Production of Essential Oil From Lemongrass FULL

Production of Essential Oil
from Lemongrass
GROUP: F6
VILLAMARIN, Jenalyn L.
ESTRELLANES, Mary Joy Q.
SUBMITTED TO:
Engr. Winston B. Flora
TABLE OF CONTENTS
Page
Acknowledgement
Abstract …………………………………………………………………… 1
Introduction ……...……………...…………………………………………… 2
Definition of the Project …………………………………………………… 4
Company Mission and Objectives ……………………………………… 6
History & Related Literature ……………………………………………… 9
Properties & Composition of Essential Oils ………………………….. 11
Manufacturing Process ……………………………………………………… 13
Major Raw Material ………………………………………………………….. 15
Methods & Procedure ……………………………………………………….. 16
Analysis of Essential Oils …………………………………………………… 18
Application ………………………………………………………………………. 22
Equipment Description ……………………………………………………… 24
Material Balances …….……………………………………………………….. 26
Energy Balances ……………………………………………………………….. 30
Equipment Specification …………………………………………………….. 34
Waste Disposal …………………………………………………………………. 38
Utilities …………………………………………………………………………. … 39
Plant Location ………………………………………………………………….. 40
Material Safety Data Sheet …………………………………………………. 45
Market Study …………………………………………………………………….. 51
Market Aspect …………………………………………………………………… 58
Marketing Program ……………………………………………………………. 59
Market Segmentation …………………………………………………………. 65
Marketing Strategy …………………………………………………………….. 66
Socio-Economic Study ………………………………………………………… 67
List of Figures, Tables and Graphs
Figure 1: Organizational Chart ……………………………………………... 7

Figure 2: Equipment Layout ………………………………………………… 33
Figures 3 & 4: Plant Layout …………………………………………………. 42
Figure 5: Plant Location Map ………………………………………………. 44
Graph 1: Historical Demand of Lemongrass Oil ……………………… 54

Graph 2: Projected Demand of Lemongrass Oil ……………………… 56
Table 1: Energy Requirement ……………………………………………… 31

Table 2: Equipment Optimization ………………………………………… 32
Table 3: Demand of Lemongrass Oil …………………………….……… 52
Table 4: Historical Demand of Lemongrass Oil ……………………… 53
Table 5: Projected Demand of Lemongrass Oil …………………….. 55
Table 6: Properties of Lemongrass Oil ………………………………… 57
Table 7: Price Values of Lemongrass Oil ……………………………… 62
Table 8: Price Values of Lemongrass Oil (Foreign Market) …….. 63
Financial Study
Financial Assumptions ………………………………………………………… 68

GANTT Chart ……………...…………………………………………………….. 69
Inventory of Raw Materials ………………..…….…………………………. 70
Inventory of Finished Goods ……………….………………………………. 71
Pre-operating Salaries and Fringe Benefits ……………….………….. 72
Annual Salaries and Fringe Benefits ……………….……………………. 74
Annual Salary Projection …………………………………………………….. 76
Pre-operating Utilities ………………………………………………………… 77
Electricity, Water and Fuel Consumption ………………………………. 79
Utilities Projection ………………………………………………………………. 81
Land, Land Improvement and Building ………………………………... 82
Office Supplies ………………………………………………………………….. 83
Office Equipment and Furniture ………………………………………….. 84
Machinery and Equipment ………………………………………………….. 85
Repair and Maintenance …………………………………………………….. 87
Projected Annual Depreciation ……………………………………………. 88
Taxes and Licenses ……………………………………………………………. 89
Fixed Capital Investment ……………………………………………………. 90
Project Cost ………………………………………………………………………. 91
Cost of Sales ……………………………………………………………………… 92
Marketing and Administrative Expenses ……………………………….. 93
Amortization ……………………………………………………………………… 94
Income Statement …………………………………………………………….. 95
Cash Flow ………………………………………………………………………… 96
Cash Disbursement ……………………………………………………….…… 97
Balance Sheet ……………………………………………………………………. 98
Expenditures during Pre-operating Period ……………………………… 99
Interim Interest Expense …………………………………………………….. 100
Break-even Analysis …………………………………………………………… 101
Payback Period ………………………………………………………………….. 102
Return on Investment ………………………………………………………… 103
Recommendation and Conclusion ……..…………………………………. 104
Appendix
Appendix 1: Historical Data of Lemongrass Oil
References
ACKNOWLEDGEMENT
I, Jenalyn L. Villamarin, would like to wholeheartedly dedicate this

feasibility study, Production of Essential Oil from Lemongrass, to my mother,
Leticia L. Villamarin. I also want to dedicate this study to my two angels, Keith
and Yesha Villamarin. This study would not be possible without God’s guidance
and provision. I offer the sufferings that I encountered in this study to Him.
The very first person that I would like to acknowledge is non-other

than my sister, Ms. Lady Carissa Rosann V. Gillies. I don’t know what I would do
without her. I would also like to extend my appreciation to all the people who
have extended their support in this feasibility study. To my father, Mr. Earl
Dennis A. Gillies, I thank you for your continuous support and guidance. I would
also like to thank my good friends, Ms. Rica Riel, Ms. Melba Briñes and Ms.
Melanie Belen, for sharing what they know and for lending me some materials
and books to be used as reference.
Ms. Mary Joy Q. Estrellanes would like to express her sincerest

appreciation to her parents, Mr. Victor M. Estrellanes and Mrs. Dolores Q.
Estrellanes, her siblings Alvin Vic Q. Estrellanes and Marvin Q. Estrellanes, her
architecture friends, Sarah Shiela P. Bautista and Ownery de Castro Diala and to
her friend who inspired her to study in Mapua Institute of Technology, Engr.
Romeo Cabilugan.
Olio del Limone Company
ABSTRACT1
This study aims to utilize lemongrass or tanglad (Cymbopogon Citratus

D.C. Stapf) as an alternative source of natural essential oil since lemongrass is
cheap and grows abundantly in the Philippines.
Lemongrass is extracted from leaf by steam distillation because it has high

conversion efficiency. The steam distillation is carried out under controlled
temperature and pressure.
The characteristic of strong pleasant aroma of lemongrass is ascribed to

citral, the chief constituent of the oil. It is the starting material for the
preparation of the ionones, a group of very important synthetic aromatic
processing a strong lasting odor. These ionones are employed for the
manufacture of synthetic Vitamin A. Because of this, lemongrass oil has now
become one of the most important essential oil.
1
Production of Lemongrass Oil, March 1999
INTRODUCTION2
Natural essential oils are volatile, fragrant and pleasant tasting oils
obtained from leaves, roots, flowers and fruits. They have wide applications in
pharmaceutical, foods, perfumery and cosmetics.
A variety of Philippine plants have a high content of essential oils that are
feasible for commercial production. These plants mature fast, requiring little
maintenance and grow in almost all parts of the archipelago. The extraction of oil
from these varieties poses no special problems and the end product is
marketable both locally and abroad.
Lemongrass, commonly referred to as "tanglad", is an excellent source of

essential oil. It grows abundantly in the Philippines and can be cultivated
commercially.
The characteristic aroma of lemongrass is ascribed to citral, which is the

chief constituent of lemongrass oil. Citral is the starting material for the
manufacture of ionones and is also used in the preparation of food flavors,
cosmetics and perfumes. The fresh lemon-like odor of citronella oil is rich in
alcohols and aldehydes (predominantly geranoil, citronellal and
hydroxycitronellal).
2
This industry is both dollar earning and dollar saving, labor intensive and
makes use of indigenous raw materials and locally manufactured machinery and
equipment.
At present, our country has been continually dependent on foreign

essences for adequate supply, which uses up large outlay of dollars. If local
producers can meet domestic demand and quality requirements, this will
generate acceptance of local brands of products and boost massive production of
this commodity.
1
DEFINITION OF THE PROJECT3
The essential oil industry in the country today is practically not well
established despite the fact that the country is abundant in flora, which are
potential sources of essential oils.
Lemongrass (Cymbopogon citratus D.C. Stapf) referred to as "tanglad" is

an excellent potential source of essential oil. Essential oils are highly in demand
as they are constant ingredients in making perfumes and cosmetics, soaps,
detergents and pharmaceuticals to conceal unpleasant odors and tastes. There's
a bright market prospect for essential oil considering its substitutability and
export potential.
The project is in line with the country's end goal of producing products
that would compete in local market. The project aims to provide quality essential
oil that would meet the demand of consumers. The main objective of extracting
essential oil from lemongrass is to increase the quality. The potential worth of
the project is to offer quality product at a competitive price as well as to provide
job opportunities among locals of San Ramon, Nabua, Camarines Sur.
3
COMPANY NAME
The company will be named Olio del Limone Company, which

means “lemon oil” in Italian. The name of our product will also be taken from the
company name.
COMPANY LOGO
MISSION
1. Olio del Limone Company shall produce high quality product.

2. Olio del Limone Company shall lessen the need of importation for
essential oils.
3. Olio del Limone Company shall contribute in economic growth and
development.
4. Olio del Limone Company shall engage in promoting environmental
concern and awareness.
STATEMENT OF OBJECTIVES
To gain profit
To be one of the sources of quality lemongrass oils among the
users from the Philippines
To lessen the importation of lemongrass oil
To target 5.56% share on the growing demand of lemongrass oil
FEASIBILITY CRITERIA4
The main focus or the principal criteria, as an important guideline for this
project, is profitability. Profitability will also be considered to have an impact on
the socio-economic environment. The study will account the benefits it will
provide to the people of the community or municipality and to the government.
PRODUCT DESCRIPTION5
Lemongrass or "tanglad" grows abundantly in the country and is now

being commercially cultivated. This plant matures fast requiring little
maintenance. It has been valued for its numerous medicinal uses. Its oil is used
as food flavoring, in the perfume industry, and in the scenting of soaps,
detergents, shampoos, lotions and others. Lemongrass oil has a variety of uses
and functions in the industry due to its properties and characteristics.
4
5
HISTORY AND RELATED LITERATURE6
Essential oils are aromatic oily products of plant's origin. Also known as
volatile or ethereal oils, essential oils derive their popular name from the
Paraclesian concept of a substance's concentrated or essential form. The terms
"volatile" and "ethereal" distinguish these oils from the fixed or glyceride
vegetable and animal oils, and the mineral oils. Essential oils have been obtained
from 90 plant families, and at times different essential oils can be secured from
different parts of the same plants.
Essential oils are mixtures of organic chemicals formed as by-products of

plant metabolism. Their principal constituents are terpenes, but aliphatic and
benzenoid components may also be present. Essential oils vary in properties
according to plant species, climate, soil, time and method of harvesting, and
production and storage processes.
The use of essential oils by man predates written records, but

archaeological evidence attests that ancient civilizations, including those of
Egypt, Sumeria, Akkad, Assyria, Babylon, Crete and China had acquired a certain
skill in extracting, blending and preserving plant and seed oils. It was not until
the 14th century, however, that the Catalan physician of Arnold of Villanova first
gave recognizable details of a distillation process for essential oils.
6
Lemongrass oil is an indispensable ingredient in the manufacture of soap,

perfumes and other industrial products. At present, our country in large
quantities is importing it although the grass from which this oil is derived can be
grown profitably under Philippine conditions. Lemongrass is found to be
indigenous in the region but is planted in backyard scale and used for bathing
and other medicinal purposes only.
The recent economic crisis led to the realization that cultivating the crop
locally would be more advantageous than importing the oil. By promoting the
commercial planting of lemongrass, the country could save a lot in foreign
exchange. It is in this context that the government urged the private sector to
participate in the program. At present, there are several manufacturers in the
industry like Quintessence Oils Inc., Salcom Coconut Milling Co., and Mr. Edgardo
Virina's Company.
*
PROPERTIES OF ESSENTIAL OILS7
Essential oils are generally colorless to slightly yellowish when freshly

distilled, but when foreign matter is present, the color may range from red to
blue. On standing, the oils generally become darker in color. The odor of
essential oils is similar to that of the portion of the plant from which they are
derived and these odorous characteristics are much more concentrated in the
essential oil. The terpenese they contain are fairly readily oxidized, resulting in a
turpentine odor.
The specific gravity of these materials varies from 0.84-1.18. They are
volatile to room temperature and evaporate when heated. Most essential oils are
slightly soluble in water and they are more soluble in sugar solutions. The
principal terpenless (deterpenated) oils and sesquiterpeneless oils are bergamot,
grapefruit, lavender, lemon lime, mandarin, orange, peppermint, petitgrain and
spearmint.
7
COMPOSITION OF ESSENTIAL OILS8
The essential oils are mixtures, generally consisting of a major

hydrocarbon portion and of many minor oxygen-, nitrogen- and sulfur-bearing
components. The hydrocarbons are usually terpenes, isoprene, 3-methyl-1,3-
butadiene, C5H8, sesquiterpenes and polyterpenes.
8
MANUFACTURE OF ESSENTIAL OILS9
The raw material from which essential oils are manufactured may either
be fresh, partially dehydrated or dried, but for flower oils such as rose and
orange blossom the raw material must be fresh or preserved with glycerol or
salt. Marjoram, pennyroyal, peppermint and spearmint are distilled fresh. Dried
substances often require maceration (softening) with the distilling medium
before distillation, and they must also be properly comminuted.
MANUFACTURING PROCESS10
The fabricated extractor consists of a strainer inserted into a stainless

steel tank. A condenser is attached to this tank by means of metal tube. It is a
shell and tube apparatus, the outer portion of which is provided with openings
near both ends to serve as inlet and outlet or running water. Rubber tubings are
connected to these openings with the inlet and outlet are connected to a chilled
water circulator.
Boiler-Steam Distillation is a process by which the plant charge is steam.

The steam comes from a separate boiler via an open coil. This process is the
most technically advanced that has been proven to be commercially viable.
9
10
Here's how the extraction of essential oil using the above extractor by steam
distillation is done:
1. Wash the leaves.

2. Load the leaves to the dryer.
3. From the dryer, cut the leaves in the rotary cutter.
4. Weighing the chopped and dried leaves.
5. Putting the dried leaves into the extractor.
6. Heating the boiler.
- The boiling water extract the essential oils in the process. The steam
carrying the essential oil passes through a metal tubing that leads to the
condenser.
7. Filling the condenser with water before the boiler starts generating steam.
- The essential oil that volatilizes goes with the steam and is
condensed and collected at the receiver. As the steam is condensed, the
oil and the water separates through the automatic separator, wherein, the
oil floats in the oil collector while the water drains to the water collector.
8. Packaging and sealing the settled essential oils.
9. Refrigerating the bottled essential oils to prevent chemical decomposition
brought about light and air exposure.
10
MAJOR RAW MATERIAL11
Common Name: Lemongrass

Local Name: Tanglad (Tagalog, Bicol) Barani (Ilocos), Baraniw (Pangasinan),
Salay or Salaid (Tagalog), Balioko (Visayas), Sai (Manobo, Mandawe,
Sulu), Lemongrass, Sweetrush, Gingergrass (English)
Scientific Name: Cymbopogon citratus D.C. Stapf
Description: Lemongrass is an aromatic grass about 210-315 cm tall. The

leaves are linear, lanceolate (125x1.7 cm), panicle very large (30-80 cm long),
drooping and lax. The color is grayish green, rarely with a tinge of purple. It is
decompound, with raceme pairs in dense masses.
11
METHODS AND PROCEDURE12
A. CUTTING
Cutting of leaves enhance and help catalyze the production of the oil
during the process. It is an advantage also because cutting can increase the
quantity of the grass fed during the operation.
B. DISTILLATION
Distillers prefer to distill partly dried leaves because more can be charged
into the still. Also, dry leaves require less steam and fuel to distill. It is advisable
to eliminate weeds from citronella grass, but when oil prices are low, few
distillers can afford this precaution. Cut leaves into short pieces prior to
distillation. Whole or uncut leaves occupy more space because of uneven
distribution in the still. Steam channeling and lower yield of oil also result.
Chop the materials to make it compact in the boiler. By this method, the
efficiency of the still is increased. Faster steam passing through the charge
results to lower oil percentage per kilogram of condensed steam and slow passes
results into longer time of distillation and the hourly yield of oil per kettle is
lower. A still charged with 1,500 kg of dried chopped leaves of good quality yield
about 12.5 kg of oil.
12
C. CONDENSATION
The vapor that is produced by the still is the liquefied using a condenser.
Oil is adhering because it is more volatile than the steam. The liquid condensate
forms a film or continuous layer of liquid that flows over the surface of the tube
under the action of gravity.
D. OIL AND WATER SEPARATION
The objective of the process is to remove particles from steam in order to

eliminate contaminants from the fluid or to recover the water that will lessen the
concentration of the oil.
E. PACKAGING
An all-plastic drum made from blow molded HDPE will be used as

packaging material because essential oil can easily react to sunlight, which may
cause some changes in the quality of the product.
F. STORAGE
Finished products are then kept in cool warehouses as to prevent the oil
from deteriorating and loose its quality.
12
ANALYSIS OF ESSENTIAL OILS13
An essential oil may be analyzed using many of the techniques familiar in

quantitative and qualitative organic chemistry. Isolation may be accomplished by
such procedures as distillation, solvent extraction and vapor-phase isolation.
Separation techniques include the many types of chromatography, such as gas-
liquid chromatography and thin-layer chromatography. Mass spectroscopy,
nuclear magnetic resonance, optical rotation and X-ray diffraction are among the
better-known identification techniques.
Distribution:
The species are planted in most parts of the Philippines and found in
abundance or grown in commercial scale.
Site Requirements:
Lemongrass requires a warm and humid climate with plenty of sunshine

and rainfall, ranging from 250-300 cm and uniformly distributed over the year. It
is drought resistant species.
13
High temperature and sunshine promote development of oil in the plant.

When planted in hilly sites with heavy rainfall, the plant grows luxuriantly and is
harvested more frequently, but the oil and citral contents are less compared to
plants growing in regions receiving less rainfall. It thrives well at altitudes of 100-
1,200 m above sea level. It flourishes on a wide variety of soils, growing best on
well-drained sandy-loam soil. It also thrives well on light sandy soils mixed with
manure. Plants from such sandy soil yield relatively more oil with higher citral
content than plants from very fertile soil.
Maintenance:
Weeding and cultivation are important as they affect the yield and quality
of oil. Generally, 2-3 weedings are necessary during the year. Weeds can also be
controlled by applying oxyflureoron, diuron and simezine at the rate of 0.5, 1.5
and 2 kg/ha, respectively. Distillation waste, when applied at the rate of 3-5
tons/ha, is equally effective in suppressing weed growth.
Harvesting and Drying:
The time of harvesting affects yield and quality of oil. Young and tender
grass, harvested in the early season, gives oil with low aldehyde content (60-
70%) and poor solubility. The yield of oil is generally lower during rainy season
compared to dry season.
13
Initial harvest is possible after 3 months of transplanting. Subsequent

harvests take place at an interval of 40-50 days depending upon the fertility of
the soil and seasonal factors. Under normal conditions, three harvests are
possible during the first year and four harvests in subsequent years.
Because of their value, essential oils are a common prey to adulteration.

Therefore, these oils should be analyzed in the field and in the laboratory to
detect adulteration and to ensure quality. Among the tests done are:
Specific gravity:
Adulteration of essential oils by inferior oils such as kerosene or turpentine

changes the specific gravity or density of the oil. Determination of specific
gravity, therefore, is one good mean of determining adulteration.
Refractive Index:
When passing through a liquid the bending of light does not vary within
narrow limits for specific essential oils. Adulteration will change the refractive
index measured by refractometer outside of the range, thus, indicating
adulteration.
13
Ester number:
The odor of essential oils mostly comes form esters. Determination of the
amount of esters of an essential oil is a measure of odor intensity.
Analysis of Specific Compounds:
The main components or odor principles of each essential oil are known
where they vary within certain limits. By analyzing the percentage of the
principal component of an essential sample and comparing it with a standard
kind, adulteration can be detected.
Olfactory test:
Physical and chemical tests on essential oils determine the purity of the
oil, however, the do not tell anything about the most important attribute of the
oil: odor. Only olfactory testing or smelling can determine this. Olfactory testing
can also detect adulteration. For example, natural essential oils are less harsh
than their synthetic and adulterated counterparts.
13
APPLICATION14
The principal uses of essential oils are in flavorings, in perfumes, soap and
cosmetics and also in pharmaceutical preparations. Many essential oils used for
flavoring are obtained from spices and herbs. There are currently some
individuals, mainly provincial distillers who manufacture essential oils, this is
generally not on a large scale and the oils produced are not essentially of the
best quality.
The present day market for essential oils is large. Aside from industrial
users such as the perfume and cosmetic industry, soap manufacturing industries
and others, there is another half of the market, the actual consumers of natural
essential oil products like oil of wintergreen, oil of cloves and others. A careful
study of this market must examine which essential oil is popular, which are
growing in demand and which are declining in acceptability. The consumer
market is not static so that careful monitoring must be done to determine its
future needs for specific essential oils.
14
At present, most of the essential oils needed by local perfumeries,

pharmaceutical and cosmetic industries are imported from abroad. If local
producers can meet the domestic demand and quality requirements and offer
lower prices, this will generate acceptance of local brands of oil and stimulate
essential oil production thereby creating a thriving essential oil industry.
There is an important place for natural essential oils and the future of this
commodity on the Philippine scene is up to the joint efforts of producers,
researchers, dealers and consumers. Once initial acceptance by consumers is
generated, representation can be made for government incentives to put the
industry firmly on its feet and enter the world market for essential oils.
14
EQUIPMENT DESCRIPTION15
A. DRYER
The dryer removes a relatively small amount of water and other liquid
from the raw material to yield high concentration of the product.
B. CUTTER
A rotary cutter is used to reduce the size of the leaves into 2-3 in. long.
This can increase the yield of the oil during the process.
C. STILL TANK
The plant material is placed in the still and then required steam is supplied
from the boiler to adhere the oil. Iron and copper react with essential oils and
should therefore not be used for the construction of the tank. Stainless steel and
glass are the best materials to use.
15
D. CONDENSER
The condenser converts the steam and oil vapor to liquid. This is very
important and the rate of distillation depends on it. The condenser should be
made from stainless steel, glass or, in some cases, aluminum. It should be kept
cool at all times to enhance its efficiency.
E. SEPARATOR
This separates the oil from the water. It is usually done by letting the
mixture settle in a large container. Since the oil is denser than water, it is
collected at the top of the container.
F. BOILER
The boiler will supply the steam required to evaporate the oil from the
leaves of the lemongrass. It is designed to operate under specific conditions of
pressure and steam rates considering efficiency and reliability.
15
LIST OF EQUIPMENTS
* Technical Specifications
1. BOILER
Oil-fired Tube
Type: Seams-welded
Steam capacity: 3,409 kg/hr
Pressure Control: 40 psi
2. ROTARY CUTTER16
2m x 1.5 m
Speed: 900 - 1200 rpm
Screen size: 4 x 4 in.
2-4 knives
Capacity: 10 – 50 ft3
3. ROTARY VACUUM DRYER

Diameter: 0.61 m
Length: 1.8 m
Heating Surface: 3.72 m2
Working Capacity: 0.283 m3
Agitator Speed: 7.5 rpm
Weight: 1,680 kg
Drive: 1.5 hp
16
Production of Ilang-Ilang and Lemongrass Oils by Steam Distillation, March 2002
4. STILL TANK
Diameter: 4.27 m
Thick plate: 0.53 m
Capacity: 3500 kg
Height: 12.2 m
5. CONDENSER
Shell and Tube condenser

Shell: 0.20 m ID: 2.44 m long
Tubes: 1 1/4 in. OD: 0.81 m long
Single pass, cold-water-cooling element
6. OIL AND WATER SEPARATOR
Baffled type
Height: 1 m
Pipe size: 1.4 gpm (Capacity)
7. COOLING TOWER
Type: induced draft

Function: provide cooling water to the condenser
Pressure: atmospheric
- Corrosion resistance of polyethylene and PVC plastic
construction in critical contact areas.
- 97% return of process water to the heat load for reuse.
Diameter: 0.9 m
Height: 6 m
8. WATER TANK
Capacity: 24.54 m3 (cylinder)
Diameter: 2.5 m
Height: 5 m
Materials of Construction: SS 304
9. WASHING TANK
Capacity: 5.30 m3 (cylinder)

Diameter: 1.5 m
Height: 3 m
Materials of Construction: S-2 Steel plate Grade B
10. BELT CONVEYOR
Width: 14 in.
Capacity: 60 kg/hr
Belt Speed: 200 ft/min
Power: 0.2186 Hp = 0.1630 kW
11. PUMP
2 stage deep well pump

Performance: Flows to 3,785 L/min
Heads to 3,658 m
Pressure: 4,500 psia
WASTE DISPOSAL17
Leaves will be used as organic fertilizer. Solid waste when applied can be
in the form of compost. This supplies sufficient amount of nitrogen and potash in
the crops. The solid waste can be dried under the sun since as a dry substance,
the leaves are combustible. Therefore, this can be used as fuel for cooking. The
leaves of Lemongrass are an excellent cattle feed if mixed with molasses. The
cattle owner will be notified about the availability of these leaves so as to help
the company disposes the solid waste. The wastewater can be used for watering
the plant. There is no danger because the oil may come out with the wastewater
are organic and biodegradable. The heated water that will come out from the
shell-tube condenser will be recycled by allowing the steam to pass through a
cooling tower.
17
UTILITIES18
ELECTRICITY
Adequate supply of electricity is necessary for plant machineries and

equipment. It will also provide lighting and run our facilities.
WATER
Water supply is needed for the process and operation itself. It will also be
used for cleaning the machinery.
FUEL
The fuel is used for running the boiler and for transportation needs.
COMMUNICATION DEVICES
Telephones, computers, e-mail and Internet are needed to speed up the

promotion and performance of the company.
18
PLANT LOCATION
Our plant is located at a 5,000 m2 land at San Ramon, Nabua, Camarines

Sur. The location is ideal because of the following:
Abundant supply of raw materials

Manpower is less expensive because it is situated at a rural area
Utilities such as power, water and fuel is less expensive
Adequate transportation
Nabua is a 2nd class municipality in the province of Camarines Sur,

Philippines. According to the 2000 census, it has a population of 70,909 people in
12,724 households.
POWER
The strategic location of Nabua along the Luzon grid makes it an ample
recipient of power supply from NAPOCOR. Within the municipality itself, the
Camarines Sur Electric Cooperative (CASURECO) as the exclusive provider retails
supply of electricity. All barangays within the municipality are already energized
both in urban and rural barangays.
TRANSPORTATION
For the municipality of Nabua, transportation is very much important

because of its strategic location and membership in the Legazpi-Iriga-Naga-Daet
growth corridor and preferred development strategy of the agro-industrial
commerce and tourism. Thus, enhancement of the municipal transport system
would play crucial role in the attainment of the desired development. Land
transportation available are the various road systems and the Philippine National
Railways (PNR) track facilities traversing the municipalities. Generally, the
municipality has adequate road lengths based on the standards of 1.5 km per
100 hectares of arable land.
COMMUNICATION FACILITIES
Existing communication services and facilities includes cable television,

telephone services, telegraph services and telegraphic transfer, cell phones, as
well as postal services.
WATER SUPPLY
There are three (3) existing level III water supply system that provides
potable water, namely: Nabua Water District, Duran Water System, and
Sagumay Water System.
MATERIAL SAFETY DATA SHEET
1. IDENTIFICATION OF SUBSTANCE/PREPARATION & COMPANY.
PRODUCT NAME: Olio del Limone
2. HAZARDS IDENTIFICATION:
Concentrated product. Do not ingest. Observe good housekeeping

procedures.
4. FIRST-AID MEASURES:
INHALATION: Remove from exposure site to fresh air. Keep at rest.

Obtain medical attention.
EYE CONTACT: Rinse immediately with plenty of water for at least 15
minutes. Contact a doctor if symptoms persist.
SKIN CONTACT: Remove contaminated clothes. Wash thoroughly with
soap & water, flush with plenty of water. If irritation
persists, seek medical advice.
INGESTION: Rinse mouth out with water. Seek medical advice
immediately.
OTHER: When assessing action take Risk & Safety Phrases into account
5. FIRE FIGHTING MEASURES.
EXTINGUISHING MEDIA RECOMMENDED: Use CO2, Dry Powder or Foam
type Extinguishers, spraying extinguishing media to base of

flames. Do not use direct water jet on burning material.
SPECIAL MEASURES: Avoid vapour inhalation. Keep away from sources of
ignition. Do not smoke. Wear positive pressure self-
contained breathing apparatus & protective clothing.
EXTINGUISHING PROCEDURES: Closed containers may build up pressure
when exposed to heat and should be cooled with water
spray.
6. ACCIDENTAL RELEASE MEASURES.
PERSONAL PRECAUTIONS: Avoid inhalation & direct contact with skin &
eyes. Use individual protective equipment (safety glasses,
waterproof-boots, suitable protective clothing) in case of
major spillages.
ENVIRONMENT PRECAUTIONS: Keep away from drains, soils, surface &
ground waters.
CLEANING UP METHODS FOR SPILLAGES: Remove all potential ignition
sources. Contain spilled material. Cover with an inert or non-
combustible inorganic absorbent material, sweep up and
remove to an approved disposal container. Observe state,
federal & local disposal regulations.
7. HANDLING & STORAGE.
PRECAUTIONS IN HANDLING: Apply good manufacturing practice &

industrial hygiene practices, ensuring proper ventilation.
Observe good personal hygiene, and do not eat, drink or
smoke whilst handling.
STORAGE CONDITIONS: Store in tightly closed original container, in a
cool, dry & ventilated area away from heat sources &
protected from light. Keep air contact to a minimum.
FIRE PROTECTION: Keep away from ignition sources & naked flames.
Take precautions to avoid static discharges in working area.
8. EXPOSURE CONTROLS/ PERSONAL PROTECTION.
RESPIRATORY PROTECTION: Avoid breathing product vapour. Apply local

ventilation where possible.
VENTILATION: Ensure good ventilation of working area.
HAND PROTECTION: Avoid all skin contact. Use chemically resistant
gloves if required.
EYE PROTECTION: Use safety glasses.
WORK/HYGIENE PRACTICES: Wash hands with soap & water after
handling.
9. PHYSICAL & CHEMICAL PROPERTIES.
COLOUR: Pale to brownish-yellow

APPEARANCE: Mobile liquid
ODOUR: Heavy lemon-like odor
FLASHPOINT °C: 71
SPECIFIC GRAVITY @ 20°C: 0.8550-0.9050
REFRACTIVE INDEX @ 20°C: 1.4830-1.4890
SOLUBILITY IN 70% ETHANOL @ 20°C: 1+3
10. STABILITY & REACTIVITY.
REACTIVITY: It presents no significant reactivity hazards, by itself or in

contact with water. Avoid contact with strong acids, alkali or
oxidising agents.
DECOMPOSITION: Liable to cause smoke & acrid fumes during
combustion: carbon monoxide, carbon dioxide & other non-
identified organic compounds may be formed.
11. TOXICOLOGICAL INFORMATION.
Acute oral LD50 >5g/kg. E.I. and W.I. Lemongrass oils have been found
non-irritant, non-sensitizing & non-photo toxic.
12. ECOLOGICAL INFORMATION.

BIODEGRADABILITY: Data not available
PRECAUTIONS: Prevent surface contamination of soil, ground & surface
water.
13. DISPOSAL CONSIDERATIONS.
Avoid disposing to drainage systems and into the environment. Seek

expert advice.
16. OTHER INFORMATION.

Conc. % Limits:
PACKAGING:
Type Suitability
Glass Yes
Lacquer lined steel/tin Yes
Aluminum Yes
HPPE No
F/HDPE Yes
Other plastic No
SHELF LIFE: Min. 12 months when stored within advised conditions.

Q.C. REQUIREMENTS: In-line with general product specification. Always
satisfy suitability for specific application. Retest after 6 months.
The data provided in this material safety data sheet is meant to represent
typical data or analysis for this product and is correct to the best of our
knowledge. The data was obtained from current and reliable sources, but is
supplied without warranty, expressed or implied, regarding its’ correctness or
accuracy. It is the user's responsibility to determine safe conditions for the use of
this product, and to assume liability for loss, injury, damage or expense arising
from improper use of this product. The information provided does not constitute
a contract to supply to any specification, or for any given application, and buyers
should seek to verify their requirements and product use.
MARKET STUDY19
USES AND APPLICATION OF THE PRODUCT
Lemongrass oil has a variety of uses in the industry, it is primarily

consumed in the production of soaps and detergents which comprises its 60%
market share then followed by 10% of the cosmetic and 18% of food and
flavoring industry, 10% are from the perfumery and the least is for the
production of medicine which comprises only 2% of the market.
* PHARMACEUTICALS
1. Circular muscles and joints
- muscle pain, poor blood circulation
2. Digestive System
- fever, infectious disease
3. Nervous System
- headache, nervous exhaustion, stress related
4. Skin Care
- acne, athlete’s foot, excessive perspiration, insect repellent
* COSMETICS AND PERFUMERY
* SOAPS AND DETERGENTS
* FOOD AND FLAVORING INDUSTRIES
19
DEMAND20
The country has local manufacturer of this kind of product and import.
Therefore the demand is computed as:
DEMAND = LOCAL PRODUCTION + IMPORT
Table 3: Demand of Lemongrass Oil
LOCAL
IMPORT PRODUCTION DEMAND
YEAR (kg) (kg) (kg)
1994 48,928 8,750 57,678
1995 50,479 36,370 86,849
1996 65,531 8,319 73,850
1997 88,554 4,450 93,004
1998 41,779 0 41,779
1999 50,761 16,665 67,426
2000 68,512 618 69,130
2001 57,212 182 57,394
2002 10,653 22,529 33,182
2003 26,735 0 26,735
*Source: NSO (National Statistics Office)
20
HISTORICAL DEMAND
Table 4: Historical Demand of Lemongrass Oil
YEAR HISTORICAL DEMAND (kg)
1994 57,678
1995 86,849
1996 73,850
1997 93,004
1998 41,779
1999 67,426
2000 69,130
2001 57,394
2002 33,182
2003 26,735
*Source: NSO (National Statistics Office)

Graph 1: Historical Demand of Lemongrass Oil
Historical Demand of Lemongrass Oil
100 000
80 000
60 000 Demand(kg)
40 000
20 000
0
1994 1996 1998 2000 2002
Year
Historical data shows that there is noticeable increase and decrease in

demand of lemongrass oil. This can be attributed to the fast-growing industries,
which are the primary market of lemongrass oil.
PROJECTED DEMAND
Table 5: Projected Demand of Lemongrass Oil
YEAR QTY (kg)
2005 1,068,221
2006 1,251,406
2007 1,434,592
2008 1,617,777
2009 1,800,962
2010 1,984,147
2011 2,167,332
2012 2,350,518
2013 2,533,703
2014 2,717,888
Graph 2: Projected Demand of Lemongrass Oil
Projected Demand of Lemongrass Oil
3 000 000
2 500 000
2 000 000
Demand(kg)
1 500 000
1 000 000
500 000
0
2005 2007 2009 2011 2013
Year
From the graph we can see that the demand is constantly increasing
indicating that the product has a future, as shown in the projected demand.
MARKET ASPECT21
BUSINESS OPPORTUNITIES
Currently the status of local production regarding the essential oil is very
poor. Companies, that use this product, depend on importation because local
production cannot meet its own demand and the standards for the product. Olio
del Limone Company hopes to make it big in the future and soon penetrate the
international market.
PROJECTED MARKET SHARE
Our company targets a 5.56% market share here in the Philippines. It will
be fixed for the subsequent years.
Market Share
Olio del
Limone Locally
5.56% produced
31 %
Imports
63.44%
21
Extraction of Oil from Lemongrass, January 2004
MARKETING PROGRAM22
1. INDUSTRY ANALYSIS
A. Rivalry/Intensity of Competition: LOW
There are companies that produce essential oil in the country. There is
only one large-scale company and the others are small-scale producers. They
help each other to supply the demand in the market.
Essential Oil producing companies:
o COLA (San Luis, Aurora)

o Ms. Cecilia Asuncion's Co. (Gasan, Marinduque)
o Jose Vidal's Co. (San Jose, Occidental Mindoro)
o Orion Country Agro-Development Inc. (Biliran)
o Farmers Cooperative (Cabadbaran, Siargao, Surigao del Norte)
o Quintessence Oils Inc. (Jones, Isabela)
B. Bargaining power of Buyers: LOW
Buyers have a low bargaining power since there is limited suppliers,

buyers cannot have the leverage in calling for a lower price.
22
C. Bargaining power of Suppliers: HIGH
Since the suppliers are limited, and there's conspiracy among them, they
can dictate the price leaving the buyers without a choice.
D. Threat of New Entrants: LOW
The threat of new entrants is low because the industry is not being ruled
by big and well-entrenched essential oil companies. Moreover, an addition to the
industry will enable the suppliers to cope up with the increasing demand in the
market.
E. Threat from Substitutes: HIGH
Threat from substitutes is high since essential oil can be produced from
synthetic materials having the same quality.
22
2. SWOT ANALYSIS
STRENGTH
Raw materials are locally defined
High quality product.
WEAKNESS
Newly established company
OPPORTUNITIES
Can compete locally since there is a high demand for quality

essential oils
The quality of our product can compete globally
Job opportunities will be available for people
Can be marketed abroad
THREATS
Possible emergence of competitors
Climate is very unpredictable
Threats of synthetic oils
Unstable economy
Lower price of competitor
3. MARKETING ANALYSIS23
PRODUCT
Olio del Limone, through careful and effective processing using the most
efficient equipment available, is always assured to have it at its best quality. The
product will be stored in a cool and dark place to prevent exposure to sunlight,
which minimizes the reaction that may occur.
PRICE
The product will be sold at a considerable price. Customers ordering in

large quantities shall avail price discounts. Our company aims to produce a
product without sacrificing its quality. Listed are some of the following price
values of Lemongrass oil.
Table 7: Price values of Lemongrass Oil24
Local Producer Price (Php/kg)

Quintessence Oils Inc. 1,800
Salcom Coconut Milling Co. 1,800
Mr. Edgardo Viriiña 1,700
23
24
Table 8: Price values of Lemongrass Oil (Foreign Market)25
Country FOB (Php/kg) Landed Cost

(Php/kg)
U.S.A 1,400 1,514
Europe 1,350 1,405
Price of Olio del Limone, Inc.
Olio del Limone ……………………………… Php 1, 200/kg
The foreign market producers of oil sell their product at a lower cost
compared to local producer. Also, traders of imported oil charge additional cost
due to some taxes from importing this oil.
25
Import Business Manifest Average Price Year 2004
BOC (Bureau of Customs)
PROMOTION
Olio del Limone Company will hire sales representatives that would be
responsible in finding clients and potential customers. We will conduct seminars
and orientation regarding our product to different industry.
For the assurance of the product, the company must guarantee that the
standards and requirements for packing, marking, labeling are met to maintain
customers constancy.
1) Products are correctly modestly sealed.

2) Net and gross weight is proper and filled with adequate air and space
between the surface of the oil and at the top of the container.
3) Labeled to specify the identity of the product.
PLACE
Our product will be available and distributed in places where our major
consumers are located. Olio del Limone products will be sent to the consumers
according to delivering conditions.
25
MARKET SEGMENTATION26
USES AND APPLICATIONS
Soaps and detergents - 60%

Food and Flavorings - 18%
Cosmetics - 10%
Perfumery - 10%
Pharmaceuticals - 2%
LIST OF POTENTIAL MARKETS
UNILAB Philippines
Unilever Philippines
Interphil Lab.
Mead Johnson Philippines
Avon
Colgate-Palmolive Philippines
International Flavors and Fragrance
New Flavor House
Sarah Lee
Procter and Gamble Philippines
Splash Klan Philippines
26
MARKETING STRATEGY27
MARKETING PLAN
The company will be producing quality wise product to answer the needs
for essential oil in the country. After establishing a firm market share, Olio del
Limone Company plans to go global making a stand that the country has an
adequate supply of essential oils.
DIRECT SELLING
Olio del Limone Company will adopt a direct selling method since it has a
limited market in the industry. This will help the manufacturers feel safer
particularly when it involves substantial outlay of money. Adopting the method
will help also develop specification suited for a particular product.
DISCOUNTS AND ALLOWANCES
Discounts and allowances will be considered since the product is locally

produced. A 5% discount will be given to the buyer granted that they will pay
within 10 days of date and in full within 30 days, quantity discounts will depend
on the bulk of purchase. F.O.B. allowance will be minimal due to its accessible
location.
27
SOCIO-ECONOMIC STUDY28
The project contributes to improve the standards of living, community

development, and the use of local materials. The project is an added source of
income for individuals, therefore, improving the standards of living of families
and individuals.
Employees will be properly trained and fairly paid. The municipal

government, as well as the national government, will gain from the taxes the
project will contribute. The government can use the taxes for the development of
their community if properly managed.
Since the raw materials are locally available and locally produced,
importation is definitely out of the principle. Local producers of the lemongrass
plant will benefit from the project, especially during the pre-operating period.
28
FINANCIAL ASSUMPTIONS:
1. Unit price of Lemongrass in Inventory of Raw Materials is increasing

annually by 10%.
2. Purchase and Usage in Inventory of Raw Materials is increasing
annually by 5%.
3. Production in Inventory of Finished Goods is increasing 5% per year.
4. In the pre-operating and annual salaries, fringe benefits are 25% of
the monthly salary.
5. For the salary projection, salaries and fringe benefits are increasing
annually at 5%.
6. Cost of fuel, electricity and water increases 5% annually.
7. For repair and maintenance, allow 1% of equipment cost for the first
year, 10% increase for the second year and is increasing 5% per year.
8. Taxes and Licenses is 1.5% of land, land improvement and buildings.
9. Insurance is 1% of assets.
10. In Marketing and Administrative expenses, sales tax is 12% of sales.
11. Delivery and packaging expenses is 1% of sales.
12. Interim Interest Expense is 15% per annum.
RECOMMENDATION AND CONCLUSION:
In conclusion to our study, we find that the production of essential oil

from lemongrass is a feasible industry to endeavor on and invest in.
Due to the limitation in time and finances however, we weren’t able to

intensify our investigative study on the price of raw materials per kilogram and
the competitive price of lemongrass oil in the present market.
In addition to this, electrical or power consumption may vary on the

National Power Corporation’s adjustments based on the time an investor would
like to engage in this business, hence, we recommend that future studies should
concentrate more on these aspects that we didn’t have the liberty to pursue
further.
REFERENCES:
Production of Ilang-Ilang and Lemongrass Oils by Steam Distillation

March 15,2002
Production of Lemongrass Oil

March 12, 1999
NSO (National Statistic Office)
Plant Design and Economics for Chemical Engineers 4th edition

By Max S. Peters and Klaus D. Timmerhaus
Perry’s Chemical Engineer’s Handbook 7th edition

By Robert H. Perry and Don W. Green
Introductory Accounting Part One and Two by D.S. Pasion
Basic Accounting Concepts, Principles, Procedures & Applications

By Edwin G. Valencia
Workbook in Financial Management by Magiting S. Medina
Principles of Managerial Finance: A Financial Analysis Approach

By Cesar G. Saldaña
http://connection.cwru.edu/mbac424/breakeven/BreakEven.html
http://en.wikipedia.org/wiki/Nabua%2C_Camarines_Sur
http://elgu2.ncc.gov.ph/nabua/index.php?cat1=6&cat2=4

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Production of Essential Oil

List of Figures, Tables and Graphs

Figure 1: Organizational Chart ……………………………………………... 7

Graph 1: Historical Demand of Lemongrass Oil ……………………… 54

Table 1: Energy Requirement ……………………………………………… 31

Financial Assumptions ………………………………………………………… 68

I, Jenalyn L. Villamarin, would like to wholeheartedly dedicate this

The very first person that I would like to acknowledge is non-other

Ms. Mary Joy Q. Estrellanes would like to express her sincerest

This study aims to utilize lemongrass or tanglad (Cymbopogon Citratus

Lemongrass is extracted from leaf by steam distillation because it has high

The characteristic of strong pleasant aroma of lemongrass is ascribed to

Lemongrass, commonly referred to as "tanglad", is an excellent source of

The characteristic aroma of lemongrass is ascribed to citral, which is the

At present, our country has been continually dependent on foreign

DEFINITION OF THE PROJECT3

Lemongrass (Cymbopogon citratus D.C. Stapf) referred to as "tanglad" is

The company will be named Olio del Limone Company, which

1. Olio del Limone Company shall produce high quality product.

Lemongrass or "tanglad" grows abundantly in the country and is now

HISTORY AND RELATED LITERATURE6

Essential oils are mixtures of organic chemicals formed as by-products of

The use of essential oils by man predates written records, but

Lemongrass oil is an indispensable ingredient in the manufacture of soap,

PROPERTIES OF ESSENTIAL OILS7

Essential oils are generally colorless to slightly yellowish when freshly

COMPOSITION OF ESSENTIAL OILS8

The essential oils are mixtures, generally consisting of a major

MANUFACTURE OF ESSENTIAL OILS9

The fabricated extractor consists of a strainer inserted into a stainless

Boiler-Steam Distillation is a process by which the plant charge is steam.

1. Wash the leaves.

MAJOR RAW MATERIAL11

Common Name: Lemongrass

Description: Lemongrass is an aromatic grass about 210-315 cm tall. The

METHODS AND PROCEDURE12

D. OIL AND WATER SEPARATION

The objective of the process is to remove particles from steam in order to

An all-plastic drum made from blow molded HDPE will be used as

ANALYSIS OF ESSENTIAL OILS13

An essential oil may be analyzed using many of the techniques familiar in

Lemongrass requires a warm and humid climate with plenty of sunshine

High temperature and sunshine promote development of oil in the plant.

Harvesting and Drying:

Initial harvest is possible after 3 months of transplanting. Subsequent

Because of their value, essential oils are a common prey to adulteration.

Adulteration of essential oils by inferior oils such as kerosene or turpentine

Analysis of Specific Compounds:

At present, most of the essential oils needed by local perfumeries,

3. ROTARY VACUUM DRYER

Shell and Tube condenser

6. OIL AND WATER SEPARATOR

Type: induced draft

Capacity: 5.30 m3 (cylinder)

10. BELT CONVEYOR

2 stage deep well pump

shell-tube condenser will be recycled by allowing the steam to pass through a

Adequate supply of electricity is necessary for plant machineries and

Telephones, computers, e-mail and Internet are needed to speed up the

Our plant is located at a 5,000 m2 land at San Ramon, Nabua, Camarines

Abundant supply of raw materials

Nabua is a 2nd class municipality in the province of Camarines Sur,

For the municipality of Nabua, transportation is very much important