RICE MILL

Introduction:

Rice is the staple food for 65% of the population in India. It is the largest consumed
calorie source among the food grains. With a per capita availability of 73.8 kg it meets
31% of the total calorie requirement of the population.India is the second largest
producer of rice in the world next to China. The all India area, production, and yield of
rice in the year 2001-02 was 44.62 million hectares, 93.08 million tonnes and 2086 kg/
ha respectively. In India paddy occupies the first place both in area and production. The
crop occupies about 37 % of the total cropped area and 44% (2001-02 position ) of total
production of food grains in India. West Bengal is the leading producer of paddy in the
country. It accounts for 16.39% of the total production, and the other leading states are
Uttar Pradesh (13.38%), Andhra Pradesh (12.24%), Punjab (9.47%), Orissa (7.68%) and
Tamil Nadu (7.38%); the remaining states account for 33.45% of the production. India is
also one of the leading exporters of rice in the world market. India's export of rice stood
at 23.89 lakh MT in 1997-98. The corresponding value of foreign exchange earned was
to the tune of Rs. 3371.00 crore in 1997-98. Indian Basmati Rice has been a favorite
among international rice buyers. Following liberalization of international trade after
World Trade Agreement, Indian rice will become highly competitive and has been
identified as one of the major commodities for export. This provides us with ample
opportunity for development of rice based value-added products for earning more
foreign exchange. Apart from rice milling, processing of rice bran for oil extraction is
also an important agro processing activity for value addition, income and employment
generation.

Many of the rice processing units are of the traditional huller type and are inefficient.
Modern rice mills are having high capacity and are capital intensive, although efficient.
Small modern rice mills have been developed and are available in the market but the
lack of information is a bottleneck in its adoption by the prospective entrepreneur. The
present model will go a long way in bridging the information gap.
Description of Rice Milling Operation:

Paddy in its raw form cannot be consumed by human beings. It needs to be suitably
processed for obtaining rice. Rice milling is the process which helps in removal of hulls
and barns from paddy grains to produce polished rice. Rice forms the basic primary
processed product obtained from paddy and this is further processed for obtaining
various secondary and tertiary products.

The basic rice milling processes consist of:

Process Definition

1. Pre Cleaning : Removing all impurities and unfilled grains from paddy

2. De-stoning : Separating small stones from paddy

3. Parboiling (Optional) : Helps in improving the nutritional quality by gelatinization of

starch inside the rice grain. It improves the milling recovery percent during deshelling
and polishing / whitening operation 4. Husking : Removing husk from paddy

5. Husk Aspiration : Separating the husk from brown rice/ unhusked paddy

6. Paddy Separation : Separating the unhusked paddy from brown rice

7. Whitening : Removing all or part of the bran layer and germ from brown rice

8. Polishing : Improving the appearance of milled rice by removing the remaining bran
particles and by polishing the exterior of the milled kernel

9. Length Grading : Separating small and large brokens from head rice

10. Blending : Mixing head rice with predetermined amount of brokens, as required by
the customer

11. Weighing and bagging : Preparing the milled rice for transport to the customer
The flow diagram of the various unit operations are as follows:

Status of Rice Milling Units in India:

Rice milling is the oldest and the largest agro processing industry of the country. At
present it has a turn over of more than 25,500/- crore per annum. It processes about 85
million tonnes of paddy per year and provides staple food grain and other valuable
products required by over 60% of the population. Paddy grain is milled either in raw
condition or after par-boiling, mostly by single hullers of which over 82,000 are
registered in the country. Apart from it there are also a large number of unregistered
single hulling units in the country. A good number (60 %) of these are also linked with
par-boiling units and sun -drying yards. Most of the tiny hullers of about 250-300 kg/hr
capacities are employed for custom milling of paddy. Apart from it double hulling units
number over 2,600 units, underrun disc shellers cum cone polishers numbering 5,000
units and rubber roll shellers cum friction polishers numbering over 10,000 units are also
present in the country. Further over the years there has been a steady growth of improved
rice mills in the country. Most of these have capacities ranging from 2 tonnes /hr to 10
tonnes/ hr.

Need for improved rice mills:

The recovery of whole grains in a traditional rice mill using steel hullers for dehusking is
around 52-54%. There is excessive loss in the form of coarse and fine brokens. Further
loss of large portion of endosperm layers during the dehusking operation further
accentuates the problem. Against it, the recovery percent of whole grains in modern rice
mills using rubber roll shellers for dehusking operation is around 62-64%. The whole
grain recovery percent further increases to 66-68% in case of milling of parboiled paddy.
Thus it can be seen that there is an overall improvement of recovery of whole grains by
about 10-14% if one uses rubber roll shellers for rice milling operations. The conversion
ratio ( i.e. recovery % of various final product and byproduct for every 100 kg feed of
raw paddy) for these improved rice mills are can be as follows:

1. Percent of milled rice : 62-68%

2. Percent of rice bran : 4-5%

3. Percent of rice husk : 25%

4. Percent of germ wastages : 2%-8%

It has been observed that dehusking using rubber roll shellers reduces the risk of
breaking the grain because husk is pulled off almost at once and pressure is applied by
means of resilient surfaces across the width of the grain, where kernels, generally are
much more uniform than they are by length. Moreover, the process does not remove the
internal epidermis of the husk. Thus the deshelled grains with their silver skin envelope
are protected against scratches and keep longer and better while the silver skin and the
germ increases the quantity of bran which is produced while whitening. The improved
rice mills have a better husk and rice bran aspiration system. The same prevents mixing
of fine brokens with rice bran. Therefore the quality of rice bran obtained is better.

It has also been observed that the location of rice mills are confined to a few selected
production centres. Their development as a village level agro processing unit is yet to
take a proper shape. In the absence of village level rice milling unit, the farmers have to
travel great distances for milling the rice. This leads to increased transportation and
handling losses. Thus there is a need to develop improved rice mills as a village level
agro processing unit for bringing about technical upgradation and development of the
sector. Value addition and generation of gainful and sustainable employment
opportunities are the other possible benefits arising out of this agro processing industry.

The Central Govt. is also providing a big boost towards the development of this industry.
It has since repealed w.e.f. May 27, 1998 the Rice Milling Industry (Regulation) Act,
1958 and Rice Milling Industry (Regulation and licensing) Rules , 1959. Further, rice
milling sector which was earlier reserved for the small scale sector, have now been
dereserved. As such, no license/ permission is now required for setting up a rice mill.

Investment components of an improved rice mill:

The various investment components are as follows:

Land, layout plan and site development requirement:

The land requirement for establishing an improved rice milling unit will depend upon

1. Whether the unit will be using a parboiling unit for pre-treatment of paddy before
commencement of milling operation or it will be directly milling raw paddy.
2. Whether a single pass or a multipass milling unit is to be installed.

Generally 2.00 to 2.50 acre of land is required for establishing an improved rice milling
unit having an installed processing capacity of 2 MT/ hr; operating for single shift / day
of 8 hr duration; 300 days per annum; i.e. 4800 MT /annum. The land should be with
proper elevation. Low lying areas should be avoided. Else proper land filling,
compaction and consolidation should be done. Drainage and linkages with road and
other communication should also be ensured. The layout of the rice milling plant should
be done in a manner that helps in smooth operation of various unit operations in tandem
to bring about optimal capacity utilization and economizing power consumption. The
tentative cost of land and land development charges for the model project has been
considered at Rs. 5.00 Lakh ( Rs. 3.75 Lakh being the cost of the land @ Rs. 1.50 Lakh
per acre for 2.50 acre and the remaining Rs. 1.25 Lakh being the cost for site
development such as construction of boundary wall, internal roads and drainage system
etc.)

Civil construction:

The various construction requirement of an improved rice milling unit are as follows:

1. Raw paddy godown

2. Cleaning unit

3. Drier and necessary supporting structures such as, boiler /blower system etc.

4. Milling section

5. Finished product stores

6. Machine rooms

7. Auxiliary structures such as office, watch and ward etc.

The size and civil cost of these structures depend on the production capacity of the
project . The tentative civil structures and estimated cost are as follows:

Civil Structures

(Amt. Rs.)
S.No. Item Size / Unit Cost Total Cost
Specifications
1 Raw paddy 80' x 35' Rs. 300 / sq. 840000
godown- RCC ft
framed
superstructure
with 10'' thick
brick walls, IPS
flooring with
damp proof
treatment with
1.62 kg DPC
/sq.m of floor
area and base of
the side walls,
roofing
consisting of
ACC sheets
affixed with J
hooks, bolts and
other accessories
to steel truss
made of MS
 angle of desired
section
2 Cleaning Shed - 25' x 32' Rs. 300 / sq. 240000
Similar to the ft
raw paddy
godown
3 Milling shed 80' x 35' Rs. 300 / sq. 840000
-RCC framed ft
superstructure
with brick
walls , IPS
flooring and
roofing
consisting of
ACC sheets
affixed with J
Hooks and nuts
to steel trusses
made of MS
angle of desired
section and
strength bearing
capacity.
4 Finished product 30' x 35' Rs. 300 315000
or Milled rice /sq.ft
storage shed
5 Machine shed - 40' x25' Rs. 300 /sq. 300000
with masonry ft
structure with
ACC sheet
roofing on lean
 truss
6 Auxiliary
structures
a Office unit 10' x 15' Rs. 300 / sq. 45000
ft
b Labor quarters 30 ' x 15' Rs. 300 / 135000
sq.ft
c Machine Room 40' x 15' Rs. 300 / 180000
for auxiliary sq.ft
machines like
blowers/
generator set etc.
d Bore well and L.S. 100000
water
connections
e Sanitary and L.S. 50000
plumbing
charges
f Miscellaneous L.S. 50000
charges
7 Total for Civil 3095000
Construction
Cost

Technology:

It is better to use rubber roll shellers for dehusking of paddy in the unit for better
performance.

Plant and machinery and electricals:

The details of the nature and type of plant and machinery, their capacity, power
consumption, level of automation varies upon the market needs, nature and type of the
end products and the investment capacity of the entrepreneur. Whenever paddy is
required to be parboiled prior to deshelling, a parboiling unit with steam boilers has to be
installed by the milling unit. The same will increase the P&M cost.

The details of plant and machinery for the rice milling unit are as follows:

1. Paddy cleaner

2. Rubber Roll Paddy Shellers

3. Paddy Separators

4. Blowers , Husk and Barn Aspirators

5. Paddy Polishers

6. Rice grader/ aspirator

7. Bucket Elevators

Plant & Machinery

(Amt. Rs.)
S.No. Item and Description Total Cost
1 Raw paddy cleaner cum aspirator 650,000
consisting of large aspiration of desired
suction width fitted with double fans
with necessary damper controls. The
precleaner is also provided with a
magnetic separator for removing iron
particles ( for avoiding damage to other
machines in the rice mill) feed hopper
 and other accessories viz. bearngs, block
sockets, shafting pulley, holding bolt etc.
2 One rubber roll paddy sheller 98,000
3 Paddy Separator for separating 45,000
undeshelled paddy from deshelled paddy.
4 Blowers, husk and barn aspirators for 35,000
aspiration of light particles, separating
husks from dehusked kernels and for
separating bran from milled rice.
5 3 nos. of cone type paddy polishers of 600,000
suitable capacity for polishing and
whitening rice grains to the desired
degree
6 Rice grader/ aspirator for purification 50,000
and grading of polished rice grains and
for separation of the fine brokens, coarse
brokens from whole rice.
7 Bucket elevators for bulk transport and 90,000
conveyance of raw paddy, milled rice
from 1 unit operation to another in a rice
milling unit
8 Electricals (AC-3 phase induction motors 250,000
for each of the machine, DOL starters,
control panel, internal wiring and
lighting)
9 Subtotal 1,818,000
10 Insurance , freight, erection and 363,600
commissioning charges @20% of the
subtotal
11 Total 2,181,600
The specifications and capacity of the various equipment has to be judged properly for
deciding upon their cost and appropriateness for the rice milling unit.

Electrical and other items:

The tentative power requirement for various equipment for the rice milling unit is as
follows:

Electricals

S.No. Equipment Electric Motor (HP)

1 Paddy cleaner 5
2 Rubber Roll Paddy 15
Shellers
3 Paddy Separators 5
4 Blowers , Husk and 7.5
Barn Aspirators
5 Paddy Polishers ( 3 45
nos. in series each with
15 Hp motor)
6 Rice grader/ aspirator 5
7 Bucket Elevators 7.5
8 Internals 10
9 Subtotal 100

A provision of Rs. 2.50 lakh has been considered towards electricals and internal
lighting purpose. Since each of the machine used for undertaking various rice processing
operations is provided with it own independent power source (AC-3 phase induction
motor), the cost of electrical motors have been included as part of the plant and
machinery cost.

Miscellaneous fixed assets:

A provision of Rs. 2.00 Lakh under miscellaneous fixed assets has been considered for
meeting the expenses for office furniture, fixtures, steel ladders and platforms for
cleaning of machines, fire fighting arrangements etc.

Utilities:

Power:

The total power requirement for the model project will to the tune of 75 KW . The
essential power requirement of the unit is about 90 HP and accordingly suitable standby
generator provision is made.

Water:

Water is required for parboiling and domestic comsumption purpose. Suitable

arrangements for continuos water supply of desired quality and quantity should be
ensured while appraising the proposal.

Standby diesel engines, generator sets and other utilities:

Suitable standby D.G. set is required to be installed in the unit. Thus for the project, a
DG Set of 100 KVA capacity with a cost of Rs. 3.75 lakh has been considered. However,
it is an optional item and the need is to be assessed depending upon the power supply
position in the area.

Contingencies:

A 5% contingency provision may be made for the unforseen expenses.

Organizational setup:

The unit may require a plant supervisor, one accountant cum store keeper, three machine
operators, one peon and two security staff. Apart from this, three skilled workers and
twelve unskilled workers may be required for managing the day to day operation of the
unit. Depending upon the size of the unit, the manpower requirement may be modified.

Insurance:

The rice milling units should go in for adequate insurance to cover the fixed assets and
stocks.

Eligibility of borrowers:

The borrowers can be proprietary and partnership firms, cooperatives, joint stock
companies, corporations, APMC board, growers associations, NGOs etc.

Repayment:

The repayment schedule has been calculated considering the tenure of the term loan to
be 9 years inclusive of a grace period of 2 years. However, banks are free to decide upon
the repayment schedule depending upon the net cash flow assessed.

Interest rate for ultimate borrowers:

Banks are free to decide the rate of interest within the overall RBI Guidelines. However,
for working out the financial viability and bankability of the model project we have
assumed the rate of interest as 12% p.a.

Interest rate for refinance from NABARD:

As per the circulars of NABARD issued from time to time.

Security:

Banks may take a decision as per RBI Guidelines

Results of financial analysis are as under:

The financial analysis of the investment on an improved rice mill having an installed
capacity of 4800 MT/ annum has been attempted and is placed from Annexures I to VII.
The project has a margin money component of 25% with the rate of interest on term loan
and working capital as 12% p.a. and 13% p.a. respectively. For this project, the financial
indicators of the investment are as under:

Net Present Value @ 15% DF (NPW) = Rs. 34.14 lakh

Internal Rate of Return (IRR) = 28.22%

Benefit Cost Ratio (BCR) = 1.03:1

Average Debt Service coverage Ratio (DSCR) = 1.64:1

Annexures