NEEM BASED PESTICIDE

CONTENTS

SECTION I PRODUCT CHARACTERISTICS

SECTION II PRODUCT APPLICATIONS

SECTION III INDIAN MANUFACTURERS

SECTION IV IMPORT/EXPORT LEVEL

SECTION V PRICE DETAILS

SECTION VI INDIAN DEMAND

SECTION VII BROAD OUTLINE OF MANUFACTURING PROCESS

SECTION VIII RAW MATERIAL REQUIREMENTS, UTILITY

AND AVAILABILITY

SECTION IX GLOBAL SCENARIO

SECTION X DISCUSSIONS ON ECONOMIC CAPACITY,

PROJECT COST AND PROFITABILITY PROJECTIONS

SECTION XI SWOT ANALYSIS

SECTION XII FACTORS INFLUENCING THE POSITION FOR

NEW INDUSTRY AND RECOMMENDATIONS

1
 SECTION - I

PRODUCT CHARACTERISTICS

1.1. General details

Neem pesticides are systemic and do not induce pest resurgence unlike other synthetic
insecticides.

While, every part of Neem tree has pesticidal applications, the important Neem based
product, that can be used for pesticide applications are the following

Neem oil
Azadirachtin (Active ingredient)

1.2. Neem oil :

General details

Appearance Non drying,bitter liquid.

Colour Greenish brown
Odour Garlic,repulsive
Refractive index at 40deg C 1.4617 to 1.4627
Specific gravity at 30deg C : 0.9087 to 0.9189
Iodine value 68 to 75.8
Saponification value 193 to 204
Unsaponification matter 0.8 to 2.4%

Composition

In composition, neem oil is much like other vegetable oils, composed primarily of
triglycerides of oleic, stearic, linoleic, and palmitic acids.

The neem seeds are reported to have 45% of oil content.

The neem seed kernel is rich in fatty acids, often up to 50 percent of the kernel's weight.

Neem seed oil is bitter with garlic/sulphur smell and contains vitamin E and other essential
amino acids.

2
The composition percentages vary from sample to sample depending on place and time of
collection of the seeds.

Fatty acids Percentage

Myristic acid 0.2 to 2.6
Palmitic acid 1.6 to 16.2

Stearic acid 14.4 to 24.1

Oleic acid 49.1 to 61.9

Linoleic acid 2.3 to 15.8

Arachidic acid 0.8 to 3.4

Other lower fatty acid 23

1.3. Azadirachtin (Active ingredient)

Molecular formula C35H44O16

Classification Triterpeniod
Molecular weight 720
Melting point 155 to 185 deg.C
Appearance Microcrystalline pale yellow coloured crystals
Moisture 50% moisture in fresh

10 to 15% moisture in semi dried fruit

9% in well dried fruit

3
 SECTION - II

PRODUCT APPLICATIONS

2.1. Neem oil

General details

Oil extracted from the seeds goes into soaps, waxes, and lubricants, as well as into fuels
for lighting and heating.

The solid residue left after the oil is removed from the kernel is employed as fertilizer and
soil conditioner.

Application sector

* Pesticide
* For soap making
* Refined neem oil for herbal medicine
* Refined neem oil for massage oil

Neem oil in the soap industry:

Generally, the crude oil is used to produce coarse laundry soaps. The non-edible oil gives
soap of unattractive brown colour, which retains its characteristic odour. This could be
rectified by a second boiling of the oil and then salting out of the soaps.

However, more expensive soaps are made by saponifying the crude oil and distilling the
resulting fatty acids before adding the lye. The resulting almost colourless and odourless
product is suitable for top-quality toilet and laundry soaps

4
Pesticide sector

Neem oil, extracted from whole seeds (with the hard shell in tact) by simple mechanical
crushing using country `ghani' is suitable as an insecticide.

Solvent extraction and expeller crushing damage the chemical structure of the bio-acitve
principles in neem oil, according to experts.

Neem products are efficient against 105 insect species belonging to ten orders namely
Orthoptera, Dictyoptera, Lepidoptera, Hemiptera, Diptera, Coleoptera, Hymenoptera,
Isoptera, Thysanoptera and Siphonaptera.

Refined neem oil for Herbal medicine/Massage oil

Neem oil is found to be a strong spermicide and it is without side effects.

The antibacterial activity of neem oil has been tested and is comparable with activities
that of Malkalguni oil, Darudi oil and Karantee oil.

Neem oil has proved as cheaper substitute for pre-operative antiseptic solutions.

Neem oil displays a stimulative, antiseptic and alternative effect when used for massage of
the body.

It is an active remedy against boils, ulcers resulting from chronic syphills.. It is remarkably
effective in infections of ring worms. It is used in skin disease such as scrofula, as a
liniment in the case of rheumatism, in arthritis, diabetis and also to lower blood pressure.

Cosmetics

Purified neem oil is used in nail polish and other cosmetics.

Lubricants

Neem oil is nondrying and it resists degradation better than most vegetable oils.

In rural India, it is commonly used to grease cart wheels. It could find many similar
lubrication applications in other locations, especially in village settings in the warmer parts
of the world where neem can be grown.

5
Birth control formulations

The Defence Institute of Physiology and Allied Sciences (DIPAS) has done research
studies on the birth control properties of neem oil isolates.

These studies conducted on rats, rabbits, monkeys as well as human volunteers reveal that
neem oil can be ideal birth control.

2.2. Azadirachtin

Azadirachtin technical is used for preparing ready to use formulations for agricultural,
textile, domestic, veterinary pest management.

6
 SECTION - III

INDIAN MANUFACTURERS

Neem oil is produced by a number of small and unorganised units and the important
manufacturers of Neem oil include the following.

* Aazadirachtin Pvt. Limited

Block 94 Sanjay Place,
Agra - 282 002
Product : Cold pressed Neem oil, neem cake, neem bio insecticide, azadirachtin, urea-
coating etc.

* A.P. Products
26, Madhu Estate,
P.B.Marg, Worli, Mumbai - 400 013
Product : Neem tree products like Neem oil, neem extracts

* Bangur Agro Tex Pvt. Ltd.

205, Saraswati, S. V. P. Road,
Borivli (W), Mumbai - 400 003
Product : Herbs, Neem Products like Neem Oil, Neem Cake, Neem Extract

* Cheminova Agro Tech

Gate No. 352, Mohida Turfe Shahada,
Nandurbar - 425 409
Product : Neem oil, neem oil cake, neem kernel oil, neem kernel cake etc.

* Disel & Auto Spares (India)

301 Shanti House,
Off C G Road, Ahmedabad - 380 009
Product : Neem oil

* Dr. Jains Forest Herbals Pvt. Ltd.

A-10 Raj Industrial Complex,
Unit No.A-10, 2nd Floor, Military Road Marol,
Andheri East, Mumbai - 400 059
Product : Neem oil

* D.M.R. International/Deluxe International

No.10, Kuya Street,
Sriperumbudur - 602 105
Phone: +(91)-(4111)-32709/32067/32518/32244
Fax: +(91)-(44)-5341022/5342211

Azadirachta Indica - Neem - cake

Azadirachta Indica - Neem - Leaves
Azadirachta Indica - Neem - Oil
Azadirachta Indica - Neem - Powder
7
* Gayathri Oil Mill
41/545, Kotha Pet,
Kurnool - 518 001
Product : Neem oil, neem cake

* J.D. Corporation
203 Yogeshwar, 135/139 Kazi Sayed Street,
Masjid Bunder, Mumbai - 400 003
Product : Neem oil,

* Lalitha Neem Pvt. Ltd.

PSK Road, Rajapalayam - 626 117
Products: Neem oil and Neem cakes

* Maruthi Sastha Associates

1020, 80 Feet Road, Ist Block,
Koramangala, Bangalore - 560 034
Products: Neem oil and Neem cake

* Nectar Biotech Limited

66 Karpagam Avenue, R A Puram,
Chennai - 600 028
Products: Neem Based products :Neem oil. Neem extracts neem cakes.

* Olympic Exporter
21, Muthamil Nagar, Adiyanuthu (P.O),
Dindigul - 624 003
Products: Neem oil and Neem cake.

* Palakshree Packaging Pvt.Ltd

B-304, Ganesh Plaza Nr Navrangpura Bus Stop,
Ahmedabad - 380 009
Products: Neem oil and Herbal Products

* Pioneer Enterprise (Mumbai)

101, Raudat Tahera Street,
Mumbai - 400 003
Phone: +(91)-(22)- 23472534
Fax: +(91)-(22)- 23472325
Products: Natural products for Organic Farming like Herbal Extracts, Botanical Herbs,
Natural Colours, Azadirachtin, Allium Sativum, Neem products.

* Plasma Power Private Limited

New B23, "B" Block
2nd Avenue, Anna Nagar
Chennai - 600 102
Products: High purity Neem oil, neem cake

8
* P.S.K.Shanmugarajan & Sons (P) Ltd.
21/63-C, West Colony,
Komarapalayam - 638 183
Products: Neem oil, neem herbal extract for termite control,

* Quest Marketing Company

G-2, Sector-C, Awho Colony,
Hyderabad - 500 016
Products: Neem Products like Neem oil, Neem cake, Neem Kernels, Neem Leaf Powder.

* Sahayata
166, Jodhpur Park,
Kolkata - 700 068,
Products: All types of Neem Products like Neem based herbal toilet soap, Pure Neem Oil.

* Shri Ambica Oil Cake Industries

Khatraj Chokdi, Mahemadabad, Kheda - 387 130
Phone: +(91)-(2694)-44661
Fax: +(91)-(2694)-44860
Products: Neem (azadirachta indica), biopesticides of neem

* T.Stanes & Company Limited

8/23-24, Race Course Road
Coimbatore-641 018
Phone : 0422-211514, 213515 to 213518
Fax : 091-0422-217432
Product : Neem based pesticide - Nimbicidine (Azadirachtin)

* Viprama Industries
A-30 M.I.D.C. Dasarkhed,
Malkapur - 443 101
Products: Neem Oil, Neem Cake, Neemseed Powder Etc.

* Vinamra Oils & Herbs

41, Anupam Nagar Extn.,
Gwalior - 474 003,
Products: Neem Oil,

* Welcome Trading Corporation

153, Portugese Church Street,
Chennai - 600 001
Products: Neem oil and neem cake

9
 SECTION IV

IMPORT/EXPORT LEVEL

4.1. Imports Nil

4.2. Present exports level of Neem oil Around 260 tonnes per annum

4.2.1. Countrywise exports of Neem oil

Period: April 2001 to March 2002

Country Quantity in kg

Australia 9943
Austria 1000
Baharain IS 1015
Brazil 20990
Canada 8061
Chinese Taipei 2000
China P RP 2010
Colombia 100
Denmark 2648
Egypt A RP 812
Fiji IS 90
France 980
German F Rep 2720
Ghana 300
Greece 800
Israel 300
Italy 3700
Japan 15297
Korea RP 4082
Malaysia 18108
Mexico 8780
Netherland 2761
Philippines 1000
Sierra Leone 100
Singapore 5690
South Africa 5928
Spain 26040
Sri Lanka 4075
Switzerland 900
Thailand 985

10
UAE 865
UK 2892
USA 102575
Zimbabwe 2320

Sample of Export Details of Neem Oil from Chennai port

Period 2002

Name of the exporters Country Quantity Date Port

Plasma Power Pvt.Ltd. Vancouver 600 Ltr Jan 2002 Chennai

M/S.Commercial Services Singapore 190 Kgs Jan 2002 Chennai
Afsan Exports Singapore 90 Kgs Jan 2002 Chennai
Plasma Power Pvt.Ltd. Los Angeles 1000 Ltr Feb 2002 Chennai
Plasma Power Pvt.Ltd. Pusan 1000 Kgs Feb 2002 Chennai
Southern Petrochemical Ind. Stockholm 6000 Ltr Feb 2002 Chennai
Plasma Power Pvt.Ltd. Vancouver 1000 Ltr Feb 2002 Chennai
Plasma Power Pvt.Ltd. Kawaihae 600 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Chicago 1040.88 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Port Tampa 832.70 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Livorno 1200.00 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Kahoma City 1000 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Chicago 1100 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Chicago 2000 Ltr Mar 2002 Chennai
Plasma Power Pvt.Ltd. Jakarta 400 Ltr Mar 2002 Chennai
E.I.D. Parry Marseille 950 Kgs Mar 2002 Chennai
( India ) Ltd.
Plasma Power Pvt.Ltd., Chicago 30.00 Ltr April 2002 Chennai
Plasma Power Pvt.Ltd. San Diego 600.00 Ltr May 2002 Chennai
Plasma Power Pvt.Ltd. Chicago 1600.00 Ltr May 2002 Chennai
Plasma Power. Los Angeles 2000.00 Ltr May 2002 Chennai
Plasma Power Oklahoma City 1000.00 Ltr May 2002 Chennai
Plasma Power Los AngeleS 2498.10 Ltr May 2002 Chennai
E.I.D. Parry Avivil Tel 5.00 Ltr May 2002 Chennai
(India )
Plasma Power London 25 Ltr May 2002 Chennai
Plasma Power London 25 Ltr May 2002 Chennai
E.I.D. Parry ( NICE 420 Kgs May 2002 Chennai
Plasma Power Mexico City 1600 Ltr May 2002 Chennai
K. Sivaram Seoul 50 Kgs May 2002 Chennai
Southern Manila 800 Lts May 2002 Chennai

11
4.2.2. Countrywise exports of Neem extracts

Period April 2001 to March 2002

Country Qunatity in Kgs

Austria 50
Japan 763
Kenya 5000
Malaysia 90
Mauritious 530
Netherland 1000
Spain 200
Sweden 6000
U Arab Emts 300
UK 525
USA 31503
Zimbabwe 2208
48169

4.2.3. Sample of individual exports of Neem based pesticide

Period 2002

Name of the Exporters Quantity in Value in Rs. Country Date Port

tonnes
E.I.D.Parry (I) Ltd., 0.400 148200 Kobe 21.06.2002 to Chennai
10.07.2002

12
 SECTION - V

PRICE DETAILS

Price of Neem extracts Rs.370 per kg

Price of Neem pesticide formulation Rs.460 per kg

Taxes and duties Extra as applicable

13
 SECTION -VI

INDIAN DEMAND

Indian Azadirachtin potential

Under the optimistic assumption of an azadirachtin content of 5g per kg of dried

kernels,there is already in existence reservoir of about 150 tonnes of azadirachtin per
year in India.This quantity can be tapped for commercial exploitation.

Export opportunities

There has been a positive feedback from the United States and Europe for Neem
pesticides. However, the registration process for pesticides is highly complicated in
these markets. It takes five to six years for a new product to be evaluated and registered
for field use, besides costing millions of rupees. This is the primary reason why the
expected export turnover has not materialised.

In the US, Neem pesticides are permitted on certain greenhouse and ornamental crops
and tests are continuing with other crops. The American market is monopolised by a
single company Thermal Trilogy which has joint venture partner in India. A few more
Indian companies are likely to get their products registered soon. By 1999-2000, Neem
pesticides are likely to have a significant market in the US and Europe. Following the US
example, countries in Europe, the Far East and Australia are also expected to approve
registration.

The marketing problems were not anticipated by a number of units in India which started
producing Azadirachtin powder as a technical grade pesticide during the last two years.
Currently, a gram of pure Azadirachtin is valued at $1 in the international market. The
export turnover cannot be significant unless the market outlets are developed to facilitate
greater use of the products in the US. It would, therefore, be wise to concentrate on the
Indian market by making CIB-approved formulations.

Marketing problem

In the case of Neem, there are the problems of aflatoxin and lead contamination. The
Neem seed in India is collected during the rainy season and processed in an unhygenic
manner, which can result in fungal growth and aflatoxin production. Fruit collected on
roads gets contaminated with lead due to auto exhaust. The organic farming
associations in Europe have come out against importing from India those agro products,
where aflatoxin contaminated neem oil is used as pesticide. The future demand for
neem products in organic farming would depend on how effectively these problems are
tackled. Quality maintenance is,therefore, crucial for the steady growth in the usage of
neem pesticides.

14
Use of Neem oil in pesticide sector

Plant products recommended for pests and diseases

Product Target crop Insect pest disease Dose

Neem seed kernel Coconut Rhinocerous beetle With sand 1:2 ratio
Neem oil Rice BPH 3% FS
Sheath rot 15 lt/ha FS
Shealth blight (to be followed after neem
cake soil applications)

Redgram Pod borers 2% FS

Green gram Mildew 3% FS
Powdery
Coconut Termite 5% spray on the base upto
2m Ht.

Cotton Mealy bug 3% FS

Bengalgram Whitefly 5% FS
Pod borer 0.01% combined with
Endosulfan 0.07%

Gingelly Shoot webber and Pod 0.01% FS

borer

Neem cake Rice Sheath blight 150 kg/ha soil application

5 kg/tree
Coconut Tanjore wilt

15
Advantages

* Neem Emulsifiable Concentrate (EC) acts as an ovipositional deterrent. Insects do not lay
eggs on treated crop.

* It is an insect growth regulator. Malformed adults emerge which eventually suffer

mortality without damaging the crop.

* Neem EC works as an antifeedant and repellent.

* Neem EC does not affect the health of human beings, live stock, poultry and fish.

* It is selective in action against insects. Neem does not kill plant friendly predators and
parasites.

* It has been observed that crops when sprayed with neem oil EC are pest-free and grow
vigorously.

Presently available neem kernel all over India is 4,18,000 tonnes

Indian demand for Neem oil: Around 1.5 lakh tonnes per annum

NEEM CAKE

Neem cake is produced as byproduct in the production of Neem oil

Neem has demonstrated considerable potential as a fertilizer..

The residue left after the oil has been removed varies widely in composition. However, the
broad ranges in composition of Neem cake are:

Crude protein 13-35 percent

Carbohydrate 26-50 percent
crude fiber 8-26 percent
Fat 2-13 percent
Ash 5-18 percent
Acid-insoluble ash 1-17 percent

The neem cake has considerable local potential. Although too bitter for animal feed, it
seems to have unique promise as a fertilizer. It contains more Nitrogen, Phosphorus,
Potassium, Calcium, and Magnesium than farmyard manure or sewage sludge.

It is widely used in India to Fertilise cash crops, particularly sugarcane and vegetables.
16
Plowed into the soil, it protects plant roots from nematodes and white ants, probably due
to its content of the residual limonoids.

Neem cake sometimes seems to make soil more fertile than calculations predict. This is
apparently due to an ingredient that blocks soil bacteria from converting nitrogenous
compounds into nitrogen gas. When mixed with Urea, for example, neem cake cuts down
on the amount of Urea converted to nitrogen gas in the soil. So far, this finding, which
might prove to be a major breakthrough, has not been pursued beyond the laboratory. If it
proves real in everyday practice, it might boost the effectiveness of fertilizers everywhere,
restoring to the soil that part of their power now lost by bacterial action.

Size of the industry

The size of the Indian Neem industry is currently only Rs.40 to Rs.50 crore of which exports
accounted for about 50%.

Growth rate in demand 5 to 6% per annum

17
 SECTION -VII

BROAD OUTLINE OF MANUFACTURING PROCESS

Drying of the seeds

Drying of the seeds is carried out by guadrant method. In this process, the space (mostly
it is the godown as the season coincides with monsoon) is divided into four guadrants.

The stock is piled in three of them to a height of two feet. Each of the lot is shifted to the
next quadrant every two or three days. The stock gets heated due to auto oxidation. The
heat is used for expediting the drying on one hand and on the other, during agitation, the
extra heat is ventilated to avoid burning up or deterioration of the seed.

Drying can also be carried out in sun. The foreign matter is separated from the seeds by
using sieves of different sizes, before storing the seeds in gunny bags.

Storing of the seeds

The seeds are stored for 1 to 2 months during which they achieve maturation in oil
content. Storing is necessary to get optimum yield of oil.

Decortification and Winnowing

The seed or fruit is decorticated in stone chakki or decorticator.

The husk is separated with winnowing fan.

The decorticator gives 70% shell and 25% kernel, when dried fruits are used. It gives
45% shell and 50% Kernel when depulped seeds are used. The windege loss is 4 to 5%.

18
Neem based products

Neem Kernel Extract

50 gm of Neem kernel is required for use in 1 litre of water. The Neem kernel is
pounded gently. It should be pounded in such a way that no oil comes out. The outer
coat is removed before pounding. This is used as a manure.

The seeds that are used for preparation of Neem kernel extract should be atleast 3
months old and should not be used after 8 to 10 months. Before 3 months or after 8
months, the azadirachtin contents is quite low in the seeds and hence it cannot be
efficiently used for pest control.

The pounced Neem kernel powder is gathered in a muslin pouch and this is soaked
overnight in the water. The pouch is squeezed and the extract is filtered. To the filtrate,
an emulsifier like tween 80, sandovit, soap oil, nirma or soap cake powder is added. One
ml of emulsifier is added to one litre of water. The emulsifier helps the extract to stick
well to the leaf surface.

The kernel extract should be milky white in colour and not brownish.

Neem leaf Extract

For 5 litres of water, 1 kilogram of green leaf is required. Since the quantity of leaves
required for preparation of this extract is quite high(nearly 80 kilograms are required for
hectare), this can be used for nursery and kitchen gardens. The leaves are ground and
the extract is filtered. The extract is beneficial against leaf eating caterpillars, grubs,
locusts and grasshoppers. To the extract, emulsifier is added as mentioned for kernel
extract.

There is no need to boil the extract. Boiling reduces the azadirachtin content. Hence the
cold extract is more effective. Some farmers prefer to soak the leaves for about one
week. However, this creates a foul smell.

Neem Cake Extract

100 gms of Neem cake is required for 1 litre of water. The Neem cake is put in a muslin
pouch and soaked in water. It is soaked overnight before use in the morning. It is then
filtered and emulsifier is added at the rate of1 ml for 1 litre of water. It is now ready for
spraying.

Neem Oil Spray

30 ml Neem oil is added to 1 litre of water and stirred well. Only then will the oil and
water mix well. To this emulsifier is added (1 ml/1 litre). It is very essential to add the
emulsifier and mix properly. It should be used immediately. Otherwise oil droplets start
floating. A knapsack sprayer is better for Neem oil spraying in preference to a hand
sprayer.

19
Neem as Fertiliser

Neem has shown great promise as a potential fertilizer. Neem cakes and Neem leaves
can be used for this purpose. They widely used in India to fertilise cash crops. When it
is ploughed into the soil, it also protects plant roots from nematodes and white ants. The
leaves are also used as fertiliser.

AZADIRACHIN

Yield of Azadirachtin

The yield of azadirachtin per kilo of Neem seeds collected from various sources has been
estimated as follows:

Source Yield of azadirachtin (g/kg)

Commercial Indian 0.75,0.2

Kenya 1.00
Nigeria 2.00
Ghana 3.5

Extraction of Neem oil

The neem oil which is extrated from the neem fruit is a very valuable medicine and
insecticide.

The neem oil extraction process includes collection of the fruits, drying, storage,
decortification, winnowing and finally crushing in expellers.

Collection : The neem fruits are swept together or handpicked. They are depulped by
rubbing with soil or ash and then trampling on them.

The fruits are sold either as fresh or dried ones or depulped seed or even as kernels.

The moisture content in commercial neem fruit is 6 to 9.6% and after drying the moisture
content in 5%.

Extraction process

Extraction is carried out in Ghani expeller. 30-40% oil is obtained when Kernels are
crushed. Ghani gives about 5% less oil. The fruits give 4-6% and depulped seeds give
14-15% oil in expellers. 7-9% residual oil in cake is recovered by deoiling in solvent
extraction plant.

Maximum oil yield is obtained after 2 to 5 months fruit collection.

The refining process for oil is patented. The refining can be carried out with silica gel.

20
Oil yield

Crushing in Whole fruit Depulped seed Kernel

Ghani - - 25-30%
Expeller 406% 12-16% 30-40%

Neem extract as pesticide

The most important active ingredient is Azadirachtin, extracted from the neem seed
kernels. It basically acts as an antifeedent and phogorepellant.

The amount of Azadirachtin neem seed kernels is influenced by a number of factors such
as humidity, climatic exposure to sunlight, seed drying, pH and method of extraction.
Although, Azadirachtin is one of the many constituents of the seed kernel, it is the
compound found in the highest concentration and may therefore, serve as a sub
representative of the biological activity.

The concentration varies from source to source and the percentage ranges from 1.5% to
7%. On average, the Indian seed kernel contain about 3.5% of Azadirachtin.

Source of technology

* SPIC Science Foundation, Chennai

Major plant and machinery details

Name of the equipment Name of the suppliers

Dryer The Anup Engineering Ltd.,

Behind 66 KV Electric Sub Station
Odhav Road, Ahmedabad-382 415

ATRE Thermal Products Pvt. Ltd.,

Pushpa Heights, 1st Floor,
Bibwewadi Corner, Pune-411 037

Extractor Bangalore Pollution Control Systems Pvt. Ltd.,

2, IInd Floor, 5th Phase, Ist Stage
Bangalore-560 044

The EIMCO-K.C.P. Ltd.,

183, Anna Salai,
Chennai-600 006
Wet grinder K.B. Engineering
B/58, Kiran Estate, M.G.Road,
Goregaon (W), Mumbai-400 062

21
 Netzsch India Pvt. Ltd.
P.O. Box No.7314,Plot No.1961-B,
Asidad Colony,
Chennai-600 101

Pulveriser ACE Pack Machines

23, V.N. Industrial Estate
Bharathi Colony,Near Athiparasakthi Temple
Peelamedu, Coimbatore-641 004

Frigmaires Engineers
PO Box 16353, 8, Janata Industrial Estate
Senapati Bapat Marg
Opp Phoenix Mill, Lower Parel (W)
Mumbai-400 013

Boiler Cethar Vessels Ltd.,

No.4, Dindigul High Road,
Trichy

Firetech Boilers Pvt. Ltd.

No.211, 2nd Cross,
38th Main, B.T.M. Layout
2nd Stage, Bangalore-68

22
 SECTION VIII

RAW MATERIAL REQUIREMENTS, UTILITY AND AVAILABILITY

Raw material requirement

Basis: One tonne

Deoiled neem cake 2.61 tonne

Spices, vegetables and other chemicals

Utilities:-

Fuel 480 litres

Power 100HP

Raw material availability:

Neem seeds constitute the basic raw material for Neem pesticides. Some 25 years
back,the Khadi and Village Industries Commission (KVIC) estimated seed production at
five lakh tonnes.However,recent estimates indicate the quantity may be many times
more.Nearly 100 oi mills and 40 bio pesticide units consume more than five lakh tonnes
of seed annually.

Fruit collection and marketing has become an organised business in Tamil Nadu,Andhra
Pradesh,Maharashtra and Uttar Pradesh.Adequate quantity of seed is available for the
next four to five years,but in the long run,a shortage of Neem seeds is likely.This gap has
to be filled by new Neem plantations.

Production level of Neem seeds : 1,85,000 tonnes per annum

The domestic demand is likely to gallop as increasing applications are found for neem
seeds, ranging from pesticidal to fungicidal, as a contraceptive and anti-diabetic
preparations, for skin care, in soaps and shampoos, and for toothpaste and mouth-
washes. The present surplus in supply over demand (both domestic and export) of neem
seeds couls turn into a deficit in a few years. The solution is commercialisation of neem
plantations.

23
Neem cultivation can be viable, if intercropped with the jaffra plant which produces the
annato-coloure (orange) natural dye. On one acre, 80 neem trees intercropped with 90
jaffra plants is not expected to yield returns on an operational cost of about Rs.6,000 in
the first year and Rs.2,000 in the second. The jaffras are expected to generate a return
of about Rs.5,000 in the second year.

Alternately, neem can be intercropped with indigo. Some corporates have already started
getting into the commercialisation of neem.

24
 SECTION IX

GLOBAL SCENARIO

Global suppliers

* International Sourcing Inc.

779 Susquehanna Ave.
Franklin Lakes, NJ 07417, USA
Contact: Larry Smith
Vice President
Tel:(201)560-0111
Fax: (201)560-1156
E-mail : isi@insourcenj.com

Activity : Trading house

* Pokonobe Industries,
PO Box 1756
Santa Monica, CA90406, USA
Contact: Robert Grebler
General Manager
Tel:(310)392-1259
Fax:(310)392-3659
E-mail : sales@pokonobe.com

Activity : Trading house

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 SECTION X

ECONOMIC CAPACITY AND PROJECT COST

Economic capacity 15 tonnes per annum of Natural extracts

100 tonnes per annum of Neem formulation

Project cost Rs.171 lakhs

Assessment of project cost

1. Land

S.No. Description Cost

Rs.in lakhs
1.1 Cost of land of one acre at Rs.5.5 lakh per acre 5.5
1.2 Cost of levelling, laying internal roads/fencing and 0.55
compound wall

Subtotal 6.05

2. Building

S.No. Description Cost

Rs.in lakhs
2.1 Factory building of area 320 sq.m. at Rs.3200/sq.m. 10.24
2.2 Non-factory building of area 70 sq.m.at Rs.4500/sq.m. 3.15
Subtotal 13.39

3. Cost of Plant & Machinery

S.No. Description Cost

Rs.in lakhs
3.1 Cost of basic plant and machinery 45
3.2 Instrumentation and control 3.38
3.3 Pipelines and valves 4.5
3.4 Structurals for erection 2.25
Subtotal 55.13
3.5 Octroi, excise duty, sales tax, etc.at 12% 6.62
3.6 Packaging and insurance charges (2%) 1.1
3.7 Transportation charges (2%) 1.1
3.8 Machinery stores and spares (2%) 1.1
3.9 Foundation charges (2%) 1.1
3.10 Installation charges (2%) 1.1
Total cost of plant and Machinery 67.25

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4. Technical know-how fees Rs.2.00 lakhs

5. Miscellaneous fixed assets

S.No. Description Cost

Rs.in lakhs
5.1. Electrification 4.5
5.2. Steam boiler and auxillaries 4.5
5.3. Water storage tank, borewell etc. 0.8
5.4. Fuel storage tank 1.2
5.5. Laboratory equipment 0.8
5.6. Office machinery & equipment 1.6
5.7. Material handling equipment, packaging machinery, 1.3
weigh balance, etc.
5.8. Diesel generator 4.4
5.9. Effluent treatment 1.3
Total 20.4

6. Preliminary & Pre-operative expenses:

S.No. Description Cost

Rs.in lakhs
6.1. Preliminary expenses 1.3
6.2. Pre-operative expenses:-
6.2.1 Establishment 1.3
6.2.2 Rent rates and taxes 1.6
6.2.3 Travelling expenses 0.8
6.2.4 Interest and commitment charges on borrowings 8
6.2.5 Insurance during construction period 1.7
6.2.6 Other preoperative expenses and deposits -
6.2.7 Interest on deferred payment -
Total 14.7

7. Provision for contingency Rs.7.83 lakhs

8. Working capital margin Rs.39.32 lakhs

9. Total project cost Rs.171 lakhs

10. Means of Finance

Promoter's contribution Rs.68 lakhs

Term loan from financing institutions Rs.103 lakhs
Total project cost Rs.171 lakhs

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11. Financial statements

Cost of production

A Variable cost Rs. in lakhs

Raw material and utilities 340.98

Spares and maintenance 4.04
Selling expenses 25.78
Total variable cost (A) 370.79

B Fixed cost

Salaries and wages 9

Interest on term loan and working capital loan 39.7
Depreciation 9.1
Administrative expenses 15.47
Total fixed cost (B) 73.26

C. Total cost of production (A+B) 444.05

D. Selling price per kg. (in Rupees)

Neem extract 370
Neem formulation 460

E. Annual sales turnover 515

F. Net profit before tax (E-C) 71.45

G. Breakeven point in % 51%

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 SECTION XI

SWOT ANALYSIS

Strength Large availability of Neem plantation

Weakness Lack of consolidation of the industry

Opportunity Eco friendly product and exports

Threat Poor product quality due to mushroom

growth

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 SECTION XII

FACTORS INFLUENCING THE POSITION FOR A NEW INDUSTRY

AND RECOMMENDATION

Neem is one of the widely discussed subjects in India today. The advocates of use of
natural pesticides, the green campaigners and those who believe in appropriate resources
based development are propagating at every available forum about the tremendous
relevance of Neem for India. The fact the Neem trees are grown in large quantities in India
have made many people in India think that the Indian neem trees represent great
opportunity for the country in several ways.

Neem pesticides represents an excellent investment opportunity, in view of the eco-

friendly nature of the product, its use in highly relevant and growth oriented sector such as
pesticides, export prospects and reasonable return.

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