Business Opportunity in Turmeric Processing
Turmeric (botanical name-Curcuma Longa), one of the most important spice crops in India, is used to colour and flavour the food products.The yellow pigmented fraction of Turmeric (Curcumin,)is used as a colourant in food products and also as an anti-inflammatory agent in medicinal formulations.
India is the largest Turmeric producer in the world, with an annual production of nearly 10 lakh tonnes, accounting for nearly 80 per cent of world’s production. In India, Telangana is one of the largest producers of Turmeric, followed by Andhra Pradesh, Tamilnadu and Maharashtra (see picture 1).
In FY 17, India produced 10.51 Lakh tonnes of Turmeric, of which nearly 1.1 lakh tonnes valued at Rs. 1200 crores was exported. Additionally, India exported Turmeric based oleo resins and Turmeric oil, valued at around Rs. 400 crores.
Turmeric processing technology
Turmeric can be processed into two products Turmeric powder and Turmeric extracts including oleo resins and Turmeric oils.Turmeric oleo resins/oils are extracted through solvent extraction of turmeric powder. The solvent extraction plant can process a variety of spices including Capsicum, Pepper, Amla, Marigold etc. A plant of a capacity of 500 kg per day requires land of 20,000 square ft. and power load of 60 HP.
Since the extracts (oleo resins) are used in food preparation/pharmaceuticals and largely cater to exports, the oleo resin extraction operations have to be compliant with the USFDA, and European food safety guidelines. The companies that manufacture extracts usually obtain certifications such as HCAAP, Kosher, and Halal.
The Turmeric power manufacturing is mostly done by micro enterprises and there are a number of players in each region. Additionally, most large spice powder manufacturers such as MDH spices, Everest Spices, Aachi Masala also sell turmeric powder.
Turmeric oleoresins and oils
This segment has a number of large players as well as SMEs. The large companies extract oils from a number of spices and their products are targeted at export market. (See table 1). These are mostly based in Kerala, due to easy availability of spices. In addition to these large players, there are a number of SMEs that are spread across spice growing states such as Tamilnadu, Andhra Pradesh, Karnataka, Gujarat etc.
|Table 1: Spice Extract manufacturers in Kerala|
|S. No.||Company Name||Product Range||Location|
|1.||Synthite||Value added spice extracts and natural spice powder||Kolenchery, Kerala|
|2.||Universal Oleoresins||Spice Oils, Spice Oleoresins, natural colours||Kochi, Kerala|
|3.||Arjuna Natural Extracts||Formulations based on spice extracts||Aluva, Kerala|
|4.||VD flavours||Essential oils from spices||Kochi, Kerala|
|5.||Plant Lipids||Spice oils and oleoresins||Kochi, Kerala|
|6.||Kancor Ingredients||Oleo Resins, Essential Oils & Isolates, Mint, Menthol & Isolates, Floral Extracts, Speciality Ingredients, Organic Ingredients.||Ernakulam, Kerala,|
|7.||Plant Lipids.||Spices and other Essential Oils.||Kochi, Kerala|
|Source : FineTrain research|
Key consumers of oleoresins in the domestic market include FMCG companies such as Hindustan Lever, Godrej, Colgate Pamolive, herbal products manufacturers such as Ayur Herbals, Dabur, Himalayan Drug Company, cosmetics product manufacturers such as Garnier Laboratories and pharmaceutical companies such as Dr. Reddys, Cipla etc.
Profitability and return on investment
The capital investment required for a Turmeric powder unit would be under Rs. 50 lakhs for a capacity of up to 2 tonnes per day. Since there is limited value addition in the powder manufacturing process and the manufacturer has to pay large commissions to distributors and retailers, the operating margins of such manufacturers would be thin and profitability would depend on their ability to sell large volumes.
Capital investment in Turmeric extraction capacity of 500 kg per day could be up to Rs. 2 crores. The profitability would depend on the spread between the oleo resin and Turmeric price and the yield of the extraction process. A tonne of turmeric can yield anywhere 4-5% of extracts. Assuming that a tonne of turmeric yields 40 kgs of Curcumin (95%) and 30 litres of oil, the gross margin calculation is as under
|Table 2. Turmeric Oleoresin Processing: Profitability|
|kgs||Price (Rs/kg)||Value (Rs.)|
|Total Raw material cost||1,39,500|
Note: The prices of Turmeric and its Oleo resin are based on export data of 2017 provided by DGFT
The overall profitability and return on investment would depend on the producer’s ability to secure regular orders. Further, any value addition to the products by developing formulations based on the extracts can improve revenues as well as profitability.
Why Turmeric processing may be an attractive opportunity
Demand for Turmeric extracts is growing rapidly in foreign and domestic market. For example, India’s Turmeric extract exports have tripled over the past three years from Rs. 150 crores in FY 15 to Rs. 500 crores in FY 18.
The infrastructure availability (cold storage, common infrastructure for grading and sorting of agri products) for food processing industry is improving as government is providing incentives for development of food parks/spice parks etc. Further, food processing units are also being given incentives in the form of capital subsidies to set up and expand their businesses.
 Source: report on state wise/spice wise production by Spice Board Of India
 DGFT data base: http://commerce-app.gov.in/eidb/ecomq.asp
How we can help
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