ASSIGNMENT OF PROJECT APPRAISAL

Assignment Topic:
PC-II
Submitted To:
Ms. Uzma Shahid
Submitted By:
Madiha Mahmood (113)
Muqaddes Farman (114)
Syada Urooj Fatima (79)
Maryam Malik (124)
Anila Asghar (410)
Laeeqa Tahir (86)
Amina Rizwi (125)
Maeda Iqbal (65)
Tuba Irshad (75)



Lahore College for Women University



GOVERNMENT OF PAKISTAN
PLANNING COMMISSION


PC-II FORM




(SURVEY AND FEASIBILITY STUDIES)
MODERNIZATION / REHABILITATION AND
ESTABLISHMENT OF INDUSTRIAL UNITS IN RURAL
AREAS OF SINDH (AGRO BASED CLUSTER
DEVELOPMENT OF SMALL AND MEDIUM
ENTERPRIZES)








GOVERNMENT OF PAKISTAN
PLANNING COMMISSION
PC-1I FORM

PROFORMA FOR DEVELOPMENT PROJECTS
(SURVEY AND FEASIBILITY STUDIES)


1) Name by which survey/ feasibility will be identified
2) Administrative authorities responsible for
i) Sponsoring
ii) Execution
3) Details of survey/feasibility study

i. General description and justification
ii. Implementation period
iii. Year wise estimated cost
iv. Manpower requirements
v. Financial plan

4) Expected outcome of the survey feasibility study and details of projects likely to be
submitted after the survey.


Feasibility Study:
The feasibility study is an evaluation and analysis of the potential of a proposed project which is
based on extensive investigation and research to support the process of decision making. Purpose
is to determine whether it
(1) is technically feasible,
(2) is feasible within the estimated cost, and
(3) will be profitable.
Feasibility studies are almost always conducted where large sums are at stake. It is
also called feasibility analysis.
Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of an
existing business or proposed venture, opportunities and threats present in the environment,
the resources required to carry through, and ultimately the prospects for success. In its simplest
terms, the two criteria to judge feasibility are cost required and value to be attained.

A well-designed feasibility study should provide:
a historical background of the business or project,
a description of the product or service,
accounting statements,
details of the operations and management,
marketing research and policies,
financial data,
legal requirements and tax obligations.

Generally, feasibility studies precede technical development and project implementation. A
feasibility study evaluates the project's potential for success; therefore, perceived objectivity is
an important factor in the credibility of the study for potential investors and lending institutions.
It must therefore be conducted with an objective, unbiased approach to provide information upon
which decisions can be based.

I) NAME BY WHICH FEASIBILITY WILL BE IDENTIFIED
Agro based Clusters in Sindh for the Rice milling in Larkana.

II) ADMINISTRATIVE AUTHORITIES RESPONSIBLE FOR
A. Sponsoring
P & D Department, Govt of Sindh
B. Execution
SMEDA

III) DETAILS OF SURVEY / FEASIBILITY STUDY
The concept of cluster development is based on effective networking thus building on collective
efficiencies within the cluster and among cluster stakeholders i.e. the enterprises located in the
cluster, their associations, trade bodies, vendors etc. The cluster development approach is based
on the basic rationale that since the issues and problems faced by enterprises falling in a
particular cluster are common therefore the remedial and developmental initiatives and programs
may be formulated, designed and implemented more effectively to achieve a set of
developmental goals and objectives. Instead of applying an umbrella strategy for development at
macro or national level, integrated approach based on a focused strategy is applied for the
development of a particular cluster.

General Description And Justification
Rice Cluster Larkana
1.1 Cluster Brief
Rice is consumed as a major food item after wheat and is third largest crop after wheat and
cotton by acreage. It is annually cultivated on an area of around 5 million acres. The crop
occupies about 10% of the total cropped area. Annual rice production averaged at 4.75 million
tones in 2004-5. It accounts for 17% of value added by major crops. Punjab is the leading
producer of rice in the country. It accounts for 59.5% of the total production. The next leading
province is Sindh where it accounts 29.5%. The remaining provinces NWFP and Balochistan
contribute 11% of the total production. On the world level, Pakistan ranks 14th in rice production.
It is the 6th largest exporter of rice, holding 6% share in rice export of the world. Rice export was
around 2 million tones in 2004-5.Pakistan Basmati rice has been a favorite among international
rice buyers.
Rice Crop in Sindh has been grown since centuries as its cultivation dates back even before the
civilization of Moen-e-jo-Daro. There was substantial area of 487 thousand hectares under rice
cultivation even before the barrages the area further increased with the opening of barrages in
1932 and reached at 704 thousands hectares in 1998 and produced 1.5million tons. In Sindh Rice
is cultivated in two different geographical areas i.e Northern or upper Sindh (comprising
Larkana, Qamber-Shahdadkot, Shikarpur, Jacobabad, Kashmore and Dadu Districts) and
Southern or Lower Sindh (comprising Thatta, Badin, and Tando Mohammad Khan Districts.
There are approximately 850 Rice Mills are working in Sindh-Balochistan and approximately
700 are working in Sindh to process the paddy among 700 rice mills 300 are in Larkana and
Kamber Shahdadkot.

History and Background
Before the 1978 there were old iron hullers for the husking in Larkana but in the mid 90s Sheller
were introduced then soon after Rubber polisher SM 18 were introduced to achieve high yield
and know one Silky/water polisher is installed in Larkana. Perhaps first is Northern Sindh.
Mostly millers in cluster have outdated units hardly few has SM18 rubber polisher. More then 60
percent millers are un-educated and almost 95% doesnt know what is happening in international
market or interest in international market. If we compare existing cluster set-up with Japan,
China and Thailand cluster machinery is out dated.

Defining the Products
Larkana rice cluster is famous for its IRRI production it can be broadly categorized into
following segments:
IRRI-6
IRRI-9
DR-82
Broken-rice
Geographical Location
The Larkanas rice cluster is highly decentralized and varied in terms of size and location. The
small and unorganized units are located in surroundings of city like Kamber, MiroKhan, Dokri,
Naudero and Ratodero while large and medium organized units are located within the city area
of Larkana and Shahdadkot.

Core Cluster Actors
The Rice Millers Association of Larkana and Sindh Balochistan Rice Millers Association
is core cluster actor. The major highlights of Larkanas rice milling cluster is as follows:

Table: Larkanas ri9ce milling Cluster
No of units 300
Large and Medium units 200
Small units 100
Employment Generated Employing 7800
Permanent employees 1800
Seasonal employees 6000
Paddy Production 6,36,932 tons
Total Investment 750 millions
All of 300 units in the cluster are member of Sindh Balochistan Rice Millers Association. The
900 members of Association is producing 2.4 million tones of rice out of which 1.8 million ton is
exported in current year which has current value of 1.3 billion US.
Process of Business Operation:

Production Processes:
Human beings cannot consume Paddy in its raw form. It needs to be suitably processed for
obtaining rice. Rice milling is the process, which helps in removal of hulls and barns from paddy
grains to produce polished rice. Rice forms the basic primary processed product obtained from
paddy and this is further processed for obtaining various secondary and tertiary products. Milling
process of paddy starts when the paddy is brought from fields and gathered in an open space of
milling area where it is gathered for drying and is placed in an open place till it achieve desire
moisture level. Then paddy is brought and placed in a ware house where it is processed into
following stages:
Cleaning:
Removes foreign objects, such as hey, stone, tree stump, from the paddy.
Hulling:
Remove excessive husks to clean paddy. On removed, brown rice is separated from the husks
though ventilation process and mechanical equipment leaving pure brown rice available for
milling.
Milling:
The milling, or whitening, stage removes the bran layer from brown rice. The modern multi-
break, vertical whiteners use both abrasion and friction to gently and efficiently convert brown
rice to milled white kernels. The bran layer is by air ventilation, which sucks in the brand layer
process usually takes 2 to 3 cycles, depending on the required milling degree.
Polishing:
Smoothing and brightening a surface of rice grain by a roll or series of rolls.
Grading:
Separates milled rice (mixture of different sizes: Whole grain, head rice, and broken rice) by a
sieve grader include several sizing techniques.
Sorting:
Removes rice defects, such as discolorations, yellows, immature (green), chalky, peck, seeds, red
rice, glass, stones. Add value to white rice to ensure that only the cleanest rice is passed.
Pack / Storage:
The finished rice will be packed and stored in individual bags, according to its grade, and the
rice is ready for delivery to customers
Analysis of Business Operation:
Raw Material
The main raw material which is paddy is normally purchased from local growers and some time
from wholesalers or money lenders. Both these raw material suppliers are located within the
cluster as Larkana is famous for its paddy production. The millers within the cluster purchases
the raw material directly from growers, moneylenders and some time from wholesalers on cash
which usually borrow from banks during the season as a working capital.
Technology
Technology is rapidly changing in all spheres of life these days but rice millers in the cluster are
unwilling to adopt modern technology perhaps they are always in profits except few years back.
Before the 1978 there were old iron hullers for the husking in Larkana but in the mid 90s Sheller
were introduced then soon after Rubber polisher SM 18 were introduced to achieve high yield
and know one Silky/water polisher is installed in Larkana. Perhaps first is Northern Sindh.
Mostly millers in cluster have outdated units hardly few has SM18 rubber polisher. More then 60
percent millers are un-educated and almost 95% doesnt know what is happening in international
market or interest in international market. If we compare existing cluster set-up with Japan,
China and Thailand cluster machinery is out dated.
Market Analysis
Milled rice is usually directly sold to the traders and to exporters through the brokers. Some
millers are also directly involved in the export of milled rice.

Institutional Setup
Entrepreneurs Associations
Sindh Balochistan Rice Millers Association
Larkana Chamber of Commerce and Industry (LCCI)

Private Business Development Service (BDS) Providers
Number of Private BDS providers in the cluster are offering their services to the cluster. The
BDS providers in the areas of technology, product standardization and latest milling units are the
main requirement of the cluster.

SWOT Analysis:
The SWOT analysis of the cluster will be useful for clean understanding of the capabilities of the
cluster to face the challenge a head..
Strength:
Easy availability of paddy.
Easy availability of fuel (diesel).
Easy availability of Machinery and maintenance.
Easy availability of labor force.
High capacity for investment of entrepreneur.
Exposure to export market.
Encouraging Industries policy of Govt.
Good transport facilities.
High demand in local and international market.
Weaknesses:
Low level of education.
Non availability of quality paddy.
Un-willingness to use moisture meters.
High broken percentage.
Low milling yield.
Un-hygienic conditions within milling process.
Low level of modernization and up gradation technology.
Lack of marketing awareness.
Lack of common facility within the cluster.
Opportunities:
Up gradation due to involvement of different stake holders.
Improvement in quality and high milling yield.
Increasing demand of milled rice in world market.
Demand for low price.

Threats:
Quality requirement of international market (e.g. Aflatoxin).
Supply of mix-up verities.
Rejection of product by exporters.

Investment Opportunities
As rice is major staple food item after wheat and has huge potential in local and international
market specially concerned with current demand in world market has created opportunity for
investment in the cluster as already there is huge gap within the cluster for modern units.

PROPOSED PLAN:
Considering the potential of the cluster it is proposed to make the intervention in the cluster by
up-grading the existing infrastructure of rice processing units. In first phase, services of
consultant are required for detailed study and in second phase, a pivotal project may be initiated.

Services Required
The services of a consultant will be required for the following:
To conduct the technical analysis of rice processing unit cluster
To recommend the alternatives for up gradation
To prepare a comprehensive Technical Report
To monitor and supervise the up-gradation process
Expected Benefits:
The project upon completion is expected to deliver the following benefits:
i. Low broken percentage
ii. High yield
iii. Polished grain
iv. Lower production cost
v. Safety for workers(lungs problem)
vi. Introduction of new technology and opening up new doors of innovation.