POTATO & BANANA CHIPS MANUFACTURING UNIT

 

Purpose of the Project:

The project is for establishment of Banana and Potato Chips manufacturing unit at the

village level in order to add value to the produce of farmers of the area. The unit will utilise

banana and potato to produce chips and powder, for which there is a good demand in the

market.

Importance of the project and the product:

Banana is one of the important fruits in India and occupies about 4.83 lakh hectares with a

production of about 16.17 million MT. Banana is considered as a rich source of energy

producing food. It is consumed in several varieties of preparations and forms. Major share of

banana production in the country is consumed in the fresh form. Being highly perishable in

nature, there is a need to preserve this important fruit by processing it to produce banana

pulp, banana chips, banana powder etc. to cater to the needs of different sections of the

society and thereby provides incentives to the growers. Varieties of Banana suitable for chips

and powder manufacturing are Nendran, Cavendish and Pachabale. Banana powder is

used in weaning foods for infants or in manufacturing bakery and confectionery

products.

India's production of potato is about 224 lakh MT. The production is largely concentrated

in the northern part of the country. Potato is a rich source of starch & carbohydrates,

significant amounts of vitamins and minerals. It is estimated that about 25 % of the potatoes,

which are spoiled due to several reasons, may be saved by processing and preservation of

various types of processed products. The potatoes can be processed for preservation and

value addition in the form of wafers/ chips, powder, flakes, granules, canned slices etc.

Potato Powder is one of the oldest commercially processed vegetable products. In India it is

used in baking industry and as a thickening agent in the soups. Chips are the most

commonly consumed first generation snack foods. They are used as snack food both in

domestic as well as in fast food centres and restaurants as side dish & garnisher. Moreover,

the product can be safely stored for upto six months without change in quality. Varieties of

Potato suitable for chips and powder are Kufri Chipsona - 1, Kufri Chipsona - 2, Kufri

Jyoti and Kufri Chandramukhi.

Value addition can be in the form of grading, cleaning, packing, pre-cooling, primary

processing like cutting, trimming, removal of inedible portion, processing to final products

etc. According to the FAO definition, processed foods can be of three types: Primary,

Secondary and Tertiary. (i) Primary processing involves basic cleaning, grading and

packaging, (ii) Secondary processing involve modification of the basic product to a stage just

before the final preparation at consumer's kitchen and (iii) Tertiary processing leads to high

value-added ready-to-eat products.

The fruit and vegetable processing industry in India is extremely de-centralised, as a large

number of these units (about 70 %) are in the cottage and small sector. There is a need to

have technology upgradation for better quality, recovery, packaging and marketing

techniques in all the segments of the industry.

TECHNICAL DETAILS

 Process Flow Chart

1. Chips: Harvesting -- Receiving -- Washing -- Peeling (manual) -- Slicing -- Removal

of excess water -- Frying -- Mixing of salt and spices -- Cooling -- Packaging --

Transport -- Marketing

2. Powder: Harvesting --Receiving -- Washing --Peeling (manual) -- Drying --

Pulverising -- Packaging -- Transport -- Marketing

Chips and wafers are the age old snacks and fast foods in India and hence no outside

technical support is required. There are a number of equipment manufacturers and technology

suppliers in the country who guide the entrepreneurs in installation and commissioning of

such units.

Location: The site should be a raised one, well drained and must be well connected by roads.

It should be preferably in a raw material production area or at the consumption centre. Either

one or both raw materials (potato and banana) must be produced in the area. The hygienic

condition of the surroundings must be kept in mind while selecting the site. Water and power

in sufficient quantities and qualities must be available. The plant site selected for the purpose

is located in the industrial area in Gomti nagar, Lucknow, Uttar Pradesh.

Installed Capacity

The present model project is for processing of 0.8 MT per day by operating in a single shift

basis. Based on the seasonality of raw materials, the annual installed capacity of the present

model project is considered as given below:

S.No. Name of the product Raw material (MT) Finished Products

(MT)

1 Banana 120 21.60

2 Potato 120 24.00

  Total 240 45.60

The capacity utilization pattern considered for working out the economics is 50 % in the

first year, 80 % in the second year and 90 % from the third year onward.

Buildings

For a project of the present size, a factory building of 40 m x 10 m will be sufficient. The

various structures required are as given below:

Platform for receiving the raw material - 8 m x 5 m.

1. Working space for the factory - 12 m x 10 m.

2. Store room - 3 m x 4 m.

3. Finished product storage - 10 m x 10 m.

4. Office - 3 m x 4 m.

5. Other common facilities like lobby, water closet, bath and verandah.

Plant and machinery

The following plant and machinery will be required :

Chips making/ slicing machine - 2

Potato peeling machine - 2

Oil sieve - 2

Diesel furnace - 2

Frying pan - 2

Pouch sealing machine - 2

Stainless Steel working tables (3' x 8') - 10

DG Set (10 HP) - 1

Miscellaneous equipment and assets

The processing plant and machinery may be procured from the Indian manufacturers and

suppliers. The cost for above plant and machinery including foundation, erection and

commissioning is estimated at Rs 488000.00

Backward linkages

(a) Raw material: Most of the raw materials may either be available locally or may be

procured directly from the markets or through the agents. High quality potato supply

can be ensured from Shimla(KUFRI) & other nearby districts of U.P.

(b) Banana varieties for chips purpose can be procured at a reduced cost from agents

having efficient supply chain management system linked with efficient banana

producing regions.

(c) Other Inputs: Other inputs like packaging material, salt, spices, vegetable oils,

chemicals, etc. may be procured from the local market.

(d) Quality Control: The process must ensure the in-house quality control by using the

quality raw material and standard manufacturing processes and obtain FPO license.

(e) Utilities:

Water: The total water requirement of the project will be about 5000 litres per

day. Proper arrangement for the required supply of water must be made.

Power: The maximum power requirement for the processing unit will be about

10 HP. Proper power connection along with the standby arrangement is

required to be done.

Manpower: The unit will require a manager, 2 skilled and 4 unskilled

labourers. Also provision for security and appropriate number of marketing

personnel should be made.

Packaging material: The finished product has to be packed in the polyethene

pouches, which may be procured locally.

Forward Linkages

Marketing Arrangement: The product is becoming popular among the rural masses and

marketing arrangement may be made in the nearby rural as well as urban areas. The

marketing can be tied up with the existing market network of food supply shops, railway

stations etc. and with the reputed supply chains to meet the domestic needs.

Environmental Aspects

There is no harmful effluent from the unit. The organic wastes like potato and banana peels

etc. are decomposable and bio-degradeable and hence the disposal of the same will not be a

problem. However, the disposal of the waste from the site to a suitable dumping ground or

manure/compost making unit should be made.

BROAD INVESTMENT COMPONENTS

Capital Cost details :

The estimated project cost for the model is Rs 2105490 including one month working capital

requirement of Rs 67490 capitalized fully. The details of outlay are summarised below:

Particulars Required Cost (Rs.)

Land 50000

Land Development 50000

Buildings and civil structures 1400000

Plant and Machinery 488000

Misc. Fixed Assets 50000

Working capital 67490

Total project cost 2105490

Working capital

The average operating cycle of the unit will be one month and the monthly working capital

requirement of the unit is Rs 67490 and the same will be fully capitalized.

FINANCIAL VIABILITY

The project is found to generate adequate surplus and the scheme is financially viable. The

financial parameters in brief are as under :

i) NPW : Rs 13,46,075

ii) IRR : 35.77 %

iii) BCR : 1.174 : 1

iv) DSCR : 1.53 : 1

v) Repayment period : 7 years inclusive of 1 year grace

vi)Quantum of refinance : 90% of the bank loan.

vii)Break Even Point: 50.3%

viii)percentage of profit on sales: 80%

Repayment:-The period of loan will vary between 5 years to 10 years depending on the cash

flow. The repayment period may include a grace period (to be decided by the financing bank

as per the individual scheme) of a maximum of 2 years.

 

 

PROJECT  OUTLAY   (Amount  Rs)

Sl.No. Particulars QuantityCost

Considered

1 Land      

 

Cost of land including registration

(limited to the extent of 10 % of the

project cost)

0.25

Acre  50000

2 Land Development     50000

3 Civil Structures      

  Buildings (40 m X 10 m)     1400000

4Plant and machinery(includes

erection&commissioning)    488000

5 Miscllanious fixed assets     50000

6Working capital requirement for

one month capitalised fully    67490

  Total project cost     2105490

  Margin Money   25.00% 526373

  Bank loan   75.00% 1579118

 

 

DETAILS OF PLANT AND

MACHINERY( Amount Rs )

Sl.No.Plant &

MachineryQuantity Rate (Rs) Amount

1

Chips making

machine

(Slicing

machine)

2 50000 100000

2Potato peeling

machine2 30000 60000

3 Oil Sieve 2 20000 40000

4 Disel furnace 2 25000 50000

5 Frying pan 2 11000 22000

6Pouch sealing

machine2 8000 16000

7

Working tables

SS 3' X 8' (6

Nos)

10 5000 50000

8 DG Set (10 HP) 1 50000 50000

9 Miscelleneous LS   50000

10Errection and

commissioningLS   50000

  Grand total     488000

 WORKING CAPITAL REQUIREMENT (Amount Rs.)

Particulars Working capital requirement during first year

Raw material  

Total 40000

Edible oil 3040

Power and fuel 3800

Packaing material 1900

Salary and wages 14583

Administrative expenses (TA,printing and

stationery, P&T, advertisement etc)4167

Total 67490