INTRODUCTION

Spices play an important role in enhancing the flavour and taste of the processed foods. On
account of their ability to impart flavour and aroma, spices have been used in the preparation of
a wide variety of processed foods. Spices are required in preparing appetizing and digested
beverages and confectionary, soup powders, sauces, instant curries, canned meat and poultry
products etc. Spices are also used in the medicines because of their carminative stimulating and
digestive properties. Demand for processed spices is directly linked with its consumption in
food processing industry and this is set to grow in coming years with growth of population and
fast changing food habits as well as increase in purchasing power of the middle and upper class
households. Considering the potential market opportunity of such units, the present detail
project report has been developed. The main objective of such initiative is to productively
utilize the abundantly available resources of the local area and to enable uninterrupted supply of
the products to market throughout the year.

PROJECT DESCRIPTION
The proposed project is that of setting up of a Spice Grinding and Packaging unit at H.M.T area
of Srinagar Kashmir.
The key products of the proposed project are as follows;
 Chili Powder
 Jeera Powder
 Turmeric Powder
 Dhania Powder
Spices are used all over the country and the unit can go on adding new products once achieves
stability in the market.
The proposed project would procure the raw materials from the farm level available locally.
After processing, the products would be supplied to the market through distributors/
wholesalers/retailers.

MARKET PROSPECT
There is good scope for domestic market for this commodity in processed form. The demand for
spice powder is increasing day by day with the changing attitude as well as improvement in
purchasing power of the people. The products find good market in urban as well as rural areas
of the state.
Marketing plan of the proposed project may include good quality maintenance, promotional
campaign like offering special discounts, referrals, advertisement and tying up with buying
houses.
TECHNOLOGICAL PROCESS
The processes involved are as follows:
 Washing
 Peeling & cutting
 Drying
 Grinding/pulverizing
 Mixing
 Packing/loading/supply
PROCESS DETAILS:
(i) Washing: First of all, the spices are washed with water to remove impurities.
(ii) Peeling & Cutting to Small Pieces: Some spices require peeling and cutting to small pieces.
Such spices are peeled with hand knives.
(iii) Drying: Spices are spread on the floor to provide sun drying. At times, mechanical dryers
are also used. Tray type dryer is most suitable.
(iv) Grinding/ Pulverising: Spices are grinded in dry form.
(v) Mixing: After all the above operations, various spices for different purposes are mixed
together.
(vi) Packaging: At the end, spices powder is packaged in automatic form, fill and sealing
machine.
(vii) Transportation and Marketing: Thereafter, the products are transported and supplied to the
bulk purchasers.

CONSUMABLES, POWER, HUMAN RESOURCES AND UTILITY

The major consumables required are as follows;
1. Turmeric, Chili, Jeera and Dhania.
2. Packaging Materials including secondary packaging.
POWER:
The total requirement of power for the project is 16.92 KW. The total power supply would be
distributed in the following way;
 Plant & Machinery - 14.92 KW
General Lighting - 2.00 KW
UTILITY:
WATER: Constant flow of water would be necessary in the operation of the plant. Water
would be obtained from bore well and can be stored in an overhead tank, from where it will be
supplied to the required areas. Process water should be free of mud and suspended particles.
OTHER UTILITIES: Other utilities includes fuel etc. those should be locally available.

HUMAN RESOURCES:
Particulars of Employee Numbers Salary/ Month Cost/ annum
(Rs) (Rs)

Manager 1 12500 150000

Sales Person 4 8250 396000
Skilled Workers 2 6250 150000
Semi-Skilled Workers 3 5000 180000
Unskilled Workers 4 4500 216000
Expenses on salary in
the 1st year 1092000

INSTALLED CAPACITY
The installed production capacity of the unit per annum is as follows;
Turmeric Powder - 25 Ton
Chilli Powder - 15 Ton
Jeera Powder - 10 Ton
Dhania Powder - 10 Ton
PROJECT COST ESTIMATES AND MEANS OF FINANCE
MEANS OF FINANCE:
The Proposed Project Cost of Rs. 19.09 Lakhs would be in the following manner as shown
below.
1. Loan from bank/fi @ 60% = 11.454 lakhs
2. Promoters contribution @ 40% = 7.636 lakhs
 Total = 19.09 lakhs

TOTAL PROJECT COST:

The Capital cost of the project would be estimated on the basis of installed capacity assuming
200 working days per annum. The total cost of the Project including margin for working capital
has been estimated at Rs. 19,09,000.00 as detailed below

Particulars Amount (Rs. lacs)

Land & Site development Own Land/ On Lease
Building & Civil Works 6.00
Plant & Machinery 6.22
Misc. Fixed Assets 2.00
Preliminary & Pre-operative Expenses 2.00
Contingencies & Escalation @ 5% 0.51
Working Capital 2.36
TOTAL 19.09

PLANT & MACHINERY:

The total cost of Plant & Machinery has been estimated at Rs.6,22,000.00 as detailed below
Particulars Qty Amount (Rs)
Pulveriser with Motor and accessories 2 510000
Disintegrator with Motor 1
Hot Air Dryer 2
Sieving Machine 1
Automatic Form Fill and Sealing Machine 1
Manual Packaging Machine 2
Platform Weighing Scale 1
Aluminium Top Working Tables 3
Washing Tanks, SS Utensils, Trays - 30000
and Laboratory Equipment’s
Miscellaneous Equipment’s - 25000
Subtotal 565000
Add: Taxes, transportation and 56500
installation etc @ 10%
TOTAL 621500

ECONOMIC VIABILITY AND FINANCIAL ANALYSIS

COST OF PRODUCTION:
The cost of production has been estimated annually. The various cost components taken into
account are cost of administrative expenses, consumable stores, utilities, wages and salaries,
repairs and maintenance, insurance, interest rates, taxes, depreciation. etc.

REPAIR & MAINTENANCE:

Cost under Repair and Maintenance expenses have been assessed by charging 1% on Land &
Building, 2% on Machineries and 1.5% on Fixed Assets on first year with increase of 2% on
subsequent years
DEPRECIATION:
In calculating the cost of operation, depreciation @ 10% would be calculated under straight line
method after absorbing the pre-operative and contingencies expenses.

FINANCIAL CHARGES:
The interest on proposed term loan amount of Rs. 11.454 Lakhs has been calculated@ 8% being
the rate of interest.

NET PROFIT:
The proposed project is expected to generate profit from the first year of operation itself and
will gradually increase with increase in capacity utilisation.

FINANCIAL ANALYSIS:
The break-even point, internal rate of return of the proposed project is determined.
SUMMARY OF THE PROJECT

Sl. No. Particulars Description

A. Project Description
1. Proposed Project Spice Grinding and Packaging Unit

2. Capacity of the Plant/Unit Turmeric Powder: 25 Ton

(At 100% capacity) Chili Powder: 15 Ton
Jeera Powder: 10 Ton
Dhania Powder: 10 Ton

Total : 60 Ton
B. Project Cost
1. Land Own Land/ On Lease
2. Civil Works & Buildings Rs.6,00,000.00
3. Plant & Machinery Rs.6,22,000.00
4. Fixed Assets Rs.2,00,000.00
5. Pre-operative Expenses Rs.2,00,000.00
6. Contingency & Escalation Rs.51,000.000
7. Margin for Working Capital Rs.2,36,000.00
Total Rs.19,09,000.00
C. Means of Finance
1. Equity @ 40% Rs.7,63,600.00
2. Loan from Bank @ 60% Rs.11,45,400.00
Total Rs.19,09,000.00
D. Basic Assumptions
1. Power Rate Per Unit Rs.6.00/- Per Unit
2. Interest Rate Term Loan: 8%; WC Loan: 12%
 SKUAST-K

COLLEGE OF AGRICULTURAL
ENGINEERING AND TECHNOLOGY

Project report on “Spices Grinding and Packaging”

Submitted by: Hilaas Ahmad

Reg.no. : MTAE/2018/71
Instructor: Dr Shazad Faisal