rice milling unit are as follows: •Paddy cleaner •Rubber Roll Paddy Shellers •Paddy Separators •Blowers.

Milling section 5. boiler /blower system etc.Technical Aspects Civil construction: The various construction requirement of an improved rice milling unit are as follows: 1. Machine rooms 7. Cleaning unit 3. 2. Auxiliary structures such as office watch and ward etc. Finished product stores 6. Raw paddy warehouse. . Drier and necessary supporting structures such as. 4.

Bagura. Rajshahi and Jamalpur districts. 000/-. Utilities Total power requirement will be 30 HP whereas water requirements are not much. Thus even at 100% utilization. the quantum of paddy would go up. Annual expenditure under this head at 100% activity level could be BDT.Technical Aspects Raw materials Paddy is the only raw material required. The input-output ratio is 100:80 and to that extent. supplies should not be a problem. Looking to the total production of paddy in Netrokona. . Dinajpur. the requirement will not be more than 750 tones per year. 90. But it is advisable to have long term supply arrangements in place.

• Tax exemption on the interest payable on foreign loans and on royalties and technical know-how fees. • Open exchange controls. • Tax-exemption and duty-free importation of capital machinery and spare parts for 100% export-oriented industries. the government has put in place an extensive programe of incentives.Taxation Aspects Agro Based Industry Taxation Rate . • Exemption of income tax unto three years for expatriate employees. • Double-taxation avoidance. • Term loans and working capital loans from local banks allowed. .3. • Hundred percent foreign equity allowed. • Capital. which include: • Tax-holidays. as per bilateral agreements already concluded. profit and dividend repatriation facilities. • Reinvestment of repairable dividends treated as new investment.20% In order to entice investors.

514 .606 41. 27.Financing Aspects Project Economics Bank 40% Equity 60% BDT.908 Total Financing 100% 69.796.918.877.

60 lac and BDT. Preliminary & Pre-operative Expenses Expenses like registration and legal fees. 4. 0.30 lacs.60 lacs as worked out hereunder: . The total cost under this head is taken at Rs.000/-.50. 3. Plant and Machinery A detailed list is already furnished.80 lacs and margin of BDT.Financial Aspects DETAILS OF THE PROPOSED PROJECT 1. Working Capital Requirement Capacity utilization in the first year is assumed to be 60% and at that level. 2. will be adequate. 1.mtrs.is adequate.3. interest during implementation etc.10 lacs. With built-up area of 80 sq. total working capital needs are likely to be BDT.000/. are taken at BDT. Land and Building Land admeasuring to about 200 sq.mtrs. The respective cost would be BDT. Miscellaneous Assets A provision of BDT. 40. 2. 5. 2.40 lacs comprising of bank loan of Rs. 5. administrative and other charges.

7 0.6 .4 Bank 0.05 Promoters 0.75 0.4 2.05 -3.7 1.25 1.8 0. in lacs) Particulars Shock of RMs Stock of Finished Goods Receivables Other Expenses Period ½ Month ½ Month Margin 30% 25% Total 1 1.3 0.Financial Aspects (BD.25 5.35 1 Month 1 Month 25% 100% Total 2.

33 : 1 30% 1.6 8 2.5 .7 2.4 0.3 0.5 0.6 8 (BDT.Financial Aspects Cost of the Project and Means of Financing Item Land and Building Plant and Machinery Miscellaneous Assets P&P Expenses Contingencies @ 10% on Building and Plant & Machinery Working Capital Margin Total Means of Finance Promoters' Contribution Loan from Bank/FI Total Debt Equity Ratio Promoters' Contribution 2.4 5. in lacs) Amount 2.

9. Product-mix may vary and hence an average selling price of BDT 25. Production Capacity and Build-up The processing capacity is taken at 600 tonnes per year on two shift working.per ton.60 lacs is calculated @ 12% assuming repayment in 4 years including a moratorium period of 1 year. as explained earlier.Financial Aspects PROFITABILITY CALCULATIONS 1.000 3. etc. 60. it is assumed to be 70%. in lacs) Product Rice Husk/Bran. As explained earlier. Sales Revenue at 100 (BDT.500 Total Sales Value 120 3. 4. 13. processing techniques etc. Qty. Hence. price of husk and bran is also taken at BDT. Interest on bank assistance for working capital is computed @ 14% per annum. Similarly. The annual requirement at 100% capacity shall be 600 tonnes. capacity utilisation in the first year is taken at 60% whereas second year onwards. processing of 600 tonnes would. Raw Materials Required at 100% Different qualities of paddy is grown in the state and the mill would process suitable good paddy from time to time. (Tones) 480 90 Selling Price/Ton 25. 2. 3. . 5. Considering average price of BDT. Utilities The annual expenditure under this head at 100% activity level is estimated to be BDT. on an average.000/. 6.15 123.50 lacs. 82.5 Selling price of rice would vary depending upon the quality of inputs.750/. Depreciation It is computed on WDV basis and rates assumed are 10% on building and 20% on machinery and miscellaneous assets.500/. 3.per ton is assumed.which would fluctuate in line with quality of inputs. the yearly cost would be BDT.000/-. yield 480 tonnes of edible paddy or rice with 80% recovery. Interest Interest on term loan of BDT.

26 1.59 Net Profit Income-tax @ 20% Profit after Tax Cash Accruals Repayment of Term Loan 1.84 -- 2.35 0.25 0.28 1.13 1.Financial Aspects No.21 0.60 0.85 28.05 3. A Particulars Installed Capacity Capacity Utilization Sales Realization B Cost of Production Raw Materials Utilities Salaries Stores & Spares Repairs & Maintenance Selling Expenses @ 10% Administrative Expenses Total C Profit before Interest & Depreciation Interest on Term Loan Interest on Working Capital Depreciation 24.37 0.42 1.42 1.36 1. in lacs) 2 Year nd 70% 38.30 3.30 st (BDT.10 3.55 0.30 30.45 0.75 0.62 0.30 0.67 2.53 0.41 0.09 0.21 3.88 0.18 0.33 0.65 .71 1 Year --600 Tonnes-60% 33.39 35.

[B] Fixed Cost Break-Even Point [D] ÷ [C] 24.15 0.Financial Aspects BREAK-EVEN ANALYSIS No.66 0.53 28.89 4. in lacs) .82 0. [A] [B] Particulars Sales Variable Costs Raw Materials Utilities (70%) Salaries (60%) Stores & Spares Selling Expenses (80%) Admn Expenses (50%) Interest on WC [C] [D] [E] Contribution [A] .25 0.5 57% Amount 33.3 (BDT.41 2.18 2.3 0.

80 Operating Leverage = Contribution/EBT = 4.41 = 1.Financial Aspects LEVERAGES Financial Leverage = EBIT/EBT = 2.41 = 3.54 ÷ 1.58 .13 = 0.80 ÷ 3.41 ÷ 1.13 Degree of Total Leverage = FL/OL = 1.

85 2.26 3rd Yr 2. in lacs) 4th Yr 2.59 1.68 0.14 15.29 8. 8.56 1.02 The IRR is around 20%.9 2.68 1.45 2.6 -0.29 0.99 18% 1.16 1.3 1.23 2.26 16% 1.38 1.18 0.39 Internal Rate of Return (IRR) Cost of the project is BDT.29 1.6 2.05 8.16 8.57 1.78 0.48 1.57 1.11 1.62 1.53 1.07 0.23 1. in lacs) 20% 1.44 0.11 2.68 2.26 1.85 2.01 1.45 1.89 3.42 1.49 1.45 2.26 2.Financial Aspects Debt Service Coverage Ratio (DSCR) Particulars Cash Accruals 1st Yr 1.71 0.84 2nd Yr 2. .00 lacs.84 2. Year 1 2 3 4 5 6 Cash Accruals 1.38 1.6 4.67 Interest on TL Total [A] Interest on TL Repayment of TL Total [B] DSCR [A] ÷ [B] Average DSCR 0.45 (BDT.47 (BDT.08 1.

g. Planning and funding of the public extension programs would be decentralized up to the Upazila level. knowledge-based and responsive to the changing need of farmers in the context of increasing commercialization of agriculture. This system may be referred as `One Station` service where the users will get necessary advisory services on crop. demand-driven. . farmers preference and market demand.Social Aspects Objectives: The main objective of the PROJECT is to strengthen the national agricultural technology system to increase the agricultural productivity and add value to the selected commodities and improve market linkage.(a) promotion of contract farming. Agricultural Extension. Emphasis would be given on making the system more efficient. (b) improved low cost post-harvest management practices. and (b) develop capacity of farmers. fish) based on comparative advantage. and (ii) institutional efficiency enhancing measures through-(a) institutional strengthening of Hortex Foundation and other dedicated agencies dealing with high value agriculture. milk. More specifically. Development of Value Chain. the component would finance: (i) stronger farmer market linkage through. poultry. livestock and fisheries sub-sectors. agri-business staff and public officials in commercial farming including export procedures. and (c) introduction of higher sanitary and phyto-sanitary standards for the national and export markets. The main focus of this component is to promote the development of value chain of a few selected high value commodities (e. fruits. vegetables. The main focus of this component is to strengthen and introduce a decentralized pluralistic extension system.

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