ESSENTIAL OILS

PRODUCT CODE : 313183007

QUALITY AND STANDARDS : Lemongrass oil IS: 327

Mentha Arvensis oil IS: 3134

PRODUCTION CAPACITY : Essential oil of Lemongrass 12 MT

Essential oil of Basil 6 MT
Essential oil of Mint 12 MT
Value : Rs. 2,52,00,000/-

MONTH AND YEAR : May, 2014

OF PREPARATION

PREPARED BY : Ms. Vanshi Uniyal

Investigator (Chemical)

1. INTRODUCTION
Essential Oils have added a lot of value to the growth of flavor and fragrance
industry as well as agriculture. The economy of the country being agriculture based,
its farmers were engaged in traditional agriculture growing mostly food crops,
which has caused them low returns. Imperative need has, therefore, been felt of
growing essential oil bearing crops for a long time past, under diversified farming
programme which have proved to be cash crops offering much better returns to the
farmers. In our country, some 1300 species are known to contain Aromas, but only
about 50 of these plants and oils derived from them are in consistent demand in
trade & industry.

The process of globalization of Fragrance and Flavor industry, which started

about a decade before, is now growing rapidly. Essential oils are the backbone of the
Fragrance and Flavor industry all over the world. Industry sources suggests that
Essential oils of Basil, Citronella, Lemongrass, various varieties of mints, Palmarosa,
Sandalwood, Geranium, Lavender, Patchouli are finding increasing use in
fragrances and flavors formulations for use in variety of industrial & consumer
applications. Besides, flavor & fragrance applications, essential oils are now finding
inroads in ‘Aromatherapy’. Beside this, essential oils will gain added importance
due to environmental safety and regulatory provisions applicable to petroleum-
based aroma chemicals causing pollution.

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Thus, the principal sector using essential oils are:

PERSONAL CARE PRODUCTS:
- Cosmetics & Toiletries (eg. Skincare, hair care products)
- Perfumery (Eau De Toilette, Eau de Cologne, etc ‎)

HOUSEHOLD PRODUCTS:
- Cleaning Preparations for hospitals & schools.
- Room fresheners

FOOD & BEVERAGES

- As a flavor ingredient, natural essential oils are preferred over
synthetic substitute on account of stringent laws governing the food
preparations.
- Soft drinks (citrus oils & vanilla based formulations)

HEALTH CARE PRODUCTS

- Traditional medicines
- Alternative medicines (Aromatherapy)

2. MARKET POTENTIAL
For the past four decades, mints are commercially cultivated in India. Of
these, the Japanese Mint, yielding menthol is grown extensively in northern India.
Other major producing countries are China and Brazil and to a smaller extent
Thailand and Vietnam. A large part of the country’s oil production is exported. It
meets fierce competition in trade with China. The crop has of late involved a large
sector in processing and trade activity in several small towns of U.P. (Rampur,
Sambhal, Chandausi, Badaun, and Barabanki). A large number of farmers, traders,
distillers and exporters are associated with this activity. The investment in the
industry is estimated at Rs.350 crores.

3. BASIS AND PRESUMPTIONS

 It has been assumed that the unit would be located close to Aromatic
Plantation of about 60-70 hectare for Mints, Geranium, Basil, Lemongrass,
Palmarosa, etc.
 Essential oil yield has been assumed as 0.7% for mint; 0.6% for lemongrass
and 0.5% basil of the weight of the respective herb, on an average.
 It has been shown in the profile that aromatic herbs would be purchased as
raw materials. However, it has become a common practice in North India to
utilize the capacity of the unit on job work basis.
 The rate of interest has been taken 14% on an average both for fixed
investment and working capital.

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4. IMPLEMENTATION SCHEDULE
The approximate time required for various activities is given below.
However, it may vary from place to place depending upon the local circumstances
and enthusiasm of the entrepreneur:
Period
S. No. Activity
(in Months)
1. Scheme Preparation and Approval 0-1 Month
2. EM Part - I Registration & Preparation of Project 1-2 Months
Report
3. Sanction of loan 2-5 Months
4. Clearance from State Pollution Control Board 3-4 Months
5. Placement of order for machinery and delivery 4-5 Months
6. Installation of machines 6-7 Months
7. Power connection 6-7 Months
8. Trial Run 7-8 Months
9. Commercial Production 9 Months onwards

Due to overlapping of some activities, normally 6-9 months are required to

implement the project.

5. TECHNICAL CONCEPTS
5.1. Process of Manufacture
Various processing techniques are used for extracting essential oils out from
aromatic herbs depending upon the material to be processed. The extraction of the
oil from the herb or the flower is conventionally done by Water or Steam Distillation.
Solvent Extraction was later introduced that increased the yield and produced better
quality of the essential oil but this technique was a little expensive in recovery of
solvent and sometimes had limitations on account of traces of solvent remaining in
the final product. However, cost-effective distillation, i.e. steam distillation is
utilized for distilling woody material like sandalwood, cedar wood/vetiver & celery
seed whereas; solvent extraction technique is utilized for production of
concentrates/absolutes from flowers of Jasmine & Tuberose.
In this profile, water-steam distillation of grassy material like lemongrass,
mint, basil, geranium has been described. During the process, the material is charged
over a false bottom of a M.S perforated grid in a still under which water is heated to
generate low pressure steam. Steam so generalized passes through grassy herb
whereby volatile essential oil gets enriched with steam and reached to a separator
through condenser. Essential oils, being normally light get separated from water by
decantation in a separator.
Any entrepreneur interested in entering this industry can draw a big benefit
by a careful planning and selection of the herb for cultivation that will depend on the
kind of soil, rainfall and climate of the proposed location. The process of extraction
will depend on the kind of herb and the capacity of the proposed project.

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5.2. Quality Control & Standards

Product should conform to the following standards:
S. No. Item Sandards
1 Lemongrass oil IS: 327
2 Mentha Arvensis oil IS: 3134-1962-1977

5.3. Production Capacity (Per Annum)

Quantity: 30 MT of Essential oil (Mint, Basil, Lemongrass)

5.4. Pollution Control

NOC from State Pollution Control Board is to be obtained and effluent should
be treated before disposing.

5.5. Energy Conservation

Suitable measures should be used for the appropriate use of fuel and electricity.

6. FINANCIAL ASPECTS
6.1. Fixed Capital
Land & Building
Land & Building of 1200sq ft. on rent.

6.1.1. Machinery & Equipments

Amount
S. No. Description Qty.
(Rs.)
1 Field Distillation Unit comprising water-steam
distillation still, 3 tone herb charge cap, with condenser
2 Nos. 6,00,000
& receiver (including chain-pulley for loading &
unloading of herbs in the unit).
2 Furnace 2 Nos. 70,000
3 Overhead tank, pump with motor 1No. 70,000
4 Laboratory & Miscellaneous LS 25,000
5 Miscellaneous - 20,000
6 Motor Pump - 5,000
Total 7,90,000
i Erection & installation @ 10% 79,000
ii Office Furniture & Equipments 50,000
iii Preoperative Expenses 20,000
Total Fixed Investment 9,39,000

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6.2. Working Capital (Per Month)

6.2.1. Personnel (Salary & Wages)
S. No. Designation No Rate Total (Rs.)
1 Supervisor 1 10,000 10,000
2 Skilled Workers 1 9,000 9,000
3 Unskilled Workers 1 8,000 8,000
Total 27,000
Perquisites @ 10% 2,700
Total 29,700

6.2.2. Raw Material

Qty. Rate Value
S. No. Item
(Tonnes) (Rs./Tonne) (Rs.)
1 Mint 143 5000 7,15,000
2 Lemongrass 167 4000 6,68,000
3 Basil 100 3000 3,00,000
4 Tin Packaging Bottles for oil (1 liter) 2500 10 25,000
Total 17,08,000

6.2.3. Utilities
S. No. Description Value (Rs.)
1 Power (40 unit /day; 1000 units @ Rs. 7/- per unit) 7,000
2 Fuel/wood/coal 6,000
3 Water 1,000
Total 14,000

6.2.4. Other Contingent Expenses

S. No. Description Value (Rs.)
1 Rent 8,000
2 Postage & Stationary 1,000
3 Repairs & Maintenance 2,000
4 Advertisement & Publicity 3,000
5 Transportation 2,000
6 Telephone/ Mobile 1,000
7 Miscellaneous Expenses 2,000
Total 19,000

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6.2.5. Working Capital/ Total Recurring Expenditure (p.m.)

S. No. Description Value (Rs.)
1 Raw Materials 17,08,000
2 Salary & wages 29,700
3 Utilities 14,000
4 Other Contingent Expenses 19,000
Total 17,70,700

Total Working Capital (2 Months): Rs. 17,70,700 X 2= Rs. 35,41,400

6.3. Total Capital Investment

1. Fixed Capital 9,39,000
2. Working Capital for 2 Months 35,41,400
Total 44,80,400

7. FINANCIAL ANALYSIS
7.1. Cost of Production (Per Annum)
S.No. Description Amount (Rs.)
1 Total Recurring Cost per year 2,12,48,400
2 Depreciation on Machinery & Equipment @ 10% 79,000
3 Depreciation on Furniture @ 20% 10,000
4 Interest on Total Capital Investment @ 14% 6,27,256
Total 2,19,64,656

7.2. Turn Over (Per Annum)

S.No. Description Qty. Amount (Rs.)
1 Essential oil of Mint @ 1000/-per kg 12 MT 1,20,00,000
2 Essential oil of Basil@ 600/-per kg 6 MT 36,00,000
3 Essential oil of Lemongrass@ 800/-per kg 12 MT 96,00,000
Net Turn Over 2,52,00,000

7.3. Net Profit (Per annum) (Before Taxation)

= Rs. 2,52,00,000 – Rs. 2,19,64,656 = Rs. 32,35,344

7.4. Net Profit Ratio

32,35,344
= X 100 = 12.83 %
2,52,00,000

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7.5. Rate of Return

32,35,344
= X 100 = 72.21 %
44,80,400

7.6. Break Even Point

Fixed Cost (Per Annum)

S. No Description Amount (Rs.)

1 Depreciation on Machinery & Equipment @ 10% 79,000
2 Depreciation on Furniture @ 20% 10,000
3 Rent 96,000
4 40% of other Expenses excluding Rent/Transport 43,200
5 40% of Salary & Wages 1,42,560
6 Interest on Total Investment @ 14% per annum 6,27,256
Total 9,98,016

B.E.P
9,98,016
= X 100
9,98,016 + 32,35,344

= 23.57 %

ADDRESSES OF MACHINERY & SUPPLIERS

S. No. Name of the Supplier
1 M/s Swaraj Fabricators
2 M/s. Param Engineers Pvt. Ltd.
3 M/s. S. S. Fabrication
4 M/s. Umech Engineering Pvt.
Ltd.
5 M/s. Pharmac Engineers
Address of the Supplier
Faizabad Road, Barabanki,
Uttar Pradesh-225001
4th Km., Rampur Road, P.O. Clutter Buck
Ganj, Bareilly, Uttar Pradesh-243502
No. 5, Amit Apartment, Sector-13,
Rohini , Delhi - 110085, Delhi
L-13, Gali No. 9, New Rohtak Road Indl.
Area, Anand Parbat, New Delhi
J / 137 1st Floor , Ansa Industrial state,
Saki Vihar Road, Andheri East, Mumbai

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