Key Takeaways
- Even a profitable besan mill plant can face serious cash flow stress if raw material inventory, finished goods stock, and credit sales are not properly funded through adequate working capital.
- A 5–20 TPD besan plant typically needs working capital equal to about 15–25% of annual turnover, depending on its operating cycle, chana dal holding period, and sales model.
- Indian banks generally assess working capital using operating cycle, projected balance sheet, and turnover-based approaches, sanctioning a cash credit limit linked to drawing power and promoter margin.
- Cash credit is not a fixed entitlement – drawing power is recalculated monthly based on eligible stocks and receivables, and actual available funds may be lower than the sanctioned limit.
- Project Report Bank, led by CA Manish Gugliya, prepares customised DPRs, financial projections, and CMA data to help besan manufacturers structure viable working capital and cash credit proposals.
Introduction
Working capital is as critical to a besan manufacturing plant as the besan mill machinery itself. A plant may have excellent production capacity, consistent quality output, and strong market demand, yet the business can still face liquidity issues if day-to-day operational funding is inadequate.
India’s besan market is valued at approximately ₹32,000 crore, and the food processing industry continues to grow. Entrepreneurs setting up besan gram flour units – from small 5 TPD operations to 20 TPD plants and beyond – frequently focus on fixed capital (land, building, machinery) while underestimating how much money gets locked in whole gram and chana dal inventory, finished besan stock, and trade receivables every single day.
Bulk procurement of chana dal, typically concentrated around harvest months (March–May), can lock significant funds into raw materials for 30–90 days. Utility costs are a significant operational expense due to high energy consumption in cleaning, dehulling, and grinding operations. Meanwhile, wholesalers and distributors often demand 15–45 days of credit, creating a continuous gap between cash outflows and inflows.
Consider a simple example: a besan plant purchases chana dal worth ₹25 lakh on day one, pays power and wages over the next fortnight, and dispatches finished besan worth ₹30 lakh to a distributor on 30-day credit. The plant has a healthy gross margin per kg – but for 30 days, ₹30 lakh of the company’s working capital position is blocked in receivables, while suppliers, employees, and utility providers need to be paid. If the cash credit limit is under-assessed, even profitable operations can face cheque returns and delayed salaries.
This article covers the complete framework of besan manufacturing working capital: its definition and components, illustrative requirements for 5, 10, and 20 TPD plants, the working capital cycle, cash credit facilities, bank assessment methods, CMA data, drawing power, price sensitivity, and documentation requirements.
What Is Working Capital in Besan Manufacturing?
Working capital is the money blocked in stocks, receivables, and day-to-day expenses that keeps a besan plant running. Without it, a company fails to pay suppliers, employees, and operational costs on time – regardless of how strong its order book may be.
Definitions and formulas:
- Net working capital = Current Assets − Current Liabilities. Working capital is calculated as current assets minus current liabilities, and positive working capital indicates sufficient resources to cover short-term obligations.
- Gross working capital = Total current assets (inventory, receivables, cash equivalents, and other short term assets).
Permanent vs seasonal working capital:
Permanent working capital is the minimum, year-round level of funds required – for example, raw materials for 15 days plus receivables for 15–20 days. Temporary or seasonal working capital is the additional amount needed during harvest procurement or festive demand peaks.
Working Capital Gap:
Working Capital Gap = Inventory + Receivables + Other Current Assets − Trade Payables − Other Spontaneous Current Liabilities.
Bank-financed working capital (cash credit) covers the gap after the promoter’s contribution:
Bank Finance (Cash Credit) = Working Capital Gap − Promoter Margin.
Compact numerical example (illustrative):
| Item | ₹ Lakh |
|---|---|
| Total Current Assets | 120 |
| Total Current Liabilities | 60 |
| Net Working Capital | 60 |
| Promoter Margin (25%) | 15 |
| Bank Cash Credit | 45 |
This structure appears on the company’s balance sheet and directly affects the current ratio, a financial metric banks examine closely during credit appraisal. Most banks expect a current ratio of at least 1.25–1.33 for manufacturing units.
Major Components of Besan Plant Working Capital
Working capital for any besan mill plant largely sits in raw material stocks, finished besan inventory, and trade receivables, adjusted by supplier credit and other current liabilities.
Current assets include cash, accounts receivable, and inventory. Current liabilities include accounts payable and short term debt. The net difference determines how much external finance is required.
| Component | Typical Holding | Notes |
|---|---|---|
| Whole gram / chana dal inventory | 15–45 days | Largest current asset; price-sensitive |
| Work-in-progress | 1–3 days | Short for continuous process plants |
| Finished besan inventory | 7–25 days | Higher for branded retail, lower for bulk |
| Packaging material stock | 15–30 days | BOPP pouches, cartons, labels |
| Trade receivables | 7–45 days | 7–10 for nearby wholesalers; 30–45 for distributors |
| Cash & bank balance | Operational minimum | Petty cash, bank operating balance |
| Less: Supplier credit | 7–20 days | Offsets raw material inventory |
| Less: Outstanding expenses | 5–15 days | Wages, power, admin payable |
| Less: Statutory dues | As applicable | GST, TDS payable |
Accounts receivable creates a cash-flow gap in besan manufacturing due to credit terms offered to buyers. Supplier credit can help manage cash flow in besan production by aligning payment with sales collections, partially offsetting the receivable burden.
For whole gram and chana dal inventory, price spikes directly increase the rupee value of this current asset – a 15% rise in chana dal prices means proportionally higher funds blocked in raw material stock. For finished goods, branded retail models with multiple SKUs (500 g, 1 kg, fine besan packs) require substantially higher inventory than bulk supply models.
Each bank applies its own norms and risk appetite when assessing these components. The desirable current ratio for food processing manufacturing is typically above 1.25–1.33.
Working Capital Requirements for 5 TPD, 10 TPD and 20 TPD Besan Plants
This section presents the core practical analysis with clearly marked illustrative assumptions. All figures are indicative and intended to demonstrate the calculation methodology. Exact figures will vary based on actual procurement prices, sales realisation, operating efficiency, and market conditions.
Common assumptions (illustrative):
- Operating days: 300 per year
- Besan yield from chana dal: ~72%
- Raw material cost: ₹80/kg (bulk chana dal)
- Conversion + packaging cost: ₹12/kg
- Average besan selling price: ₹100/kg (wholesale)
- Raw material holding: 25 days
- Finished goods holding: 15 days
- Receivable days: 20 days
- Supplier credit: 15 days
- Outstanding expenses: 10 days
| Parameter | 5 TPD | 10 TPD | 20 TPD |
|---|---|---|---|
| Annual production (MT) | 1,500 | 3,000 | 6,000 |
| Annual turnover (₹ Cr) | 15.00 | 30.00 | 60.00 |
| Annual raw material cost (₹ Cr) | 11.67 | 23.33 | 46.67 |
| RM inventory (25 days, ₹ Lakh) | 79.9 | 159.8 | 319.6 |
| Finished goods (15 days, ₹ Lakh) | 56.3 | 112.5 | 225.0 |
| Receivables (20 days, ₹ Lakh) | 82.2 | 164.4 | 328.8 |
| Other CA (packaging, cash) | 15.0 | 25.0 | 45.0 |
| Total Current Assets (₹ Lakh) | 233.4 | 461.7 | 918.4 |
| Supplier credit (15 days RM) | 47.9 | 95.9 | 191.8 |
| Outstanding expenses | 18.0 | 32.0 | 58.0 |
| Statutory dues | 5.0 | 8.0 | 14.0 |
| Total Current Liabilities (₹ Lakh) | 70.9 | 135.9 | 263.8 |
| Net Working Capital (₹ Lakh) | 162.5 | 325.8 | 654.6 |
| WC as % of turnover | 10.8% | 10.9% | 10.9% |
| Promoter margin (25%) | 40.6 | 81.5 | 163.7 |
| Indicative bank CC (₹ Lakh) | 121.9 | 244.3 | 490.9 |
Working capital intensity (as a percentage of turnover) tends to fall slightly as capacity increases, due to economies of scale and stronger bargaining power with buyers and suppliers. These illustrations assume moderate inventory and receivable norms; plants with longer chana dal holding or branded retail distribution can see working capital requirements rise to 15–25% of turnover.
For detailed financial projections and capacity-level analysis, refer to besan project cost and means of finance and besan plant capacity planning on Project Report Bank.
How to Calculate the Working Capital Cycle
The operating cycle for a besan plant measures the total time from cash outflow for buying whole gram or chana dal to cash inflow from sale of finished besan. The cash conversion cycle is an important indicator of liquidity in manufacturing operations.
Formulas:
- Raw Material Holding Period = (Avg RM Inventory ÷ Annual RM Consumption) × 365
- Processing Period = (Avg WIP ÷ Annual COGM) × 365
- Finished Goods Holding Period = (Avg FG Inventory ÷ Annual COGS) × 365
- Receivables Collection Period = (Avg Receivables ÷ Annual Credit Sales) × 365
- Payables Deferral Period = (Avg Trade Payables ÷ Annual Credit Purchases) × 365
Gross Operating Cycle = RM Holding + Processing + FG Holding + Receivables
Net Operating Cycle (Cash Conversion Cycle) = Gross Operating Cycle − Payables Deferral
Illustrative example (10 TPD besan plant):
| Component | Days |
|---|---|
| RM holding | 25 |
| Processing (WIP) | 2 |
| Finished goods holding | 15 |
| Receivables collection | 20 |
| Gross operating cycle | 62 |
| Less: Payables deferral | 15 |
| Net operating cycle | 47 days |
If the same plant reduces receivable days from 20 to 12 (through tighter credit control), the net cycle drops to 39 days – reducing cash credit utilisation by approximately ₹20 lakh and saving roughly ₹2 lakh per year in interest.
Key levers for improvement include faster collections, optimised chana dal procurement timing, tighter finished goods norms, and realistic supplier credit negotiation. For a detailed analysis of besan manufacturing recovery, yield and process losses, the assumptions behind processing period can be refined further.
Cash Credit Facility for Besan Manufacturing Plants
A cash credit account is the most common bank working capital facility for Indian manufacturing MSMEs, including besan mill plants and flour mill units. Working capital helps fund operations and meet short term obligations on a revolving basis.
Key distinctions:
- Cash Credit vs Overdraft: CC is backed primarily by hypothecation of stock and book debts; OD is usually backed by deposits or other securities.
- Term loan vs Working Capital Finance: A term loan finances fixed assets (land, building, besan mill machinery list items). Cash credit finances day-to-day operations – raw materials, expenses, and the gap between cash outflows and customer collections.
Interest is charged only on the utilised amount, not the full sanctioned limit. The bank recalculates drawing power monthly based on stock and debtor statements submitted by the borrower. Annual renewal and review of limits is standard practice.
Security typically includes primary hypothecation of stocks and book debts, with possible collateral such as equitable mortgage of property or personal guarantees. Interest rates, margin requirements, and security cover vary between public sector banks, private banks, and cooperative banks, subject to RBI’s broad prudential norms but bank-specific credit policies.
Operational compliance includes stock audit for larger limits, insurance for inventory and plant, regular submission of CMA data for renewals, GST returns, and audited financial statements.
Bank Methods for Assessing Working Capital
Indian banks use multiple assessment approaches depending on borrower size, turnover, risk profile, and internal credit policy. RBI issues broad guidelines, but detailed norms differ by bank and evolve over time.
A. Turnover Method: Often used for smaller MSMEs with working capital limits up to ₹5 crore. The common practice treats approximately 25% of projected annual turnover as assessed working capital, with about 5% as borrower’s own funds and 20% as bank finance. These are indicative norms, not fixed regulatory mandates applicable to every borrower.
B. Operating Cycle Method: Calculates inventory and receivable levels from cycle days, derives total current assets, subtracts trade creditors and other spontaneous liabilities to find the working capital gap, and applies margin to determine the bank-financed portion.
C. Projected Balance Sheet Method: Banks project the full balance sheet for 1–3 years, estimate current assets and current liabilities, and determine the net working capital and the amount to be funded via cash credit.
D. MPBF Approach: The Maximum Permissible Bank Finance concept originated from the Tandon Committee norms, where Method II required the borrower to maintain a current ratio of approximately 1.33:1 (promoter contributing 25% of total current assets). Most banks today use internal risk-based models and no longer strictly follow the classic MPBF formula, though the underlying principles remain influential.
E. Cash Budget Method: Particularly useful for seasonal and agro-based industries like besan manufacturing, where chickpeas are seasonal crops whose prices fluctuate based on harvest cycles. Banks may prepare a month-wise cash inflow and outflow budget for sanctioning limits. Understanding how banks analyse CMA data can help entrepreneurs prepare stronger proposals.
Banks require a Debt Service Coverage Ratio (DSCR) of at least 1.25 for loan approval – this applies to both term loans and overall project appraisal. A company needs a DSCR of at least 1.25 to demonstrate adequate repayment capacity.
CMA Data for Besan Plant Cash Credit Loans
CMA data (Credit Monitoring Arrangement data) is a structured financial statement package widely used by Indian banks for assessing working capital and term loan proposals. CMA data is mandatory for loans above ₹10 lakh in most banks.
Key statements in CMA data:
- Historical financials for 2–3 years (for existing units)
- Projected Profit & Loss account, balance sheet, and cash flow for 5 years
- Working capital assessment and bank borrowing levels
- Fund flow statement and key ratios (current ratio, DSCR, inventory and debtor days)
Financial projections should cover 5 years for bank loan applications and must align production capacity, chana dal consumption, recovery and yield, selling prices, and operating expenses with realistic capacity utilisation assumptions.
Sample CMA-style working capital assessment (Year 1, illustrative – 10 TPD plant):
| Current Assets | ₹ Lakh | Current Liabilities | ₹ Lakh |
|---|---|---|---|
| RM inventory | 160 | Trade creditors | 96 |
| WIP | 12 | Expenses payable | 32 |
| Finished goods | 113 | Statutory dues | 8 |
| Packing & stores | 15 | ||
| Receivables | 164 | ||
| Cash & bank | 10 | ||
| Total CA | 474 | Total CL | 136 |
| Net WC | 338 | ||
| Bank CC | 254 | ||
| Promoter margin | 84 |
CMA projections are prepared or reviewed by a Chartered Accountant using reasonable assumptions, but they are not a guarantee of actual future performance. For detailed guidance, refer to besan plant financial projections, CMA data and DSCR analysis on Project Report Bank.
Drawing Power Calculation for Besan Manufacturing Units
Drawing power is recalculated by the bank (usually monthly) based on stock and debtor statements. A borrower cannot draw the entire sanctioned cash credit limit if the drawing power is lower.
Step-by-step illustration (₹ Lakh):
| Item | Gross Value | Margin | Eligible for DP |
|---|---|---|---|
| Eligible RM stock (chana dal) | 100.00 | 25% | 75.00 |
| Eligible finished besan | 60.00 | 25% | 45.00 |
| Eligible packing material | 10.00 | 25% | 7.50 |
| Total eligible stock | 170.00 | 127.50 | |
| Eligible receivables (<90 days) | 80.00 | 30% | 56.00 |
| Less: Ineligible receivables (>90 days) | 15.00 | – | 0.00 |
| Total DP | 183.50 | ||
| Sanctioned CC limit | 150.00 | ||
| Available DP (lower of DP or limit) | 150.00 |
Margin percentages are illustrative – actual margins depend on individual bank policies and sanction terms.
Important distinction:
- Sanctioned Limit: maximum facility approved by the bank
- Drawing Power: maximum utilisation allowed based on current stocks and receivables
- Actual Utilisation: what the borrower has actually drawn
If drawing power falls below the outstanding balance (due to stock depletion or receivables ageing), the account becomes irregular and may trigger cheque returns even when the sanctioned limit appears higher.
Impact of Chana Dal Prices on Working Capital
Chana dal typically forms 65–75% of total production cost for a besan plant, making raw material price movements a major driver of working capital requirements. Seasonal price fluctuations in raw materials can significantly impact working capital requirements.
The all-India average retail price of gram dal is approximately ₹92.81/kg as of recent data. Bulk procurement costs may be somewhat lower.
Sensitivity analysis (30 days RM stock, 10 TPD plant, illustrative):
| Scenario | RM Price/kg | 30-Day Inventory Value (₹ Lakh) | Extra WC Needed (₹ Lakh) |
|---|---|---|---|
| Base case | ₹80 | 192.0 | – |
| +10% | ₹88 | 211.2 | 19.2 |
| +15% | ₹92 | 220.8 | 28.8 |
| +20% | ₹96 | 230.4 | 38.4 |
If the sanctioned limit is fixed and raw material prices rise sharply, the same physical stock uses a larger portion of the cash credit, leaving less headroom for receivables and other current assets.
Practical strategies include optimizing chana procurement during peak seasons to reduce costs, spreading purchases rather than concentrating all buying in one window, using shorter holding periods when prices are elevated, and reviewing selling prices frequently. Detailed chana dal procurement and inventory planning guidance is available on Project Report Bank.
Working Capital Requirements Under Different Sales Models
The sales model significantly alters inventory, receivables, and packaging cost patterns, changing working capital intensity.
- Bulk B2B supply: Loose besan in 25–50 kg bags. Lower packaging cost, quicker payment cycles (7–15 days), and lower finished goods holding. Lowest working capital intensity.
- Wholesale distributor model: Branded or semi-branded packs through regional distributors. Higher packaging inventory, 15–30 days distributor credit, and slightly higher finished goods stock norms.
- Branded retail besan: Multiple SKUs (500 g, 1 kg, 5 kg fine besan packs). Higher investment in finished goods, slower movement in modern trade, receivable periods of 30–60 days. Highest working capital intensity.
- Institutional supply / private-label manufacturing: Predictable batch orders, 30–45 day payment terms, separate stocks for contract specifications.
For a deeper comparison of how these models affect output capacity planning and margins, refer to the analysis on bulk supply versus branded retail besan.
Working Capital Margin Money and Promoter Contribution
Margin money for working capital is the portion of total current assets that must be funded from the promoter’s own long-term sources – equity, unsecured loans, or internal accruals – not from bank cash credit or other short term investments or borrowings.
Example: If total working capital requirement is ₹200 lakh and the bank requires 25% margin, the promoter must invest ₹50 lakh. The bank may finance ₹150 lakh through cash credit.
This is distinct from term-loan margin money (a percentage of project cost for fixed assets like land, building, and machinery). Both are considered separately in a bankable business plan.
Banks insist on promoter contribution to ensure adequate risk sharing, prevent inefficient use of borrowed funds, maintain a reasonable current ratio, and keep overall gearing within acceptable limits. Actual margin requirements differ between banks and depend on credit rating, security, external guidelines, and internal lending policies. Promoters should plan conservatively – increasing current assets through internal accruals is the most sustainable path for existing besan plants seeking enhanced limits.
Documents Required for Cash Credit Finance
Documentation varies by bank, loan amount, and borrower profile, but certain categories are common across most working capital loan proposals for besan plant and food processing units.
Promoter & business documents: KYC (PAN, Aadhaar), business constitution documents, Udyam/MSME registration, GST registration, FSSAI licence.
Project-related documents: Detailed project report including working capital assessment, CMA data in bank-acceptable format, a machinery list with quotations for besan mill plant equipment, land/building documents. A bank ready project report includes scheme-specific annexures and formats as required by the lending bank. For a comprehensive besan mill project report framework, Project Report Bank provides customised documentation.
Financial documents: Last 2–3 years audited financial statements (existing units), latest provisional financials, ITR of promoters, bank statements for 6–12 months.
Working capital-specific: Projected balance sheet, P&L and cash flow statements, stock statements and debtor ageing, details of existing limits and securities, net worth statements.
Financial projections include P&L, balance sheet, and cash flow for 5 years as standard practice for bank loan applications.
Common Mistakes in Besan Working Capital Assessment
Underestimating working capital is one of the most frequent causes of post-sanction cash stress in new besan mill and flour mill projects.
Inventory and assumption errors:
- Ignoring the need to hold seasonal chana dal stocks for 30–60 days at harvest prices
- Under-budgeting finished goods inventory for branded packs with multiple SKUs
- Assuming unrealistic supplier credit (60–90 days when actual practice is 10–20 days)
- Projecting very low debtor days despite 30–45 day market reality
Financial modelling issues:
- Using inconsistent capacity utilisation assumptions
- Not linking raw material consumption logically with production volume and yield
- Not providing for price fluctuations, wastage, and process losses
- Showing high profits but negative cash flow due to heavy stock build-up without adequate CC limit – confusing profits with cash flow is a critical planning error
Operational misperceptions:
- Treating the sanctioned cash credit as automatically available cash without understanding monthly drawing power restrictions
- Not planning promoter margin funds separately, assuming the bank will finance 100% of working capital
- Mismatched figures between projected balance sheet, P&L, and cash flows in the DPR
Strategies to Reduce Working Capital Requirements
Effective working capital management involves tight inventory control and prompt receivable collections. Learning about operational efficiency can enhance profitability in besan production significantly.
Inventory optimisation: Use realistic but tight norms for raw material and finished goods days. Just-in-Time (JIT) production can minimize inventory costs in besan manufacturing, though this must be balanced against supply chain reliability.
Procurement strategies: Spread purchases rather than buying all chana dal in one short window. Use pre-agreed pricing with trusted suppliers where possible.
Receivables control: Document credit terms clearly with distributors and customers. Offer small discounts for faster payment. Limit further supplies to overdue debtors until dues are cleared.
Internal processes: Better demand forecasting, weekly monitoring of stock and debtor levels against bank norms, and basic MIS reports to track working capital cycle components.
Periodic reassessment: Seek timely enhancement of cash credit limits when turnover grows, backed by updated CMA data and DPR showing justified working capital expansion.
Role of a Chartered Accountant in Working Capital Finance
In my experience advising besan manufacturers and other food processing entrepreneurs over the past two decades, I have observed that the difference between a successful bank finance proposal and a rejected one frequently comes down to the quality of financial preparation rather than the project itself.
Project finance advisory is vital for MSMEs and entrepreneurs seeking capital for new ventures. Customised financial modelling supports project financing decisions and investor presentations.
At Project Report Bank, we support besan manufacturers with:
- Preparing detailed, bankable DPRs covering both term loan and working capital requirements
- Designing financial projections that realistically connect capacity, raw material consumption, selling prices, and margins
- Compiling historical and projected financials for CMA data, ensuring internal consistency
- Estimating optimum working capital requirements and appropriate cash credit limits
- Planning promoter margin and overall means of finance
- Clarifying assumptions to bankers and supporting limit renewals and enhancement proposals
Professional Bank Finance DPR and Loan Proposal Assistance for besan plants and other manufacturing projects at Project Report Bank typically starts around ₹25,000, with fees varying by assignment size and complexity. Readers seeking a customised consultation are welcome to reach out via WhatsApp using the contact details available on ProjectReportBank.com. No bank sanction is guaranteed – the objective is to prepare a professionally structured, defensible proposal.
Frequently Asked Questions
How much working capital is required for a 5 TPD and 10 TPD besan manufacturing plant?
Under illustrative assumptions (300 operating days, ₹80/kg chana dal, ₹100/kg besan selling price), a 5 TPD plant may require net working capital of approximately ₹1.6–2.5 crore, while a 10 TPD plant may need ₹3.2–5.0 crore. Working capital as a percentage of turnover typically ranges between 10–25% depending on inventory and receivable norms. A typical project cost for a besan mill ranges from ₹5–40 lakh for micro and small-scale units, but medium and larger plants invest substantially more.
Can a newly established besan mill get a cash credit limit along with its term loan?
Yes, banks routinely sanction both term loan and cash credit simultaneously for new manufacturing projects. The CC limit for a new unit is typically based on projected turnover and estimated working capital from the DPR and CMA data. However, initial drawing power may be limited until the plant commences operations and builds inventory and receivables.
What is the typical working capital cycle for a besan plant?
For a besan plant supplying to wholesalers and retailers, the net operating cycle typically ranges between 40–80 days. Bulk B2B supply models can achieve shorter cycles (35–50 days), while branded retail models with modern trade receivables may extend to 70–90 days.
How do seasonal chana prices affect existing cash credit limits?
When chana dal prices spike, the same physical stock quantity absorbs a larger portion of the sanctioned CC limit. If the limit is not enhanced, headroom for financing receivables and other current assets shrinks. Banks may agree to temporary enhancements during procurement season, supported by revised stock statements and updated projections. Besan manufacturing qualifies for a 15–35% capital subsidy under PMEGP for eligible micro-enterprises, which can partially offset the initial capital burden though not the ongoing working capital challenge.
Is CMA data compulsory for every cash credit application?
CMA data is mandatory for loans above ₹10 lakh in most banks. For smaller limits, banks may use simplified assessment formats. For medium and large besan plants, a properly prepared CMA data package with consistent projections significantly strengthens the company’s ability to secure adequate working capital finance. A besan mill typically requires 4–8 workers for a 500 kg/day unit, and even at this scale, professional financial documentation improves sanction prospects. A 500 kg/day besan plant typically has a net margin of 8–15%, making adequate working capital planning essential to convert those margins into actual liquidity.
Conclusion
Successful besan manufacturing depends not only on plant and machinery but equally on correctly assessed and well-managed working capital. A besan plant that runs short of liquid assets for inventory, receivables, and daily expenses will struggle operationally – regardless of its production capacity or market demand. Negative working capital, if persistent, signals deeper financial stress that banks and investors will scrutinise.
Accurate estimation of current assets, current liabilities, and the working capital gap – supported by sound CMA data, realistic projections, and a clear business plan – is essential for sustainable cash flow and timely bank repayments. Whether a plant operates at 5, 10, or 20 TPD, the cash credit limit must be aligned with the operating cycle and sales model, and should be reviewed as turnover and raw material prices evolve.
From my practice, the single most valuable step a besan manufacturer can take before approaching a bank is to invest time in understanding the numbers – not just the projected profits, but the money required to keep operations running every day. Prudent financial planning, transparent communication with bankers, and customised professional advisory make the difference between a project that secures adequate finance and one that remains perpetually under-funded.
CA Manish Gugliya FCA, DISA (ICAI) Practising Chartered Accountant since 2006 Manish Gugliya & Company, Ratlam, Madhya Pradesh