Techno Economic Feasibility Pomegranate Aril Extraction

Pomegranate Aril Extraction with Modern Technology

Presented By:Trina Bhagat 05 Meghraj Gawande 09 Rishika Mittal 30 Sagar Shinde 38

Jyoti Jadhav 51

Presented to:Mr. Suresh Bhosale

Faculty-Techno Economic Feasibility Report

INTRODUCTION TO THE PROJECT

We are a group of entrepreneurs, who are pursuing MBA in Agribusiness and want to set up a processing plant, in the Satara district of Maharashtra where we will concentrate mainly on Pomegranate aril extraction using modern technology. The cost of the project is around 2.3 crores.

Pomegranate• Botanical Name: Punica granatum• Family: Lythraceae• Origin: Native to the region of Persia and

the Himalayan ranges of India• Deciduous shrub or small tree growing in between

five and eight meters tall.• The “super fruit”, loaded with important health

benefits• Major Cultivators: India, Iran, USA, Turkey, Spain,

Israel are leading growers in world.

Indian scenario• There is an increase from 96.9 thousand ha in 2003-04 to

116.4 thousand ha in 2005-06; similarly, the production has increased from 664.9 thousand tons to 849.1 thousand tons.

• The total production of pomegranate is concentrated mainly in the – Western Maharashtra, – Karnataka, – Andhra Pradesh, – Gujarat

The area, production and productivity of pomegranate in India

YEAR AREA(000’ ha)

PRODUCTION( 000’tons)

PRODUCTIVITY(tons/ha)

2003-2004 96.9 664.9 6.86

2004-2005 111.8 800.7 7.16

2005-2006 116.4 849.1 7.29

Source: Indian Horticulture Database, 2006

Pomegranate Aril• An aril (or arillus) is any specialized outgrowth from the funiculus (attachment point of the seed) (or hilum) that covers or is attached to the seed.

• In pomegranate we can see these arils, which are the fruit part which we eat.

•So, we are going to deal in extracting this aril and market it .

Nutritional BenefitsEnergy 285 kJ (68 kcal)Carbohydrates 17.17 g

Sugars 16.57 g

Dietary fiber 0.6 g

Fat 0.3 g

Protein 0.95 g

Thiamine (Vit. B1) 0.030 mg (2%)

Riboflavin (Vit. B2) 0.063 mg (4%)

Niacin (Vit. B3) 0.300 mg (2%)

Pantothenic acid (B5) 0.596 mg (12%)

Vitamin B6 0.105 mg (8%)

Vitamin C 6.1 mg (10%)

Iron 0.30 mg (2%)

Potassium 259 mg (6%)

Medicinal Properties• Extremely rich source of antioxidants, vitamins

C, E and A and vital fatty acids• Ability to fight cancer, Diabetes• Strengthens the cardiovascular system• Fights osteoarthritis• Lowers bad cholesterol• Currently gained importance in Ayurvedic

medicines.

Reasons for selection of pomegranate

• Untapped market potential of pomegranate Aril

• Arils are Ready to eat.• Their will be no issues of external appearance

of fruit.• Medicinal values, Ayurvedic importance.• Line of machineries and equipments

Why Aril Extraction?

• Market Potential is high• New Concept in Indian Market• Market for ready-to-eat Fresh fruits is

increasing in National & International market.• Consumer friendly.• High export potential.

The Fresh-Cut Market• What?

Fresh agricultural produce that has been onlyphysically altered – i.e. washed, peeled, cut, etc. – while maintaining its farm-freshness.

• Why?The fresh-cut market is increasingly popular in today’sfast-paced, health-conscious world, offering garden freshproduce that’s ready to eat.

• According to US surveys:

81% of consumers address health issues through choice of food consumption.76% report regularly buying fresh-cut products.

Our Planning of unit•We are going to establish highly mechanized unit for extraction of Aril

•We are concentrating on Domestic market(70%), Export Market (30%)

• Under domestic market ,Metro cities, Agri retail chains, 5 star hotels will be contacted for market.

•For Export market we are concentrating on European market.

DETAIL PROJECT REPORT

Title of Project

“ Pomegranate Aril Extraction with Modern Technology ”

Objectives

• To procure, extract and sell pomegranate arils in domestic and international market profitably.

• To provide hygienic and nutritive arils in convenient packages.

Background of Entrepreneurs

• Names: Trina Bhagat, Meghraj Gawande, Rishika Mittal, Jyoti Jadhav, Sagar Shinde.

• Qualification: All are MBA in Agri Business with good Management skills. They even have Horticultural and Biotechnological background to work efficiently.

TECHNO FEASIBILTY ANALYSIS

• Location Of The Project• Land & Plant Layout• Selection Of Plant And Machinery• Raw Material• Market and marketing strategies• Manufacturing Process/ Tech.

LOCATION OF THE PROJECT

• For opening unit of pomegranate Aril Extraction we have chosen place in Tal:Karad, Dist: Satara in Maharashtra.

• Here one of partner has is own self owned land, which is road touch to NH-4.

• Total land is 1 acre.

Why Maharashtra?

• Maharashtra is leading cultivator of pomegranate.• Statistical data for pomegranate in MH for year

2005-2006

• State Govt. and Agri dept has various schemes, policies, subsidies for such processing units.

• Good availability of raw material, infrastructure, transportation.

AREA (OOO’ha) PRODUCTION (000’tons)

PRODUCTIVITY (tons/hec)

91.0 593.6 6.5

Why Karad?

• It has got strategic position.

Contd..

• Close to raw material area i.e. Solapur, Nashik, Ahmednagar

• Close to Pune i.e. 150km , Mumbai is 300km• So near to market area, port for export with

good connectivity of roads.

Land and Site development

• Land area is around 1 acres.• Its market price is around 1 lakh to 1.5 lakh• Site development includes internal roads, leveling

& compound wall.• Proper planned buildings is planned.• Proper facility of Water is done with Bore wells• MSEB power and communication facilities viz. Tele

communication and Postal services are locally available at site.

Layout of the unit

Garden

Restroom

Administration

Toilet

Storage

Receiving and weighing

Processing

Packaging &Dispatch

Parking

In

Out

Plant and Machinery

Extractor

Contd…

Contd..

RAW MATERIAL

• It will be procured directly from farmers of Satara, Solapur, Nashik, Ahmednagar.

• For assured supply of raw material, we will go for contract farming.

• Local market and Pune market will also be contacted for raw material.

• B grade fruits will be used mostly. • For packaging material it will be properly designed keeping in

mind all necessary things.• Corrugated boxes will be taken from local market.

Varieties of Pomegranate• Mridula• Bhagwa• Ganesh• Phule Arkata

Why these Varieties?• Good fruit size• The average fruit weight is 250-300 grams.• Arils are dark red in colour• Varieties are recommended by Mahatma Phule Krishi

Vidyapeeth, Rahuri and Maharashtra Pomegranate Growers Research Association ,Pune.

Manufacturing Process for Aril Extraction The fruit is fed inverted, either manually or mechanically, onto a conveyor of open-bottomed circular holders.

The crowns are cut off and grips lift the fruit onto the next level conveyor, pressing it down onto corolla-opening knives that longitudinally score the skin.

Flexible drums press down on the fruit causing it to open in segments and eventually to flatten.

As the fruit is flattened, the arils fall out with the help of oscillating air jets.

The untouched and undamaged arils are gravitationally water-separated from other fruit parts such as peel or membrane, and ready to be conveyed for packing.

Packaging

250 gm Packets

Tray Details

Material A-PET

Length 173 mm

Width 129 mm

Height 35 mm

Colour Crystal Clear

1000 gm Packets

Tray Details

Material A-PET

Length 227 mm

Width 177 mm

Height 60 mm

Colour Crystal Clear

Use of Peels•Dry peels of pomegranate are used with Tulsi leaves and ginger to prepare medicine for Cough.•Peels of pomegranate are also used colouring cloths•Peels are used in many ayurvedic medicines•Tooth powder is also made.•So , we can sell our by product to companies which deals in Ayurvedic medicines and cosmetic product.

Market

• Market – We are concentrating on Export market and Domestic market too.

• Mostly Developed nations (European national) will be targeted.

• Under domestic market we will concentrate on all Metro cities, Big retail chains and 5 star hotels.

• For Urban market we will have small packets with low cost

Marketing Strategies

• Segmentation: We are targeting Upper middle class and higher class

customers.• Targeting:Working families in all cities• Positioning:Hygienic Arils in Consumer friendly packets• Direct Marketing :Marketing Head will look for orders and sell the product.

No out sourcing for marketing.

Promotional Activities

• For Domestic Market: Hoarding in Metro cities BannersStall in Food FestivalsAdvertisement in News paper, Magazines• For Export: Advertisement on InternetAwareness among exporters

Staff Details

• Production Staff– Supervisor/Manager -1– Packaging Staff-2– Processing Staff-2

• General Administration Staff– Accountant-1– Driver-1– Watchman-2– Sweeper-1

Financial Viability of project

ASSUMPTIONS

• Average purchase price of pomegranate as Rs. 40/kg (B class quality and even C class pomegranates can be utilized here)

• All the popular varieties of pomegranate grown in Maharashtra can be used as raw material in EAP process technology.

• The Average selling price of arils in India is assumed as Rs. 150/kg and export price of Rs. 200/kg.

Cost of the ProjectSr.No. Items Amount in Rs.

1 Land(approx 2500ft) 1,00,000/-

2 Building 18,00,000/-

3 Plant and Machinery 200,00,000/-

4 Technical engineering &consultancy fees 2,00,000/-

5 Expenses on foreign technical for 1 month 2,00,000/-

6 Misc fixed assets(Electrical installation, furniture, generator, Diesel, Telephone installation, firefighting equipment etc)

5,00,000/-

7 Pre operative expenses 2,50,000/-

8 Provision of contingencies 5,00,000/-

9 Working capital margin(Approx w.c. requirement is Rs.2 Lacs)

50,000/-

10 Total 236,00,000/-

Means of financeItems Amount in Rs

Total cost of the project 236.00 lacs

Promoter’s contribution 59.00 lacs

Bank Term loan 177.00 lacs

Cash Credit 2.00 lacs

Subsidies Available

• By NHB:– Under Scheme, Development of commercial

Horticultural through Production and Post harvest Management – Subsidy available is 20% of project cost.

– Under Scheme, Capital Investment Subsidy for construction & modernization of cold storage- subsidy available is 25% of project cost.

Sales Projection

• Minimum production capacity :3000 M.T. per year

• Average productivity :10 MT/ha• Conversion ratio :30% of total production

converted to aril production based on market situation

Sales Projection

• Capacity of Unit =175 kg/hr(on an av. 2.5 kg of fruits converting to 1 kg arils)

• Total working months= 5 months• Working hours per day= 15hrs(2-shift)• Efficiency of machinery= 95%• Total Production=175*15*25*5=328125 kg• Assumption : 30% production- exports 70% production- Domestic market

Sales Projection

• Export volume =328125*30%=98438 kg• Domestic market=328125*70%=229687 kg• Total sales =Domestic + Export =(229687*159)+ (98438*200) Total =54140650= 541 lacs

Cost of Raw Material

• Raw material required – Fruits required = 328 M.T. *(100/95)*2.75 =949 M.T. =950 M.T. Raw material cost=950*40,000 = Rs.380,00,000

Cost of ProductionItems Amount in Rs.

Raw Material 380,00,000

Manpower 2,40,000

Fuel, lubricants and Electricity 2,50,000

Administration 4,50,000

Repairs and Maintenance 5,00,000

Packing and forwarding 2,25,000

Market promotion 5,00,000

Depreciation 20,00,000

Interest (term loan) 24,00,000

Interest on working capital 30,000

Total cost 4,45,95,000=446 lacs

Fixed= 38475000Variable=6120000

Conversion Cost

• Yearly operation cost = Rs 44600000• Less cost of raw material(fruit) = -Rs 38000000• Cost of managing the unit/year=Rs. 6600000• Total production/ year = 328125 kg• Cost of conversion of 1 kg fruit to arils =6600000/328125=20.11• Adding 15% as profit ,hiring charges =Rs 23.12/kg

Contd..

• Total sales = Rs .541 lacs (as calculated before)• Profit before tax(PBT)= 541-446= 95 lacs

Debt Service Coverage Ratio(DSCR)

• 7 year repayment programme and 1 year gestation• Loan installment = 198/7 =28.28 lacs• DSCR= Net surplus+ Depreciation Installment +Interest = 95+20 = 2.19 28.28+24• The DSCR for any financial institution to accept the

project should be 1 : 1.75.• The ratio of 1: 2.19 would be above the minimum norm.

Debt Service Coverage Ratio(DSCR)

YEARNet

surplus Interest DepriciationLoan

installment DSCR

1ST 95 24 20 28.28 2.199693956

2ND 101.86 23 18 28.28 2.337363495

3RD 110 22 16.2 28.28 2.509944312

4TH 117 21.5 14.58 28.28 2.643230213

5TH 119.14 21 13.1 28.28 2.683441558

AVG. DSCR ---- ----- ---- ---- 2.474734707

Profitability statementParticular 2nd YEAR 3rd YEAR 4th YEAR 5th YEAR 6th YEARNET SALESAril sales 541 550 560 575 575

TOTAL INCOME 541 550 560 575 575EXPENDITURE

-Raw Material ConsumedPOMEGRANATE FRUITS 380 385 390 400 400

-Direct Labour Cost 2.4 2.5 2.5 2.6 2.6-Power & Fuel 2.5 2.5 2.6 2.7 2.7

-Administration 4.5 4.5 4.5 4.5 4.5-Packing & Forwarding Cost 2.25 2.35 2.35 2.45 2.45

-Repairs & Maintenance 5.00 5.0 5.00 5.20 5.25-Depreciation 20.00 18.00 16.2 14.58 13.1

Cost sales 416.7 419.85 423.15 432.03 430.6Operating Profit 124.3 130.15 136.85 142.97 144.4

-Selling & Admn. Expenses 5.00 5 4.5 4.2 4.00-Interest on Term Loan AND 24.00 23.00 22.00 21.50 21.00

working capital loan 0.30 0.29 0.28 0.27 0.26Profit Before Tax (PBT) 95.00 101.86 110.07 117.00 119.14

Provision For Taxation 28.50 30.558 33.021 35.1 35.742Net Profit after Taxation (PAT) 66.50 71.302 77.049 81.9 83.398

Internal Rate of ReturnIRR

Particulars Cons. Period 1st YEAR 2nd YEAR 3rd YEAR 4th YEAR 5th YEAR

Total revenue 541 550 560 575 575

Total Expenses 416.7 419.85 423.15 432.03 430.6

Profit Before Tax 124.3 130.15 136.85 142.97 144.4

Adjust Depreciation -20 -18 -16.2 -14.58 -13.1

Interest 24.00 23.00 22.00 21.50 21.00

Tax (at 33.66%) 28.5 30.558 33.012 35.1 35.742

Profit after Tax 66.5 71.302 77.049 81.9 83.398

Add Depreciation 20 18 16.2 14.58 13.1

Interest 24.00 23.00 22.00 21.50 21.00

Cash Profit 110.5 112.303 115.249 117.98 117.498

Net Investment@15%

IRR = 39%

Benefit cost ratio

Benefit Cost Ratio= the net benefits per year/ Annual Operating cost = 95/65.95= 1.44 The BC Ratio is more than 1 and hence should be acceptable.

Break Even Point Analysis

BEP = Fixed Cost/Contribution (In % capacity utilization) = Fixed cost/ Sales - Variable cost = 6120000/ 54100000-38475000 = 39.1%The Break Even point in terms of capacity utilization is 39.1

%. This BEP is a achievable target for the project.

Sensitivity Analysis

• The purpose of the sensitivity analysis or CVP analysis is to study the cushion available in the profitability of the project to withstand shortfalls in the expected results owing to uncertainties

• Assuming that the raw material availability decreases due to “Oily spot” disease in a particular year. The direct effect of this is the increase in the prices of raw material i.e. pomegranate fruits. Considering this situation in mind we have assumed that the production cost increases by 10 %. In this scenario the various ratio’s for the financial viability of the project are calculated as follows.

• Increased raw material cost- Rs. 427,00,000• DSCR = 2.02• Benefit to Cost ratio = 1.30• IRR = 34 %• From all of the above ratio’s we can conclude

that the project will be financially viable in case of any adversities.

Future Plans

• Production of pomegranate Aril Wine• Production of pomegranate Juice.• Pomegranate Dried Arils.• Increase the shelf life arils through modified

atmospheric packaging technology.

Social Responsibility

• Employment to local people.• Source of assured income to the farmers of

dry land area.• Help from SHG can be sought for cleaning,

packaging & other administrative work. This will be a source of income for the group members.

SWOT ANALYSIS

STRENGTHS• The technology can give boost to the consumption of

pomegranate.

• It may lead to increase in the profitability of pomegranate growers due to easier market access.

• Fruit is suitable in semi arid and arid regions with low consumption of water under drip and hence can upscale the economy of farmers in dry land area in Maharashtra.

WEAKNESS

• The technology is not introduced so far in India and no technocrat or skilled workers available.

• Have to depend on Israel for technological know how, spare, etc.

• Unaware of the market acceptability of Indian consumers.

Contd..

• Substantial amount has to be spent on marketing, advertisement and publicity.

• The shelf life of 10 days has to be extended further for tapping distant market.

• With existing shelf life the cold chain has to be maintained efficiently.

OPPORTUNITIES

• Scope to modify the technology to suit Indian situation and make it more cost effective.

• Can convert it into semiautomatic rather than fully automatic requiring low labour and reduction of fixed assets value.

• The market of growing middleclass people in India, having more disposable income and awareness of hygiene, can be tapped progressively.

• Export market can be further explored.• Possible to tap health and pharmaceutical market.

THREATS

• Acceptability of Indian fruits in foreign markets due to stricter codex norms may be in doldrums.

• Disease controlled on pomegranate crop and the vindictive propaganda in export market.

• A volatile price of imported spare parts and non availability of foreign technical know how.

Thank You