Economic analysis of thin Poha processing units in Bhandara district, Maharashtra

Introduction

Rice is an important agricultural commodity of India and plays a significant role in the agricultural economy of Maharashtra. Bhandara district is a major rice-producing region where paddy is processed into various value-added products. Among these, Thin Poha (flattened rice) is an important processed product that contributes to value addition, employment generation and better utilization of paddy. The profitability of Thin Poha processing depends on the expenditure incurred on raw material, labour, energy, packaging, transportation and fixed investment, along with returns from the main product and by-products. Hence, analysis of cost and returns and determination of the break-even level are essential for assessing the economic performance of processing units. The present study was therefore undertaken to analyse the cost, returns and break-even position of Thin Poha processing units in Bhandara district of Maharashtra. Specific objectives of this work are to estimate cost and returns of thin poha and to analyse break-even point.

Methodology

Area of study: The present study was undertaken in Bhandara District. For study three tehsils was selected, such as Bhandara, Lakhani and Tumsar and from each tehsil two units were selected. Thus total six units were selected for study.

Period of study:

The data was collected for the period of year 2025-26.

Analytical tools:

As per the objectives of study, the required information was collected from the Rice processing unit, various descriptive statistical tool was employed to know the profitability of rice processing and was judged with the help of variable cost, fixed cost and total cost.

Fixed cost:

It includes data on the cost of machinery, building, furniture, wages of permanent employee, Laber license, insurance and taxes. The data was collected specially from each mill on the above item.

Variable cost: Variable cost consists of expenditure on purchase of raw material waged of casual labour oil and lubricants energy charges repair maintenance of machine, packing cost and invest on working capital.

Total cost: Total cost of processing composed of the total fixed cost and total variable cost and was calculated by adding these costs together.

Total cost = Fixed cost + Variable cost

Gross Returns: The gross returns was defined as the total rate of returns on an investment before the deduction of any expenses.

Gross Return = Quantity of the product * price per unit Net Returns: Net returns refers to returns after deducting all expenses from the gross returns generated by the investment.

Net return = Gross return -Total cost

Benefit-Cost Ratio: The benefit cost ratio compares the present value of all benefit with that of the cost and investment of the project.

Break-Even

Results and Discussion

Processing of agricultural product is one of the important means of creating a time and form utility in the product, adding value to the product and boosting up the demand and supply of food products. Result are arranged as per the objectives. The capital investment for Thin Poha units was apportioned under four major heads, namely land, building, machinery & equipment, and miscellaneous expenditure. The total capital investment amounted to ₹10.42 lakh for small units, ₹30.26 lakh for large units, and ₹20.28 lakh overall. Considering the expected life of 15 years for small units, 20 years for large units, and 17.5 years overall, the annual establishment cost was calculated at ₹0.69 lakh, ₹1.51 lakh, and ₹1.10 lakh respectively.

Cost and returns of Thin Poha

Fixed Cost of Thin Poha Processing (₹ lakh/year)

The fixed cost structure of Thin Poha units comprised depreciation on building, machinery, furniture, appliances, and vehicles, along with interest on fixed capital and recovery of annual establishment cost. The total fixed cost was estimated at ₹3.50 lakh for small units, ₹6.64 lakh for large units, and ₹5.07 lakh overall. With annual processing quantities of 1,800 quintals in small units, 5,400 quintals in large units, and 3,600 quintals overall, the fixed cost per quintal worked out to ₹194.44, ₹122.96, and ₹140.83 respectively.

Variable Cost of Thin Poha Processing (₹ lakh/year)

The variable cost of Thin Poha units was mainly driven by raw material expenses, which accounted for over 71 percent of the total. Other significant components included labour, fuel, packaging, transportation, repair and maintenance, and interest on working capital. The total variable cost was estimated at ₹71.64 lakh for small units, ₹214.91 lakh for large units, and ₹143.28 lakh overall. With annual processing quantities of 1,800 quintals in small units, 5,400 quintals in large units, and 3,600 quintals overall, the variable cost per quintal was uniform at ₹3,980 across all categories. The cost structure of Thin Poha units revealed that variable costs dominated, accounting for more than 95 percent of the total, while fixed costs contributed only a small share. The total cost was estimated at ₹75.14 lakh for small units, ₹221.55 lakh for large units, and ₹148.35 lakh overall. With annual processing quantities of 1,800 quintals in small units, 5,400 quintals in large units, and 3,600 quintals overall, the total cost per quintal was calculated at ₹4,174.44, ₹4,102.78, and ₹4,120.83 respectively.

Gross returns of Thin Poha Processing (₹ lakh/year)

The gross returns from Thin Poha units were derived primarily from the sale of the main product, which contributed about 95 percent of total returns. Thin Poha production amounted to 1,800 quintals in small units, 5,400 quintals in large units, and 3,600 quintals overall, with average selling prices ranging between ₹4,731 and ₹4,787 per quintal. By-products such as rice bran, broken rice, and rice husk together contributed nearly 5 percent of total returns. The overall gross returns were estimated at ₹89.56 lakh for small units, ₹271.85 lakh for large units, and ₹180.71 lakh overall, translating into gross returns per quintal of ₹4,975.56, ₹5,034.26, and ₹5,019.72 respectively. The break-even analysis of Thin Poha units indicated that the annual fixed cost was ₹3.50 lakh for small units, ₹6.64 lakh for large units, and ₹5.07 lakh overall. With selling prices ranging between ₹4,975 and ₹5,034 per quintal and a uniform variable cost of ₹3,980 per quintal, the break-even point was estimated at 352 quintals for small units, 630 quintals for large units, and 495 quintals overall. In monetary terms, this translated to ₹17.51 lakh, ₹31.72 lakh, and ₹24.77 lakh respectively. The margin of safety was considerably high, at 80.44 percent for small units, 88.33 percent for large units, and 86.25 percent overall, confirming the financial stability and resilience of Thin Poha processing enterprises.

Conclusion

The analysis of Thin Poha processing units in Bhandara district demonstrated clear economic viability. The total capital investment was ₹10.42 lakh for small units, ₹30.26 lakh for large units, and ₹20.28 lakh overall, with annual establishment costs of ₹0.69 lakh, ₹1.51 lakh, and ₹1.10 lakh respectively. Fixed costs per quintal were ₹194.44 in small units, ₹122.96 in large units, and ₹140.83 overall, while variable costs per quintal remained uniform at ₹3,980. Gross returns reached ₹89.56 lakh for small units, ₹271.85 lakh for large units, and ₹180.71 lakh overall, resulting in net returns of ₹14.42 lakh, ₹50.30 lakh, and ₹32.36 lakh respectively. The benefit-cost ratio was above unity (1.19, 1.23, and 1.22), and break-even output was low at 352 quintals, 630 quintals, and 495 quintals compared to actual production of 1,800, 5,400, and 3,600 quintals. A high margin of safety (80.44%, 88.33%, and 86.25%) confirmed that Thin Poha enterprises are financially stable and profitable.

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