How to Start a Mini Dal Milling Business in 10 Steps

Do you want to start a mini dal milling business? Are you searching for the dal mill business plan? This article includes a detailed guide on how to start a dal mill business and a sample project profile with cost and profit.

In India, dal milling is a profitable business. Depending on the production output, you can start this business at any size. Generally, the large-scale operation ensures more profitability. However, a mini dal mill is also a financially feasible business.

Different types of dals are the very important and essential food grains in India. Some of the most popular dals are Masoor, Green Moong, Mung, Tur, Chana, Rajma, Urad, Lobia, or black-eyed pea, Matar dal, Chickpea, etc.

In our country, dal milling is the third-largest food processing industry after rice and wheat. Madhya Pradesh holds the first position in producing dal. The state accounts for 23% of total pulse production in the country. Other major pulses producing states are Rajasthan, Maharashtra, Gujarat, Tamil Nadu, Odisha, Bihar, and West Bengal.

Read: Top Small Scale Manufacturing Business Ideas

The overall success and profitability of a dal mill depend on the regular supply of raw materials. So, if you live in a dal producing area where you can procure raw dal easily, you can start this business.

Step-by-step Guide for Starting a Dal Mill Business

1. Create a Dall Mill Project Report Plan

In initiating the business, you must prepare the project report first. A project report not only helps in getting the finance but also helps in establishing the business properly without major mistakes. And you must talk to the professional industry experts for preparing the report on behalf of you. And in that case, you will need to provide sufficient inputs to him or her.

First of all, you need to check whether you already have sufficient space for establishing the plant or not. If you have your own space then it is good, otherwise, you may think about getting the space on rent.

Secondly, determine whether you will start the project with your own capital or with bank finance. In the case of finance, you will need to provide collateral security to the banks.

Other important considerations are to determine the production quantity output and what specific type of dal you will process. Actually, the machinery price varies depending on these aspects.

Here in this article, we include a sample project report format to get some basic ideas.

2. Preparation of Dal Mill Project Report

Broadly, the project report has two major segments. One is the technical aspect and the other is the project economics.

Technical Aspects

Production Capacity: 159 kg/hr.
Number of Shifts: 2
Daily production capacity: 2.53 tonne
Capacity utilization: 70%
Working days per annum: 300
Annual Production: 6%
The loss during dehusking: 6%
Net Production: 500 tonne/annum

Infrastructure Requirement

Covered Area: 1000 Sq. ft.
Power requirement: 25 KW
Water: Minimal

Project Economics

Fixed Capital (Rs. in lakh)
1. Land Own
2. Site Development = 0.45
3. Building (working shed 750 Sq.ft. = 4.87
4. Plant and Machinery = 1.84
5. Misc. Fixed Assets = 0.50
6. Preliminary/Pre-operative expenses = 0.30
Total = 7.96

Working Capital Requirement (Rs.in lakhs)
1. Raw material and Consumables 1 month = 9.23
2. Finished goods 1 week = 2.87
3. Working expenses 1 month = 0.42
4. Receivables 1 week = 2.93
Total = 15.45

Working Capital to be financed as –
Margin Money = Rs. 3.86 lakh
Bank Finance = Rs 11.59 lakh

Term Loan(75%) = Rs. 5.97 lakh
Promoter’s Equity(25%) = Rs. 1.99 lakh
Total = Rs. 7.96 lakh

Cost of the Product & Profit Percentage
A. Capacity Utilisation: 70%
B. Output (MT) : 500 MT/annum
C. Annual Revenue: Rs. 135.00 lakhs
The cost of various types of pulses varies. Hence, we have taken an average cost of Rs. 27,000 per tonne. The annual sales revenue for 500 MT is estimated at Rs. 135 lakhs.

Return on Sales = 66%

3. Registration & Licensing

Dal is a food grain item. So, initiating this type of project requires different types of registration and licensing. First of all, you will need to register your business. If you want to operate the business as a proprietorship, then you only need a Trade License from the local Municipal Authority. Otherwise, you can consider registering an LLP or Pvt. Ltd. or Ltd. company.

Suggested Read: How to Register a Company in India

After registering, apply for MSME Udyog Aadhaar registration online. And then you will need FSSAI Registration and GST number. This product doesn’t come under the BIS specification. Also, this type of factory operation doesn’t require any sort of NOC from the Pollution Control Board.

4. Arrange Finance

This is one of the most important aspects. Depending on the project size, you will need to arrange the finance. Generally, banks provide loans. Otherwise, you can also consider the finance from rural cooperatives or venture capitalists.

Suggested Read: How to Get a Small Business Loan in India 

On a macro level, this type of project requires two different types of investment. These are fixed costs and working capital costs. If you can arrange the fixed capital, then it is better to apply for a cash credit or overdraft facility to a bank.

5. Select Location

The requirement of space depends on the total production output. You need to provide spaces for raw material storage, finished goods storage, machinery operation, and office operation. Also, you must have a toilet facility for the workers.

However, you need to select the location carefully, It is always better to select a location that has sufficient distance from the residential areas. If you establish the plant nearby residential places, your neighbors may feel disturbed.

Also, you must check the electricity and regular water availability at that specific location. That space must have a wide entrance. Also, check the nearby transport facility before selecting the space.

6. Dal Mill Machinery

Some of the basic machines and equipment required to start a dal mill plant are the following:

• Precleaner
• De-huskers
• Grader
• Bucket Elevators
• Aspirators and Blowers
• Control Panels
• Destoner
• Pedal Mixer
• Packaging Unit

Actually, the total cost of plant and machinery varies depending on the capacity.

7. Raw Material for Dal Mill

The main raw material is different types of dal. Apart from that, you will need packaging consumables only. Generally, processed dals are packed in 25 Kg bags for wholesale. For retailing, you can provide packaging in 1 Kg or 5 Kg max to max.

8. Dal Mill Technical Know-How

If you are starting this business without any prior experience, then it is better to procure the technical know-how from Govt. research centers. In India, CFTRI provides technical know-how and training both in exchange for fees. Here, you can check some basic steps in manufacturing the pulses milling.

Basic processes in dal milling are cleaning, grading, conditioning, de-husking, splitting, separation, polishing, and bagging. The major variation is involved with the de-husking process only. Sometimes you can use linseed oil during dry milling operation to impart shine or better appeal to the milled dal.

The removal of the outer layer of husk and splitting the grain into two equal halves is known as the milling of pulses. To facilitate de-husking and splitting of pulses, you can use the alternate wetting and drying method.

9. Dal Mill Process Flow-chart

Pulses

↓

Cleaning, chaffs, dirt, etc.

↓

Pitting

↓

Pretreatment with Linseed Oil

↓

Conditioning

↓

De-husking and splitting mixture of husk, small broken and powder

↓

Grading

↓

Polishing

↓

Grade I pulses

10. Create a Distribution Network

In our country, after preparing the goods, distribution is the most successful and proven way of marketing. In the initial days, you can either send the finished packets to the retail counters or you can send the goods to the wholesalers. Currently, institutional markets are also doing very well.

Also, you can consider keeping your products in shopping malls and online marketplaces like Amazon. As your business grows, you can consider several different ways to promote your dal mill business throughout the country.