Zafar Idrees Rice & Processing Plant

Zafar Idris Rice & Processing Mills (Pvt.) Ltd. Okara

Eexcutive Abstract
Doctors Rice un-doubt one of the leading brand in the international market. Today known as Zafar Idris Rice Mills Processing Mills is sparkling legacy, was originally established by our respected father late Haji Ali Nawaz in Okara during early sixties. Now a day parboiled was prepared manually using conventional methods and the quality was not up to mark. In 1981 Dr. Capt. Zafar Iqbal completed MBBS from Allama Iqbal Medical College Lahore and then started his medical practice in Okara and also joins this rice mill. His continuous efforts have a result in being quality rice. Mrs. Shahnaz Zafar is a business graduate and 10 years milling experience. She has professional expertise in Rice Milling and techniques for the expert quality production. Successful efforts of Mrs. Shahnaz Zafar Iqbal have given a good name of the company within the country and in international market as well. She ensures to serve her valued customer by keeping consistent and strict quality measures reliable and on time delivery on competitive price and take a very personal approach to the products she represents. It is only because of the combine efforts of Dr. Capt Zafar Iqbal, Mrs. Shahnaz Zafar and Nadim Idris our professional team who work untired to convert this raw commodity into a high quality food product. Our aim is to maintain the standard of our quality and to satisfy our reputable clients. As per our buyers requirements we have variety of good products, to fulfill the demands of our customers.

Zafar Idrees Rice & Processing Plant

Introduction
Their hard earned credibility of national and international level is because of combine efforts of Dr. Capt. Zafar Iqbal and Mrs. Shahnaz Zafar. All the process (paddy drying, husking) processing milling are out under the supervision of qualified, efficiently and experienced professionals. In 2003 a fully automatic parboiled plant and best of its kind was setup at Zafar Idrees Rice & processing mills. There hygienically pure extra long grain thoroughly cleaned and hygienically produce rice, capacity 40,000 Tons per annum. Management strongly believes in key role of technology in producing hygienic and good quality product on consistent basis the processing plant installed at Zafar Idrees Rice & Processing mills Okara was supplied by world renowned Buhler Gmbh (German and Swiss) consisting of modern and sophisticated machines. Performance of these machines is ranked amongst very beat in the world. With an annual capacity of 80,000 Tons (10 Ton/hr) the plant performs with remarkable finess and accuracy that other find hard to match. Buhler Gmbh is automatic name on food processing industry. High level of automation and well thought plant layout ensure no human contact from husking to packing stage, accurate grading excellent finishing no breaking and hairline cracks in final product. So our products have been authenticated for quality and exquisite taste by the nationals of many countries. An exquisitely designed project equipped with the most innovative, state of the art and quality sophisticated and modern technology is in operation.

Exclusive features of the unit are:

1. Paddy and rice storage warehouses.. 2. Most modern fully automatic parboiled plant ensuring yield of 40,000 tons of rice per annum. 3. Milling & processing capacity falls 10 tons/hr around 80,000 tons per annum. 4. Rice processing plant installed at here was supplied by world renowned Buhler (German, Swiss,

Corporate Organization structure

Their corporate and managerial hierarchy is given as below. Dr .Capt. Zafar Iqbal (Chief Executive), Mrs. Shahnaz Zafar (Managing Director), and Nadim ldris (Director). 2

Zafar Idrees Rice & Processing Plant

Vision and Mission

Zafar Idris Rice and Processing Mills Pvt. Ltd. Has strongly emphasized on Hygiene, quality standards and nutritional rice. Their mission is, Our prime ambition has to been to achieve recognition for quality of Pakistani rice at world level.

Our Aim is to:

Provide quality rice most hygienic conditions. No compromise on quality. Buyers satisfaction and commitment honored. Latest and modern technology.

Competitive Advantage
Their competitive advantage is due to low cost leadership, differentiation and focus bases on latest technology, highly innovative, and efficient management and committed labor. They are strongly focused on both national and international market needs and following all new trends by producing quality rice to delight their customers.

Products
Their product range covers all the superior varieties of rice from the Punjab. Long Grain Super Basmati/Parboiled White. Extra Long Grain 1121/ Parboiled White. Long Rain Basmati 385. Parboiled/ White. Non Basmati 386 IRRI6 IRRI9 IRRI Fine Suprii.

Carefully selected right from the farmers and processed under ISO9001 and HACCP certified Quality Management System where international quality and sanitation standards are strictly adhered to.

Nutrition Information and Ingredients (Design Of Products & Services)

Zafar Mills has a good R & D based highly motivated, innovative and team based culture to design and manufacture their rice. The standard size of their rice is in-between 1.8 to 1.3 mm based on robust design. 3 Energy ---------------- -----------365.04 Calories CARBOHYDRATE--------------------- 82.75g PROTEIN------------------------------------- 8.5g FAT (Which are saturated------------ 0.35g

Zafar Idrees Rice & Processing Plant CHOLESTEROL------------------------ Not detected CALCIUM --------------------------------- 9 gm Riboflavin--------------------------------- ---.05 mgs Thiamine------------------------------.021 mgs Fiber------------------------------------.04 g Niacin-----------------------------------3.8 mgs Iron--------------------------------------4 mg

Parboiled Rice
Parboiled is a unique hydrothermal process that enhances the nutritive properties of rice. To produce parboiled rice paddy has been boiled and stream heated before milling for a short time. During this process nutrients contained into the outer grain migrated to the grains centre. It also drives thiamine, Vitamins, Riboflavin Niacin and minerals from the outer grain of paddy into the centre grain called endosperm. So the parboiled rice is nutritional superior to highly mille raw rice. After boiling process the paddy is dried milled and polished by a fully automatic plant. During process due to starch gelatinization the parboiled rice is harder and has a higher resistance against insects and has a long storage life. Because of hydrothermal process it enhances the nutritive properties and has lower digestive values. It has better cooking properties the grain are loose and will not stick together by the consumers. Thats why healthy conscious generation is shifting sharply to parboiled rice from raw rice. Parboiled is a unique hydrothermal process is which nutrients contained into the outer grain migrated to the grains centre. So parboiled rice has added thiamine, Vitamins, Riboflavin, Niacin and minerals these nutrients persist even after washing & soaking prior to cooking.

International Strategy
Among Global strategy options Zafar Idris is following internation strategy cause of export of their quality rice to Middle East, European Countries, Canada, and Iran. This is based on low local Responsiveness and Low cost reduction considerations.

Layout Strategy Description of Rice Milling Operation:

Paddy in its raw form cannot be consumed by human beings. 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.

Zafar Idrees Rice & Processing Plant The basic rice milling processes consist of:

Process Definition
1. Pre Cleaning: Removing all impurities and unfilled grains from paddy 2. De-stoning: Separating small stones from paddy 3. Parboiling (Optional): Helps in improving the nutritional quality by gelatinization of starch inside the rice grain. It improves the milling recovery percent during deshelling and polishing / whitening operation 4. Husking: Removing husk from paddy 5. Husk Aspiration: Separating the husk from brown rice/ unhusked paddy 6. Paddy Separation: Separating the unhusked paddy from brown rice 7. Whitening: Removing all or part of the bran layer and germ from brown rice 8. Polishing: Improving the appearance of milled rice by removing the remaining bran particles and by polishing the exterior of the milled kernel 9. Length Grading: Separating small and large brokens from head rice 10. Blending: Mixing head rice with predetermined amount of brokens, as required by the customer 11. Weighing and bagging : Preparing the milled rice for transport to the customer The flow diagram of the various unit operations is as follows:

Zafar Idrees Rice & Processing Plant

Zafar Idrees Rice & Processing Plant

Envirnomental Background PEST ANALYSIS Political: Pakistan is facing political instability, Government is lacking good industrial
policies to help and promote big industries and SMES, and moreover, high taxes no subsidiaries, and not effective foreign policies that have negative impact on rice industry of Pakistan.

Economic: Pakistan GDP has gone down to 4.1 % in 2009-2010, per capital income
has decreased also, Unemployment rate is accelerating, inflation is very high, poverty line has been increased that is showing a bad impact on rice industry.

Social: Pakistan has gone through lots of social and demographic changes since last
decade; people are becoming very health conscious, focused on low diet food with high calories and good nutritions and vitamins. Social trends of Pakistan are based on the following. Time: People of the Pakistan have time to cook and enjoy various delicious dishes of rice on daily basis. Money: Majority of the people of Pakistan have money to buy and eat rice even low class, middle class and upper middle class based on the quantity they purchase. Energy: People of the Pakistan are very energetic and fun loving, they want to consume rice and get more energy.

Technological: Following are the technological factors that impact the rice industry
given as below. Raw Material: The increased prices of raw material due to global economic recession and inflation have a negative and bad impact on rice industry and cost of production has been increased. Energy: Pakistan is going through energy crisis now days such as (shortage of Electricity, Suigas, and CNG), High prices of patrol, diesel, kerosene oil, and furnace oil which has bad impact on rice industry and increased their cost of production. Technology: There has been huge improvement in technology in Pakistan and through out the world which can have a positive impact on rice industry, improved or high quality of rice, high output and low production cost. Information and telecommunication: Huge improvement in Pakistan and through out the world in the telecommunication and information system and its availability on competitive price has a positive impact on better supply chain of rice industry and reduced the cost of production. Biomedicine: Since last decade there has been huge improvement in pharmaceutical sector based upon innovation and creativity. Biomedicine has 7

Zafar Idrees Rice & Processing Plant other related products which are directly or indirectly used in the production of rice and showing a positive impact on rice industry and keeping the cost of production down.

Rice Industry Analysis (Porters Five Forces)

Determinants

Porter Five Forces Bargaining Power of Buyer. Defining Question

Concentration

Are the buyers fragmented of highly concentrated? If they are few concentrated then buyer bargaining power is typically high, Does your product buyers purchase represent a significant fraction of the buyers cost? If so, buyer bargaining power is typically high. Is the buyer product or service a commodity? If the products are standard or undifferentiated, buyers typically have high bargaining power.

Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesnt apply to your industry. 1 2 3 4 5 N/A

Product Cost versus Total Purchases Product Differentiation

3 N/A

3 N/A

Switching Costs Are switching cost low or High? If buyers face few switching cost their bargaining cost is typically High.

3 N/A

Profits

Do buyers earn low profit? If so they are typically more likely to bargain hard.

3 N/A

Zafar Idrees Rice & Processing Plant

Backward Integration

Can they make what you make themselves? If so the threat is typically high.

3
N/A

Impact on Quality/ Performance

Is the product you offer important to the quality of the buyers product or services? If not buyer power typically high.

3 N/A

Buyers Information

Does the buyer have complete information on the product he may purchase? If so buyer power typically high.

3 N/A

1-2s, 3-1s, 6-4s So the bargaining power of buyer is (High) The above factors show that bargaining power of buyer is high because in this industry buyer are fragmented. Buyers are in three segments of rice industry, local market, national market and export market. Product differentiation is almost none all are manufacturing rice but their product line varies from company to company. Switching cost of buyers is very low because there is hundreds of company producing rice at competitive prices so buyer can switch easily. As there are 3 main buyer segment of this product so backward integration can also be done that way they can be self-supplier of their raw material and husk and have more bargaining power over their suppliers and create a completive advantage based on low cost.. Now a day customer is more aware of what he is purchasing so buyer information about the product are very high.

Bargaining power of suppliers.

Determinants Defining Question Assess the power of Suppliers Circle one of the following. 1 = low, 5 = high, or N/A if it doesnt apply to your industry. 1 2 3 4 5 N/A

Concentration

Are your supplier fragmented or highly concentrated? If an industry is dominated by a

Zafar Idrees Rice & Processing Plant

few companies the suppliers are typically powerful. Presences of Substitute inputs Product Differentiation Are there any substitutes for your supplier products? If not supplier are typically powerful. Product is standard and undifferentiated. Suppliers with differentiated product typically have more bargaining power, then supplier selling commodities. How costly is it for you to switch from suppliers product? If switching cost is high suppliers are typically more powerful. Is your industry an important customer the supplier group? If not supplier are typically powerful.

1 1

3 N/A 3 N/A

4
4

5 5

Switching Costs

3 N/A

Importance Relative to Customer.

3 N/A

Forward Integration

Can the supplier produce the product you make? Is their threat of forward integration? If so supplier is typically powerful. Is your supplier product essential to the quality or performance of your business? If so suppliers are typically powerful.

3
N/A

Impact on Quality/ Performance

3 N/A

4-2s, 1-3, 2-4s. So the bargaining power of supplier is (low). Above factor of suppliers shows that suppliers have low bargaining power in this industry. Numbers of supplier are fragmented in this industry and there is no substitute available for the supplier product. Suppliers selling commodities there are no product differentiation in supplier product. Switching cost is low for the buyers. Rice Industry is the fastest growing industry so the industry is an important customer for the supplier group. Huge R&D and investment is required in this industry so forward integration is not easy and not possible; company may have to bear huge loss because brand identity is also an important issue. 10

Zafar Idrees Rice & Processing Plant

Determinants

Intensity of Rivalry Defining Question

Industry growth

How slowly or quickly is the industry growing? If it is slow growing industry there is likely to be a more intense fight among rivals for market share. Does your business have a high fixed cost? If so rivals will typically be tempted to cut price to ensure sales, thus posing a significant threat. Is your product commodity? The closer the product is to being a commodity the higher intensity of rivalry. How costly is it for your buyer to switch between providers? Low switching cost typically increases rivalry. How frequently is there a problem of excess capacity in your industry? Over capacity often lead to price cutting. If so there is typically a threat. Is branding critical for your Rivals success? Brand identification by buyer reduces the threat of rivals. Are there a large number of firms of equal size and power, all chasing after the same customer? If so rivalry is typically intense. Are there competitors with different strategies and frame of reference? When competitors are diverse it is more difficult to establish the rules of game so the threat form competitor is greater. Are exit barrier are low or high? High exit

Assess the intensity of Rivalry. Circle one of the following. 1 = low, 5 = high, or N/A if it doesnt apply to your industry. 1 2 3 4 5 N/A

Fixed Cost

3 N/A 3 N/A

Product Differentiation

Switching Costs

3 N/A

Intermittent Overcapacity

N/A

Brand Identity

3 N/A 3 N/A 3 N/A

Concentration and balance Diversity of competitors

Exit Barrier

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Zafar Idrees Rice & Processing Plant

barriers make it costly to abandon a product.

N/A

1-2s, 7-4s So the intensity if rivalry are (high) The factors select to identify the intensity of rivalry show that intensity of rivalry is high in this industry. The demand of rice is growing every year because the rice is substitute also among commodities and food items which are necessity of life but the rice industry is at is maturity because they have many big players in the industry and holding the maximum market share. Fixed costs are very high in this industry. Products have commodities and switching cost is low. There a large number of firms of equal size and power and all chasing the same customers. Exit barriers are also high because specialized assets used in tires manufacturing cannot be easily sold.

Determinants

Threat of New Entrants. Defining Question

Economies of Scale and experience

Does successful entry require that companies have significant economies of scale or experience? Barriers to entry are typically high when an aspiring company must cut cost in order to compete in a large scale and /or experienced market. Do new companies need to spend heavily on brand identification? Brand identification is typically a barrier to entry. Do new entrants need to differentiate by spending heavily on advertising, customer services or product differences to over come existing customer loyalty? Product differentiation is typically barrier to entry. Does the buyer have to pay to switch from one supplier product to another? High switching cost is typically barrier to entry. Does the new company need to invest large financial resources? Huge capital requirement are typically barrier to entry.

Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesnt apply to your industry. 1 2 3 4 5 N/A

Brand Identity

3 N/A 3 N/A

Product Differentiation

Switching Costs

3 N/A

Capital Required

3 N/A

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Zafar Idrees Rice & Processing Plant

Access to Distribution Cost advantage Does the new comer have access to distribution channel for product or services? Difficult access can typically be a high barrier to entry. Established companies have cost advantages over new rivals because they have already obtained proprietary product technology, access to raw materials etc. Such cost advantages are typically a barrier to entry for new entrants. Government policies can help to preserve or limit competition. Policies can typically create a barrier to entry. New entrants may decide not to enter a new market if existing firms are likely to retaliate. Established firms may have a history of retaliating, resources to fight back a strong commitment to the industry. Also if the industry is growing slow, they may retaliate against new players who would threaten sales growth

3 N/A 3 N/A

Government policies Expected Retaliation

1 1

4 4

5 5

N/A 2
3 N/A

7-2s, 1-4s So the threat of new entrant is (low) Above new entrant factors show that the threat of new entrant is low in this industry. Successful entry requires that companies have significant economies of scale or experience. Access to distribution is also another problem for the new comer in mature market. Established companies have cost advantages over new rivals because they have already obtained proprietary product technology, access to raw materials etc. New entrants may decide not to enter a new market if existing firms are likely to retaliate. Established firms may have a history of retaliating, resources to fight back a strong commitment to the industry

Determinants

Threat of Substitution Defining Question

Price performance

Does the substitute offer a better price performance? A substitute product or

Rate the threat. Circle one of the following. 1 = low, 5 = high, or N/A if it doesnt apply to your industry. 1 2 3 4 5

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Zafar Idrees Rice & Processing Plant

service is a threat to competition when it offers a higher performance at a given price or the same performance at lower price. Is it costly for buyer to switch to the substitute product or service? When buyers must may more to switch a substitute, the threat of substitute is low.

N/A 1

Switching Cost

3 N/A

4-1, 2-1 So the threat of substitute is (Moderate) Based on above mentioned factors the threat of substitute is moderate in rice industry.

Porter findings and result:

After porter analysis we can say that the industry is neither unattractive nor attractive it is moderate industry because buying power of buyer and intensity of rivalry is high in this industry which is not attractive but on the other hand power of supplier and threat of new entrant is low which shows attraction in the industry, substitute are not available currently. 1-2s, 3-1s, 6-4s So the bargaining power of buyer is (High) 4-2s, 1-3, 2-4s. So the bargaining power of supplier is (low). 1-2s, 7-4s So the intensity if rivalry are (high) 7-2s, 1-4s So the threat of new entrant is (low) 4-1, 2-1 So the threat of substitute is (Moderate )

SWOT Analysis Strength: Their main strength is innovative and efficient management highly trained
and committed labor force, latest technology, R & D, and organizational culture based on team focused culture.

Weakness: Their weakness is based on weak financial positions and lack of good
distribution network nation wide. They took heavy loans from banks to expand their utility and import latest technology.

Opportunity: Their main opportunity is based on increased population of Pakistan,

opening of multinational restaurants, increased consumption of quality rice which is favoring their business growth. Also Pakistani rice is well known and well reputed in the world market that also shows good opportunity for our rice industry.

Threat: Inflation, new entrants in rice processing industry, energy crisis( Load
shedding and Sui Gas shortage), domestic violence and terrorism, and political instability of Pakistan. 14

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Ogrganizational Anlaysis International Strategy

Among Global strategy options Zafar Idris is following internation strategy cause of export of their quality rice to Middle East, European Countries, Canada, and Iran. This is based on low local Responsiveness and Low cost reduction considerations.

Activities
Zafar Idris Mills is performing tthree types of activities. 1. Manufacturing rice for local Market 2. Further processing as per customer demand of rice. 3. Processing manufactured rice and extra polishing for export.

Problems
Based on our visit and discussion with Capt. Zafar Iqbal (CEO) of Zafar Mills and production supervisor of the mills we have identified the following problems through out their supply chain. 1. They are facing energy shortages and crisis due to shortfall in the supply of electricity and sui gas. 2. Their Sheller capacity is 40,000 tons/year, and processing plant capacity is 80,000, so they are 40,000 tons/year behind. 3. They are have few warehouses to hold raw material, and processed rice. 4. They are lacking good distribution network. 5. They dont have good advertisement programs. 6. They face shortages and have to pay high prices for paddy because they are dependent on external suppliers.

Recommendations
Upon our analysis of Zafar Mills Pvt. Ltd as an organization and their activities regarding their business, we have the following recommendations. 1. They should install their own power generation plant so they can avoid interruptions and cycle time wastage. 2. They should install a new Sheller plant that can produce up to 50,000 tons/ year to match with the processing capacity. 3. They should build new warehouses to hold their processed rice and raw material to avoid wastages and losses. 4. They should go for vertical backward and vertical forward integration.

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Zafar Idrees Rice & Processing Plant 5. They should focus on local and national efficient advertisement to make more awareness to consumers and dealers about their quality rice.

Summary
We visited Zafar Idris Mills Pvt. Ltd. Okara. as a group and had a discussion with Mrs. Shahnaz Zafar ( Managing Director ). She gave us brief detail information about their Mill, their rice manufacturing processes and their business strategies. Their location is based on their proximity to customers, competitors, skilled labor and raw material. They are producing 5 types of rice, differentiated based on dynamic needs. They have emphasized over the quality, and environmental standards. They are following ISO9000, and ISO14000. They are focused on innovation and quality to meet the dynamic needs and have a developed and modern R & D (lab) for rice manufacturing. They are focused on robust design during processing of rice so they can avoid minor variations in the size of their rice. They are using computer software also during their manufacturing of rice. They are very efficient in the production of Parboiled rice and which is creating competitive edge for them. Zafar Mills is serving three three segments of market such as local market ( Okara), national market, and international market ( Export). They are focused on high quality and cost reduction as well as. They are using latest technology Buhler for the polishing of rice and trying to achieve 6 sigma. Zafar Mills is following product focus strategy because they are producing high volume and low variety product. In this process there is high fixed cost, high utilization of their machinery and low variable cost. Zafar Mills is having 5 Acre area in total; they always buy raw material and paddy in advance and stock it well in their warehouses to avoid shortages of paddy and high prices of paddy in season. Zafar Mills Pvt. Ltd. is following international strategy as well as because they are exporting rice to foreign countries such as middle east.Infuture they are focusing to expand their business by buliding a new rice sheller in Sahiwal area. They are always doing well ahead stocking before the rice processing season starts and they are not using any inventory management model such as POQ, EOQ, or Disount Quantity.

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