INTRODUCTION
The extraction of vegetable oil is a profitable venture that in most cases rewards manufacturers with profitable returns. Vegetable oil is extracted from various oil seeds such as mustard, coconut, soybean, peanut, rapeseed, cottonseed, sesame, etc through a pressing process. People use cooking oils for various purposes, including cooking, and the production of plastic and soap. The waste products of cooking oil production are now used to fuel the diesel engine.
MARKET POTENTIAL
The India edible oil market was valued at US$ 30.2 Billion in 2020 and is expected to exhibit a CAGR of 4.10% during 2021-2026. Based on the product type, the Indian edible oil market can be divided into palm oil, soybean oil, mustard oil, sunflower oil, and others. Currently, soybean oil holds the majority of the total market share. Based on the application, the Indian edible oil market can be segmented into HoReCa (Hotel, Retail, and Catering), home users, and the food processing industry. Among these, home users currently account for the largest market share.
FUNDING SOURCE
Under the support of the Development Alternatives Group, such enterprises have been financed by HDFC Bank and HDB Bank, with an average loan size of INR 2,00,000.
BUSINESS ECONOMICS
FIXED CAPITAL (One Time Expenditure)
| MACHINERY & EQUIPMENT | AMOUNT (in INR) |
| Oil expeller machine | 131,250 |
| Liquid Pouch Packing Machine | 1,50,000 |
| Preoperative expenses | 20,000 |
| TOTAL | 3,01,250 |
WORKING CAPITAL (recurring expenditure per month)
| RAW MATERIAL | AMOUNT (in INR) |
| Oil seeds (3,750 kg @ INR 130/kg) | 10,937 |
| Packaging material pouches (1,875 500 ml pouches @ INR 5/pouch) | |
| STAFF AND LABOUR | AMOUNT (in INR) |
| Entrepreneur’s Salary (@ INR 10,000/month) | 4,000 |
| UTILITIES & OTHER EXPENSES | AMOUNT (in INR) |
| Rent | 8,000 |
| Repair and Maintenance | 2,000 |
| Electricity | 4,000 |
| TOTAL | 5,30,875 |
FINANCIAL SUMMARY (Annual)
| FINANCIALS | AMOUNT (in INR) |
| Fixed Cost | 3,01,250 |
| Working Capital (for each cycle of 2 months duration) | 5,30,875 |
| Total Enterprise Cost | 8,32,125 |
| Annual Revenue | 33,60,750 |
| Total Expenditure (annual working capital) | 31,85,250 |
| Enterprise Profit (per annum) | 1,75,500 |
| Payback Period (in months) | 21 |
BASIC ASSUMPTIONS
- The machinery would process 25 kg of oilseed per hour and operate for 3 hours a day for 25 days a month
- For each kilogram of oil seeds processed, only 0.5 kg of oil is extracted
- The waste from the extraction process is sold as cattle feed for INR 15/kg
- One 500ml pouch of oil retails for INR 280
- The enterprise also provides the services of using the oil extractor as a service for INR 100/kg.
Note: All figures mentioned are indicative and for reference purpose only. Development Alternatives Group bears no liability for accuracy. For any further information, please contact Development Alternatives on +91-11-2654-4100 or +91-11-2654-4200.
Star Entrepreneur
A resident of Orchha, Pushpendra Sahu set up his enterprise in 2017. Prior to which he was working part time as a handyman and earning INR 3000 monthly
- Collected INR 35,000 from his family for purchase of machinery
- Current monthly income at INR 10,000