PROPOSAL FOR NEW SPICE BUSINESS ( BUSSINESS PLAN).pdf

slide 1
INTRODUCTION

Indian cuisine and lifestyle are heavily influenced by spices
India is known as the "home of spices" and is the largest consumer, producer, and exporter of spices
India produces around 75 of the 109 varieties listed by the International Organization for Standardization
In the fiscal year 2022, the export value of spices from India exceeded 300 billion rupees
Top importers of Indian spices include China, US, Vietnam, Hong Kong, Thailand, UK, UAE, Malaysia, Bangladesh, and Sri Lanka
Top exported spices and products include mint products, chilli, spice oils & oleoresins, turmeric, cumin, pepper, curry powders/paste, cardamom seeds, other spices (tamarind, asafoetida, and cassia), and garlic
The consumption of spices in Indian households is significant, with the market growing annually at 160,669.3 Crores
The masala business has great potential with low investment, including home-based spice making businesses.
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MARKET OPPORTUNITY IN INDIA
The Indian spices market is projected to reach approximately 900 billion INR  by 2023, with growth in the sector expects to be led by branded spices and spice mixes. India being the largest spice producing country producing 50 different types of spices people are looking for ready-made food, and spice powder makes their cooking more accessible. Hence the usage of the spice powder is increasing consistently and futuristic.
Powdered spices are convenient to use, and it saves time and physical efforts for preparing different delicious cuisine. Every commercial food industry like hotels, restaurants, catering business and many more are using powder spices on a daily basis.
slide 3
CHALLENGES FACED BY SPICE MANUFACTURING COMPANIES IN INDIA:

WORKING LABOUR ISSUE 
The pungent odour of spices which gives sharp sensation is not suitable for health if exposed for a more extended period. Hence there is always a significant issue of discovering working labour in the Indian spice industry.

MARKET CREDIT 
The credit market risk with distributers or mediators in the spice industry is always at high, and hence this leads as a significant challenge.

PACKAGING LEAKAGE 
There are many small scale industries in India where still hand-made packaging is done due to budget constraint, which results in packaging leakage. If they plan to opt hi-tech types of machinery, then costing is increased; hence this has always been the point of concern.

EXPANSION IS DIFFICULT BECAUSE OF HI-TECH MACHINERIES
Each day innovation is introduced, to keep updated and in trend, companies have to adapt to each change. For SME’s, it is challenging to expand themselves due to the introduction of new technology and this act as a challenge for brands.

A LOT OF COMPETITION 
The spice industry faces intense competition since the concentration of suppliers is more Its competition is often at the regional level. There are also many small local companies often operating in a specific location, and as the demand for authentic organic

1. FOUNDATION COURSE II
ASSIGNMENT –II :
PREPARE DPR OF YOUR NEW BUSSINESS VENTURE
PROPOSAL FOR NEW SPICE BUSINESS ( BUSSINESS PLAN)

2. INTRODUCTION
•Indian cuisine and lifestyle are heavily influenced by spices
•India is known as the "home of spices" and is the largest consumer, producer, and exporter of spices
•India produces around 75 of the 109 varieties listed by the International Organization for Standardization
•In the fiscal year 2022, the export value of spices from India exceeded 300 billion rupees
•Top importers of Indian spices include China, US, Vietnam, Hong Kong, Thailand, UK, UAE, Malaysia,
Bangladesh, and Sri Lanka
•Top exported spices and products include mint products, chilli, spice oils & oleoresins, turmeric, cumin,
pepper, curry powders/paste, cardamom seeds, other spices (tamarind, asafoetida, and cassia), and garlic
•The consumption of spices in Indian households is significant, with the market growing annually at
160,669.3 Crores
•The masala business has great potential with low investment, including home-based spice making
businesses.

3. TheIndianspicesmarketisprojectedto
reachapproximately900billionINRby
2023,withgrowthinthesectorexpectsto
beledbybrandedspicesandspicemixes.
Indiabeingthelargestspiceproducing
countryproducing50differenttypesof
spicespeoplearelookingforready-made
food,andspicepowdermakestheircooking
moreaccessible.Hencetheusageofthe
spicepowderisincreasingconsistentlyand
futuristic.
Powderedspicesareconvenienttouse,and
MARKET OPPORTUNITY IN INDIA
itsavestimeandphysicaleffortsforpreparingdifferentdeliciouscuisine.Everycommercialfoodindustrylikehotels,restaurants,cateringbusiness
andmanymoreareusingpowderspicesonadailybasis.

4. CHALLENGESFACEDBYSPICEMANUFACTURINGCOMPANIESININDIA:
•WORKINGLABOURISSUE
Thepungentodourofspiceswhichgivessharpsensationisnotsuitableforhealthifexposedforamoreextendedperiod.Hence
thereisalwaysasignificantissueofdiscoveringworkinglabourintheIndianspiceindustry.
•MARKETCREDIT
Thecreditmarketriskwithdistributersormediatorsinthespiceindustryisalwaysathigh,andhencethisleadsasasignificant
challenge.
•PACKAGINGLEAKAGE
TherearemanysmallscaleindustriesinIndiawherestillhand-madepackagingisdoneduetobudgetconstraint,whichresultsin
packagingleakage.Iftheyplantoopthi-techtypesofmachinery,thencostingisincreased;hencethishasalwaysbeenthepoint
ofconcern.
•EXPANSIONISDIFFICULTBECAUSEOFHI-TECHMACHINERIES
Eachdayinnovationisintroduced,tokeepupdatedandintrend,companieshavetoadapttoeachchange.ForSME’s,itis
challengingtoexpandthemselvesduetotheintroductionofnewtechnologyandthisactasachallengeforbrands.
•ALOTOFCOMPETITION
ThespiceindustryfacesintensecompetitionsincetheconcentrationofsuppliersismoreItscompetitionisoftenattheregional
level.Therearealsomanysmalllocalcompaniesoftenoperatinginaspecificlocation,andasthedemandforauthenticorganic
spicesincreasedthedemandformaintainingthequalityoftheproductraised.

5. BENEFITSOFHAVINGASPICEBUSINESSININDIA
Indiaisoneoftheleadingsourcesofthemostflavorfulspices.Thereareplentyofbenefitsandadvantagesthatencouragemore
individualstostarttheirspicebusinessinIndiafinally.Let’sexploreafewsubsidiesandschemesthatmakethespicebusinessa
profitableventureinIndia.
•Indianspicesboard:
Establishedin1987,itpromotestheexportanddevelopmentofIndianspices.•Govt.subsidyforinternationalspicesampleshipping:
SpiceexporterswithaspicehousecertificatecanreceiveRs.
50,000assistanceforsendingsampleabroad.
•Printingsubsidiesforpromotionalmaterials:
Registeredspiceexporterscanavailasubsidyofupto50%(maxRs.2
lakhs)forpromotionalmaterials.
•SubsidyforexportpromotionofIndianspice:
Spiceexporterwithrecognitioncangetaninterestfreeloanofupto100
%forlisting/slottingand50%forproductdevelopment(maxRs.2.5crore.)
•North–easternregionspiceprocessingsubsidy:
Provide33%aidforprimaryprocessingfacilities(maxRs.25lakhsper
beneficiary)and50%forfarmergroup(maxRs.35lakhs).
•Financialassistanceforinternationaltradeshows:
Reimbursementof50%ofairfarefortradefairParticipantsandstall
owner(maxRs.1lakhandRs.1.5lakhrespectively)

6. SPACEREQUIRED
•Choosingtherightlocationdependsonthescaleofthebusinessandbudget.Thestategovernmenthaverestrictiontostart
thefoodbusinessfromhomehenceensurethatthelocationisobeyingthelawofthegovernmentdecided.
•Nomassivespaceisrequiredwhenitcomestostartingabusinesswithspices,around250sqyardcanbeusedforprocessingof
piecesandother250sqyardisneededforthepackagingofthespices.
•Checkcommercialspacewherebasicamenitiesareavailablesuchaswater,electricity,etc.
•Makesurethelocationistransportationfriendlyandeasilyaccessibletothetargetmarket.
RAWMATERIALSREQUIRED:
Theessentialingredientsrequiredinspicepowderareungroundedspices,andalongwithrawmaterials,youwillneedpackaging
materialswhichwillactasprotectionofspicepowder.
MACHINERYREQUIRED:
Grindingmachineisnecessarymachineryrequiredinspicebusinessdependinguponthescaleofindustriestheequipmentisused.
LargescaleindustriesuseImpactPulverizermachinewhilesmallscaleindustriesuseDoublestagePulverizer.
Othermachinerysuchasspicegrinder,weighingscale,packagingmachine,compressor,androasterarealsorequired.

7. REGISTRATION&LICENSEREQUIREDFORSPICEBUSINESSININDIA
Asspicepowderispartofthefoodcategoryhence,ithastosatisfyalotofregulationsfromstategovernmentsuchasfollows,
1.CompanyRegistration:
RegistrationoffirmshouldbedonedependinguponthescaleofbusinessifitsPvt.Ltd.or
partnershiporsinglepersoncompany,thefirmisregisteredaccordingly.2.GSTRegistration:
GSTregistrationisalsoessentialtogainGSTnumber,whichisamust.
3.Udyam/MSMERegistration:
RegisteringbusinessthroughUdyamRegistration/MSMERegistrationwillhelptoavailthe
facilitiesandgrantfromtheStateGovernment.
4.TradeLicense:
ATradelicenseisadocument/certificatethatallowsanapplicanttostartaspecificbusinessorbusinessina
specificarea.Itisthereforenecessarytoobtainatradelicensefromthelocalauthorities.
5.FSSAIRegistration:
Spicepowderisafooditem,soyoumustobtainafoodprocessinglicenseorFSSAIregistration.
6.IECcode:
TheIECisthefirstregistrationrequiredforbusinessesimportingorexportinggoodsandservicesfromIndia.Itis
thereforenecessarytoapplyfortheIECcode.
7.BIScertification:
YoumustapplyforBIScertification,whichhasISIspecificationsforgroundspices
8.ISOCertification:
ISO9001company’sproductsandservicesmeetcustomerexpectationsandexcellentcustomersatisfaction.
ItisthereforeessentialforabusinesstoobtainISOcertification.
ItisadvisabletoobtainAGMARKcertificationalso.

8. SPICEMANUFACTURINGPROCESS
1.CLEANING:
Itisaveryinitialprocessforspicemakinginwhichtheungroundedspices
arecleanmanuallybyremovingimpuritieslikestone,dust,anddirt.
2.DRYING:
Aftercleaningandwashingprocessdisplaytheminsunlightsothattheydry,
thequalityofthespicepowderwilldependonthewell-driedspice.Ifpropercleaningand
washingdonottakeplace,itwillleadtothegrowthofbacteria,whichwillpoisonfood.
3.ROASTING:
Oncespicesaredried,theyaregoingthroughtheroastingprocess,the
roastingofthespicesisessentialbecauseitwillhelptogivethearoma,colourandgood
tastetospicepowder.
4.GRINDING:
Grindingmachineisusedforpulverizingtoconvertthespicesintopowder
form.
5.GRADING:
Thegradingisaprocesswhichisthebasisoftheinclusionandproportionof
spicesmixwiththeirrawmaterialused,alsodependsonthetypeofspices(flavour),size,
shape,density,andcolour.
6.SIEVING:
Makesurethatspicepowderhasauniformmeshsize
7.PACKAGINGOFSPICE:
Seasoningandspicesaddmassiveflavortoyourfavorite
dishes,buttoworktheirmagic,theymustbefresh;hencecorrectpackagingismandatory.
SpicesPackagingwillprotectyourspicesfromissuessuchasmoisture,puncture,odor,
andmore.Youarehenceguaranteeingthatyourseasoningsandspicesmakeitsafelyfrom
thewarehousetoyourcustomers’tastebuds.

9. BackUpPlan
•Diversifyproductrange:
Alongwithspices,newproductrangewillincluderelateditemssuchasspiceblends,seasonings,marinades,oreven
ready-to-cookspicemixes.Thiscanhelpyoucatertoawidercustomerbaseandmitigaterisksassociatedwithfluctuationsin
demandforspecificspices.
•Explorenewmarkets:
WhileIndiaisasignificantmarketforspices,considerexploringopportunitiesininternationalmarketsaswell.Thiscan
helpdiversifycustomerbaseandreducerelianceonanysinglemarket.Conductmarketresearch,identifypotentialexportmarkets,
andestablishrelationshipswithdistributorsorimportersinthoseregions.
•Investintechnologyandautomation:
Toimproveefficiencyandreduceoperationalcosts,investingintechnologyandautomation.Thiscouldincludeupgrading
processingandpackagingequipment,implementinginventorymanagementsystems,orutilizingdigitalmarketingstrategiesto
reachawideraudience.
•Buildstrongrelationships:
Nurturerelationshipswithsuppliers,aswellasyourcustomers,toensureasteadysupplyofqualityspicesandaloyal
customerbase.Maintainstrongcommunicationchannels,offerexcellentcustomerservice,andconsiderloyaltyprogramsor
partnershipstoretaincustomers.
•Createacontingencyfund:
Setasideacontingencyfundtocoverunexpectedexpensesordownturnsinthemarket.Thisfundcanprovideabuffer
duringchallengingtimesandhelpsustainbusinessuntilconditionsimprove.
•Monitormarkettrends:
Stayupdatedonmarkettrends,consumerpreferences,andregulatorychangesinthespiceindustry.Thiswillenableto
adaptbusinessstrategiesaccordinglyandstayaheadofthecompetition.

10. Capital Investment (INR in Lacs)
SrNo Particulars Total
1 Land & Site Development Exp. 20.00
2 Buildings 25.30
3 Plant & Machineries 29.15
4 Motor Vehicles 4.00
5 Office Equipment 9.90
6 Technical Knowhow Fees & Exp. 2.50
7 Preliminary& Pre-operative Exp. 0.50
8 Provision for Contingencies 1.20
9 Margin Money -Working Capital 18.62
TOTAL 123.17
APPENDIX 1: CAPITAL INVESTMENT
Means of Finance (INR in
Lacs)
Sr
No
ParticularsTotal
1Capital 33.10
2
Long/Medium Term
Borrowings
90.07
TOTAL 123.17
APPENDIX 2:
MEANS OF FINANCE

11. Plant and Machineries (in INR)
SrNo Designation Number Price
1 Washing and Cleaning Machine 1 3,00,000
2 Automatic spice grinding machine 2 4,20,000
3 Tray Dryer 2 6,00,000
4 Digital weighing balance 2 95,000
5 Masala mixer machine 2 1,00,000
6 Powder Filling and Packaging Machine 1 5,00,000
7 Lab Testing Equipment 2,00,000
8 Electrical Fittings 5,00,000
9 Miscellaneous Equipment 2,00,000
Total 29,15,000
Total cost of Plant and Machineries is 29.15 Lacs
APPENDIX 3: PLANT AND MACHINERIES

12. Details of Manpower (in INR)
SrNo DesignationNumberSalary /Person/ MonthAnnual Cost
1 Accountant 1 18,900 2,26,800
2 Manager 1 22,000 2,64,000
3 Mechanic 2 11,000 2,64,000
4 Helpers 3 10,000 3,60,000
5 Labours 6 9,000 6,48,000
6 Security 2 8,400 2,01,600
Total 15 19,64,400
Totalmanpower15,Add:benefits@30%:INR5,89,320soTotalannual
wages:INR25,53,720(Annualincreaseinwages7%)
APPENDIX 4: DETAILS OF MANPOWER

13. Basic Revenue Projections (INR in Lacs)
SrNo Particulars Year 1Year 2Year 3Year 4Year 5
1 Turnover 658.70724.57797.03876.73964.40
2 Cost of Operations 628.50687.68758.10835.92921.89
3 Gross Profit 30.2036.8938.9340.8142.51
4
Earnings Before Interest, Tax,
Depreciation and Amortization
(EBITDA)
30.2036.8938.9340.8142.51
5 Profit Before Tax 3.8221.0526.0930.3534.02
6 Profit After Tax 2.2214.7418.2621.2523.81
APPENDIX 5: BASIC REVENUE PROJECTIONS

14. Break even capacity at maximum capacity utilisation
Sales ₹6,58,70,357
Variable cost ₹1,15,29,705
•Running and maintenance cost ₹98,80,554
•Interest on Working capital ₹53,500
•Electricity expense ₹15,95,652
Difference ₹5,43,40,652
Fixed costs ₹43,06,838
Wages and salaries ₹25,53,720
Depreciation ₹5,57,250
Fixed charges for office ₹1,44,000
Electricity fixed charge ₹1,50,000
Insurance cost ₹82,300
Interest on TL ₹8,19,568
Particulars Rs. per kg Rs. per kg
Average Sales price per kg ₹230.00
Average Cost of Production
Input Raw Material cost ₹200.00
Electricity cost ₹4.57
Running and maintenance ₹2.00
Packing charges ₹2.00
Selling expense ₹1.00
Interest on working capital ₹0.80
Total cost of production ₹210.37
Average Profit per unit ₹19.63
Total Sales in number of Units for BEP 2,19,001
Total BEP % 76.61 %
Inidealsituationifthesaleis100%
achievedfromday1ofbusinessstart
thenConsideringBEP77%thebreak
evenwillcomein10monthsonly

15. 1st year (50%) 2nd year (70%) 3rd year (90%)
Yearly Sales ₹ 3,29,35,178.50 ₹ 4,61,09,249.90 ₹ 5,92,83,321.30
MonthySales ₹ 27,44,598.21 ₹ 38,42,437.49 ₹ 49,40,276.78
Total Sales in number of Units @
230 rs/ unit
1,43,196 2,00,475 2,57,754
Fixed costs
₹ 43,06,838.00 ₹ 43,06,838.00 ₹ 43,06,838.00
Average Profit per unit
₹ 19.63 ₹ 19.63 ₹ 19.63
Total Sales in number of Units for
BEP
2,19,401 2,19,401 2,19,401
Yearly Sales should be done to
match BEP
₹ 5,04,62,187 ₹ 5,04,62,187 ₹ 5,04,62,187
Daviationfrom BEP ₹ -1,75,27,009 ₹ -43,52,938 ₹ 88,21,134