Neem Oil Project Report, Business Plan

Introduction to Neem Oil Project Report, Manufacturing Business Plan: For starting a Neem Oil extraction business-appropriate knowledge about the oil extraction method is essential. There are many techniques employed for industrial and commercial extraction of neem oil. Neem Oil extraction by using solvents such as ether, alcohol, and hydrocarbons is a popular process in this sector. The selection of the Neem Oil extraction method relies on the nature of the chemical compound that you are planning to obtain.

Commercially produced Neem Oil when treated using solvent lacks Azadirachtin. This kind of Neem Oil is not preferred for use on certified organic crops. The different methods of oil extraction generate different compositions of neem oil. It will be based on usage and the purpose of the extracted neem oil.

Neem Oil Project Report, Manufacturing Business Plan

Market potential of Neem Oil: The main usage of Neem Oil is seen in agriculture. In the agriculture industry, Neem Oil is commonly used as an insecticide, natural pesticide, and fungicide. The presence of Azadirachtin in neem oil helps in various applications when used in different dosages. Another industrial application is for preparing neem coated chemical fertilizer for instance urea.

Apart from agriculture, Neem Oil has extensive market potential as it is used in the cosmetic industry as well. In developing skincare, body care products, hair care, Neem Oil is a vital raw material. In the Ayurvedic cosmetic industry and herbal medicine, this Neem Oil is highly recommended nowadays, as it is an important ingredient.

Business Plan for starting Neem Oil Manufacturing Unit

For manufacturing set-up, a proper business plan is an operational tool to obtain Neem Oil in a proper way minimize risks and achieve the goal. According to the market analysis, identify what type of Neem Oil you plan to obtain. It also aids you to decide the appropriate procedure for extraction and requisite machinery. It is sensible to have a project report well before you launch the business. It will also assist you to calculate your start-up fund requisites. Design a business plan based on that and even include the various marketing strategies you have thought of for this business.

Market potential of Neem Oil
Presumptions and assumptions in Neem Oil Business
License, permissions and registrations required to start Neem Oil Manufacturing Business
Area or land required for starting Neem Oil Manufacturing Business
Raw materials required for Neem Oil Manufacturing Business
List of machinery required for starting Neem Oil Manufacturing Business
Manufacturing process of Neem Oil
Project economics of Neem Oil Manufacturing Business
Marketing strategies to promote your Neem Oil

Presumptions and assumptions in Neem Oil Manufacturing Project

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.
You can expect profit percentage of 7% – 8% in the first year, later it increases based on the quality and marketing of your product.

Legal Compliances required for starting Neem Oil Manufacturing Project

For beginning the Neem Oil extraction business, you must first decide the legal pattern of your business. You can plan to start with less capital and can register your business as a sole proprietor or any business entity available in your region. You should check the various essential permits and licenses that must be obtained from the local authority.

Register your business with ROC
Obtain Trade license
Get SSI registration
Factory license is essential
Food operator license is mandatory
BIS certification is a must
“NOC” from the pollution control board
AGMARK certification
Fire license must be acquired
FSSAI is mandatory, as Neem Oil Manufacturing business is classified under a food processing industry

Area required to start Neem Oil Manufacturing Business

The area or space required to start Neem Oil Manufacturing Unit is 500 – 800 sq. mt. This will depend on the scalability of your business. As you need to set up and establish the production unit required for Neem Oil Manufacturing Process.

Raw materials required to start Neem Oil Manufacturing Business

The major raw materials required are neem seeds, from which oil is extracted.

List of machinery and equipment required to start Neem Oil Manufacturing Business

The list of machinery depends upon the type of manufacturing process which you wish to choose. Below is the list of mechanical pressing methods:

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.

The manufacturing process of Neem Oil

Mechanical pressing method

The primary procedure of extraction consists of the grade-wise separation of seeds. Grading of seeds is performed according to the amount of oil content in the seeds and based on sizes as well. Firstly, the fruits are gathered in a drum, and the kernels are removed to obtain the seeds. Next, the seeds are woven dried, and then added into the oil extracting machine when the mechanical pressing method is employed.

The Neem Oil is produced by pressing by mechanical pressure and gathered in a drum. Finally, filtration is performed to separate the various unwanted elements left in the extracted oil to have a high-quality and pure neem oil.

Solvent Extraction Method

In the solvent extraction method, solvents such as petrol or white gasoline are added to the seeds after proper oven drying is accomplished. The solvents aid in extracting the Neem Oil out of the kernel up to a particular percent. Later the neem seeds could be pressed if necessary. The collected oil is stored in a silo where the pure Neem Oil is obtained from the crude oil.

Neem Oil Project Report/ Economics of Neem Oil Manufacturing Business

In case if you miss this: Onion Oil Project Report.

Land and building construction on a rental basis: Rs. 3,00,000

Cost of Machinery: Rs. 2,39,500

Pre-operative expenditure: Rs.29,500.

Fixed capital investment:

Machinery: Rs. 2,39,500
Pre-operative expenses: Rs. 29,500
Total: Rs. 2,69,000

Working capital analysis:

Neem seeds 60 tons @ Rs. 2000/ton: Rs. 1,20,000
Scented Neem seed oil 500 lit. @ 60/lit.: Rs. 30,000
Packing materials (plastic containers, cartons, etc.): Rs. 20,000
Total: Rs. 1,70,000

Utilities:

Wood 30 quintals @ Rs. 120/qtl.: Rs. 3,600
Electricity 300 KWH @ Rs. 3.00: Rs. 900
Total: Rs. 4,500

Staff and Labour:

Skilled labour: Rs. 10,000
Unskilled labour: Rs. 7,500
Salesman: Rs. 3,000
Accountant: Rs. 2,500
Peon: Rs. 2,000
Total: Rs. 25,000

Other expenses

Rent: Rs. 2,500
Transport and travel: Rs. 2,000
Telephone: Rs. 400
Stationery: Rs. 100
Publicity: Rs. 1,000
Sale tips: Rs. 1,000
Other miscellaneous expenses: Rs. 2,000
Taxes and levies: Rs. 500
Total: Rs. 9,500

Total working capital per month = 1,70,000 + 4500 + 25,000 + 9,500 = Rs. 2,09,000.

Total Capital Investment:

Fixed capital: Rs. 2,69,000
Working capital: Rs. 2,09,000
Total: Rs. 4,78,000

Cost of production (per annum):

Depreciation on machinery and equipment @ 10%: Rs. 22,950
Depreciation on furniture @ 20%: Rs. 2,000
Recurring expenditure (per annum): Rs. 25,08,000
Interest on total cap. Investment @ 14%: Rs. 66,920
Total: Rs. 25,99,870

Turnover of Neem Oil Manufacturing Business

Neem seed oil turnover 92.4 MT @ Rs. 30,500/ton: Rs. 28,18,200 (Say Rs. 28,20,000).

Profit in Neem Oil production

Profit = Rs. 28,20,000 – Rs. 25,99,870 = Rs. 2,20,130

Net profit ratio = Profit x 100/Turnover = 7.8%

Break even analysis:

Fixed cost (per annum):

Total depreciation: Rs. 24,950

Interest @ 14%: Rs. 66,920

40% salary: Rs. 1,20,000

40% other exp. Except rent: Rs. 33,600

Rent: Rs. 30,000

Total: Rs. 2,75,470

B.E.P. = FC x 100 / FC + profit = 55%.

Marketing strategies to promote your Neem Oil product

Focus on business dealings with the industries that need Neem Oil as raw material. It is always recommended to launch at least one product with your brand name for retail. Develop your website. Register your business in popular B2B platforms so that people will identify and recognize your brand. Stress on building a strong distribution network for your product.

You may also check this: Flour Mill Project Report.

Conclusion of Manufacturing of Neem Oil

For a person who is interested to invest in the agricultural sector, the Neem Oil Manufacturing business could be planned for earning good profits with less investment.

1 COMMENT

Soubhagya Kumar Das August 17, 2021 At 11:29 am

Dear sir.
I am interested in manufacturing of neem oil and product like phenyl .hand wash Nd soap .kindly guide me to start this business also the training if can arrange about manufacturing and the machineries also the cost involved