1.      INTRODUCTION

1.1.    Background

Maize (Zea mays) is one  of the important Kharif crops of Himachal Pradesh. The major area under maize is rain fed and there is no substitute for this crop during rainy season. The quality of maize grown in the state is very good. It is an important crop of the state both as staple food as well as for feed. The farmers are compelled to sell their produce to the traders at throw away prices due to lack of local demand and excess production. The trends in production, consumption and marketing of this crop have drawn the attention of the State Government for finding out  the value addition locally. They planned to promote  processing of this crop in to value added products. Some efforts were also made to set up a processing plant in the state but the same could not materialized. 

Keeping this in view, the Himachal Pradesh State Directorate of Agriculture, Shimla assigned NABARD Consultancy Service a study to assess the feasibility of maize processing in the State with the following objectives.
(1)               To assess the production and marketable surplus of maize.
(2)               To identify the suitable technology.
(3)               To assess the techno-economic feasibility and location for setting up processing unit. 

The broad terms of reference for the study were as under:

1.2     Terms of Reference

1.          To assess the district wise production and marketable surplus of maize in the State.

2.       To survey the existing resources / institutions / organisation and various linkages existing in various parts of the area.

3.          To identify / recommend possible products of maize based on the quality.

4.       To identify / recommend suitable technologies for processing of maize and suggest suitable locations for setting up such units, keeping in view the forward and backward linkages including marketing.

5.      To assess the financial implications and suggest means of finance and financing pattern.

6.      To assess techno - economic feasibility and financial viability of the project for securing financial assistance from different sources such as loans from banks and financial institutions and grant from Ministry of Food Processing Industries, GoI and other agencies.

7.                  Identify the agencies and suggest strategies for implementation of the project.

The study was completed in two phases. The first phase of the study was conducted in Maharashtra to identify suitable technology for processing of maize to value added products.  The technology followed by the existing units in the state were studied.  Phase II of the study was taken up in Himachal Pradesh to assess the marketable surplus of maize and also ascertain the feasibility of setting up of maize processing unit(s).

1.4     Methodology

The primary data were collected from the existing units, traders of maize products, farmers, consultants, suppliers of plant and machinery, units consuming maize products as raw material and various officials of State Govt. Departments of Agriculture, Himachal Pradesh Krishi Vishvavidyalaya, Industries and Pollution Control Board and some professionals who have worked in this sector. The study was completed in two phases. 

Phase I- The study covered the existing maize processing units at Dhule (Maharashtra),  Ahmedabad (Gujarat) and units consuming maize products at Baddi, Himachal Pradesh.  

Phase II- Covered field study in  four major maize producing districts in Himachal Pradesh, namely Una, Hamirpur, Mandi  and Kangra. 

The owners of the existing maize processing units in Gujarat and Maharashtra and farmers in Himachal Pradesh were interviewed individually and also group discussions were held with farmers wherever possible. In addition, discussions were held with the Indian Starch Manufacturing Association, Mumbai and Indian Maize Development Association, New Delhi to know the common issues connected with the maize processing industry. 

The secondary data were collected from various Departments of State Government in H P, like Director of Agriculture, Director Industries and State Pollution Control Board.

1.5     Reference Year

The year 2002-03 was taken as reference year for the study. However, some data/information pertain to 2003-04. Vital and important inferences were made based on the latest information/data. 

1.6     Data Analysis

Data were analysed using Lotus 123/ Excel work sheets. Other methods and procedures followed in the study were discussed in the respective chapters. 

1.7     Limitations of the Study

?         Data availability from the secondary sources was sometimes not consistent with actual field level data and  from other sources.

?         The information collected from the owners of the units and farmers is based on personal interviews and hence may not be comparable with the official records/ books of accounts.

2.        AN OVER VIEW OF INDIAN MAIZE (Zea mays)

Maize (Zea mays) is classified into dent, flint, waxy, sweet and pop corn categories. Dent corn (Zea mays var. indentata) also known as field corn, containing both hard and soft starch, becomes indented at maturity. Flint corn (Zea mays var. indurata)  having hard, horny, rounded or short and flat kernels; with the soft and starchy endosperm is enclosed by hard outer layer. Both of these varieties are used for industrial purposes.  Popcorn (Zea mays var. everta) has  small pointed and rounded kernels with very hard endosperm which on exposure to dry heat  popped or evereted by the expulsion of the contained moisture and forming a white starchy mass many times the size of the original kernel. Sweet corn (Zea saccharata or Zea  rugosa)  is distinguished by kernels containing a high percentage of sugar in the milk stage and therefore suitable for table use.

Indian maize has white, red, purple, brown or multicoloured kernels and is characteristically dent corn. The dent corn is useful for starch processing  by wet milling method. The area and production details of this cereal crop is given as under: 

2.1     Production of Maize

The total area under maize cultivation in the world is 139 million hectares with a production of 598 million MT ( mMT ). USA is the world's largest producer and exporter of maize with an out put of 240  mMT from an area of 29 million hectares. Other major producers are China (125 mMT), European Union (39 mMT), Brazil (37 mMT), Mexico (19 mMT), Argentina (14 mMT) and India (11 mMT). 

Among all cereals, maize occupies the fifth largest in area, fourth largest in output and third largest in yield. India is the tenth largest producer with a production of 11.10  mMT from an area of 6.6 million ha. The average yield in India is 1.77 MT/ha which is very low as against 7 MT/ha in temperate areas of developed economies and 3.8 MT/ha of global average. 

Maize is cultivated in almost all states in the country. Bihar is the leading producer in India followed by Rajasthan, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Karnataka and Himachal Pradesh. The crop is grown both in Kharif and Rabi seasons in India with a share of 85 per cent and 15 per cent, respectively. 

In Himachal Pradesh, it is grown only in Kharif season, mainly under rain fed conditions. The total production of maize for the last three years in Himachal Pradesh is presented in Annexure I. The data indicate that maize is a major Kharif crop in Himachal Pradesh cultivated in an area of  3.0 lakh ha, which is over 70 per cent of the total cultivated area of 4.30 lakh ha. The average annual production in the state is over 6.0 lakh MT, which is more than 80 per cent of total Kharif production of 7.78 lakh MT of food grains.  As per a rough estimate based on a farm gate price of Rs.4/kg, the  produce of the State is worth Rs.240 crore per year. 

Analysis of time series data for the last 10 years, reveal that there was not much variation in the  area under maize, but the production had suddenly declined during 2002-03 to 4.79 lakh MT from 7.68 lakh MT due to severe draught. Further, the CAGR indicates  that  there was no growth in the area and production of maize in the State due to stabilised cropping pattern. There was marginal increase in area and production in Bilaspur district. Though not very significant, a negative CAGR had been observed in all other districts, indicating that no further expansion in area is possible in these districts. The major share of production comes from Mandi, Kangra, Chamba and Sirmaur districts. The average yield of maize in Himachal Pradesh is 2.0- 2.5 MT / ha.  Sirmour district has the highest productivity of 2.3 MT / ha followed by Mandi with 2 MT / ha. The productivity level of other districts range between 1.5-2.0 MT / ha, indicating thereby the scope to improve the productivity by adopting improved agronomic practices. 

2.2     Utilisation pattern of maize

The major share of maize produced in the developed countries is either utilised for production of ethanol or production of feed for livestock. Globally maize accounts for 15 per cent of the world's proteins and 19 per cent of the calories derived from food crops. 

Maize produced in India is utilised for human consumption (33%), starch production (9%), poultry feed (46.5%), brewery (0.5%) and animal feed (11%). There are no precise data available on the utilisation pattern in Himachal Pradesh. However, the discussions with farmers and policy makers indicate that only 20 per cent of maize is utilised for human and animal consumption in the state. The remaining 80 per cent is supplied to the processing factories especially  poultry and animal feed plants located in other states. 

2.3     Assessment of  Market Surplus of Maize

The market surplus in respect of food grains in India as compared to other crops is quite low between 5-10 per cent.  But the consumption of maize in Himachal Pradesh for food has declined over a period of time. The use of maize in daily diet has been replaced by wheat and rice. The shift  in consumption pattern is attributed to the increase in purchasing power of the local people and prevalent public distribution system of Government.  The district- wise market surplus of maize arrived at by discussions with farmers and Agriculture Department officials is given as under: 

Table.1. Estimation of market surplus of maize in Himachal Pradesh

                                                                                    Assessment year 2002-03

For the assessment year 2002-03, there was a market surplus of 2.36 lakh MT in 4 major maize producing districts in the state, even despite of low production during this year due to drought.  Keeping in view the market surplus of 65 to 70 per cent, the average annual surplus for the state works out to 4.0 lakh MT per annum.  

2.4     Marketing of Maize in Himachal Pradesh

The marketing of food grains in the state is not strictly regulated. There are no operating food grain markets in the state. As there are no notified markets, farmers sell the crop to the local traders. In districts like Una, Kangra and Hamirpur, traders from adjoining states collect maize from the farmers directly. These traders offer very low prices and also cheat farmers in weighment. The maize purchased from the farmers in Himachal Pradesh is supplied to animal and poultry feed units in adjoining states, like Punjab and Haryana. The starch units of Punjab and Uttar Pradesh also procure raw material from this state directly from the farmers and traders. 

Himachal Pradesh supplies nearly 4.0-5.0 lakh MT of maize to other states every year after meeting its own requirement of food and feed.

2.5     Farm Gate Price of Maize

The market price of Indian Maize fluctuate between Rs 350/- per quintal  to Rs. 750/- per quintal in different states and  different seasons. The price is generally high for Rabi season maize than Kharif season maize. The price fluctuation is due to seasonality of production creating a demand and supply gap during off season. In order to reduce the demand supply gap, maize is also imported from other countries.

In Himachal Pradesh, the price  fluctuation is not very wide. The price generally hovers around Rs.350/- per quintal to Rs.500/- per quintal during peak and lean seasons, respectively. The farmers in Una and Hamirpur districts get relatively higher price than Mandi and Kangra districts. The  main reason for this is that it is easier to transport the produce from Una and Hamirpur to Punjab than from Mandi and Kangra. The district-wise farm gate prices at which the traders purchase maize are given in the Table below:

 Table.2. Changes in farm gate price of maize in Himachal Pradesh

 2.6     Problems in Maize Production in Himachal Pradesh

The maize crop in the state have some inherent problems, which limit its cultivation and  production. The important factors being

?         Rising income levels leading  to a shift of consumer preference from coarse cereals (maize) to fine grains (wheat and rice).

?         Increased monkey menace during the recent years compelling the farmers to switch over to some other crops like paddy, vegetables etc., especially in irrigated areas.

?         Lack of systematic/ regulated marketing.

?         Negligible processing facilities.

?         Dependency on rain fed conditions.

?         Least preference by farmers in view of lower returns.

?         Unfavorable weather conditions like untimely rainfall and thunder storms causing lodging of the crop.

?         Temperate climate of Himachal Pradesh does not favour its cultivation during Rabi Season.

The above problems, though difficult to overcome,  can be reduced considerably  by combined efforts of farmers, policy makers and Government departments through a combination of developmental and policy measures. Spring season cultivation with irrigation could be tried. Newer single cross hybrids should be tried.

3.      STATUS OF MAIZE PROCESSING

Maize is one of the staple foods of poor families. Traditionally, the grain is converted into flour in mills for making bread. Immature cobs are roasted and eaten all over the country. It is an important raw material for animal and poultry feed  and corn flakes manufacturing units. But the quantity of maize utilised by these units is limited as the existing  units are of small scale nature. They make only a few products having limited demand. Hence, an alternative large scale unit which can process a large quantity of maize to different value added products is required to be set up.  

3.1     Methods of Maize Processing

Maize is usually processed by two distinct processes, namely wet milling and dry milling.   Dry milling produces grits, corn flour and minimum amount of corn meal. The technology has been standardised by Central Food Technological Research Institute (CFTRI), Mysore. The technical know how is available with CFTRI on price. The service for turn key project is also available with the institute. Dry milling units have a crushing capacity of 10 MT/day with a project cost of Rs.20 lakh. Such units can be set up any where in the state depending upon the availability of raw material, power and suitable land. 

3.1.1    Dry Milling  

The maize kernels are screened, tempered with hot water/steam to loosen the germ and bran. Then it is degerminated to remove the germ. The husk is separated by means of aspirators. The degermed maize is dried to a moisture content of 15-15.5 per cent followed by sifting. It then is subjected to milling to produce grits, meal and flour. The germs separated  is dried and passed through an expeller to produce the corn oil. The different products that result from dry milling are as under : 

CFTRI has developed a mini mill for dry milling of maize. The grits is the main product of dry milling process, which is used as porridge by boiling domestically. The processing units use grits for manufacture of products like ready-to-eat snacks (corn flakes), wall paper paste and manufacture of glucose by direct hydrolysis. The process flow of dry milling is as under: 

Cleaning => Conditioning => Degerminating => Drying & Cooling => Grading & Grinding => Sifting & Classifying => Purifying => Drying => Packaging 

1.2       Wet Milling

Maize is generally processed to manufacture corn starch by wet milling method the world over. The by-products of starch manufacture, like corn oil, corn steep liquor, gluten etc. are the important value added products.

The grain is unloaded from the trucks directly in receiving area or stored in silos. The material is fed to the cleaning section by a feed conveyor. The cleaning section is housed in 3 floors, where the material is screened for debris such as sand, stones and any other foreign particles. The clean material is then sent to steeping section. It is received in a  tank where it is washed with hot water first and subsequently steeped in water containing sulfur-dioxide @ 0.2 per cent for 70 hrs at 52^oC. Steeping softens the kernels and also removes some solubles. Sulphur dioxide act as preservative. The steep water produced in this process is then concentrated and fortified with vitamins, minerals to produce corn steep liquor. It is then subjected to primary and secondary grinding, wherein the germ and husk are separated. The degermed maize is passed through a fibre washing section where the fibre (husk) is separated by pressure washing. Now the mixture consists of gluten and starch. The gluten is separated from starch by centrifugal separation. The starch slurry is then passed through a 12 stage hydroclone washing system, wherein the  starch is washed and concentrated simultaneously. Starch slurry usually has a moisture content of 42 per cent. The starch slurry thus obtained is diverted to various production lines for manufacture of liquid glucose and  modified starches such as dextrose, dextrose mono hydrate etc. The wet starch is then dried by hot air by passing through a drier.  The dry starch has a moisture content of 11-12 per cent. 

The slurry containing gluten is passed through a rotary vacuum filter in which a portion of the moisture is removed  followed by drying in a hot air drier.  The dried gluten thus obtained has a moisture content of 12 per cent. The gluten is mainly used for  poultry feed. 

The average recovery of various products and co-products of maize during the wet milling are

                                Starch    -   60-62 %

                                Gluten   -    8-9 %

                                Germ     -    6-7 %

                                Husk      -    22-24 % 

3.1.3    Manufacture of Corn Flakes

The corn flakes is one of the important value added products manufactured out of yellow and white maize. It is generally eaten as a breakfast cereal but the demand for this product is limited to hotels and big cities. It is a product of dry milling, which is manufactured by flaking of the major grain after extraction of germ. The flaked grain is either roasted for manufacture of corn flakes, breakfast cereal or fried to manufacture corn flakes served as snack foods. The raw flakes are also used for manufacture of beer. There are only a few companies like Mohan Meakin, Gaziabad and Kellogs, whose brands of corn flakes are very popular in Indian market. A brief process flow of corn flakes is given as under: 

Receiving => Cleaning & Polishing => Milling => Bran => Cooking under pressure => flavouring => Agitation (lump breaking) => Drying => Sweating => Flaking => Roasting/ Frying => Grading => Packing

 The corn grains after cleaning and polishing are milled to remove the germ and bran. Germ is utilised for extraction of corn oil. The bran is cooked under pressure in rotary steam cooker and mixed with flavouring material. The cooking is completed when the material turns out to a uniform translucent colour. The cooked material is carried to an agitator or lump breaker and finally dried in drier to moisture level of about 15 per cent to 20 per cent. The dried material is kept in tempering tanks for few hours to permit the residual moisture to become equally distributed, which is known as sweating. This is very essential to have uniform pressing for the flakes. The tempered material is next passed though a heavy duty flaking machine. The flakes are then immediately transferred to gas fired rotary ovens for roasting. While rotating, the flakes are continuously carried forward until they are dropped into conveyer. The roasted flakes are subjected to inspection, preferably on conveyers or tables. Then properly roasted flakes are graded and transferred to the packing bins immediately because flakes are hygroscopic. They are then packed in  water resistant polythene packages or food grade waxed paper packages. 

A corn flakes unit of 300 MT per annum will require an investment of Rs.50 lakh. The plant and machinery is available in India. As the demand for this product in the state is limited, the units may have to market their products mainly outside the state. 

3.2     Limiting Factors for Maize Processing in Himachal Pradesh

?         Non availability of regular supply of required quantity of water in some districts.

?         Consumption of maize as a staple food by local population and limited preference for processed products.

?         No organised marketing or bulk procurement and consequent lack of bulk purchase scope for the industry.

?         Availability of maize in only one season.

?         Slow growth of demand for starch in the state

?         Poor rail connectivity

?         High transportation cost both for raw materials and finished goods due to hilly terrain makes it less competitive.

                            4.    STATUS OF CORN STARCH INDUSTRY

4.1            World Scenario

There has been a positive trend during the past two decade in the wet milling industry. Corn has been the major source of starch (83%) followed by potato (6%), Cassava (6%), wheat (4%) and rice (1%). Maize is utilised mainly for ethanol production in the developed countries like US and EU, whereas in the rest of the world, it is either used as a staple human food or manufacture of starch and its derivatives.

The global production of starch from all sources was 48.5 mMT in the year 2000. US with  the largest starch industry contributes 51 per cent followed by EU (17%) and the rest by others. During the same period 39.4 mMT of starch was derived from maize, whereas potato and wheat contributed 2.6 and 4.1 mMT, respectively. 

The world demand for starch products is growing at an annual rate of 4 per cent. The demand for starch syrups is higher than dry starches in developed countries, whereas in developing countries, the situation is reverse. Due to the steady growing demand, the total world output of dry starches and syrups were estimated to reach 71 mMT and 37  mMT, respectively by 2010. 

EU is the major exporter of both native and modified starches, followed by US and Thailand. The largest starch consumers are US, EU, China and India. The world per capita demand for starch is 8.4 kg/annum, whereas India's per capita demand is 0.4 kg/annum. 

4.2     Indian Scenario

The wet milling industry in India is limited to certain pockets such as Gujarat, Maharashtra, Madhya Pradesh, Punjab, Karnataka and Chattisgarh. There are about 17 wet milling units with a crushing capacity of about 3400 MT of maize/day. The state-wise number of wet milling units and the installed capacity is given in the Table.3. below: 

                        Table.3. Wet Milling units in India

 The list of major starch producers in India is given in (Annexure II b). Gujarat is  the largest producer of starch, having six units with a total crushing capacity of 1350 MT of maize per day, followed by Maharashtra with 5 units and capacity of 1050 MT  and Madhya Pradesh with 3 units and capacity of 450 MT maize. (Fig.1.)

The average processing capacity of the units in India is 200 MT of maize / day. There are plants with as high crushing capacity as 400 MT/day. However, there is no plant in the country with crushing capacity of less than 100 MT/ day. The selection of technology is very important as regards to the viability of the unit is concerned. A unit in Buland Sahar, Uttar Pradesh has been reported to have been closed due to improper selection of technology. 

4.3     Status of Maize  Processing in Himachal Pradesh

Himachal Pradesh has no starch producing unit. There are few animal and poultry feed units in Kangra and Una districts. A mini dry mill with CFTRI technology is proposed to be set up in the Industrial area of Mandi District  in near future.

5.      STATUS OF MARKETING OF MAIZE PRODUCTS IN INDIA

The starch is the main product of a maize processing unit, which is consumed in various other industries like food, pharmaceuticals, textiles, paper, hotels and restaurants, etc. The other products include Gluten, Germ, Fibre (husk) and Corn Steep Liquor. Gluten has  great demand in animal feed industry because of its high protein content (70%). Germ is expressed to extract germ oil which is a low cholesterol containing edible oil. Fibre, mainly the husk, is used by animal feed manufacturers. It has demand in wet form itself for animal feed. Corn Steep Liquor is one of the substrates for culture media for manufacturing of antibiotics and other microbial production systems.

In India, Mumbai, Delhi, Ahmedabad and Kolkata are the major markets for processed maize  products. Other important markets include Bhopal, Hyderabad, Chandigarh, Lucknow, Bangalore etc. Most of the starch manufacturers of Gujarat, Maharashtra, Punjab, etc., have their marketing offices in Mumbai. Hence, Ahmedabad and Mumbai are the major trading centres for corn starch in India. 

Maize processors directly market their products to the consumers like pharmaceutical industries, hotels, textiles, paper industries, etc. and through traders as well. Most of them have their marketing offices in metros and big cities for direct sale. They also sell through trading agencies as well. These traders restrict marketing of the products of one or a few companies and prefer to procure different maize products from a single supplier. Therefore, it is advisable for a maize processor to have processing facilities for starch and its derivatives like liquid glucose, dextrose monohydrate, etc. Also, different industries require different types of  starch and the processor should be able to meet their demand to compete in the market. Starch and Gluten have good export potential as well. India exports these products to Sri Lanka, South East Asian countries, Bangladesh and South Africa.

The consumption of starch in Himachal is very limited because of slow industrial development and its requirement for food and hotel industry is met from other states. Nearly 25 pharmaceutical units have been set up at Baddi in Solan district and each of them consumes nearly 4-5 MT of starch per annum, which comes to nearly 200 MT of starch requirement per year. Further, Dabur India has set up a manufacturing unit of Glucose from Dextrose Mono Hydrate (DMH). The DMH is obtained from maize starch through a series of process including Liquefaction, Incubation, Filtration, Ion Exchange, Evaporation, Crystallization and Drying. Currently, this unit purchases about 20 MT of DMH per day from maize processing units of Gujarat and Punjab. Its annual requirement of this product is 2000 MT.  A down stream DMH manufacturing unit can be set up easily attached to a starch manufacturing unit. Similarly, Liquid Glucose (LG)  also has good demand in India and a LG manufacturing unit can also be set up along with a starch manufacturing unit from maize. In addition, there are a few textile manufacturing units located in the state which require low grade starch. This demand is being met from Ahmedabad and Mumbai. The procurement price of such units goes up due to the addition of  transportation cost of Rs.2.0 to Rs.2.5 per kg of starch. Further, if the starch units are set up in the state, they will get  exemption from excise duty and sales tax to the tune of about 18-20  per cent. Hence the maize processing unit if set up in the State will not face any difficulty in marketing the main product, the starch.  

The husk can be sold locally, but the unit may face difficulty in selling corn steep liquor as there is no unit in the state which produce antibiotics and microbial products. Corn oil can be marketed outside the state as there is good demand for it.

6.      CRITICAL FACTORS IN SETTING UP A MAIZE PROCESSING PLANT

6.1     Raw material

The viability of a maize processing plant depends upon the availability and  uninterrupted  supply of raw material to the unit. On an average, a unit with a crushing capacity of 100 MT/ day will require about 30000 MT of maize per year (assuming 300 days of operation of the plant). Hence, the availability of raw material is one of the important consideration in deciding the location of maize processing unit. Keeping in view the cropping pattern, consumption of the maize by local population and market surplus as indicated in Table.1 in the preceding chapters, it should not be a problem for a unit of above capacity to procure the raw material during Kharif season. The plant will be able to procure major portion of its raw material requirement with in the radius of 200 km. The state produces mainly yellow dent corn which is most suitable for wet milling for manufacture of starch and other by-products .  

In Himachal Pradesh maize is mainly a Kharif crop. The harvesting is done in the month of September- October. As mentioned earlier, the farmers sell major portion of their produce immediately after harvesting. The remaining portion is released to the market depending upon the demand and market trends till February to March. As the traders procure maize from the farmers, the unit will be able to source the  raw material from traders for another 2-3 months. Hence, there will be difficulty in procuring local maize for about 3-4 months during June to September. This can be overcome if the units  procure maize in bulk during the Kharif and store in silos for the lean months. The possibility of obtaining it from adjoining states like Punjab and Haryana is also available. States like Bihar and Punjab produce winter maize. The maize is generally packed in gunny bags in bulk. The most common mode of transportation   is by lorries.  

6.2     Land

Land requirement of starch manufacturing unit is very high, as it requires large area to set up plant and machinery and effluent treatment plant. There should be enough land for disposal of treated waste water. A unit with crushing capacity of 100MT/day should have at least 10 acres of land. However, if available at reasonable price, the unit may acquire upto 15 acre of land to meet future expansion requirements. In our model, we have assumed 10 acre of land for assessment of viability. As per the Industrial Policy Guidelines and Incentive Rules- 1999, the land is also allotted by State Government to the units on lease basis. The details of the terms and conditions for allotment of land is presented in Annexure IX. 

6.3     Water

The water requirement for the wet milling industry is relatively large with an average use of 4 cum per MT of crushing per day. For a wet milling unit of 100 MT capacity, therefore about 4 lakh litre of water/ day is required. The site where wet milling units are set up should have a good source of water, preferably a perennial river. As the unit also generate high amount of sewage water, which require to be disposed off properly. In case the water is to be sourced from ground, the water table should be high and the areas should fall in white category of unrestricted use. 

6.4     Power

The average power requirement is about 170-250  units per day per MT of maize crushing. The milling unit requires uninterrupted power supply and hence a DG set is required as standby arrangement. Himachal Pradesh is reported to be surplus in power and there should not be any problem in respect of power supply. The power tariff in the state is also very reasonable, which help in viability of the unit. 

6.5     Steam

The steam requirement  is 1 ton / MT of maize crushing. The units manufacturing starch by wet milling in states like Maharashtra and Gujarat, use coal for production  of steam. However, coal as a source of energy for boilers is not permitted in Himachal Pradesh. Hence, oil fired boilers need to be installed. This may raise the cost of operation of the unit to some extent. 

6.6     Technology

The technology is indigenous except for starch-gluten separation and starch washing unit which is imported through companies like Alfa Laval. The entire plant can be fabricated by the fabricators at Ahmedabad and few other parts of the country. There are a number of suppliers for setting up of the plant on turnkey basis. Some of which are listed in Annexure III.  A view of a maize wet milling unit is given in Fig.2. below: 

 Courtesy: The Kisan Sahakari Starch Mfg. Society Ltd. Dhule, Maharashtra 

Starch is usually manufactured from maize by a process known as wet milling. The wet milling process is a complex process, which involves a series of operations, by which the corn is separated into three parts, the outer hull or bran, the germ (the source of most of the corn oil) and the endosperm (the source of gluten and starch). The critical operations which have a direct bearing on the quality of the final product are 

?         Raw material selection and cleaning - Good quality yellow dent corn without various impurities will increase the quality of the final product.

?         Steeping - Germination of maize and the microbial growth are controlled by steeping.

?         Hydroclone washing - The simultaneous washing and concentration of starch to the desired moisture and solid level increases the quality and marketability of the finished product. 

The different steps involved in the wet milling are presented below.

6.6.1        Receiving

The corn is transported to the unit in trucks in gunny bags and offloaded in receiving area or in silos. The receiving area should be designed in such a manner that there is enough space for smooth movement of expected number of vehicles. The grain is fed to the belt conveyor which takes the maize grains to cleaning section.

6.6.2        Cleaning

The grain contain various impurities like cobs, stones, metal parts, dust, other foreign matter etc. These unwanted materials are removed in cleaning section. The grain is passed over perforated metals sheets, air blowers, electromagnets to remove the impurities.

6.6.3        Steeping

The grain is fed into large steep tanks with hot water at 52 ⁰C and steeped for 70 hr. Generally, RCC steep tanks are used by the existing units in India. However, steep tanks can also be fabricated by stainless steel but it increase the capital cost. The RCC tanks should be designed in such a manner that it withstand the gravitational force, as well as the weight of the material. Steeping mixture containing sulfur dioxide (SO₂) @ 0.2 per cent concentration in hot water is added in the steeping tanks to prevent germination and bacteria. The steeping conditions the grain for later steps by softening of the maize kernels and loosen the bonds between germ, husk and endosperm. During the soaking process, nutrients are absorbed into the water and this water is later evaporated to concentrate the nutrients to get corn steep liquor or condensed corn fermented extractives.

6.6.4        Grinding

The grinding process is completed in 2 stages. The grinders are made of stainless steel with adjustable RPM with or with out pneumatic settings. There are a number of manufacturers of grinding machines in India. In first stage, the steeped maize grains are ground coarsely to loosen the husk and germ. The second stage grinding, known as fine grinding, help in detaching the germ from the grain.

6.6.5        Germ Separation  ( Degermination )

The pasty mix obtained after fine grinding is pumped to water filled settling troughs, known as germ separators or degerminators. It is a 3 stage process where the slurry containing soluble husk, gluten and starch are separated from germ. The lighter density rubbery germ float on the top and is skimmed off.  The germ is passed to germ drier which is finally sent to oil extraction unit. The germ contains 45 per cent oil and the rest is crude fibre and moisture. The starch manufacturers generally prefer to sell germ rather than  own oil extraction unit.

6.6.6    Fibre Washing Section

The slurry of husk, starch and gluten is ground for better recovery of starch. The fibre washing is a 6 stage process which is carried out by DSM box. The husk is separated from the soluble starch and gluten slurry by a counter current flow system. The husk is sent to either drying section or used as animal feed in wet form. The husk is mainly carbohydrate which also contains 8 per cent protein.

6.6.7    Thickening

The slurry of starch and protein is passed through a centrifugal concentrator to get the concentrated slurry. This machine is also called as milk stream thickener.

6.6.8        Primary separation

The thickened slurry is passed through a high speed centrifuge to separate the heavier starch from the lighter protein (Gluten).

6.6.9    Gluten thickening

The protein slurry is passed through a centrifuge to get concentrated slurry of gluten. The gluten contains 65 per cent protein  and is a good source of protein for the animals and is used in animal feed preparation.

6.6.10 Rotary vacuum filter

The thickened gluten slurry is further concentrated to get gluten cake with 40 per cent solids through a rotary vacuum filter. The cake is further dried by hot air and / or sun to bring down the final moisture content to 12 per cent.

6.6.11 Hydroclone system

The starch slurry received from the primary separation is passed through a multi stage hydroclone system ( Fig.3 ) which concentrate the starch slurry to 42 per cent solid level. Alfa Laval is the main company supplying this system in India for starch units 

6.6.12 Drying

The concentrated starch slurry is then dried by hot air application (175 ⁰C) to 11-12 per cent moisture content level.

The main product of wet-milling of maize is starch. Besides, it produces four major co-products for the feed industry namely the steep water, husk (hulls or bran), germ and gluten. These co-products represent about 25-30 per cent of the processed maize.  The starch is raw material for various ancillary industries like dextrose monohydrate, dextrins, saccharin etc.  For manufacture of further derivatives of starch, ancillary units need to be attached with starch manufacturing units.

The wet milling has developed into an industry that seeks optimum use and maximum value from each constituent of the maize kernel. In addition to starch and the various other products, and edible corn oil, the industry has become an important source of well-defined specialised ingredients used in feed formulation industry. 

6.7     Effluent Treatment Plant

Effluent treatment plant is an essential component of a starch industry. It should be set up as per the norms of State Pollution Control Board. It has been made mandatory to set up a ETP in all starch manufacturing units.  

7.     INFRASTRUCTURE FACILITIES AND INDUSTRIAL DEVELOPMENT IN H.P.

7.1     Industrial Development in the State

The entire State is industrially backward, except some development on the periphery of the State. The State has been classified basically into two categories, namely “Industrially developing areas” and “Industrially backward areas”. The development blocks of Paonta Sahib and Nahan in the district Sirmour and Nalagarh, Dharampur & Solan in the district Solan, excluding backward panchayats as notified by the Government of HP from time to time, would fall in the category of “industrially developing areas.” The rest of the State, including backward panchayats in the industrially developing areas referred to above falls in the category of “industrially backward areas”. Tribal areas of the State, as notified from time to time have been treated as tax free industrial zones. This offers vast potential and incentives for new entrants to set up various industries in the State. In addition, the State has, by and large, clean environment and cool weather congenial for many industries.

The industrial growth in the state has been mainly under small scale sector. It has about 196 medium and large scale units with a total investment of about Rs.2378 crore and 30,176 small scale units with an investment of about Rs. 710 crore. The district-wise data on the number of units in medium and large scale sector are given in Annexure - IV. It can be seen from the data that the district Solan is a fairly developed district in the state with respect of number of units. The reasons for the same is its proximity to industrially forward States like Punjab and Haryana and also nearness to important markets like Chandigarh, New Delhi etc. Sirmaur and Una are another two districts where there is some industrial growth quite obviously due to the same reasons specified above. Steel and steel products, chemical and chemical products, food products and electronics are some of the major industries of the state. Among the food products, fruit and vegetable based units dominate the list. Processing of food grains especially maize is negligible, rather nil.

7.2            Infrastructure Facilities

The infrastructure facilities available in the state are given below in a nutshell:

7.2.1    Railways

Himachal Pradesh being comprised of mainly  hilly areas,   railways network is very limited. There is only 200 km of narrow gauge rail network between Shimla and Kalka and Joginder Nagar to Pathankot. A Broad gauge line connecting Nangal-Talwara passing through Una district is under construction.

7.2.2    Roads 

The road network is fairly good in the state with 23,544 km of roads connecting all the district headquarters and subdivisions as well as blocks. Three national highways (No.20,21 &22) pass across the state.

7.2.3    Telecommunication

Whole of State has been provided with electronic exchanges and OFC network of nearly about 6000 Km. The State has the latest state of the art telecom network and excellent connectivity.

7.2.4    Air Links

Himachal Pradesh is approachable by air from New Delhi/ Chandigarh. There are 3 smaller airports in the state at Shimla, Kullu and Dharmasala. Various domestic air lines operate regular flights from Delhi.

7.2.5    Power

Himachal Pradesh has number of hydel power units and is surplus in power. It supplies electricity to other states as well. All indutries are provided required quantity of electricity by State Electricity Board at reasonable rates.

8.      SWOT ANALYSIS

8.1     Strengths     

?         Corn production in the country has been growing steadily over the past five years. The anticipated production of maize during the year  2004-05 is estimated to be in the range of 9-10 mMT.

?         GoI’s initiative to increase the area of cultivation and production of maize during the X five year plan period and its inclusion under the technology mission give impetus to maize production in the State. Directorate of maize has set a target to raise the output of maize to 18 mMT by the end of the tenth plan period mainly through increase in yield to 23-24 q / ha.

?         Starch manufacturing from maize  generates about 1 MT of by-products for every 2 MT of starch produced and these by-products are worth more per MT than maize itself making the starch manufacture  an economic venture.

?         Strong raw material base with total production of 6.0-7.0 lakh MT and 4.0-4.5 lakh MT of market surplus.

?         Maize is becoming one of the cash crops for farmers, as a  major part of it is usually sold for market. Further, there is no substitute for it particularly in rain fed condition and so the farmers will continue to grow maize.

?         Agro processing is one of the thrust areas for the Government of Himachal Pradesh. A special package of incentives is available for the processing units set up in Himachal Pradesh.

?         It will be the first maize processing plant in Himachal Pradesh, hence, shall not face any difficulty in marketing its products.

?         The maize starch is a preferred product compared to its substitutes like potato starch and tapioca starch.

?         The productivity of maize is high which can still be raised. Higher the productivity, lesser will be the cost of production. 

8.2     Weaknesses     

?         Seasonal availability of maize in Himachal Pradesh. Since only Kharif crop is cultivated , the local raw material will not be available in other seasons. To run the plant during summer and rainy season maize grain has be procured from other states or buffer stocks to be maintained by the processing units.

?         Competition for maize procurement by the poultry feed industry would limit the raw material availability.

?         No organised market/ single place for bulk procurement. Maize has to be procured  from individual farmers or through middle men/traders which may hamper the regular availability or may cause price fluctuations.

8.3     Opportunities

?         Backward linkage with farmers ( contract farming type arrangement ) is possible as maize has become one of the cash crops in the state.

?         Demand for starch is high from varied users like food, pharmaceuticals, textiles, paper, packaging etc.

?         The demand  is likely to increase to 186 lakh MT by 2011-2012

?         Great export demand for corn gluten as a poultry feed in South East Asian countries.

?         Substantial subsidies from the Govt. in the form of land , subsidised power, water etc.

?         Corn starch is identified as one of the ingredients for manufacture of biodegradable plastic. The demand for corn starch is expected to increase in future.

?         Corn starch is a substrate for manufacture of alcohol, which has been identified as an environment friendly fuel.     

8.4       Threats     

?         Maize is produced in HP only in Kharif season and mainly grown under rain fed conditions.

?         Stiff competition from other producers within the country. 

The strengths and opportunities of maize processing in Himachal Pradesh outweigh weaknesses and threat.

9.      FEASIBILITY OF MAIZE PROCESSING IN HIMACHAL PRADESH

9.1     Technical Feasibility 

The maize can be processed in to variety of products like grits, germ and flour by dry milling and other products especially corn flakes at small scale level. Such units can be set up any where in the state where maize is a major Kharif crop. The technology for such units is available locally. But, in view of the high market surplus of maize grain in the state, large scale units may be required to be set up to manufacture value added products. The technology of maize processing is readily available in India, especially in States like Gujarat, Maharashtra, Madhya Pradesh, Karnataka, Punjab and  Uttar Pradesh, which can be transferred easily to H.P. However, as discussed in the preceding chapters, there are some limiting factors for wet milling, the most suitable method to utilise the large surplus production of maize. Keeping in view the limiting factors, some ideal locations for setting up of a wet milling unit in Himachal Pradesh are identified as under: 

9.1.1    Baddi in Solan district

Baddi is one of the most developed growth centres for industrial development in Himachal Pradesh. It is the most approachable location from Chandigarh. It is easily approachable from all the maize growing districts of Himachal and also from major cities of Punjab and Haryana. The infrastructure is fairly well developed at this location. The units set up at Baddi can procure raw material from all of the maize growing districts of the state. The land is available but high cost may be a limiting factor. Sufficient ground water is available, which can be exploited for processing unit. There is ready market for starch in Baddi itself and being close to Chandigarh and other important cities there should not be any problem in marketing of the  products.  

9.1.2.   Takarala in Una District

Due to close proximity to Punjab and Haryana, the Una district is in an advantageous location. This centre  is also well connected to all maize growing districts and also to the potential markets like Chandigarh, New Delhi etc. Takarla in Amb Block has been identified as one of the suitable locations for setting up of maize processing units. There will not be any problem in acquiring the required area of land. Ground water is sufficiently available which can be exploited easily for the unit. There will not be any problem of sewage water disposal. The unit can procure raw material from all maize growing districts of Himachal Pradesh during Kharif season, as the entire maize sold in the state passes through Una. During Rabi season, the units can procure raw materials from the adjacent states like Punjab, Haryana, etc. This is the only location in Himachal Pradesh where broad gauge railway connection is available at Una. 

9.1.3    Bhambla in  Mandi District

Bhambla is a centrally located place for all the districts producing maize. The place is situated in the border area of Mandi, Hamirpur and Una districts. It has been identified as a growth centre for industrial development by the Government of Himachal Pradesh. The place is well connected to procure raw material from Mandi, Hamirpur, Kangra, Chamba etc. Some of the maize sales occurring in Una district may not come to this place, as the competition from Punjab traders will be stiff there. However the site selection in Bhambla may have to be made carefully as the requisite land area and water may not be available at one place. 

9.1.4    Balh Valley, Dist Mandi

Balh valley is another ideal location. It is located on NH21 (Chandigarh - Manali) between Sunder Nagar and Mandi. This is a plain maize growing area. Some area of maize cultivation is irrigated. The raw material can be procured locally during Kharif season while from other districts/states could be procured during lean season. There may be difficulty in getting a contiguous plot of land, but sufficient quantity of water is available. There will not be any problem for sewage disposal. 

9.1.5    Mataur, Dist. Kangra

Kangra is one of the major maize growing districts of Himachal Pradesh. The district is also adjacent to other major growing districts like Chamba, Mandi and Hamirpur. The cultivation in the district is only under rain fed conditions. The district is connected with Punjab by narrow gauge railway line and by national highway. Mataur has been identified as an ideal location for setting up maize processing units. The raw material can be procured from Chamba and adjoining areas of Punjab. Sufficient land is available but the high cost is a  limiting factor. Both, ground and surface waters are available in plenty.

9.2     Financial Viability

The economics of a minimum viable unit are given in Annexure V (a) to V (g). Various techno-economic parameters for the model maize processing unit are assumed keeping in view the existing situation and market conditions. The techno-economic parameters assumed are given in Annexure V (a). Even though, the MSP for procurement of maize for this year is Rs 525 / quintal, we have assumed an average price of Rs.500/- per quintal in consideration of the situation prevailing in H.P, field data collected and also the variations in MSP announced year to year. A unit is considered viable if its IRR works out to greater than 15 per cent at 15 per cent discounting factor. Further, the unit is considered  as bankable if its DSCR is greater than 1.5.

9.2.1    Installed capacity

A plant of 100 MT of wet milling maize crushing capacity per day is considered as a minimum viable unit. A unit of this capacity will produce the following products.

The plant will function 3 shift per day and 8 hour per shift. Keeping in view, the nature of activity the capacity utilisation of 50%, 70% and 90%, during first, second and third year onwards can be achieved easily. 

9.2.2    Project Cost

The project cost for setting up of a 100 MT wet milling of maize per day has been assessed at Rs. 14.32 crore is given in Annexure V (b-d) and summarised as under: 

 9.2.3    Working Capital Requirement

The working capital requirement of the unit will be very high and is estimated at Annexure V(d).  As the raw material is  seasonal in nature, there will be high inventories. The farmers will be required to be paid immediately, hence, the creditors of one week are assumed. Starch is marketed through traders and it takes one month to realise the sale proceeds. Keeping, this in view a debtors of 30 day period is assumed. The working capital requirement of the unit is estimated at Rs. 2.64 crore, Rs. 3.69 crore and Rs. 4.74 crore, during the first, second and third years, respectively. 

9.2.4.   Financial Viability

The cash flow statement of the unit is given in Annexure V(e) and the financial indicators at Annexure V (f). The financial indicators are as under            

All the financial indicators meet the requirement, hence a wet milling unit of 100 TPD of maize crushing capacity in Himachal Pradesh will be a viable unit as well as bankable. 

9.2.5    Sensitivity and Risk Analysis

Keeping all variables constant, the critical factors like number of shifts per day and installed capacity were subjected to sensitivity analysis. The results are given as under: 

It can be observed from the above sensitivity analysis that the wet milling unit should run round the year at 3 shifts per day basis. The project will be viable even at 2 shift per day of operation but it will not be bankable. If unit operate at 1 shift per day only, it will be unviable. 

The installed capacity of a wet milling unit of 76 MT corn/day is viable; but the plant and machinery are designed for 50 MTPD and 100 MTPD only, hence, minimum 100 MTPD of maize crushing capacity  unit is considered as viable unit. 

9.2.6    Break Even Analysis

The break even analysis is given in Annexure VI. A wet milling unit of 100 MTPD maize crushing capacity will break even at 40 per cent of capacity utilisation during first year of operation. 

9.2.7    Repayment period

The repayment period of a maize wet milling unit is given in Annexure VII. The bank loan can be repaid with in a  period of 8 years including 1 year grace period. 

9.2.8    Risk Analysis

9.2.8.1 Subjective Risk Analysis

·        Raw material procurement risk during off season

·        Risk of natural calamity like drought etc.

·        Marketing of starch and other by products  

9.2.8.2 Objective Risk Analysis

We have assumed a very conservative capacity utilisation of 50%, 70% and 90% during first 3 years. The project has been subjected to objective risk analysis as per the risk variables table as per Annexure VIII (a). Simulations have been carried out over 200 iterations and the results are enumerated in the risk analysis table as per the Annexure VIII (b & c). It can be seen from the risk analysis that all the parameters i.e. IRR, BCR, NPV and DSCR are not influenced much. The probability of negative outcome in respect of IRR is 2%, which indicate that the risk of project becoming unviable is quite low. The sensitivity analysis in absolute terms has been carried out and the results are found to be satisfactory. It can be concluded from the above that the project is not sensitive to identified risk variables.  

9.3       Financing Arrangement

The project can be financed by institutions like Commercial Banks, term lending institutions like IDBI, ICICI Bank, etc. NABARD may also extend its co-finance jointly with other banks. The bank loan @75 per cent of project cost can be extended by the bank. The margin money as per the Reserve Bank of India/ NABARD guidelines will be required to be brought in by the beneficiaries. At present, the margin money requirement for such projects is 25 per cent of project cost. Various incentives and subsidies are available for the industry, which are described in Chapter 12. The economics have been worked out with out considering the subsidies and hence the viability will improve further when such incentives are tapped. The subsidy/ incentives from Central/ State Government available to the unit are mostly routed through the financing banks which can be adjusted against the last installment of repayment as back-ended subsidy. NABARD provides refinance assistance to the eligible banks for extending loans to such units. Since the project cost of wet milling process is quite high, consortium arrangement of financing will be an alternative. 

The unit requires high quantum of working capital and hence the bank may be required to sanction separate working capital limit to the unit. 

10.    POTENTIAL ASSESSMENT FOR MAIZE PROCESSING

Maize is one of the important Kharif crops of Himachal grown over an area of 3.0 lakh ha with annual production of 6.0 lakh MT and market surplus of 4.0  lakh MT per annum. At present, the processing of maize to value added products is negligible. It was one of the staple foods for the local people but its consumption has declined over a period of time. Increased income levels and the PDS support available for rice and wheat by Government of India have led to the reduction of consumption of maize by local people and thereby leaving a huge market surplus. This surplus is tapped at cheaper rates by the neighbouring states, as stated earlier. This potential can be tapped locally for processing in to value added products in the state itself. Though, there is a huge potential, it may not be possible to process the entire surplus maize to value added products  with in H.P immediately as market development would take time. Keeping these factors in view, the following processing potential is suggested as feasible for the state to plan.
 

E = Existing, N = New

In view of the above potential, the investment requirement for the next 4 year is given as under:
 

In a period of 4 years, 3 wet milling units can come up easily with an investment of Rs. 42.96 crore for which suitable locations are suggested in the report. Small scale units for manufacture of corn flakes, poultry and animal feed units, dry milling units for manufacture of grits  and other products can be set up in all maize growing areas which will require an investment of Rs. 50 crore.  

11.    SOCIAL AND ECONOMIC IMPACT OF THE PROJECT 

11.1   Environmental Issues 

In order to bring down the cost of production, the units in  Maharashtra and Gujarat use coal fired boilers for steam generation. Himachal Pradesh State Pollution Control Board (HPPCB) does not permit the installation of coal based boilers. Hence, the companies will require to install oil fired boilers for the units. 

The starch manufacture by wet milling process uses sulphur dioxide (SO₂) as preservative during the steeping process. The three main pollutants which are released into the atmosphere during the wet milling process are volatile organic compounds, sulphur dioxide (SO₂) and particulate matter. The  SO₂ is released during the process of initial steeping process and evaporation. The emission levels of these pollutants by maize processing industry are usually quite low. 

However, to mitigate the hazardous pollutants, an Effluent Treatment Plant (ETP) is made mandatory for maize processing industry by the Government of India.. The treated water can be utilised for agricultural purposes within the permitted BOD level of 30 PPM. Financial support in the form of capital subsidy is also available from Ministry of Environment and Forests, Government of India for the purpose. 

11.2   Economic Impact 

Maize wet milling unit will have positive economic impact, as it will utilise its own raw material to produce value added product. It will reduce the dependence on other states for import of starch and other maize products. The farmers of the State will be benefited as there will be a ready market for their main Kharif season crop. The units importing starch from other states will get their raw material with in state at a lower rates.  

11.3   Employment opportunities

The wet milling unit will create both direct and indirect employment opportunities. The manpower requirement of the unit is given in Annexure V (g). The unit will create employment opportunities for around 70 skilled and unskilled workers directly. The chain go on increasing down the line in procurement and marketing. The indirect employment opportunities around the unit is estimated as under:  

 It can be observed from the above Table that the indirect employment generation is four times of the direct employment opportunities.

12.    INCENTIVES FOR MAIZE PROCESSING UNITS 

12.1.    Schemes of Ministry of Food Processing Industries, GOI.

12.1.1 Grant Assistance for Capital Investment

The Ministry of Food Processing Industries is the nodal agency for development of processed food sector in the country. The ministry has been operating several plan schemes for the development of food processing industry since the inception of 8^th Five Year Plan. The schemes envisage higher quantum of financial assistance to difficult areas including Himachal Pradesh.  Grant assistance @25 per cent of the capital equipments and technical civil work upto Rs.50 lakh in general areas and 33.33 per cent upto Rs.75 lakh in difficult areas including Himachal Pradesh is available from the MFPI to units under private, public and joint sectors. Maize processing is one of the eligible activities for support from Ministry of Food Processing Industries. 

12.1.2.Scheme for strengthening of backward linkages in food

            processing industries 

The objective of the scheme is to increase capacity utilisation of fruits & vegetables processing as well as grain and coarse grain, by ensuring regular supply of raw materials through contract farming,  ensure remunerative price to farmers by creating direct linkage between farmer and processor; provide high quality seeds / fertilisers /pesticides and planting materials to farmers along with technical know-how etc. through the processor. 

Under this scheme, Joint / Assisted / Private Sector / NGOs / Cooperatives / PSUs are eligible for grant in the form of reimbursement upto 10 per cent of the total purchases made by processors in a given year, limited to Rs. 10 lakh per year for a maximum period of five years. 

The processing companies would be required to supply high quality seeds / fertilisers / pesticides and technology to contracted farmers, along with necessary extension work at reasonable charge.  The group of contracted farmers should not be less than 25 in number.

12.2   Incentives to Industrial Units in Himachal Pradesh

Various incentives are being given to the industrial units in H.P as per the Industrial Policy Guidelines and incentive Rules - 1999, Department of industries, Government of Himachal Pradesh ( Annexure IX ). The package of incentives available to the fruit, vegetable and maize processing industries consuming atleast 60 per cent of their total consumption from local produce per annum and located in industrially backward areas (except produce of breweries, distilleries, non-fruit/ vegetable wineries and bottling plant both for country liquor and Indian Made foreign liquor), are eligible for the following incentives. 

?         Land/shed shall be allotted on out of turn basis at a nominal price /rent to be determined by the Government from time to time. While considering allotment, such unit(s) shall get precedence even over units in priority sector.

?         GST exemption for a period of 10 years will be admissible to new industrial units.

?         The GST on the raw material, processing and packaging material except timber, shale and limestone used by the existing and new industrial unit(s) for captive manufacturing within the State shall be leviable at a concessional rate of 1 per cent upto 31-03-2009.

?         Central Sales Tax at a concessional rate of 1 per cent shall be leviable on the goods manufactured by new & existing industrial units upto 31-03-2009.

?         Such new industrial unit(s) shall be exempted from the payment of electricity duty for a period of 10 years. No electricity duty shall be charged on the power generated from D.G.set/ hydel plant.

?         Such new industrial unit(s) shall be exempted from the payment of State excise duty for a period of 7 years.

?         Period of these concessions will be to new industrial unit(s) from the date of commencement of commercial production or from the date of notification issued in this regard, whichever is later. In case of existing unit(s), these concessions, as eligible, would be available from the appointed day or the date of notification, whichever is later.

?         Such new industrial unit(s) shall be eligible for a subsidy of 10 per cent in the rate of interest on term loan for a period of 6 years subject to a ceiling of Rs.10.00 lakh p.a., provided that the unit pays a minimum of 6 per cent interest after availing the interest subsidy. In case the rate of interest after a subsidy of 10 per cent falls below 6 per cent, the rate of subsidy shall be reduced accordingly. This subsidy shall not be admissible on defaulted/rescheduled installment(s) and the period of default shall be counted for determining the period of eligibility.

?         Such new industrial unit(s) will be entitled to an investment subsidy @ 25 per cent on cost of plant and machinery installed subject to a ceiling of Rs. 25.00 lakh. The sanction/disbursement shall be governed by erstwhile C.I.S. Manual.

?         Any new industrial unit(s) except breweries, distilleries, non-fruit/vegetable based wineries and bottling plants (both for Country Liquor and Indian Made Foreign Liquor) in the tribal areas of the State, as notified from time to time, shall be exempted from payment of any State taxes and duties (excluding levies in the shape of cess, fees, royalties etc.) for a period of 10 years from the date of commencement of commercial production or the date of notification by the concerned department(s), whichever is later. As regards other incentives, unit(s) in these areas shall be treated at par with the unit(s) in industrially backward areas.

?         The Government may also grant project specific special package to any new medium and large scale industrial unit proposed to be set up in the State which has potential for substantial employment generation, both direct and indirect, ancillarisation etc. on case to case basis, in the public interest.  

13.    SUGGESTED ACTION PLAN 

The following action plan is identified by the study to promote maize processing in Himachal Pradesh.

1.       The study report may be given wide publicity by the State Government through Industries Department. The report may be circulated to the entrepreneurs and they may be invited to explore the possibility of setting up  maize processing unit in Himachal Pradesh

 (Deptt. of  Agriculture/ Industries, HP)     

2.                  The findings of the study may be discussed among bankers, officials from Government Departments including Director of Industries, Research Institutes and entrepreneurs in a workshop to draw a time bound action plan for future.

 (Deptt. of  Agriculture/ NABARD/ SLBC, HP)     

3.                  In order to promote contract farming to ensure supply of  maize to the proposed unit, the state government may consider to amend the State Agriculture Produce Marketing Act to allow contract farming as legal practice as suggested by Government of India.

 (Deptt. of  Agriculture, HP/ HPMB)     

4.                  State Government may consider providing land to the entrepreneurs at concessional rate, either on lease basis or freehold, as land cost is prohibitive in setting up of such units.

 (Deptt. of Industries, HP)     

5.                  As maize starch is used by other industrial units, like pharmaceutical, textile etc., a comprehensive development plan to promote such units along with maize processing unit need to be drawn by State Government.

 (Deptt. of  Industries, HP)     

6.                  Identification of suitable Rabi season varieties or for extended Kharif season varieties is needed to extend the cropping season. for Himachal Pradesh.

      (HPKV Palampur / Deptt. of Agriculture)     

7.                  The maize processing units require large land area and the high cost of land may act as a limiting factor. The lease rental charged by State Government ranged between Rs.400 per sq.mtr. to Rs.1000 per sq. mtr. at different locations identified for setting up of the maize processing unit. The State Government may consider providing land at a concessional lease rental at an uniform rate in all locations in Himachal Pradesh for maize processing units.

 (Deptt. of  Industries, HP)

DISCLAIMER

The views expressed

in this report are advisory

in nature. Nabcons and NABARD assume

no financial liability to any one using

the report for any purpose. 

( B.R.Premi)               ( Somainder Singh )                            ( V. Esakkimuthu)

Manager                   Manager                                               Assistant Manager                                                                                                                                                               

 Annexure -I

District-wise area production and productivity of maize in H.P.

Area ('000 ha), Production ('000 MT) and Productivity (q/Ha)

A :- Area, P:- Production, PR:- Productivity

Source: Director Agriculture, Shimla, H.P.

Annexure II

List of major starch manufacturing units in India 

Annexure - III

Major consultants/ Supplier of Technology of Wet Milling of maize in India

Annexure -IV

District-wise group-wise details of units in Medium & Large Scale Sector

Annexure - V (a)

Unit for manufacture of maize starch by wet milling method
	Techno-economic Parameters
S.No.	Particulars	Assumptions
1	Project cost		1432.008
2	Cost of land per acre (Rs. lakh)		30.000
3	Installed capacity (Raw material)
	TPD	100
	No. of working days	300
	Working hours/day	24
	Installed capacity (MT corn /annum)		30000
4	Recovery
i	Starch		60.00%
ii	Gluten (protein)		5.00%
iii	Germ		10.00%
iv	Husk		15.00%
5	Capacity utilisation	Yr1	Yr2	Yr3
		50%	70%	90%
		(Rs/Kg)		(Rs/MT)
6	Cost of maize	5.00	1000	5000
	Procurement expenses	0.50%
		Rs./ MT
7	Consumables (Sulphur, packing material, chemicals etc.)	350.00
8	Price realisation	(Rs./Kg)		(Rs./MT)
i	Starch	10.00		10000
ii	Gluten (protein)	12.00		12000
iii	Germ	14.00		14000
iv	Husk	4.00		4000
9	Power Consumption
i	Power load (KVA)	800.00
ii	Power factor	0.80
iii	Lakh units /year	46.08
iv	Cost of power (Rs/unit)	3.50
10	Steam consumption
i	Steam requirement (MT/Hr)	4
ii	Cost per MT	500.00
iii	Cost of Steam (Rs. lakh/ year)	144.00
11	Interest on term loan		12%
12	Interest on W.C.		14%
13	Depreciation on Civil Works		5%
	Plant and Machinery		10%
	Misc. fixed assets		5%
14	Wage rate		100
15	Insurance of fixed assets		2.50%
16	Selling expenses - Commission		0.50%
	Selling expenses - Freight		0.50%
17	Repayment period		8	Years
	Grace period		1
18	Income tax		30%

 Annexure - V (b)

Unit for manufacture of maize starch by wet milling method
	Project Outlay
			( Rs. in lakh )
Sr.No.	Particulars	Rate/qty.	Amount	Remarks
1	Land   (acre)	10	300.00
	Land development		20.00	Lump sum amount
	Sub Total		320.00
2	Building and Civil Structures		250.00	Steeping tanks 4 Nos. of 100 MT capacity each, Silo storage, unit and office buildings etc.
3	Plant and machinery		769.65
4	Misc. fixed Assets		34.25
5	Prelim & Pre-operative expenses	2%	27.48
6	Margin money for working capital		30.63
	Total project cost		1432.01
	Margin Money	25%	358.00
	Bank loan		1074.01

Annexure V ( c )

	Unit for manufacture of maize starch by wet milling method
	Details of Plant and Machinery
		Rs. in lakh
S.No.	Particulars	Number	Rate	Total value
1	S.S. Coarse Grinder (36 inches dia, 700 RPM, 50-250 MT/day)	2	5.5	11
2	Degerminator/Separator (3 stage)	3	5	15
3	Fine Grinder (36 inches dia, 700 RPM, 50-250 MT/day)	1	7	7
4	DSM box for fibre washing (6 stage)	6	2.5	15
5	Centrifugal Separators (separation of protein and starch)	1	80	80
6	Hydro clone starch washing  (12 stage)	1	80	80
7	Gluten thickner	1	80	80
7	Hydrolic press for gluten	2	10	20
8	Gluten drier	1	15	15
9	Starch pulveriser & Drier	1	50	50
10	Germ drier	1	20	20
11	Boiler oil fired (8 tonne steam/Hr)	1	40	40
12	Effluent treatment plant	1	200	200
13	D.G. set (500 KVA)	1	25	25
14	Miscelleneous equipments	LS		75
15	Erection & Commissioning	5%		36.65
	Grand total			769.65

Annexure - V ( d )

 

Unit for manufacture of maize starch by wet milling method
Assessment of Working Capital Requirement
			( Rs. in lakh )
S.No.	Particulars	Period (days)	Yr1	Yr2	Yr3
1	Raw material stock	30	75.00	105.00	135.00
2	Work in process	4	12.95	18.06	23.17
3	Finished goods	30	97.09	135.44	173.80
4	Debtors	30	97.09	135.44	173.80
	Total current assets		282.12	393.95	505.77
5	Creditors (current liabilities)	7	17.50	24.50	31.50
6	Working capital gap		264.62	369.45	474.27
7	Margin money for W.C.	25%	66.1558	92.36212	118.5684
8	Bank loan		198.47	277.09	355.71

Annexure - V ( e )

	Unit for manufacture of maize starch by wet milling method
		Income and Expenditure Statement							( Rs. in lakh )
Sr.No	Particulars	Yr1	Yr2	Yr3	Yr4	Yr5	Yr6	Yr7	Yr8	Yr9	Yr10
I	INCOME
1	Installed capacity (MT)
	Maize (raw material)	30000	30000	30000	30000	30000	30000	30000	30000	30000	30000
	Starch	18000	18000	18000	18000	18000	18000	18000	18000	18000	18000
	Gluten (protein)	1500	1500	1500	1500	1500	1500	1500	1500	1500	1500
	Germ	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000
	Husk	4500	4500	4500	4500	4500	4500	4500	4500	4500	4500
	Total	27000	27000	27000	27000	27000	27000	27000	27000	27000	27000
2	Capacity utilisation (%)	50%	70%	90%	90%	90%	90%	90%	90%	90%	90%
3	Products (MT)
	Maize (raw material)	15000	21000	27000	27000	27000	27000	27000	27000	27000	27000
	Starch	9000.00	12600.00	16200.00