Virgin Coconut Oil Project Report (VCO), Plan

Introduction to Virgin Coconut Oil Project Report(VCO), Manufacturing Business Plan: Hello friends, are you planning to start a virgin coconut oil business in India? Well, you are in right place. Virgin Coconut Oil (VCO) is gaining popularity as a functional food and people are getting awareness every day. It is estimated that VCO will experience tremendous growth in the market. Virgin coconut oil is naturally processed, without chemicals and additive-free item from fresh coconut meat or using the derivatives, which has not been processed under chemical methods after extraction. It is the cleanest form of coconut oil, water-white, comprises natural vitamin E, and has not experienced hydrolytic or atmospheric oxidation as attested by its very low free fatty acid percent and peroxide value. It has a mild to intense fresh coconut fragrance based on the type of process used for production.

A guide to Virgin Coconut Oil Project Report(VCO), Extraction Process and Manufacturing Business Plan

Virgin Coconut Oil Business Plan
Virgin Coconut Oil (pic credit: pixabay)

Virgin Coconut Oil (VCO) is extracted using fresh coconut milk sourced from matured coconut of 12 months old. VCO can be consumed in natural form without the need for further refining. Virgin coconut oil is popular for its MCTs (Medium Chain Triglycerides). The most important medium-chain fatty acid found in VCO is lauric acid. It comprises 48 % of VCO. Lauric acid has powerful anti-microbial characteristics capable of terminating disease-causing bacteria, fungi, viruses, and parasites. Researchers reported that the presence of medium-chain fatty acids in mother’s milk could be the primary ingredient that defends newborn children from infections for the first few months of their birth, while their immune system is still taking shape.

Uses of Virgin Coconut Oil

VCO has considerable advantages for therapeutic purposes such as antimicrobial, anti-HIV/AIDS drugs, for the treatment of Alzheimer’s disease, and anti-cancer therapy.

Essential composition of Virgin Coconut Oil

  • Moisture: Maximum 0.1%
  • Volatility: Maximum 0.2% at 120°C
  • Free Fatty Acid: Maximum 0.2%
  • Peroxide Value: Maximum 3 meq/kg
  • Relative density: 0.915 – 0.920
  • Refractive index: 1.4480 – 1.4492 at 40°C
  • Insoluble impurities: Maximum 0.05 by mass
  • Saponification Value: 250 – 260 mins.
  • Iodine Value: 4.1 -11
  • Unsaponifiable matter: Maximum 0.2-0.5 by mass
  • Specific gravity: 0.915 – 0.920 at 30 °C/30 °C
  • Polenske Value: Minimum 13
  • Total Plate Count: < 0.5
  • Color Water: clean
  • Odor and Taste: Smells natural with a fresh coconut scent, free of sediments, and is free from rancid odor and taste.

Business plan for starting Virgin Coconut Oil Production Plant in India

To start a small-scale Virgin Coconut Oil Manufacturing Business in India, you need to first draft a perfect business plan by considering the following points:

  • Basis and presumptions of Virgin Coconut Oil Manufacturing Business
  • Implementation schedule
  • List of approvals required to start Virgin Coconut Oil Manufacturing Business
  • Raw materials required for Virgin Coconut Oil Manufacturing Business
  • List of machinery and equipment for extracting Virgin Coconut Oil
  • Manufacturing process of Virgin Coconut Oil
  • Project economics of Virgin Coconut Oil Manufacturing Business

Basis and presumptions of Virgin Coconut Oil Manufacturing Business

  • The Virgin Coconut oil plant can be operated in three shifts. About 8 hours daily day and 300 working days for a year.
  • The interest rate for the business will be 12% per annum on the investment borrowed. 
  • The expenses regarding acquiring licenses, raw materials, packing materials, machinery and considered based on the scalability of the project profile that differs from place to place.
  • The rental expenses of the production shed and land are considered as per the prevailing rates and may differ from place to place.
  • The unit capacity utilization could be around 75% since the unit is operated continuously.

Implementation schedule of Virgin Coconut Oil Manufacturing Business

The project execution will need around nine to ten months. The estimated break-up of

activities and the duration for each activity are stated below:

  • Project preparation and permissions: 0 – 2months
  • Registration under MSME Act 2006 and loan sanction: 2 – 4 months
  • Machinery and equipment purchase and installation: 4– 5months
  • PFA License: 5– 7months
  • Power connection setup: 5– 7months
  • Machinery installation: 7 – 8months
  • Recruiting staff and test run: 8 – 9 months
  • Commercial production can be presumed to begin: 10th month

List of approvals/Licenses required to start Virgin Coconut Oil Manufacturing Business in India

The next step is to acquire the below list of licenses, permissions, and registrations for starting Virgin Coconut Oil Manufacturing Business in India-

  • MSME registration
  • GST registration
  • ROC
  • Registration of firm
  • Shop Act License
  • FSSAI License
  • IEC Code
  • Export License
  • Fire and Safety
  • ESI
  • PF
  • No Objection Certificate from pollution board
  • Trade license from local municipal authority
  • You need to maintain BIS standards IS 966:1962

Raw materials required to start Virgin Coconut Oil Manufacturing Business

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

Coconuts for Vergin Coconut Oil Manufacturing
Coconuts (pic source: pixabay)

It is analyzed that to get 1 liter of VCO, 7 kg of dehusked coconut is needed that is about 17 coconuts.

The manufacturing process of Virgin Coconut Oil

Below are the steps in Manufacturing Virgin Coconut Oil. 

  • Dehusking: Husk is removed either by coconut dehusking machine or manually.
  • Deshelling: This is performed to remove the shell of the coconut. This is performed without breaking the kernel.
  • Paring: It is done to peel the brown skin of the kernel using a paring machine.
  • Blanching: Pared coconuts will be submerged in boiling water for some time with blanching tank.
  • Draining: It can be performed by a vibratory screener. This will avoid the excess water existing in the blanched coconuts.
  • Disintegration: Pared coconuts are added into a disintegrator where pared nuts are sliced into small pieces and will be prepared for extraction.
  • Milk extraction: Shredded coconuts are placed into a milk extractor and coconut milk comes out of the extractor. Extracted milk is gathered in collecting vessels. Extracted coconut milk is next sent for filtration to avoid the presence of any solids. The residue obtained after extraction is dried using the oven and packed with a defatted desiccated coconut.
  • Centrifugation: This process is best to separate two immiscible entities. After centrifugation, oil and skim milk gets separated. Coconut oil is therefore separated from coconut milk.
  • Filtration: The oil is sent through the filter and sent for packing. Vacuum dehydration of oils will avoid the excess moisture in oils.

Virgin Coconut Oil Project Report (VOC)/Economics of Virgin Coconut Oil Manufacturing Business in India

You may also check this: Flaxseed Oil Manufacturing Project Report.

Virgin Coconut Oil Manufacturing Process
Virgin Coconut Oil Manufacturing (Image source: pixabay)

Land and building construction on a rental basis per month: Rs.2,500.


  • Cast iron pan 1000 lit. capacity (200 kg. wt): Rs. 1,20,000
  • Rotor cum screener to expel oil Rs. 4,000
  • Decorticator: Rs. 500
  • Aluminium Disc 500 lit. capacity: Rs. 20,000
  • Stirrer with motor 1 HP (for blending purpose): Rs. 10,000
  • Other necessary equipments for cooking: Rs. 5,000
  • Automatic filling machine for liquid: Rs. 70,000
  • Office furniture: Rs. 10,000
  • Total: Rs. 2,39,500 

Pre-operative expenditure:

  • Wooden chulla four nos.: Rs. 2,000
  • Project profile: Rs. 200
  • Travel: Rs. 2,000
  • Regn. With Sales tax: Rs. 2,000
  • Packing advance for plastic containers, cartons: Rs. 15,000
  • Stationery: Rs. 300
  • Telephone connection: Rs. 3,000
  • Other misc. exp.: Rs. 5,000
  • Total: Rs. 29,500

Fixed capital investment:

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

Working capital analysis

  • Raw coconuts 60 tons @ Rs.2000/Ton: Rs. 1,20,000
  • Scented coconut oil 500 lit. @ 60/lit.: Rs. 30,000
  • Packing materials (plastic containers, cartons,etc.): Rs. 20,000
  • Total: Rs. 1,70,000


  • Wood 30 quintals @ Rs.120/qtl.: Rs. 3600
  • 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 misc. expr.: 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 equipments @ 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 Virgin Coconut Oil production

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

Profit in Virgin Coconut 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%.

Important points to consider while Manufacturing Virgin Coconut Oil

Coconut selection

The maturity of coconut is a very significant aspect of the quality and recovery of VCO particularly in processes having the coconut milk route. Coconut kernels from fully mature coconut have the greatest oil percentage and are comparatively less protein quantity.

Coconut milk is an emulsion of oil and water soothed by protein. To obtain the oil from coconut milk, the protein bond must be disrupted to recover much oil if the kernel from which the coconut milk is extracted has high oil content and lower protein content. To identify the maturity of nut, shell and husk must be brown and gives a sloshing sound when it is shaken.

Always note that nuts when it is fully mature do not have haustorium. As the oil content of the kernel and quality of the oil begins declining once the haustorium is developed.

Handling of equipment in Virgin Coconut Oil Manufacturing Business

Coconut meat/kernel and coconut milk contain low acid content so they are very prone to microbial infection. Because of this, strict sanitation in the unit location, people, and machinery should be practiced regularly. For manufacturing Virgin Coconut Oil, food-grade stainless steel is mainly recommended to use for making all the parts of machinery. Because it will be in touch with all the raw materials like coconut kernel or coconut milk. Water to be used as a diluent or rehydrating agent must be of good quality, free from pathogens and too many mineral constituents.

Packaging of Virgin Coconut Oil product

The presence of water in the oil will ensure the product’s shelf life less i.e., water in the oil will lead to rancidity while storage. An important note is that you need to maintain water content in the virgin coconut oil should be less than 0.1%. The oil should be properly dried and cleaned before packaging the final product of Virgin Coconut Oil.

By-products in Virgin Coconut Oil Manufacturing Business

Chief by-products in VCO units are brown skin, shell, and defatted desiccated coconut powder.


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