Palm Oil Manufacturing Project Report

Palm Oil Manufacturing Project Report, and Business Plan

Introduction

Hello friends, today we are here with a new topic called “Palm Oil Manufacturing Project Report and Business Plan”. An oil palm is a super crop that contains more than half of the entire packaged items consumed globally. It is the world’s highly consumed edible oil and is the most versatile raw material base popular in this industry. Its applications are found in food, cosmetics, energy, animal feeds, chemical, and pharmaceuticals sectors; and its profit profile so attractive that it has accurately seen the growth and is always shows an emerging market. Palm oil, for years, has been popular among all the various oils on market.

This article will guide any individual with some knowledge in the world of palm, help to explore its plantation, harvesting, and application methods; its financial and investment aspects; and ultimately the trends depicting the potential and scope of the business in the future.

A Guide to Palm Oil Manufacturing Project Report, and Business Plan

Market potential of Palm Oil Manufacturing Business in India

Oil palm crop is one amongst the highest palm oil generating crops among the all-perennial plants. Oil palm produces edible palm oil and palm kernel oil. This oil palm is referred to as golden palm because of its high yielding capacity. An Oil palm generates nearly 4 – 5 tonnes per ha which are called CPO – a Crude Palm Oil, from approximately 0.40 to 0.50 tonne per ha of PKO – Palm Kernel Oil starting from the 4th to 30th year considered as its productive life span.

The oil palm crop is the major raw material used for producing oil palm. In India, oil palm is being cultivated in almost 13 states in more than 3,15,000 hectares by 2017-18 under properly irrigated conditions. Some of such states Andhra Pradesh, Karnataka, Gujarat, Tamil Nadu, and Bihar.

Uses of Palm Oil

It is used for a wide range of purposes which are listed below:

Food: Palm oil is the chief ingredient in cooking oils, margarine, industrial frying fats, confectionery, ice cream, vegetable ghee, non-dairy creamer, cheese analog, salad dressing, supplements, and condiments.

Cosmetics and Personal Care: Palm is even added to most cosmetic items. It is seen in balms and lipsticks for its shine and color-holding properties; in candles, soaps, and detergents for its texture; and as a base component in creams and skin-based therapeutics (particularly anti-aging products) as it holds tocopherol and tocotrienol properties, both of which have healing characteristics.

Oleochemicals: Oleochemicals are the oils and fats obtained from natural plants and animals that are broken down into simpler forms like fatty acids, glycerol, esters, and others. Palm oil is a raw material in oleoresins, which are used in the manufacture of surfactants, lubricants, industrial cleaning products, agrochemicals, grease, and printing ink.

Energy and Biomass: Palm oil is used as feedstock in the biodiesel plants in Southeast Asian and European countries, this, in turn, stands as one of the reasons behind the increased growth of palm cultivation in recent years.

Livestock: Palm kernel, as it is rich in protein around 22%, is an eccentric but inexpensive source of nutritional value and used as a supplemental food product and as animal feed.

Market value of Palm Oil

The palm oil value chain is designed and built similar to that of the crude oil industry. It includes an upstream segment (planting, harvest, cultivation), a midstream stage (refining and processing), and a downstream stage (end-products retailing, brands, and industrial byproducts).

List of licenses required to start a Palm Oil Manufacturing Business in India

For starting Oil Palm Making Business you need to get the following list of permissions, license and registrations-

  • Firstly, you need to avail of GST number
  • Trade License could be applied by approaching Municipal Authority which is essential.
  • Apply for MSME Udyog Aadhaar online. Thus, will aid in availing the Govt. schemes and loans.
  • Palm Oil manufacturing is included under the category of the food processing operation and hence it requires FSSAI registration. It is mandatory.
  • Also, you can approach the BIS certification if you want to sell the product across the nation. The BIS specification for Noodles is IS 1485:1976.
  • If you want you can even register for a Trademark of your product or company.
  • If you want to export your product to other countries, you need an IEC number.
  • Obtain a trade license from the local authority.
  • VAT registration is a must.
  • The BIS Certification (Bureau of Indian Standards) is essential for food products.
  • You need to get a pollution control NOC. But it is recommended to verify with the local office.
  • Also, ensure to register your business with ROC.
  • GMP and PFA Act are very essential as you will hire employees for your unit.
  • Any food products should have ISO certification for building trust in consumers so apply for ISO 9001 certification

Area required for starting Palm Oil Manufacturing Business

The area differs based upon the plant size or scalability of your business. You will require a commercial cover space of 800-1000 sq. mt. Generally, you can begin a small-scale oil palm manufacturing business in 800 sq. mt. area with proper power and water connection.

Manufacturing process of Palm Oil

In case if you miss this: Paper Plate Making Project Rate.

Oil Palm Fruits
Oil Plam Fruits (Image credit: pixabay)

Oil palm usually begins to bear fruit in two and a half years after plantation with commercial harvest starting from the sixth month. But the yield of an oil palm tree is comparatively low at this time and remains so until till 7 years.  After the seventh year, the tree attains peak production, where its output sustains constant until up to 18 years, after which it starts to come down. The oil palm life span for typical commercial usage is 25 years.

The fully mature oil palms yield around 18 to 30 metric tons of fresh fruit bunches (FFB) for a hectare. The yield will be based on several factors, such as age, soil and climatic conditions, seed quality, quality of plantation management, and the harvesting period and processing of FFB. The ripeness of FFB harvested is significant in maximizing the grade and quantity of palm oil obtained.

The milling of fresh fruit bunches (FFB) should be done within 24 hours of harvesting to reduce the development of fatty acids that decrease the commercial value of the processed palm. FFB is first sent to the palm oil mills where they are sterilized under high-pressure steam, later the palm fruits are enzyme-deactivated and split from the palm bunches. After steaming, the palm fruitlets are crushed with a pressing machine that extracts the palm oil.

As previously stated, the palm oil palm is available in two types: CPO is obtained from the flesh of the fruit, and PKO using the seeds or kernels. For about ten tons of CPO derived, one ton of PKO is harvested. For CPO, the waste and water are separated with a centrifuge. The cleared CPO is then passed for refining, while the palm kernel will be sent for crushing. The empty fruit bunches and liquid waste arising after this step are reused as fertilizer in the plantations.

Both CPO and PKO then pass another stage of refining that will remove impurities, colors (through bleaching), and odors (through deodorizing), and the oil is processed into various grades via fractionation. The end products of these processes are palm stearin (this is solid at room temperature) and palm olein (it is liquid at room temperature) fractions, whose different characteristics make them appropriate for a variety of food and non-food items.

Down streaming segment of Plam Oil extraction

The downstream segment of palm oil the retailing of the end products or derivatives after the refining process. They are palm olein (CPO), palm kernel cake (PKO), palm stearin (CPO and PKO), and other substrate bases. Of the various derivatives, CPO olein and stearin are the leading ones among palm’s derivatives, because of their usage in various segments that is from edible oil to surfactants, animal feed, biofuel, cosmetics, and lubricants.

Palm Oil Manufacturing Project Report/Economics of Palm Oil Manufacturing business in India

Land and Building: Rs. 5,50,000

Plant and Machinery: Rs. 2,70,000

Miscellaneous Assets: Rs. 55,000

P&P Expenses: Rs. 40,000

Contingencies @ 10% on Land and Building and Plant and Machinery: Rs. 80,000

Working Capital Margin: Rs. 1,35,000

Total: Rs. 11,30,000.

Palm Oil Manufacturing Project Report – Means of finance

Promoters’ Contribution @ 25 %: Rs. 2,80,000

Loan from Bank/FI: Rs. 8,50,000

Total: Rs. 11,30,000

Debt Equity Ratio: 1.96 : 1

Promoters’ Contribution: 25%.

Palm Oil Manufacturing Project Report – Working capital calculation

Raw materials/ Packing materials: Rs. 1,70,000

Working expenses: Rs. 1,00,000

Finished goods: Rs. 1,00,000

Receivable: Rs. 80,000

Total: Rs. 4,50,000.

Palm Oil Manufacturing Project Report – Cost of Machinery

Table Ghani 1: Rs. 70,000

Oil Expellers 2: Rs. 80,000

Filter Press 1: Rs. 60,000

Other Support Equipments, electric motor and testing facilities: Rs. 60,000

Total: Rs. 2,70,000.

Palm Oil Manufacturing Project Report – Profit in Palm Oil making business in India

Sales price of Palm Oil: Rs. 32,16,000

Sales price of De-oiled Cake: Rs. 4,44,000

Total: Rs. 36,60,000

Profits in Palm Oil making business = Sales – Project cost = Rs. 32,60,000 – Rs. 28,80,000

= Rs. 7,80,000.

Conclusion

There has been a drastic demand for biodiesel in Southeast Asian and Western countries, which also includes the minimum requirement (around 20% in China and Indonesia) of palm oil-based diesel. In this diesel, palm oil is mixed with traditional diesel as a source of energy. These policies have effectively driven the palm oil-based biodiesel demand in the coming years, and as a result increased the crop’s correlation to energy expenses, thereby propelling CPO costs into a new trading range.

The final major reason for the palm oil growth is “sustainability aspects.” Particularly, there has been an increasing trend and policy against GMO-based oils in continents like Europe and restriction on consumption of trans-fat foods in the USA. These reasons have led to the switching of palm oil in food instead of soybean and sunflower oil.

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