Feasibility Report

ON

AWAN RICE MILL

INTRODUCTION

The study provides information regarding investment opportunity for

setting up a rice husking and polishing unit in Pakistan, especially in

the area of Sahiwal, Okara, Lahore , Hafizabad and Sialkot districts.

which is grown on a large irrigated area in Pakistan. The objective of this document is to provide information about investment opportunity for setting up a Rice Husking & Polishing Unit. Rice is grown on irrigated areas of all the four provinces of Pakistan. The rice crop is sown in the months of June/July and harvested in September/October. The crop needs a fertile land and a heavy fertilizer for getting good yields. Rice is a high water-intensive crop. It needs flood irrigation during the entire season. There are different varieties of rice crop, which differ in tastes and aromas. Two main species of rice, i.e. Basmati and Irri, are most commonly grown in Pakistan. The average yield of rice is 14 maunds (40 kg) per acre for Basmati and 29 maunds (83 kg) per acre for Irri rice. Basmati is considered to be the most superior variety of rice.

Opportunity Rationale Pakistan's second largest staple food crop, rice, is a source of foreign exchange earnings. At the end of the eighties, Pakistan followed the USA and Thailand as the third largest rice exporting country in the world. The long grain sweet smelling rice called basmati is grown only in parts of Pakistan. The peculiar soil, climate and farming techniques combine to produce this world-renowned variety of rice, which is a gourmet's dream. Basmati rice is now available in most super markets in all over the world.

The demand for polished rice is increasing in the export market and there is still shortage of modern rice processing mills that can produce branded rice of the required quality. Pakistan produces good quality rice in the world. Basmati rice is the most delicious variety of rice produced in Pakistan. The proximity of Middle East market has enabled Pakistan's rice to compete with the International rice. The market for coarse rice i.e. Irri is decreasing in the Middle East as the consumer preferences have changed in Saudi Arabia and other Arab countries towards the quality Basmati rice. Basmati fetch highest unit price per ton in the international market.

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.   In addition, our customers will always be treated

with the utmost integrity, honesty and fairness.

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. We offer a traceability, end-to-end controlled  process  by

conducting checks and monitoring every stage.

EXECTIVE 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.

Eastern Region rural side is dependent on agriculture to a large extent

and paddy crop is one of the chief farm produce in this area. The number of

marginal, small farmers & agricultural laborers is very large in the area, and

their quantity of production is very small. Therefore most of them are

dependent on small millers in the neighborhood for converting their paddy

into rice. Apart from this, the miller can also procure paddy from, the market

& sell the rice at a profit on commercial basis.

Technical Aspects:-Since it is proposed to install mini rice mill, the process of rice milling is

not a very complex one and technical training of a very high order is not

required. The supplier of the machinery will be able to provide initial guidance

to run the Equipments. Power consumption for the attached motor is also low.

Implementation schedule:-

a) Project Duration 5 years

b) Phasing of the project Beginning from 2009 to 2013

Objectives of Project.

1- We will strive to provide our customers with the largest  selection of

rice varieties

2- To provide the rice at affordable price to the customers.

3- To satisfy the customer is our priority.

4- Deal with honesty and fairness.

Location of Project.

Yousaf Wala

5 km Lahore road

Sahiwal

Variety-wise Distribution of Area under Rice Cultivation(in Pakistan)

Area Under Rice Cultivation

Area Under Rice Cultivation

Irri

Basmati

Other

(Total area 2.5 million hectares)

Proposed Capacity The husking unit is assumed to operate on 60% capacity utilization in the first year. The unit will process 48 tons per day of paddy during seven months of operations.3The ricepolishing unit will also operate on 60% capacity utilization in the first year and will process 32 tons of polished rice for the year4.

CURRENT INDUSTRY STRUCTURE Rice industry is growing over the last three decades with an increasing demand of processed rice in local as well as in export market.

Major Players Major players in the rice processing industry are

located in Lahore, Gujranwalan and Hafizabad districts. etc.

MARKETING

Local Market Rice is the second largest food item of the Pakistani households after wheat flour. During the last decade, the production of rice in Pakistan has been around 5 million tons per annum. Around 2.9 millions tons of rice is available for domestic consumption of Pakistan. The per capita availability of rice in Pakistan is 20.78 kg.

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

RAW MATERIALS The raw material of the husking unit is paddy, obtained from rice harvesting. The paddy can be purchased from the local grain market (Mandi) as well as directly from the farmers on cash basis. The paddy-harvesting season starts in mid of September and ends in December.

Rice Husking Rice husking unit will use the paddy as raw material. Husking is the process of separating the rice from the husk. Rubber roll and hullers are used to shatter the paddy to produce rice. Different processes are used for separation of head rice, broken rice, rice powder, dust & bran.

Polishing Unit Rice polishing unit will use the brown rice for cleaning and polishing. Various types of cleaners/polishers are used to give shining and silkiness to the rice. The husking of paddy produces different products, including 53% head rice, 10% broken rice, 2.5% powder rice, 33.50% husk and 1.00% waste &dust particles. The rice-polishing unit processes the head rice (brown rice) to make different value added rice products like silky and non-silky rice. The operations of a polishing unit are spread over a period of eight months. In the current industrial practice, both the husking and polishing units are not operated at one time due to certain reasons. After the husking operation, the brown rice requires a time of six to ten weeks for the drying and conditioning. So, the brown rice is stored for a period of at least two months before taking it to the polishing process. For the purpose of this report major portion of head rice (brown rice) will be supplied from in-house husking unit while rest will be purchased from the local market. The processed rice (both brown rice and polished rice) will be stored during the first few months of harvesting season, as the prices are generally lower due to oversupply of rice in the market.

MACHINERY & EQUIPMENT

Details of Husking Machines Majority of the machinery required for husking and polishing unit is manufactured locally apart from few items like SM and NF machine, which are used for refining the rice. Machinery can also be imported from China at cheaper rates compared to those from Japan or Korea. The major machinery components of the rice husking mill are manufactured in the local market of Daska, Jallalpur Bhattian, Gujranwala and Lahore. Amongst the foreign suppliers, China is considered to be more competitive than other countries. It’s better to purchase S.M.18 and NF 14 machines from China and other from local market. The local market manufacturers are supplying the China made S.M. 18 and NF 14 along with other machinery components.

Total Cost of the Husking Plant Rs.2,74,000

Details of Rice Processing (Polishing) Machines Major machinery required for rice polishing is also manufactured 2ocally. It is being manufactured at towns of Daska, Jalalpur Bhatian, Gujranwala and Lahore. Modern machinery can also be imported from China, Japan, Germany and Korea. It is recommended for the proposed project to use NF-14, S.M. 18 and Paddy separator from China and other machinery components from local market.

Total Cost of Polishing Machine Rs.5,639,000

Furniture & Fixtures

Total cost Rs.200,000

Office Equipment

Total cost Rs.375,000

LAND & BUILDING REQUIREMENT

Land Cost Area (sq ft) Kanal

Required Land 4,000(4 Acre) 32

Rate per kanal 87,500Total cost 6,000,000

Total Project Cost The Estimated project cost is,

Project Summary Total Cost

Land 6,000,000

Building 21,359,272

Plant and Machinery 9,859,950

Furniture an Fixture 200,000

Office Equipment 375,000

Vehicles 2,039,000

Pre operating Expenses 770,000

Contingencies 106,890

Initial working Capital 29,086,402

Total Project Costs 69,796,514

Project Economics

Bank 40%

27,918,606

Equity 60%

41,877,908

Total Financing 100%

69,796,514

DEDICATION

“We dedicate this report to our beloved parents, teachers and

friends”

C.E.O.Mr. Zahid Hussain

Finance ManagerMr. Abid Nadeem Ghori

G.MMr. Muhammad Yar

Marketing ManagerMr. Ahmad

Ms.Tahmeena

HR ManagerMs.Taiba Aslam

Sales ManagerMr. Nadeem Iqbal

Project Cost: The total estimated project cost is 69.7 million rupees.

Objectives of Project.

5- We will strive to provide our customers with the largest  selection of

rice varieties

6- To provide the rice at affordable price to the customers.

7- To satisfy the customer is our priority.

8- Deal with honesty and fairness.

Our Target Market.

Our target market is to cover the area of eastern Punjab, especially in the area of

Sources of funds

40%of total capital we take as a long term loan from

financial institutions and 60% from own sources.

Location of Project.

Yousaf Wala

5 km Lahore road

Sahiwal.

Organizational Hierarchy

Bibliography

01- Mr. Anwar Ali (owner of Jitala Rice mills) Mian Channu

02- Punjab Rice Mill Bhawalnagar

03- www.unesco.org