CONTENTS

 EXECUTIVE SUMMARY
 BUSINESS DESCRIPTION
 MARKETING PLAN
 INDUSTRY OVERVIEW
 OPERATIONS
 FINANCIAL VIABILITY
 RISK ANALYSIS
 APPENDIX
 REFERNCE
 Executive Summary
Statement of purpose
The business plan is to open a new fruit-juice concentrate plant. This study includes the analysis for the amount of
investment required, the sources of fund, source of raw material, cost analysis, marketing of the product, export
potentials and next three years expansion programs.

It was important to find a product to manufacture which has demand in the market. The changing food habits and
increased export has boosted the demand side of bottled fruit juice both in the domestic market, institutional market
(hotels, hospitals, airlines and defence).
There is a growing demand for orange, pineapple and apple juice both in the domestic and international market.
The demand of high aromatic passion fruit juice in the European and American market is also very encouraging.
Mizoram has good existing production of passion fruit.
The place where the plant was to be established was the second issue. Then the question was whether to purchase a
land outside the city or to get a rented plot within the city. For that Aiginia, Orissa was selected where there is no
shortage of raw material and infrastructure is also very good. After that it was decided to take land on rent for
Rs.15,000 per month. Should fruits be produced to reduce the cost of production or it should be purchased directly
from the market? In case it is purchased from the market then at what rate and in what quantity it should be
purchased was also studied. Fruits are available in market at Rs.40-120 per kgs and there is very low margin there
in producing it so it was decided to purchase ‘Fruits’ directly from the market instead of manufacturing itself.
For marketing the product it was important to find out which geographical areas to target the product. A detailed
study of fruit processing industry was done and information from various studies already done in this respect was
also analyzed. The literature review helped me to understand the industry in a better way. Loop holes in the
industry, problem faced by manufacturers came into my knowledge.
Financial forecasts
The financial analysis showed that the project is financially feasible. The breakeven analysis helped to find out the
minimum amount of ‘Fruit’ to be processed everyday.
Business Description
SAI KRISHNA Foods
D-129, Aiginia-751035,
Dist- Aiginia,
Orissa.

Sai Krishna Foods is a partnership firm of Mr. Dattatreya krishnan , Mr. saisankar , Mr.C.B sathpathy and Mr.
Jagannath panda with an investment of Rs.50 lakhs each .

The plan is to purchase ‘FRUITS’ from the market and pack it into Tetrapack cartons. By packing it into tetra pack
cartons products’s life will increase to 12 months which is generally 2-3 days in room temperature. There is huge
demand for ‘fruits’ and related products in eastern part of the country. The supply of ‘fruit juices’ is not sufficient
to meet its demand. There is an opportunity to sell ‘Friut juices’ purchased at a much lower price in Orissa and then
to sell it in those areas.

The plant for processing and packaging is proposed to open in Aiginia. Aiginia which is a village in Orissa is
located 20 kms from Bhubaneswar. The main reason for this particular location is that it is close to city;
transportation facility is also very good; rent for land is also very low as compared to the city. Four acre industrial
plot cost Rs.15,000 a month. Transportation will be done through local transportation trucks and also to all part of
the country. It will take maximum of 3 days to transport processed ‘FRUITS’ to any part of the country. So local as
well as national marketing will be possible but the major concern in the beginning part will be on the local market.

Marketing Plan
The present industry is fragmented by different operation sizes as follows :
 Home Scale 44%
  Cottage Scale 17%
 Small Scale 16%
 Relabeller 14%
 Large Scale 9%

It is very difficult to estimate the actual and potential market size of this product category. However, there is a
latent demand of around 10 crores litters of natural fruit juice which is much more than current consumption/
supply level of around 3 crores litters, both organized and unorganized sectors taken together.

Further, the per capital consumption in India is estimated to around 25 ml against 45 litters in Germany, 42.5 litters
in Switzerland and 39 litters in USA. Market analysts expect a growth rate of 20% per annum and hence the
industry offers a significant opportunity.

Fresh and processed fruits have been identified as a thrust area for export too. In view of the above, it appears that
there is a good scope for the propose.

2.1 Mission and Vision

Mission Statement
To take Food Processing Industry to the highest level in the country

Vision Statement
To be the No.1 player in food processing industry in next 10 years.
2.2 Four P’s of Marketing

Product
Fruit juice can be categorized as :
 Tropical
 Citrus
 Fresh/ Cellular
 Temperate
 Re-constituted

Tropical fruit juice

 Pineapple
 Passion fruit
 Mango
 Guava
 Papaya
 Tomato

The quality and flavour of the extracted juices depend on ripeness, processing and storage conditions. They are
susceptible to degradation during thermal processing and require capture and recovery of volatiles during the
evaporation stage, in order to maintain high quality.
Citrus fruit juice
 Orange
 Lime
  Lemon
 Grapefruit

The quality and flavour of the extracted juices depend on ripeness, processing and storage conditions. Essential
oil content of citrus fruit is important in maintaining the typical flavour profile of the juice. However, excessive
oil content can give objectionable off-flavours. The behaviour of each juice component must therefore be
considered in developing the correct process parameters for a high quality product.

Fresh and Cellular Fruit Juice

The world fruit juice market has become much more competitive in recent years and in most developed
countries, there is a plentiful supply of fruit juice concentrate. The market for reconstituted orange, apple and
pineapple juice in particular has become very competitive.
To meet this demand, there is a growing trend toward the production of “not-from-concentrate” (NFC) juices
since these are perceived to be of better quality than reconstituted juices.
Temperate fruit juice
Temperate fruit juices includes :
 Apples
 Pears
 Grapes
 Berries
 Peaches
 Plums
 Apricots
These temperate area fruit are processed using similar process equipment, but each has particular characteristics,
which affect the exact method of extraction and thermal treatment. Most of these fruits contain pectin, which needs
to be removed in order to produce a clear and product.

Re-constituted Juices and Nectars

Most fruit juice has traditionally been distributed from the growing region as a concentrate to save on
transportation costs. The concentrate is then diluted with water close to the point of sale, pasteurized, and re-
packaged.

Nectars are obtained by the addition of water and sugar to fruit juice, fruit juice concentrate, fruit puree or a
mixture of these. Fruits suitable for nectar production includes :
 Apricot
 Peach
 Pear
 Mango
 Guava
 Apple

Price
‘Fruit juices’ is sold around Rs.150 per Ltr in most of the places. The wholesale price of ‘Fruit juices’ in Orissa Rs
80 – 90. There is quite a margin left even after processing it in Tetra packs. Around Rs.37 will be the costing on
processing, packaging and transporting by trucks one liter of ‘fruit juice’ to any part of the country.

Promotion
The plan is to sell around 500 Ltrs of ‘juices’ everyday for which very strong marketing is required. Selling will be
done through distributors. In the first stage Northern eastern states and parts of Orissa will be the target and once
these areas are covered southern part of the country will be covered.

Place
The plant will be located in Aiginia, Orissa. It is 20 kms from Bhubaneswar. The main reason for this particular
location is close to city; transportation facility is very good; rent is very low as compared to the city.

Three A's of marketing - Availability, Acceptability and Affordability

People in India are becoming health conscious and prefer non aerated fruit drinks. Hence no efforts are needed to
make it acceptable. In many states like Assam, Tripura etc. there is ample demand for ‘fresh fruit juices’ but there
is not sufficient supply by the local manufacturers to fulfill this demand. It leaves the third vital marketing factor
affordability. The consumer are paying very high prices for the products. Even though the prices are very high the
consumers are not reluctant to consume and this is a positive sign for the industry.
2.3 Target Market
The demand from such product generate from three sector :
Army & Defence.
Hotel, Catering services and Airlines.
Civilians.
Besides, there is export potentialities. The export can be formulated by APEDA (Agro Product Food Export
Development Authority).
The market for the product is segmented into two parts. Firstly are the households & the ones consuming in bulk
and secondly those who consume in small quantities. The Packaging is in four different sizes i.e. 200ml, 500ml,1ltr
and 2ltr . The main reason for this product depth is to fulfill the demand of all types of consumers
2.4 Competitive Advantage

Long lasting: Where normal ‘fruit juices’ last for only 1-2 days. Tetra packed‘juices’ will last upto 12

months. Technology is available to last ‘Fruit juice’ for a longer period.

No Artificial Preservatives and Colour: The preservative used is just sugar syrup and sodium benzoate. Since

no artificial preservative and colour is used thus the goodness of ‘juice’ will be there.
 Packaging: The packaging is planed as to suit all type of consumers. A pack of 200 ml for the consumption

of 1 people; pack of 1ltr for the consumption of 4-6 people and a pack of 2ltr for 8-10 people.
2.5 Product development
Further, the per capital consumption in India is estimated to around 25 ml against 45 litters in Germany, 42.5 litters
in Switzerland and 39 litters in USA. Market analysts expect a growth rate of 20% per annum and hence the
industry offers a significant opportunity.
Major fruit processors therefore with to produce fruit juices, which are of such a high quality that the product
can be readily differentiated from cheaper counterparts. To meet this demand, there is a growing trend toward
the production of “not-from-concentrate” (NFC) juices since these are perceived to be of better quality than
reconstituted juices.
In the US, production of NFC orange juice has grown to 30% of the total production within five years and,
despite the high cost of transportation, this trend is being repeated in Europe. Similarly new opportunities are
arising for NFC juice containing cells and fibre processed from wide range of freshly squeezed and cellular fruit
juices.
The export potential for the business is very good but in the early stage the focus is given only to capture the Indian
market.
Industry Overview
India is the world’s second largest producer of food products next to China, and has the potential of being the
biggest in the world.

The Food Processing Industry was estimated to grow at 9-12%, on the basis of an estimated GDP growth
rate of 6-8%, during the tenth plan period.

The Food industry contributes about 18% of India’s manufacturing output and around 5% of total industrial
investment.

The Industry employs 1.6mn workers directly. The number of people employed by the industry is projected
to grow to 37mn direct and indirect job workers by 2025 (in next 18 years).

Food processing is a key industrial sector for India; it accounts for a gross output of more than US $ 69.4 billion,
out of which value-added food products comprise US $ 22.2 billion. Size of the semi-processed and ready to eat
packaged food industry is over US $ 1 billion, and it is growing at over 20 per cent a year. The total processed food
production in India is likely to double in the next ten years. There is an opportunity for large investments in food
and food processing technologies, skills and equipment, especially in areas of canning, dairy and food processing,
specialty processing, packaging, frozen food/refrigeration and thermo processing. Fruits & vegetables, fisheries,
milk & milk products, meat & poultry, packaged/convenience foods, alcoholic beverages & soft drinks and grains
are important sub-sectors of the food processing industry. Health food and health food supplements are another
rapidly rising segments in this industry.
The food processing sector in India has been accorded high priority by the Government of India, with a
number of fiscal incentives, to encourage commercialization and value addition to agricultural produce.
The food processing industry sector, which leap-fogged during the period 1990-95 has slowed its pace
in the past half decade as, the manufacturers have realized that the consumer is yet to familiarize
himself with the products available in the mark

Packaged Food Products

Packaged food products have been slow in penetrating the large potential presented by India’s 300 million strong
middle classes. But due to growing urbanization and changing food habits, the demand has been rising at a good
pace and there is enough latent market potential waiting to be exploited through developmental efforts.
et.
Fruit Products

Indian Scenario :

Since withdrawal of excise duty on fruit and vegetable products there has been significant rise in the growth rate of the industry. The

sector has registered a production growth of 13% overall, exports have been increasing continuously and pur at US$ 250.5million.

The total investment approved so far exceeds Rs. 4309 crores (US$ 1.19 billion), out of which foreign investment
is Rs. 788 crores (US $ 218.8 million).

3.6 SWOT Analysis

In order to understand the Industry in a better way it is important to study the Industry in detail and the best way to
do so is to see the SWOT analysis. ‘FRUIT juice’ is not yet as popular in the country as it should be. A large part
of the population is vegetarian and health conscious. It is a good substitute to the aerated and coloured drinks not
only for its rich taste but also for its nutrition.
Strength

1. Increasing awareness:
‘Fruit juice’ is getting popular not only among the vegetarian consumers but also among the non-vegetarians
consumers. ‘Fruit juice’ now is not limited to the northern part of the country, states like Karnataka, Andhra
Pradesh etc also have started demanding more and more of ‘Fruit juice’

2. Supply matches demand:

Efforts to increase fruit production by farmers are strongly influenced by the degree to which demand signals are
transmitted through the marketing system. Fruit vending associations have played an important role in transmitting
the message of urban market demand to them. Since the demand in the urban scenario is rapidly increasing so is
the supply generated by the farmers.
Weakness

1. Low margin of retail selling:

At Rs.40-60 a kg, the farm-gate price of fruits is perhaps the lowest in the world. The native farmer does not
receive any subsidy. So the Indian products in the post-GATT world can not compete those from many advanced
nations that now dominate global markets.

2. Technological gaps:
Those who bring in new technologies or sign joint ventures with foreign companies stand to benefit the most.

3. Poor farming:
Poor quality of trees ,fertilizers , micronutrients and lack of organized production, improper handling and tending
of fruits and fruit products are problems requiring urgent attention.

4. Low Consumption:
The major States are still deficient in fruit consumption by the standard of 10 ounces per day recommended by
nutrition experts.
Opportunities

1. Surplus capacity:
A large variety of fruits are grown in India, of which mango, banana, citrus, guava, grape, pineapple and apple are the
major ones. Apart from these, fruits like papaya, sapota, annona, phalsa, jackfruit, ber, pomegranate in tropical and
sub-tropical group and peach, pear, almond, walnut, apricot and strawberry in the temperate group are also grown in
a sizeable area. Although fruit is grown throughout of the country, the major fruit growing states are Maharashtra, Tamil
Nadu, Karnataka, Andhra Pradesh, Bihar, Uttar Pradesh and Gujarat .

2. High Volumes:
India is the second largest producer of Fruits after China, with a production of 44.04 million tonnes of fruits from an area of
3.72 million hectares .
3. Government interference:
India is the world's largest independent judiciary, well established and free from government interference.

4. Low inflation rate:

Inflation in the country has been under control for a long period now. It rarely touched double digit which shows
that the market is very much stable.
5. High Margins
Urban consumers pay a high price for ‘Fruit juice’ although it is of poor quality. According to a recent survey the
retail price is higher in India than in any other important country. The high level of prices is principally due to
shortage of supply.

Threats

1. Major players:
There already exist large producers in the country like ”TROPICANA”,”REAL” etc. who are working
on a large scale. They not only have cost benefits but also high market share. These producer
have already established there brands in the market.
2. Foreign players:
As there is huge growth opportunities in the country in this sector many foreign players will like to enter the Indian
market. If the foreign players enter into the country the local player may not be able to compete as they will bring
huge investment with them. The foreign countries are technologically very advanced as compare to the local
companies thus they will be more efficient and cost competitive.

Conclusion

The supply of fruits to urban areas is unsatisfactory both in quantity and quality. This is due to lack of organized
production , difficulties of transport , high prices and its distribution by a host of middlemen.
Better operational efficiencies are needed to improve yields, reduce waste, minimize protein losses during
processing, control production costs, save energy and extend shelf-life. The adoption of Good Manufacturing
Practices (GMP) would help manufacture fruit products conforming to international standards and thus make their
exports competitive.
Latest packaging technology can help retain nutritive value of packaged products and extend their shelf-life. For
proper storage and transportation, cold chain needs to be strengthened. Good scope exists for value-added products
like desserts, puddings, custards and sauces etc.

Brand image needs to be projected in leading international dairy trade fairs, particularly of those countries to
which exports are being targeted.

Another step may be to encourage technical collaboration and marketing tie-ups with leading international dairy
companies.

Investment Potential in Fruit Processing :

The country’s share in the world trade of processed fruits is still less than one percent. As such, abundant
investment opportunities are there in the expanding domestic market and export arena. An increasing acceptance of
new products with market development efforts is seen.
Changes in export-import policies and exchange rate adjustments have helped improving the export potential. India offers to
foreign investors a well balanced package of fiscal incentives for exports and industrial investments. It includes
complete tax exemptions and tax holidays. Investment incentives are offered by both the Central Government and
the Government of the State in which the unit is located. India has tax treaties with 40 countries.
India is a land of opportunity for investors looking for new and expanding markets. Growth prospects in the food
sector are termed healthy, according to various studies on the subject.
The basic infrastructural elements for a successful enterprise are in place.
Key elements of free market system
 raw material (milk) availability
 an established infrastructure of technology
 supporting manpower

An entrepreneur's participation is likely to provide attractive returns on the investment in a fast growing market
such as India.
food processing equipment:
Potential exists for manufacturing and marketing of cost competitive food processing machinery of world-class
quality.

Food packaging equipment:

Opportunities lie in the manufacturing of both machinery and packaging materials that help develop brand loyalty
and a clear edge in the marketing of fruit products.
Distribution channels:
For refrigerated and frozen food distribution, a world class cold chain would help in providing quality assurance to
the consumers around the region.
Retailing:
There is scope for standardizing and upgrading food retailing in major metropolitan cities to meet the shopping
needs of a vast middle class.

New enterprises are cropping up in hundreds: a few with foreign collaboration have come up. Some make specialty
fruit products like “TRANSFAT” free products. The advent of foreign brands produced in India is changing the
profile of the national industry. In fact, any multinational food company looking for overseas manufacturing
facilities would find India irresistible. Already, companies like PEPSICO, DEL VALLE LINE, PARLE AGRO
LTD are gaining popularity. Others are testing the waters before making their debut
 Operations
Location of the Plant
The site should be surrounded by available raw materials as well as skilled manpower.
So there is a lot of scope to develop a food processing plant in Orissa involving fruit products. Aiginia which is a
small village in Orissa located 20 kms from Bhubaneswar is chosen for the plant. The main reason for this
particular location is that it is close to city; transportation facility is also very good; rent is very low as compared to
the city.
Proposed capacity
The proposed multi fruit juicing unit will have a finished production capacity of about 1,500 MT juice per annum
as follows :
Product Installed 1st & 2nd year 3rd year
Capacity Production onward
(MT) Productio
@ 70% n @ 80%
Pineapple concentrate 525 367 420
Orange Juice 245 172 196
Pineapple Juice 390 273 312
Sliced Pineapple 120 84 96
Passion fruit 220 154 176
Total 1500 1050 1200

Raw Material
The raw material and other material requirement for manufacturing pineapple, orange and passion fruit juice for
the projected production mix and quantity will be as follows :
Item RM Annual Quantit Annual
Quantity value of RM y (MT) value of
@ 70% (Rs. In 2nd year RM (Rs. In
(1050 Lakhs) onward Lakhs)
MT) s@
80%
(1200
MT)

Pineapple 3139.50 55.88 3588.0 63.86

0
Orange 571.67 28.58 653.33 32.67
Passion fruit 513.33 23.10 586.67 26.40
Total Quantity
Sugar required per MT 157.50 24.41 180.00 27.90
finished product
Preservatives & - 2.63 - 3.00
Additives @ Rs. 250/MT
finished product
Packing materials @ Rs. - 52.50 - 60.00
5000/-
Fuel for generating 48.30 9.66 51.84 10.37
steam as well as for DG
set
Total 4430.30 196.76 5059.8 224.20
4

Land requirement : 4 acres of land

Plant and Equipment

The main plant and equipment will be for following activities:

Fruit handling & Inspection/ washing Juice extraction

Reception
Juice processing Juice finishing Centrifugation
Homogenization Membrane filtration Pasteurization
De-aeration Concentration Essence recovery
Concentrate post- Aseptic or non-
treatment aseptic packaging
In the orange line following additional systems will be installed
Oil removal system after Juice Extraction Section and Oil recovery as well as Special Treatment of Orange/ Lime
Juice facility after the Homogenization section.

Building and civil work

About 3000 sq. m. industrial and other shed/building including aseptic rooms and raw material refrigerated room.

Power requirement
Total connected load of about 250 KW will be required. Due to present short supply of power a DG set back up of
150 KVA is also envisaged.

Water requirement
About 75 KL of water will be required every working day.

Employment
93 persons of different category as per following table
Sl. Type On roll Salary/ Total Annua
No. wages per rupees l cost
month per Rs. In
month Lakhs
1. Managerial (Senior) 2 18,000.00 36,000.00 4.32
2. Sr. Engineer 3 12,000.00 36,000.00 4.32
3. Engineers 3 10,000.00 30,000.00 3.6
4. Technical 4 6,000.00 24,000.00 2.88
supervisor
5. Non-Technical 9 4,000.00 36,000.00
supervisor
6. Clerical staff 2 3,500.00 7,000.00 0.84
7. Skilled worker 10 3,500.00 35,000.00 4.2
8. Semiskilled worker 30 3,000.00 90,000.00 10.8
9. Unskilled worker 30 2,000.00 60,000.00 7.2
Total 345,000.0 42.48
0
SUPPLIER OF EQUIPMENT
SSP Limited
Contact Person : Mr. Tapas Chatarjee
Address : 19 DLF Industrial Area, Phase-II, 13/4, Mathura Road,
Faridabad, Haryana-121003 (INDIA)
Phone : +(91)(129) 2275441/ 2277730
Fax : +(91) (129) 25277441
E-mail : info@sspindia.com
M/s Albertson International, USA
M/s Bardo Citrus Products, USA
M/s In Industries Alimenticias, Brazil
M/s Citrosuco Paulista, Brazil
M/s Alfa Leval, Sweden/ India

PACKAGING AND CONTAINER REQUIREMENTS

Certain commodities are to be packed on specified quantities by weight, measure, or number. These include baby
food, weaning food, biscuits, bread, butter, coffee, tea, vegetable oils, milk powder, and wheat and rice flour , fruit
juices. Use of materials such as PVC is not allowed in packaging in most cities, due to environmental concerns and
waste disposal problems.
POLICIES
Though no industrial license is required for setting up F & VP industries, setting-up 100% EOUs requires specific
Govt. approvals.

This sector is regulated by the Fruit Products Order, 1955 (FPO), issued under the Essential Commodities Act. The
Ministry of Food Processing Industries administers this order. The order lays down product specifications and
quality control requirements on production-hygiene, relabeling and marketing of processed fruit product.

All processing units are required to obtain a license under this order. Periodic inspection of units is also carried out. In addition,
consignments of fruit products intended for export are subject to pre-shipment inspection under the FPO. Many F&VP industries are
eligible for automatic approval of foreign technology agreement and up to 51% foreign equity participation.
The Department of Commerce Notification No. 44 (RE-2000)/1997-2002 dated November 24, 2000,
requires imports of certain products, including some food products (milk powder, condensed milk, infant milk
foods, milk-cereal based weaning foods) and food additives to comply with mandatory Indian Quality Standards.
All manufacturers and exporters of these products to India are required to register with the Bureau of Indian
Standards. However, the enforcement of this regulation has not been very strict, as the current imports of these
products have been very small (mostly in mixed containers).
Preservatives
The maximum allowable limit for class II preservatives varies with the type of food stuff in which it is used. There
is no maximum allowed limit in the use of class I preservatives.
LABELING REQUIREMENTS
A. General Requirements
Part VII of the PFA Rules, 1955, and the Standards of Weights and Measures (Packaged Commodities) Rules,
1977, as amended, lay down labeling requirements for all packaged foods.
The label should provide the following information:
Name, trade name or description contained in the package
Name of ingredients used in the product in descending order of their composition by weight or volume
Name and complete address of manufacturer/packer/importer/vendor/
Country of origin of the imported food (if the food article is manufactured outside India and packed in India)
Net weight, number, or volume of contents
Distinctive batch, lot, or code number
Month and year the product was manufactured or packed
Month and year by which the product is best consumed
Maximum retail price (MRP)

B. Requirements Specific to Nutritional Labeling

Implied nutritional and health claims are allowed on food products. However, there are no statutory nutritional
requirements. Manufactured and imported food stuffs claiming to be enriched with nutrients such as minerals,
proteins, or vitamins, should indicate quantities of such added nutrients on the label. Though there is no official
position on implied and/or health claims, such claims should be able to withstand the verification of a court of law,
if challenged.

4.5 Government Regulations

Prevention of Food Adulteration Act, 1954

This Act is the basic statute that is intended to protect the common consumer against the supply of adulterated
food. This specifies different standards for various food articles. The standards are in terms of minimum quality
levels intended for ensuring safety in the consumption of these food items and for safeguarding against harmful
impurities and adulteration. The Central Committee for Food Standards, under the Directorate General of Health
Services, Ministry of Health and Family Welfare, is responsible for the operation of this Act. The provisions of the
Act are mandatory and contravention of the rules can lead to both fines and imprisonment.

Standards on Weights and Measures (Packaged Commodities) Rules, 1977

These Rules lay down certain obligatory conditions for all commodities that are packed form, with respect to
declarations on quantities contained. These Rules are operated by the Directorate of Weights and Measures, under
the Ministry of Food and Civil Supplies.
Export (Quality Control & Inspection) Act, 1963
The Export Inspection Council is responsible for the operation of this Act. Under the Act, a large number of
exportable commodities have been notified for compulsory pre-shipment inspection. The quality control and
inspection of various export products is administered through a network of more than fifty offices located around
major production centers and ports of shipment. In addition, organizations may be recognized as agencies for
inspection and /or quality control. Recently, the government has exempted agriculture and food products, fruit
products and fish and fishery products from compulsory pre-shipment inspections; provided that the exporter has a
firm letter from the overseas buyer stating that the overseas buyer does not require pre-shipment inspection from
official Indian inspection agencies.

Pollution Control

No Objection Certificate from Pollution Control Board is a must.

Bureau of Indian Standards (BIS)

The activities of BIS are two fold, the formulation of Indian standards in the processed foods sector and the
implementation of standards through promotion and through voluntary and third party certification systems. BIS
has on record, standards for most of processed foods. In general, these standards cover raw materials permitted and
their quality parameters, hygienic conditions under which products are manufactured and packaging and labeling
requirements. Manufacturers complying with standards laid down by the BIS can obtain and "ISI" mark that can be
exhibited on product packages.

PROCESS
 The farm arrived fruit are first washed than sorted for inspection. From inspection conveyor the fruit is
passed on to fruit mill for crushing and than to hydraulic press for juice extraction.
 Extracted juice is than filtered through press filter and again sent to centrifuge for clarification.
 The clarified fruit juice is concentrated in evaporation plant.
 The concentrated juice is sterilized in plate heat exchanger by heating.
 The sterilized juice in the hot condition is aseptically packed in aseptic bags by aseptic filling packing
machine.

Financial Viability
Estimated Project Cost

(Rs. In Lakhs)
Description of Investment Total Cost
Preliminary expenses 2.60
Land and Land Development 4.90
Drains, Roads & Walls 19.60
Civil Structural 49.30
Main processing plant and equipment 697.60
Auxiliaries 22.00
Utilities 77.10
Pollution control equipment 26.30
Other assets 8.20
Electrical 29.10
Eng. & pre operative expenses 135.40
Margin for working capital 32.90
Total Capital cost 1105.00
 Break-even Point
Break-even point of the project is determined in the 2nd year at 80% of installed capacity. The break-even point of the projection is at
35% of installed capacity in the 2nd year of operation when plant optimizes its production at 1200 TPY.
Pay Back Period
The entire capital investment excluding margin for working capital will be paid back within 5 years and 1 months
of operation.

Internal Rate of Return

IRR is calculated by Yield Method and works out to be 24.80%. On an average 24.80% net of tax will be earned on
the invested amount (less of margin for working capital) in each year for 10 years, after allowing for the repayment
of the sum originally invested.
Projected Profitability Statement
Sl. Description 1st 2nd year 3rd 4th year 5th 6th year
No. year year year
Installed capacity in 1500 1500 1500 1500 1500 1500
MT

A. Production
1. Utilization % 70 80 80 80 80 80
2. Production 1050 1200 1200 1200 1200 1200

B. Income from
1. Sales of finished 545.41 623.32 623.32 623.32 623.32 623.32
product
2. Transport subsidy on 4.91 5.62 5.62 5.62 5.62 5.62
finished product @
90%
3. Transport subsidy on 0.32 0.36 0.36 0.36 0.36 0.36
finished goods @
50%

C. Manufacturing Expenses
1. Raw materials 131.98 150.83 150.83 150.83 150.83 150.83
2. Consumables 55.13 63.00 63.00 63.00 63.00 63.00
3. Fuel 9.66 10.37 10.37 10.37 10.37 10.37
4. Stores & spares 5.61 6.41 6.41 6.41 6.41 6.41
5. Power energy charges 14.03 15.59 15.59 15.59 15.59 15.59
6. Power demand 2.70 3.00 3.00 3.00 3.00 3.00
charge
7. Labour & Supervisor 31.02 34.12 34.12 34.12 34.12 34.12
8. Miscellaneous 4.50 6.00 6.00 6.00 6.00 6.00
Total C 254.63 289.33 289.33 289.33 289.33 289.33

D. Adm. & Sales Expenses

1. Adm. Salaries 2.82 3.10 3.10 3.10 3.10 310
2. Sales Adm. Cost 648 713 713 713 713 7.13
3. Miscellaneous 6.00 8.00 10.00 12.00 12.00 12.00
expenses incl. Phone,
printing stationary,
traveling
4. Sales expenses @ of 10.50 12.00 12.00 12.00 12.00 12.00
Rs. 1000/- per MT.
Total D 25.80 30.23 32.23 34.23 34.23 34.23

E. Operating Profit
B-(C+D) 270.20 309.74 307.74 305.74 305.74 305.74
F. Depreciation
By S.L. Method 65.81 65.81 65.81 65.81 65.81 65.81
G. Profit after 204.39 243.93 241.93 239.93 239.93 239.93
depreciation (E-F)
H. Interest Charges
1. On term loan 99.45 87.02 74.59 62.16 49.73 37.29
2. On bank borrowing 14.92 14.92 13.06 11.19 9.33 7.46
Total H 114.37 101.94 87.64 73.35 59.05 44.75
I. Profit before taxes 90.02 141.98 154.28 166.58 180.87 195.17
(PBT) (G-H)
J. Provision for taxes
nil as per NEIP
K. Profit after taxes 90.02 141.98 154.28 166.58 180.87 195.17
(PAT) (I-J)
 Risk Analysis
---------------------------------------------------------------------------------------------------------------------------------------------

Various types of risks associated with the project

Project-specific risk
The source of revenue for this project is mainly in the Bhubaneswar-Cuttack twin city where there is huge demand.
In the initial stage the success of the project would be solely dependent on these cities. It is very risky to be
dependent on only one market. There are two solutions to it. Firstly to find out more market within the country and
secondly the foreign markets i.e. export of products. But the major problem with foreign market is the competition,
quality and price. The international market is huge and there is cut throat competition in this industry. It will be
very difficult to be price competitive in the international market. The quality in the country is also a major problem
as it is not good when compared with other countries.

Competitive risk

At present there is not much competition in this field as it is still an unorganized sector. When we talk about major
players they are very few like PEPSICO, PARLE AGRO etc. Only few players are covering the whole country so
there is good scope to start with a regional level.
Industry-Specific risk
The industry is not much subjected to technological changes. Besides it requires huge investment but it is a labour
intensive industry as much is dependent on raw material. The major risk associated with the industry is the subsidies
provided by the government. Government is promoting food processing industry and huge incentives like tax relaxation
are given. In future if the government policies changes than the whole industry will be in a dilemma.
Market risk

Food processing industry is on a boom, there is a huge opportunity in this field. The demand for fruit products is
huge in the country therefore the price is high. A slight change in prices will affect the working of the business.

International risk

A lot of revenue may depend of exports in future. Not only products but the expansion the project, diversifications
etc. will mainly depend on the export business. If there is any change in the international market demand, foreign
currency fluctuations then the business has to re-estimate its plans.
Various techniques to control risk
6.1:Sensitivity Analysis
It suggests the earning that will help the business to sustain itself and if the promoters expects a return then they
can be satisfied.
6.2:Scenario Analysis
The objective of such a scenario analysis is to get a feel of what happens under the most favorable or the most
adverse configuration of key variables, without bothering much about the internal consistency of such
configurations.

6.3:Break-even analysis
Break-even point of the project is determined in the 2 nd year at 80% of installed capacity. The break-even
point of the projection is at 35% of installed capacity in the 2 nd year of operation when plant optimizes its
production at 1200 TPY.

6.4 Pay back period

The project requires an initial investment of Rs.1150.00 lakhs and the cash flows assumed are as follows.

Year Cash Inflows (in lakhs)

1 270.2
2 309.74
3 307.74
4 305.74
5 305.74
 6 305.74
The payback year is the third year and the Payback period is 5 years and 1 months (2370.2 + 309.74 +
307.74+305.74+305.74= 1499.16 lakhs)
REFERENCE
 www.ciionline.org

 http://www.sommecan.com/roundcanseamers/roundcanseamers.

 www.canseamers.com

 http://www.canlinemachine.com/index.asp

 Micro-entrepreneurs By Andrea Westall & Peter Ramsden, New Economics Foundation

 Small Business Management By Srinivas.S.Rao