Ground & Processed Spices
Uploaded on : February 2019
Introduction
Spices are an integral part of Indian food, with consumption not only in household, restaurants and other eateries but also in food processing industry such as pickles, sauces, instant curry powers, ready to eat food preparation and so on. Hence, a spice grinding unit is recommended.
Objectives
The objective of the profiles is to encourage and assist prospective entrepreneurs in MSME sector in and guiding making them aware of the opportunities of this sector. It is also being developed by the Directorate of the Food Processing Industries, Government of West Bengal to help entrepreneurs with knowledge about raw materials availability, knowledge of market, source of technology and plant and machinery suppliers. M/s ITV Agro & Food Technologies Pvt. Ltd., New Delhi has helped in developing the project profile.
Raw Material Availability
The major raw material shall be un-ground turmeric, black pepper and chillies. Considering 5 % process loss, the total quantity required would be 63 tonnes per year for the proposed capacity of 60 tonnes. Spices are widely grown in Meghalaya, Assam and Kerala . Total production of spices in the country is estimated to be 5387092 MT / year out of which production in West Bengal is estimated to be 211128 MT/ year. Hence, availability of raw material round the year will not be a problem. The project would require printed polythene bags of different sizes which would be available locally.
Market Opportunities
Spices are essential ingredients imparting taste and flavour to food preparations. Besides their everyday use in household, they are also used in large quantities in restaurants, hotels, catering services, food processing industries, and road side eateries and so on. Spices are fast moving consumable items and have large potential. There has to be a wide-spread network of dealers or retailers backed up by advertisements in local media.
Total export of spices from the country during the year 2009-10, 2010-11 and 2011-12 is estimated to be Rs.55650 lacs, Rs.684070/- lacs and Rs.978342/- lacs respectively.
Project Description
Product & Its Uses
Many spices are used all over the country and the unit can go on adding new products. But this note considers only some of them like turmeric powder, black pepper powder and chilli powder. This activity can be started in several states of the country where as this note considers West Bengal as the preferred location.
Capacity
The capacity of the unit is to process 60 MT / year of various spices.
Manufacturing Process
The manufacturing process is very well established and does not involve technicalities. Un-ground spice are cleaned manually to remove impurities like mud stones and are then washed in water. After drying them in sunlight, they are graded and grounded with the help of grinding machine to convert them in powder form. Disintegrator is used in case of solid material like turmeric to obtain uniform mesh size. Spices in powder form are then weighed as per the contemplated packing quantities and packed in printed polythene bags and then these bags are sealed on automatic sealing machine.
Project Components & Cost
Land & Building
Land measuring around 150 sq. meters, is adequate with built –up area of about 75 sq. meters, consisting of main production area, packing room and godown. The total cost is expected to be Rs.4.88 lacs.
Plant & Machinery
The suggested production capacity is 60 tonnes per year for which the following equipment costing about Rs.15.00 lacs are envisaged.
ITEM |
QTY. |
Disintegrator |
1 |
Spice Grinding Machine |
1 |
Plastic sealing Machine |
1 |
Weighing Scales |
2 |
Miscellaneous Assets
A provision of Rs.1,00,000/- is made to take care of other support items like picking tables, storage racks etc.
Utilities
Power requirement would be 10HP whereas water is required in small quantity to clean ungrounded spices and for potable purposes. The total cost of utilities is estimated at Rs.1.70 lacs / year.
Prel. & Pre Operative Expenses
A lump sum provision of Rs.50000 is made to take care of expenses like establishment start-up.
Working Capital Assessment
The total requirement of working capital in the first year at 60 % capacity utilization would be Rs.12.62 lacs comprising bank loan of Rs.8.97 lacs and margin amount of Rs.3.65 lacs as worked out hereunder:
PARTICULARS |
PERIOD |
MARGIN |
TOTAL |
BANK |
PROMOTERS |
Stock of raw and packing material |
1 month |
30% |
4.00 |
2.80 |
1.20 |
Stock of Finished Goods |
½ month |
25% |
2.70 |
2.03 |
0.67 |
Receivable |
1 month |
30% |
5.92 |
4.14 |
1.78 |
Total |
|
|
12.62 |
8.97 |
3.65 |
Project Cost & Means of Finance
ITEM |
AMOUNT ( RS.IN LACS) |
Land and Building |
5.63 |
Plant and Machinery |
15.0 |
Miscellaneous Assets |
1.00 |
P & P Expenses |
0.50 |
Contingencies @ 10% on building and plant and machinery |
1.66 |
Working capital margin |
3.65 |
Total |
27.44 |
Means of Finance |
|
Promoters' contribution |
10.98 |
Term loan from Bank / FI |
16.46 |
Total |
27.44 |
Debt Equity Ratio |
1.5:1 |
Promoter's contribution |
40% |
Financial assistance in the form of grant is available from the Ministry of Food Processing Industries, Govt. of India, towards expenditure on technical civil works and plant and machinery for eligible projects subject to certain terms and conditions.
Projected Profitability
Production Capacity
The rated production capacity of the plant is 60 tons per year whereas actual capacity utilization is expected to be 60% and 75% during 1st year and 2nd year respectively
Sales Revenue at 100%
PRODUCT |
QTY (TONS) |
SELLING PRICE (RS. / TON) |
SALES (RS. IN LACS) |
Turmeric Powder |
35 |
1,50,000 |
52.50 |
Black Pepper powder |
10 |
5,50,000 |
55.00 |
Chille powder |
15 |
1,50,000 |
22.50 |
|
|
Total |
130.00 |
Raw Material Required At 100%
PRODUCT |
QTY (TONS) |
SELLING PRICE (RS. / TON) |
SALES (RS. IN LACS) |
Turmeric |
36.75 |
93,000 |
34.17 |
Black Pepper |
10.50 |
3,20,000 |
33.60 |
Chille |
15.75 |
90,000 |
14.17 |
|
Total |
|
81.94 |
Profitability Statement
S. NO. |
PARTICULARS |
1ST YEAR |
2ND YEAR |
A. |
Installed capacity |
60 Tons |
|
|
Capacity Utilisation |
60% |
75% |
|
Sales Realisation |
78.00 |
97.50 |
B. |
Cost of Production |
|
|
|
Raw Materials |
49.16 |
61.44 |
|
Packing Materials |
1.80 |
2.25 |
|
Utilities |
1.02 |
1.27 |
|
Salaries |
4.20 |
4.62 |
|
Stores and Spares |
0.60 |
0.75 |
|
Repairs and Maintenance |
0.60 |
0.75 |
|
Selling Expenses @ 10% |
7.13 |
8.94 |
|
Administrative Expenses |
0.60 |
0.75 |
|
Total |
65.11 |
80.82 |
C. |
Profit before Interest & Depreciation |
12.85 |
16.68 |
|
Interest on Term Loan |
1.97 |
1.97 |
|
Interest on Working Capital |
1.25 |
1.56 |
|
Depreciation |
2.10 |
1.94 |
|
Net Profit |
7.53 |
11.41 |
|
Income-tax @ 20% |
- |
1.14 |
|
Profit after tax |
7.53 |
10.27 |
|
Cash Accruals |
9.63 |
12.21 |
|
Repayment of Term Loan |
Nil |
4.00 |
Break Even Point Analysis
S. NO. |
PARTICULARS |
AMOUNT (RS. IN LACS) |
|
(A) |
Sales |
|
97.50 |
(B) |
Variable Costs |
|
|
|
Raw Material |
61.44 |
|
|
Packing Material |
2.25 |
|
|
Utilities (70%) |
0.88 |
|
|
Salaries (60%) |
1.61 |
|
|
Stores and Spares |
0.75 |
|
|
Selling and Distribution Exps (70%) |
7.15 |
|
|
Admn Expenses (50%) |
0.38 |
|
|
Interest on WC |
1.56 |
74.46 |
(C) |
Contribution (A) – (B) |
|
23.04 |
(D) |
Fixed Costs |
|
8.25 |
(E) |
Break Even Point |
|
36% |
Debt Service Coverage Ratio (DSCR)
PARTICULARS |
1 ST YEAR |
2 ND YEAR |
3 RD YEAR (Rs.in lacs) |
Cash Accruals |
9.63 |
12.21 |
14.65 |
Interest on TL |
1.97 |
1.87 |
1.49 |
Total (A) |
11.60 |
14.18 |
16.14 |
Interest on TL |
1.97 |
1.97 |
1.49 |
Repayment of TL |
- |
4.0 |
4.0 |
Total (B) |
1.97 |
5.97 |
5.49 |
DSCR (A)/(B) |
5.88 |
2.37 |
2.93 |
Average DSCR |
3.72 |
||
Internal Rate of Return (IRR)
Cost of the project is Rs. 27.44 lacs |
(Rs. in lacs) |
||
YEAR |
CASH ACCRUALS |
24% |
32% |
1 |
9.63 |
7.70 |
7.20 |
2 |
12.21 |
9.73 |
6.95 |
3 |
14.65 |
7.67 |
6.29 |
4 |
14.65 |
6.15 |
4.68 |
5 |
14.65 |
4.98 |
3.66 |
|
Total |
36.23 |
28.78 |
The IRR is around 32%.
Manpower Requirement
PARTICULARS |
NOS. |
MONTHLY SALARY (RS.) |
TOTAL MONTHLY SALARY (RS.) |
Supervisor |
1 |
8000 |
8000 |
Skilled Workers |
2 |
7500 |
15000 |
Semi-Skilled Workers |
2 |
6000 |
12000 |
|
|
Total |
35000 |
Assumptions
• The plant will work for 300 days in a year.
• The operating capacity is 60%, 75%, 90 % during 1st year , 2nd year and 3rd year respectively.
• The interest on term loan is taken at 12% per annum and on working capital it is 14% per annum.
• Price of raw material and selling price are taken at prevailing market rate.
Sources of Technology
CFTRI, Mysore, has successfully developed the technical know-how for the product. BIS has laid down quality standard. The compliance under FSSAI act is a must.
Plant & Machinery Suppliers
1. Avity Agrotech and Industries
No.490-491, c-1 Chandan Complex, G.I.D.C,
Makarpura , Vadodara – 390010 Gujarat
Ph. 0844 7570776
2. Yagnam Pulverier Private Limited
Plot no. R-869. Rabale M.I.D.C.,
Thane- Belapur Road,
Navi Mumbai – 400701, Maharashtra
Ph. 08447526964
3. Best Engineering Technologies
Plot. No. 69-A, No. 5-9-285/13,
Rajiv Gandhi Nagar, Industrial Estate,
Kukatpally, Hyderabad – 500037,
Ph. 08447523620
www.bestengineeringtechologies.com
Contact for more information
Information Manager
TIMEIS Project
E-mail: timeis@ficci.com
