Is Maize Processing and Manufacturing Business Profitable in India?

Maize production is essential to India, as it employs 15 million Indian farmers. Maize qualifies as a possible crop for doubling farmer's income due to its ability to generate higher income for farmers while also offering useful work. The maize value chain in the country has enormous potential for expansion. Maize consumption has climbed at an annual rate of 11% during the last five years. Maize is now used to make over 3500 different goods, including specialized maize like QPM (Quality Protein Maize). These trends present new opportunities for India's maize industry.

Overview

Maize, also known as the "Queen of Cereals," is the world's second most important cereal crop in terms of land. In 2016-17, global maize output reached over 1040 million MT, with the United States leading the way with 38 percent, followed by China with 23 percent. With a production volume of 26 million MT in 2016-17, India accounts for about 2% of the global total. Maize production employs around 650 million people in India, with over 15 million farmers involved. Furthermore, maize represents more than 2% of the entire value of agricultural crop output.

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Current Scenario

The current maize production scenario shows hybrid maize on 65-70 percent of acreages, with the majority of it being used for feed and industrial purposes, while food-grade maize is grown using traditional cultivars (OPVs). Although the rate of hybrid adoption has slowed in recent years, farmers have continued to replace conventional cultivars/old hybrids with newer, higher-yielding hybrid types. States like Karnataka, Rajasthan, Andhra Pradesh, and Madhya Pradesh account for half of the country's total maize acreage. The aforementioned states, including Bihar, produce about two-thirds of the country's corn.

However, it is important to note that the national maize productivity is far lower than global standards. India's yield standards are nearly half those of the rest of the world, therefore there is a lot of room for improvement in this strategically vital crop.

On the demand side, maize consumption climbed by 2% over the previous year, reaching 24 million metric tonnes in FY 2016–17. This total demand includes 13.5 million metric tonnes of chicken feed, 1.8 million metric tonnes of starch, 1.2 million metric tonnes of ethanol, and the rest for food, seed, and other uses. The feed sector, which is rising at a CAGR of 6-7 percent globally and 9 percent in India, presents a big potential for maize growers. By 2022, India will require 45 million metric tonnes of maize just to meet domestic consumption needs.

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Demand and Future Ahead

The growing use of maize in feed and industry, particularly for poultry feed and starch, has not only boosted demand, but has also opened up new investment opportunities through the creation of maize processing facilities. In this context, there is potential for extending Indian Maize Starch's product line, increasing crop recovery, and growing demand in the beverage and biofuel industries. Supporting such efforts through policy and investment would undoubtedly give the maize processing and value addition industry a considerable boost. When compared to traditional crops, such as corn,

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The private sector has primarily contributed to the enormous growth of the paddy and wheat, maize-based industries. Effective execution of Maize Vision 2022 would be critical in providing a considerable boost to the sector. An enabling regulatory environment with broader stakeholder engagement across the value chain would be critical in triggering rapid crop development and providing the required momentum for the agriculture industry as a whole.

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To fully realise maize's potential as "the future cereal crop," a combination of strategies and interventions centred on technological advances, producer aggregation and linkages, supporting infrastructure, foregoing PPP relationships, and facilitating multiple policy initiatives is required.

Book Link: Handbook on Maize (Corn) Processing and Manufacture of Maize Products

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Properties
BIS (Bureau of Indian Standards) Provision & Specification
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Present Market Demand and Supply
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Project at a Glance

Assumptions for Profitability workings	Plant Economics
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Plant & Machinery Indigenous Machineries Other Machineries (Miscellaneous, Laboratory etc.)
Other Fixed Assets Furniture & Fixtures Pre-operative and Preliminary Expenses Technical Knowhow Provision of Contingencies
Working Capital Requirement Per Month Raw Material Packing Material Lab & ETP Chemical Cost Consumable Store
Overheads Required Per Month And Per Annum Utilities & Overheads (Power, Water and Fuel Expenses etc.) Royalty and Other Charges Selling and Distribution Expenses
Salary and Wages	Turnover Per Annum
Share Capital Equity Capital Preference Share Capital
Annexure 1:: Cost of Project and Means of Finance
Annexure 2:: Profitability and Net Cash Accruals Revenue/Income/Realisation Expenses/Cost of Products/Services/Items Gross Profit Financial Charges Total Cost of Sales Net Profit After Taxes Net Cash Accruals
Annexure 3 :: Assessment of Working Capital requirements Current Assets Gross Working. Capital Current Liabilities Net Working Capital Working Note for Calculation of Work-in-process
Annexure 4 :: Sources and Disposition of Funds
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Annexure 6 :: Profitability ratios D.S.C.R Earnings Per Share (EPS) Debt Equity Ratio
Annexure 7 :: Break-Even Analysis Variable Cost & Expenses Semi-Var./Semi-Fixed Exp. Profit Volume Ratio (PVR) Fixed Expenses / Cost B.E.P
Annexure 8 to 11:: Sensitivity Analysis-Price/Volume Resultant N.P.B.T Resultant D.S.C.R Resultant PV Ratio Resultant DER Resultant ROI Resultant BEP
Annexure 12 :: Shareholding Pattern and Stake Status Equity Capital Preference Share Capital
Annexure 13 :: Quantitative Details-Output/Sales/Stocks Determined Capacity P.A of Products/Services Achievable Efficiency/Yield % of Products/Services/Items Net Usable Load/Capacity of Products/Services/Items Expected Sales/ Revenue/ Income of Products/ Services/ Items
Annexure 14 :: Product wise domestic Sales Realisation	Annexure 15 :: Total Raw Material Cost
Annexure 16 :: Raw Material Cost per unit	Annexure 17 :: Total Lab & ETP Chemical Cost
Annexure 18 :: Consumables, Store etc.,	Annexure 19 :: Packing Material Cost
Annexure 20 :: Packing Material Cost Per Unit	Annexure 21 :: Employees Expenses
Annexure 22 :: Fuel Expenses	Annexure 23 :: Power/Electricity Expenses
Annexure 24 :: Royalty & Other Charges	Annexure 25 :: Repairs & Maintenance Exp.
Annexure 26 :: Other Mfg. Expenses	Annexure 27 :: Administration Expenses
Annexure 28 :: Selling Expenses	Annexure 29 :: Depreciation Charges – as per Books (Total)
Annexure 30 :: Depreciation Charges – as per Books (P & M)	Annexure 31 :: Depreciation Charges - As per IT Act WDV (Total)
Annexure 32 :: Depreciation Charges - As per IT Act WDV (P & M)	Annexure 33 :: Interest and Repayment - Term Loans
Annexure 34 :: Tax on Profits	Annexure 35 ::Projected Pay-Back Period And IRR