1

1.1

VEGETABLE OIL REFINERY

Introduction

Vegetable oil and fat resources are indispensable to mankind as a source of nutrient and
industrial raw materials. Crude vegetable oil obtained from various oil milling units is further
refined before use for edible purposes. Refined edible oil is a process where free fatty acids
are volatized, condensed and recovered simultaneously with vacuum de-colouring operation.
Sometimes, refining process is limited to simple physical treatment such as heating and
filtering in regard to refining of superior quality of crude oil. Generally the cake in the oil is
separated by centrifuge, decolouring by active clay and steam deodorization at high
temperature in vacuum up to 5 mm. Hg.
1.2

Objective

The primary objective of the model report is to facilitate the entrepreneurs in understanding
the importance of setting up unit of vegetable oil refinery, technology and financial
parameters of various components for preparation and submission of project proposal to
bank for sanction of long term loan. This model report will serve as guidance to the
entrepreneurs on starting up such a new project and basic technical knowledge for setting up
such a facility
1.3

Raw Material Availability

The major raw materials required are crude groundnut oil, crude sesame oil and crude
mustard oil. The state of MP has abundant production of crude as well as refined vegetable
oils round the year. Thus procuring adequate quantity of crude oil will not be a bottleneck.
Other materials like phosphoric acid, citric acid, bleaching powder etc would be available
from the nearby trading centres.
1.4

Market Opportunities

The importance of edible refined vegetable oils has been appreciated and ambitious plan has
been chalked out to increase production of edible refined vegetable oils, including soya bean
oil, by the Government of India in the previous Five Year Plans. The demand for refined
edible vegetable oils has increased in the consumer market. With growing population,
increase in the disposable income and overall trend of consumerism, demand for edible oils
is shooting up year after year. The country still imports large quantities of crude edible oil.
The domestic production has gone up during last few years but there still exists a gap
between demand and supply which results in large imports. Thus a new vegetable oil refinery
has got good potential.
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1.5

Manufacturing process

Special pre-treatment steps which are essentially a combination of de-gumming and blending
under special operating conditions, eliminate all impurities and render oil fit to be processed
at elevated temperature under vacuum. Various steps involved in refining are:

Super cleaning
Contobleaching and
De-acidification

All these processes are very well standardized and practiced in the country since long. The
average recovery is 90%.
1.6

Products

It is possible to refine edible oils from crude groundnut oil, sesame oil, mustard oil etc. In this
project, these three crude edible vegetable oils have been considered for refining purposes.
1.7

Availability of know how and compliances

CFTRI, Mysore has successfully developed the technical know-how. Apart from compliances
under PFA Act, registration under AGMARK is advisable.
1.8

Capacity of Plant

The installed production capacity of the proposed unit would be 1200 MTA.
1.9

Project component and cost

Major components of the projects and their costs are described in the table hereunder:
Particulars
LAND & BUILDING
Land
Land Development
Land Area
Building
Production Block
Processing Centre
Packaging Unit
Storing Unit
Contingencies
PLANT & MACHINERY
Plant & Machinery
Contingencies
MISCELLANEOUS FIXED ASSETS
Total Miscellaneous Asset
Contingencies
PRE-OPERATIVE EXPENSES
Establishment
Professional Charges
Security Deposits
TOTAL

Project Profiles - MP Agros

Unit

800

625.00

Total
44.50
5.00

800

1,500.00

12.00

SqM
SqM
SqM

350
75
75
10%

5,000.00
5,000.00
5,000.00

LS

1
20%

7,500,000

LS

1
20%

1,000,000

1
1
1

1,444,000
500,000
360,000

17.50
3.75
3.75
2.50
90.00
75.00
15.00
12.00
10.00
2.00
23.04
14.44
5.00
3.60
169.54

SqM

Qty

Cost/unit

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The cost of the various components will depend on the location of the project. Item wise
assumptions are as under:
1.10 Plant and Machinery
The major machineries required for the vegetable unit are super cleaning section,
contobleach section, deacidification section, steel structure, water cooling system, Oil storage
tanks, boiler, water softening unit, storage tanks, pipes, accessories etc. The total cost of
plant and machinery is Rs. 90 lakhs.
1.11 Building
The main production block will cost around Rs. 27.50 lakhs. The building will be divided into
processing centre, packaging unit and storing unit. .
1.12 Miscellaneous Assets
A provision of Rs. 12 lakhs would take care of all the requirements.
1.13 Preliminary & Pre-operative Expenses
A provision of Rs. 23.04 lakhs would take care of pre-production expenses like
establishment, professional charges, security deposits etc.
1.14 Working Capital Requirement
ITEMS
RAW MATERIAL & PACKAGING
SUNDRY DEBTORS
TOTAL
MARGIN
MPBF
INTEREST ON WC

Year 1
89.79
166.14
255.93
63.98
191.95
21.11

Year 3
138.14
255.60
393.74
98.44
295.31
32.48

Year 5
138.14
255.60
393.74
98.44
295.31
32.48

38.59%
21.41%

90.11
50.00

40.00%

93.41

100%

233.52

1.15 Means of Finance

EQUITY CAPITAL
MOFPI SUBSIDY
TERM LOAN
FINANANCIAL INSTITUTIONS
-Payable half yearly Installments
TOTAL

Project Profiles - MP Agros

25%

50.00

14

10.00%
6.70

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1.16 Cash flow statement

PARTICULARS
SOURCES OF FUNDS
EQUITY CAPITAL
SUBSIDY
NET PROFIT
(INTEREST ADDED BACK)
DEPRECIATION
PRELIMINARY EXP.W/O
INCREASE IN TERM LOAN
INCREASE IN BANK BORROWINGS-WC
TOTAL

Year 1

Year 3

Year 5

Year 7

30.22

71.52

67.82

64.86

11.35
3.29
191.95
236.81

11.35
3.29
29.53
115.69

11.35
3.29
82.46

11.35
3.29
79.50

1.17 Projected balance sheet

PARTICULARS
LIABILITIES
EQUITY CAPITAL
RESERVES & SURPLUS
TERM LOAN
BANK BORROWINGS-WC

Year 1

TOTAL

90.11
49.76
86.71
191.95
418.53

Year 3

Year 5

Year 7

90.11
103.24
59.91
295.31
548.57

90.11
165.33
33.11
295.31
583.86

90.11
226.99
6.31
295.31
618.72

Year 3
1,704.00
1,617.84
1,434.40
183.44
86.16
32.04
32.04

Year 5
1,704.00
1,621.54
1,434.40
187.14
82.46
31.02
31.02

Year 7
1,704.00
1,624.50
1,434.40
190.10
79.50
30.74
30.74

1.18 Profitability statement

Particulars
INCOME
EXPENDITURE
VARIABLE
FIXED
GROSS PROFIT
PROFIT BEFORE TAX
RETAINED PROFIT

Year 1
1,107.60
1,062.74
935.83
126.91
44.86
(0.24)
(0.24)

1.19 Key Indicators

NET PRESENT VALUE at current Inflation (Rs. in lakhs)
INTERNAL RATE OF RETURN %
AVERAGE DSCR
BREAK EVEN POINT %
PAY BACK PERIOD ( YEARS)

368.57
35.02
1.56
88.60
4.89

1.20 Man power Requirement

PARTICULARS
ADMINSTRATIVE STAFF
Administrative Officer
Accountant
Marketing Officer
SUPERVISORY STAFF
Supervisors
WORKERS
Machine Operator
Semi Skilled Labours
Helpers

Project Profiles - MP Agros

NOs.
1
1
2
3
3
8
12

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1.21 Assumptions
Project & Financing
Contingencies on Building
Contingencies on Equipment
Term Loan
Rate of Interest on Term Loan
Subsidy Considered
Subject to ceiling
Expected time of Installation
Moratorium
CAPACITY
Rated Capacity Per Annum
80% of Installed capacity
Number of Operational Days
DAYS
Working Hours Per day
Hrs
CAPACITY UTILIZATION
Year I
Year II
Year III
SALES PRICE
Ground Nut Oil
Mustard Oil
OTHER EXPENSE
Commission
Marketing Expenses
POWER
Connected Load
HP
DEPRICIATION AS PER COMPANYS ACT
BUILDING
PLANT & MACHINERY
MISC. FIXED ASSETS
LAND & SITE DEVELOPMENT
MAINTENANCE
BUILDING
PLANT & MACHINERY
MISC. FIXED ASSETS
LAND & SITE DEVELOPMENT

10%
20%
40%
10%
25%
10
6

Months
Months
TPA

1200
300
20
65%
90%
100%
70,000
72,000
6.0%
2.5%
90
3.34%
10.34%
7.07%
1.63%
2.50%
4.00%
3.00%
2.00%

1.22 Sources of technology / Machinery

Technology of the project related material handling equipment is available with indigenous
companies and could be set up at competitive prices. Major suppliers are understated

Sifter International, Plot No. 83, Sector 6, Faridabad-121006

Tel. No. 2231154-4540, Fax: 2230039

Osaw Agro Industries Pvt. Ltd., Osaw Complex,

Jagadhri Road, Ambala Cant.- 133001, Tel. No. 2699167-354-547, Fax: 2699018

Forsberge Agritech (I) Ltd, GIDC Estate, Makarpura, Vadodara

Chempro, Engg. and Consultants, 43, Sukhshine Complex,

Sunrise Park, Nr. Drive In, Ahmedabad-380054. Tel No. 26851135/9010.

Container Industries, C-299, Ghatkopar Industrial Estate,

72 LBS Marg, Mumbai- 400080

The actual cost of projects may deviate on change of any of the assumptions.
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