Brown Rice Report BI To BP by Naval Bhushania

7/27/2019 Brown Rice Report BI To BP by Naval Bhushania

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BI TO BP Brown Rice Business Plan

BUSINESS IDEA

STARTING A NEW PRODUCT

LINE OF BROWN RICE

&

INSTALLING NEW RICE

MILL PROJECT

TOGAIN GOVT. BENEFIT

Submitted By: - Summited To: -

Naval Bhushania Mr. Amit Rathi

JGI IDEA (12MBA65002)




OBJECTIVES

1) MARKET SIZE

2) GROWTH DRIVER & POTENTIAL

3) KEY COMPETITORS

4) KEY COST DRIVERS

5) WORKING CAPITAL REQUIREMENT

6) MARGINS EXPECTED

7) CUSTOMER SEGMENTATION

8) EXPECTED MARKET SHARE & REVENUE

9) USP OF THE BUSINESS

10) WHY you are the best person to manage it.11) OTHER FINDINGS

MAJOR PROBLEMS & LIMITATIONS




1. MARKET SIZE-

Note -: The link given states the Data comparison of 2 to 3 years.

I have not considered the market of brown Rice in India.

The Southern India will be a Good market for Rice Butchallenge will be Uniqueness and Price barrier due todistance. It is because of the culture and the eating habitsof people of southern part of India.

I have only focused on Export Markets.

The market size is estimated based on few factors-:

Understood the Rice Production in India Which includesBoth Basmati and Non- Basmati Rice.

Then analyzed the production of rice state wise with recent

data and statistics.

Basmati Rice Production State Wise-:

Click on the Link for Statistics

As Chhattisgarh could not grow Basmati Rice due toclimatic Conditions the figures of total rice productiongiven was assumed under the category of Non-basmatirice.

Click the link for Statistics

Note- My Focus is on Non- Basmati Brown Rice.




Then I took out the data of Total Rice Exports from Indiato rest of the world. Basmati & Non Basmati Rice.

Click the file to see statistics

Then I found the data of Total Non- Basmati Rice ExportsAll over the world from India.

Click the file to see statistics

Country Wise Analysis of Brown Rice As Per their

Consumption-:

QRC RICE INSPECTION CELL KARACHI, COUNTRY

WISE POSITION OF EXPORT OF BASMATI RICE

PLEASE THE FILE IN MAIL ATTACHMENT SIR.

Brown Rice Consumption As Per Report Given Above-:

SL No.

Name of the Country Quantity (MT) Value ($)

1. Belgium 25.00 19,946

2. Germany 226.68 1,80,854.37

3. Greece 25.00 19,9464. Italy 514.77 4,49,437.70

5. Reunion 72.00 57,442,09

6. Spain 350.00 3,19,874.00

7. Sweden 1175.00 937462.00

8. U.K. 8355.35 74,50,994.40

9. UAE 4.35 5644.00

10. USA 222.77 228,474.00




Results & Outcomes-:

Chhattisgarh- 5293.8 MT

Chhattisgarh stands in the 6th

position on production of Non Basmati Rice in India

In rice Exports the Chosen country for Brown Rice issome of the European Countries like Germany & Italy.

Top Exports Markets With Premium Quality Rice-Mexico, Japan, Haiti, Turkey, Iraq, Saudi Arabia,Venezuela, Honduras.

Limitations & Problems-:

Unable to Analyze to Export to which Country andWhy to export with all advantages and dis-

advantages. Figures / statistics to get Brown Rice Consumption

for NON-Basmati Rice Country Wise very difficult.

Analysis of Indian Market and Consumption.

How to target the market.




2. GROWTH DRIVER & POTENTIAL-

The above data shows that there is high growth in market.

See the link for Rice Exports and Its growth-:http://articles.economictimes.indiatimes.com/2013-05-16/news/39310641_1_india-rice-exporters-association-basmati-vijay-setia

Few Reasons are-

The growth reason is the advancement in the technology inAgro-based business.

There is a sudden awareness of healthy and organic rice inmany European countries and even in USA & U.K. because of their life style and eating habits.

The potential market is the richest countries of the world people are earning very high as the Disposable Income isalways to be spend.

The support of Govt. in export and various incentives forfarmers.

Every year there is huge loss of paddy due tomismanagement of Govt.

Rice production in the country is increasing (Francisco, 2011),yet the threat of growing rice utilization persists mainly becauseof rising population and per capita consumption.

LIMITATIONS & PROBLEMS:-

As per the research the market has potential as I amfocusing on Exports but getting into Exports I have notanalyzed seen any barriers.

I have not considered the Indian Market

http://articles.economictimes.indiatimes.com/2013-05-16/news/39310641_1_india-rice-exporters-association-basmati-vijay-setia










TRENDS In Rice Production & Utilization (1990-2010)

3. KEY COMPETITORS:-

The competition in my business will be based on various types-:

A) Industry wise-: All rice producers all over the world will be my competitors as per the total rice industry and eventhe person who trade (Semi-finished to Finished goods) inthis business will also be my competitor.

B) Geography Wise / Area Wise-: All the person who willmanufacture the Rice in the particular place where-

I am producing my product

I am selling my product

C) Product Wise Competition-: I am adding a new productline of Brown Rice so any other company with the production of the brown rice will be my competitor.




FINANCIAL CALULATIONS-:

4. KEY COST DRIVERS

Few Key Cost Drivers are-:

Working Capital Interest

Transportation till Sea port

Technology for Quality (Sortex Machine)

Project Components and their tentative Cost-

a) Land and Land Development-

Cost of Land

Cost of Leveling/Development

Cost of Approach Road

Cost of Compound Wall

b) Building & Civil Work-

Main Factory Building

Raw Material Godown

Finished Goods Godown & Packing

Administrative Building

Conference Hall

Generator Room & Work Shop

Sanitary & Plumbing

Watchmen Cabin

Electricity Chamber




c) Plant & Machinery-

Milling Section

Paddy Plant

Sortex & Packing Plant

d) Miscellaneous Fixed Assets-

The provision has to be made for electrification,M.S.E.B Deposit, Transformer, one D.G. Set,

computers, and furniture & fixture as per requirement ofthe project.

Margin Money for Working Capital

RAW MATERIAL

ELECTRICITY CHARGES

SALARY& WAGES

STORES & SPARES

Project cost

Land & Site Development

Civil Work

Plant & Machinery

Miscellaneous Fixed Assets Contingency- 5% of the on cost of plant &

Machinery

Pre-operative Expenses

Margin Money for Working Capital




Land and Land Development (for New Rice Mill Plant)

SL No.

Description Cost (Rs. In crores)

1. Land Cost (1Acre) 43,560 Sq feet .80

2. Cost of leveling & Development .05

3. Cost of Approach Road (Sharing ByParent Company)

.07

4. Cost of Compound Wall (Some shared

Few build)

.08

5. Building & Shade Cost (25000 Sq .feet) 1.10

6. Plant & Machinery (4 TPH) (Buhler) 2.36

7. Color Sorter Buhler (New Machine) .76

8. Electrical Infrastructure (500 KVA) .17

9. Electricity Deposit .05

10. Preliminary Exp. .07

11. Office Furniture (Shared) .01

12. Other Machinery Tool Kit .02TOTAL COST 5.54

Govt. Benefit for New Rice Mill Industries as Per Gram SwarajYojana. SMALL SCALE INDUSTRIES-:

Land & Building 35%Plant & Machinery 50%

Electric Installation for H.T. Consumers 3 Lakhs(Up to 750 KVA)Capital Subsidy up to 5 Lakhs for Minimum 3 Years




Total Savings-:

Total Cost of Land 45 Lakhs(As per Registry and Stamp Duty Approx)Original Cost- 80 LakhsOther Exp. On Land 12 LakhsBuilding & Shade Cost 110 Lakhs

Total Exp. 167 LakhsSubsidy 35% (58.45) Lakhs

Plant & Machinery Cost (2.76+.76) 352 LakhsSubsidy 50% 176 Lakhs

Other SubsidyElectric 3 LakhsCapital Subsidy 15 lakhs(5lakhs for 3 years)

Total Subsidy (58.45+176+3+15) 252.45 LAKHS

LESS FROM TOTAL COST = (5.54-2.5245) = 3.0155CRORES




5.WORKING CAPITAL REQUIREMENT-

Profitability Assumptions-:

Particulars Paddy Requirements

PLANT CAPACITY (4

TPH)

4

NO. OF WORKING HOURS 16

NO. OF DAYS 300

ANNUAL REQUIREMENT

AS INSTALLEDCAPACITY (MT)

19200

Yield & Production:- The raw material used in mill will be

Raw Paddy

Particulars Yield (%)

Raw Rice 60

Husk 21

Broken Rice 9

Rice Bran 8

Other impurities 2Total 100




Note-:The company Will have 2 shifts 12 Hours for day and 12 hoursfor NightFew Financial Policy which will affect the Cash Flow of theCompany: -

Debtor Turn Over Will be 20 Days

Wages (weekly) 20 Labor Daily 20* Rs.150= 100000 RsPer Month

Salary (Monthly)= Approx 1.5 lakhs

Contract Labor Exp. (Weekly) 2lakh Month approx

Electricity Charges (Monthly)

Stores & Repairs (Weekly)

Other Expenses (Daily)

Mandi Tax (Every 7th

day) 2.% on paddy

Nirastrit Tax (Every 7th

Day).20% on paddy Interest Expenses (Monthly)

Transportation Exp (Daily)

Brokarage & Commission

TDS Per Month On labor

TDS on Interest If Taken from Out side

Calculation of Mandi Tax and Nirastrit Tax-:

Total Paddy Purchase For 25 daysRs 3,44,000,00* 2.20%= 7,56,800 Rs

Raw Material Paddy: -

Capacity of Plant for 25 Days Output

(4TPH*16 Hours)* 25 days = 1600 Ton in 25 days




Average Cost of Paddy is Rs. 2150 Per Quintal = 21500 Per ton1600 Ton *21500= Rs 3,44,00,000 Crores

SL No. Margin Money For WorkingCapital

Amount in Lakhs

1. Raw Material (25 days)+ WIP 344.00

2. Electricity Charges 4

4. Wages 1

5. Salary 1.5

6. Contract Labor 2

7. Other Exp 28. Mandi + Nirastrit tax per month 8

9. Transportation + Mill Spares 3

10. Interest will be Approx 10

Total Working Capital 375.5

Installment for Machinery*

Note-:

Goods In Progress is included in Raw material + Stock offinished Goods.

Cash Receiving from the By products has not beencalculated. Like Husk, Bran, Broken

Interest Calculation May vary as for machinery therewould be Installment Per Month Which is not calculated.

Even interest will may vary because of subsidy Benefits.

Payment for TDS & Brokerage is not yet calculated.

Total Investment Before subsidy- 3.755+5.54 = 9.295 CroresAfter Subsidy 2.5245 Crores

Final Investment= 6,77,05,000 Crores




6. MARGINS EXPECTED-:

Returns Or Profitability Calculation-:

Expected Margin Will be after all expenses 200 to 300 Rs PerQuintalTotal Production= 19200 T output2000 per Ton*19200= Rs 3,84,00,000 Profit Approx

Break even will be 3 to 4 years.

7. CUSTOMER SEGMENTATION-:

Focus only on Exports of Non- Basmati Brown Rice.It will be sold among low and Middle-Income families over theForeign Countries to fit the purchasing power and appetites ofordinary families is instrumental in addressing our nutritionconcerns and narrowing the gap between domestic rice supplyand demand.

Few Consumers are-:

1) House Wife 2) Big Retail Stores and Exporters like Reliance, Big Bazar,

Wall-mart.

3) Educational Institute with residential facilities 4) Kirana Store and Super Markets

5) Health Conscious People 6) Athletes or Sports Player 7) Hotels and Restaurants (Focused On Organic Dishes)

8) Brown rice for Pregnant Women




PRODUCT REVIEW-:

Product Name Main Feature Type of Customer

VISHNU BHOG

RICE (special

hybrid Rice)

-Sweet in taste.

-More nutritious.

-Small size

Diabetics, House

wives, Sports

People &

Educational

Institutes.

DABOOJI

(H.M.T, NON

BASMATI

RICE)

-Comparative

Small size than

Basmati.

-Scented rice

-Attractive

packing.

House wife,

Marriages, Party,

Hotels &

Restaurants

BROKEN RICE

(NON BASATI &

SPECIAL

HYBIRD)

-By Product of

main product

- All

advantages of

main product

- Easy to cook

House Wife, Price

Countious People

and Used to

prepare for some

Special dishes Like

Idli By

Restaurants




8.EXPECTED MARKET SHARE & REVENUE-:

The market for Brown Rice is huge and it depends on my penetration strategy for which market I will go, if I am focusingon European Countries in that only ITALY then totalConsumption of Brown Rice in Italy from July 2012 to march2013 is 514.77 MT,

I will be able to only capture only 16 percent of market.

PROBLEMS & LIMITATIONS:-

According to the data I don’t have figure for consumptionof Non basmati Brown Rice in these countries.

Market share country wise or as a whole??

How to calculate revenue and how it will be different fromTotal sales for the year.

9. USP OF THE BUSINESS-:

Development on Manufacturing Process of Brown Rice toprevent Nutrition Loss and best Quality and at Affordable

Price.

10. Why ME?

Because I already have the experience into this business formore then 3 years and even My family is into this business formore then 30 years.




11. OTHER FINDINGS: -

STEPS FOR IMPLEMENTATION OF THE PROJECT:

The society/ Owner has to raise the requisite share capital;

Land Purchase/Leased by the society;

Obtained assurance from State Electricity Board (MSEB)for providing required electricity connection;

NOC from Pollution control board;

Prepared plan and estimates for civil work of main plantand other ancillary buildings;

Obtained quotations from suppliers of plant & machineryand other equipment’s;

Identify market for finished products.

STRATEGY:- Positioning:

1. Differentiation in the form of healthy nutritious ricewith cooking techniques.

Product strategy 1. Hybrid and non-basmati rice to create awareness

about health and attractive packaging and manual totell people how to cook rice, warehouse facility ofthe bulk purchaser.

Pricing strategy 1. Discounts for bulk purchaser2. Margin for sales persons3. Higher commission for broker to compete

Distribution strategy 1. Lower Price to the brokers and traders to flood the

market.2. Provide warehousing facility for bulk purchasers.




3. Credit period for 2 months.4. Sending People to explain the rice cooking

techniques and to prevent nutrition loss.

5. Campaigning in fare, colony’s traders meet for brandawareness.

6. Giving extra incentives for new spreading the rice innew market or region

MAJOR PROBLEMS & LIMITATIONS-:

The calculation of working capital after checking the

market size and total revenue may vary as per TotalProduction raw materials paddy other things it has beencalculated but biggest GAP is total Sale will be 19,200tons sale price will be 45000 Per ton approx.

The sale will be 19200*45000= 86,46,00,000 its hugeamount.

The problem with execution and Amount receivable from

debtors in Number of days. The discount to be given to exporters.

Problems with weather I have sell to exporters or settingup with a contract with foreign companies.

Brown Rice Report BI To BP by Naval Bhushania

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