slide 1
INTRODUCTION
Indian cuisine and lifestyle are heavily influenced by spices
India is known as the "home of spices" and is the largest consumer, producer, and exporter of spices
India produces around 75 of the 109 varieties listed by the International Organization for Standardization
In the fiscal year 2022, the export value of spices from India exceeded 300 billion rupees
Top importers of Indian spices include China, US, Vietnam, Hong Kong, Thailand, UK, UAE, Malaysia, Bangladesh, and Sri Lanka
Top exported spices and products include mint products, chilli, spice oils & oleoresins, turmeric, cumin, pepper, curry powders/paste, cardamom seeds, other spices (tamarind, asafoetida, and cassia), and garlic
The consumption of spices in Indian households is significant, with the market growing annually at 160,669.3 Crores
The masala business has great potential with low investment, including home-based spice making businesses.
slide 2
MARKET OPPORTUNITY IN INDIA
The Indian spices market is projected to reach approximately 900 billion INR by 2023, with growth in the sector expects to be led by branded spices and spice mixes. India being the largest spice producing country producing 50 different types of spices people are looking for ready-made food, and spice powder makes their cooking more accessible. Hence the usage of the spice powder is increasing consistently and futuristic.
Powdered spices are convenient to use, and it saves time and physical efforts for preparing different delicious cuisine. Every commercial food industry like hotels, restaurants, catering business and many more are using powder spices on a daily basis.
slide 3
CHALLENGES FACED BY SPICE MANUFACTURING COMPANIES IN INDIA:
WORKING LABOUR ISSUE
The pungent odour of spices which gives sharp sensation is not suitable for health if exposed for a more extended period. Hence there is always a significant issue of discovering working labour in the Indian spice industry.
MARKET CREDIT
The credit market risk with distributers or mediators in the spice industry is always at high, and hence this leads as a significant challenge.
PACKAGING LEAKAGE
There are many small scale industries in India where still hand-made packaging is done due to budget constraint, which results in packaging leakage. If they plan to opt hi-tech types of machinery, then costing is increased; hence this has always been the point of concern.
EXPANSION IS DIFFICULT BECAUSE OF HI-TECH MACHINERIES
Each day innovation is introduced, to keep updated and in trend, companies have to adapt to each change. For SME’s, it is challenging to expand themselves due to the introduction of new technology and this act as a challenge for brands.
A LOT OF COMPETITION
The spice industry faces intense competition since the concentration of suppliers is more Its competition is often at the regional level. There are also many small local companies often operating in a specific location, and as the demand for authentic organic
PROPOSAL FOR NEW SPICE BUSINESS ( BUSSINESS PLAN).pdf
1. FOUNDATION COURSE II
ASSIGNMENT – II : PREPARE DPR OF YOUR NEW BUSSINESS VENTURE
PROPOSAL FOR NEW SPICE BUSINESS ( BUSSINESS PLAN)
2. INTRODUCTION
• Indian cuisine and lifestyle are heavily influenced by spices
• India is known as the "home of spices" and is the largest consumer, producer, and exporter of spices
• India produces around 75 of the 109 varieties listed by the International Organization for Standardization
• In the fiscal year 2022, the export value of spices from India exceeded 300 billion rupees
• Top importers of Indian spices include China, US, Vietnam, Hong Kong, Thailand, UK, UAE, Malaysia,
Bangladesh, and Sri Lanka
• Top exported spices and products include mint products, chilli, spice oils & oleoresins, turmeric, cumin,
pepper, curry powders/paste, cardamom seeds, other spices (tamarind, asafoetida, and cassia), and garlic
• The consumption of spices in Indian households is significant, with the market growing annually at
160,669.3 Crores
• The masala business has great potential with low investment, including home-based spice making
businesses.
3. The Indian spices market is projected to
reach approximately 900 billion INR by
2023, with growth in the sector expects to
be led by branded spices and spice mixes.
India being the largest spice producing
country producing 50 different types of
spices people are looking for ready-made
food, and spice powder makes their cooking
more accessible. Hence the usage of the
spice powder is increasing consistently and
futuristic.
Powdered spices are convenient to use, and
MARKET OPPORTUNITY IN INDIA
it saves time and physical efforts for preparing different delicious cuisine. Every commercial food industry like hotels, restaurants, catering business
and many more are using powder spices on a daily basis.
4. CHALLENGES FACED BY SPICE MANUFACTURING COMPANIES IN INDIA:
• WORKING LABOUR ISSUE
The pungent odour of spices which gives sharp sensation is not suitable for health if exposed for a more extended period. Hence
there is always a significant issue of discovering working labour in the Indian spice industry.
• MARKET CREDIT
The credit market risk with distributers or mediators in the spice industry is always at high, and hence this leads as a significant
challenge.
• PACKAGING LEAKAGE
There are many small scale industries in India where still hand-made packaging is done due to budget constraint, which results in
packaging leakage. If they plan to opt hi-tech types of machinery, then costing is increased; hence this has always been the point
of concern.
• EXPANSION IS DIFFICULT BECAUSE OF HI-TECH MACHINERIES
Each day innovation is introduced, to keep updated and in trend, companies have to adapt to each change. For SME’s, it is
challenging to expand themselves due to the introduction of new technology and this act as a challenge for brands.
• A LOT OF COMPETITION
The spice industry faces intense competition since the concentration of suppliers is more Its competition is often at the regional
level. There are also many small local companies often operating in a specific location, and as the demand for authentic organic
spices increased the demand for maintaining the quality of the product raised.
5. BENEFITS OF HAVING A SPICE BUSINESS IN INDIA
India is one of the leading sources of the most flavorful spices. There are plenty of benefits and advantages that encourage more
individuals to start their spice business in India finally. Let’s explore a few subsidies and schemes that make the spice business a
profitable venture in India.
• Indian spices board: Established in 1987, it promotes the export and development of Indian spices.
• Govt. subsidy for international spice sample shipping: Spice exporters with a spice house certificate can receive Rs.
50,000 assistance for sending sample abroad.
• Printing subsidies for promotional materials: Registered spice exporters can avail a subsidy of up to 50% (max Rs. 2
lakhs) for promotional materials.
• Subsidy for export promotion of Indian spice: Spice exporter with recognition can get an interest free loan of up to 100
% for listing/slotting and 50% for product development (max Rs. 2.5 crore.)
• North – eastern region spice processing subsidy: Provide 33% aid for primary processing facilities (max Rs. 25 lakhs per
beneficiary) and 50% for farmer group (max Rs. 35 lakhs).
• Financial assistance for international trade shows: Reimbursement of 50% of airfare for trade fair Participants and stall
owner (max Rs. 1lakh and Rs. 1.5 lakh respectively)
6. SPACE REQUIRED
• Choosing the right location depends on the scale of the business and budget. The state government have restriction to start
the food business from home hence ensure that the location is obeying the law of the government decided.
• No massive space is required when it comes to starting a business with spices, around 250 sq yard can be used for processing of
pieces and other 250 sq yard is needed for the packaging of the spices.
• Check commercial space where basic amenities are available such as water, electricity, etc.
• Make sure the location is transportation friendly and easily accessible to the target market.
RAW MATERIALS REQUIRED :
The essential ingredients required in spice powder are ungrounded spices, and along with raw materials, you will need packaging
materials which will act as protection of spice powder.
MACHINERY REQUIRED :
Grinding machine is necessary machinery required in spice business depending upon the scale of industries the equipment is used.
Large scale industries use Impact Pulverizer machine while small scale industries use Double stage Pulverizer.
Other machinery such as spice grinder, weighing scale, packaging machine, compressor, and roaster are also required.
7. REGISTRATION & LICENSE REQUIRED FOR SPICE BUSINESS IN INDIA
As spice powder is part of the food category hence, it has to satisfy a lot of regulations from state government such as follows,
1. Company Registration: Registration of firm should be done depending upon the scale of business if its Pvt. Ltd. or
partnership or single person company, the firm is registered accordingly.
2. GST Registration: GST registration is also essential to gain GST number, which is a must.
3. Udyam/MSME Registration: Registering business through Udyam Registration / MSME Registration will help to avail the
facilities and grant from the State Government.
4. Trade License: A Trade license is a document/certificate that allows an applicant to start a specific business or business in a
specific area. It is therefore necessary to obtain a trade license from the local authorities.
5. FSSAI Registration: Spice powder is a food item, so you must obtain a food processing license or FSSAI registration.
6. IEC code: The IEC is the first registration required for businesses importing or exporting goods and services from India. It is
therefore necessary to apply for the IEC code.
7. BIS certification: You must apply for BIS certification, which has ISI specifications for ground spices
8. ISO Certification: ISO 9001 company’s products and services meet customer expectations and excellent customer satisfaction.
It is therefore essential for a business to obtain ISO certification.
It is advisable to obtain AGMARK certification also.
8. SPICE MANUFACTURING PROCESS
1. CLEANING: It is a very initial process for spice making in which the ungrounded spices
are clean manually by removing impurities like stone, dust, and dirt.
2. DRYING: After cleaning and washing process display them in sunlight so that they dry,
the quality of the spice powder will depend on the well-dried spice. If proper cleaning and
washing do not take place, it will lead to the growth of bacteria, which will poison food.
3. ROASTING: Once spices are dried, they are going through the roasting process, the
roasting of the spices is essential because it will help to give the aroma, colour and good
taste to spice powder.
4. GRINDING: Grinding machine is used for pulverizing to convert the spices into powder
form.
5. GRADING: The grading is a process which is the basis of the inclusion and proportion of
spices mix with their raw material used, also depends on the type of spices (flavour), size,
shape, density, and colour.
6. SIEVING: Make sure that spice powder has a uniform mesh size
7. PACKAGING OF SPICE: Seasoning and spices add massive flavor to your favorite
dishes, but to work their magic, they must be fresh; hence correct packaging is mandatory.
Spices Packaging will protect your spices from issues such as moisture, puncture, odor,
and more. You are hence guaranteeing that your seasonings and spices make it safely from
the warehouse to your customers’ taste buds.
9. Back Up Plan
• Diversify product range:
Along with spices, new product range will include related items such as spice blends, seasonings, marinades, or even
ready-to-cook spice mixes. This can help you cater to a wider customer base and mitigate risks associated with fluctuations in
demand for specific spices.
• Explore new markets:
While India is a significant market for spices, consider exploring opportunities in international markets as well. This can
help diversify customer base and reduce reliance on any single market. Conduct market research, identify potential export markets,
and establish relationships with distributors or importers in those regions.
• Invest in technology and automation:
To improve efficiency and reduce operational costs, investing in technology and automation. This could include upgrading
processing and packaging equipment, implementing inventory management systems, or utilizing digital marketing strategies to
reach a wider audience.
• Build strong relationships:
Nurture relationships with suppliers, as well as your customers, to ensure a steady supply of quality spices and a loyal
customer base. Maintain strong communication channels, offer excellent customer service, and consider loyalty programs or
partnerships to retain customers.
• Create a contingency fund:
Set aside a contingency fund to cover unexpected expenses or downturns in the market. This fund can provide a buffer
during challenging times and help sustain business until conditions improve.
• Monitor market trends:
Stay updated on market trends, consumer preferences, and regulatory changes in the spice industry. This will enable to
adapt business strategies accordingly and stay ahead of the competition.
10. Capital Investment (INR in Lacs)
Sr No Particulars Total
1 Land & Site Development Exp. 20.00
2 Buildings 25.30
3 Plant & Machineries 29.15
4 Motor Vehicles 4.00
5 Office Equipment 9.90
6 Technical Knowhow Fees & Exp. 2.50
7 Preliminary& Pre-operative Exp. 0.50
8 Provision for Contingencies 1.20
9 Margin Money - Working Capital 18.62
TOTAL 123.17
APPENDIX 1: CAPITAL INVESTMENT
Means of Finance (INR in
Lacs)
Sr
No
Particulars Total
1 Capital 33.10
2
Long/Medium Term
Borrowings
90.07
TOTAL 123.17
APPENDIX 2:
MEANS OF FINANCE
11. Plant and Machineries (in INR)
Sr No Designation Number Price
1 Washing and Cleaning Machine 1 3,00,000
2 Automatic spice grinding machine 2 4,20,000
3 Tray Dryer 2 6,00,000
4 Digital weighing balance 2 95,000
5 Masala mixer machine 2 1,00,000
6 Powder Filling and Packaging Machine 1 5,00,000
7 Lab Testing Equipment 2,00,000
8 Electrical Fittings 5,00,000
9 Miscellaneous Equipment 2,00,000
Total 29,15,000
Total cost of Plant and Machineries is 29.15 Lacs
APPENDIX 3: PLANT AND MACHINERIES
12. Details of Manpower (in INR)
Sr No Designation Number Salary /Person/ Month Annual Cost
1 Accountant 1 18,900 2,26,800
2 Manager 1 22,000 2,64,000
3 Mechanic 2 11,000 2,64,000
4 Helpers 3 10,000 3,60,000
5 Labours 6 9,000 6,48,000
6 Security 2 8,400 2,01,600
Total 15 19,64,400
Total manpower 15, Add: benefits @ 30%: INR 5,89,320 so Total annual
wages: INR 25,53,720 (Annual increase in wages 7%)
APPENDIX 4: DETAILS OF MANPOWER
13. Basic Revenue Projections (INR in Lacs)
Sr No Particulars Year 1 Year 2 Year 3 Year 4 Year 5
1 Turnover 658.70 724.57 797.03 876.73 964.40
2 Cost of Operations 628.50 687.68 758.10 835.92 921.89
3 Gross Profit 30.20 36.89 38.93 40.81 42.51
4
Earnings Before Interest, Tax,
Depreciation and Amortization
(EBITDA)
30.20 36.89 38.93 40.81 42.51
5 Profit Before Tax 3.82 21.05 26.09 30.35 34.02
6 Profit After Tax 2.22 14.74 18.26 21.25 23.81
APPENDIX 5: BASIC REVENUE PROJECTIONS
14. Break even capacity at maximum capacity utilisation
Sales ₹ 6,58,70,357
Variable cost ₹ 1,15,29,705
• Running and maintenance cost ₹ 98,80,554
• Interest on Working capital ₹ 53,500
• Electricity expense ₹ 15,95,652
Difference ₹ 5,43,40,652
Fixed costs ₹ 43,06,838
Wages and salaries ₹ 25,53,720
Depreciation ₹ 5,57,250
Fixed charges for office ₹ 1,44,000
Electricity fixed charge ₹ 1,50,000
Insurance cost ₹ 82,300
Interest on TL ₹ 8,19,568
Particulars Rs. per kg Rs. per kg
Average Sales price per kg ₹ 230.00
Average Cost of Production
Input Raw Material cost ₹ 200.00
Electricity cost ₹ 4.57
Running and maintenance ₹ 2.00
Packing charges ₹ 2.00
Selling expense ₹ 1.00
Interest on working capital ₹ 0.80
Total cost of production ₹ 210.37
Average Profit per unit ₹ 19.63
Total Sales in number of Units for BEP 2,19,001
Total BEP % 76.61 %
In ideal situation if the sale is 100%
achieved from day 1 of business start
then Considering BEP 77% the break
even will come in 10 months only
15. 1st year (50%) 2nd year (70%) 3rd year (90%)
Yearly Sales ₹ 3,29,35,178.50 ₹ 4,61,09,249.90 ₹ 5,92,83,321.30
Monthy Sales ₹ 27,44,598.21 ₹ 38,42,437.49 ₹ 49,40,276.78
Total Sales in number of Units @
230 rs/ unit
1,43,196 2,00,475 2,57,754
Fixed costs ₹ 43,06,838.00 ₹ 43,06,838.00 ₹ 43,06,838.00
Average Profit per unit ₹ 19.63 ₹ 19.63 ₹ 19.63
Total Sales in number of Units for
BEP
2,19,401 2,19,401 2,19,401
Yearly Sales should be done to
match BEP
₹ 5,04,62,187 ₹ 5,04,62,187 ₹ 5,04,62,187
Daviation from BEP ₹ -1,75,27,009 ₹ -43,52,938 ₹ 88,21,134