Business opportunity:  Eco-friendly tableware from Bagasse

India uses nearly 10,000 tonnes of single use plastic every day including plastic bags, multi-layer laminates and disposable cutlery. Imminent ban on single use plastic is likely to create huge demand for alternatives that can replace such products.  One such opportunity is emerging in the tableware segment, where use of plastic plates/takeaway boxes/bowls is rampant.

Bagasse based tableware, an eco-friendly substitute to single use plastic, is rapidly gaining market acceptance, and a number of new enterprises are contemplating entering this field. In this blog, we answer key questions that you may have about starting such a business.

What is Bagasse and can it be directly used to make Tableware?

Bagasse refers to the waste from sugar cane after its juice has been extracted by the sugar mill. it is generally used as fuel in the sugar mills or brick kilns.

Bagasse cannot be directly used to make the tableware. It has to be first converted into pulp, by a paper mill. There are two suppliers for such pulp in India; Yash Papers Ltd and Century Paper and Board Mills Ltd. Pulp can also be imported from Thailand and Iran.

What’s the manufacturing process and minimum viable capacity?

Bagasse based pulp is first mixed chemicals that make it oil and water resistant. It is then fed into forming machine, where it is poured on to moulds and heated for nearly 30 minutes. The finished product is inspected for quality, its edges are trimmed and then it is packaged and dispatched.

The machinery comprises a pulp homogeniser along with several moulding machines, where products of different shapes can be obtained. Minimum viable capacity would be 1 tonne per day.

How does bio degradable cutlery work vis a vis plastic?

Bagasse based cutlery works perfect for disposable applications in terms of its ability to hold oily food as well as hot and liquid products (See Table1). However, since it is made in small volumes, it is at least twice as expensive compared to plastics. Other eco-friendly products such as tableware made from Areca nut leaves also cost as much.

opportunity-table

How big is the opportunity?

Market for plastic based tableware is estimated to be nearly 3 lakh tonnes per annum, assuming that biodegradable cutlery can initially replace 25% of the plastic based products, its market could be around 70,000 tonnes per annum.
The product finds acceptance in quick service restaurants, schools, cinema halls, temples and organisations such as Railways that provide catering services to their passengers. In addition it could also be bought by caterers, who are currently using plastic table ware.

What is the capital requirements and return on investment?

The capital requirement for a minimum viable capacity (1 tonne per day) would be up to Rs. 2.5 -3 crores, depending on the pulping capacity and product mix. The capital requirement per tonne of capacity decreases as the capacity increases as large part of the capital expenditure is towards pulp mixing capacity, whose cost doesn’t increase significantly with rising volumes. For example a pulping machine for 6 tonnes per day of capacity may cost only 30% higher than a pulper that has a capacity of 2 tonnes per day.
The return on investment would be a function of the ability of the company to sell large volumes. In order to breakeven (recover the fixed cost such as interest, depreciation, labour), one needs to operate the plant at 50% utilisation.

What are the key challenges in this business?

Marketing remains the most important challenge across all businesses and Tableware is no different. While demand scenario remains favourable, the product needs across clients are very different. For example product offering required for a QSR may be very different from temple that only needs bowls for prasadam, or an udipi restaurant that would need takeaway container to hold hot liquids. Therefore one must first decide target clientele before finalising the product mix and ordering machinery.
The second important aspect would be to manage raw material supplies and minimise wastage. Pulp has a short shelf life of around 15 days after which it may attract fungal infection, therefore raw material inventory needs to be optimised. Further, product quality should meet user’s specifications, thus minimising rejections.

How can we help you?

We assist green businesses in scaling up their operations through our services in debt raising and market development. If you

  • Would like to know more about Baggase based Tableware business, purchase our report here.
  • Would want to understand your target market- Engage us to do market research
  • Are looking to raise capital, we can assist you with both equity and debt
  • Are looking to sell/purchase a green business, we can identify right business for you and support you throughout the transaction.

Business Opportunity: Eco-friendly Tableware From Bagasse

Download Table Of Contents

Share This:

National Resource Efficiency Policy (NREP): Can it revive the circular economy?

Over the last decade, much has changed in the regulatory landscape of waste management sector as number of old rules (Plastic Waste Management Rules 2011, Solid Waste Management Rules 2000) have been upgraded and new rules (E-Waste Management Rules 2016, Construction and Demolition Waste Management rules 2016) have been implemented. However, the ground realities remain grim: on the one hand, our cities are crumbling under piles of uncollected waste, while on the other hand waste management companies are unable to get enough waste.

In this context, the draft National Resource Efficiency policy (NREP), aims to create an overarching policy framework to promote resource efficiency across all sectors. It recommends a life cycle driven approach for managing resources right from their extraction to disposal. It proposes penalties for extraction of virgin material, design standards for product longevity and reuse, encouragement of production of green products, strict rules for collecting waste from consumers/bulk generators and taxes on landfills. The policy has good intent, but may not be able to achieve the desired impact in absence of a robust circular industry that can collect and process waste.

Historically, waste management policies have been implemented through Pollution Control Boards (PCBs), who are responsible for licensing and regulating the industry. As such, the emphasis has been on regulation, which now needs to shift to industry enablement. Further, NREP must address issues such as lack of access to waste, small scale of operations and high taxes that render circular companies uncompetitive.

Access to waste

India’s circular industry is nascent, with only handful of public listed companies and no unicorns. It mostly exists in selected sectors such as electronic waste, plastic waste and to some extent in tyre, metal recycling and municipal solid waste processing.

Getting access to segregated waste in large quantity is a big constraint for the industry. For example, while annual e-waste generation in India is estimated to be 20 Lakh tonnes, most formal sector recyclers are not able to collect even 5000 tonnes per annum. Similarly tyre recyclers that reclaim rubber from tyres face challenges in collecting waste tyres. Many waste and biomass based power plants have been closed down due to unavailability of segregated waste. Metal recycling industry relies on imported scrap, and construction waste recycling is yet to take off as segregating waste and converting it to useful products is not profitable.

Unlike regular manufacturing industries, where raw material can be bought from other sources, circular economy companies need to collect waste (their raw material) from a wide variety of sources and incur considerable cost in transporting it to the recycling centres. Additionally, generators of waste are not ready to pay for its disposal; instead, they expect to be paid for their waste. Moreover, composition of waste changes on a daily basis, making it difficult for companies to deliver standardised products, thus affecting their financial viability.

Waste can be divided into two categories; post-consumer waste and pre consumer (industrial) waste. The cost of collection of post-consumer waste is high and volumes are low, as consumers do not have sufficient incentives to dispose the waste in a responsible manner. For example, most of the Multi-Layer Plastic (MLP) waste cannot be recycled as it is mixed with household waste and the cost of cleaning MLP waste makes the recycling unviable. Industrial waste is somewhat easier to collect, but the waste generators are nonetheless unwilling to pay for its disposal. To add to this, high end machinery for recycling is mostly imported, adding to the project cost of recycling ventures.

Some of the remedial measures that could be implemented for this could are:

  • Funding mass awareness programmes on waste segregation, waste disposal and capacity building of informal sector should be routed through waste management companies who have incentives for doing it effectively as they stand to gain from higher waste collection
  • Incentivise domestic machinery manufacturers to develop indigenous machinery for onsite waste segregation/processing

Financial incentives to achieve economies of scale

India’s recycling industry is dominated by a large number of micro enterprises with low processing capacities. For example, a majority of the 7500 (Report by FICCI, 2017) plus formal and informal plastic recyclers, have capacities lower than 10 tonnes per day, whereas globally new plants are being built with a capacity of more than 100 tonnes per day. Similarly, most of around 300 e-waste recycling companies dismantle e-waste manually and have not invested in modern facilities for recycling/refining the waste. The tyre recycling companies that have been dismantling cross ply tyres need to invest in technology to be able to process radial tyres.

NREP has proposed to set up a green fund to facilitate access to finance for technology and process improvement. A part of this fund could be exclusively reserved for financing value addition related to capex of circular economy companies. This fund could work on the lines of energy efficiency cluster financing program of the World Bank/SIDBI which provides financing for energy efficiency/pollution reduction measures to foundries.

Rationalising taxes in the entire value chain

NREP proposes rationalization of the tax regime to make secondary raw materials price-competitive. The taxes would need to be rationalised throughout the product value chain. For example, the GST rates on plastic scrap have already been reduced to 5%, but the products made out of the plastic waste such as plastic granules, roofing sheets, furniture, sacks etc. attract 18% GST, in line with the products made from virgin material. Further, since recyclers buy their raw material from scrap sellers, many of whom are not registered with GST, they are not able to claim input credit, and therefore their effective taxation is higher than that of manufacturers of products based on virgin products.

Further, NREP may also want to advocate the case of rationalisation of taxes/subsidies on the products that compete with the recycled products. For example, organic fertilsier (made from food waste) competes with chemical fertilsier such as Urea/DAP, which are heavily subsidised. Rationalisation of subsidies on chemical fertilsier will provide a boost to the organic fertiliser sector and make the operations of agri waste recycling companies profitable.

Monitoring the health of circular industry

The new policy lists resource productivity, domestic material consumption, extraction and output as indicators for measuring resource efficiency. It may be prudent to add circular industry health to the list of indicators, which could be measured in terms of growth in sales of formal sector enterprises, their employee strength and capital expenditure.

In summary, NREP with its proposed measures of life cycle management of resources, is a good step toward building the circular economy. However, the implementation approach needs to be different though, one that gives priority to the entrepreneurs /enterprises in the sector.

How can we help?

We are an advisory firm for small and medium enterprises in green industries. We can help you evaluate the viability of your proposed green venture and assist you in raising funds for growing your business. If you are looking to purchase or sell your business, we can help you identify the right buyer/seller and hand hold you throughout the transaction.If interested, please get in touch with us at admin@finetrain.com We look forward to helping you negotiate your path to a successful SME business!

Share This:

How to successfully buy an SME business!

A second-generation entrepreneur in the construction industry is not inclined to join the family business. He would rather start his own. However, his previous start up venture failed, and this time around he would like to buy a running business.

A seed production company is looking to leverage its expertise in agri-related businesses and is interested in buying companies in the food processing industry.

A Mumbai based waste management company is looking to acquire similar companies in South India to increase its market.

Just three examples, but which show the variety of reasons entrepreneurs may want to buy businesses – gaining access to clients, boosting their current business, and simply, improving their chances of success.

Let’s take a closer look at the reasons for buying a business…


  • The existing business comes with its infrastructure/team and clients, thus saving you the time it would take to build all these. Given that chances of survival and success of a new businesses are less than 10 per cent in India, buying an existing business may be a less risky proposition.
  • In some industries, obtaining regulatory approvals or large contracts may be cumbersome and time-consuming. Here, a new company is better off buying an existing business. For example, for an entrepreneur looking to start an environment testing lab, acquisition of a National Accreditation Board for Testing and Calibration Laboratories (NABL) certified lab1 would be attractive, as such certification takes more than a year to obtain. Similarly, businesses that have long term contracts with large institutions such as Indian Railways or defence organisations would be attractive as the process of empanelment with these organisations can be very cumbersome.
  • You may not have the know-how required run a new line of business and buying a business would give you access to the expertise. For example, you could be interested in renewables such as wind energy, biogas, which require very specialized expertise.
  • The new business complements your existing business and you can sell its products to your existing customers. For example, you could be in the business of selling irrigation equipment to farmers and would like to acquire businesses that sell organic fertilisers.

The process of buying a business can be long and overwhelming, requiring a long search process, followed by legal, financial due diligence and obtaining financing for the acquisition. The following steps may help you to move forward quickly.

  1. Understand your motive for purchasing a new business: The motives for investing in a business can vary from the need to own and operate a business to earning a steady income and appreciation in the value of your investment. The desire to own and operate a business can be very strong, if you come from a business family and are not keen on joining a family business. In such a case, the business must be selected based on your strengths, location, budget etc., as described in the document. If you are looking at purchasing a business as an investment, the task is much simpler because the angel investing eco system is getting organised in India and is facilitated through several angel networks, colleges and incubators.
  1. Select the sectors you are looking to invest in: Knowing what business is right for you is perhaps the most important aspect of investing in a business. Having clarity on the sector as well as your expertise is a good first step in the process of selecting a business, as it would help you narrow down your choices and simplify the process of evaluation.

    The key to identifying right business starts with understanding your expertise, experience, and interest which can add value to the business. For example, say you have experience in selling pharmaceuticals – you may want to look at companies in nutraceutical/pharma sectors, so that you can leverage your familiarity with the sector. Are you are interested in solving problems related to the environment? Does lack of access to drinking water in India seem like an opportunity to you? Then, you may want to explore companies that are in the business of water recycling.

  1. Assess your budget: Buying a business can be the most important financial decision in your life, not only because of considerable expense at the time of buying but also while running and growing the business. Therefore, it is important to assess the total outlay/budget that you can keep aside for the transaction and evaluate your funding options. If you are planning to liquidate your other assets to finance the purchase, you should estimate the time required for liquidation as well as value of the assets.

    Financing by a bank would depend on your credit profile, nature of business being bought and ability of the business to generate enough cash so that it can service the debt. Banks would find it easier to finance the purchase, if the consideration is towards assets whose value can be ascertained easily. For example, if you are purchasing a food product company and the majority of purchase value is towards the brand, banks may not be willing to fund such a transaction.

  1. Find a relevant business: This is the most difficult part, as many businesses that may be looking to sell do not openly talk about it, fearing loss of reputation. However, once you have decided on the sector, you can reach out to various stakeholders including machinery suppliers, technical consultants, bankers etc., who may be aware of businesses that are available for sale.

    You can also directly contact businesses that you are interested in. The database of such businesses can be found from the local industry associations. Additionally, there are a number of online market places for local businesses that are on sale.

  1. Evaluate the business: It is important to evaluate the reason for the owner to sell the business. Is it because they are unable to mobilise additional capital to meet their growth needs, or because market prospects for their products/services are declining? Sometimes founders want to focus their energies on other ventures or retire from the business. The key questions that you need to get addressed should include:
    1. Is the product/service relevant to the market in the short-medium and long run?
    2. What is the cost of manufacturing and sale of goods as compared to its selling price?
    3. What skills does it need to run the business; are those exclusively with the owner, and will you be able to get those skills in the market?
    4. What will you bring that will make the business more profitable?
    5. Does the business come with land and are you interested in buying the land?
    6. What are the liabilities of the business – sometimes the liabilities may not reflect on the company’s books as the owner may have taken unsecured loans (from friends/family) and promised them a share in the business.
    7. Do you want to buy a business or just its assets? Typically, if a business has huge liabilities and is being sued by its creditors, its assets would be sold separately. For example, many banks sell the assets of their borrowers that have turned into non-performing assets.

      Additionally, you can develop your own filters for evaluating a business – for example you can consider businesses that have been existing for at least three years, sell their products to other businesses (and not in the retail market) and do not have more than 50 employees.

  1. Value the business: Valuation of a business would depend on a number of factors, but most important would be its ability to generate cash flows in the future and the amount of capital it needs to grow the business to the next level. The value would also be a function of its customer base and share of revenue from repeat orders. For example, a cold storage company with regular rental income from its existing projects is less risky than a recycled plastic pallet manufacturing facility that sells its pallets to only one large customer.

    The value/price of the opportunity is also a function of who among buyer and seller needs the deal to take place urgently.

  1. Obtain financing and close the deal: Once you have informally agreed to buying a business, a letter of intent specifying your desire to buy the business, subject to completion of due diligence is typically provided. This covers several aspects such as compliance to various laws and verification of financial statements.

    In the meanwhile, financing for the sale must be arranged through a bank loan or your own resources. Even if bank financing is available, you would still need to contribute at least 25-35% of the purchase consideration.

    On completion of due diligence, a sale deed is signed indicating transfer of the business to the buyer and sale consideration. You may also want to insist on a non-compete agreement and minimum handholding for a year by the existing owner.

Buying a business is very different from buying real estate, where negotiation is largely restricted to property value. The process of purchase of a business requires wide-ranging skills including understanding seller motivation/expectations, business valuation, negotiation and obtaining financing. We suggest that you hire professional services to successfully close the deal.

How can we help?

We are an advisory firm for small and medium enterprises in green industries. We can help you evaluate the viability of your proposed green venture and assist you in raising funds for growing your business. If you are looking to purchase or sell your business, we can help you identify the right buyer/seller and hand hold you throughout the transaction.If interested, please get in touch with us at admin@finetrain.com We look forward to helping you negotiate your path to a successful SME business!

Share This:

Multi Layered Plastic Recycling: opportunities and challenges

Multi layered plastics (MLP) such as potato wafer packet, chocolate wrapper, wrappers for ready to eat foods and pharma products are criticised for their lack of recyclability, leading to littering of our cities and oceans. However, MLPs remain the cheapest and most viable option for packaging of food and pharma products and it may not be possible to completely replace them atleast in the near term. In this blog, we examine entrepreneurial opportunities available in MLP waste management and challenges faced by these businesses.

How big is the MLP waste problem?

India consumes close to 150001 tonnes of plastics per day, of which only 60% is recycled. Packaging plastics (MLPs and single use plastics such as light weight plastic bags, coffee cups, disposable utensils), contribute to majority of the non-recycled plastics. MLPs cannot be recycled economically, as these are made of two or more layers of plastics and separating the layers is not cost effective.

MLP waste can be broadly divided into two categories: industrial waste and post use waste. Industrial waste refers to the waste generated in the flexible packaging /converting units, this waste is relatively clean and can be converted into products such as plastic ropes/bags or fuel. Post use waste comprises waste generated from households and other consumption centres such as malls, commercial establishments. Such MLPs are contaminated and have high moisture content as they are mixed with the organic waste; it is this waste, which mostly finds its way to the landfill.

Is there a shortage of MLP waste processing capacity?

MLP waste can typically be converted into power or fuel, through a number of processes (see picture 1). Additionally, it can also be used a filler for laying roads.

Picture 1: Laminate waste treatment options
wastetreatment
Among above mentioned methods, co processing in cement plants has taken off to an extent. Currently around 542 cement plants all over the country have made investments in co processing facilities that allows them to use alternate fuel in the kiln. As per Cement Manufacturers Association (CMA), cement plants currently have a Thermal Substitution Rate (TSR) of 4%, indicating that they meet 4 per cent of their fuel requirements from alternate fuels including plastic waste. Cement industry has proposed to increase their TSR to 25% by 2025, which will allow them to consume up to 12 million tonnes of plastic waste. While cement plants can handle contaminated waste, it has to be moisture free as wet waste is difficult to process.

Waste To Energy (WTE) plants burn unsegregated waste to produce power. Currently there are around 7 operational WTE plant, 403 under different stages of construction. WTE plants are ideally meant for processing dry waste, as wet waste (largely organic in nature) has lower calorific value and therefore is ineffective. However, given the lack of availability of segregated waste, they use mixed waste. While these plants have faced issues related to their compliance with pollution control norms, they are still preferred by the municipalities around the country as they can handle large amounts of unsegregated waste.

Pyrolysis refers to the process of converting plastic to oil, which can be used as a fuel. This process also needs clean /moisture free waste. Pyrolysis is yet to take off, largely to due unavailability of clean waste and risks related to the pollution compliance of such units. However, these plans can work well in industrial estates where availability of 2-3 tonnes of clean waste per day is assured.

Plastic has been used to build roads in Chennai, Indore, Pune and Meghalaya. The challenges again are lack of availability of required amount of clean plastic waste.

As such, the key issue that hampers laminate waste management is lack of availability of clean laminates that are fit to be processed and not shortage of waste processing facilities as such. The existing capacity of the cement and waste to energy facilities is enough to meet the needs of the industry.

Where are the opportunities for new businesses?

On the one hand, there is huge amount of MLP and plastic waste which needs recycling and on the other hand waste treatment providers such as cement kilns, WTE and pyrolysis plants don’t get desired quality of waste. Thus, there is a large opportunity to set up businesses that can incentivise households to segregate dry and wet waste, collect the segregated waste and channelize it to recyclers. Given the potential opportunity, a number of companies (see Table 1) have started aggregating household waste and supplying it to recyclers.

Table 1: Waste Management companies
CompanyLocationRemarks
Lets recycleAhmedabadWaste management, waste handling and reporting services for corporates, also owns recycling facilities, funded by impact investors such as Aavishkaar and Asha impact
Waste venturesHyderabadWaste collection, segregation and channelization , has been funded by Vilcap investments
Karo SambhavGurugram, HaryanaE waste PRO, funded by IFC, clients includes HP, Apple Del and Xiaomi
GEM enviroDelhiPlastic waste PRO, counts Bislery, Pepsi, Coco Cola among its clients
Raddi ConnectMumbaiWaste collection and channelization
Thekabadiwala.comBhopalDoorstep waste collection and channelizing the waste,  recently raised angel funding of Rs. 3 crores
Saahas zero wasteBangaloreWaste management, EPR and consulting services, has raised funds from India Angels network
Rudra Environmental SolutionsPuneCollects plastic waste and converts it to fuel in their own pyrolysis plant. Has been acquired by Blue Planet environmental solutions Pte limited, Singapore
Source: FineTrain research

Further, changing regulatory landscape in plastic waste management sector has boosted the viability of this sector. The regulations on plastic waste management are evolving and EPR (extended producer responsibility) was introduced in 2016. EPR makes producers, importers and brand owners responsible for processing of end of life plastic waste generated by their products. These companies can also take services of a Producer Responsibility Organisation (PRO) to manage their waste. Although, EPR for plastic waste is still in its early days, some FMCG companies have started warming up to this idea. For example, Indian Pollution Control Association (IPCA), a Delhi based PRO is implementing a project called “We Care” on behalf of FMCG companies such as PepsiCo , Nestle, Dabur and other to collect MLPS and channelize them to the recyclers. Recognition and acceptance of a PRO in plastic waste management provides a sustainable source of revenue for waste management companies and therefore makes their operations more viable.

Regulation is also slowly making an impact on waste segregation mindset of Indians. For example, in Mumbai and /Bangalore in situ (on site) composting is mandatory for bulk generators who generate more than 100 kg of waste every day as the municipality does not collect wet waste from such bulk generators.

Increasing awareness about consequences of informal recycling on the health of workers and environment is also bringing about a change in the mindset of people to own up their waste and sell it only to authorised recyclers. This in turn is likely to lead to an increase in demand for PROs in the long term.

What are the key challenges?

While the opportunity is large, the waste management companies face challenges related to lack of adequate clean waste and funding.

  1. Competition from informal sector: Almost all companies in formal waste recycling sector including e waste, bio-waste and plastic waste do not get adequate waste. For example more than 90 per cent of4 e waste is handled by informal sector and 50 per cent5of plastic recycling is done by informal sector, resulting in less than adequate availability of waste to the formal recyclers. The informal sector is able to offer higher prices for the waste vis a vis formal recyclers as they their processing costs are lower due to lower operational/manpower costs/capex costs. For example, a formal plastic recycling units needs to invest at at-least Rs. 1 cr in a recycling unit including the processing machinery and pollution control equipment for treating dust and waste water. However, the cost for informal sector are negligible as most of the work is done manually, and without any compliance to pollution control.
  2. Access to funding: The waste related business are working capital intensive, as they need to pay for the waste upfront, while they get paid only after sizable quantity of each type waste is collected, sorted and sent to the recycler. Additionally, they need large godown for waste storage and employ a number of people in sorting the waste. Further, they require funds for conducting awareness campaigns and marketing. Since these businesses do not have large physical assets, traditional channels such as bank are not able to meet their requirements. Similarly, such businesses also find it difficult to attract equity capital, as it is difficult to scale up operations across geographies.
    However, emergence of impact investors and green funds has improved the funding prospects of these businesses. As can be seen in the Table 1, a number of investors including IFC, Aavishkaar, Asha impact and angle investors have invested in waste related businesses.

How can we help?

We are an advisory firm for small and medium enterprises in green industries. We can help you assess viability of your proposed plastic waste related venture including availability of waste, technology selection and market for recycled products. If you already have a waste related business, we can support you in raising capital for your growth plans and also in acquiring green businesses.

Reach us @

Write to us: bchhatre@finetrain.com , admin@finetrain.com
Call us: 800 888 4932

Share This:

Loans to MSME in 59 minutes — A radical reform or just an eyewash?

One of the biggest announcements for MSME sector in 2018, was the 59 minute loan scheme, which promises loans of up to INR 1 crore to MSMEs from public sector banks (PSBs) through a seamless online lending market place called PSBLOANIN59MINUTES. This web portal approves a loan in 59 minutes and connects the borrower to the bank branch for sanction and disbursal.

The process is as follows: on submission of the information online, the portal does an analysis of the data and approves or rejects a loan. For loans that are approved in-principle, the portal provides information on banks that offer required product, loan amount, rate of Interest etc. The applicant has to choose the branch of the bank through which the loan shall be processed and disbursed and make payment of a convenience fee of INR 1000. The “in-principle” approval is valid for a period of 15 days from the date of approval. The Bank receives a preliminary report from the portal, where a set of 22 parameters are checked along with profile of the promoters, business activity, analysis of past financial statements, risk scoring, assessment of limits, fraud analysis and verification from GSTIN and MCA. Then, the applicant has to approach the bank branch along with the system generated approval letter and list of indicative documents. The bank would do required due diligence and sanction/disburse the loan.

As per MSME PULSE , the size of loans to MSME (under INR 25 crore) is estimated to be around INR 25 lakh crore, of which the share of public sector banks is large (around 48%). While the share of PSBs in MSME lending has been declining, they still retain a dominant share of over 75% for loans under Rs. 10 lakh, highlighting their critical role in financial inclusion. The biggest advantage of a PSB loan is its low cost, which could be 5-7 % lower than that of NBFCs and fintech portals. For a small borrower looking to borrow a collateral free loan under INR 1 crore, PSB loans are the most accessible loans, as both private banks and NBFCs mostly lend against a security. PSB loans are also an important source of funding for the manufacturing sectors such as food processing, textile, chemicals, and auto components.

As such, this policy measure may be a sincere attempt to reduce the time and effort required to secure credit from PSBs, thus easing the life of an entrepreneur. The demand for such a portal is validated by both the large number of applications (around 1.31 lakh) received within 2 months of its launch, and their total loan value. To substantiate, assuming an average loan size of INR 30 lakhs, these applications translate into loan requirement of INR 40,000 crore, which is almost 5% of the total MSME credit for loans below INR 1 crore . However, unless these applications translate into loan disbursals, the portal would remain just another channel for the PSBs to generate qualified leads

Advantages of the portal

The difficulties in getting a loan from PSBs stems from unwillingness of the ground level staff to even acknowledge/accept the loan application. Even after a loan is approved, the high turnaround around time for the disbursal of the loan remains a challenge. Therefore, the portal is a good first step to ateast reduce the number of branches to be visited. In addition, the MIS behind the portal would make it easier for the banks to closely monitor reasons for rejection of a loan.

Performance

While the intent of the scheme is good, its success depends on the ability of PSBs to quickly disburse the loans that have been approved by the portal. According to official data, the portal received 1.31 lakh applications during the first 50 days of its launch, of which around 1.12 lakh applications were approved, with a strike rate of 85%. However of these 1.12 lakh applications, sanctions were accorded for just 40,669 cases, which translates into a loan sanction ratio of around 36%. This loan sanction ratio could actually be overstated as the applications through the portal may include those for loan renewals from existing clients of banks, which are likely to have higher approval to disbursal ratio vis-a-vis that of a new client. Even if we assume that these applications are all new, the conversion ratio does seem low, as just over a third of the approved loans seem to have been sanctioned. The above performance indicates the following gaps:
1) High approval ratio of the portal suggests one of two things: either most of SMEs that are applying through the portal have good credit quality or the portal’s credit sanction norms are relaxed. Low loan sanction ratio suggests that there are differences in the credit assessment methods of banks vis-a-vis that of the portal;
2) Takeover of loans among banks is not easy, and banks are finding it difficult to extend loans under multiple banking arrangements
3) Lack of resources at bank branches to follow up with the SME and carry out due diligence
4) Unwillingness at branch level staff to lend under CGTMSE

Suggestions

To address the above issues, some of the following steps may be needed to improve the credit evaluation process of the portal along with related policy measures to facilitate loans by banks and improve their loan disbursals:

Process improvements that may be needed to improve loan disbursal

systems to increase the likelihood of the sanction of approved loans. Specific areas that require attention are:

  • The portal should be able to capture the existing liabilities of the borrower correctly so that rejection from the banker does not take place on account of inaccurate information on the existing debt levels. Moreover, the risk rating parameters of the portal have to be similar to that of the banks so that there are no disputes in the quantum of credit sanction.
  • For borrowers seeking term loans for a new asset, the portal needs to assess viability of new projects and the availability of other resources such as required land/technology with the entrepreneur.
Policy measures to support easy lending
  • Relaxation of takeover norms would be required to facilitate easy takeover of loans among lenders. For example, for borrowers who already have a secured loan, a new lender may not be willing to provide a collateral free loan and may want to take over the existing loans as well. Similarly obtaining any enhancement on working capital loan from a different lender would be difficult, as banks would not be inclined to share security on pari passu basis for such small exposures.
  • Since MSME sector credit seekers also require assistance in filing the application, consultants enrolled with SIDBI could be incentivised to take up the work related to filling application forms
  • Many small enterprises do not have GST registration and may not want to obtain the same as the threshold turnover for GST registration has been revised. The portal may want to waive GST registration as a mandatory requirement for companies with turnover of INR 40 lakhs. The credit assessment parameter for such companies could be based on bank account statements and alternate data points such as profile of their customers, industry profitability, and track record of the utility bill payments.

In the absence of the above measures, this web portal would just be a superfluous channel for generating qualified leads for the PSBs alongside their websites and tie ups with online e-commerce platforms; what would be really enterprising is converting these leads into qualified loans for disbursal.

Share This:

Bio-CNG: Should you consider entering this business?

Though Biogas has been around for nearly three decades, it has been a small industry, dominated by family size plants used for providing cooking fuel and power. Prospects for Biogas plants are improving slowly but significantly, largely driven by the government policies that have allowed use of Bio-CNG (purified Biogas, also known as Compressed Bio Gas or CBG) in commercial vehicles and availability of subsidy for large scale plants. In September 2018, government of India (GOI) announced a policy on Sustainable Alternative Towards Affordable Transportation (SATAT), which proposes to set up 5,000 new Bio-CNG units across the country by 2025 and generate 15 million tonnes of Bio-CNG.

India is the third largest energy consumer in the world with fossil fuels accounting for over 90 per cent of the energy mix. Renewable fuels such as Bio-CNG present a huge opportunity as they not only reduce our dependence on imports but also offer a solution to tackle the growing amount of organic waste and pollution arising out of crop burning.

No wonder then that Bio-CNG industry is suddenly attracting several entrepreneurs, including existing Biogas facilities that are looking to upgrade to Bio-CNG. Profitability of Bio-CNG businesses depends on a host of factors including macro issues that influence demand for cleaner fuels and local elements such as availability of feedstock, capital requirements and ability of entrepreneurs to market their products. This article analyses four key factors that affect viability of Bio-CNG ventures.

1. Demand for cleaner fuels

Natural gas contributes to around 23% 1of primary energy mix (see Figure 1) in India, with a consumption of around 164 MMSCMD2 (equivalent to 45 million tonnes per annum), growing at around 4 per cent per annum. Power, Fertiliser and City Gas Distribution (CGD) are key consuming sectors (see Figure 2). Since the domestic production of gas has not increased significantly, consumption of imported gas (LNG) has been rising (see Figure 3).

Bio-Chart

Consumption of gas is constrained by the limited availability of infrastructure related to its supply and distribution. Gas distribution network pipelines are available only in 96 districts in Northern and Western parts of country. Similarly, there are only 1424 CNG dispensing stations, 82% of which are located in Maharashtra and Gujarat3. Petroleum and Natural Gas Regulatory Board (PNRB) is expanding City Gas Distribution (CGD) network significantly so as to cover 400 districts and set up additional 9000 CNG pumping stations. The CGD network will be used to supply Bio-CNG also, therefore boosting its demand.

2. Cost competitiveness of Bio-CNG vis-a-vis other fuels

For large scale adoption, Bio-CNG would need to be cost competitive with LNG, commercial LPG and fuel oil that are used by the transport and industrial sectors. As per SATAT, the introductory price (ex- factory) of Bio-CNG is likely to be Rs. 46/kg and retail price could be around Rs. 52-55 per kg ($14–$15 per MBTU).

The prices of LNG have been decreasing of late, and landed prices of LNG in the near term are expected to be around $ 13 per MBTU, thus translating into a price of Rs. 48 per kg. Over the long term, significant decrease in LNG prices, would put pressure on Bio-CNG prices also.


Note: landed prices of LNG have been calculated by adding $5 to the cost of contracted LNG, to account for cost of regasification and distribution

With regard to Bio-CNG’s cost competitiveness with industrial fuels such as LPG and fuel oil, according to CRISIL4 , at an average crude price of $64 per barrel, landed cost of fuel oil and LPG would be $12.1 per MMBtu and $16.9 per MMBtu respectively, as against Bio-CNG’s expected prices of $14-15 per MMBtu. Therefore any significant decline in crude prices from current levels could also put pressure on Bio-CNG prices.

The key question that needs to be analyzed is whether a Bio-CNG plant will be profitable at a price of Rs. 46 /kg (ex-plant). Important components of Bio-CNG cost include feedstock, power, and manpower and capital costs, with feedstock cost accounting up to 40% per cent. Therefore feedstock cost (including transport) and its biogas yield play a critical role in determining viability of Bio-CNG unit. For example, a feedstock such as cow dung has a poorer biogas yield vis-a-vis other sources, resulting in lower Biogas output and higher capital costs. However it may be available free of cost, thus reducing the operating cost and making the operations viable.

Table 1: Bio-CNG cost (Rs/Tonne)
Raw Material 16,931.22
Direct Labour 4,162.26
Power 5,333.33
P
Others
3,153.54
Operating costs 29,580.35
Interest and depreciation 12,195.66
Total cost 41,776.01

An indicative cost structure for a press mud based BIO-CNG unit is provided in Table 1. It has been assumed that the capacity of the plant is 10 TPD of Bio-CNG and its capital cost is Rs. 34 crores, with a subsidy of Rs. 8 crores. The plant procures press mud at a price of Rs. 800 per tonne and press mud yields about 105 cubic meter of Bio gas per tonne.

As can be seen from the Table 2, the cost of Bio-CNG increases from Rs. 39,000 per tonne to Rs. 52,000 per tonne due to an increase in the feedstock cost from Rs. 600 per tonne to Rs. 1100 per tonne.

table-second

As such, to be competitive, the Bio-CNG unit must get feedstock almost free; therefore units with captive access to the feedstocks are more likely to succeed.

3. Capital cost

As a thumb rule, cost of a project that handles around 200 tonnes of waste per day (produces 10 tonnes of Bio-CNG per day) is likely to be around Rs. 30-35 crores. The fixed cost (interest and depreciation) contributes to as much as 30 per cent of the total cost of production and this can vary depending on the cost of land and machinery and timely receipt of subsidy, as described below.

  • Land cost: Around 4 acres of land is required to set up a plant that can handle 200 tonnes of waste per day. The cost can vary hugely depending on the location and whether the land is agricultural or industrial, land cost is typically funded by the entrepreneur.
  • Machinery and civil work: These together contribute to almost 70 % of the cost of a Bio-CNG plant. The machinery comprises biogas holder, scrubber, upgradation unit, plant automation equipment and piping/electricals and its cost can vary a lot across vendors depending on whether they are manufacturing it in house or procuring it from others. Civil work is typically executed through local contractors and its costs may not differ across vendors.
  • Timely receipt of regulatory approvals: A Bio-CNG unit requires a number of permissions including a license from Petroleum and Explosives Safety Organisation (PESO), fire safety certifications and a certification from MNRE (Ministry of New & Renewable Energy). Ability of the company to secure these licenses on time can minimize delays in commissioning of the plant and result in cost savings. Additionally, receipt of subsidy is also subject to project completion and commencement of commercial production and any delay in project commissioning would also delay the subsidy, therefore increasing the interest cost.

Since purity/quality and specifications to standards is of topmost priority for a Bio-CNG unit, quality of machinery/upgradation technology should not be compromised. Significant cost savings can be realised by working directly with OEMs who can provide both biogas fabrication and CBG upgradation technology, instead of engaging with contractors who would outsource critical plant components.

4. Market

While the offtake for Bio CNG from OMC is assured to an extent, it would be important to develop alternate set of customers such as industries/hotels, who can perhaps provide better pricing/payment terms and provide cushion when the demand from OMC declines. Also, the potential for sale of organic fertiliser would need to be assessed. Fertilisers/compost are typically sold through dealer network and require large sales force that can educate farmers on benefits of organic fertilisers. Alternatively, the option of bulk sale to fertiliser companies needs to be explored.

Our view

The need for cleaner fuels is evident given that by 2030, under the Paris Climate Change Agreement, India has committed to meeting 40% of its electricity con from renewable energy sources. While macro environment remains positive, the key risk to a Bio-CNG plant viability is lack of any linkage between the feedstock and final product price and lack of clarity on the price revision mechanism under SATAT. Since Bio-CNG would compete with fossil fuels, its pricing would depend on the price of CNG/LPG, whereas the price of its feedstock may move very differently. This is already the case with biogas based power plants/waste to energy plants that are not able to compete with decreasing tariffs of solar/wind power plants. Therefore, feedstock analysis, availability and long term agreements for purchase of feedstock are critical to the viability of Bio-CNG plants. Industries such as sugar mills, distilleries, and poultry farms that have captive access to feedstock would be most favourably disposed to take advantage of this opportunity.

How can we help?

We can help you assess viability of your proposed Bio-CNG venture and support you in raising capital for the same. If you are looking to purchase/sell an existing Biogas/waste management company, we can identify prospective buyer/ seller and support you throughout the transaction.

Reach us @

Write to us: bchhatre@finetrain.com , admin@finetrain.com
Call us: 800 888 4932

Share This:

Change in MSME definition: Does it help the sector?

The union cabinet recently approved a change in the definition (see Table 1) of Micro, Small and Medium enterprises (MSME), to base it on their turnover as against investment in fixed assets. The Micro, Small and Medium Enterprises Development Act, 2006 will be amended accordingly to reflect the new definition. A change in definition of MSME assumes significance as it is used to provide a number of incentives such as capital, interest and technology/market promotion subsidy by the central and state governments.

Table 1: MSME definition
EnterpriseEarlier definitionNew definition
MicroManufacturing enterprises: Investment in plant and machinery< INR 25 lakhs
Service enterprises: Investment in equipment/machinery<INR 10 lakh
Annual Turnover< INR 5 crore
SmallManufacturing enterprises:Investment in plant and machinery between INR 25 lakhs and INR 5 crore
Service enterprises:Investment in equipment between INR10 lakhs and INR 2 crore
Annual turnover between INR 5 crore and INR75 crore
MediumManufacturing enterprise: investment in plant and machinery between INR 5 crores and 10 crore
Service enterprises: investment in equipment between INR  2 crores and 5 crores
Annual Turnover between INR 75 croreand 250 crore
Note: Turnover of enterprises is likely to be calculated based on GST returns

The new classification may result in many medium enterprises being classified as small enterprises (or small getting classified as micro) based on their turnover. Such reclassification would be positive for enterprises in sectors such as engineering, machine fabrication, apparel, construction contractors etc, where a large number of MSMEs are vendors to public sector enterprises (PSUs). These PSUs reserve 20 per cent of their procurement requirements for micro and small enterprises.

Further, a turnover based definition coupled with incentives for filing GST will encourage MSMEs to file taxes and transact through bank accounts, resulting in improved information availability on the sector for the policy makers. The GST filings of 2017-18, already show an increase of almost 50 per cent in the number of unique indirect tax payers.

The most significant impact though would be on state governments who would now have to revise their industrial policies that currently offer incentives to new enterprises based on their investment in plant and machinery. These policies could broadly be divided into two categories:

  • Capital investment subsidies (subsidies on machinery, building); and
  • Interest related subsidies where loans given to micro and small enterprises attract lower interest rates.

For example Government of Telangana offers Interest subsidy under Pavala vaddi on the term loan taken for fixed asset by new micro and small enterprises. The amount of loan is currently governed by the investment guidelines as defined by the MSME Development Act, 2006. This scheme may have to beredesigned to reflect the new MSME definition. Similarly, central government schemes such as PMEGP (Prime Minister Employment Generation Programme) that provide subsidy to micro and small enterprises will also have to be revised accordingly.

As such, the change to a more transparent mechanism based on turnover is a welcome step as it would make it easier for MSMEs to grow and transition from micro to small and medium enterprises. Further, unlike earlier definition which incentivised enterprises to remain small (as the incentive decreased with the increase in fixed assets), the new definition would likelystimulate investment in the sector.

Share This:

Precast Concrete – Growing Business Opportunity

Precast Building elements refer to building parts such as walls, columns, beams, slabs that are made in the factory and transported to the construction site, as against conventional method of onsite construction. These can be used for all types of construction including high rise residential buildings, commercial projects, villas etc. Precast walls can be used for factories, warehouses and also as fences, partition walls etc. Since precast concrete elements are made in a factory, construction is faster and more precise as compared to onsite construction.

Precast is not new in India, it has been well adopted in civil structures such as tunnels, bridges, flyovers and underpasses. Usage of Precast concrete products for commercial & residential construction has started getting acceptance over the past 5 years, mostly in IT offices, factories and hospitals.

Precast technology requires considerable initial capital expenditure (for the factory and equipment) and is most suitable/viable for projects where a large amount of quality construction has to be delivered quickly. Potential for use of precast elements on a large scale seems to be emerging from the growth of affordable housing[1], which is attracting a number of real estate developers as well as financial institutions that are looking to lend to affordable home buyers. The sector has got an impetus from Pradhan Mantri Avas Yojana, which was launched in November 2015 and aims to build 2 crore houses by 2022. The GOI has provided several incentives including the status of infrastructure sector for easy access to funding, 100% tax deduction on profits on affordable housing projects for the developer and credit linked subsidies for the home buyers.

Who are the key players?

The players in the precast market are of two types – builders who have invested in this technology for their captive usage and construction contractors who provide turnkey solutions. Some of the real estate developers who have set up their own precast plants include Supertech, Amrapali, and Sobha Developers etc. The contractors that provide precast related turnkey solutions are PRECA solution, Teemage Precast, KEF Infra, VME Precast, L&T etc.

Markets such as Bangalore, Noida, and Chennai have seen early adoption of the precast technology. Hyderabad is also picking up and two new precast plants have been set up there by the local construction industry.

What is the manufacturing process?

The process starts with the preparation of concrete in the batching plant, followed by casting on the specially prepared bed, curing and transportation to the site. Manufacturing can be semi/fully automated depending upon the capital investment (See Figure 1).

Figure 1: Manufacturing process

The machinery required for the plant setup includes batching plant, pallet/bed, shuttering profiles, concrete distributor, oscillator (for compacting concrete), plotting & cleaning unit (can be done manually), concrete smoothening device, cranes, automation and miscellaneous equipment. The machinery is provided by a number of international companies such as Elematic (Finland), Sommer Precast, Weckenmann (both Germany) and Spiroll (UK) that have offices in India.

How much Capital is required and what will be the profitability?

The capital required for a production capacity of 600 sq.m/shift including investment in plant and machinery and working capital would be over Rs. 30 crores. The overall profitability & return on investment would be contingent on the entrepreneur’s ability to secure regular orders. In order to breakeven, the entrepreneur should be able to run the plant at 50% capacity or construct around 4-5 lakh sq.ft. per annum.

What are the key challenges?

Despite its merits, there are some challenges for entrepreneurs looking to enter the Precast industry.

  1. Given the large amount of capex required to set up a precast unit, it is viable when the construction volumes are large and hence the entrepreneur/construction contractor should be addressing a large market or have some anchor customers that would allow at least 50% utilisation of the capacity.
  2. Unlike other building materials such as light weight bricks, panels etc., precast material is not sold off the shelf. Therefore the company that is contemplating entering the precast market should also have design and construction expertise.

How can we help?

We can help you start a precast building elements manufacturing unit through a number of services including market research, techno economic feasibility assessment and assistance in raising funds. In case you are looking to acquire an existing precast/building material unit, we can assist you in identifying such a company and in the process of acquisition.

[1]Houses with 30 square meters carpet area in the four metro cities and 60 square meters carpet area in the rest of the country

Reach us @

Write to us: bchhatre@finetrain.com , admin@finetrain.com
Call us: 800 888 4932

Share This:

Green products: How to set up Compostable Plastic bags business?

Compostable plastic bags are plastic bags that decompose into natural components such as carbon, water and biomass upon their contact with soil. As per DS6400, the most widely recognised international standard for compostable plastics, such plastics should completely disintegrate into natural components within 180 days in composting environment.

India generates huge amount of plastic waste (nearly 15,000 tonnes per day). It is estimated that only around 60 per cent of this waste is recycled and remaining gets dumped in the landfills and other places. Prominent among non-recyclable plastics are poly bags made from Polyethylene (PE), which can take up to 100 years to disintegrate.

Plastic bags have been completely banned in Maharashtra[1] (except for milk packets and some specific applications). Further, 17 States and Union Territories in the country have imposed partial ban on these bags with restriction on the thickness of the bags to minimum 50 microns. Increasing awareness about environmentally sustainable products along with restrictions on the usage of plastic bags have improved the prospects of compostable bags.

What are compostable Plastics?

Compostable plastics can be made out of bio based or petroleum based compounds (Resins) as shown below.

Figure1: Types of compostable plastics

Currently, the market for compostable resins is small, at around 1 million tonnes[2] (less than 0.5% of world’s annual plastic consumption of 320 million tonnes). These resins are patented by large multinationals such as BASF, NOVAMONT and have to be purchased from them or their dealers, thus resulting in higher price and limited availability. However, their consumption is predicted to grow at a CAGR of 20% over the next five years[3], and with the rise in demand, the availability of such plastics is likely to increase and their prices would become competitive.

How do compostable bags compare with conventional bags?

Compostable resins’ tensile strength, printability and weight bearing capacities are similar to that of conventional polymers such as Polyethylene (PE). In fact, in some specific applications, compostable resin may offer higher density and tensile strength as compared to  PE, thus resulting in requirement of less tonnage of the resin vis-à-vis PE.

However, currently, the compostable plastic resin is 2-3 times costlier than the conventional resins. Further, the costs of processing these resins into products such as bags are also higher due to smaller size of the processing capacities. As a result, these bags are 3 times as costly as conventional bags. For example, a medium size compostable garbage bags is currently priced at Rs. 220 (for a pack of 30 bags) as compared to a price of Rs. 70-80 for similar conventional bags.

What are the international and domestic standards for compostable Plastics?

There are a number of standards for compostable plastics including ASM D6400 (USA) and EN 13432 (Europe) and ISO 17088.

An Indian manufacturer of compostable plastic bags has to obtain a certification from Central Pollution Control Board (CPCB) for selling compostable bags and related products. The certification process requires the product to be tested in a government authorised lab to check its compliance to ISO 17088.

Table 1. International Standards for compostable bags
S.NoStandardization BodyStandard
1ASTM – American Society for Testing and MaterialsASTM D6400
2European StandardsEN 13432, EN 14995
3ISO – International Organization for StandardizationISO 17088

Is manufacturing compostable bags complex?

No, the manufacturing is very simple and is a two-step process; first the resin is processed into a film through a blown film manufacturing machine, the film is then cut, printed and sliced as per the bag sizes. Currently most Indian manufacturers use conventional LDPE blown film machinery for sheet extrusion. The resin is either directly imported from the manufacturers (list of bioplastic resin manufacturers is available in Table.2), or their dealers.

Table 2. Bio Resin manufacturers
S.NoCompanyCountry
1BASFGermany
2Bio-FedGermany
3CarbioliceFrance
4FKuR KunststofGermany
5NatureWorksNetherland
6NovamontItaly

Is there a market for compostable bags?

The demand for compostable bags is rising driven by growing concern about the environment and changing regulatory landscape. The waste management regulations in India are getting more stringent about handling and disposal of all types of waste including plastic. Therefore, specific segment of the market such as trash bags, bags for nurseries are witnessing a lot of interest from supermarkets, retail chains etc.

Given the demand, a number of new manufacturers have entered the market in past two years. The number of CBCB registered manufacturers of compostable bags has increased to 12 from just 2/3 a couple of years back ( a list of CPCB approved vendors is available here ).

The usage of other biodegradable/environmentally sustainable products is also increasing. Recently McDonald’s India has proposed to replace its plastic cutlery with a combination of wooden and biodegradable plastic cutlery ( available in this link: McDonald’s India kicks out plastics )

How much capital is required and what will be the profitability?

The capital requirements would depend on the machinery and the scale of operations. For example, a blown film machine of a capacity of 15-20 tonnes a month available for around Rs. 30 lakhs. However a European machinery (smallest capacity of 400 kg per hour) specifically made to handle bioplastics can cost more than Rs. 3 crores.

The minimum capital requirement including working capital is likely to be over Rs. 60 lakhs. The overall profitability and return on investment would be contingent on the manufacturer’s ability to secure regular orders and keep processing costs under control.

What are the key challenges?

  • Most states do not have a policy on regulation of usage of compostable plastic bags currently. The guidelines on allowing such bags in retail market would be critical for the growth of the industry.
  • The processing machinery is designed for conventional plastic, which can withstand higher temperature as compared to compostable plastics. Therefore getting the right product requires a number of trials.
  • The certification process for compostable bags is time consuming and can take up to 6-8 months.

[1] As per the circular, dated 10th July 2018 of Maharashtra Environment department, the compostable plastic bags are allowed for horticulture, agriculture, and handling of solid waste.
[2] Source: Global production of bioplastics, a publication by European bioplastics
[3] Source: European-bioplastics.org

How can we help?

We can help you start a compostable plastic bags manufacturing unit through a number of services including viability assessment, market landscaping and technical consultation

Reach us @

Write to us: bchhatre@finetrain.com , admin@finetrain.com
Call us: 800 888 4932

Share This:

Business Opportunity – Amla Processing

Amla or Aonla commonly known as Indian gooseberry, is known for its medicinal properties. It is used across a number of industries including Aurvedic medicines, Cosmetics and Food products.

The production of Amla was 9.89 lakh tonnes in FY 17, with majority of it coming from Uttar Pradesh (UP) and Madhya Pradesh (M.P).

Figure 1: Amla production and top producing states[1]

What are the key Amla based products and its manufacturing process?

Amla Candy: Amla candies are made by cutting the fruit and coating it with sugar syrup at different brix values. The fruit pieces are then dried to bring down the moisture content and coated with sugar powder, to prevent them from sticking to each other.

Amla Supari: The process is similar to that of the candy. Natural colouring agents, flavours such as mint & dry fruits are added for taste and appearance.

Amla Juice: Washed Amla fruits are transferred to shredder, Amla juice thus extracted, sterilized and packed in bottles.

Amla Powder: Amla powder is used in herbal & cosmetic industry. The fruit as a whole is dried, pulverised and packaged as per the requirements.

What is the machinery and capital required for Amla processing?

Amla processing doesn’t require large investment in machinery and infrastructure. The machinery and capital requirements are presented in Table.1

Table 1: Budget for Amla processing plant
ProductUsage/MarketMachineryTotal Budget
Amla CandyRetailAmla breaking machine, steam jacketed kettle, tray dryer and packaging machine.The budget including machinery for a capacity of 1 tonne per day and working capital would be ₹40 lakhs
Amla Supari
Amla JuiceRetail & CommercialAmla shredding machine, hydraulic press, storage tank with steam jacket and packaging machine.The budget including machinery for a capacity of 2 tonne per day and working capital would be ₹20 lakhs.
Amla PowderRetail & CommercialDryer, pulveriser and packaging machineryAmla powder making plant can be established within ₹ 10 lakhs

Why Amla Processing is an attractive opportunity?

Growing popularity of alternate medicines, health foods and herbal products are driving the demand for Amla based products. The potential for Amla extract as a food ingredient is increasing significantly, owing to the growing global nutraceuticals and functional food market.

As per a report by consumer data analytics firm Nielsen India, sales of personal care products made of natural, herbal and Ayurveda ingredients are growing 1.7 times as fast as the overall market. Given the shift towards natural products, large consumer goods companies such as Colgate, Hindustan Lever are also introducing natural variants of their products. Since Amla is a rich source of vitamin C, a very powerful antioxidant and anti-ageing vitamin, usage of Amla in cosmetics and food products will continue to grow, thus making Amla processing an attractive opportunity.

What are the challenges?

Amla is a highly perishable fruit with a short shelf life of 5-6 days. Hence, the plant runs only during the harvesting period i.e. from October to February. The plant can be used to process other products such as Fruit based bars (Guava, Mango, Pineapple, etc). One may need to invest in addional machinery such as peeler/ pulper/mixer depending on the fruit.

Other challenges for the new entrants is to create a market for their brand, which will have to compete with the well established players. Based on the product portfolio, retail network has to be established.

How can we help?

We can help you start an “Amla Processing Unit” through a number of services including viability assessment, market landscaping, technical consultation and project execution support.

[1] Horticultural Statistics at a Glance 2017 – National Horticulture Board

Reach us @

Write to us: bchhatre@finetrain.com , admin@finetrain.com
Call us: 800 888 4932

Share This: