FEASIBILITY REPORT

INTRODUCTION

During recent years mushroom consumption and production has got the boost considering its
nutraceutical importance and the demand among the elite population. However, much needs
to be done to enhance its reach up to the masses. Among the cultivated mushrooms, button
mushroom has dominated the national as well as the international market despite of its long
cropping period and little complex system of substrate making. On the other side there are
mushroom species, which has quite simple cultivation technology and short cropping cycle and
among these paddy straw mushroom (Volvariella volvacea) is one.

SECTOR BACKGROUND

Mushrooms have been identified as priority item in government's recent programme of

promoting production of vegetables and fruits in the country. Though there are many types of
mushrooms produced and marketed world over with lion's share of button mushroom
(32-35%) and nearly 85% of Indian production. However, paddy straw mushroom is the most
primitive mushroom in India and its cultivation started way back in 1943 at Coimbatore.
Volvariella diplasia was the first mushroom to be cultivated. It was followed by cultivation of
more popular specie, V. volvacea of this mushroom. Since then its cultivation has spread to
several regions of the country but it is more popular in coastal states and specifically in Orissa,
West Bengal, Andhra Pradesh and Chhattisgarh states. As per recent estimate the state of
Orissa produces around 10,000 tons of this mushroom annually. However, this much
production of this mushroom stands nowhere as China only produces nearly 6,00,000 tons of
this mushroom annually. In India 19 edible species of this mushroom have been recorded but
cultivation methods have been devised for three of them only viz., V. esculenta, V. diplasia and
V. volvacea. Mushrooms are very good source of proteins with very high nutraceutical
properties. In India this sector is growing at the rate of 15% per annum, whereas in world it is
growing at the rate of 12%.

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PROMOTER BACKGROUND

The Promoter Mr Nabin Chandra Bera has 20 years of experience in mushroom spawn units. He
has taken the training on cultivation of mushroom and mushroom spawn from OUAT. He has
also taken the training on Indoor System Mushroom Cultivation from the Director of
Mushroom Research (Indian Council of Agricultural Research) , Chambaghat, Solan, Himachal
Pradesh.

IMPLEMENTATION SCHEDULE

The regular commencement of production will take around six months after availability of
finance from financial Institution. The firm would be able to start commercial production after
about 6 months from availability of finance.

The following steps are involved in implementation of the project:

• Selection of site
• Form of ownership
• Feasibility report
• Registration with DIC
• Arrangement of finance (term loan and working capital)
• Construction of factory shed and building
• Procurement of machinery and equipment
• Plant erection and electrification
• Recruitment of manpower
• Arrangement of raw material including packaging material
• Selection of marketing channel
• Miscellaneous: power and water Connection

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PROJECT REPORT FOR SETTING UP OF AN INTEGRATED MUSHROOM CULTIVATION AND
SPAWN PRODUCTION UNIT

BROAD OUT LINE OF THE PROJECT

1. Name of the company : M/S B M AGRO TECH

2. Registered office and address : AT-BHABANIPU

POST-PIPILI
DIST-PURI

3. Proposed Location : PIPILI

4. Promoters : NABIN CHANDRA BERA

5. Cost of Project : Rs 25.08 Lakhs

6. Proposed capacity : Total 30 tons of paddy straw mushroom production

proposed to be sold as fresh in the domestic market.

7. Future planning : Enhancing the capacity to 100 tons per annum along
with setting up of processing/canning unit.

8. Raw materials : Main raw materials for cultivation of paddy straw

mushroom viz., paddy straw, poultry manure, cotton
ginning mill waste and lime (calcium carbonate) are
available in most of the coastal states or the adjoining
states, where the environmental conditions for its
cultivation are congenial.

9. Marketing: : During the last few decades, the demand for

mushrooms in country has increased several folds.
Besides good local and domestic market there is
huge demand for canned paddy straw mushroom in
world market and it is fetching almost double the
rates of button mushroom. The fresh market of gulf
countries is still untapped besides the traditional
market in USA and European countries. State of
Orissa has already a big demand of this mushroom
along with the adjoining states like West Bengal,
Andhra Pradesh, Chhattisgarh, Karnataka and
Maharashtra. Since, the coastal states has the
congenial climatic conditions for cultivating of this
mushroom under natural conditions for at least 9

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 months in a year and an average price of Rs. 80/kg of
fresh mushroom is envisaged.

10. Employments : 7 persons

11. Power : 60 HP

12. Sales : 24 Lakhs

13. Profit after tax : 4.94 Lakhs

WHY MUSHROOMS CULTIVATION

1. Excellent source of good quality protein with ability to fight the problem of malnutrition in
the country.
2. Highest producer of protein per unit area and time.
3. No competition with arable land and possibility of utilizing vertical space.
4. Profitable and environmentally sustainable way of converting agro-wastes in to quality
food.
5. Excellent and proven medicinal properties (against diabetes, cardiac diseases, hypertension,
cancer, viral diseases etc)
6. Ability to provide employment to unemployed youths and women.
7. Foreign exchange earner through export.

TECHNOLOGY ENVISAGED

Two types of cultivation systems for cultivation of paddy straw mushroom are available
- starting from outdoor cultivation technology involving the paddy straw alone and cultivation
under the shadow of trees or under thatched huts to complete indoor cultivation technology by
using the paddy straw along with cotton ginning mill waste or cotton ginning mill waste alone
and preparing compost by using two phase composting technology. The present project
proposes to adopt complete indoor cultivation technology to ensure higher productivity of this
mushroom along with round the year cultivation. This will reduce the chances of crop failure
due infection/infestation of competitor moulds and insect-pests. It will also help in getting
nearly three times more mushroom yield than the traditionally used outdoor cultivation
technology.

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MANUFACTURING PROCESS AND DETAILS OF PRODUCTION

The project will have the capacity of producing 20 tons of paddy straw mushroom per annum.
The stages of growing and manufacturing details are given below.

The cultivation method can be divided into spawn preparation, substrate, compost
preparation, bedding and pasteurization, spawning and cropping, crop management and
mushroom harvesting.

1. Spawn (mushroom seed production): The project proposes to set up its own spawn
production unit to ensure consistent supply of quality spawn. To obtain higher
mushroom yield, quality spawn of improved strains with ability to give higher
mushroom yield during shortest possible period will be produced.

2. Substrate: Among substrates, cotton ginning mill waste is the preferred substrate for
cultivation of paddy straw mushroom by this method. However, paddy straw can also
be used. Cotton waste contains more cellulose and hemi-cellulose and the fine texture
of cotton waste help in retention of moisture, which minimize the water requirement at
later stage of cropping and thus help in avoiding damage to fruiting primordia.

3. Compost preparation: In composting, cotton ginning mill waste alone or paddy straw +
cotton ginning mill waste in 1: 1, w/w ratio are wetted for first 2 days. The workers are
used to tread the cotton waste so that it absorbs sufficient quantity of water. After 2
days of substrate wetting, poultry manure is added @ 5.0% to the wetted substrate and
pile/stack (1.5 m high x 1.5 m wide) is raised. The length can be up to any extent.
However, nothing is added in case of cotton ginning mill waste substrate. First 2
turnings are given at an interval of one day each and calcium carbonate @ 1.50% (dry
wt. basis) is added at third turning and the substrate is left for fermentation for next 2
days.

4. Bedding and pasteurization: After 4 days of outdoor composting, the compost is spread
on shelves and the thickness of the substrate varies in different season from 10 cm to 15
cm. During summer months lesser thickness is needed, while higher in winter to
preserve moisture and heat. The surface is leveled by pressing lightly. After 24 hours of
compost spreading, live stream is introduced with the help of rubber hose of 6 cm in
diameter. A temperature of 62°C is maintained for 5-6 hours for cotton ginning mill
waste compost and of 65 °C for 7 hrs for paddy straw compost. After steaming, the shed
or room is kept closed to keep a temperature of 48-50 °C for next 48 hrs and followed
by natural cooling of the substrate. The compost is spawned on reaching the
temperature near 35°C.

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5. Spawning and cropping: The compost is spawned with fresh spawn @ 1.5% (wet
weight) or 5.0% (dry weight) basis of the compost. The pieces of broken spawn are
inserted at a depth of 2 to 2.5 cm at a distance of 12 to 15 cm. The spawn is covered
with displaced compost and the bed is covered with thin plastic sheet. The room
temperature is maintained at 32 to 34°C during spawn running and the
compost will be colonized within next 4-5 days in cotton waste compost and 5-6 days in
paddy straw compost.

6. Fructification & crop Management: During spawn running period water and light are
not needed but a little ventilation is needed. By at the end of 3-4 days, fluorescent light
along with little more ventilation is provided in the rooms. The plastic sheets are
removed on ss" day, followed by little sprinkling of beds with water. The pinhead will
start appearing on 6th - th day of spawning. After another 4 to 5 days, the first flush of
mushroom will be ready for harvesting. The room conditions needed for better
fructification are temperature 30-32 DC, relative humidity 80%, fluorescent light (4-5
hours/day) and intermittent fresh air. Watering of the compost is not often
recommended as it lowers the temperature and suffocates the tiny primordial and
reduces mushroom yield. Crop management to achieve the best possible combination
of light, temperature, ventilation, relative humidity and compost moisture is in fact an
art of judgment, experience and effort.

7. Harvesting: The straw mushroom is harvested before the volva/cup breaks or just after
rupture and these stages are called as the button and egg stages. Under normal growing
conditions, harvesting of straw mushroom at good condition is to be done twice or
thrice in a day (morning, noon and afternoon). The first flush normally exists for 3 days,
which constitute about 70 to 90% of the expected mushroom yield. The intervening
period of 3 to/5 days between two flushes require thorough watering and maintaining
of optimum conditions inside the rooms. The next flush again survives for 2-3 days and
yields fewer mushrooms than the first flush. The second flush adds only 10 to 30% of
the total mushroom yield.

On reaching the harvestable size, the fruiting bodies should be carefully separated from
the beds/substrate base by lifting and shaking slightly left or right and then twisting
them off. The mushrooms should not be cut off by knives or scissors from the base of
the stalk, because the stalks left behind on the bed/substrate will rot and be attacked by
pests and contaminated by moulds, which in turn will destroy the mushroom bed.

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8. Use of spent compost

• The spent compost can be dried & used for cultivation Pleurotus sajor-caju, or in
vermicompost preparation, followed by its use as manure in field and in bio-fuel
(biogas, bio-ethanol and briquette) production.

• After P. sajor-caju production, the spent compost can again be used as a good soil
conditioner.

9. Important steps for obtaining healthy mushroom crop

The important steps for harvesting healthy crop of straw mushroom are:

• Compost should have moisture in the range of 60 to 65%

• Immediate spawning is advocated on obtaining compost temperature at 35"C,
followed by covering with plastic sheets, which should be maintained for next 4 days.
• Ventilation is prohibited during first 3 days following spawning.
• The plastic sheets should be removed at 5 to 6 days after spawning, followed by
sprinkling of water on bed surface and ventilating the cropping room.

10. Troubleshooters

The important trouble shooters in cultivation of paddy straw mushroom include:

• Poor spread of spawn: It is because of inadequately beaten or too compact compost bed
or poor quality of spawn.

• Presence of contaminants: Temperature might not have been high enough during
pasteurization or the steam might not have reached up to the core of the compact
compost or the use of contaminated spawn.

• Strong ammonia smell: It smells because of excessive use of nitrogen source or

improper conditioning at Phase-II of composting.

• Mycelium drying out: It occurs because of scarcity of water or excessive

ventilation.

• Failure to form fruiting body: It happens because of deficiency of light,

degenerated spawn or too old spawn, excessively high temperature or poor
ventilation.

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• Death of young mushroom: It occurs because of the use of degenerated spawn,
insect infestation, insufficient oxygen, excessive CO2, sharp temperature fluctuations
or diseases caused by fungi or bacteria.

• Growth of Coprinus: It is because of the use of excessive nitrogen sources, poor

quality straw or excess heat of the compost bed.

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DESIGN AND DETAILS OF MUSHROOM UNIT

The unit has been designed as per the latest technology of paddy straw mushroom
cultivation. The following main structures are proposed.

1. Composting Yard
2. Cropping Rooms
3. Spawn Laboratory
4. Office
5. Miscellaneous Structures viz., water tank, service room, boiler room, sorting and
packaging room, etc

1. Composting Yard: 60 x 40 x 15 ft (height), concrete flooring, G.I. roofing on RCC

pillars. Three ft high walls on two sides. It will have 3 sets of compost retaining
walls constructed at 8 ft apart. One guddy pit is also provided for recycling of
leachate nutrients back in compost.

2. Cropping Rooms: One cropping room of 40 x 20 x 12 ft (height). Both on one

side of gallery of 10ft width. Walls and ceiling of the growing rooms to be
insulated with 2" thermocole sheets. Two vents of 1.5 ft2 are to be provided on
the back walls. Provision of water and electricity in each room with at least 8
fluorescent tube lights and 2 power points. Each room will have one air handling
system (AHU) above the door for climate control inside the room, mainly for
injection of fresh air, recalculating inside air and humidification when needed.
AHUs are connected with fresh air duct and recirculation duct.

Bed area: 36' x 10' x 6 tiers

Compost 6.0 kglft2 = 12960 kg or 12.96 tons

(Cultivation proposed on beds and hence lesser space between shelves IS required and
more compost can be accommodated on racks of lesser heights)

3. Spawn laboratory: 850 ft2 including boiling room cum bag filling/ingredient
mixing room (15 x 12 ft2), sterilization room (12 x 10), inoculation room (12 x 10
ft2), incubation room (20 x 10 ft2) and storage room (20 x 10 ft2).

4. Office: 200 ft2 for sitting of the manager, supervisor, staff etc.

5. Utilities: Five rooms of 15 x 12 ft2 each to take care of ingredients of spawn/compost,

boiler, generator, tools, sorting and packaging of mushrooms. Total area required is
1000 ft2.

Page 9
 COST OF PROJECT

Sl No. Particulars Rs in Lakhs

1. Land and Site Development 1.50
2. Building 19.48
3. Plant and Machinery 2.00
4. Furniture & Fixture 0.90
5. Preoperative Expenses 1.20
Totals 25.08

1. Land and Site Development: If sufficient land is available with the promoter at the
proposed site where the project is intended to be set up, the required land will
have to be leveled and developed including boundary wall raising/barbed wiring
making the total cost of Rs. 1.5 lakhs (Annexure –“ I”).

2. Buildings: Design and layout of the buildings to be constructed are given in the
figures enclosed and annexed as Annexure –“ II” (Rs. 15.28 lakhs)

3. Plant and Machinery: Cost Rs. 2.00 lakhs (Annexure –“ III”)

4. Furniture and Fixture: Rs. 0.90 lakhs (Annexure –“ IV”)

5. Preoperative Expenses: Non-refundable deposits-project cost, trial production, FPO

fees, and interest paid during moratorium period are considered under preoperative
expenses.

SOURCE OF FINANCE

Sl No. Particulars Rs in Lakhs

1. Term Loan 20.00
2. Promoter Contribution 5.08
Total 25.08

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10
Raw Materials:

Main Raw Materials needed in the project are paddy straw, cotton ginning mill waste, poultry
manure, lime (calcium carbonate of commercial grade), gypsum, wheat grains, plastic sheets,
PP bags, empty glucose/ glass bottles, plastic rings, cotton rolls, etc. (Annexure-“V”)

Annual requirement of the projects are:

Raw Materials 1 Crop X 1 Room (Tons) Annual Requirement (Tons)

Paddy Straw 2.0 48
Cotton Ginning Mill Waste 2.0 48
Poultry Manure 0.200 4.8
Lime 0.060 1.44
Plastic Sheets 1000 X 3 Sq ft 72 Sq ft X 1000
Wheat Grains 0.090 2.16
PP bags/empty glass bottles 2.50kg 0.060
Chemicals Items Rs 25,000/-

Management and Consultancy:

The project will be supervised personally by the promoter from the very beginning. Promoters
will be guided by the part time contract consultant, with TA and DA and consultancy fee on year
basis who will be responsible to give overall guidance on all facets of commercial cultivation of
this mushroom at all stages of crop.

Manpower:

As per Annexure – “VI”, competent persons are available and shall be employed. Casual
labourers’ at reasonable rates are available in the project area.

Power and Fuel:

Power load of 60 HP is required and will be obtained from respective state electricity board;
Details are given in the Annexure – “VII”.

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11
Marketing:

Earlier because of poor awareness about nutritional and medicinal attributes of mushrooms,
the per capita consumption in the country was very low. However, with the spread of
awareness, the per capita consumption in the country in continuously on the rise. Mushrooms
contain about 90% water are poor in calorie and because of which these are the preferred food
for obese people. On the other hand paddy straw mushroom is rich in protein and contains
about 4% protein on fresh wt. basis and 35-40% on dry wt. basis. The quality of protein
provided by mushrooms is again of good quality as these contain most of the essential amino
acids. Mushrooms are low in fat and contain high amount of linoelic acid (PUFA), while lacks
cholesterol and dreaded sterol, which make mushroom as the choice of dieticians for heart
patients. Due to absence of starch and low sugar contents these are the delight of the diabetic
patients. Due to high fiber content these are highly suited food for patients suffering with
hyperacidity and constipation. Mushrooms are also good source of potassium, vitamins of B
complex group, vitamin C and vitamin D. These also possess many medicinal properties like anti
cancer, hypocholesterolemic and hypolipidemic. In few countries mushrooms have been
advised along with chemotherapy for cancer patients.

The demand of mushrooms, both in domestic as well as international market is

increasing at a phenomenal rate. It is also reflected in the rate of increase in world
production of mushrooms, which is nearly 12% per year. India roughly produces
120,000 tons of mushrooms, out of which button mushroom only contributes about
1,00,000 tons. The rest is shared by oyster, paddy straw and milky mushrooms. Button
mushroom is presently the only mushroom in the country, which has attained the commercial
scale of cultivation due to the coming up of bigger units. Compared to button mushroom, the
paddy straw mushroom is easy to cultivate and the raw material availability is not a limitation.
The process involved is quite simple and being tropical in nature it does not require much
manipulation of the environmental conditions as majority of the country's area is either semi-
tropical or tropical. This mushroom has a well established local market and its popularity has
spread in all coastal states and the adjoining states. It is also considered as the tastiest
mushroom mainly because of texture and flavor. Countries like Taiwan, Malaysia, Indonesia and
Thailand also export the canned mushrooms world over. As per the present figures our per
capita consumption of mushrooms is around 40-50 g against the 3-3.5 kg in the developed
countries. This poor consumption is mainly due to non-availability of mushrooms in most
part of the country and lack of awareness about the nutritional values of mushrooms. As
such no difficulty in marketing of paddy straw mushroom is perceived at present.

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 MUSHROOMS PRODUCTION IN INDIA

Year Production ( X 1000 tons)

1975 1.0
1980 3.0
1985 5.0
1990 8.0
1992 15.0
1995 30.0
2000 70.0
2007 100.00
2014 120.00

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 PROFITABILITY PROJECTIONS

As it is evident from the annexure-VIII that the project is highly profitable, economically viable
and financeable from bank.

ASSUMPTIONS FOR PRODUCTION AND PROFITABILITY

1. Two (2) cropping rooms with of 12.00 tons compost (4.0 tons dry substrate) handling
capacity.
2. 12 crops will be taken as per availability of improved strains, which give optimum yield
(30-35 kg/ 100 kg dry substrate) in 20 days of one cropping cycle.
3. Annual Production = 1.4 tons X 2 room X 12 crops X 0.35 = 33.60 tons but we consider
here 30 tons

Accepted Production = 30 tons

4. Rate of interest on term loan @ 12% and

5. Depreciation: 5% on building, 15% on Plant & Machinery and 10% on Furniture & Fixture
and Other Fixed Assets.

6. Interest will be served during the moratorium period

7. Selling and Distribution Expenses is considered as 10 % of total Turnover.

8. Administrative Expenses is considered 7% of total turnover.

9. A hike of 10% of Sales and 15% of expenses is taken into consideration for preparation
of profitability statements.

10. Sundry Debtors and Sundry Creditors are being taken as one month of Sales and Raw
Material purchased respectively.

SALES PROJECTIONS

Installed Capacity = 32 TPA

Sales = 30 TPA fresh

a. Sales of fresh mushrooms: 30 tons @ Rs 80,000/ ton= Rs. 24.00 Lakhs

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 ANNEXURE-I

LAND AND SITE DEVELOPMENT

Sl No. Particulars Cost in Rs. (Lakhs)

1. Sufficient land if already in possession with the promoter Nil
2. Land Levelling and Site Development Nil
3. Gate and boundary Walls 1.50
Total 1.50

ANNEXURE-II

BUILDINGS

Sl No. Particulars Area Sq. Ft Unit Cost (Rs.) Total Cost in Rs. (Lakhs)
1. Growing Rooms 800 X 2 700/- 11.20
(Inclusive of insulation)
2. Composting Yard 1000 300/- 3.00
3. Service Room 180 600/- 1.08
4. Office 200 600/- 1.20
5. Utilities 1000 300/- 3.00
Total 19.48

ANNEXURE-III

PLANT AND MACHINERY

Sl No. Particulars Cost in Rs. (Lakhs)

1. Tem. and Humidity Controllers for growing rooms- 2 sets 0.20
2. Multi Channel Thermometers- 3 Nos 0.30
3. Wood Racks for 2 growing Rooms 0.80
4. Air Conditioners 3 ton Capacity 0.50
5. Boilers (20 Litre Water Capacity)- 2 numbers 0.20
Total 2.00
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 ANNEXURE-IV

FURNITURE & FIXTURE

Sl No. Particulars Cost in Rs. (Lakhs)

1. Electricity Fittings 0.50
2. Furniture and Fixture 0.20
3. Sprayers System 0.20
Total 0.90

ANNEXURE-V

RAW MATERIALS
(For one crop for one cropping room)

Sl Particulars Quantity Rate Cost in Rs.

No. (Lakhs)
Span
1. Paddy Straw and Cotton Ginning 4.0 tons Rs.2500/ton 10,000.00
Mill Waste
2. Poultry Manure 0.200 tons Rs.800/ton 160.00
3. Lime/ Calcium Carbonate 60.00 kg Rs.7/kg 420.00
4. Plastic Sheets 1000 ft long X 3 ft 250.00
Wide
5. Wheat Grains 90 kg Rs 15/ kg 1350.00
6. PP Bags for spawn 2.50 kg Rs 100/kg 250.00
7. Chemicals (calcium sulphate, 500.00
calcium carbonate, malt extract
etc)
8. Empty glass bottles, cotton 1,000.00
roles, butter papers, plastic rings
etc.
Total 13,930.00
Total cost of raw material required for 12 crops for 2 rooms (Rs 13,930 X 2 X 12) =Rs. 3.34 Lakhs

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 ANNEXURE-VI

WAGES AND PERKS

Sl Particulars No Monthly Total /Year

No. Salary (Rs. In Lakhs)
1. Manager 1 Self 0.00
2. Supervisor 1 8,000/- 0.96
3. Boiler Attendant 1 5,000/- 0.60
4. Electrician 1 5,000/- 0.60
5. Labourers 4 4,500/- 2.16
Total 4.32

ANNEXURE-VII

POWER AND FUEL EXPENSES

Sl Particulars Per Month Total /Year

No. (Rs. In Lakhs)
1. Energy (Electricity) 10,000 1.20
2. Fuel (Diesel) 10,000 1.20
Total 2.40

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