Model Detailed Project Report

CHILLI POWDER
Under the Formalization of Micro Food Processing Enterprises Scheme

(Ministry of Food Processing Industries, Government of India)

Prepared by

Indian Institute of Food Processing Technology (IIFPT)

Pudukkottai Road, Thanjavur, Tamil Nadu
Ministry of Food Processing Industries, Government of India

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 TABLE OF CONTENTS

Model Detailed Project Report ........................................................................... 1

1 Executive Summary .................................................................................... 4
2 Objective Of The Project............................................................................. 7
3 Project Profile .............................................................................................. 8
4 General overview of RED Cilli production, clusters, phm and value addition in
india ...................................................................................................................... 9
4.1 Introduction ................................................................................................................. 9
4.2 Origin, Distribution And Production Of Chilli ............................................................... 9
4.3 Health Benefits And Nutritional Importance ............................................................. 10
4.5 Cultivation, Bearing And Post-Harvest Managements ............................................. 12
4.6 Processing And Value Addition In India ................................................................... 14
5 Model Chilli Powder Processing Under FME Scheme ........................... 15
5.1 location Of Proposed Project And Land ................................................................... 15
5.2 Installed Capacity Of Pocessing Plant ..................................................................... 15
5.3 Raw Material Requriment For The Unit .................................................................... 15
5.5 Processing Process .................................................................................................. 16
5.6 Maekrt Demand And Supply For RED CHilli POWDER .......................................... 18
5.7 Detail Rroject Assumptions ...................................................................................... 18
5.8 Machinery Sappliers ................................................................................................. 27
6 Limitations Of Model DPR And Guidelines For Entrepreneurs ............ 28
6.1 Limitations Of Model DPR ........................................................................................ 28
6.2 Guidelines For Enteprenures ................................................................................... 28

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 LIST OF TABLES

TABLE 1 Project at Glance ................................................................................................................................... 5

TABLE 2 Project Description ................................................................................................................................ 8
TABLE 3 Nutritional Composition Of Chilli ........................................................................................................... 11
TABLE 4 Project Details ...................................................................................................................................... 18
TABLE 5 Fixed Capital Investment ...................................................................................................................... 19
TABLE 6 Working Capital Requirments ............................................................................................................... 20
TABLE 7 Total Project Cost ................................................................................................................................. 21
TABLE 8 Means Of Finance ................................................................................................................................ 21
TABLE 9 Expenditure, Revenue And Profitability ................................................................................................ 21
TABLE 10 Repayment Schedule .......................................................................................................................... 22
TABLE 11 Assets Depreciation ............................................................................................................................ 23
TABLE 12 Financial Assessment Of Project ........................................................................................................ 24
TABLE 13 Break Even Analysis ........................................................................................................................... 25

LIST OF FIGURES

FIGURE 1 Chilli crop ............................................................................................................................................ 12

FIGURE 2 Harvesting of Chilli .............................................................................................................................. 13
FIGURE 3 Red Chilli Powder Process Flowchart ................................................................................................. 16
FIGURE 4 Pia chart for Better Understanding Of Expences Of EACH Head ...................................................... 26
FIGURE 5 Plant Layout ........................................................................................................................................ 26

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1 EXECUTIVE SUMMARY

Chili powder (also spelled chile, chilli, or, alternatively, powdered chili) is the dried, pulverized fruit of
one or more varieties of chili pepper, sometimes with the addition of other spices (where it is also
sometimes known as chili powder blend or chili seasoning mix).It is used as a spice (or spice blend) to
add pungency (piquancy) and flavor to culinary dishes.

Chili powder is sometimes known by the specific type of chili pepper used. Varieties of chili peppers
used to make chili powder include Aleppo, ancho, cayenne, chipotle, chile de árbol, jalapeño, New
Mexico, pasilla, and piri piri chili peppers. Gochugaru is a variety used in Korean cuisine traditionally
made from sun-dried Korean red chili peppers known as taeyang-cho, with spicier varieties using
Cheongyang peppers. Kashmiri chili powder is bright red, but mild in heat and used in Indian cuisine,
named after the region of Kashmir.

India is one of the largest consumer and exporter of chillies. It consumes around 6.2 million tonnes i.e.
about 90% of the total produce of the country. The demand from the chilli powder-producing sector
constitutes 30% of total production in the country.

Demand for Indian chilli in Malaysia, Bangladesh, Sri Lanka and USA has been growing on an average
between 20 - 25% because of its quality and price competitiveness.

Andhra Pradesh is the largest producer of Chilli in India and contributes about 26% to the total area
under Chilli, followed by Maharashtra (15%), Karnataka (11%), Orissa (11%), Madhya Pradesh (7%)
and other states contributing nearly 22% to the total area under Chilli

INDIAN CHILLI PRODUCTION

Other States

Andra Pradesh

Madhya Pradesh

Maharashtra

Orissa Karnataka

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 TABLE 1
PROJECT AT GLANCE

1 Name of the proposed project Chilli Processing Unit

2 Name of the entrepreneur/FPO/SHG/ Cooperative
3 Nature of proposed project
4 Registered office
5 Project site/location
6 Names of Partner (if partnership)
7 No of shareholders (if company/FPC)
8 Technical advisor
9 Marketing advisor/partners
1 Tonn/day (60, 70 & 80%
10 capacity utilization in the 2nd,
3rd and 4th years’ onwards
Proposed project capacity respectively)
11 Raw materials Chilli Processing Unit
12 Major product outputs Chilli Powder
13 Total project cost : Rs. 21.78 Lakhs
· Land development, building & civil : construction Rs. 3.50 Lakhs
· Machinery and equipment’s : (Lakhs) Rs. 11.14 Lakhs
· Utilities (Power & water facilities) : (Lakhs) Rs. 0.7 Lakhs
· Miscellaneous fixed assets : (Lakhs) Rs. 0.8 Lakhs
· Pre-operative expenses : (Lakhs) Rs. 0.9 Lakhs
· Contingencies : (Lakhs) Rs. 2.00 Lakhs
· Working capital margin : (Lakhs) Rs. 2.74 Lakhs
14 Working capital requirement
· 2nd year (Lakhs) Rs. 5.48 Lakhs
· 3rd year (Lakhs) Rs. 6.52 Lakhs
· 4th year (Lakhs) Rs. 7.53 Lakhs
15 Means of Finance
· Subsidy grant by MoFPI (max 10 lakhs) : : Rs. 10.00 Lakhs
· Promoter’s contribution (min 20%) Rs. 4.36 Lakhs
· Term loan (45%) : Rs. 7.42 Lakhs
16 Debt-equity ratio 0.28
17 Profit after Depreciation, Interest & Tax
· 2nd year (Lakhs) Rs. 22.47 Lakhs
· 3nd year (Lakhs) Rs. 18.98 Lakhs
· 4nd year (Lakhs) Rs. 22.60 Lakhs
18 Average DSCR 5.79

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 19 Benefit-Cost Ratio 1.28
20 7 Years with 1year grace
Term loan repayment period
21 Payback period for investment 1 years 5 months

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2 OBJECTIVE OF THE PROJECT

The Prime Objective of the Report is to present a Viable Bankable Model of “Red Chili Powder
Processing Unit” through adoption of appropriate technology, utilization of resources, quality
production and suitable market strategy.

Some important objectives behind setup of “Red Chili Processing Unit” are:

ü The prime objective is to setup this unit is to produce & make available quality product in most
hygienic conditions with good packaging, untouched & with very less human interference during
entire operations till market.

ü To produce & market safe, quality-assured products with highest nutrient value than existing one.

ü Improve customer’s nutrition by allowing them to consume quality processed product.

ü Empowering the lifestyle of promoter by adopting proper techniques in production and marketing of
final product.

ü Proper utilization of land, water, labour & other resources for better plant economics.

ü Employment generation for youth and women in surrounding areas.

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3 PROJECT PROFILE

TABLE 2
PROJECT DESCRIPTION

PARTICULARS DESCRIPTION

Project Name “SET UP OF RED CHILLI POWDER PROCESSING UNIT”

Project Location

Project Area 5000 Sq Ft

Project Proposed Economic Activities Setup of Chilli Powder Processing Unit

Project Capacity/Annum Chilli Powder Processing Unit

ü 450 kg / Day Capacity

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4 GENERAL OVERVIEW OF RED CILLI PRODUCTION, CLUSTERS, PHM AND VALUE ADDITION
IN INDIA

4.1 INTRODUCTION

It is known as the most valuable crop of India. It is used as a principle ingredient of various curries and
chutneys, also used in vegetables, spices, condiments, sauces and pickles. Pungency in chillies is due
to the active constituent "Capsaicin", an alkaloid. The native home of chilli is considered to be Mexico
with secondary origin of Guatemala. Chilli was introduced in India by the Portuguese in Goa in the
middle of 17th century and since then it had rapidly spread throughout the country. Capsaicin has many
medicinal properties, especially as an anti-cancerous agent and instant pain reliever. It also prevents
heart diseases by dilating blood vessels. Major chilli growing countries are India, China, Pakistan,
Indonesia, Korea, Turkey and Sri Lanka in Asia; Nigeria, Ghana, Tunisia and Egypt in Africa; Mexico,
United States of America in North & Central America; Yugoslavia, Spain, Romania, Bulgaria, Italy and
Hungary in Europe and Argentina, Peru and Brazil in South America. India is the world leader in chilli
production followed by China & Pakistan. Andhra Pradesh, Maharashtra, Karnataka, Orissa, Tamil
Nadu, Bihar, UP and Rajasthan are the main chilly growing states.

Chilli is one of the most important commercial crops of India. It is grown almost throughout the country.
There are more than 400 different varieties of chillies found all over the world. It is also called as hot
pepper, cayenne pepper, sweet pepper, bell pepper, etc. Its botanical name is “Capsicum annuum”.
The world’ shortest chilli “Naga Jolokia” is cultivated in hilly terrain of Assam in a small town Tezpur,
India. Different varieties are grown for vegetables, spices, condiments, sauces and pickles. Chilli
occupies an important place in Indian diet. It is an indispensable item in the kitchen, as it is consumed
daily as a condiment in one form or the other. Among the spices consumed per head, dried chilli fruits
constitute a major share. Currently, chilies are used throughout the world as a spice and also in the
making of beverages and medicines. If some varieties of chillies are famous for red colour because of
the pigment ‘capsanthin,’ others are known for biting pungency attributed to ‘capsaicin.’ India is the only
country which is rich in many varieties with different quality factors. Chillies are rich in vitamins,
especially in vitamin A and C. They are also packed with potassium, magnesium and iron. Chillies have
long been used for pain relief as they are known to inhibit pain messengers, extracts of chilli peppers
are used for alleviating the pain of arthritis, headaches, burns and neuralgia. It is also claimed that they
have the power to boost immune system and lower cholesterol. They are also helpful in getting rid of
parasites of gut.

4.2 ORIGIN, DISTRIBUTION AND PRODUCTION OF CHILLI

Chilies are known from pre-historic times in Peru. They are believed to have originated in the tropical
America. It is also said that chillies have originated in the Latin American regions of the New Mexico
and Guatemala as a wild crop around 7500BC, as per the remains of the pre-historic Peru. The people
native to these places domesticated this crop in and around 5000 BC,. Chilli is said to be the first ever
domesticated crop in America. The three species C. annuum, C. frutescens and C. chinense evolved
from a common ancestor located in the North of the Amazon basin (NW-Brazil, Columbia). Further
evolution brought C. annuum and C. frutescens to Central America, where they were finally

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domesticated (in México and Panamá, respectively), whereas C. chinense moved to the West and was
first put to cultivation in Perú. Two other species were first cultivated in Western South America: C.
baccatum in the Peruvian lowlands and C. pubescens at higher elevations, in the Andes (Perú, Bolivia,
Ecuador). At that time, chillies were cultivated by the farmers together with a primary crop to protect the
primary crop from any damage from birds. Columbus carried chilli seed to Spain in 1493. The cultivation
of chilli and Capsicum spread rapidly from Spain to Europe. The Portuguese brought capsicum from
Brazil to India during the year 1584. Chillies became popular in the whole of Asia rapidly and native
Asians started cultivating this crop as well. The south Asian climate suited this crop, and since its
introduction in the 16 century has been increasingly cultivated in south Asia. Chillies are the cheapest
spices available in India and are eaten across all groups of people. The most important chilli growing
states in India are Andhra Pradesh, Maharashstra, Karnataka and Tamil Nadu, which together
constitute nearly 75 percent of the total area. Andhra Pradesh tops the list in dry chilli production
followed by Tamil Nadu, Maharashtra, Orissa and Karnataka.

4.3 HEALTH BENEFITS AND NUTRITIONAL IMPORTANCE

Pungency in chilli is due to the alkaloid “capsaicin” contained in the pericarp and placenta of fruits, it
produces mild to intense spice when eaten. Capsaicin is a potent inhibitor of substance P, a
neuropeptide associated with inflammatory processes. The hotter the chili pepper, the more capsaicin
it contains. The hottest varieties include Naga Jalokia, habañero and Scotch bonnet peppers. Jalapeños
are next in their heat and capsaicin content, followed by the milder varieties, including Spanish
pimentos, and Anaheim and Hungarian cherry peppers. Capsaicin is being studied as an effective
treatment for sensory nerve fiber disorders, including pain associated with arthritis, psoriasis, and
diabetic neuropathy. When animals injected with a substance that causes inflammatory arthritis were
fed a diet that contained capsaicin, they had delayed onset of arthritis, and also significantly reduced
paw inflammation.

Fresh Chilli peppers are very rich in vitamin C: i.e. 111.0 mg. per 74 grams in comparison to only 37
mg. in oranges, which makes them very effective as immune system stimulants and healing agents
especially for cellular damage. Many folk remedies recommend Chilli pepper in wound cleaning
preparations for gangrene and open sores and even as a styptic, though more modern sources
generally advise against using Chilli on broken skin. While drying, Chilli loses most of its vitamin C, it
increases the vitamin A content by 100 times. Vitamin A is a powerful anti-oxidant and anti-inflammatory
agent. Chilli preparations have been used as a gargle to treat sore throat and laryngitis. Surprisingly, it
has been shown that Chillies do not aggravate or cause stomach ulcers. In fact, they have a
preventative effect, as stomach ulcers are mostly caused by bacteria and it’s antibacterial action kills
such bacteria. In folk-medicine they have also long been used to treat worms. Chilli has a very beneficial
effect on the circulatory system. Studies have shown that it counter act on cholesterol build up and
reduces platelet aggregation, thus reducing the risk of heart attacks and strokes. It also lowers high
blood pressure and increase peripheral circulation.

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 TABLE 3
NUTRITIONAL COMPOSITION OF CHILLI

Value {Per 100 gm}

Parameters CHILLIES DRY CHILLIES (GREEN)

Moisture 10.000 gm 85.700 gm
Protein 15.000 gm 2.900 gm
Fat 6.200 gm 0.600 gm
Minerals 6.100 gm 1.000 gm
Fibre 30.200 gm 6.800 gm
Carbohydrates 31.600 gm 3.000 gm
Energy 246.000 K cal 29.000 K gm
Calcium 160.000 mg 30.000 mg
Phosphorus 370.000 mg 80.000 mg
Iron 2.300 mg 4.400 mg
Vitamins
Carotene 345.000 µg 175.000 µg
Thiamine 0.930 mg 0.190 mg
Riboflavin 0.430 mg 0.390 mg
Niacin 9.500 mg 0.900 mg
Vitamin C 50.000 mg 111.000 mg
Minerals & Trace
Elements
Sodium 14.000 mg --
Potassium 530.000 mg --
Phytin Phosphorus 71.000 mg 7.000 mg
Magnesium -- 272.000 mg
Copper -- 1.400 mg
Manganese -- 1.380 mg
Molybdenum -- 0.070 mg
Zinc -- 1.780 mg
Chromium -- 0.040 mg
Oxalic Acid -- 67.000 mg
Caloric values
Chili (Dry) 297
Chili (Green) 229

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4.5 CULTIVATION, BEARING AND POST-HARVEST MANAGEMENTS

Harvesting is done when the pods are well ripened and partially withered in the plant itself. The
harvested pods are kept in heaps either indoor or in shade away fromdirect sun light for 2 or 3 days so
as to develop uniform red colour and then dried in the sun by spreading them on clean dry polythene
sheets, cemented / concrete drying yards etc. Pods are spread out in thin layers for uniform drying with
frequent stirring to prevent mold growth and discolouration. The dried pods are heaped and covered by
clean gunny bags / polythene sheets. The moisture content of dry pods are kept at 8- 10 %. Improved
drying system could be used to ensure cleanliness and uniform colour of the product.

FIGURE 1
CHILLI CROP

Climate Requirement for Chilli Farming

The chili is a plant of tropical and sub -tropical region -It grows well in warm and humid climate and a
temperature of 20-25°C. Low moisture in soil during blossom development and fruit formation causes
the bud, de blossom and fruit drops. Excessive rainfall is detrimental to the crops, because it brings
about defoliation and rotting of the plant. As a rained crop, it is grown in areas receiving an annual
precipitation of 25-30 inches.

Soil Requirement for Chilli Farming

Chilli can be grown in a range of soils, but black soils which retain moisture for long periods are suitable
for rainfed crop whereas well drained soils, deltaic soils and sandy loams are good under irrigated
condition. However, in hills of Uttarakhand, chilli are grown in a wide range of soils ranging from sandy
to clay loam mixed with gravel and coarse sand.

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 FIGURE 2
HARVESTING OF CHILLI

Post-harvest Management:-

Harvesting is done when the pods are well ripened and partially withered in the plant itself. The
harvested pods are kept in heaps either indoor or in shade away from direct sun light for 2 or 3 days so
as to develop uniform red colour and then dried in the sun by spreading them on clean dry polythene
sheets, cemented / concrete drying yards etc. Pods are spread out in thin layers for uniform drying with
frequent stirring to prevent mold growth and discoloration. The dried pods are heaped and covered by
clean gunny bags / polythene sheets. The moisture content of dry pods are kept at 8- 10 %. Improved
drying system could be used to ensure cleanliness and uniform colour of the product.

After removing the extraneous matters like plant parts, etc. well dried pods should be packed in clean,
dry gunny bags and stored ensuring protection from dampness. Dunnage should be provided to stack
the packed bags to prevent moisture ingress from the floor. Care should be taken to stack the bags at
50 –60 cm away from the wall. Storing chilies for longer period may lead to deterioration. However, if
cold storage facilities are used, the product may be stored for 8-10 months. Insects, rodents and other
animals should be effectively prevented from getting access to the premises where chilli is stored.

1. Harvesting should be done during early mornings, It should be avoided during rains or just after
rains.
2. While harvesting fruits, care should be taken to hold stalks firmly and fruit should be pulled
upward gently, breaking the base of the stalk.
3. For dry chilies, care should be taken that the fruit should not be ripened or over ripened.
4. The harvesting should not be delayed as delayed harvesting gives poor quality produce.
5. The harvested fruits should be heaped indoor for 2-3 days, so that the partially ripe fruits, allows
the whole produce to develop a uniform red colour.
6. The best temperature for ripening is 22-25 C and direct sunlight is to be avoided since this can
result in development of white patches.
7. The ripen pods should be dried in the sun spreading them on clean dry polythene sheets,
cemented drying yard.
8. The moisture content of dry pods should be kept at 8-10%
9. Reverting solar dryer are used for drying helps in reducing of drying time.

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 10. Chillies should be stack at 50 to 60 cms. away from the wall.
11. Periodic fumigations during storage with methyl bromide and phosphine is useful to control
insects.
12. The product should not be stored for longer period except in case of cold storage with moisture
proof plastic liners (polythene bags) preferably between 0-10 C with 65 to 70 percent humidity.
13. If possible while transporting from field, plastic field crates in places of sacks may be used to
avoid mechanical damage.

4.6 PROCESSING AND VALUE ADDITION IN INDIA

Processed products such as dehydrated chilli, pickle, powder, paste, sauce, etc., can be prepared for
higher returns. Generally growers sell chilli directly even though real return can come only from
processed products. Hence, farmers must be educated in the processing of chilli for value addition.

Juice of chilli brings a warming flush to the skin and eased soreness. Capsicum has a tonic and
carminative effect and is especially useful in a tonic dyspepsia. Pungent types of chillies are used by
the pharmaceutical industry in the preparation of stimulant and counter irritant balms and in stomach
ache, carminative and stimulant formulation.

The pungency in chilli is due to the alkaloid capsaicin contained in the pericarp and placenta of fruits.
Capsaicin is a key ingredient in many liniments and together with other chemical compounds found in
chilli peppers is prescribed in the treatment of rheumatism and bruises. It is also used to treat stomach
aches involves poor functioning of stomach muscles. Capsaicins are also being used in clearing the
lungs and sinuses, enhance the flow of digestive juices, which trigger the brain to release endorphins
(natural pain killers), help to neutralize cavity causing acids, protect the body against cancer through
anti oxidant activity. Because of capsaicin’s specific excitatory and neurotoxic properties on c-fibres,
capsaicin has been extensively used for relieving pain and thermo regulation. Capsicum is administered
in the form of powder, tincture, lineament, plaster, ointment, medicated roll etc. Two types of pain relief
products are currently being marketed including cream containing 0.75 percent capsaicin (eg. Zostrice
TM) and plaster containing three percent oleoresin (Vorwek-TM). It also corrects bowel disorders and
it prevents the formation of puss in the wound and because the red-hot chilli pepper is an inhospitable
place for bacteria, its extracts have been used as antibacterial agents.

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5 MODEL CHILLI POWDER PROCESSING UNDER FME SCHEME

5.1 LOCATION OF PROPOSED PROJECT AND LAND

The entrepreneur must provide description of the proposed location, site of the project, distance from
the targeted local and distant markets; and the reasons/advantages there of i.e. in terms of raw
materials availability, market accessibility, logistics support, basic infrastructure availability etc.

The ideal locations for establishment of exclusive Chilli Powder processing unit are in the production
clusters of Chilli growing states/Areas such as Andhra Pradesh, Karnataka, West Bengal, Uttar
Pradesh, Gujrat, Tamil Nadu and Maharashtra where adequate quantities of surplus raw materials can
be available for processing.

5.2 INSTALLED CAPACITY OF POCESSING PLANT

The maximum installed capacity of the Processing unit in the present model project is proposed as 150
tonns/annum or 500 kg/day input capacity of Chilli. The unit is assumed to operate 300 days/annum @
8-10 hrs/day. The 1st year is assumed to be construction/expansion period of the project; and in the
2nd year 70 percent capacity, 3rd year 80 percent capacity and 4th year onwards 90 percent capacity
utilization is assumed in this model project.

5.3 RAW MATERIAL REQURIMENT FOR THE UNIT

A sustainable food processing unit must ensure maximum capacity utilization and thus requires an
operation of minimum 250 days per year to get reasonable profit. Therefore, ensuring uninterrupted raw
materials supply requires maintenance of adequate raw material inventory. The processor must have
linkage with producer organizations preferably FPCs through legal contract to get adequate quantity
and quality of raw materials which otherwise get spoiled.

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5.5 PROCESSING PROCESS

FIGURE 3
RED CHILLI POWDER PROCESS FLOWCHART

Harvesting

Drying

Shorting/ Grading

Stem Cutting

Crushing/ Milling

Sieving

Packing

Harvesting
Harvesting is done when the pods are well ripened and partially withered in the plant itself. The
harvested pods are kept in heaps either indoor or in shade away from direct sun light for 2 or 3 days so
as to develop uniform red colour.

Drying
Drying in the sun by spreading them on clean dry polythene sheets, cemented / concrete drying yards
etc. Pods are spread out in thin layers for uniform drying with frequent stirring to prevent mold growth

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and discolouration. The dried pods are heaped and covered by clean gunny bags / polythene sheets.
The moisture content of dry pods are kept at 8- 10 %. Improved drying system could be used to ensure
cleanliness and uniform colour of the product.

Shorting and grading

Sorting is the process of grouping according to size, shape, weight, image and color. Grading is pre-
requisite for development of the modern marketing, trade and economy of any commodity. The Indian
chillies are graded mostly by farmers on the basis of colour and size, before they are brought in the
market. The damaged discoloured and immature pods are removed depending on market demand.
However, at traders level the other important quality parameter are moisture and stalks. Excess
moisture add weight to the pods but give room to various fungi to grow. Similarly, if the stalk of the pods
is broken, exposing the seeds entirely, the seeds may fall out. On the other hand in absence of optimum
moisture the pods may break and let off the seeds. Thus the seed and pod ratio in a lot is also a valuable
parameter of grade.

Dry Cleaning

Cleaning the spice prior to packaging and sale, is to ensure that the spice is of the highest quality and
will obtain the highest price. Cleaning should remove all the foreign matter that lowers the quality and
endangers the sale. The first step majorly is of de-stoning & leaf removing. Vibratory sieves are used
to remove sand, small stones, seeds & dust particles & air blower is used to remove leafs.

Steam Cutting

Chillies stem cutting machine is generally used to cut the stem of the red chillies in bulk amount saving
the time and labour costs. By using this machine the red chillies stems are easily cut. This machines
are generally used in mirchi powder making companies.

Crushing/ Milling

Process of milling is commonly also known as grinding process. Under this process the crushed parts
are milled & grinded to powder form. After 2-3 rounds of proper grinding fine chili powder is obtained.

Sieving

Centrifugal sifter with fine mesh can be used & replaced with traditional sifters. The internal shaft with
rubber blades rotate to break the lumps along with it passing through desired size of fine mesh to get
smooth fine chili powder.

Powder chilli packing

Red Chilli Powder Should having 8% moisture content for safe storage. Mostly packed in plastic
pouches.

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5.6 MAEKRT DEMAND AND SUPPLY FOR RED CHILLI POWDER

Indian states like Andhra Pradesh, Gujarat, Rajasthan, Orissa and Madhya Pradesh are the five leading
states for the production of spices. The new age urban population around the world is extremely health
conscious which is causing rise in demands for organic spices. The three biggest clients of spice
manufacturers include retail, industrial and catering sector. Andhra Pradesh leads the country in the
production of chilli, with 49% Spices are generally sold at premium spices and also in greater demand
which can further enhance export revenues in major spice producing countries. Spices farming
mechanism starts at grass root level conserving the generative and renewing capacity of the soil, plant
nutrition, and soil management, yields nutritious food rich in vitality which has resistance to diseases.
Increasing demand of natural flavoring and coloring agents in food, medicinal properties and health
benefits are driving the spices market. There is high demand for spices from regions like Asia Pacific,
Middle East and Europe.

5.7 DETAIL RROJECT ASSUMPTIONS

This model DPR for Chilli powder unit is basically prepared as a template based on certain assumptions
that may vary with capacity, location, raw materials availability etc. An entrepreneur can use this model
DPR format and modify as per requirement and suitability. The assumptions made in preparation of this
particular DPR are given in This DPR assumes expansion of existing Red Chilli Processing unit by
adding Red Chilli Powder Processing line. Therefore, land and civil infrastructures are assumed as
already available with the entrepreneurs.

Herewith in this DPR, we have considered the assumptions as listed below in the tables of different
costs, which may vary as per region, seasons and machinery designs and supplier.

TABLE 4
PROJECT DETAILS
Detailed Project Assumptions
Parameter Value
1 Capacity of the processing unit 500 Kg/Day input Capacity of Chilli
2 Utilization of capacity 1st year implementation, 60% in 2nd year, 70% in
3rd year and 80% in 4th year onwards.
3 Working days per year 300 days
4 Working hours per day 8 hrs.
5 Interest on term and working 12%
capital loan
6 Repayment period Seven years with one-year grace period is
considered.
7 Average prices of raw material Rs. 70/Kg.
8 Final Product Chilli Powder

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9 Recovery Rate 90%
10 Average Selling Price 140 Rs/Kg

TABLE 5
FIXED CAPITAL INVESTMENT

Sr. Particulars Size/ Quantity Total Unit Amount

No. Dimensions / (No) Area Cost (Rs) Amount
Specification (Sq (Rs) (Lakh)
ft)
A Capital Investment 1 Plot 3,50,000 3.50
Capital Investment 3,50,000
3.50
B Machinery & Equipment’s
1 Micro pulveriser with 1MT/hr 1 260000 2,60,000 2.60
10 HP
motor starter and all
accessories
2 Hanging weighing 100 kg 1 17000 17,000 0.17
Scale
3 Digital Weighing 100 kg 2 4,300 8,600 0.09
Machine
4 Band Sealer 2 2159 4,318 0.04
5 Packaging Machinery 2000 pack/ hr 1 650000 6,50,000 6.50
6 Sieving m/c. 15 kg/ hr 2 82,000 1,64,000 1.64
7 Miscellaneous 1 10000 10,000 0.10
Machinery & 11,13,918 11.14
Equipment’s
C Other Costs
C1 Utilities & Fittings
1 Water 70,000 0.70
2 Power
Total 70,000
0.70
C2 Other Fixed Assets
1 Furniture & Fixtures 80,000 0.80
2 Electrical Fittings
Total 80,000
0.80
C3 Pre-operative
Expenses

Model DPR On Chilli Powder Processing Unit Page 19

1 Legal Expenses, 90,000 0.90
Start -up Expenses,
Establishment Cost,
Consultancy fees,
Trials and others
2 Plastic Tray Capacity
3 Electrical Fittings
Total 90,000 0.90
C4 Contingency 2,00,000 2.00
Total 2,00,000 2.00
C Total Cost
(C1+C2+C3+C4) 4.40
4,40,000
II Total Cost (I+F+G) 19,03,918 19.04

TABLE 6
WORKING CAPITAL REQUIRMENTS
Sr. No. Description Quantity Unit Total Cost Total Total
Rate/ Kg (Rs) /Day Cost Cost
(Rs) / (Rs) /
Month Year
1 Chilli 500 70
35,000 8.75 87.50
2 Packaging Material 1,000 3.5 3,500
(1 kg or ½ Kg) 0.88 8.75
3 Labour - Cleaning, 12 300/day 3,600
Stem Removing 0.90 9.00
4 Supervisor / Manager 1 500/ day
600.00 0.15 1.50
5 Electricity 360
0.09 0.90
6 Transportation 500
0.13 1.25
7 Miscellaneous 300.00
0.08 0.75
Total Cost 43,860.00 10.97 109.65
Working Capital Margin 2,74,125.00 2.74
20%

Model DPR On Chilli Powder Processing Unit Page 20

 TABLE 7
TOTAL PROJECT COST

Sr. No. Particulars Amount In Lakhs
i Land Development & Building Structure 3.50
ii Plant & Machinery 11.14
iii Other Fixed Assets 2.40
iv Working Capital Margin 2.74
v Contingency 2.00
vi Total Project Cost 21.78

TABLE 8
MEANS OF FINANCE
Sr. No. Particulars Amount In Lakhs
i Subsidy 10.00
ii Promoters Contribution 4.36
iii Term Loan 7.42
Total Means of Finance (1 to 3) 21.78

TABLE 9
EXPENDITURE, REVENUE AND PROFITABILITY
PARTICULARS+A2:G45 YEAR
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr
Capacity % - 60.00 70.00 80.00 90.00 100.00
A. INCOME
Sales of Chilli Powder - 95.45 112.47 129.82 147.51 165.53

Total - 95.45 112.47 129.82 147.51 165.53

B.EXPENSES
Raw Material - 52.50 62.48 72.10 81.90 91.88
Consumables - - - - - -
Packing cost - 5.25 6.25 7.21 8.19 9.19
Transportation cost - 0.75 0.89 1.03 1.17 1.31
Direct employee cost - 6.30 7.50 8.65 9.83 11.03
Depreciation - 2.46 2.13 1.85 1.60 1.39
Office Rent -
Plant Electricity Cost - 0.54 0.64 0.74 0.84 0.95
Miscellaneous - 0.45 0.54 0.62 0.70 0.79
Office Expenses - 0.66 0.73 0.80 0.88 0.97

Model DPR On Chilli Powder Processing Unit Page 21

Telephonic Expenses - 0.06 0.60 0.66 0.73 0.80
Indirect Employee - 0.50 0.50 0.50 0.50 0.50
Repair & Maintenance - 0.50 1.50 1.65 1.82 2.00
Audit, Accounts & - 0.44 0.44 0.48 0.53 0.59
Compliance
Insurance 0.5 2 2 2 3
Total Cost - 70.91 86.19 98.49 111.11 124.03

Add :- Opening Stock - 8.39 9.93 11.46 13.02

Less :- Closing Stock - 8.39 9.93 11.46 13.02 14.61

Cost of Sales - 62.52 84.65 96.96 109.55 122.44

GROSS PROFIT - 32.93 27.81 32.86 37.96 43.09

- 34.50% 24.73% 25.31% 25.73% 26.03%
FINANCE EXPENSES
Interest on Term Loan 0.89 0.82 0.69 0.57 0.44 0.31

Interest On CC - - - - -
Total Interest 0.89 0.82 0.69 0.57 0.44 0.31

PROFIT BEFORE TAX -0.89 32.11 27.12 32.29 37.52 42.78

INCOME TAX (30%) -0.27 9.63 8.14 9.69 11.26 12.83

PROFIT AFTER TAX -0.62 22.47 18.98 22.60 26.26 29.94

TABLE 10
REPAYMENT SCHEDULE
Year Outstandi Disburs Total Surplus Interest Repay Total o/s Balanc
ng loan at e- ment outstan for payme ment of outgo Loan at e left
start of yr. ding repaym nt principa the end
Loan ent l of the
yr.
1 -0.00 1.57 0.89 0 0.89 7.42 0.68
7.42 7.42
2 9.35 0.82 1.06 1.88 6.36 7.47
7.42 7.42
3 14.97 0.69 1.06 1.76 5.30 13.21
6.36 6.36

Model DPR On Chilli Powder Processing Unit Page 22

 4 18.29 0.57 1.06 1.63 4.24 16.66
5.30 5.30
5 4.24 21.91 0.44 1.06 1.50 3.18 20.41
4.24
6 3.18 25.13 0.31 1.06 1.37 2.12 23.75
3.18
7 2.12 26.42 0.19 1.06 1.25 1.06 25.17
2.12
8 1.06 31.40 0.06 1.06 1.12 (0.00) 30.28
1.06

TABLE 11
ASSETS DEPRECIATION
PARTICULARS YEAR
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr
Land & Building Structure
Opening Bal. 3.50 3.15 2.84 2.55 2.30
Additions 3.50
Less :- Depreciation @ 10% 0.35 0.32 0.28 0.26 0.23

Closing Bal. 3.50 3.15 2.84 2.55 2.30 2.07

PARTICULARS YEAR
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr
Plant & Machinery
Opening Bal. 11.14 9.47 8.05 6.84 5.81
Additions 11.14
Less :- Depreciation @ 15% 1.67 1.42 1.21 1.03 0.87

Closing Bal. 11.14 9.47 8.05 6.84 5.81 4.94

PARTICULARS YEAR
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr

Model DPR On Chilli Powder Processing Unit Page 23

Other Required Material &
Accessories
Opening Bal. 4.40 3.96 3.56 3.21 2.89
Additions 4.40
Less :- Depreciation @ 10% 0.44 0.40 0.36 0.32 0.29

Closing Bal. 4.40 3.96 3.56 3.21 2.89 2.60

TOTAL DEPRECIATION -
PARTICULARS YEAR
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr
Land & Building Structure - 0.35 0.32 0.28 0.26 0.23
Plant & Machinery - 1.67 1.42 1.21 1.03 0.87
-
-
Other Required Material & - 0.44 0.40 0.36 0.32 0.29
Accessories
TOTAL DEPRECIATION - 2.46 2.13 1.85 1.60 1.39

TABLE 12
FINANCIAL ASSESSMENT OF PROJECT
YEAR
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr 8th yr
Cost 124.03
19.04 70.91 86.19 98.49 111.11 125.05 125.57
Benefit
- 95.45 112.47 129.82 147.51 165.53 167.19 168.86
Discounting
Rate 0.91 0.83 0.75 0.68 0.62 0.56 0.51 0.47
P.V Cost
17.31 58.60 64.75 67.27 68.99 70.01 64.17 58.58
P.V Benefit
- 78.88 84.50 88.67 91.59 93.44 85.79 78.78

Total P.V Cost 469.69
Total P.V Benefit 601.64

Benefit Cost Ratio 1.28

Model DPR On Chilli Powder Processing Unit Page 24

 TABLE 13
BREAK EVEN ANALYSIS
PARTICULARS Year
1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr
Annual Production
in Kg - 67,500 78,750 90,000 1,01,250 1,12,5 1,12,5
00 00
Revenue
- 95.45 112.47 129.82 147.51 165.53 167.19
Selling Cost Per -
Kg 141.40 142.81 144.24 145.68 147.14 148.61

Office & General

Expenses - 1.16 1.77 1.94 2.14 2.35 2.59
Depreciation
- 2.46 2.13 1.85 1.60 1.39 1.21

Total Fixed Cost

- 3.62 3.90 3.79 3.74 3.74 3.79
Total Fixed Cost -
Per Kg 5.36 4.95 4.21 3.69 3.33 3.37

Total Variable -
Cost 64.80 77.11 88.99 101.09 113.40 113.40
Variable Cost Per -
Kg 96.00 97.92 98.88 99.84 100.80 100.80

Contribution -
30.65 35.35 40.83 46.42 52.13 53.79
Contribution per -
Unit 45.40 44.89 45.36 45.84 46.34 47.81
Contribution in % - 32% 31% 31% 31% 31% 32%

Break Even Point -

kg 0 0 0 0 0 0
Break Even Point -
Rs 2.94 3.21 3.10 3.05 3.06 3.12
Break Even In % -
11.82 11.02 9.28 8.05 7.18 7.05

Margin Of Safty -
92.50 109.25 126.71 144.45 162.48 164.07

Model DPR On Chilli Powder Processing Unit Page 25

 FIGURE 4
PIA CHART FOR BETTER UNDERSTANDING OF EXPENCES OF EACH
HEAD

FIGURE 5
PLANT LAYOUT

Model DPR On Chilli Powder Processing Unit Page 26

5.8 MACHINERY SAPPLIERS

There are many machinery suppliers available within India for processing machineries and
equipment. Some of the suppliers are:

• Stellar Food Tech. Pune, Maharashtra, India

• Proveg Engineering & Food Processing Private Limited
• Near Swad Kolhapur Restaurant, Chikhli, Pune
• Lithotech Food & Spice Machinery
• Vasai East, Mumbai
• Varahi Industries
• GIDC Vatwa, Ahmedabad
• Srinidhi Industries
• 17. Bommasandra, Bengaluru

Model DPR On Chilli Powder Processing Unit Page 27

6 LIMITATIONS OF MODEL DPR AND GUIDELINES FOR ENTREPRENEURS

6.1 LIMITATIONS OF MODEL DPR

i. This DPR has provided only the basic standard components and methodology to be adopted by an
entrepreneur while submitting a proposal under the Formalization of Micro Food Processing Enterprises
Scheme of MoFPI.

ii. This DPR is made to provide general methodological structure not for specific
entrepreneur/crops/location. Therefore, information on the entrepreneur, forms and structure
(proprietorship/partnership/cooperative/ FPC/joint stock company) of business, background of
proposed project, location, raw material base/contract sourcing, entrepreneur’s own SWOT analysis,
market research, rationale of the project for specific location, community advantage/benefit,
employment generation etc are not given in detail.

iii. The present DPR is based on certain assumptions on cost, prices, interest, capacity utilization, output
recovery rate and so on. However, these assumptions in reality may vary across places, markets and
situations; thus the resultant calculations will also change accordingly.

6.2 GUIDELINES FOR ENTEPRENURES

i. The success of any prospective food processing project depends on how closer the assumptions
made in the initial stage are with the reality of the targeted market/place/situation. Therefore, the
entrepreneurs must do its homework as realistic as possible on the assumed parameters.

ii. This model DPR must be made more comprehensive by the entrepreneur by including information
on the entrepreneur, forms and structure (proprietorship/partnership/cooperative/ FPC/joint stock
company) of entrepreneur’s business, project location, raw material costing base/contract sourcing,
detailed market research, comprehensive dehydrated product mix based on demand, rationale of the
project for specific location, community advantage/benefit from the project, employment generation,
production/availability of the raw materials/crops in the targeted area/clusters and many more relevant
aspects for acceptance and approval of the competent authority.

iii. The entrepreneur must be efficient in managing the strategic, financial, operational, material and
marketing aspects of a business. In spite of the assumed parameter being closely realistic, a project
may become unsustainable if the entrepreneur does not possess the required efficiency in managing
different aspects of the business and respond effectively in changing situations.

iv. The machineries should be purchased after thorough market research and satisfactory
demonstration.

Model DPR On Chilli Powder Processing Unit Page 28

v. The entrepreneur must ensure uninterrupted quality raw materials’ supply and maintain optimum
inventory levels for smooth operations management.
vi. The entrepreneur must possess a strategic look to steer the business in upward trajectory.

vii. The entrepreneur must maintain optimum (not more or less) inventory, current assets. Selecting
optimum source of finance, not too high debt-equity ratio, proper capital budgeting and judicious
utilization of surplus profit for expansion is must.

viii. The entrepreneur must explore prospective markets through extensive research, find innovative
marketing strategy, and maintain quality, adjust product mix to demand.

ix. The entrepreneur must provide required documents on land, financial transaction, balance sheet,
further project analysis as required by the competent authority for approval.

x. The entrepreneur must be hopeful and remain positive in attitude while all situations.

Model DPR On Chilli Powder Processing Unit Page 29