Get Floored by the Flour Business

The increasing demand from fast food restaurants in India for burger buns and other bakery products has perhaps given an impetus to the need for flour, thus creating an opportunity for an impressive growth of the milling sector. This is true not only in India but also globally. Ashok Malkani takes a microscopic look at the growth of the India’s milling sector and the opportunities for new entrants in this industry.

 

The Indian bakery industry, today, occupies a prominent position in the Indian processed food sector. The Indian bakery market is estimated to be worth Rs. 16,500 crore, and it is growing at 7.5 percent per annum.

The thriving bakery sector in the country has also increased the demand for the raw materials, providing opportunities to several entrepreneurs to enter the business of raw materials of bakery products. One of the basic needs of the bakery industry is flour of food grains, particularly of wheat – refined (maida) as well as whole wheat. The need for flour mills has thus increased in the country and, several entrepreneurs are eyeing this opportunity.

 

Robust Growth

The packaged wheat flour in India has broken the age-old tradition of grinding wheat at the local chakki mills. According to IKON Marketing Consultant’s pan India research report titled ‘The Indian Packaged Wheat Flour (Atta) Market – Breaking the Traditions’, “The packaged wheat flour market in India is growing at a CAGR of 19 percent over the past three years and may likely to be double the current size by the end of this decade,” The report was published in June 215.

According to the IKON’s estimates, if the growth trajectory remains the same, the market of packaged wheat flour in India may likely to be more than double the current size by the end of the current decade.

Wheat lends itself to making snack food items. Besides breads, there are many pasta products such as vermicelli, macaroni, instant noodles, etc. which are made from wheat flour. These products are meant for direct consumption. Market for such food products is growing rapidly.

Taruna Sondarva, Sr. Consultant at IKON, is of the opinion that the marketers need to come up with new and innovative product packaging and product proposition for differentiating themselves and for sustainable long-term growth. The consumers are likely to, eventually, give more importance to the origin of ingredient and related convenience factors in their purchase. 

      Azaz Motiwala, Founder &CMD of IKON Marketing Consultants, had gone on record as stating, “I am highly optimistic about the packaged wheat flour market in India. The current growth figures look promising. However, the players with strong brand image, product quality, distribution network and constant R&D for product innovation capabilities will be the ones who are going to stay in the market.”

It may be mentioned that the Indian packaged wheat flour market consists of several brands. Besides leading brands, there are more than 500 regional brands in India in this segment.

Today, the packaged and branded segment of atta in the country is largely dominated by big domestic brands such as Aashirbad, Shaktibhog, Rajdhani, etc. The new trend is of the retailers developing and offering private label portfolio in the atta segment, with healthy mix of national and regional brands, to connect with the local communities. Many roller flour mills have started marketing their packaged atta in their area (catching the market share by luring the retailers by giving higher margins compared to the multinationals). This has increased competition, which calls for efforts for segmenting and introducing different variants targeting different population.

As per a recent CII Mckinsey Survey, there are 812 roller flour mills in our country; producing approximately 25 million tonnes of milled cereal products worth Rs. 1200 crores. Flour Mills can be installed with minimum capacity of 30 TPD of raw material crushing capacity per day to maximum 1000 TPD.

Apart from over 1,100 large flour mills that convert wheat into products, there are nearly three lakh small units operating in this segment across the country, in the unorganised sector. 

The brightest feature of the wheat milling sector in India is possibly the robust growth in its demand. The roller flour industry in the country has an annual turnover estimated at over Rs. 40,000 crore.

Considering the industry’s size and low brand penetration, international giants have set their sights on the nascent but promising Indian market for branded wheat products. The domestic branded atta market is currently growing by around 25 percent annually. The packaged and branded segment is largely dominated by multinationals, although there are also a few big domestic brands such as Shaktibhog and Rose. Atta is one of the staple and basic food, not only for Indians but for people all over the globe. The protein content of wheat differs according to the variety of wheat. Some Canadian wheat contains high protein, while English wheat contains low quantity of it.

The demand growth of atta in India is increasing day by day, particularly in 5 to 10 Kg packs, for which the thriving bakery sector is also playing a role. Looking at the significant demand for atta in bakeries, there is very good scope for setting up an atta chakki(flour milling) plant.

Generally, milling business opportunities in India involve wide manufacturing operations. According to the product and raw materials different types of milling business can be initiated as small and medium scale industry.

Starting a Small Flour Mill

If you are planning to start a small flour mill it is important that you locate it in an area where you are sure of getting business. If one has to cater to the bakery segment, then the flour mill must be in an area where there are small scale bakeries around. In metropolitan cities like Mumbai, there are several small scale bakeries located in different areas.

Remember, location will determine the success of your business. The business should be situated such that it can conform to the zoning regulations of the region. If you are going to ignore this, there are high chances that your business will not perform well at the end of the day. Therefore, it is wise to conduct market research so that you can determine some of the best places where you can establish the business in question.

 

For Roller Flour Mill

The roller flour milling industry is the largest organised segment for utilisation of wheat in the country. It acts as a crucial bridge between wheat growers and wheat product consumers. Mills engage in wheat blending, flour blending, fortification and quality maintenance.

The roller flour mill is a process industry to mill wheat and provide the endosperm as various fractions viz: maida, sooji, and atta. The skin or bran is separated from the endosperm and sold as cattle feed.

All these products not only have a domestic demand but also a good export potential . Furthermore, the bakery industry of our country hugely depends on these ingredients as raw materials, making the milling business a financially viable one.

However, these products need to be sold as per the guidance issued by the Food and Civil Supplies Department of the concerned state.

To start – and succeed – in this business you must have an appropriate location. To ensure this, check the available transportation facility, electricity, water, semi-skilled manpower and drainage facility. For a small scale unit a space of about 3000 sq. ft. is the basic requirement.

The requirements of plant and machinery for roller flour mill are as follows:

  • Bucket elevator
  • Reel machine (three segments)
  • Rotory separator with aspiration channel
  • Scourer machine with aspiration channel
  • Intensive dampener
  • Rotometer
  • De-Stoner
  • Indent cylinder
  • Screw conveyor
  • V-Groove, pulleys, couplings, V-Belts, etc.
  • Dust cyclone
  • L.P fan for cleaning
  • Magnate
  • Silogate
  • Roller mill body
  • Roll grooving & spindle cutting
  • Purifier
  • Supper cyclone

Additionally, you will need to of course have testing equipment and packaging machinery.

 

Basic Requirements for Milling Business

Before embarking on the milling business, one also needs to pay attention to some basic requirements like:

  • Trade License from the local municipal authority.
  • Applying for Udyog Aadhaar MSME Online Registration
  • Checking with the local municipal authorities about other requirements for the flour mill.

One also needs to look at the financial aspects. Business analysts recommend that you should thoroughly study and examine the amount of money and other resources you will require in order to start and maintain your milling business. There are different ways to finance the business, including loans and personal cash.

Flour milling business generally demands two different types of investments. One is the fixed capital investment. It includes land (if you purchase the land), building, machinery, registration and licensing fees. If you start the business with a rental premise then fixed capital includes the security deposit amount for the area of land. Of course, in a rented property also, the cost of machinery, registration and licensing fees can comprise the fixed capital.

Another investment is the working capital investment. This includes rent, electricity bills, etc.

 

Challenges and Precautions for Millers

Infestation in wheat flour is a common challenge faced by the flour millers. It can often be a daunting task to maintain the quality of wheat flour. With proper care & controlled conditioned environment, flour can be stored up to six months without any signs of damage. However, in India, it is difficult to achieve this feat. It gets infested within two months. Infestation is due to several reasons, the main one being moisture content.

If the wheat has a high moisture content and it is not cleaned properly it will be infested faster. In order to improve the shelf life of the flour, following additional precautions should be taken by millers:

  • Use clean & fumigated wheat for milling
  • Use scouring machines in the cleaning line
  • Set cleaning machines with optimum efficiency to separate out all the impurities from the wheat
  • Clean the dead pockets of the cleaning line frequently, to get rid of non-moving grains at elevator bottom & outlets, wheat conveyor troughs and tempered wheat conveyors.
  • Fumigate empty wheat bag.
  • Before milling, use scourers to remove dirt in tempered wheat
  • Regularly clean the milling equipments like roller mills, feed hoppers, flour conveyors, gravity spouts, plan shifters purifiers, bran finishers, flour bins, flour elevators, flour packing hoppers, bran elevators line, etc.
  • Fumigate packing materials before every use
  • Frequently fumigate bins & conveyors
  • Used mill spares & sieves must be cleaned and then placed at the store
  • Fumigate the mill with proper sealing annually.

Experts in the field claim that the production process for each item – maida, sooji, atta, etc. – is different and one can source the manufacturing technology, on payment of a fee, from the government.

However, it may be mentioned that wheat grains comprise of three main parts–the enveloping skins, the embryo and the endosperm – in differing proportions; depending upon the plumpness of the grain. On an average, the composition is: 83 percent endosperm, 2.5 percent embryo and 14.5 percent enveloping skins.

 

Bright Future

With the Indian bakery industry taking rapid strides due to the demand from the working couples and with the growing QSR segment, the demand for flour is expected to increase in the country.

In fact, the demand for flour is increasing across the globe. The Allied Market Research Report states that the Global Flour Market was valued at 200,497 million USD in 2015 and is expected to reach 270,895 million USD by 2022, registering a CAGR of 4.4 percent during the forecast period 2016-2022.

The report further adds that the movement from traditional to urban and modern lifestyles of consumers has increased the demand for various types of flours in the preparation of fast food items. Succinctly, rise in urban and modern lifestyle has increased the demand for various types of flours in the preparation of fast food products such as pizzas, donuts, fried meat items, and burgers.

 “Moreover, rise in health concerns for high-protein flour provides an impetus for flour millers to produce gluten-free flour alternatives. Change in taste and preference of consumers as well as dietary concerns for manufacturers to develop differentiated products have impacted the overall sales,” noted the report.

The trend of people becoming health conscious and demanding health food encouraged the fortification of wheat flour. According to Food Safety and Standards Authority of India (FSSAI), Cargill, General Mills, Inc., Patanjali and Hindustan Unilever are among the companies, which have agreed to begin fortifying their wheat flour in India. They have already started fortifying wheat flour in their products.

It is believed that fortification of wheat flour with iron, folic acid and vitamin B12 offers one of the most feasible and cost-effective strategies to combat anaemia and other micronutrient deficiencies, which impact more than 50 percent of India’s population across the population groups and geographies, affecting all socio-economic classes.

We can see that not only the demand for flour in India is expected to increase, but wheat flour options are also becoming healthier. This in turn would give a further impetus to the Indian bakery and confectionery industry, in the near future.                                    n

 

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