Citronella Oil Project Report, Business Plan

Introduction to Citronella Oil Project Report, Business Plan: The oil which is popular as citronella essential oil is obtained from citronella grass. Oil of citronella is having insect and animal repelling properties naturally and can be distilled from the two grass variants. It is yellow to brown with a grassy/floral fragrance in it. The oil of citronella has many components. The exact composition is based on the grass variety. However, the chief ingredients are citronellal, citronellol, and geranial. The oil of citronella is used in foods and beverages like flavoring agents. It is generally confirmed as safe for use as a food additive by FDA (Food and Drug Administration) department.

A Guide to Citronella Oil Project Report, Manufacturing Business Plan

Uses and applications of Citronella Oil

Citronella oil is highly used as a natural insect repellent. This oil is included in several mosquitoes repelling goods like scented candles, sprays, lotions, and even collars, and many other items.
Citronella Essential Oil reduces or inhibits the growth or spread of pathogenic airborne bacteria, avoids flying insects, even avoids negative moods, and relieves the body and mind.
The use of citronella oil on the skin can aid to improve the skin tone and makes it smooth. Because of various skin benefits, citronella oil is used in products like oil control creams, sunscreen salves, skin inflammation evacuation creams, and many other similar products.
Citronella possesses anti-microbial and anti-contagious properties.
Citronella oil will also help in providing relief and mitigating effects for stomach-related issues like those having problems internally in the stomach, digestive organs, etc.
Citronella oil has a tremendous pain-relieving feature. Only a few drops of citronella oil on muscle torment or joint torment will relieve the pain.

Market potential of Citronella Oil Manufacturing Business

The global market has a great requirement for citronella oil and the demand is growing due to the demand for this oil in the food and beverage, Ayurvedic, and cosmetic sectors. Some countries like India, the USA, Germany, and Japan are the main traders of citronella oil in the globe due to its applications in different end-user industries. On the supply side, suppliers are spending and initiating strategic collaborations with citronella farmers and traders to get the main raw materials whenever needed.

Business plan for starting Citronella Oil Manufacturing Business

The use of Citronella oil has kept growing in recent times. This is probably associated with the medical benefits which it offers to the customer. The next important aspect is to create a proper business plan. The business plan should comprise a comprehensive analysis of availing capital, planning about business arrangements, handling the flow of business and strategies for marketing the product, etc. Also, thorough market research by investigating the close by retailers about the purchasing behavior on medicinal goods and customer habitats will be helpful. It will aid the owner while planning for this business and run it smoothly.

The business plan for Citronella Oil Manufacturing Business will finally aid in the following aspects:

Detailed project report of Citronella Oil Manufacturing Business
Basis and presumptions for Citronella Oil Manufacturing Project
Implementation Schedule of Citronella Oil Manufacturing Business
List of approvals, licenses, and other permissions required for the business
Raw materials required for starting Citronella Oil Manufacturing Business
List of machinery required for starting Citronella Oil Manufacturing Business
The manufacturing process of Citronella Oil
Economics of Citronella Oil Manufacturing Business

Basis and presumption for starting Citronella Oil Manufacturing Business

Number of Working Days in a year: 300 Days
Number of Shifts in a day: 1
Hours in a Shift: 8 hours
Plant Capacity: Consider on Average production capacities of the plant.
Raw Material Availability
Depreciation: Straight Line Method
Manpower: According to project Requirement
Rent estimate: On the basis of the current market price of the area.
A potential area of Marketing the products: Local market and households.
If the project is funded, the term loan would be: 60 – 80% of the Total investment
Moratorium Period: 6 – 12 months
Repayment Period: 5 – 7 years

Implementation schedule for Citronella Oil Manufacturing Business

Implementation schedule for Citronella Oil Manufacturing Project Report can commence production within 1 – 2 months after the approval and first release of term loan.

Legal formalities required for starting manufacturing of Citronella Oil business in India

The licenses must be taken for any type of business entity. The approval to operate is given by nearby state government official experts. After this is approved, one can start constructing their items. One aspect must be kept in mind that if the oils are produced specially for medications and beauty care products then they should abide by the medications and Cosmetics Act and guidelines.

Below is the list of a license, permissions, and registrations required for starting Citronella Oil Manufacturing Business-

MSME registration
GST registration
ROC
PAN Card
Aadhar registration
Registration of firm
Shop Act License
FSSAI License
IEC Code
Export License
Fire and Safety
ESI
PF
No Objection Certificate (NOC) from pollution board
Trade license from the local municipal authority

Area required to set up a Citronella Oil Manufacturing Plant

The location to establish the business is one of the significant components for manufacturing citronella oil. In this case, because you will be interested to have citronella oil, it’s better to find the extraction unit nearby the citronella cultivation region. This will reduce transportation expenses, which could be channelized for other expenses.

List of machinery required for starting Citronella Oil Manufacturing Business

Below is the list of machinery required to start Citronella Oil Manufacturing Business –

Condenser
Evaporate vessel
Pump (condensate)
Florentine flask
Pump (cooling water)
Steam boiler
Cooling tower

Manufacturing process of Citronella Oil

The extraction of citronella oil can be done using Ohmic heated hydro-distillation, hydro-distillation, or steam distillation. The preferred and famous methods of extracting citronella oil are steam distillation and hydrodistillation methods. To separate citronella oil by steam distillation process, new or dried plant content is arranged in a glass segment having higher and lower parts linked with a condenser and water flagon individually. The water vapor which is developed in the condenser is transferred to the plant, accused of fundamental oil than to the condenser, where it gets consolidated. The extracted oil is lighter than water and it gets separated by the process called decantation. The fundamental oil is similarly extracted by hydrodistillation which is more or less the same as steam distillation. The main difference here is the plant material is set in a carafe that holds water and the set-up is conveyed to bubbling. The fume mix of oil and water is delivered. This is sent to the condenser after the build-up of water is separated from the oil through decantation.

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Citronella Oil Project Report/ Economics of Citronella Oil Manufacturing in India

Fixed Capital

Land and site development: Rs. 1,00,000
Building and civil works: Rs. 5,00,000
Plant and machinery: Rs. 15,27,000
Miscellaneous Fixed Assets: Rs. 1,98,000
Preliminary and pre-operative expenses: Rs. 2,23,000
Contingencies and escalation @ 5%: Rs. 1,16,000
Working capital: Rs. 1,15,000
Total: Rs. 27,79,000

Working Capital

Raw materials: Rs. 88,000
Power and utility: Rs. 10,000
Salaries: Rs. 74,000
Finished goods: Rs. 1,34,000
Receivables: Rs. 1,49,000
Total: Rs. 4,58,000

The total cost required for starting Citronella Oil Manufacturing Business

Fixed Capital + Working capital = Rs. 27,79,000 + Rs. 4,58,000 = Rs. 32,37,000.

The income per annum in Citronella Oil Making Business

Total income / annum: Rs. 36,25,000.

Profitability in Citronella Oil Production Unit

Profit = Total cost – Total Income = Rs. 36,25,000 – Rs. 32,37,000 = Rs. 3,88,000.

Marketing strategies to promote your Citronella Oil product

It is a well-known fact that citronella essential oil is a standard one and used by a wide population, thus it has to compete with various brands presently as there are plenty available in the market. Thus, one must have proper marketing and promotional strategies to establish the brand in the initial days.

Few options where the newly launched brand can be advertised are listed below:

Promote by publishing on local newspapers, periodicals, radio, and television channels.
Arrange to place billboards in high footfall locations.
Entertain the roadshow in special targeted locations.
Sponsor for small festivals, and events, and parties.
Promote online using Facebook, WhatsApp, Insta, etc especially by influencers if possible.
Install banners when it is possible particularly in strategic regions having spa, food joints, etc to attract customers.

Conclusion of Citronella Oil Manufacturing Business

Citronella oil is considered and marketed as one of the healthiest oils in the nation. It won’t do any damage while using for medicinal purposes on hair or skin, etc. Thus, it is recommended to venture into citronella oil extraction and earn revenue. If you want to decrease input costs and enhance profits, you can plan for the commercial cultivation and growth strategies of this plant.

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