DATE PROCESSING AND PACKING

1.0 INTRODUCTION:
Dates have been cultivated since ancient times. Date palms thrive under the rigorous climate
of sub-tropical desert. Date processing enjoys a high economic importance in the world. Dates
have nutritive values and are consumed in large quantity in all parts of the country. Kachchh
region of Gujarat produces good quality dates and there is a very good scope to set up facility
for processing and packing of dates at a suitable location. Date processing technology has
improved during last few years, which has made it possible to process them hygienically. This
technology has made it possible to produce a marketable product which can easily be
handled, transported, stored and packed in attractive packing before sale.

2.0 PRODUCT
2.1 Applications
It is proposed to clean dates in the most hygienic conditions and to market the processed
dates in various attractive packages of 1/2 kgs, 1 kg and 2 kgs and 20 kgs bulk packings at
the most economical prices in India. The preferred location will be Kuchchh region of Gujarat
which produces good quality dates.
2.2 Compliances with the provisions of the FPO and PFA Act are mandatory.

3.0 MARKET POTENTIAL

A date processing and packing unit can be set up in rural areas, where intensive date palm
cultivation exists and labour is cheap and available in the season. With more and more
awareness about health, number of people have started consuming dates regularly. Apart
from direct consumption, they are also used to make some other preparations and some sweet
items are made from them. The market is confined mainly to urban and semi-urban areas
but it is growing very rapidly. There is not much competition in this line and proper selling
network, adequate publicity and consistency in quality shall be the important aspects.
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4.0 MANUFACTURING PROCESS
Ripe and uniform sized dates are selected for processing purpose. The date processing covers
four main activities.

Primary Cleaning

Crate Filling

Vacuum Date Fumigation

Washing and Conditioning

The process is not only standardized but is very simple.

5.0 CAPITAL INPUTS

5.1 Land and Buildings
A plot of land of about 600 sq.mtrs. shall be needed which would cost around Rs. 1.80 lacs.
The built-up area requirement will be 350 sq.mtrs. and considering construction rate of
Rs.2,500/sq.mtr., the total cost would be Rs.8.75 lacs. A provision of borewell would mean
additional expenditure of Rs.3.50 lacs and underground and overhead water storage tanks of
5,000 ltrs. capacity would cost another Rs.1.00 lac.

5.2 Plant and Machinery

It is suggested to install date processing and packing plant of 600 tonnes during season of
about 8 months and 2 shift working every day.

The total cost of machinery is likely to be Rs.45.00 lacs as explained under: (Rs. in lacs)
Item Qty Value
Primary Cleaning Line 1 10.00
Washing/ conditioning Machine 2 5.00
Conveyors -- 7.50
Bulk Packing Line 1 4.00
Thermo pack Line 1 5.00
Pitting/Pressing Line 1 6.00
Electrification and Installation -- 5.00
Plastic Crates 1500 1.50
SS Vessels, plastic tubs, Lab. Equipments -- 1.00
Total 45.00

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 5.3 Miscellaneous Assets:
Other assets like tools and equipments, structure and handling equipments, tables, chairs,
storage racks in the factory etc shall be required, which would cost about Rs.12.00 lacs.

5.4 Utilities
Total power requirement shall be 50 HP whereas daily water requirement shall be around
10,000 ltrs. for which a provision of borewell has been made.

5.5 Raw and Packing Materials

The main raw material required are ripe date bunches from which good quality, uniform size
dates are selected for processing and packing. The unit should enter into contract with
established date farms to ensure adequate and timely supply of quality dates at the factory.
Printed polythene bags and corrugated boxes, labels and BOPP tape shall be the packing
material.

6.0 MANPOWER REQUIREMENTS

Particulars No Monthly Total Monthly

Salary (Rs.) Salary (Rs.)
Skilled Workers 2 2,500 5,000
Semi-skilled Workers 2 1,750 3,500
Unskilled Workers 10 1,250 12,500
Salesman 1 2,500 2,500
Clerk 1 2,500 2,500
Total 26,000

7.0 TENTATIVE IMPLEMENTATION SCHEDULE

Activity Period (in months)
Application and sanction of loan 2
Site selection and commencement of civil work 2
Completion of civil work and placement of
orders for machinery 6
Erection, installation and trial runs 2

8.0 DETAILS OF THE PROPOSED PROJECT

8.1 Land and Building (Rs. in lacs)
Particulars Area (Sq.Mtrs) Cost
Land 600 1.80
Building 350 8.75
Borewell and Water Tanks -- 4.50
Total 15.05

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8.2 Plant and Machinery
The total cost of machinery is estimated to be Rs.45 lacs, as explained earlier.

8.3 Miscellaneous Assets

The provision for miscellaneous assets of Rs. 12.00 lacs shall be adequate as explained
earlier.

8.4 Preliminary and Pre-Operative Expenses:

The registration charges, establishment expenses, trial run expenses, interest during
implementation etc would be around Rs.8 lacs.

8.5 Working Capital Requirement

At 60% utilization in the first year, the total working capital needs shall be as under:
(Rs. in lacs)
Particulars Period Margin Total Bank Promoters
Stock of Raw and
Packing Materials Month 30% 2.50 1.75 0.75
Stock of Finished Goods Month 25% 3.00 2.25 0.75
Receivables Month 25% 5.25 3.95 1.30
Working Expenses 1 Month 100% 1.50 -- 1.50
Total 12.25 7.95 4.30

8.6 Cost of the Project and Means of Financing:

(Rs. in lacs)
Items Amount
Land and Buildings 15.05
Plant and Machinery 45.00
Miscellaneous Assets 12.00
Preliminary and Pre-operative Expenses 8.00
Contingencies @ 10% on land and
building and machinery 6.00
Working Capital Margin 4.30
Total 90.35
Means of Finance
Promoter's Contribution 28.35
Bank Loan/ Financial Institutions 62.00
Total 90.35
Debt Equity Ratio 2.19 : 1
Promoters' Contribution 31%

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 Financial assistance in the form of grant is available from the Ministry of Food Processing
Industries, Govt. of India, towards expenditure on technical civil works and plant and
machinery for eligible projects subject to certain terms and conditions.

7.0 PROFITABILITY CALCULATIONS

9.1 Production Capacity and Build-up:
The installed production capacity of the proposed unit would be 600 tonnes during every
season and the expected utilisation is 60% in first year and 75% thereafter.

9.2 Sales Revenue at 100% Capacity

(Rs. in lacs)
Product Qty. Selling Price Value
Tonnes Per Ton/Rs.
Processed Dates 600 35,000 210.00

9.3 Raw and Packing Materials Required at 100%

(Rs. in lacs)
Product Quantity Rate Value
Tonnes Ton
Date Bunches 750 12,000 90.00
Cost of Packing Materials
@ 1500/Ton -- -- 9.00
Total 99.00

9.4 Utilities
The per season cost of utilities at 100% activity level would be Rs.5.00 lacs.

9.5 Interest
The interest on term loan of Rs. 62 lacs has been calculated @ 14% per annum assuming
repayment in 6 years including a moratorium period of 1 year, whereas interest on working
capital would be 14% per annum.

9.6 Depreciation
It has been calculated on WDV basis @ 10% on building and 15% on machinery and other
assets.

9.7 Selling Expenses

A provision of 20% of sales income has been made every year towards transportation, selling
commission, advertisement etc.

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10.0 PROJECTED PROFITABILITY
(Rs. in lacs)
No Particulars 1st Year 2nd Year
A Installed Capacity ---600 MTA ---
Capacity Utilisation 60% 75%
Sales Realization 126.00 157.50
B. Cost of Production
Raw and Packing Materials 59.40 74.25
Utilities 3.00 3.75
Salaries 3.12 3.60
Stores and Spares 1.80 2.40
Repairs and Maintenance 2.10 2.70
Selling Expenses @ 20% 25.20 31.50
Administrative Expenses 2.00 3.00
Total 96.62 121.20
C. Profit before Interest & Depreciation 29.38 36.30
Interest on Term Loan 8.12 6.90
Interest on Working Capital 1.12 1.40
Depreciation 9.87 8.46
Net Profit 10.27 19.54
Income-tax @ 20% 2.55 3.94
Profit after Tax 7.72 15.60
Cash Accrual 17.59 24.06
Repayment of Term Loan -- 11.60

11.0 BREAK-EVEN POINT ANALYSIS (Rs. in lacs)

No. Particulars Amount
A Sales 126.00
B Variable Cost
Raw and Packing Materials 59.40
Utilities (70%) 2.10
Salaries (70%) 2.18
Stores and Spares 1.80
Selling Expenses (70%) 17.64
Administrative Expenses (50%) 1.00
Interest on working capital 1.12
Total 85.24
C Contribution (A - B) 40.76
D. Fixed Cost 24.49
E. Break Even Point (D C) 60%

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12.0 [A] LEVERAGES
Financial leverage
= EBIT/EBT
= 19.51 10.27
= 1.90

Operating Leverage
= Contribution / EBT
= 40.76 10.27
= 3.97

Degree of Total Leverage

= FL/OL
= 1.90 3.97
= 0.48

[B] Debt Service Coverage Ratio (DSCR)

(Rs in lacs)
Particulars 1st Yr 2nd Yr 3rd Yr 4th Yr 5th Yr 6th Yr
Cash Accruals 17.59 24.06 26.03 27.85 30.05 32.57
Interest on TL 8.12 6.90 5.28 3.65 2.03 1.12
Total [A] 25.71 30.96 31.31 31.50 32.08 33.69
Interest on TL 8.12 6.90 5.28 3.65 2.03 1.12
Repayment of TL -- 12.40 12.40 12.40 12.40 12.40
Total [B] 8.12 19.30 17.68 16.05 14.43 13.52
DSCR [A] [B] 3.17 1.60 1.77 1.96 2.22 2.49
Average DSCR ----------------------------------- 2.20 -------------------------------

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 [C] Internal Rate of Return (IRR)
Cost of the project is Rs. 90.35 lacs.
(Rs. in lacs)
Year Cash 16% 18% 20%
Accruals
1 17.59 15.16 14.90 14.65
2 24.06 17.88 17.28 16.70
3 26.03 16.69 15.85 15.07
4 27.85 15.37 14.37 13.42
5 30.05 14.30 13.13 12.08
6 32.57 13.35 12.05 10.91
7 34.08 12.06 10.70 9.51
192.23 104.81 98.28 92.34

The IRR is around 19%.

Some of the machinery suppliers are

1. Forsberge Agritech (I) Ltd, Makarpur GIDC, Vadodara
2. Apurva Engg Works, Boriwali, Mumbai 400 098
3. International Food Machinery Corporation, Opp. Deepbhavan, Pt. Nehru Marg,
Jamnagar-361008
4. Sahyog Steel Fabrication, 28, Bhojrajpara, Gondal-360311. Tel No. 224075
5. Techno Equipments, 31 Parekh Street, Girgaum, Mumbai 400 004
6. FMC Technology Hong Kong Ltd, 2 Bhubaneshwar Housing Society, Pashan Road,
Pane 411 008. Ph: 25893700. Fax: 25893701

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