POTATO CHIPS MAKING INTRODUCTION: India is one of ... - smallB

POTATO CHIPS MAKINGINTRODUCTION:India is one of the largest producers of potato. Besides being used as a daily food item in variousvegetable preparations, potato today increasingly finds use in the form of chips or wafers assnacks food. The potato chips and wafers are popular processed food items that giveconsiderable value addition to potatoes.MARKET POTENTIAL:The main consumers of potato chips and wafers are families especially in urban and semi-urbanareas. Besides, hotels, restaurants, canteens, army establishments require potato chips insignificant quantities.The leading brands are Lays, Binnies, Uncle chips, Ruffles, Bingos. These are priced at aroundRs 20.00 per pack of 90 gm i.e. around Rs 220/- per kg. It should be possible for tiny units insmall urban areas to sell potato chips at around Rs 170/- per kg. and this would enable thempenetrate in the market.In urban areas, the per capita consumption of potato chips or wafers may be conservatively taken½ Kg. per annum. The annual demand in a town having a population of 2 lakh is estimated at100000 Kg per year. A tiny unit could be set up with a capacity of 10000 to 15000 kg. In a townwith a population of 2 lakhs, if there are two units, they would be catering to only 25 to 30% of thedemand. Hence, there are good prospects for potato chips units especially near the potatogrowing areas.PLANT CAPACITY:A capacity of 9000 kg per annum and annual output of 6300 kg is suggested on the followingbasis.Processing capacity per day : 240 Kg.Average yield of wafer/chip : 12.5%Daily production per single shift of 8 hours : 30 Kg.Effective working days per year : 300 daysAnnual production capacity : 9000 kg.Capacity utilization : 70%Annual output : 6300 kg.RAW MATERIALS:Fresh potatoes are the main raw materials. Besides, edible oil is required as a frying medium andadditives such as salt and flavouring agents are required. Consumable is mainly packing materiali.e. polythene bags. The annual requirement of potato and edible oil corresponding to the annualproduction of 6300 tonnes per year is as follows:Fresh Potato : 50,000 kg.Edible oil : 4,000 Ltrs.The annual production of potato in the north-eastern region is about 9.42 lakh tones per year. It isgrown mainly in Assam, Meghalaya, Tripura, Nagaland and Arunachal Pradesh. The State-wiseproduction is as follows:Lakh tones/year2004-05___Assam : 5.89Meghalaya : 1.49Tripura : 1.06Nagaland : 0.20Manipur : 0.01Sikkim : 0.33Mizoram : 0.04Arunachal Pradesh : 0.40Total 9.42 lakh tones.184

PROCESS :The main process steps in the production of potato chips are –(A. Visual inspection and sorting of potatoes;(B. Washing;(C. Peeling and trimming;(D. Slicing and cutting;(E. Washing, sorting and dewatering;(F. Frying;(G. Cooling, salting and packing.MACHINERY:The main equipment required are –(A. Potato peeling machine cap. 40/50 kg per hour with 0.5 HP motor.(B. Slicing machine with arrangement to adjust thickness of slice complete withmotor etc.(C. Blancher(D. Spin dryer to extract excess moisture cap.4kg/charge taking 3 to 4 minutescomplete with motor.(E. Deep fat fryer(F. Electric polythene bag sealing machine upto 30cm wide.(G. Weighing machine.INFRASTRUCTURE:The main infrastructure requirements are –Shed : 1000 sq.ft.Power : 2.5 KWWater : 1600 ltrs/day.LOCATION:Keeping in view the availability of potatoes, the following locations are suggested.Assam : Barpeta, Mankachar, Tezpur, LakhimpurDibrugarh, Jorhat, Nagaon, Silchar.Meghalaya : Shillong, Tura, Williamnagar, Nongstoin,Jowai.Tripura : AgartalaArunachal Pradesh : TawangNagaland : Kohima, Mokokchung.Sikkim : Rumitek, Dentam, Brang, SomgochooTOTAL CAPITAL REQUIREMENT:The total capital requirement including fixed capital and working capital is estimated at Rs 4.29lakh as follows. Of this, the project cost comprising fixed capital and margin money on workingcapital is Rs 3.59 lakh.(Rs. lakhs)(A. Fixed Capital:Land and BuildingPlant & Machinery 2.25Misc. Fixed Assets 0.50Preliminary & Pre-operative expenses 0.45Total (A) 3.20B. Working Capital:Raw materials 7 days 0.12Packing material 2 months 0.08Stock of finished goods 7 days 0.19Working expenses 1 month 0.16Receivables 15 month 0.54185On rentTotal (B) 1.09Grand Total (A+B) 4.29 lakh

Note: Working capital may be financed as –Bank Finance: 0.70 lakhMargin Money: 0.39 lakhMEANS OF FINANCE:Promoter’s contribution and equity assistance (35%)Term Loan (65%)TotalRs 1.26 lakhRs 2.33 lakhRs 3.59 lakhOPERATING EXPENSESThe annual operating expenses are estimated at Rs 9.25 lakh as given below:Raw materials and consumables –(Rs. lakh)Potato 50,000 kg. 2.34[ (a) 33000 kg @ Rs 4/kg.for 8 months and(b) 17000 kg @Rs 6/kg.for 4 months]Edible oil 4000 Ltrs@ Rs 55/Ltr. 2.20Additives, flavours, chemicals 0.40Packing materials –Polythene bags, tin containers 0.50Utilities 0.40Wages & salaries 1.50Rent 0.36Other overheads 0.40Selling expenses @ 5% on sales 0.53Interest on term loan @12% 0.28Interest on bank finance @15% 0.11for working capitalDepreciation 0.23Total 9.25SALES REALIZATION:Sales realization of 6300 kg of Potato chips @ Rs 170/- per kg would be Rs 10.71 lakh.PROFITABILITY:Based on the sales realization and the operating expenses, the profit (pre-tax) at rated capacitywould be Rs 1.46 lakh per year. This works out to a return on investment of 34%. The plant wouldbreak even at about 46% of the rated capacity.HIGHLIGHTS:The major highlights of the projects are as follows:Total Capital requirement : Rs 4.29 lakhPromoter’s contribution : Rs 1.26 lakhAnnual Sales realization : Rs 10.71 lakhAnnual operating expenses : Rs 9.25 lakhAnnual Profit (Pre-tax) : Rs 1.46 lakhPre-tax return on sales : 14%Break-Even Point : 46%Number of persons employed : 4 Nos.186

MACHINARY SUPPLIER:1. M/s Gardener’s Corporation, 2. M/s Hindustan Engineering Co.,6, Doctor’s Lane, 25/31, Ropewalk Street,(Near gole Market)Rampart Row.Post Box No. 299,Fort,New Delhi – 110 001. Mumbai – 400 0233. M/s Raylons Metal Works, 4. M/s Prakash Machine Tools,J.B. Nagar,5, Khetra Das Lane,Kondivitta Lane,(Besides Broadway Hotel),Andheri, Kolkata – 700 012Mumbai – 400 0595. M/s B. Sen Barry & Co.65/11, Rohtak Road,Karol Bagh,New Delhi – 110 005.187