Despite the costs involved, mill owners are modernising to remain competitive.

R. Balaji

Rice mills in Tiruchi are emerging out of a shell after the last few decades of controlled existence under the monopoly system of the State Government. With that era passing and the industry pitted against more modern counterparts elsewhere, it is fast gearing up for change.

Mr A. Murugesan, Treasurer, Tiruchi District Rice Mill Owners' Association, says at least 30-40 of the 200 rice mills are modernising and expanding. There is even one export-oriented unit coming up.

From the 1970s till a few years ago, these mills had been catering to rice production under the State Government's monopoly procurement system and had been insulated from development. But over the last 4-5 years, when the market had been opened up, they realised that technologically, they had been left behind as compared to the mills elsewhere, he said.

Ideally, their capacity has also expanded - each mill now processes about 30-40 tonnes of paddy a day. It would help if they could scale up to 50 tonnes or more, but that would cost about Rs 2-3 crore, and financial capacity is a limitation.

Most are putting in machines - the popular equipment is a colour sorter that removes discoloured grains and dirt - that improve the quality of output. That alone costs about Rs 15 lakh. More equipment is needed for polishing the grains, but that will be ready soon, he says.

Apart from finance, a major constraint is the power tariff and the charge for high-tension connections. They are currently powered by low-tension supply and need high-tension connections to deploy more equipment. But they would have to shell out a maximum demand charge that could run into several thousand rupees even when the mill is not in operation. Mills operate seasonally between February and April and in October-November. They cannot pay a power charge when the mill is not running. The State Government should give them exemption, he said.

The size of operation also does not justify a captive power plant though there is a potential to use biomass-based power plant. No rice mill is opting for such facilities, he said.

Mr B. Rajantran, Managing Director, High-Tech Agro Food Pvt Ltd, who is putting up a 50-tonne a day plant at a cost of Rs 5 crore, says that he has opted to put high-end imported machines despite the higher cost. That is the only option to survive - quality, he says.

Mr Rajantran's family has been in the rice mills business for over four generations and he is now involved in exports. Mills cannot afford to stay with low-cost traditional systems. They have to explore new markets. His experience in exporting rice to West Asia has given him the confidence to look at developed countries.

The unit that is coming up at Peramangalam, about 30 km from Tiruchi, is to be ready in three months. Quality is the key, consumers are willing to pay for it, he says.

If rice millers from Andhra Pradesh and Karnataka can afford to bring in rice to the markets in Tamil Nadu, it is because of quality. "Millers here should use the advantage of saving on the cost of transport to spend on upgrading quality. Millers from other States spend up to Rs 1.50 to transport a kg of rice to the market here, I plan to use that margin to put in equipment that will give a better quality," he says.

(This article was published in the Business Line print edition dated March 31, 2006)
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