Detailed Project Report on Potatoes Chips...

RAJASTHAN AGRICULTURAL

COMPETITIVENESS PROJECT

Detailed Project Report on

Potatoes Chips Processing

Prepared by:

AGRI BUSINESS PROMOTION FACILITY

Rajasthan Agricultural Competitiveness Project 1

Table of Contents

List of Figures 2

List of Table 3

Chapter 1-Introduction of Potato 4

Chapter 2- Potato Processing in India 10

Chapter 3-Technical Process Flow 17

Chapter 4- Quality Control 24

Chapter 5- Technology Options Available 26


Figure 1:States Producing Potato in India ................................................................................6 Figure 2: Potato production in India ..........................................................................................7 Figure 3:Yield and Production of Potato ..................................................................................7 Figure 4:Major potato producing Districts in Rajasthan ............................................................8 Figure 5:Major varieties of Potato in Rajasthan ........................................................................8 Figure 6: Various Potato Products .......................................................................................... 10 Figure 7:Leading Potato Chips brand ..................................................................................... 13 Figure 8: Supply Chain Of Potato Chips ................................................................................. 14 Figure 9:Major Indian Chips Brand ......................................................................................... 14 Figure 10: Market share of Potato chips in India .................................................................... 15 Figure 11:Manual Potato Chips Processing Line Operating Model....................................... 18 Figure 12: High End Fully -automatic Potato Chips processing Line Operating Model ......... 20 Figure 13: Potato Chips Packaging machine ......................................................................... 22

List of Figures


Table 1:Major Potato producing countries ................................................................................5 Table 2: Cost Economics of Potato...........................................................................................9 Table 3: Area Production, Marketable Surplus in Cluster .........................................................9 Table 4: Resource mapping for potato value chain in Bari .......................................................9 Table 5: Potato varieties in India............................................................................................. 13 Table 6: Assumptions for Rental and Captive Model .............................................................. 26 Table 7: Assumptions for Operating Capacity utilization ......................................................... 26 Table 8: Project Cost Summary .............................................................................................. 27 Table 9: Means of Finance Summary ..................................................................................... 27 Table 10: Civil Cost Summary ................................................................................................ 27 Table 11: Utilities and other project components .................................................................... 28 Table 12: Plant and Machinery ............................................................................................... 28 Table 13: Income Statement ................................................................................................... 31 Table 14: Balance Sheet ........................................................................................................ 34 Table 15: Assumptions for Operating Capacity ...................................................................... 36 Table 16: Project Cost Summary ............................................................................................ 36 Table 17: Means of Finance Summary ................................................................................... 37 Table 18: Civil Cost Summary ................................................................................................ 37 Table 19: Utilities and other project components .................................................................... 38 Table 20: Plant and Machinery ............................................................................................... 38 Table 21: Income Statement ................................................................................................... 40 Table 22: Balance Sheet ........................................................................................................ 42

List of Table


The potato (Solanum tuberosum) is fundamentally important as a staple

food of humanity. Potatoes are grown and eaten in more countries than any

other crop. It is a cool-season vegetable which is at par with wheat and rice,

as one of the most important staple crop in the human diet around the world

and has a specialized underground storage stem called "tuber”.

Major roles of potato as a crop are mentioned below:

Potato is one of the most important crops in the world today. It produces

more protein and calories per unit area per unit time and per unit of water

than any other major food plant. It also contains phosphorus, calcium, iron

and some vitamin C & A. The protein calorie ratio is high One hectare of

potato can yield 22 to 23 metric ton of production. . It is versatile,

carbohydrate-rich food, highly popular worldwide and prepared and served

in a variety of ways, making them a good source of energy. Freshly

harvested, it contains about 80 percent water and 20 % dry matter. About

60 to 80 %of the dry matter is starch.

As a food item, potato has widespread acceptance across cultures and

social classes. More than a billion people worldwide eat potato, and global

total crop production exceeds 350 million metric tons.

1.1 Global scenario – Potato

Potato, popularly known as ‘The king of Vegetables' is a major food crop

grown by more than 100 countries in the world. Presently China, Russia,

India, Poland and U.S.A. contribute to a major share of the total world

production.

As a hunger releiving crop

In form of food, either fresh or processed or as an animal food

An item of commerce

Resource Bio-diversity

Use as a feed stock in industry for starch and alchol

As a propagule,from which to produce next crop

Chapter 1-Introduction of Potato


According to the report of FAO, total vegetable production in the world is

364,808,768 MT out of which China is the largest producer of potato in

year 2016-17, with an annual production of 99,122,420 MT followed by India

with less than half of the total potato produced by China. The table below

shows the major potato producing countries:

Table 1:Major Potato producing countries

Sno. Country Production('000 MT ) Area ( '000 Ha)

1 China 991224.29 5815.14

2 India 43770.00 2130.00

3 Russia 31107.80 2030.86

4 Ukraine 21750.29 1311.60

5 United States 19990.95 407.81

6 Germany 10772.10 242.50

7 Bangladesh 9474.10 475.70

8 Poland 8872.45 311.62

Source: http://www.fao.org/faostat/en/#data/QC

1.2 Indian Scenario - Potato

India ranks 2nd as the world's largest potato producing nation after China.

Since 1990, per capita consumption of Potatoes has risen from around 12

kg to 17kg per year.

In India, Potato is not primarily a rural staple but a cash crop that provides

significant income to the farmers. Potatoes are grown on the Indo-Gangetic

plain during the short winter days from October to March while some year-

round production took place in relatively high altitude areas in the South.

The major states of India that comprise Potatoes are highlighted in the

diagram given below

http://www.fao.org/faostat/en/#data/QC


Figure 1:States Producing Potato in India

Source : http://agricoop.gov.in

The production for Potato in India has increased significantly in 2016-17

as captured in the figure given below having a production of 48,604

Thousand MT with an area of 2,347 Thousand Ha and has many potato

producing states and districts producing potato in abundance. Uttar Pradesh

dominates the production of potato in India with highest productivity of

32.3% which is the highest producing state in the production. The below

diagram shows the production of Potato in India.

Uttar Pradesh

Maharashtra

Karnataka

Assam

Madhya Pradesh Gujrat

Chhattisgarh

West Bengal

Jharkhand

Bihar

Delhi

Punjab

Haryana

http://agricoop.gov.in/


Figure 2: Potato production in India

Source :https://eands.dacnet.nic.in

1.3 Rajasthan Scenario –Potato

Rajasthan, the largest state of India (3, 42,239sq, km.) situated in the north-

western part of the Indian Union is largely an arid state. A significant portion

of the economy of Rajasthan is agrarian.

The vegetable production of profile attributes for 18,12,848 MT of

vegetables in the state of Rajasthan. The state has a diverse profile for

vegetable production with fruits such as Potato, Okra, Onion, Brinjal,

Tomato, Pea etc. Production of potato comprises of 234,552 MT which is

13 % of the total production of vegetables produced in the state. The below

diagram shows the increase in the production and yield of potato from 2010

to 2017.

Figure 3:Yield and Production of Potato

Source: Source :http://www.agriculture.rajasthan.gov.in

1,900.001,950.002,000.002,050.002,100.002,150.002,200.002,250.002,300.002,350.002,400.00

41,000.00

42,000.00

43,000.00

44,000.00

45,000.00

46,000.00

47,000.00

48,000.00

49,000.00

2014-15 2015-16 2016-17

Pro

duction in ' 0

00 H

a

Pro

duction in '000 M

T

Potato Production in India

Production Area

0

50000

100000

150000

200000

250000

2010-11 2016-17

Potato Production (MT)

76,019

234,552

0.000

5.000

10.000

15.000

20.000

2010-11 2016-17

Potato Yield(MT/Ha)

7.225

16.118

https://eands.dacnet.nic.in/

http://www.agriculture.rajasthan.gov.in/


The total area in the production of potato in the state is 14,552 Ha and the

production is 234,552 MT. Top districts in Rajasthan which Produces

Potatoes are mentioned below in the diagram

Figure 4:Major potato producing Districts in Rajasthan

Source: http://www.agriculture.rajasthan.gov.in

The district having the highest production of potato is Dholpur which is

151.50 Thousand MT. Major verities of Potato that are available in

Rajasthan are mentioned below:

Figure 5:Major varieties of Potato in Rajasthan

Chipsona 1 : It is a late maturing variet with medium compactcanopy with white flower. Tubers are white white cream colour,oval shaped with shallow eyes and it has white flesh. Thevariety is well apadted to North Indian plains and resistant tolate blight with good storability.

1533: It is medium maturing variety with medium compactcanopy with purple flower. Tubers are white cream color andoval shaped with shallow eyes and it has white flesh. It has amedium storablity as compared to Chipsona 1 but has ideal drymatter quality.

3. Sirohi

4.Hanumangarh

1.Dholpur

2.. Bharatpur

5.Kota

6.Bundi

7. Jhalwar

http://www.agriculture.rajasthan.gov.in/


1.4 District and Cluster Scenario: Production

Potato is sown in 180 ha in Bari (a major city in Dholpur) and its cropping

intensity is 4.69% of the total cropped area. The total production in the

cluster is 4500 MT. The productivity of the cluster is 25000kg per ha and is

higher than the district average of 12279 kg/ha i.e. 12721 kg higher than

the district average. The proposed area of potato is planned to be increased

to 250 Ha after watershed development i.e. an increase of 70ha. The cost

economics of potato is as mentioned below:

Table 2: Cost Economics of Potato

Commodi

ty

Cost of

cultivation(Rs./Ac

re)

Productivi

ty

(Qlt/Acre)

Selling

Price

(Rs./Ql

t)

Revenu

e

(Rs./Acr

e)

Net

Surplus(Rs./A

cre

Potato 28,880 160 425 64,000 35,200

Source: GT Analysis

Table 3: Area Production, Marketable Surplus in Cluster

Cluster Area(Ha) Production(MT) Marketable

Surplus

(MT)

Value of

marketable

surplus

Dholpur 8,728 151,500 2,736 164 Lakhs

Source: GT Analysis

Table 4: Resource mapping for potato value chain in Bari

Cluster Major Mandi/s

around cluster

No. of FPCs

Targeted

Near buy Cold

Store With

Capacity

Bari Dholpur-30 km,

Agra-89

km,Bharatpur-90

km

5 Dholpur-4505 MT

Lots of private

cold stores

around Bharatpur

and Agra

Source: GT Analysis


Potato is one of the most important crops in the world today. Worldwide, the

potato is the third most important food crop, after rice and wheat, in terms

of human consumption. They are utilized in a variety of ways mentioned in

the below diagram:

Figure 6: Various Potato Products

In merely half a century industrial processing of potatoes into consumer

products has developed into a major activity in the potato world. Potato

processing industry is dominated by a single processing technique which

is frying at a high temperature in oil. The two major products which

comprises are French fries and potato chips.

In an increasingly fast society there is growing demand for snacks that are

easy to buy, store and eat, with an increasing number being eaten 'on the

move'. With this background, the potato wafers and chips market seems to

Pancake

Gravy Thickner

Soup

Potato custrad Powder

Flour

Flakes

Wafers

Chips

Chapter 2- Potato Processing in

India


hold good growth prospects. The potato chips and wafers are popular

processed food items that give considerable value addition to potatoes. The

potato chips category maintains a dominant lead over other salty snacks

Potato chips have a high market consumption and share in the snacks. The

market for potato chips is an assured and growing one.

Potato chips are thin, fried or baked potato slices that represent one of

the most valuable segments within processed potato products. Chips are

usually made of floury potatoes as they have lower levels of water and

sugar. Potato chips are served as a snack, appetiser or side dish with

the addition of other flavours and ingredients such as salt, cheeses and

spices among others.

Potato chips are one of the most convenient food options currently available

for people to keep pace with their busy lifestyle. It shortens the meal

preparation time and can be served in the form of a quick snack or part of

the meal.

2.1 Global scenario

Potato chips are consumed all over the world, their consumption and

penetration levels vary widely across regions and also has a massive sale

in the salty snacks category. The United States and Western

Europe currently represent the biggest markets accounting for nearly two

thirds of the total global demand. Growth rates in these markets, however,

have reached maturity levels whereas the emerging markets such

as India, China, Russia, etc. are expected to show promising growth rates

in the future.


Market Segmentation of Potato chips is shown below:

Major factors driving the global demand of potato chips are growing

urbanisation, rise in disposable incomes and rapidly changing lifestyles. the

global potato chips market has grown at a CAGR of around 4% during 2010-

2017 and reached a market value worth US$ 28 Billion. The global potato

chips market is highly imploding with the presence of numerous small and

By Region By Product Type By Distribution

Channel

Plain

United Kingdom

Brazil

Argentina

China

Russia

India

Supermarke

ts and

Hypermarke

ts

United States

Flavored

Others

Online

convenience and

Grocery Stores

Specialty Food

Stores

Potato Chips Market


large manufacturers who compete in terms of prices and quality. Some of

the leading players operating in the market are:

Figure 7:Leading Potato Chips brand

2.2 Indian Scenario

Indian potato processing industry has emerged fast due to economic

liberalization coupled with growing urbanization, expanding market options

and development of indigenous processing varieties.

Processing has helped to reduce the post-harvest losses and it not only

result in economic gains to the farmers but also provide better food and

nutritional security to the country. Keeping in view, the future demand of raw

material for processing in India and utilization of more potato produce

towards value addition, short duration varieties having good yield potential

(30-35t/ha) with high dry matter (21-23%) and low reducing sugar, are

required.

The potato supply chain in India has a manoeuvring aspect which has a

strong integration. Companies developing suitable varieties of potatoes

such as ITC, Merino Industries, CPRI offer a lot of promise for the future

potato processing potential in India. Potato varieties in India suitable for

Processing Chips are mentioned below:

Table 5: Potato varieties in India

Characters Potato chips

Tuber Shape Round (2.5 – 3.3 inch )

Skin colour White/ yellow

Eye Depth Shallow

Flesh colour White/ yellow

Texture Mealy

Uniformity High

Defects Minimum

Dry matter(%) >20

Reducing sugars <100 mg

Phenols Less


Glycoalkoids <15 mg

Keeping quality Good

Damage resistance High

Various stages of supply chain in the process of potato chips, from the

farmers to the consumers is explained below in the given diagram:

Figure 8: Supply Chain Of Potato Chips

According to global snack market analysis, potato chips account for an

average of 35% of the total savoury snacks market. The main consumers of

potato chip and wafers are families especially in urban and semi-urban

areas. Besides, hotels, restaurants, canteens, army establishments require

potato chips in significant quantities. The Indian chips market, sized at Rs

7,000-7,500 crore has been growing at a robust pace of 15% over the past

five years and going forward, is expected to grow at a similar pace. The

leading brands of potato chips in India are:

Figure 9:Major Indian Chips Brand

Uncle Chips

Lays Bingo Haldirams

Bikano Balaji Diamond

Farmers Manufacture

rs Collectors

End- consumers Retailers

Distribut

ors/

Exporter

s


These chips are priced at around Rs 20.00 per pack of 90 gm i.e. around

Rs 220/- per kg. The below graph shows the share of Potato chips in India,

where Lays have the highest share which is 49%.

Figure 10: Market share of Potato chips in India

Source :https://www.statista.com/statistics/562644/market-share-of-potato-chips-in-india-

by-company/

Due to the rising health consciousness among global population, several

potato chips manufacturers are launching value added products that are

healthier as compared to traditional potato chips. This includes products

with reduced fat and calorie content, fortified with healthy ingredients, lower

cholesterol, etc. Chips that are gluten-free, non-GMO verified and made with

sea salt, natural colours and flavours are gaining more popularity than the

traditional ones

The snacks food sector including potato chips is developing most rapidly.

Demand for processing quality potatoes over next 40 years is expected to

rise at the fastest pace for French fries (11.6% ACGR) followed by potato

flakes/ powder (7.6%) and potato chips (4.5%). The snack food market is

reportedly growing annually at 7 to 8%. Potato chips are estimated to

constitute 85% of total salty snack food market showing an annual growth

of 17%.

2.3 Rajasthan Scenario

Production of potato in Rajasthan comprises of 234,552 MT out of which

majorly the potatoes went for processing which includes wafers and chips.

Some of the local potato chips manufacturer which are quite famous in

Rajasthan are mentioned below:

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Pepsico(Lays)

BalajiWafers

ITC ParleProducts

HaldiramFoods

PraatapSnacks

Pepsico(UncleChips )

Market Share of Potato chips In India

https://www.statista.com/statistics/562644/market-share-of-potato-chips-in-india-by-company/

https://www.statista.com/statistics/562644/market-share-of-potato-chips-in-india-by-company/


Miraj Products Pvt. Ltd.

Aashutosh Bhujia Products

Agarwal Namkeen Products

Ganesh Narayan Rajkumar Dowtiwal

Sri Gru Udyog

Rathore Enterprises


3.1 Potato Chips Processing

The processing of Potato Chips Processing is differentiating with

three different models for various potato chips

1. Manual potato chips line

2. Semi-automatic potato chips processing line

3. Fully-automatic potato chips production line

The Manual potato chips line selected for low end chips Processing, the

potatoes arrive at the plant, they are examined and damaged potatoes are

taken out manually. The potatoes are washed thoroughly in water manually

and peeled by means of an abrasive potato peeling machine. The peelings

are washed away with sprays of water. They are then trimmed and placed in

water to prevent browning. They are sliced 1.7-1.85 mm. thick in a slicing

machine. The slices are again placed in cold water whenever there is

considerable delay in the subsequent operations of blanching. Then slices are

kept in water containing0.05% potassium met bisulphite to avoid oxidation.

The slices are blanched for 3 to 5 minutes in boiling water and spread on trays

at the rate of 4.88 kg. to 7.30kg. per square meter of tray surface. The

blanched chips are then subjected to D-Watering machine to remove excess

of water and fried inedible oil at 180-240ºC, for 3-4 minutes. The fried potato

wafers are then kept on the sieve to remove excess of oil, cooled and other

ingredients like salts, spicy mixture is sprayed as per required taste using

batch type flavouring machine. Cooled potato chips are then packed in

polythene bags and sealed. The of Low end manual potato chips line process

flow described in figure 11.

Chapter 3-Technical Process

Flow


Figure 11:Manual Potato Chips Processing Line Operating Model

In the case of Fully-automatic line, When the potatoes arrive at the plant, they

are examined and tasted for quality. A half dozen or so buckets are randomly

filled. Some are punched with holes in their cores so that they can be tracked

through the cooking process. The potatoes are examined for green edges and

blemishes. The pile of defective potatoes is weighed; if the weight exceeds a

company's present allowance, the entire truckload can be rejected. The

potatoes move along a conveyer belt to the various stages of manufacturing.

The conveyer belts are powered by gentle vibrations to keep breakage to a

minimum.

Destoning and peeling

The potatoes are loaded into a vertical helical screw conveyer which allows

stones to fall to the bottom and pushes the potatoes up to a conveyer belt to

the automatic peeling machine. After they have been peeled, the potatoes are

washed with cold water.

Slicing

The potatoes pass through a revolving impaler/presser that cuts them into

paper-thin slices, between 1.7-1.85 mm in thickness. Straight blades produce

Manual Washing & Sorting

Slicing

Peeling

Water Draining in

dewatering machine

Frying

Seasoning of Flavour

Packaging

http://www.madehow.com/knowledge/Conveyor_belt.html


regular chips while rippled blades produce ridged potato chips. The slices fall

into a second cold-water wash that removes the starch released when the

potatoes are cut. Some manufacturers, who market their chips as natural, do

not wash the starch off the potatoes.

Colour treatment

If the potatoes need to be chemically treated to enhance their colour, it is done

at this stage. The potato slices are immersed in a solution that has been

adjusted for pH, hardness, and mineral content.

Frying and salting

The slices pass under air jets that remove excess water as they flow into 40-

75 ft. (12.2-23 m) troughs filled with oil. The oil temperature is kept at 180-

240ºC. Paddles gently push the slices along. As the slices tumble, salt is

sprinkled from receptacles positioned above the trough at the rate of about

1.75 lb (0.79 kg) of salt to each 100 lb (45.4 kg) of chips.

Potato chips that are to be flavoured pass through a drum filled with the

desired powdered seasonings.

Cooling and sorting

At the end of the trough, a wire mesh belt pulls out the hot chips. As the chips

move along the mesh conveyer belt, excess oil is drained off and the chips

begin to cool. They then move under an optical sorter that picks out any burnt

slices and removes them with puffs of air.

http://www.madehow.com/knowledge/Starch.html


Figure 12: High End Fully -automatic Potato Chips processing Line Operating Model

Potato Chips Processing Line

Hopper with Feeder

Potato Washer Grader De-Stoner Peeler Inspection Conveyor

Feed Conveyor Slicer and Washing

Twin shaker Infeed ShakerContinuous FryerCooling Conveyor

& Inspection Shaker

Flavoring Drum & Spices Dispenser

Packaging


Potato grader Washer Potato washer Potato slicer

Potato Product Fryers

chips seasoning machine Chips Packaging Machine


The chips are conveyed to a packaging machine with a scale. As the pre-

set weight of chips is measured, a metal detector checks the chips once

more for any foreign matter such as metal pieces that could have come with

the potatoes or been picked up in the frying process. The bags flow down

from a roll. A central processing unit (CPU) code on the bag tells the

machine how many chips should be released into the bag. As the bag forms,

(heat seals the top of the filled bag and seals the bottom of the next bag

simultaneously) gates open and allow the proper amount of chips to fall into

the bag. The filling process must be accomplished without letting

an overabundance of air into the bag, while also preventing the chips from

breaking. Many manufacturers use nitrogen to fill the space in the bags. The

sealed bags are conveyed to a collator and hand-packed into cartons.

Figure 13: Potato Chips Packaging machine

The below mentioned is the tentative cost being spent on Potato packing in

25 grams and 50 grams packed Pouches:

http://www.madehow.com/knowledge/Overpopulation.html

http://www.madehow.com/knowledge/Nitrogen.html


o Rs. 0.79 Packaging cost for 25 grams Chips pouch

o Rs. 1.05 Packaging cost for 50 grams Chips Pouch

o 400 grams per kg diesel required for Frying of Chips

o 350 grams per kg palm oil required for Frying of Chips

o The ratio is 1/3rd for eg-100 kg of potato gives around 32 kg

of ready chips.


4.1 Quality Control

Taste samples are made from each batch throughout the manufacturing

process, usually at a rate of once per hour. The tasters check the chips for

salt, seasoning, moisture, colour, and overall flavour. Colour is compared to

charts that show acceptable chip colours.

4.2 Quality Standards

Following specifications under Bureau of Indian Standard related to

processing of such products may be referred:

IS: 4626-1978

IS: 2860-1964

IS: 7254-1974 6.2.

FSSAI License: FSSAI License is issued by the Food Safety and Standards

Authority of India (FSSAI), Ministry of Family Health & Welfare, Government

of India. Application to commence a food business must be made to the

FSSAI in the prescribed format. Based on the application and supporting

documents, FSSAI will accord approval. The Food Safety and Standards

(Licensing and Registration of Food Businesses) Regulations

2011introduced to improve the hygiene and quality of food has brought

about tremendous changes in the food industry. As per the Act, no person

shall commence or carry on any food business except under a FSSAI

license or FSSAI registration. Therefore, any food manufacturing or

processing or packaging or distributing entity is now required to obtain a

FSSAI License or Registration.

Pollution Control: There is no major pollution problem associated with this

project in terms of air and sound pollution except for disposal of waste water

which would be managed appropriately through recycling facility. However,

entrepreneur should obtain NOC from concerned State Pollution Control

Board.

Effluent Disposal: Disposal of any effluent out of the project unit should be

treated with recycling facility or dumped in such a way that these does not

cause hazard in the vicinity of the site.

Chapter 4- Quality Control


Energy Conservation: Proper care should be taken in order to use

appropriate amount of fuel and electricity.


We propose two technology options i.e. Low end and High end available

for potatoes chips. The high end technology option would require higher

capital investment as compared to the low end technology option. The high

end option includes a Fully-Automatic potato chips processing plant of 300

Kilogram per hour (KGs per hour). On the other hand, the low end

technology option requires less capital as compared to high end line which

includes low end potatoes chips processing machines of 100 Kilogram per

hour (Kgs per hour).

5.1 Low End Technology – Potatoes Processing line

Business Assumption:

The business plan has assumed that the business model operates under

Captive Mode.

The Captive Model involves direct selling of Potatoes chips in the market

after processing the raw potatoes.

The assumptions for the line of processing of potatoes under Captive Model

is given below:

Table 6: Assumptions for Rental and Captive Model

Business Case

– Assumptions

Yea

r 1

Yea

r 2

Yea

r 3

Yea

r 4

Yea

r 5

Yea

r 6

Yea

r 7

Yea

r 8

Yea

r 9

Yea

r 10

Captive

Trading 0 100

%

100

%

100

%

100

%

100

%

100

%

100

%

100

%

100

%

The assumptions for the line of potatoes processing for Operating Capacity

utilization is given below.

Table 7: Assumptions for Operating Capacity utilization

Business Case –

Assumptions

Yea

r 1

Yea

r 2

Yea

r 3

Yea

r 4

Yea

r 5

Yea

r 6

Yea

r 7

Yea

r 8

Yea

r 9

Yea

r 10

Operating

Capacity

0 35%

40

%

45

%

50

%

55

%

60

%

65

%

75% 8

0

%

5.1.1. Project Cost

The total cost of the project is estimated at Rs.39.98 Lakhs, out of which

civil cost constitutes Rs 12.60 Lakhs, plant and machinery constitutes

Chapter 5- Technology Options

Available


Rs.17.59 Lakhs, utilities & support of Rs. 5.94 Lakhs, Interest during

construction of Rs. 0.85 Lakhs and Preliminary & pre-operating expenses of

Rs. 3 Lakhs. The detailed description of each component of project cost is

depicted in the tables below.

Table 8: Project Cost Summary

Project Cost Year 1

Civil Cost 12.60

Plant & Machinery 17.59

Utility & Support 5.94

Preliminary & Pre-operative expenses 3.00

IDC 0.85

Total Project Cost 39.98

Note: We have not considered the land cost in this business model

5.1.2 Proposed Means of Finance

The promoter’s equity in the project is Rs 19.99 Lakhs which is 50% per cent

of the total project cost. The term loan considered for the project is estimated

at Rs. 19.99 Lakhs which is 50 per cent of the total project cost.

Table 9: Means of Finance Summary

Means of Finance (INR Lacs) Year 1


Funding

Equity (Promoters Cost) 19.99

Debt 19.99

Total Funding Required 39.98

Note: We have not considered grant in aid being offered by National Horticulture Board or any other

government entity/ institutions. Which may have an impact on the overall profitability of the project in a

positive way.

5.1.3 Civil Work

The total cost of civil work has been estimated to be Rs 12.60 lakhs. Cost

of civil work comprises of the cost of potato machine, Raw material storage

& Finished goods storage. The total cost of technical civil works has been

arrived at on the basis of the estimates provided by the Chartered Engineer

(Civil) and are substantiated with the requisite certificate.

Table 10: Civil Cost Summary


Civil Cost Total Area Required (SQM)

Total Civil Cost

(Lacs)

Potato Processing Machine 100 8.40

Finished good storage structure

25 2.10

Raw Material Storage structure 25 2.10

Total Civil Cost 150 12.60

5.1.4 Utilities and other project components

The total cost of Utilities has been estimated to be Rs 5.95 lakhs, which

includes water storage of 20,000 LT/hour, generator set of 30 KVA, weighing

scale, and electrical wires & panel.

Table 11: Utilities and other project components

Utility & Support Infrastructure Capacity

(No. of Units) Overall Cost (INR Lacs)

Water Storage 10000 LT 1.79

Generator 30 KVA 1.78

Weighing Scale 4 1.19

Transformer / Electrical wires and Panel 1.19

Total Utility & Support 5.95

5.1.5. Plant and Machinery

The total cost of plant and machinery has been arrived on the basis of

quotation received from various suppliers of equipment and machinery. The

total cost of P&M is considered as Rs. 17.59 Lakhs (including IGST). The

following table captures the components under Plant & Machinery.

Table 12: Plant and Machinery

Plant & Machinery Total Cost

(Lacs)

Plant & Machinery

D-watering Machine

0.53

Extra Dye (ruffle)

0.14

Chips Slicer

0.89

Chips Peeler & Washer

0.47

Packing Machine

8.82


Batch Type Flavouring Machine

0.89

Rectangular Fryer with Auto Control & Inbuilt Heat Exchanger Diesel / Gas Burner

5.35

Hand Pallet Trucks

0.47

Total Cost 17.59


5.1.6. Assumptions

Capacity Utilization Assumptions Units Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Installed Capacity

Hours in a Day 8

Number of Shifts per day Number 1 1 1 1 1 1 1 1 1

Installed Capacity -Kgs per hour Kgs/hour 100 100 100 100 100 100 100 100 100 100

Installed Capacity -Kgs per day Kgs/day 800 800 800 800 800 800 800 800 800 800

Actual Available Capacity Kgs/day 800 800 800 800 800 800 800 800 800

Capacity Utilization (%) percentage 35% 40% 45% 50% 55% 60% 65% 75% 80%

Quantity of Potatoes (Input) Normal loss 280.00 320.00 360.00 400.00 440.00 480.00 520.00 600.00 640.00

Normal loss (Peeling) 15% 42.00 48.00 54.00 60.00 66.00 72.00 78.00 90.00 96.00

Actual quantity of potatoes after peeling 238 272 306 340 374 408 442 510 544

Normal loss (Slicer ) 15% 36 41 46 51 56 61 66 77 82

Actual quantity of potatoes after slicing 202 231 260 289 318 347 376 434 462

Actual quantity of potatoes after Processing loss 52% 105 120 135 150 165 180 195 225 240

Total Quantity of Potatoes chips (Output) Kgs/day 97 111 125 139 153 166 180 208 222

Product Mix

Kgs/day

Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Potatoes Chips-25 Grams 50% 50% 50% 50% 50% 50% 50% 50% 50%


No. of Days of operation no. 262.5 350 350 350 350 350 350 350 350

Procurement Cost Assumptions Units YOY inc. Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cost of Procurement Price of potatoes

Rs/kg

1%

9 9 9 9 9 9 9 9 9

Selling Price Assumptions Units YOY inc. Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

0% 0 0 0 0 0 0 0 0


Potatoes Chips-25 Grams Rs/grams 7 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00

Potatoes Chips-50 Grams Rs/grams 14 14.00 14.00 14.00 14.00 14.00 14.00 14.00 14.00

Percentage of Rental & Captive Units YOY inc. Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Rental 0% 0% 0% 0% 0% 0% 0% 0% 0%

Captive 100% 100% 100% 100% 100% 100% 100% 100% 100%

5.1.7 Income Statement The below mentioned is the income statement for low end processing line of potatoes:

Table 13: Income Statement

Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Income

Sales of Potatoes after processing 71 109 122 136 150 163 177 204 218

Potatoes Chips-25 Grams 36 54 61 68 75 82 88 102 109


Rental Income 0 0 0 0 0 0 0 0 0

Total Income (Rs. Lakhs) 0 71 109 122 136 150 163 177 204 218

Raw Material

Potatoes 7 10 11 13 14 16 17 20 21

Power 3.06 4.28 4.49 4.72 4.96 5.20 5.46 5.74 6.02

Packing Cost 6.70 10.73 12.67 14.78 17.07 19.56 22.25 26.95 30.19

Water 1.10 1.54 1.62 1.70 1.79 1.88 1.97 2.07 2.17

Diesel 16.34 26.15 30.89 36.04 41.62 47.68 54.24 65.71 73.59

Salt 3.06 4.66 5.24 5.83 6.41 6.99 7.57 8.74 9.32


Total Direct Expenses 37 57 66 76 86 97 108 129 142

Gross Profit 34 51 56 60 64 66 68 75 75

Manpower 11.66 16.32 17.13 17.99 18.89 19.83 20.83 21.87 22.96

Repairs & Maintenance 1.08 1.14 1.19 1.25 1.32 1.38 1.45 1.52 1.60

Insurance 0.30 0.32 0.33 0.35 0.37 0.39 0.40 0.42 0.45

Admin Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Travelling Expenses 0.65 1.17 1.38 1.61 1.86 2.13 2.42 2.94 3.29

Selling & Distribution Expenses 3.57 5.71 6.42 7.49 8.24 9.44 10.23 12.39 13.22

Total In-Direct Expenses 0.00 17 25 26 29 31 33 35 39 42

EBITDA 17 27 30 31 33 33 33 36 34

Depreciation for Civil Works 0.00 0.95 1.17 1.05 0.94 0.85 0.76 0.69 0.62 0.56

Depreciation on P&M 0.00 1.98 2.34 1.99 1.69 1.44 1.22 1.04 0.88 0.75

Depreciation on Others Components 0.00 0.45 0.92 0.76 0.64 0.53 0.44 0.37 0.31 0.17

Others (Amortization - IDC, Pre-ops, Contingency) 0.00 1 1 1 1 1 0 0 0 0

Sub-Total 0.00 4 5 5 4 4 2 2 2 1

EBIT 0.00 13 21 25 27 29 31 31 34 32

Interest on Term Loan 2 2 1 1 1 0

Interest on Working Capital - Normal 0 1 1 1 1 1 1 1 1

PBT 0.00 11 19 23 26 28 30 30 33 31

Tax 0 0 2 5 6 7 7 7 8 7


PAT 0.00 10 17 18 20 21 23 23 25 24


5.1.8. Balance Sheet The below mentioned is the balance sheet statement for low end processing line of potatoes:

Table 14: Balance Sheet

TOTAL LIABILITIES Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Promoters Funds

Capital Contribution 14 20 20 20 20 20 20 20 20 20

PAT 0 10 17 18 20 21 23 23 25 24

PAT after appropriations 0 10 27 45 65 86 109 132 157 181

Sub-Total 14 30 47 65 85 106 129 152 177 201

Debt

Long Term Loans

Term Loan - Outstanding 13 17 15 11 8 4 0 0 0 0

Sub-Total 13 17 15 11 8 4 0 0 0 0

Current Liabilities

Creditors - others 0 0 0 0 0 0 1 1 1 1

Creditors - Raw Material 0 0 0 0 0 0 0 0 0 0

Bank Finance - Working Capital 0.00 2.36 3 3.62 4.02 4.41 4.79 5.17 5.96 6.33

Total Current Liabilities 0 3 4 4 5 5 6 6 7 7

TOTAL LIABILITIES 27 51 65 81 98 116 135 158 184 208

TOTAL ASSETS

Fixed Assets

Gross Block (Civil + P&M) 9 24 33 28 25 21 18 16 14 12

Purchases 15 12 0 0 0 0 0 0 0 0

Less: Depreciation 0 3 4 4 3 3 2 2 2 1


Sub-Total 24 33 28 25 21 18 16 14 12 11

Current Assets

Net Debtors 0 2 2 2 3 3 3 3 4 4

Cash & Bank Balance 0 12 31 50 71 92 113 138 165 190

Stock 0 1 2 2 2 2 2 3 3 3

Sub-Total 0 15 35 55 76 97 119 144 172 198

IDC, Pre-ops written off 3 3 2 2 1 0 0 0 0 0

TOTAL ASSETS 27 51 65 81 98 116 135 158 184 208


5.2. High End Technology – Potatoes Processing Line

Business Assumption:

The business plan has assumed that the business model operates under

Captive Mode. The Captive Model involves direct selling of Potatoes chips

in the market after processing the raw potatoes.

The assumptions for the line of processing of potatoes under Captive Model

is given below:

Table 15: Assumptions for Operating Capacity

Business

Case –

Assumptions

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

Capacity Utilization (%) 35% 40% 45% 50% 55% 60% 65% 75% 80%

The assumptions for the line of processing of potatoes for both Rental and

Captive Model is given below:

Business

Case –

Assumptio

ns

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

Rental 0%

0% 0% 0% 0% 0% 0% 0% 0%

Captive

10

0%

100

%

100

%

100

%

100

%

100

%

100

%

100

%

100

%

5.2.1. Project Cost

The total cost of the project is estimated at Rs 190.74 Lakhs, out of which

civil cost constitutes Rs 40.32 Lakhs, plant and machinery constitutes

Rs.121.27 Lakhs, utilities & support of Rs. 20.07 Lakhs, IDC of Rs. 4.08 and

pre-operative expenses of Rs. 5 Lakhs. The detailed description of each

component of project cost is depicted in the tables below.

Table 16: Project Cost Summary

Project Cost Year 1

Civil Cost 40.32


Plant & Machinery 121.27

Utility & Support 20.07

Preliminary Expenses 5.00

IDC 4.08


Note: We have not considered the land cost in this business model

5.2.2 Proposed Means of Finance

The promoter’s equity in the project is Rs. 95.37 Lakhs which is 50% per

cent of the total project cost. The term loan considered for the project is

estimated at Rs. 95.37 Lakhs which is 50 per cent of the total project cost.

Table 17: Means of Finance Summary

Means of Finance (INR Lacs) Year 1


Funding

Equity (Promoters Cost) 95.37

Debt 95.37

Total Funding Required 191

Note: We have not considered grant in aid being offered by National Horticulture Board or any other

government entity/ institutions. Which may have an impact on the overall profitability of the project in a

positive way.

5.2.3. Civil Work

The total cost of civil work has been estimated to be Rs 40.32 lakhs. Cost

of civil work comprises of the cost of potato processing machine, Raw

material storage & Finished goods storage. The total cost of technical civil

works has been arrived at on the basis of the estimates provided by the

Chartered Engineer (Civil) and are substantiated with the requisite

certificate.

Table 18: Civil Cost Summary

Civil Cost Total Area Required

(SQM)

Total Civil Cost (Lacs)

Washer, DE stoner, Continuous peeler, Slicer, Washer, Twin shaker, Infeed shaker, Continuous Fryer, Cooling Conveyer & Inspection Shaker

380 31.92

Finished good storage 50 4.2


Raw material storage

50 4.2

Total civil cost 480 40.32

5.2.4. Utilities and other project components

The total cost of Utilities has been estimated to be Rs 20.11 lakhs, which

includes water storage of 50,000 LT, generator set of 30 KVA, 4 weighing

scales and one transformer.

Table 19: Utilities and other project components

Utility & Support Infrastructure Capacity (No. of Units)

Overall Cost (INR Lacs)

Water Storage 50000 LT 8.92

Generator 100 KVA 5.23

Weighing Scale 6 1.19

Transformer / Electrical wires and panels 1 4.76

Total Utility & Support 20.11

5.2.5. Plant and Machinery The total cost of plant and machinery has been arrived on the basis of

quotation received from various suppliers of equipment and machinery. The

total cost of P&M is considered as Rs. 121.27 Lakhs (including GST). The

following table captures the distribution of P&M and utilities.

Table 20: Plant and Machinery

Plant & Machinery Capacity Total Cost (Lacs)

Washer, DE stoner, Continuous peeler, Slicer, Washer, Twin shaker, Infeed shaker, Continuous Fryer, Cooling Conveyer & Inspection Shaker

109.48

Packing machine 11.31

Hand pallet trucks 0.47

Total Cost 121.27


5.2.6. Assumptions

Capacity Utilization Assumptions Units Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Installed Capacity

Hours in a Day 8

Number of Shifts per day number 1 1 1 1 1 1 1 1 1

Installed Capacity -Kgs per hour Kgs/hour 300 300 300 300 300 300 300 300 300 300

Installed Capacity -Kgs per day Kgs/day 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400

Actual Available Capacity Kgs/day 2400 2400 2400 2400 2400 2400 2400 2400 2400

Capacity Utilization (%) percentage 35% 40% 45% 50% 55% 60% 65% 75% 80%

Quantity of Potatoes (Input)

Normal loss 840.00 960.00 1080.00 1200.00 1320.00 1440.00 1560.00 1800.00 1920.00

Actual quantity of potatoes after Processing loss 46% 276 316 355 394 434 473 513 592 631

Total Quantity of Potatoes chips (Output) Kgs/day 331 378 425 473 520 567 614 709 756

Product Mix

Kgs/day

Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10



No. of Days of operation no. 262.5 350 350 350 350 350 350 350 350

Purchase Cost Assumptions Units YOY inc. Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cost of Procurement Price of potatoes

Rs/kg

1%

9 9 9 9 9 9 9 9 9

Selling Price Assumptions Units YOY inc. Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

0%

0 0 0 0 0 0 0 0

Potatoes Chips-25 Grams Rs/grams 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00

Potatoes Chips-50 Grams Rs/grams 14.00 14.00 14.00 14.00 14.00 14.00 14.00 14.00 14.00


Percentage of Rental & Captive Units YOY inc. Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Rental 0% 0% 0% 0% 0% 0% 0% 0% 0%

Captive 100% 100% 100% 100% 100% 100% 100% 100% 100%

5.2.7. Income Statement The below mentioned is the income statement for the High end line of processing of potatoes:

Table 21: Income Statement

Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Income

Sales of Potatoes after processing 243 370 417 463 509 556 602 695 741



Rental Income 0 0 0 0 0 0 0 0 0

Total Income (Rs.Lakhs) 0 243 370 417 463 509 556 602 695 741

Raw Material

Potatoes 20 30 34 38 42 47 51 59 63

Power 8.30 11.62 12.20 12.81 13.45 14.12 14.83 15.57 16.35

Packing Cost 22.83 36.54 43.16 50.35 58.16 66.61 75.77 91.80 102.82

Water 1.47 2.06 2.16 2.27 2.38 2.50 2.63 2.76 2.90

Diesel 55.67 89.08 105.22 122.76 141.78 162.41 184.74 223.82 250.68

Salt 15.63 23.81 26.79 29.77 32.75 35.72 38.70 44.65 47.63

Total Direct Expenses 124 193 224 256 291 328 367 437 483

Gross Profit 119 177 193 207 218 228 235 257 258


Manpower 11.72 16.41 17.23 18.09 19.00 19.95 20.95 21.99 23.09

Repairs & Maintenance 5.45 5.72 6.01 6.31 6.62 6.96 7.30 7.67 8.05

Insurance 1.62 1.70 1.78 1.87 1.96 2.06 2.17 2.27 2.39

Admin Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Travelling Expenses 1.94 3.51 4.14 4.83 5.58 6.39 7.27 8.81 9.86

Selling & Distribution Expenses 12.16 19.45 22.97 26.80 30.96 35.46 40.34 48.87 54.73

Total In-Direct Expenses 0.00 33 47 52 58 64 71 78 90 98

EBITDA 86 130 141 149 154 157 157 168 159

Depreciation for Civil Works 0.00 3.02 3.73 3.36 3.02 2.72 2.45 2.20 1.98 1.78

Depreciation on P&M 0.00 13.64 16.14 13.72 11.66 9.91 8.43 7.16 6.09 5.18

Depreciation on Others Components 0.00 1.51 1.86 1.67 1.50 1.35 1.22 1.10 0.99 0.89

Others (Amortization - IDC, Pre-ops, Contingency) 0.00 2 2 2 2 2 0 0 0 0

Sub-Total 0.00 20 24 21 18 16 12 10 9 8

EBIT 0.00 66 107 120 131 139 145 146 159 152

Interest on Term Loan 9 7 6 5 3 1

Interest on Working Capital - Normal 1 3 2 2 2 3 3 3 3

PBT 0.00 57 96 112 124 133 141 143 155 148

Tax 0 3 18 32 35 38 40 41 45 43

PAT 0.00 54 78 80 89 95 101 102 111 106


5.2.8. Balance Sheet

The below mentioned is the balance sheet statement for the High end line of processing of potatoes:

Table 22: Balance Sheet

TOTAL LIABILITIES Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Promoters Funds

Capital Contribution 67 95 95 95 95 95 95 95 95 95

PAT 0 54 78 80 89 95 101 102 111 106

PAT after appropriations 0 54 132 213 301 396 497 599 710 815

Sub-Total 67 149 228 308 397 492 592 694 805 911

Debt

Long Term Loans

Term Loan - Outstanding 62 83 69 54 38 20 0 0 0 0

Sub-Total 62 83 69 54 38 20 0 0 0 0

Current Liabilities

Creditors - others 0 1 1 1 1 1 2 2 2 2

Creditors - Raw Material 0 0 0 0 1 1 1 1 1 1

Bank Finance - Working Capital 0.00 8.18 11 12.53 13.89 15.23 16.56 17.88 20.57 21.85

Total Current Liabilities 0 9 13 14 16 17 19 20 24 25

TOTAL LIABILITIES 129 242 310 376 450 529 611 715 829 936

TOTAL ASSETS

Fixed Assets

Gross Block (Civil + P&M) 46 121 163 142 123 107 93 81 70 61

Purchases 75 60 0 0 0 0 0 0 0 0


Less: Depreciation 0 18 22 19 16 14 12 10 9 8

Sub-Total 121 163 142 123 107 93 81 70 61 53

Current Assets

Net Debtors 0 6 7 8 9 10 11 12 14 15

Cash & Bank Balance 0 60 150 236 326 419 512 624 744 857

Stock 0 5 5 6 7 7 8 9 10 11

Sub-Total 0 71 162 250 342 436 530 645 767 882

IDC, Pre-ops written off 8 7 5 4 2 0 0 0 0 0

TOTAL ASSETS 129 242 310 376 450 529 611 715 829 936

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Detailed Project Report on Potatoes Chips...

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