SPICES / MASALA POWDERS

INTRODUCTION
India is known as the home of spices. Out of the 70 spices listed by the
international organization for standards almost all of them are grown in India.
Pepper, cardamom, chilies, Ginger, Turmeric and a number of spices seeds and
curry powder are some of the important powders produced and exported from
India. The annual production of all these spices comes to 2 million tonnes and
the export of spices powders is about 5000 tones. The balance is internally
consumed and also exported as whole.

MARKET
India's spices exports rose 19 percent in volume to 444,250 tonnes due to good
demand for pepper and chilli, in the year ending March 2008, as per the report
from the Spices Board.

In value terms, exports touched an all-time high of Rs.44.36 billion the short
supply in the global market and cautious selling by major producing countries like
Vietnam has pushed up the pepper prices in the international markets

Pepper exports touched new highs during the period and it rose 21.7 percent to
35,000 tonnes.

India, the second largest pepper producer and exporter, exports mainly to U.S.,
U.K., Italy, Germany and Canada.

Exports of chilli also reached an all-time high of 209,000 tonnes due to lower
Output in other major producing countries like China, Pakistan, and the Board said.

The stringent quality measure implemented by the Board has made Indian chilli
more acceptable in the international markets, it said.
Chilli exports account for 47 percent in volume and 25 percent in value of the
total export of spices and spice products from India.

Cumin seed or jeera exports also rose 8 percent to 28,000 tonnes during the
period.

However, exports of cardamom (large), ginger, turmeric, celery, garlic, and

nutmeg and mace fell short of last year's performance.

Turmeric exports fell 4.4 percent to 49,250 tonnes during the period.

Exports of ginger also declined 11 percent to 6,700 tonnes due to higher

domestic prices. Bangladesh is the largest buyer of ginger from India.

India produces over 4 million tonnes of spices and exports around 180 spice
products to over 150 countries.

INSTALLED CAPACITY
The installed capacity proposed is 60 MTs of various spices powders per annum.
This is based on an installed capacity of 200 Kgs of spices per day on single shift
basis. The product mix proposed is the following.
Curry powder 12 MTs
Chilly powder 12 MTs
Coriander Powder 12 MTs
Turmeric Powder 12 MTs
Sambar Powder 12 MTs

PLANT AND MACHINERY

The following items of plant and machinery are required for the project.
Qty Rs
Micro pulveriser 1 100000
Sieving unit 1 140000
 Blender 1 60000
Auger filling 1 120000
Other equipments 60000
TOTAL 480000

MANUFACTURING PROCESS
Curry powder ingredients namely, chilly, turmeric, coriander, etc are fed in
individual batches manually into the hopper of Micro pulveriser. It is ground to a
fine powder and the powdered spices can be collected on the other side. In order
to get the fine mesh in one grinding normally two pulverizing machines are
installed for grinding one after another. The dust collectors are employed to avoid
pollution as part of the micro pulveriser. The cleaning, sieving and mixing
operations are performed by independent machine also they can be integrated to
the micro pulveriser.
From the outlet of the pulveriser, milled stock is conveyed into the hopper of
sieving and grading machine where the stock is sieved into fine particles of size
of 40 to 60 mesh, depending up on the product finish required. Spices are
packed in polyethylene bags and again in cartons. Bulk packing is carried out in
polyethylene lined jute bags or multiplies bags of paper.
The testing instruments are provided to test the materials for moisture content,
PH values, ash percentage, particle size in sieve tester etc.

RAW MATERIALS
The raw materials namely chilly, coriander seed and turmeric bulbs/fingers. Small
quantities of other spices such as pepper, cumin seed, mustard, garlic, etc are
required for manufacturing curry powder. The materials can be procured from
dealers. The calculations are given below only for one product namely, chilly
powder. The margins on powders will almost be the same for all types of masala
powders.
 For Quantity Kgs 60000
KGs
Qty-Kgs Rate/Kg Value
Chillies 63000 40.00 2520000
Total 2520000
TOTAL for 60000 Rs. lakhs 25.20
Raw material cost per piece 42.00
Packing charges-Rs. lakhs 60000 6.00 3.60

LOCATION LAND AND BUILDING

The infrastructural facilities required for the project by way of land and building is
the following.
Built up area-Sq.ft 500
Rent p.m.-Rs 2500
Advance-10 months.Rs 25000

UTILITIES
The utilities required for the project are the following
POWER Three phase KW 11.00
Power charges Rs.lakhs p.a 1.32
WATER For process-Litres per day 300
For human consumption 200
TRANSPORT Hiring vehicles

MANPOWER
The manpower requirement for the project is given below
Monthly Total
wages
Supervisor 1 5000 5000
Skilled 4 4000 16000
Helpers 3 3000 9000
sub total 30000
 Add benefits 20% 6000
Total per month 36000
TOTAL PER ANNUM-Rs. lakhs 4.32

COST OF PROJECT AND MEANS OF FINANCE

The cost of project and Means of Finance is estimated as given below
1. COST OF PROJECT
[Rs.lakhs]
Land & Building (Advance) 0.25
Plant & Machinery 4.80
Other Misc. assets 0.10
Pre-Operative expenses 0.20
Margin for WC 0.21
5.56
2. MEANS OF FINANCE

Capital 1.96
Term Loan 3.60
5.56

-The term loan proposed is 75% of the Plant and machinery value.
-The promoters will bring in the required capital contribution to the project.

COST OF PRODUCTION AND PROFITABILTY

A cost and profitability statement projected for the first 5 years of operations is
given in Annexure. The profitability is based on the following assumptions.
Assumptions
Installed capacity 60000 Kgs of Spices Powders per annum
Capacity utilisation Year-1 -60%
Year -2 -70%
Year-3 onwards- 80%
Selling price Rs.75.00 per kg for calculation purpose only
chilly powder is taken into account. The margin
per kg almost remains constant for all materials.
Raw materials As per the details given above
Packing materials As per details given above
Power Rs.1.32 lakhs per annum at 100%
Wages and salaries Rs. 4.32 lakhs with increase 5% every year.
Repairs and Maintenance Rs.0.12 lakh per annum
Depreciation Written down value method -15 % on machinery
Selling general and Rs.20000 per month
administrative expenses
Interest on Term loan 14% per annum
Interest on working capital 14 % per annum
Income tax 33.99 % on profits

ASSESSMENT OF WORKING CAPITAL

The following levels are projected for working capital
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 0.50 0.63 25% 0.16 0.47
Expenses 1.00 0.05 100% 0.05 0.00
0.68 0.21 0.47

A bank finance of Rs 0.47 lakh is required by the unit for meeting the working
capital.

PROFITABILITY RATIOS
The project ensures good profits on investment and sales turnover.

DEBT SERVICE COVERAGE RATIO

The debt service coverage ratio of this concern is very high as the Term loan
component is too low and the returns are high in this project.
BREAK EVEN LEVEL
The break even level of the unit is 55% of the installed capacity’

LIST OF PLANT AND MACHINERY SUPPLIERS

1. Navinchandra & co
308, Thambu Chetty street
Chennai 600 001

2. Pilotsmith India Pvt. Ltd.

Kallettumkara, Trichur Dist,
680 683 kerala

3.B.R.Industries
Flat No:103 Karnik Towers,
Opp. MCH office,
Khairtabad,
Hyderabad – 500004

FINANCIAL ASPECTS
1. COST OF PROJECT
[Rs.lakhs]
Land & Building (Advance) 0.25
Plant & Machinery 4.80
Other Misc. assets 0.10
Pre-Operative expenses 0.20
Margin for WC 0.21
5.56
2. MEANS OF FINANCE

Capital 1.96
Term Loan 3.60

5.56
3. COST OF PRODUCTION & PROFITABILITY STATEMENT
[Rs.lakhs]
Years 1 2 3 4 5
Installed Capacity Kgs 60000 60000 60000 60000 60000
Utilisation 60% 70% 80% 80% 80%
Production/Sales Kgs 36000 42000 48000 48000 48000

Selling Price Rs.75 per Kg

Sales Value (Rs.lakhs) 27.00 31.50 36.00 36.00 36.00

Raw Materials 15.12 17.64 20.16 20.16 20.16

Packing Materials 2.16 2.52 2.88 2.88 2.88
Power 0.79 0.92 1.06 1.06 1.06
Wages & Salaries 4.32 4.41 4.49 4.58 4.68
Repairs & Maintenance 0.12 0.13 0.14 0.15 0.17
Depreciation 1.20 0.90 0.68 0.51 0.38
Cost of 23.71 26.52 29.41 29.34 29.32
Production

Selling, Admin, & General exp 2.40 2.52 2.65 2.78 2.92
Interest on Term Loan 0.36 0.32 0.23 0.23 0.23
Interest on Working Capital 0.07 0.07 0.07 0.07 0.07
Total 26.54 29.43 32.36 32.42 32.54

Profit Before Tax 0.46 2.07 3.64 3.58 3.46

Provision for tax 0.00 0.70 1.24 1.22 1.18
Profit After Tax 0.46 1.37 2.40 2.36 2.28

Add: Depreciation 1.20 0.90 0.68 0.51 0.38

Cash Accruals 1.66 2.27 3.08 2.87 2.66

Repayment of Term loan 0.00 0.90 0.90 0.90 0.90

4. WORKING CAPITAL:
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 0.50 0.63 25% 0.16 0.47
Expenses 1.00 0.05 100% 0.05 0.00
0.68 0.21 0.47
6. PROFITABILITY RATIOS BASED ON 80% UTILISATION

Profit after Tax = 2.40 7%

Sales 36.00

Profit before Interest and = 3.94 65%

Tax
Total Investment 6.03

Profit after Tax = 2.40 123%

Promoters Capital 1.96

7. BREAK EVEN LEVEL

Fixed Cost (FC):

[Rs.lakhs]
Wages & Salaries 4.49
Repairs & Maintenance 0.14
Depreciation 0.68
Admin. & General expenses 2.65
Interest on TL 0.23
8.19

Profit Before Tax (P) 3.64

BEL FC x 100 = 8.19 x 80 x

= FC +P 11.83 100 100

55% of installed capacity