Mustard Oil Making Project Report

Mustard Oil Making Project Report, Business Plan


Hello friends, today we are here with a new topic called ” Mustard Oil Making Project Report”. Consumption of edible oil is considerable throughout India. All Indian households consume frequently. In India, we use several edible oils such as cottonseed, sunflower, groundnut, rapeseed, mustard oil, etc. Edible oils are made by extraction from their corresponding oil seeds and there are some popular national as well as regional companies. The Eastern provinces of India consume a large share of mustard oil produced in India. Hence, West Bengal is the preferred location.

Mustard Oil is one of the popular edible oils used extensively in North Eastern, North, and Eastern parts of India. The Oil is having nutritious and therapeutic properties. The people who live in cold regions select to use this oil as this aids to retain heat in the body. Now, let us get into the details of the business plan and Mustard Oil Making Project Report.

A step-by-step guide to Mustard Oil Making Project Report and Business Plan in India

Mustard Oil Making Project Report and Business Plan in India
Mustard Oil Making Project Report and Business Plan in India (Image source: pixabay)

Uses of Mustard Oil

Edible oil is a fundamental item in Indian meals for ages. India is among the largest producers and buyers of various types of edible oils. Preference for the type of edible oil varies from state to state, e.g. people from western India need groundnut or cottonseed oil however North-East states tend to use mustard oil.

Market potential of Mustard Oil in India

Due to the atypical food habits and preparation process, Indians consume large amounts of edible oils daily. With increasing population, demand is growing annually and the country is getting semi-processed edible oils for years. Mustard oil is chosen as a cooking medium by the people of Eastern India such as by the people from West Bengal. There are several oil mills in West Bengal extracting mustard oil, though it imports oil from other states by the oil extracted by mustard seeds which are sold by West Bengal to other states in ample quantity. Hence, good quality mustard oil extracted locally can be used for selling it into the market.

Business plan for starting a Mustard Oil Manufacturing Business

To start any kind of business or production unit you need to first craft a perfect business plan. Below is the list of things required to design a business plan for the Mustard Oil Manufacturing Production Unit.

  • List of licenses, registration
  • Area required
  • Implementation schedule of the project
  • Raw materials required
  • Machinery required
  • Production process
  • Estimated cost and
  • Profit analysis

List of licenses required to start the Mustard Oil Manufacturing business in India

Below is the list of license, permissions, and registrations required to start Mustard Oil Manufacturing Business in India.

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

Area required to start Mustard Oil Manufacturing Unit

To set up a Mustard Oil manufacturing production unit one has to rent or own space of 1000-1200 Sq.mts. Because you need to establish and set up a Mustard oil production plant in India. The oilseed cake is also collected and stored. You also need to set a godown for storing the packaged oil and for raw materials also.

Raw materials used for Mustard Oil Making Business

In case if you miss this: Hand Sanitizer Project Report.

Mustard Seeds
Mustard Seeds (Image source: pixabay)

The chief raw material for oil is mustard seeds. The average production of oil from seeds is considered to be around 30%. Hence to generate 144 tons of edible oil yearly at 100% capacity utilization, around 480 tons of mustard seeds must be obtained. As we have great plantations related to mustard seeds that are about 3, 50, 000 tons every year, we do not have any trouble with procurement. Other materials needed in small amounts are additives and purifying compounds that are procured before the unit operation is initiated.

Projected capacity of Mustard Oil Production Unit

The projected capacity of the unit is to produce 480 MT / per year from mustard seeds.

Manufacturing process of Mustard Oil Production Unit

  • The manufacturing process is well-known and traditionally followed. In the first step, the dried mustard seeds are introduced into the oil extractor which causes about 90% oil extraction.
  • Next processing in expeller will do some more oil extraction. Liquid oil and solid content is then separated using filters. The solid portion referred to as oil cake is used for animal feed. Edible oil is packed using tins, jars, or in food-grade plastic pouches.
  • The oil contents will vary based on seed quality but the average recovery of oil from seeds will be between 30% – 34%.

Implementation schedule of Mustard Oil Production Unit

  • Preparation of Business Plan
  • E M Registration and permission from Director of Ayurveda One ­­­month
  • Availing the Finance/Loans from Banker or Financial Institutions Two months
  • Power facility/Building construction Six months One month
  • Obtain Machinery and Trial run. Two months
  • Staff Appointment and Labour One month
  • Actual commercial production One month

Project Components in Mustard Oil Production Unit

a) Land and building construction

About 200 sq. meters of the plot having a built-up area of 100 square meters is adequate. The cost of land could be Rs. 1 lakh but the built-up area will be Rs. 4.50 lacs. The construction cost is taken on a lower side as this will be a typical Ghani and will not require an RCC slab on the entire building. Thus, total expenses on land and construction shall be accounted for Rs. 5.50 lacs. 

b) List of machinery required for Mustard Oil Making Business

Keeping in mind, the requirement of the oil and economic feasibility of the business, it is recommended to set up equipment to generate 144 T of mustard oil annually at 100% capacity. In this segment, units are operated for about 240-250 days annually due to the irregular availability of oilseeds.

  • Table Ghani
  • Filter
  • Miscellaneous Assets
  • Oil Expellers
  • Other supporting machinery like electric motor and testing facilities
  • Materials like storage tanks, furniture, packing tables, storage racks, etc. will be around Rs. 2,50,000

c) Utilities in Mustard Oil Making Business

About 25 HP power is needed and water is necessary for potable and sanitation purposes. The annual expenses under this head at 100% activity level is about Rs. 2 lakhs. 

d) Preliminary and pre-operative expenses in Mustard Oil Manufacturing Business

A sum of Rs. 1, 00,000/- is sufficient towards establishment expenses, interest incurred for the finance acquired, other operation-related expenses, etc.

e) Working Capital Assessment in Mustard Oil Manufacturing Business

For a 60 % capacity utilization in a year, the working capital requirements will be like below:

Mustard Oil Making Project Report/Economics of Mustard Oil Making Business in India

a) Mustard Oil Making Project Report – Capital expenditure

Land and Workshed in sq.ft: Rs. 6,00,000

Machinery and Equipment: Rs. 8,50,000

Total Capital Expenditure: Rs. 14,50,000

b) Mustard Oil Making Project Report – Working Capital: Rs. 5,00,000

Mustard Oil Making Project Report – Total project cost: Rs. 19,50,000

Estimated Annual Production Capacity: Rs. 54,62,000

Raw material cost: Rs. 3,750,000

Labels and packing material: Rs. 2,50,000

Wages (Skilled and Unskilled): Rs. 10,08,000

Salaries: Rs. 90,000

Administrative Expenses: Rs. 24,000

Overheads: Rs. 60,000

Miscellaneous Expenses: Rs. 12,000

Depreciation: Rs. 1,15,000

Insurance: Rs. 14,500

Interest (As per the PLR)

a. C. E. Loan: Rs. 188,500

b. W. C. Loan: Rs. 65,000

Total interest: Rs. 2,53,500

Mustard Oil Making Project Report – Working Capital Requirement

Fixed Cost: Rs. 3,29,000

Variable Cost: Rs. 5,133,000

Requirement of WC per Cycle: Rs. 4,55,167.

Assumptions in Mustard Oil Manufacturing Business

  • The plant will be in operation for about 240 days per annum.
  • The operating capacity is 60% for 1st year, 75% in the second year, 90% in the 3rd year.
  • The interest on term loan for 12% per annum and on working capital will be 14% per year.
  • Expenses for raw material and selling cost of end products is taken at Rs. 31,000 / ton and Rs. 80,000 / ton accordingly.

That’s all folks about Mustard Oil Making Project Report and Busienss Plan.


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