Ground & Processed Spices

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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

www.lithtechindia.com

 

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