Palm Oil Production and Processing Industry1
Palm Oil Production and Processing Industry1
co
Introduction
Palm oil is an edible vegetable oil high in saturated fats and free of
Tran’s fats. Palm oil is made from the fruits of trees called African oil
palms. It is a type of vegetable oil, like sunflower or rapeseed oil. Oil
palm flourishes in the humid tropics and produces high yield when
grown 10 degrees north and south of the equator. The trees originally
came from west and South-West Africa. They grow naturally in tropical
rainforest areas, but they also are being planted and farmed especially
to produce more palm oil.
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Palm oil is the most widely-used vegetable oil in the world. Palm fruit
oil, generally known as palm oil, is produced from the pulp of the fruit
of the oil palm tree (Elaeis Guineensis). This tropical fruit is reddish in
colour because of a high beta-carotene content. The fruit is about the
size of a large olive. The fruit has a single seed or kernel, which is used
to produce palm kernel oil. Each palm fruit contains about 30-35 per
cent oil. Palm fruit oil and palm kernel oil differ significantly in their
fatty acid composition, but have the same botanical origin.
Palm oil is the second most widely produced edible oil. Each year,
Australia imports approximately 130,000 tons of palm oil.
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Palm oil and its derivatives are found in around 50 percent of all
packaged foods on Australian shelves. It has a longer shelf life than
other vegetable oils making it more appealing for food production.
Palm oil is found in many food products including biscuits, chips,
crackers and batters. It is also found in toothpaste, soap, shampoo and
cosmetics.
Palm oil plantations are the main driver for deforestation in Indonesia
and Malaysia. These two regions account for 85 percent of global
production of palm oil.
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Uses of Palm Oil:
Palm Oil is used in around 50% of products consumers purchase and
use on a daily basis. Palm Oil and derivatives otherwise known as
fractions of the oil are used in the manufacture of prepackaged food,
cosmetics, cleaning products, hair care, soaps and personal care
items. Palm Wax is used in the manufacture of candles.
Palm Oil is also used to manufacture bio fuel. Palm is also used as
feed for livestock named as palm kernel cake (PKC) which is a by-
product of palm kernel oil. PKC is considered a medium grade
protein feed used to fatten cattle and other livestock.
Palm oil is used for cooking and is also added to many ready-to-eat
foods in your grocery store.
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Its taste is considered savory and earthy.
Some people describe its flavor as being similar to carrot or
pumpkin.
This oil is a staple in West African and tropical cuisines, and it's
especially well-suited for curries and other spicy dishes.
It is often used for sautéing or frying because it has a high smoke
point of 450°F (232°C) and remains stable under high heat (2).
Palm oil is sometimes added to peanut butter and other nut butters
as a stabilizer to prevent the oil from separating and settling at the
top of the jar.
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In addition to nut butters, palm oil can be found in several other foods,
including:
Cereals
Baked goods like bread, cookies and muffins
Protein bars and diet bars
Chocolate
Coffee creamers
Margarine
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Palm oil is a very productive crop. It offers a far greater yield at a lower
cost of production than other vegetable oils. Global production of and
demand for palm oil is increasing rapidly. Plantations are spreading
across Asia, Africa and Latin America. But such expansion comes at the
expense of tropical forests—which form critical habitats for many
endangered species and a lifeline for some human communities.
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Market Outlook
Palm oil market size in India was valued at USD 5.16 billion in 2015.
Increasing demand for edible oils owing to the burgeoning population
and improving economic conditions is anticipated to remain the key
growth driving factor over the forecast period.
The industry in India presents massive potential for growth since the
government has allowed 100% FDI in plantation and has also pledged
huge financial aid to farmers in upcoming years. This development is
likely to encourage domestic cultivation landscape and generate
greater profit margins and opportunities for companies.
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Indian palm oil market revenue by product,
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Palm oil is the most consumed edible oil by volume in India, with a
share of ~40%, followed distantly by soybean and mustard oils.
However, domestic production of palm oil is limited, and over 95% of
the requirement is imported, mostly from the world’s top two
producers – Indonesia and Malaysia. Consequently, palm oil imports
constitute over 60% of the edible oil imports basket today.
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Palm Oil Consumption in India from 2011/2012 to 2017/2017
(In 1,000 Metric Tons)
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In recent years palm oil based biodiesel has entered the European
market. While biofuel has been promoted as an effective means of
reducing emissions, establishing palm oil plantations increases
greenhouse emissions. Demand for SPO for non-food industrial
application will surely depend on many factors including whether the
end product is sustainably produced.
An extract of the Palm tree fruit, palm oil is one of the major edible
oils consumed globally. Its low competitive price is one of the key
factors influencing the consumption pattern. India, Indonesia and
China are the major consumers of palm oil. Increasing demand from
the emerging economies is going to be the major contributor to the
palm oil industry in the future.
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In terms of application, although Food sector comprises of 80% of the
market share, non-food areas are becoming increasingly important. The
trend away from petroleum-based products has meant growing
demands for palm oil in usage in Soaps, Detergents, Surfactants,
Cosmetics, Pharmaceuticals, Nutraceuticals and other similar
products. Biofuels are also driving the growing demand for palm oil.
The global palm oil market size was estimated at USD 57.56 billion in
2014. Several government initiatives concerning blending of
conventional fuel with that of bio-based, as well as rapidly growing
usage of products as bio-based diesel have been gaining global
acceptance over recent years. Consumers globally are aware of bio-
based cosmetics, lubricants, and surfactants, which has also prompted
the market.
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U.S. Palm Oil Market by Application, 2012-2022 (USD Million)
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The global market for Palm Oil is projected to exceed 85 million metric
tons by 2024, driven by ubiquitous applications in a broad range of
everyday products and the resulting growing demand for certified
sustainable palm oil. Palm oil is cost-effective and low in trans-fats,
due to which its demand is high in the global market. However, the
expansion of palm tree plantations is usually carried out at the
expense of tropical forests, particularly in countries such as Malaysia.
Rising environmental concerns thus pose a tough challenge in front of
enterprises operating in the global palm oil market.
The global palm oil market is expected to grow with rising global
population, increasing biofuels production, increasing fresh fruits
bunches yields, accelerating economic growth and growing application
in various markets.
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Key trends of this market includes rising demand for red palm oil,
increasing sustainable palm oil production and growing shift towards
palm crop transplanting. However, there are some factors which can
hinder growth of the market including consumption of soybean oil in
developing countries, stringent regulations, weather uncertainties and
retail consolidations.
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The global palm oil market is segmented into North America, Europe,
Asia Pacific, and rest of the world (RoW). Asia Pacific is dominating
the market and is witnessed to have a substantial growth over the
forecast period with increasing consumption of palm oil in different
industries. Indonesia and Malaysia are the major producers and
exporters of palm fruit which are majorly contributing to the growth of
palm oil market in Asia Pacific.
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Machinery Photographs
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PALM FRUIT OIL EXTRACTOR
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Project at a Glance
(USD in
PROJECT AT A GLANCE Thousands)
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Project at a Glance
Yea Annualised Boo Debt Divid Retained Pay Proba P/E Yield Price/
r k end Earnings out ble Ratio Book Value
Valu Marke
e t Price
Per No.of
Shar Time
EPS CEPS Per Share e Per Share s
USD USD USD USD USD % USD % USD %
1- 427.4 437. 2400. 427.
2 0 916.59 40 00 0.00 100.00 40 0.00 427.40 1.00 0.00
2- 770.8 1200.0 1208 1800. 770.
3 2 2 .23 00 0.00 100.00 82 0.00 770.82 1.00 0.00
3- 1099. 1477.7 2307 1200. 1099 1099.6
4 67 7 .90 00 0.00 100.00 .67 0.00 7 1.00 0.00
1408. 1743.1 3716 600.0 1408 1408.6
4-5 65 9 .55 0 0.00 100.00 .65 0.00 5 1.00 0.00
1694. 1991.4 5410 1694 1694.0
5-6 06 4 .62 0.00 0.00 100.00 .06 0.00 6 1.00 0.00
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Project at a Glance
Yea D. S. C. R. Debt / Equit Total Retur Profitability Ratio Asset Curre
r - y as- Net n on s nt
Depo Equit Worth Net Turno Ratio
sits y Wort ver
Debt h Ratio
Individ Cumula Over GPM PBT PAT Net P/V
ual tive all Contri Ratio
bution
(Number of
(Number of times) times) % % % % % %
Initi
al 3.00 3.00
1- 28.31 141.2 85.41
2 1.34 1.34 1.68 1.68 2.03 % 9.10% 7.13% 9 % 1.63 1.00
32.87 11.02 163.7 84.84
2-3 1.70 1.51 0.82 0.82 1.08 % 16.31% % 2 % 1.75 1.52
35.86 13.76 187.0 84.82
3-4 2.11 1.69 2.10 0.36 0.36 0.56 % 21.23% % 9 % 1.73 2.19
37.79 15.67 210.4 84.81
4-5 2.59 1.89 0.13 0.13 0.28 % 24.58% % 5 % 1.61 3.00
38.97 16.96 233.8 84.81
5-6 3.16 2.10 0.00 0.00 0.12 % 26.80% % 1 % 1.46 6.89
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Project at a Glance
BEP
BEP - Maximum Utilisation Year 5
Cash BEP (% of Installed Capacity) 64.81%
Total BEP (% of Installed Capacity) 68.32%
IRR, PAYBACK and FACR
Internal Rate of Return .. ( In %age ) 28.37%
2 Years 3
Payback Period of the Project is ( In Years ) Months
Fixed Assets Coverage Ratio ( No. of times ) 6.517
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Major Queries/Questions Answered in the Report?
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5. What is the structure of the Palm Oil Manufacturing
Business and who are the key/major players ?
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9. Who are the Suppliers and Manufacturers of Plant
& Machinery for setting up Palm Oil Manufacturing
plant ?
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13. What is the total size of land required for setting
up Palm Oil Manufacturing plant ?
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18. What are the Personnel (Manpower)
Requirements for setting up Palm Oil
Manufacturing Business?
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23. What are the Profitability Ratios of Palm Oil
Manufacturing Project?
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27. What are the Market Opportunities for setting
up Palm Oil Manufacturing plant?
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Table of Contents
of the
Project Report
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1. PROJECT LOCATION
1.1. CITY PROFILE & GEOTECHNICAL SITE CHARACTERIZATION
1.1.1. General
1.1.2. Demography
1.1.3. Geography
1.1.4. Map
1.1.5. Climate & Temperature
1.1.6. Transportation
1.1.7. Culture
1.1.8. Tourism
1.1.9. Economy
2. INTRODUCTION
2.1. PALM OIL TREE
2.2. PALM OIL FOR BIOFUEL
5. HEALTH BENEFITS
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6. TYPICAL FRUIT AND PRODUCTION COMPOSITION
8. MANUFACTURING PROCESS
8.1. PROCESS DESCRIPTION
8.2. OIL STORAGE
8.3. PALM OIL PACKING
10.1. WASTE AND POLLUTION FROM PALM OIL PRODUCTION AND MANAGEMENT
10.2. SOURCES OF WASTE FROM PALM OIL MILLING
10.3. THE CLEAN DEVELOPMENT MECHANISM (CDM)
10.4. ELIGIBLE AREAS FOR CDM PROJECT
10.5. METHANE RECOVERY WITH ENERGY PRODUCTION
10.6. ELIGIBILITY CRITERIA FOR CDM PROJECTS IN TANZANIA
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13.PHOTOGRAPHS/IMAGES FOR REFERENCE
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Project Financials
• Project at a Glance Annexure
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• Plant & Machinery……………………………………………..……..5
Indigenous Machineries
Other Machineries (Miscellaneous, Laboratory etc.)
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• Overheads Required Per Month and Per Annum………….…….…8
Utilities & Overheads (Power, Water and Fuel Expenses etc.)
Royalty and Other Charges
Selling and Distribution Expenses
• Share Capital…………………………………………………….....11
Equity Capital
Preference Share Capital
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• Annexure 1 :: Cost of Project and Means of Finance
Revenue/Income/Realisation
Expenses/Cost of Products/Services/Items
Gross Profit
Financial Charges
Total Cost of Sales
Net Profit After Taxes
Net Cash Accruals
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• Annexure 3 :: Assessment of Working Capital requirements
Current Assets
Gross Working Capital
Current Liabilities
Net Working Capital
Working Note for Calculation of Work-in-process
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• Annexure 5 :: Projected Balance Sheets
D.S.C.R
Earnings Per Share (EPS)
Debt Equity Ratio
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• Annexure 7 :: Break-Even Analysis
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• Annexure 8 to 11 :: Sensitivity Analysis-Price/Volume
Resultant N.P.B.T
Resultant D.S.C.R
Resultant PV Ratio
Resultant DER
Resultant ROI
Resultant BEP
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• Annexure 12 :: Shareholding Pattern and Stake Status
Equity Capital
Preference Share Capital
• Annexure 13 :: Quantitative Details-Output/Sales/Stocks
Determined Capacity P.A of Products/Services
Achievable Efficiency/Yield % of Products/Services/Items
Net Usable Load/Capacity of Products/Services/Items
Expected Sales/ Revenue/ Income of Products/ Services/
Items
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• Annexure 14 :: Product wise Domestic Sales
Realisation
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• Annexure 21 :: Employees Expenses
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• Annexure 29 :: Depreciation Charges – as per Books (Total)
• Annexure 30 :: Depreciation Charges – as per Books (P &
M)
• Annexure 31 :: Depreciation Charges - as per IT Act WDV
(Total)
• Annexure 32 :: Depreciation Charges - as per IT Act WDV
(P & M)
• Annexure 33 :: Interest and Repayment - Term Loans
• Annexure 34 :: Tax on Profits
• Annexure 35 :: Projected Pay-Back Period and IRR
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Scope of the Report
The report titled “Market Survey cum Detailed Techno Economic
Feasibility Report on Palm Oil.” provides an insight into Palm
Oil market in India with focus on uses and applications,
Manufacturing Process, Process Flow Sheets, Plant Layout and
Project Financials of Palm Oil project. The report assesses the
market sizing and growth of the Indian Palm Oil Industry. While
expanding a current business or while venturing into new
business, entrepreneurs are often faced with the dilemma of
zeroing in on a suitable product/line. And before
diversifying/venturing into any product, they wish to study the
following aspects of the identified product:
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• Good Present/Future Demand
• Export-Import Market Potential
• Raw Material & Manpower Availability
• Project Costs and Payback Period
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