Vol. 12, Issue 6 (2023)

Author(s):
Nikhil K, Jagrati B Deshmanya, Suresh K, Vijaychandra Reddy S and Manojkumar G

Abstract:
The present study was conducted to examine the financial feasibility of cotton ginning mills in Raichur and Yadgir districts. Multistage random sampling technique was used for the selection of sample respondents. From each district, 15 cotton and pressing units are selected. Further, they were categorized into small and large based on their installed capacity and number of the ginning machine. The findings of the study revealed that the average capital investment made for the establishment of cotton ginning mill was Rs.3642.94 lakhs and Rs.3522.29 lakhs in Raichur and Yadgir districts. In case of Raichur district, cost incurred per cotton ginning and pressing unit was Rs. 3642.97 lakhs out of which variable cost and fixed cost constitute 89.97 per cent and 10.09 per cent respectively. Whereas, Net Present Value (NPV), Internal Rate of Return (IRR), payback period years and Benefit: Cost ratio were 955.61 lakhs 43.75 %, 2.58, 3.45 respectively. However, in case of Yadgir district, cost incurred per cotton ginning mills was Rs. 3522.29 lakhs out of which variable cost and fixed cost constitute 89.6 per cent and 10.4 per cent respectively. The NPV was 827.44 lakhs, IRR payback period, and B: C ratio were 39 %, 3 years, 3.17 respectively. It can be concluded that cotton ginning and pressing units in Raichur and Yadgir districts were financially feasible and economically viable, wherein units of Raichur were more economically efficient compared to the Yadgir district.