PROJECT PROFILE

ON
LEMONGRASS OIL
MAKING UNIT
 Table of Contents

INTRODUCTION 3
PRODUCTS AND ITS APPLICATION 3
INDUSTRY OUTLOOK/TREND 3
PROCESS 3
RAW MATERIAL REQUIREMENTS 4
MANPOWER REQUIREMENT (per month) 4
IMPLEMENTATION SCHEDULE 4
OTHER EXPENSES (PER MONTH): 5
WORKING CAPITAL (per month) 5
TOTAL CAPITAL INVESTMENT 5
COST OF PRODUCTION 5
IMPLEMENTATION SCHEDULE 5
COST OF THE PROJECT 6
SALES PROCEEDS (PER ANNUM) 6
PROFITABILITY (BEFORE INCOME TAX) 6
PROFITABILITY CALCULATIONS 7
References 7
MACHINERY SPECIFICATIONS 7
MANUFACTURES/ SUPPLIERS OF MACHINERY 7
STATUTORY/ GOVERNMENT APPROVALS 7
DISCLAIMER: 8
DISCLAIMER: 8
 INTRODUCTION
Lemongrass is a tall perennial aromatic grass, native to the tropical and sub-tropical climates of Asia, Australia
and Africa. India is the largest producer of lemongrass, where it is cultivated in Kerala, Tamil Nadu, Karnataka,
Assam, Madhya Pradesh, West Bengal, Uttar Pradesh and Maharashtra.

Standard Code Description

HS 33012942 Lemon Grass Oil

PRODUCTS AND ITS APPLICATION

Lemongrass oil is used in perfumery, fragrance cosmeceutical, aromatherapy, and pharmaceutical industries.
Citral is the main constituent of lemongrass oil, which used for production of fragrances for soaps &
detergents, high quality perfumes. Citral is also used as a flavor and for fortifying lemon oil and in many values
added products like Ionone’s and Vitamin A. Leaves of lemongrass are also used for making lemongrass tea.

INDUSTRY OUTLOOK/TREND
The oil is distilled from leaves and flowering tops of Lemon grass. The oil has strong lemon-like odor, due to
high percentage (over 75%) of citral in the oil. The characteristic smell of oil makes its use in scenting of soaps,
detergents, insect repellent preparations. However, the major use of oil is as a source of citral, which goes in
perfumery, cosmetics, beverages and is a starting material for manufacture of ionones, which produces vitamin
– A. The Citral rich oil has germicidal, medicinal, and flavouring properties. An allied species called West Indian
lemon grass (C.citratus) has low citral content in the oil and has meagre trade in the country.

PROCESS
The oil is extracted from the wilted herb by steam distillation in stainless steel units. The factors influencing
the oil production during distillation are: (i) Storage of the plant material, (ii) Treatment (wilting and cutting
into pieces) of the material and (iii) The method of distillation. The major source of loss is by oxidation and
rectification of the essential oil. So, if the material is to be stored before processing, it should be kept in a dry
atmosphere with limited air circulation. The essential oils are present in the oil glands, oil sacks and glandular
hairs of the plant. Therefore, before distillation, the day wilted plant material is cut into small pieces enable
them to expose directly as many oil glands as is possible. Once the plant material has been reduced in size, it
must be distilled immediately to avoid oil loss. The wilted leaves are steam distilled which takes about 4- 5
hours.

One of the methods (molecular distillation) for lemongrass oil extraction is molecular distillation process,
which yield increase citral concentration in lemongrass essential oil, without adding any extra components to
the system. Through this method higher concentration of bioactive compound (citral) can be obtained which
is 2.1 time the concentration of steam distillation.

RAW MATERIAL REQUIREMENTS

Sl. No. Particulars Quantity (Ton) Value (Rs.)
1 Lemongrass (90%-98%) Citral 1000 8,50,000
2 Packaging material (Bottles & Caps, Chemicals) Lumpsum 50000

MANPOWER REQUIREMENT (per month)

Type Number Cost (Rs.)
Manager 1 20,000
Accountant 1 15000
Labour (2 skilled and 3 unskilled) 5 80,000
Total 7 1,15,000

IMPLEMENTATION SCHEDULE
Particulars Units Details
Land 0.5 Acre 50,00,000
Building/Unit Shed Lumpsum 1,00,000
Plant & Machinery
Two steam distillation units (Capacity 10 Q) INR 4,00,000
One rectification unit INR 12,00,000
One molecular distillation unit INR 20,00,000
Utilities (Boiler, Chiller, Pulverize, Chaff-cutter, Cooling tower etc.) INR 50,00,000
Genset (Power Backup) INR 10,00,000
Total 1,47,00,000

OTHER EXPENSES (PER MONTH):

Sl. No Particulars Cost (Rs.)
1 Electricity 10,000
2 Advertising & Traveling 10,000
3 Transport 20,000
4 Misc. Fixed assets (Furniture, etc.) 15,000
5 Contingencies, Communication & Stationery 10,000
Total 65,000

WORKING CAPITAL (per month)

Sl. No Particulars Cost (Rs.)
1 Raw Material 8,50,000
2 Salaries & Wages 1,15,000
3 Other expenses 65,000
 Total 10,30,000

TOTAL CAPITAL INVESTMENT

Sl. No Particulars Cost (Rs.)
1 Working Capital 10,30,000
2 Machinery 96,00,000
Total 1,06,30,000

COST OF PRODUCTION
Sl. No Particulars Cost (Rs.)
1 Total recurring cost per annum 1,23,60,000
2 Depreciation on machinery & equipment (10%) 9,60,000
3 Interest (10%) 12,36,000
Total 1,45,56,000

IMPLEMENTATION SCHEDULE
Project Stages Months
1 2 3 4 5 6
Rent Agreement
Ordering of Machinery
Delivery of Machinery
Term/Working Loan Sanction
Installation of Machinery
Commissioning of Plant
RM/Inputs Procurement
Manpower Appointments
Commercial Production

COST OF THE PROJECT

Sr. No Costing Heads Cost (in INR)
1 Land+ Building Expenses 51,00,000
3 Plant & Machinery 1,04,00,000
4 Contingency 1,00,000
Total Cost of Project 1,48,00,000

SALES PROCEEDS (PER ANNUM)

Sl. No Particulars Quantity (Kg) Value (Rs.)
1 Lemongrass Oil 7200 1,62,00,000
Total 1,62,00,000

PROFITABILITY (BEFORE INCOME TAX)

Sl. No Particulars Profit
 1 Annual Gross Profit (INR) = Annual Sales – 16,44,000
Annual Recurring Cost
2 % of profit on sales 10.15%
3 Break-even point analysis
A. Net sales (in Rs. lakh) 162
B. Variable cost
B1 Raw Materials 8.5
B2 Other expenses 0.65
B3 Interest on Working Capital Loan 12.36
Total variable cost 21.51
C. Contribution (A-B) 140.49
D. Fixed & Semi-fixed Costs
D1 Salary 13.4
D2 Repair & maintenance 1.0
D3 Interest on Term Loan 12.36
D4 Depreciation 9.6
Total fixed cost 36.36
E. BREAK EVEN POINT 72.60%

Break-even point
𝐴𝑛𝑛𝑢𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑋100
=%
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 − 𝐴𝑛𝑛𝑢𝑎𝑙 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
PROFITABILITY CALCULATIONS
Sr. No. Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Gross Sales (Lakh) 162 178.2 196.02 196.02 196.02
A Less: (Lakh)
1. Recurring Cost 102 112.2 123.42 123.42 123.42
2. Depreciation 9.60 10.56 11.62 11.62 11.62
3. Interest 12.36 13.60 14.96 14.96 14.96
B Production cost 145.50 160.05 176.06 176.06 176.06
C Gross Profit 16.44 18.08 19.89 19.89 19.89
Taxes @ 30% 4.9 5.4 6.0 6.0 6.0
Net Profit 11.5 12.7 13.9 13.9 13.9

References
● Lemongrass oil-Eiriiindia.org
● Rastriya krishi vikash yojana-Lemon grass oil
● Director of horticulture, Odisha- Lemon Grass Project-http://odihort.nic.in

● Video Link- https://youtu.be/pgQ51oTDL0M

MACHINERY SPECIFICATIONS
Product Name: Steam Distillation Unit

● Power 5KW
● Grass storage shed 35’ x 30’
● Distillation Shed
● Distillation Unit - Hydro-steam and lifting type, capacity 1.0 MT/batch made of 304 grade stainless
steel with all accessories
o Lid lifting gear
o Furnace, Accessories and Chimney
o Condenser
o Bore Well with Water pump (STW boring, 3HP Pump Set, pipes & fittings)

MANUFACTURES/ SUPPLIERS OF MACHINERY

● Arkchem Systems Private Limited, Office No. 308, Garden Plaza, Aundh-Ra BRT Road, Wakad,
Pune - 411057, Maharashtra, India
● Ylem Energy, 29/21, Gali no -6, Anand Parbat Industrail Area, New Delhi - 110005, Delhi, India
STATUTORY/ GOVERNMENT APPROVALS
There is statutory requirement of FSSAI license for setting up of food processing industry. Moreover, MSME
& GST registration, IEC Code for Export of end products and local authority clearance may be required for
Shops and Establishment, for Fire and Safety requirement and registration for ESI, PF and Labour laws may
be required if applicable. Entrepreneur may contact State Pollution Control Board wherever it is applicable.

DISCLAIMER:
This is an indicative illustration of project profile; the above calculation can vary with the locations. Only few
machine manufacturers are mentioned in the profile, although many machine manufacturers are available in
the market. The addresses given for machinery manufacturers have been taken from reliable sources, to the
best of knowledge and contacts. However, no responsibility is admitted, in case any inadvertent error or
incorrectness is noticed therein. Further, the same have been given by way of information only and do not
carry any recommendation.

DISCLAIMER:
"The document users/third parties shall verify the facts and figures at their end and shall be solely
responsible for any action taken by it based on this document. BRIEF & SIDBI, its directors,
employees or any office shall not be liable for loss of whatsoever nature arising by using the content
of this document."