TAMIL NADU RURAL TRANSFORMATION PROJECT

Business Plan for Spices Unit

1. Village Panchayat: AA Village

2. Block: BB Block
3. District: DD District
4. Applicant: [Link]
5. Activity: Manufacturing of Spices
6. Classification: MSME - Manufacturing
[Link] classification (TNRTP) Micro
8. Purpose of Note:
To recommend for sanction of the following limits: Term Loan/Working
Capital Demand Loan/Composite Loan (Rs. In Lakhs)
9. Nature of Facility Term loan – Composite loan
10. Purpose For establishing spices manufacturing
unit.
11. Limit required Rs.12.13 Lakhs.
12. Margin 10% of the project cost of Rs.13.48
lakhs i.e Rs.1.35 Lakhs

Introduction: (Details of Promoter name, age, qualification and

experience, activity to be financed, existing or new unit, any existing
facilities with Banks etc. The present request for loan and purpose.)

[Link], aged 42years, propose to establish a spices manufacturing unit

for manufacture and sale of products such as Turmeric powder, Pepper
powder, Chilly powder, Dhaniya powder etc., The applicant has around 25
years of experience in the line of activity. The name of the proposed unit
is M/s. BBB spices. The present request is for term loan of Rs.12.13 lakhs
under TNRTP matching grant Programme for the purpose of purchase of
equipment’s for expansion of unit as well as for working capital.

About the product:

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 appetising 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.

Ground spices are extensively used in all types of curried dishes in India
and abroad. Demand for processed spices is directly linked with its
consumption in food processing industry and this is set to grow in India 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 in India.

I. Profile of the Entrepreneur

Name Mr. AAA

Spouse Name
Age 42 years
Education 10th
Aadhaar Card No 86XXXX111111
Address
Phone No --

Mobile No 9111111111
Email ID -
Number of years of experience in 25years
business
Trainings attended (no. and 3 days training at DD district
hours)
Spouse’s occupation Agriculture
If Special category SC / ST / Differently abled / Widow /
Separated woman

II. Enterprise Profile

Name of the Enterprise BBB spices

Legal form of Enterprise Yes
Registration No 22222222222
Registration Date 01.02.2021
Registered with whom
GST No (if available) No
III. Bank Linkage Details

Whether the enterprise has separate Yes

bank account
If any bank credit availed No
Name of the bank and Branch Details ABC, DD district.
Nature of the bank facility N/a
Limit Sanctioned Not applicable.
Balance outstanding as on date Rs.1.35 Lakhs (Credit)

IV. Enterprise Nature

Type of Enterprise Manufacturing

Product to be produced: Installed Capacity
Turmeric Powder - 25 Ton
Chilli Powder - 15 Ton
Pepper Powder - 15 Ton
Jeera Powder - 10 Ton
Dhania Powder - 10 Ton
1. Retail Sales
2. Institutional Sales
Service to be offered: 3. Wholesale Supply
4. Door Delivery

 The unit is located in a central

place in the village, well
connected to the road and easy
Present Demand approach to the
consumers/retailers/food
processing units/hotels etc.,

 Further since this is the only unit

in the village panchayat and
nearby villages/town, there is
good demand for the product
especially in hotels, retail
provision stores and direct
consumers who purchase in bulk.

The capacity of the unit is

production of 75 Metric tonnes
Current Supply per annum with one shift of 8
hours, for 300 days. Initial
production in the I year is
assumed at 50% of the installed
 capacity. The proposed unit
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.
Hence no issues are envisaged in
the production and supply.

V. TECHNICAL FEASIBILITY:

Location / Infrastructure:
1. Location The unit is located in a central place in
Brief on Location – Whether well the village, well connected to the road
connected to market by road etc., and easy approach to the consumers.
2. Land The business is proposed to be run in
Extent of Land, [Link]. own premises. The required land
Panchayat approval, space of around 1000 [Link] is
own/leased available.
Local Panchayat has given approval for
land and Building.
3. Building The applicant has already constructed
Approved plan from local a shed to house the machines as well
body, sq,ft, whether sufficient as for the packing activity. The
for the proposed activity approximate value of civil works
including Building, Electrification,
Water Supply, Sanitation and Drainage
etc will be Rs. 5,00,000/-. Since the
building is already in place the cost is
not factored in the cost and means of
the project. Approval/License from
Village Panchayat has been obtained.
4. Power The total requirement of power for the
Whether required power project is 16.92 KW. The total power
connection is available supply would be distributed in the
following way;
Plant & Machinery - 14.92 KW
General Lighting - 2.00 KW. The power
connection is applied for and is
expected in a week’s time.
5. Water Constant flow of water is essential for
operation of the plant. Water would be
 Whether adequate water is obtained from bore well at the project
available. site and can be stored in an overhead
tank, from where it will be supplied to
the required areas.
6. Approval The applicant has obtained FSSAI
Pollution control approval Reg. No. 3333333333333
Board/GST/FSSAI approvals dated 01.12.2020. The applicant has
or any other approval is applied for GST registration. The
required. Present Status approval is expected soon. Follow up
is being made by the applicant.

The applicant is yet to register under

UDYAM. The same is under process.
7. Materials Needed Raw-materials
Quantity / Cost / Availability /
Delivery Time to be discussed. The following raw materials are
required, which will be procured from
a. Raw materials : local farms.
Turmeric – 25 Tons
b. Equipment :
Chilli - 15 Tons
c. Technology : Pepper - 15 Tons
Jeera - 10 Tons
Dhania - 10 Tons

These raw-materials are also available

at wholesale prices in the local
market/shandy. The average
requirement will be 250 kgs/day
based on the full capacity. In the first
year it is assumed at 50% of the
installed capacity..
Equipment:(As detailed in
Annexure A)
The following machines are required:
1. Pulveriser with Motor and
accessories
2. Disintegrator with Motor
3. Hot Air Dryer
4. Sieving Machine
5. Automatic Form Fill and Sealing
Machine
6. Manual Packaging Machine
7. Platform Weighing scale
 8. Aluminium Top Working Tables.e
9. Washing Tanks, SS Utensils,
Trays and Lab Equipments.
10. Miscellaneous Equipments

Technology:
The applicant has necessary
experience for operating the machines.
No specific technology is required.
[Link] of capital assets:
Details of
equipment/machinery with As per Annexure A.
cost of individual item
required
along with quotations.
9. Cost of working capital for
one operating cycle The working capital requirement is
d. raw-materials, arrived at Rs.5.17 lakhs for the I year
e. Semi-finished goods, /- as per Annexure C.
f. finished goods,
g. receivables outstanding
[Link] working capital
needs

(The value of raw-materials,

semi-finished goods, finished
goods, receivables outstanding
to
be arrived)
OR

25% of projected annual The assessment has been done as per

sales turnover if necessary. holding levels detailed in annexure C.
(The projected annual sales
should be reasonable and
acceptable)
[Link] Requirements: The promoter is experienced in the
skilled labour available / Not line of activity for 25 years. 2 skilled
available workers, 3 semi skilled workers, 4
unskilled workers are to be employed
If not available: whether people for carrying out the day to day
can be trained? If so, training operations in a smooth manner.
period and training facility?
[Link] Process:
c. Production Plan/cycle
(operating cycle may be (i) Washing:The raw material inputs
are washed with water under high
one-day / week / month or
pressure so that the impurities are
one year as per the removed.
activity selected):
(ii) Peeling & Cutting to Small Pieces:
Some of the 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.
mechanical dryers are also used at
times. 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 are packaged in automatic
form, fill and sealing machine.

(vii) Transportation and Marketing:

Thereafter, the products are
transported and supplied to the bulk
purchasers.

The operating cycle is assumed at 30

days for the unit as detailed in
Annexure C.

VI. COMMERCIAL FEASIBILITY:

Marketing strategy :
a. Direct to customers : There is good scope for domestic
b. Bulk to Institutions : market for this commodity in processed
c. Through Retailers / form. The market for export of spices is
Wholesalers: encouraged in processed form as it will
d. Through Online: bring more value addition to the unit
price of whole spices. 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 areas of the country
particularly within the state itself.

There is considerable scope in view of

the central location. It is proposed to
allocate a small counter for direct sales
to customers also. As this is the only
unit in the village and nearby
panchayats, there will be demand for
the product. Further tie up
arrangements are to be made with star
hotels and resorts near Bhavanisagar,
for supply of spices in bulk. Focus will
also be on supply to local
retailers.
e. Pricing & Discounts : Bulk supply and immediate cash
payment will be encouraged with a
discount in price.
f. Market promotion Marketing plan of the proposed project
strategies: to include good quality maintenance,
promotional campaign like offering
special discounts, referrals,
advertisement and tying up with buying
houses.

g. Physical and digital While the payments are also accepted

connectivity: by way of cash, digital payments will be
encouraged with appropriate equipment
installed and cost will be borne by the
applicant.
h. Risks and risk mitigation Market risk – The unit is the only unit
planned: working in the village and nearby areas.
Further the quality of the product will
be superior due to procurement of high
quality ingredients at a discounted rate.
 VII. ENVIRONMENT ASSESSMENT

To be entered as per the required

Category of the enterprise proposed: Green (Code 3044)
Environment Environment Greening Support
Issue Guidelines or Measures needed
identified mitigation identified
measures (for green, orange Imple Imple
Integrated and red ment ment
(Please tick) categories) the the
mitiga greeni
tion ng
meas meas
ures ures
 Water To ensure adequate NA NA
Exploitation  Electricity measures for
of local Proper disposal of
resources waste water.
(water and Adequate care will
energy) be taken in
electrical
installations and
optimal utilization
of machinery for
conservation of
electricity.
 Dust/air pollutants There is no major NA NA
Waste  Disposal of waste pollution problem
generation water associated with
and disposal this project in
terms of air and
sound pollution
except for disposal
of waste water
Disposal of any
effluent out of the
project unit will be
treated with
recycling facility or
dumped in such a
way that these
 does not cause
hazard in the
vicinity of the site
Worker and  Safety Safety masks to be NA NA
Community measures/gadgets provided.
safety - Yes
 Chemical usage &
handling - x
 Infected raw
materials - x
 Presence of stale -
x
 Any other specify -
x

Whether the activity proposed is in the negative list: No

VIII. FINANCIAL VIABILITY

1. Cost of the project and Means of the project:

a. Cost of the Project: (Rs in lakhs)
[Link] capital * Machineries – 8.31
Cost of all the
equipments/machinery/construction(excludi
ng land cost) – As per annexure (A)
[Link] capital - As per Annexure (C) Working capital 5.17
[Link]-operative expenses* From own source
Total cost of the project (i + ii + iii) 13.48

b. Means of the project:

i. Loan from financial Institution / Bank 12.13
(95% or 90%):
ii. Margin money -Borrower’s contribution 1.35
(5% or 10%):
Total means of the project ( i + ii ) 13.48

c. Matching grant from the project** 4.04

*Existing building comprising of work shed, store house cum office with
area of 1000 [Link] is valued at Rs.5 lakhs for the purpose of depreciation
and repairs. The existing building value is not included in the project
cost.
 ** The preliminary expenses comprising of Travelling expenses –
Rs.40000/- Nonrefundable deposit Rs.87000/- Interest during holiday
period Rs.44473/-, Miscellaneous expenses Rs.35000/- totaling to
Rs.2.07 lakhs will be met by the borrower from his own source. Hence
not included in the project cost. The borrower has sufficient source to
meet the preliminary expenses.
Whether the entrepreneur has the sufficient Yes. The applicant has
means to bring in the margin money and has deposit to the extent
enough buffer to manage any cost escalations of Rs.1.35lakhs in the
Bank.

**Matching Grant is @30% of the total cost of the project (excluding pre-
operative expenses, land cost, lease). As Matching Grant will be kept in a
“Subsidy Reserve Fund” account of the bank as a back-ended grant, it is
not shown under the Means of the project. The matching grant to be
adjusted as below:

(Rs in Lakhs)
Loan initially disbursed by the Bank - 12.13
Less 30% matching grant - 4.04

Balance principal amount to be repaid by

Borrower - 8.09

Upon completion of minimum period of 18 months and upon repayment of

principal amount of Rs.8.09 lakhs and the interest portion, the matching
grant of Rs.4.04 lakhs can be adjusted to the loan account of the
borrower and the loan account can be closed.

IX. Repayment capacity

DSCR

 Loan amount Rs.1213000/- is repayable in 60 months @ 11% after

holiday period of 6 months.
 Monthly instalment - principal amount is Rs.22463/-.
 Last instalment - Rs,22395/-.
  Though the repayment is fixed for 60 months, upon prompt
repayment of 36 instalments, the loan is closed on the 43rd month
itself with matching grant amount of Rs.404400/- which is eligible
for the project.
 50% of net profit and depreciation is taken for DSCR Calculation for
the first year, since six months operation in I Year.

Particulars YEAR 1(6 M) YEAR 2 YEAR 3 YEAR 4 YEAR 5

Net profit after
tax 191500 669000 1016000 1041000 1051000
Depreciation 39000 78000 78000 78000 78000
Interest 44473 75356 45705 16054 0
Cash surplus A 274973 822356 1139705 1135054 1129000
Principal
Repayment 0 269556 269556 269488 404400
Interest 44473 75356 45705 16054 0
Repayment
obligation B 44473 344912 315261 285542 404400
DSCR A/B 6.18 2.38 3.62 3.98 2.79
Average DSCR 3.79

The average DSCR at 3.79:1 is above the required DSCR of 2:1 as per MGP
guidelines. The repayment capacity of the borrower is comfortable.

X. Recommendation:

As the proposal is viable and complies with the guidelines in respect of

atching Grant Programme, we may recommend to the concerned Bank.
 ANNEXURE - A

COST OF PLANT AND MACHINERY

Particulars Qty Amount (Rs)
Pulveriser with Motor and 2 510000
accessories as below:
Disintegrator with Motor 1
Hot Air Dryer 2
Sieving Machine 1
Automatic Form Fill and Sealing 1
Machine
Manual Packaging Machine 2
Platform Weighing Scale 1
Aluminium Top Working Tables 3
Washing Tanks, SS Utensils, Trays SET 30000
and Laboratory Equipment’s
Miscellaneous Equipment’s SET 25000
Sub total 565000
Add: Taxes, transportation and 56500
installation etc @ 10%
TOTAL 621500
Say (Rs. in lacs) 6.22

MISCELLANEOUS FIXED ASSETS

Particulars Qty Rate (Rs) Amount (Rs)

Electrical Load Security and One set -- 95000
Transformer
Furniture’s and Fixtures Set -- 50000
Miscellaneous items Set -- 45000
Sub total
190000
Add: Taxes, transportation and installation 19000
etc @ 10%
TOTAL 209000
Say (Rs. in lacs) 2.09

Total Value of Machineries – Rs.8.31 Lakhs

 Annexure B

BASIS & PRESUMPTIONS

The following Basis and Presumptions have been made:

 The project is based on a single shift basis and 300 days of working
schedule in a year, working for 8 hours a day, 25 days a month.
 The installed capacity will be 75 [Link]. The capacity utilisation is
assumed at 50% in the I Year, 60% in the second year and
thereafter at 70% every year.
 The wastage is estimated at 2% of the Raw material input.
 The packing material is estimated at 2% of the raw material cost.
 The cost of machinery and equipment/materials indicated refer to a
particular make and the prices are approximate to the prevailing
market value.
 Power rate is assumed at Rs.6.00 per unit.
 Water would be made available through bore well facility at the
project site.
 Manpower requirement for the project has been planned
considering the size of the unit.
 Interest rates considered is 11% for the composite loan.
 For repayment, a period of 6 years is planned with moratorium
period of six months.
 Insurance charges have been considered Lump Sum.
 Repair and maintenance have been calculated reasonably.
 Depreciation shown has been calculated on Straight Line Method.
 Pre-operative expenses such as Non-refundable deposits,
Architecture fees, project report fees,traveling & Convenience
amount, Interest during holiday period etc., will be met by the
promoter from his own source
 PROFITABILITY PROJECTIONS
SPICES UNIT

Amount Rs in lakhs

Particulars Yr 1 Yr 2 Yr3 Yr 4 Yr 5 Yr 6

A. Sales
Production
Capacity(Ton/annum) 75 75 75 75 75 75
Capacity Utilisation 50% 60% 70% 70% 70% 70%
Production
Capacity(Ton/annum) 37.5 45 52.5 52.5 52.5 52.5
Total Sales (A) 80.24 96.29 112.34 112.34 112.34 112.34
[Link] of Production
Raw Materials 60.5 72.6 84.7 84.7 84.7 84.7
Packing Materials 1.21 1.452 1.694 1.694 1.694 1.694
Power & Utilities 1.55 1.87 2.18 2.18 2.18 2.18
Wages & Salary 10.92 10.97 11.03 11.08 11.14 11.20
Repair & Maintenance 0.21 0.21 0.21 0.21 0.21 0.21
Other expenses @1%
of Sales 0.80 0.96 1.12 1.12 1.12 1.12
Cost of Production(B) 75.19 88.07 100.94 100.99 101.05 101.10
Gross Profit(A-B) 5.05 8.22 11.40 11.35 11.29 11.24
Depreciation 0.78 0.78 0.78 0.78 0.78 0.78
Interest 0.44 0.75 0.46 0.16 0 0
Sub Total 1.22 1.53 1.24 0.94 0.78 0.78
Net Profit 3.83 6.69 10.16 10.41 10.51 10.46
Cash Surplus 4.61 7.47 10.94 11.19 11.29 11.24
 PROJECTED BALANCE SHEET
SPICES UNIT

Particulars YR 1 YR 2 YR 3 YR 4 YR 5
LIABILITIES
Promoters Capital

Promoter Capital 1.35 1.35 1.35 1.35 1.35

Profit from P & L
A/c 3.83 10.52 20.68 31.09 41.60
MGP GRANT 4.04
Sub
Total 5.18 11.87 22.03 32.44 46.99
Secured Loan
Term Loan 12.13 9.43 6.73 4.04 0
Sub
Total 12.13 9.43 6.73 4.04 0
Unsecured Loan
Current Liabilities
Trade
Creditors 2.02 2.42 2.82 2.82 2.82
Sub
Total 2.02 2.42 2.82 2.82 2.82
Total Liabilities 19.33 23.72 31.58 39.30 49.81
ASSETS
Gross Fixed Assets
Block 8.31 8.31 8.31 8.31 8.31

Sub
Total (a) 8.31 8.31 8.31 8.31 8.31

Depreciation

[Link] 0.78 1.56 2.34 3.12 3.90

Sub
Total (b) 0.78 1.56 2.34 3.12 3.90

Net Fixed Assets Block 7.53 6.75 5.97 5.19 4.41

Current Assets
Raw Materials 2.02 2.42 2.82 2.82 2.82
WIP 0 0 0 0 0
 Finished Goods 2.5 2.93 3.36 3.36 3.36
Debtors 2.67 3.21 3.74 3.74 3.74
Sub-
Total 7.19 8.56 9.92 9.92 9.92
Other Current Assets
Deposits & Inv 3 5 12 17 30.00
Cash at Bank 1.61 3.41 3.69 7.19 5.48
Sub-
Total 4.61 8.41 15.69 24.19 35.48

Total Assets 19.33 23.72 31.58 39.30 49.81

 Annexure C

(Rs. in lacs)
Particulars Period Current Assets
(Days)
Year 1 Year 2 Year 3
Raw Materials 10 2.02 2.42 2.82
(On Raw material Cost)
Finished Goods 10 2.50 2.93 3.36
On Cost of Prod)
Receivables 10 2.67 3.21 3.74
(On Sales)
Total Current Assets(WC (30) 7.19 8.56 9.92
cycle)
Less Creditors 10 2.02 2.42 2.82
Working capital 5.17 6.14 7.10
requirement

Working Capital Cycle is 30 days

Prepared by
[Link] Ratnam
Consultant – BPF
TNRTP.