FINANCIAL ANALYSIS OF

PRODUCTION
OF MUSTARD OIL IN MALDA

(1)INTRODUCTION:-

(A)IMPORTANCE:

Mustard oil is the 3rd largest edible oil in the world after soybean oil and palm oil. The
production level of mustard oil is 13-14 million tons which occurred 12% of world’s total
edible oil production. India produces mustard seed around 5 million tones and the mustard oil
and mustard oil cake production of India is approx. 1.3 million tons and 2.4 million tons
simultaneously per year. India is self-sufficient in mustard seed and oil as import and export
of the commodity is almost non-existent

However India exports around 400000tons of oilcakes. Cultivation of mustard is between

October-November and February-March. Major growing areas are Rajasthan, UP and
Haryana.

Broadly 7 varieties of mustard are grown in India. the most popular varieties are
Brassicajuncea,Brassicacampestris, BrassicanapusL.

For thousands of years fats and oils have been important in food preparation in India.
Mustard oil is one of the most used edible oils in north, east and north eastern India.
 The oil is having nutritional and medicinal values. The people who live in cold regions
prefer to use this oil because it helps to retain heat in the body.

Being important source of edible oil and feed meal to the country mustard is undoubtedly
the focus of Indian edible oil industry. The seasonal nature of production of mustard seed and
its high susceptibility of natural fallacies, wide consumption spread all through the year,
while mustard seeds are abundantly produced in most parts of India, its milling or grinding is
mostly done by the large centralized plants which have the advantages of high efficiency and
reduced cost due to economics of scale.

The viability of any oil extraction unit considerably depends on the scale of oil cake, which
is extensively used as animal feed and other sub-product. Hence the location of unit has to be
essentially in those areas where the raw materials are locally available in abundance.

NUTRITIONAL IMPORTANCE OF MUSTARD OIL(100gm):-

1.Energy 884 kcal

2.Protein 0g

3.Carbohydrate 0g

4.Fat 100g

5.Saturated fatty acids 9.6g

6.Monounsaturated fatty acids 64.5g

 7.Polyunsaturated fatty acids 25.9g

8.trans fatty acids 0g

9.Cholesterol 0g

10.Vitamin E 40mg

11.Added vitamin A 750mcg

12.Added vitamin B 5mcg

Oil seeds occupy an important place in the agricultural and industrial economy of our
country. India is perhaps the only country in the world having the largest no of commercial
varieties of oil seeds. Besides cooking purpose it is also used in preparation ofpickles. The
mustard oil cakes (By product)is used as cattle feed.

SOME USE OF MUSTARD OIL:

We can use mustard seed as a spice in our daily food but if we extract oil from the seed we
can use it as a edible oil and other purposes. The health benefits of mustard oil can be
attributed to its properties as a stimulants, irritants, appetizer, antibacterial, antifungal, insect

AS COOKING OILIN PREPARATION OF PICKLE

Repellent, hair vitalizer, cordial diaphoretic, anti-hematic and tonic substances. This is also
very important in curing of cold, cough, headache, body pain and aches, congestion caused
by cold, and its massage is good for muscular growth. When gums are massaged with
mustard oil it strengthen them and also protect them from decay.
(B)OBJECTIVES:-

(1)To assess the price spread and marketing margin of mustard oil.

(2)To study financial analysis of mustard oil.

(3)To study the value addition over mustard seed.

(4)To analyse the socio economic condition of the owners of the mustard oil units.

(5)To assess the adoption of technology and production of mustard oil extraction.

(6)To study the problems of oil extractors in the study area.

(7)To analyse the future prospects of the unit in the study area.

(8)To make strategies for survival of oil extraction unit in the study area.

(2)FIELD OF STUDY:-

I visited a mustard oil mill located at Malda Town which is the main administrative centre
of Malda district of West Bengal. It is a municipal corporate area(Englishbazar).Englishbazar
block is served by Englishbazar police station. So the region is well connected by railways
and roadways with Siliguri, Kolkata, and Bihar. The NH-34 is within 1 km from the oil mill
and the railway station is also situated within 2 km distance approx.

(3)MARKET POTENTIAL:-

Due to peculiar food habits and preparation methods Indians use large quantities of edible
oil every day. With growing population demand is increasing every year and the country is
importing semi processed edible oil since long. Mustard oil is preferred as a cooking medium
by the people of North-East region of India including West Bengal. The tiny units are aimed
to cater to local market and there is abundant potential to meet local requirement. Due to
consumption in household and pickle industry it appears to be good scope for establishing
mustard oil units.

(4)METHOD OF DATA COLLECTION:-

To collect some essential primary data for the project on “Financial analysis of production
of mustard oil in Malda” I visited the nearby oil extraction unit named “SARBAMANGALA
OIL & DALL MILL” P.O & DIST.-MALDA (WEST BENGAL), Manufacturers& Suppliers
of “PADMA MARKA” pure mustard oil.

Then I called on with Sri Nava Kumar Das, the owner of the extraction unit. At first he was
not ready to give me their financial information but after long approach and hearing the
purpose of data collection he gave answers to my questions such as processing method of
mustard oil, name and cost of instruments and machineries, salary of the labour, buying price
of mustard seed and selling price of mustard oil and oil cakes etc. Thereafter I took some
photographs of the instruments and processing methodology. I also learnt some other projects
on mustard oil from internet. At last based on all the primary and secondary information
collected from the owner of the oil mill and internet I completed my project on mustard oil.

(5)TECHNICAL ASPECTS:-

(A)MACHINERY AND EQUIPMENTS-

a) Ghani:-A ghani is a mortar and pestle device which grinds mustard oilseeds into fine
particles and extract oil from it.it can extract 30% oil from mustard seed. the mortar is made
from iron and pestle is made with either stone or iron. There is a wooden stick tied into
mortar for continuous agitation of grinded seeds. The ghani pairs are fixed to the floor and it
works by the electrical energy of motor. There are 7 pair of working ghanis(at a time) in the
mill.
GHANI

Usually the power source is a motor harnessed to a long lever arranged to turn the pestle
inside the mortar. A batch of mustard oilseed is loaded into the mortar. As the mortar moves
the lever around the mortar, the pestle grinds the oilseed inside. This process is continued for
1 hour and under such conditions like 5% moisture content and 30 degree Celsius
temperature. These conditions are vital for chemical reaction which leads to oil extraction
from seeds. The extracted oil is expelled by the kneading action of the pestle through the hole
in the bottom of the mortar; the oil is collected in a container. Then the worker brought the
ghani to halt and the residue of seeds is removed from mortar by hand. Another batch of
seeds is placed in the mortar and the process is repeated.

b) Oil expeller:-

An expeller press is a screw type machine that presses the grinded oil seed collected from
mortar of ghani to extract excess oil from it and produce mustard oil cake. It can extract up to
5% oil from the grinded residue of seeds. The machine presses the oil seed through a caged
barrel like cavity. Raw materials enter from one side of the press and waste product exit from
the other side. The machine uses a friction and continuous pressure from the screw drives to
and compresses the seed material. There is a small opening that does not allow seed fibre
solids to pass through, only extracted oil can pass through this opening. Afterward the
pressed seeds are formed into a hardened cake which is removed from the machine. Pressure
involved in expeller pressing generates heat in the range of 60-99°C. There was 5 oil
expellers in the oil mill, among them one was large in size (king size) and rest 4 expellers are
medium in size.

Oil cake is collected here Oil is collected here

OIL EXPELLER

c) Oil filter:-

It is a large rectangular machine which is used to filter the mustard oil extracted from seeds
in ghani and expeller respectively and make the oil pure and ready for packaging. It is a cloth
filter. This machine is connected with a big container where non purified oil is kept, with a
pipe line. The non-purified oil runs through the layers of cloth in the machine and purified oil
comes out after purification within a particular opening and then goes to another big oil
container through pipe. The cloth is changed twice in a year.
OIL FILTER (CLOTH FILTER)

d) Motor:-

An electrical motor is an electrical machine that converts electrical energy to mechanical

energy. The reverse of this would be the conversion of mechanical energy to electrical energy
and is done by an electrical generator. In normal motoring mode most electric motor operate
through the interaction between an electric motor’s magnetic field and winding currents to
generate force within the motor. In certain applications such as in transportation industry with
traction motors, electric motors can operate in both motoring and generating modes. There
was a 50HP motor working in the mill. It was sufficient to pull the total workload of the oil
mill.

e) Strainer (Chalna):-

There was a strainer (commonly known as chalna) to remove dust and foreign particles
before use. It is actually a shaker with double net. It works by the electrical power of motor.
By this machine stones , sand, dirt, and split seeds can be removed easily and only the quality
seeds are collected which can be used for oil extraction.
STRAINER (CHALNA)

f) Oil container (Tin):-

After filtration the purified oil is poured in containers (Tin) of various shape and size as per
market requirement.

Oil Container (Tin)

g) Weight or volume measuring equipment:-

They are devices to measure weight or calculate mass. It is required to make appropriate
ratio of raw ingredients needed to get good quality and appropriate quantity of mustard oil.

(6)PROCESS OF MANUFACTURE:-
 On crushing mustard seeds oil and oil cake are obtained. The average oil content varies
from in the seed is 33-35%. The remaining is obtained as cake which is rich in protein and is
used as animal feed ingredient.

In the processing of mustard oil seeds are prepared at first and then oil extraction is done in
the following ways-

(a)The mustard seeds are emptied from the sack onto a dry and clean floor.

(b) Then the seeds are dried in sun for some days.

(c) Then the sun dried seeds are transferred to the strainer (chalna) and they are cleaned by
shaking by removing dust, soil, stone and other foreign materials.

(d) Then the cleaned seeds are placed manually into the ghanis. Some water is added to the
ghanis. The seeds are grinded for one hour in 5% moisture content and 30ºC continuously
under the supervision of workers.

(e) After one hour extracted oil are collected and then the grinded seed residue are collected
from the mortar manually.

(f) Then the collected seed residues are transferred to the oil expeller. The seeds are passed
through the expeller and the extracted oil is collected and from other end oil cakes are also
collected.

(g)Then the total amount of oil collected from ghanis and expeller are stored in a huge tank.

(h) From this tank oil is transported to the filter through pipes and the non-purified oil is
passed through the cloth filter and after filtration the purified oil is collected and stored in a
container,

(i) The filtered edible oil is filled into the containers which are subsequently sealed and
labelled for marketing. And the oil cakes are filled into sacks (50kg/sack) for sale.

FLOW CHART-

Mustard seeds are collected

Seeds are dried in sun

Seeds are cleaned to remove dust and foreign particles

Particular proportion of cleaned seeds+water is grinded in ghanis for 1 hour

Oil is collected and grinded seed residue is transferred to oil expeller

Extracted oil and cake is collected from oil expeller

Collected oil is passed through the filter cloth

Purified oil is filled in containers

The containers are sealed and labelled

Mustard oil cakeMustard seed oil

Generally the oil content depends on quality of seeds. So seed quality plays a vital role in
mustard oil industry. The oil content of black sarson is higher (around 35%) than Rai
(extractable oil content 20-25%). But it is a difficult task to distinguish both these seed
varieties because they are so similar in shape, colour and odour. They can be distinguished
only by experienced eyes. So selection of good quality seed is very essential for getting
higher yield of high quality edible mustard oil.

(6) FINALCIAL ASPECT:

(A) FIXED COST-

(a) Land and building – Own

(b) Construction of building –Rs. 250,000

(c) Equipment and machinery –

SL.NO Description Quantity(Nos.) Value(Rs.) Total(Rs.)

1 Oil expeller 5 150000 750000
2 Cloth filter 2 50000 100000
3 Ghani 8 pair 60000 480000

4 Strainer(Chalna) 1 20000 20000

5 Motor (50HP) 1 100000 100000
TOTAL= 1,450,000

Electrification and installation @10% of M/C cost= 145,000

Office furniture and chair for customer = 1,000

Pre-operative expenses @ 5 %( approx.) = 72,500

(d) Implantation of machinery – Rs. 20,000

Total fixed cost = 1,938,500

(B) VARIABLE COST (per month)-

a) Personnel -

SL. NO. Designation No. Salary (Rs.) Total (Rs.)

1 Manager(self) 1 20,000 20,000

2 Skilled worker 7 7,800 54,600

(260 per day)
Total = 74,600

Perquisites @ 10% of salary = Rs. 7,460

Total = Rs. 82,060

(b) Raw materials –

 Sl. No. Raw materials Quantity Rate Total(Rs.)

1. Mustard seed 20,000 kg Rs.37/kg 740,000

2. Empty tins 450 pieces Rs.30/piece 13,500

Total = 753,500

(c) Utilities –

Electricity per month (3000 units @ Rs. 9.5 per unit) = Rs. 28,500

(d) Other contingent expenses –

Sl. no Description Amount (Rs.)

1. Telephone 250

2. Repair & Maintenance 1500

3. Lubricants 200

4. Transport charge 2000

Total = 3,950

(C) TOTAL CAPITAL INVESTMENT (per month) –

Fixed cost - Rs. 1,938,500

Variable cost - Rs. (82,060+753,500+28,500+3,950)

= Rs. 868,010

Total = Rs. 2,806,510

(7) FINANCIAL ANALYSIS:-

(A)COST OF OPERATION (per annum) –

Sl. No. Description Amount (Rs.)

 1. Total recurring cost per year 10,416,120

2. Depreciation on machinery & Equipment @10% 145,000

3. Depreciation on office furniture & fixtures @20% 200

4. Interest on total investment @13% 364,846.30

Total 10,926,166.30

(B) TURNOVER –

Sl. No. Total sales(per month) Quantity(kg) Rate(Rs./kg) Total (Rs.)

1. Mustard oil 7000 97.5* 682,500

2. Mustard oil cake 13000 25 325,000

Total = 1,007,500

(*Wholesale rate of mustard oil = Rs. 95/kg and Retail rate of mustard oil = Rs. 105/kg.
We take average rate of mustard oil for calculation)

Per annum total turnover = Rs. (1,007,500*12)

=Rs. 12,090,000

(8) IMPRESSION:-

(A) Gross profit (per annum) – Rs. 12,090,000

(B) Net profit (per annum) – Turnover – Cost of production

=Rs. (12,090,000- 10,926,116.30)

=Rs. 1,163,883.70

(c) Output-Input Ratio – Gross profit / Total recurring expenditure

= (Rs. 12,090,000 / 10,926,116.3)

= 1.1065
(9) VALUE ADDITION OVER MUSTARD SEEDS:-

To calculate the value addition over mustard seed I took 1 kg mustard seed as unit
quantity. From 1 kg seeds almost 350 g (35%) oil and 650 g (65%) residue or oilcake is
obtained.

Buying price of 1 kg mustard seed = Rs. 37

Selling price of 1 kg mustard oil is = Rs. 97.5

Selling price of 350 g mustard oil = Rs. 34.125

Selling price of 1 kg oilcake = Rs. 25

Selling price of 650 g oil cake = Rs. 16.25

Now, total selling price of mustard oil and oilcake obtained from 1 kg mustard seed is = Rs.
(34.125+16.25) = 50.375

Personnel expenses over 1 kg mustard seed = Rs. 4.103

Buying of tin expenses over 1 kg mustard seed = Rs.0.675

Electricity charge over 1 kg mustard seed = Rs. 1.425

Other contingent expenses over 1 kg mustard seed =Rs. 0.1975

Total expenses over 1 kg mustard seed= Rs. (37+4.103+0.675+1.425+0.1975)

= Rs. 43.4005

So, Total profit on 1 kg mustard seed = Rs. (50.375-43.4005)

= Rs. 6.9745

FLOW CHART OF VALUE ADDITION -

PERSONNEL
(Rs.4.103) TIN (Rs.0.675)
 Oil (350g)

(Rs.34.125)

(10)INFERENCE:-

As the output-input ratio is 1.1065(>1), the project is financially viable.

(11)CONCLUSION:-

Production of mustard oil from mustard seeds provides a gainful employment to the people
supplements a good amount of economy and supports their livelihood. It is a good industry to
invest money, it gives healthy returns, for these reason it requires more investment from
higher companies.