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Brown Rice Business Plan

BUSINESS IDEA

STARTING A NEW PRODUCT LINE OF BROWN RICE & INSTALLING NEW RICE MILL PROJECT TO GAIN GOVT. BENEFIT

Submitted By: Naval Bhushania JGI IDEA (12MBA65002)

Summited To: Mr. Amit Rathi

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Brown Rice Business Plan

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

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Brown Rice Business Plan

1. MARKET SIZENote -: 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 But challenge will be Uniqueness and Price barrier due to distance. It is because of the culture and the eating habits of 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 includes Both 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 to climatic Conditions the figures of total rice production given was assumed under the category of Non-basmati rice. Click the link for Statistics

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

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Brown Rice Business Plan

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

Click the file to see statistics Then I found the data of Total Non- Basmati Rice Exports All 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. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Name of the Country Belgium Germany Greece Italy Reunion Spain Sweden U.K. UAE USA Quantity (MT) Value ($) 25.00 226.68 25.00 514.77 72.00 350.00 1175.00 8355.35 4.35 222.77 19,946 1,80,854.37 19,946 4,49,437.70 57,442,09 3,19,874.00 937462.00 74,50,994.40 5644.00 228,474.00

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Brown Rice Business Plan

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 is some of the European Countries like Germany & Italy. Top Exports Markets With Premium Quality RiceMexico, Japan, Haiti, Turkey, Iraq, Saudi Arabia, Venezuela, Honduras. Limitations & Problems-: Unable to Analyze to Export to which Country and Why to export with all advantages and disadvantages. 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.

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Brown Rice Business Plan

2. GROWTH DRIVER & POTENTIALThe above data shows that there is high growth in market. See the link for Rice Exports and Its growth-: http://articles.economictimes.indiatimes.com/2013-0516/news/39310641_1_india-rice-exporters-association-basmativijay-setia Few Reasons are The growth reason is the advancement in the technology in Agro-based business. There is a sudden awareness of healthy and organic rice in many 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 is always to be spend. The support of Govt. in export and various incentives for farmers. Every year there is huge loss of paddy due to mismanagement of Govt. Rice production in the country is increasing (Francisco, 2011), yet the threat of growing rice utilization persists mainly because of rising population and per capita consumption. LIMITATIONS & PROBLEMS: As per the research the market has potential as I am focusing on Exports but getting into Exports I have not analyzed seen any barriers. I have not considered the Indian Market

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Brown Rice Business Plan

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 even the person who trade (Semi-finished to Finished goods) in this business will also be my competitor. B) Geography Wise / Area Wise-: All the person who will manufacture 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 product line of Brown Rice so any other company with the production of the brown rice will be my competitor.

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Brown Rice Business Plan

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 Costa) 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

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Brown Rice Business Plan

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 of the 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

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Brown Rice Business Plan

Land and Land Development (for New Rice Mill Plant) SL No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Description Land Cost (1Acre) 43,560 Sq feet Cost of leveling & Development Cost of Approach Road (Sharing By Parent Company) Cost of Compound Wall (Some shared Few build) Building & Shade Cost (25000 Sq .feet) Plant & Machinery (4 TPH) (Buhler) Color Sorter Buhler (New Machine) Electrical Infrastructure (500 KVA) Electricity Deposit Preliminary Exp. Office Furniture (Shared) Other Machinery Tool Kit TOTAL COST Cost (Rs. In crores) .80 .05 .07 .08 1.10 2.36 .76 .17 .05 .07 .01 .02 5.54

Govt. Benefit for New Rice Mill Industries as Per Gram Swaraj Yojana. 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

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Brown Rice Business Plan

Total Savings-: Total Cost of Land (As per Registry and Stamp Duty Approx) Original Cost- 80 Lakhs Other Exp. On Land Building & Shade Cost Total Exp. Subsidy 35% Plant & Machinery Cost (2.76+.76) Subsidy 50% Other Subsidy Electric Capital Subsidy (5lakhs for 3 years) 45 Lakhs

12 Lakhs 110 Lakhs 167 Lakhs (58.45) Lakhs 352 Lakhs 176 Lakhs

3 Lakhs 15 lakhs

Total Subsidy (58.45+176+3+15)

252.45 LAKHS

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

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Brown Rice Business Plan

5.WORKING CAPITAL REQUIREMENTProfitability Assumptions-: Particulars Paddy Requirements PLANT CAPACITY (4 4 TPH) NO. OF WORKING HOURS 16 NO. OF DAYS 300 ANNUAL REQUIREMENT 19200 AS INSTALLED CAPACITY (MT)

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

Particulars Raw Rice Husk Broken Rice Rice Bran Other impurities Total

Yield (%) 60 21 9 8 2 100

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Brown Rice Business Plan

Note-: The company Will have 2 shifts 12 Hours for day and 12 hours for Night Few Financial Policy which will affect the Cash Flow of the Company: Debtor Turn Over Will be 20 Days Wages (weekly) 20 Labor Daily 20* Rs.150= 100000 Rs Per 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 days Rs 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

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Brown Rice Business Plan

Average Cost of Paddy is Rs. 2150 Per Quintal = 21500 Per ton 1600 Ton *21500= Rs 3,44,00,000 Crores

SL No. Margin Money For Working Capital 1. Raw Material (25 days)+ WIP 2. Electricity Charges 4. Wages 5. Salary 6. Contract Labor 7. Other Exp 8. Mandi + Nirastrit tax per month 9. Transportation + Mill Spares 10. Interest will be Approx Total Working Capital Installment for Machinery*

Amount in Lakhs 344.00 4 1 1.5 2 2 8 3 10 375.5

Note-: Goods In Progress is included in Raw material + Stock of finished Goods. Cash Receiving from the By products has not been calculated. Like Husk, Bran, Broken Interest Calculation May vary as for machinery there would 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 Crores After Subsidy 2.5245 Crores Final Investment= 6,77,05,000 Crores

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Brown Rice Business Plan

6. MARGINS EXPECTED-: Returns Or Profitability Calculation-: Expected Margin Will be after all expenses 200 to 300 Rs Per Quintal Total Production= 19200 T output 2000 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 the Foreign Countries to fit the purchasing power and appetites of ordinary families is instrumental in addressing our nutrition concerns and narrowing the gap between domestic rice supply and 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

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Brown Rice Business Plan

PRODUCT REVIEW-: Product Name VISHNU BHOG RICE (special hybrid Rice) Main Feature -Sweet in taste. -More nutritious. -Small size Type of Customer 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

House Wife, Price Countious People and Used to - All prepare for some advantages of Special dishes Like main product Idli By - Easy to cook Restaurants

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Brown Rice Business Plan

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 focusing on European Countries in that only ITALY then total Consumption of Brown Rice in Italy from July 2012 to march 2013 is 514.77 MT, I will be able to only capture only 16 percent of market. PROBLEMS & LIMITATIONS: According to the data I dont have figure for consumption of 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 from Total sales for the year. 9. USP OF THE BUSINESS-: Development on Manufacturing Process of Brown Rice to prevent Nutrition Loss and best Quality and at Affordable Price. 10. Why ME? Because I already have the experience into this business for more then 3 years and even My family is into this business for more then 30 years.

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Brown Rice Business Plan

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 plant and other ancillary buildings; Obtained quotations from suppliers of plant & machinery and other equipments; Identify market for finished products. STRATEGY: Positioning: 1. Differentiation in the form of healthy nutritious rice with cooking techniques. Product strategy 1. Hybrid and non-basmati rice to create awareness about health and attractive packaging and manual to tell people how to cook rice, warehouse facility of the bulk purchaser. Pricing strategy 1. Discounts for bulk purchaser 2. Margin for sales persons 3. 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.

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Brown Rice Business Plan

3. Credit period for 2 months. 4. Sending People to explain the rice cooking techniques and to prevent nutrition loss. 5. Campaigning in fare, colonys traders meet for brand awareness. 6. Giving extra incentives for new spreading the rice in new market or region MAJOR PROBLEMS & LIMITATIONS-: The calculation of working capital after checking the market size and total revenue may vary as per Total Production raw materials paddy other things it has been calculated but biggest GAP is total Sale will be 19,200 tons sale price will be 45000 Per ton approx. The sale will be 19200*45000= 86,46,00,000 its huge amount. 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 setting up with a contract with foreign companies.