MANGO PULP

MANUFACTURING
UNIT

GROUP 7
ASHWIN | MADHUMITHA | NEHA | SESHADRI | VIMAL
MARKET ANALYSIS
• Market Size for Mango Pulp (2016):
Production (MT) Export (MT) Domestic (MT)
465000 200000 265000

400,000
MT, 368,702
• Demand Forecast of Mango Pulp in India: 350,000

300,000

250,000

MT
200,000

150,000

100,000

50,000

0
MARKET ANALYSIS
Mango Pulp Market by Application (2016),
Jain Farm Fresh
India
Flavors
1%
Others Capricorn Food
9% Products Ltd
17%
Food and Inns
13%
56%
8%
Exotic fruits
6%

Beverages Others
90%

Increase in demand of Fruit Beverages directly affect the Mango Pulp demand
PROJECT DETAILS
• Variety to be Processed – Alphonso
– Premium variety – Better margins
– High demand for export and fruit juice plants
• Location – Nashik, Maharashtra – Food Park
– Alphonso growing area
– Subsidies – Electricity, Interest Rates
• Market – Supply to bigger mango pulp brands (Capricorn)
– Tough to establish market with limited capacity
– Good knowledge transfer
• Contract Farming
– Aiding the farmers throughout the year – Increased Yield
– Stable prices
STEPS IN PREPARATION

Procurement Ripening Washing Sorting Blanching Deseeding Pulping

Pre-Heating Decanter Pasteurization Aseptic Filling Packing Dispatch

STAFFING

Staff Number of Staff No of Months

Procurement 4 12
Unloading / Loading 6 3
Internal Transfer 8 3
Sorting 8 3
Packing 12 3
Supervision 4 3
Maintenance 4 3
Manager 1 12
OPERATIONS OF THE PLANT
• Capacity – 500 Kgs/Hour
• Two 8 Hour shifts per Day
• Working Days – 90 Days/Year
• Mango Pulp – 60% of weight of Mango

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Capacity (Tonnes) 0 720000 720000 720000 720000 720000 720000 720000 720000 720000 720000
Utilization 0 0.6 0.7 0.8 0.9 0.95 0.95 0.95 0.95 0.95 0.95
Utilized Capacity (Tonnes) 0 432000 504000 576000 648000 684000 684000 684000 684000 684000 684000
Pulp Produced (Tonnes) 0 259200 302400 345600 388800 410400 410400 410400 410400 410400 410400
Selling Price per Kg 0 110 110 110 120 120 120 130 130 130 130
Buying Price per Kg 0 55 55 50 50 45 45 40 40 40 40

• Buying Price decreases as we gain experience and do better at contract farming

• Selling Price increases due to better brand equity
CAPITAL INVESTMENT REQUIRED
Construction:
• Land – 20 Lakhs
• Construction – 30 Lakhs
Machinery:
• Washing Machine – 4 lakhs
Total Investment – 80 Lakhs
• Conveyor Belt – 2 Lakh
• Heater for Blanching – 5 Lakhs
• Destoner & Pulper – 5 Lakhs
• Pre-Heater – 1 Lakh
• Decanter – 5 Lakh
• Pasteurizer – 7 Lakh
• Aseptic Filler – 1 Lakh
FINANCING
• Equity – 30 Lakhs
• Debt – 50 Lakhs

• Interest Rate – 14%

• Principal to be paid from 2 years of operations

Year 0 1 2 3 4 5 6 7 8 9 10
Loan Intake 5000000 0 0 0 0 0 0 0 0 0 0
Debt Outstanding 5000000 5000000 5000000 4000000 3000000 2000000 1000000 0 0 0 0
Interest 0 700000 700000 700000 560000 420000 280000 140000 0 0 0
OPERATING COST

Year 0 1 2 3 4 5 6 7 8 9 10
Raw Material 0 23760000 27720000 28800000 32400000 30780000 30780000 27360000 27360000 27360000 27360000
Other COGS 0 1425600 1663200 1900800 2332800 2462400 2462400 2667600 2667600 2667600 2667600
Salaries 0 2904000 2904000 2904000 2904000 2904000 2904000 2904000 2904000 2904000 2904000
Other Expenses 0 570240 665280 760320 933120 984960 984960 1067040 1067040 1067040 1067040

Total 0 28659840 32952480 34365120 38569920 37131360 37131360 33998640 33998640 33998640 33998640

Very High Operating Costs – around 3 Crores – Relative to initial investment

High Working Capital required to run the plant
 CASH FLOW ANALYSIS
Year 0 1 2 3 4 5 6 7 8 9 10

Capital Investment -8000000 0 0 0 0 0 0 0 0 0 0

Change in NWC 0 -1834990 -268290 -88290 -254050 98660 8750 204545 8750 0 0
PAT 0 -1085880 -741360 1763160 5194560 8322480 8427480 13960020 14065020 14065020 14065020
Dep * (1-T) 0 450000 450000 450000 450000 450000 450000 450000 450000 450000 450000
Interest Shield 0 175000 175000 175000 140000 105000 70000 35000 0 0 0
Debt Repayment 0 0 0 -1000000 -1000000 -1000000 -1000000 -1000000 0 0 0

Net Flow -8000000 -2295870 -384650 1299870 4530510 7976140 7956230 13649565 14523770 14515020 14515020

Rate of Return – 20%

NPV – 1.09 Crores

IRR – 34%
SOCIAL COST BENEFIT ANALYSIS

• The increase in procurement is because of increase in productivity of farmers

• The salary is 20% lower if the plant didn’t exist – Unskilled labour

Type Interest Rate NPV IRR

Investors 20% ₹ 1,09,71,178.75 34%
Employees 15% ₹ 29,14,900.82
Farmers 15% ₹ 2,22,16,708.54
Total ₹ 3,61,02,788.10 61%
SENSITIVITY ANALYSIS
NPV IRR
Investors Employees Farmers Total Investors Total
10% 62.68% 0.00% 0.00% 22.65% 27.50% 14.71%
Selling Price
-10% -107.75% 0.00% 0.00% -39.19% ----- -33.82%
10% -86.62% 0.00% 9.91% -25.45% -45.00% -26.47%
Buying Price
-10% 40.14% 0.00% -10.36% 8.91% 20.00% 8.82%
Work Days -15 -59.86% 0.00% -16.67% -31.04% -30.00% -22.06%
Worst Case -183.10% 0.00% -8.56% -70.99% ------ -55.88%

• Decrease in Selling Price will make the project a Negative NPV one
• Increase in Buying Price also has a huge impact on the project
IMPLEMENTATION OF PROJECT

April - June

Processing
April - June June -

Government
approval
Ordering
machinery
Construction
work
Commissioning
of Plant
Procurement Selling

September November - February March Training

Farmers

June -
CRITICAL SUCCESS FACTORS
• Stabilizing the Local Prices – More production from farmers
• Throughout the year assistance to farmers for higher yield
• Long-term contracts with Buyers to have assured selling price – B2B business
• Maintenance of Quality Control

FUTURE STRATEGY
• Expansion to 2 MT/Hour
• Expansion to other Geographical areas – Reduces risk
• Direct export to Fruit Juice manufacturers
THANK YOU