Export of Leather Products

Introduction

Indian leather sector is large, estimated at around USD 17.85 billion, with exports accounting for 30 per cent of its value. Indian leather exports which stood at 5.6 billion USD[1] (INR 38,468.7 Cr[2]) in FY 17 are expected to increase to USD 9 billion by 2020[3]. Our key export destinations include USA, Germany, UK and Spain. The USA market, which has been mainly served by China so far, has opened up to Indian exports as the increasing cost of production in China has given us an opportunity to increase the market share in US[4]

Leather exports from India comprise raw hides and skins, finished Leather, leather goods, and garments, footwear and components and saddlery and harness. The export of leather & leather products for the past 5 years is shown below in Chart 1.

Chart No. 1: Export of leather and leather products from India during 2012-17

The top four destinations for Indian leather products include USA, Germany, UK & Italy, which together have a share of 45% of our total exports. The exports which has peaked in 2014-15, have somewhat declined over the past 2 years, due to a slowdown in European economy.

Footwear (leather & non-leather) and footwear components account for the lion’s share of our exports, followed by leather goods & accessories. The product wise and country wise break up of exports is available in chart number 2 and 3.

Chart No. 2: Leather products exports from India

Chart No. 3: Leather products major export destinations

How to reach/expand in the international market

Since exports account for 30% of the total leather & leather products produced in India, there are a good numbers of Indian companies that are already exporting their goods. These companies are looking to expand their customer base. Further, there are several others that are planning to have their footprints in the international market.  The process of entering a foreign market comprises following steps.

Select the market

The selection of markets will be based upon the market size of the target country, competitiveness compared to other suppliers etc.The data on export markets for various products is depicted in Table 1.

Table No. 1 : Major export markets for leather & leather products during 2016 – 2017

Table No. 1 : Major export markets for Leather & Leather products
Chapter CodeProduct DescriptionCountry% share in India’s Exports (2016-2017)
41Raw Hides & Skins (Other than furskins) and LeatherHong Kong26.07%
Italy12.54%
China12.32%
Vietnam10.28%
Korea5.51%
42Articles of Leather, Saddlery & Harness; Travel Goods, Handbags and similar articles of animal gut (other than silk worm)USA20.08%
Germany14.99%
UK10.33%
Spain8.22%
France6.10%
43Furskins and Artificial Fur, manufactures thereofUSA27.22%
UAE11.74%
France9.95%
Germany7.95%
Denmark6.42%
64Footwear, Gaiters and the like; Parts of such articlesUSA16.48%
UK14.79%
Germany11.58%
France5.64%
Italy5.05%
Source : Dept. of commerce – Export Import Data Bank
Select the Sales Channel

Trade fairs remain the most popular channel to access foreign markets. However, there are a number of other channels that can also be used.

  1. Trade Fairs : Trade fairs are conducted to bring together members of particular industry to showcase and demonstrate their latest products and services, meet with industry partners & customers and explore opportunities. The upcoming leather fairs are : “India International Leather Fair – Chennai 2018”, International leather fair in Italy – “Lineapelle” etc.
  1. Challenge : Attending trade fairs in foreign countries can be very expensive.
  1. Buying Houses/Agents (Sales Rep’s) : These are the people who buy products on behalf of the customer (store, or brand) and can act as a bridge between the manufacturers & sellers/consumers.
  1. Pros : The manufacturer can concentrate on their core business and the agent takes up the remaining tasks, the cost of acquiring the customers is low.
  2. Cons : you have to invest time in doing the due diligence of the agent
  1. Partnering with Designers : It is one of the best ways to increase the footprints in the international market.
  1. Pros : Since leather products change with fashion, designers are able to help you understand the local requirements
  2. Cons : Finding suitable designer can be very challenging
  1. Direct selling to Retail Chain & Departmental Stores : Stores such as Urban Outfitters, Anthropologie, Crate & Barrel, Habitat, Hallmark, Chicos, TESCO and The Conran Shop, procure leather goods from India.
  1. Pros : Volume of business is high, easy access to vast group of customers.
  2. Cons : Huge competition from other suppliers.
  1. Setting up a sales office in the export market : Opening a store in the export market.
  1. Pros : allows you to build customer relationship and brand value.
  2. Cons : Cost of setting up store is high
Obtain required Certifications

In the international market, buyers look for assurance about the product quality and practices used in product development. Some of the certifications are listed below in table no.2

Table No. 2: Certifications& Description
CertificationDescription
REACH ComplianceRegistration, Evaluation, Authorization and Restriction of Chemicals (REACH) is a European Union regulation that addresses the production and use of chemical substances, and their potential impacts on both human health and the environment.One of the major elements of the REACH regulation is the requirement to communicate information on chemicals up and down the supply chain. This ensures that manufacturers, importers, and also their customers are aware of information relating to health and safety of the products supplied.
SA 8000This is an auditable certification standard that encourages organizations to develop, maintain, and apply socially acceptable practices in the workplace. It measures the performance of companies in eight areas important to social accountability in the workplace: child labor, forced labor, health and safety, free association and collective bargaining, discrimination, disciplinary practices, working hours and compensation
ISOA family of standards related to quality, occupational health and safety, environmental standards, labour standards etc
Avail of Export Promotion Schemes by the Govt.

The government has developed schemes to reduce associated costs in reaching the international markets. Some of the schemes are listed in table no.3.

Table No. 3: The schemes from the GOI to promote exports
SchemeDescription
Market Access Initiative (MAI)Financial assistance is provided for export promotion activities to Export promotion councils, Industry & Trade Associations, etc.
Marketing Development Assistance (MDA)Financial assistance is available for exporters having an annual export turnover up to Rs. 30 Cr for participating in trade fairs, buyer seller meets organized by EPC’s/ Trade promotion organizations.
Indian Footwear, Leather & Accessories Development Programme (IFLADP) for 2017-20Provides international branding support to leading Indian manufacturers in Leather, Footwear and accessories, available to companies with annual turnover of over Rs. 75 crores

How can we Help?

If you are interested in expanding your businesses of leather & leather products to the international market, we can assist you in the following

  • Identifying potential markets for your products
  • Viability study for entering a particular market
  • Assistance in generating a list of potential buyers and in scheduling meetings
  • Assistance in connecting to designers and sales representatives who can sell your products in their country

[1] Council for Leather Exports (CLE)

[2] 1 USD = INR 67.90

[3] www.makeinIndia.com

[4] Indian leather units see opportunity in exports to US, other markets – Article by  Business Standard

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Business opportunity : Natural gums and Resins

Introduction

Natural gums are plant products, formed by the disintegration of plant cellulose. These are typically extracted from seeds of plants like Guar, Tamarind, Cassia tora, etc. These are polysaccharides that increase the viscosity of solutions even when added in very small quantities. Natural gums are preferred over synthetic gums in food applications.

The natural resins, gums, gum-resins (NRG) and balsam’s global market are estimated to be about 1358.44 million USD. India is the second largest supplier of natural resins & gums in international market, with a share of 16.8%, next to France, which has a market share of 26%[1]. In India, the Guar gum has a lion’s share in total NRG production as well as in exports. Therefore, the focus of this blog is on guar gum.

Guar gum-Industry at a Glance

India enjoys monopoly in the Guar gum industry with a market share of over 80%, as it has the most suitable climate for Guar gum cultivation. The Guar industry is driven by the export market, as more than 70% of domestic production is exported. The major export destinations are USA, China, Canada, Germany & Russia. Rajasthan is the largest guar producing state followed by Gujarat, Haryana and Punjab. Rajasthan alone accounts for 70% of the total production in India.

Guar Seed Cross – section and Process flow

The guar seed has 3 parts – Germ (40-45% of the weight), Endosperm (38-45%) and Husk (14-16%), as shown in figure – 1. The gum powder is produced from endosperm in a two stage process. In the first stage, the guar splits are produced and the by-product is Guar Meal (67%) (Korma – 37% & Churi – 30%). The splits are then pulverized into gum powder, and the powder is further processed into various derivatives.

Figure 1: Guar gum seed break up

Derivatives of Guar Gum & Industry specific application

Guar gum has wide range of applications in Food Industry, Textiles, Oil well drilling, Cosmetics & Pharmaceuticals, Paper, Mining, Construction and Explosives. The derivatives of guar gum powder are grouped into Non-ionic, Anionic and Cationic.

Figure 2: Derivatives of Guar gum

The applications in various industries are listed in Table1.

Table 1: Applications of Guar Gum
IndustryUses
FoodThickening, gelling, emulsifying agent and stabilizer
TextileSizing & Finishing agent
Oil well drillingFluid loss controlling agent, additives in fracturing fluids. Fast Hydration Grade is used
Pharmaceuticalstablet binders, disintegrants, emulsifier, suspending agent, gelling agent, stabilizing agent, thickening agent, film forming agent, sustaining agent and coating agent
CosmeticsConditioner and viscosifier, thickener in toothpastes & shampoos
PaperTo get better finish, improved sheet formation, increased bursting & fold strength and denser surface for printing

Demand & Supply

Guar consumption was been around 22.7 lakh tonnes in the year 2016-17. The consumption is volatile and varies depending on the export market, which accounts for more than 70% of the domestic production. The graph depicts the trends in consumption of guar seed in the past decade.

Chart 1: Consumption of Guar seed in export and domestic markets from India

Globally, oil and gas industry is the biggest user and domestically food industry is the largest consumer of Guar gum. (See chart 2&3). The sector wise demand of guar gum powder in international & domestic market is shown below in Chart 2 & 3.

Chart 2 & 3: % application across industries in Domestic & International markets

On the supply side, there are more than 600 guar processing units in India with an installed capacity of around 10 lakh tonnes. The present capacity utilization of the industry is less than 50%, due to weak demand from the export markets. However, the demand is expected to increase due to increasing oil prices, which result in higher capital expenditure on oil exploration related activities.

Price Volatility of Guar Gum

The prices of guar gum powder is highly volatile (see chart 4) and are a function of factors such as crop cultivation, shale oil and gas exploration, availability and price of substitutes, etc. The users shift to the substitutes based on price competitiveness. But guar gum has its own advantages, for example: Guar gum is soluble in both hot and cold water as against Tamarind Kernel Powder (TKP), which is soluble only in hot water. The various substitutes to guar gum are discussed in Table 2,

Table 2: Substitutes to Guar gum
IndustryUses
TextileCMS (Carboxy Methyl Starch), CMTKP (Carboxy Methyl Tamarind Kernel Powder) and Sodium Alginate
PaperTKP, Potato Starch, etc
FoodXanthan Gum, Agar , CMC (Carboxy Methyl Cellouse)
CosmeticsTKP
Shale Oil& Gas ExplorationSynthetic Polymers

Chart No.4: Per kg [2] variation of Guar gum prices over a period of years

 

Guar Gum v/s TKP

Among natural gum, Guar gum faces competition from TKP. TKP is derived from the tamarind seed. It has excellent water absorption property and high viscosity as well. The application includes, thickening agent in sizing process of textile & printing industry and binding agent in pharmaceutical industry. The detailed comparison of Guar Gum & TKP is shown in Table No.3,

Investment

The minimum viable capacity is 6TPD (6 tonne per day) and the investment required to setup guar gum powder from Guar splits is INR 4 Cr, including the civil structure, machinery and working capital. The capital cost would increase by INR 2-3 Cr, if one is manufacturing the powder directly from the seed due to the additional investment in plant & machinery and working capital. The Breakeven period is more than 5 years.

Profitability & Governing factors

The profitability depends on the conversion margins, or the spread[3] between the guar gum and guar seed price. The spread has been volatile and has ranged between 1.4 times to 3 times over the past decade.  The profit margin can be increased by having control over the seed price, by engaging with farmers in contract farming. The profits/high returns can also be improved by making value added products for specific industry such as dairy/oil.

Why Guar Gum is an interesting opportunity?

The international demand for Guar Gum from oil and gas sector is likely to increase following higher oil prices.  The demand from food sector from both domestic and international markets is likely to remain strong.

Given the availability of idle domestic capacity, one could look at purchasing or leasing existing units, thereby reducing the initial capital investment. Instead, the investment could be made towards research and development to develop new derivatives for food and other applications.

How Can We Help?

If you are interested in starting up natural gum manufacturing unit, we can assist you in the following:

  • Identifying potential markets including domestic as well as international.
  • Detailed project report preparation – Financial analysis, Profit & Loss statements for a period of 7 years, calculation of ROI, etc.
  • Identifying existing units that are available for sale and in valuation of such units

[1]As per ICAR – Indian Institute of Natural Resins & Gums report

[2] In the year 2012-13, the price of guar gum hit all time high, this is due to the huge demand from the oil exploration companies.

[3] Spread is the ratio of guar gum to guar seed prices

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BUSINESS OPPORTUNITY – FLAVOURING ADDITIVES

Flavouring additives are used in Ready-to-eat, Ready-to-cook products and beverages to enhance or modify their taste. Broadly, there are two types of flavouring agents:

Powdered flavouring additives that are extracted from vegetables, fruits and meat. These are used across a number of products such as instant noodles, pizza, snacks, etc. They are low in moisture and thus are more stable and have greater shelf life. The common process of manufacturing these additives involves roasting, extracting, blending, drying, pulverizing, and sieving followed by packaging. Some of the examples of powdered flavours include noodle masala mix, dried vegetable powder, chicken extract powder.

Liquid flavouring additives that are typically extracted from plants and herbs. The process of extraction involves solvent extraction, distillation, filtration, sterilization, and concentration followed by packaging. Oleoresins, Aloe Vera extract etc. come under this category.

Products that typically use flavouring additives include bakery, dairy, fruit juices & other fruit based beverages, soups, salads and dressings (see Figure 1).

Industry

The Indian food flavour market is estimated at around INR 15.5 billion and has been growing at around 10 per cent per annum . The market has about 100 players , including large international and domestic players as well as many small and medium enterprises. Top international players and large domestic players account for around 70 % of the market share – these comprise Givaudan (Switzerland), International Flavours & Fragrances (IFF, US), Firmenich (Switzerland), Symrise (Germany), Takasago International Corporation (Japan) and MANE (France) and SH Kelkar (Pune), Sachee Aromatics (New Delhi), Oriental Flavours & Fragrances (Valsad, Gujarat). The main customers of these are large FMCG companies, tobacco manufacturers, ice cream manufacturers and pharmaceutical companies.

Why is flavour manufacturing an attractive opportunity?

The expenditure on food accounts for 43 per cent of house hold expenditure and is growing at an annual rate of 12-13 per cent . A steady rise in consumer spend on eating out and groceries is helping packaged food (ready to eat products, biscuits, and beverages) and the food service market (quick service restaurants, home delivery of food) , which are also experiencing growth in double digits . All these factors point to a growing demand for flavour additives.

Also, flavour manufacturing is a niche business, with entry barriers such as sustained R&D efforts, long customer acquisition time and access to raw materials.

Such businesses are likely to enjoy higher profitability vis-à-vis typical food processing businesses (juice extraction, snacks manufacturing etc), where bulk volumes are needed to generate profits.

Where are the domestic flavour manufacturers located?

Most of the flavour manufacturing units are located in Maharashtra, Gujarat and Kerala as these states offer proximity to end users and easy access to raw materials such as aroma chemicals and spices/herbs.

Down south, Post bifurcation, both Andhra Pradesh and Telangana have been focussing on developing food processing sector by offering financial incentives to food processing industry and developing industrial infrastructure. Although, these two states together account for almost 20 per cent of food processing factories in the country, they don’t have many flavour manufacturing units (see Table 1), thus making it an attractive opportunity to set up a flavour manufacturing units here.

Table 1: Flavour Manufacturers from South India
S. No.Company NameProduct RangeLocation
1Aromatic Chemical & Oil CompanyFlavours, Powder & Liquid Colours, Fragrances, Emulsions, Essential Oils.Visakhapatnam, A.P
2BOS Natural Flavours.Crystals, Dehydrated Products, Essential Oils, Floral Extracts, Fruit Extracts, Spice extracts.Kochi, Kerala
3Flavours IndiaFlavours for Beverages, Dairy & Tea, Ice Creams, PharmaceuticalsPondicherry
4Florale (India)Food Flavours & Additives, FragrancesBangalore, Karnataka
5Food Ingredient SpecialitiesFlavouring essences & essential oils for biscuits & other bakery products, Ice Creams, Aerated Water, Liquors & Beverages, Flavours for pharmaceutical Products.Chennai, Tamilnadu
6Kancor IngredientsOleo Resins, Essential Oils & Isolates, Mint, Menthol & Isolates, Floral Extracts, Speciality Ingredients, Organic Ingredients.Ernakulam, Kerala
7Lux FlavoursFlavours for Dairy & Bakery products, Essential Oils, Beverages and Flavoured Water, Confectionery, Savoury, Pharmaceuticals, Alcohol, Animal Feed and Meat Industry.Chennai, Tamilnadu
8Oror Flavours & ChemicalsFlavours & Seasonings in Bakery, Confectionery, Pharma, Milk & Milk products, Beverages & Snack Foods.Madurai, Tamilnadu
9Symega Flavours IndiaFlavours for Dairy and Bakery, Beverages, Confectionery, Pharmaceuticals & Savoury.Cochin, Kerala
10Plant Lipids.Spices and other Essential Oils.Cochin, Kerala
Source: From Fragrance and Flavour Association of India

Typical operating requirements

The cost of machinery and working capital needs for an entry level capacity of around 1 tonne per day would be around INR 2 crore. The machinery depends on whether the extract is in powder or liquid form. For extracting a powder, solvent extraction method is used, whereas for extracting a liquid (oil), apart from solvent extraction, distillation or super critical fluid extraction methods are also used. Table 2 shows the typical machinery required for an entry level plant.

Key success factors

Critical success factors for this business include:

  • Nimbleness in identifying new segments such as ready-to-eat foods, branded snacks, fruit-based/energy drinks for growth
  • Good relationships with exiting suppliers and customers
  • Building up a niche segment
  • A strong R&D team that can develop new products
  • Compliance with any changing regulatory requirements
Table 2: Typical machinery needs for a Flavour Manufacturing Plant
S. No.MachineryCapacityValue (Lakh INR)
1Solvent extractor / distillation unit/super critical fluid extraction unit5 ton/ day30
2Extract mixing tank2 ton3.5
3Automatic filling and packaging machine for powder3.2
4Pulveriser1 ton per hour1.5
5Liquid extractor10
6Recovery Unit5 ton per day5
7Spray drier50
8Shaking sieve1 ton per day0.8
9Powder mixer2 ton per day5
10Automatic filling & packaging machine for liquids5.5
TOTAL114.5

How we can help you

If you are interested in setting up a flavour manufacturing unit, we can assist you in the following:

  • Competitive landscape
  • Financial viability
  • Location analysis
  • Market entry strategy
  • Regulatory issues and government incentives
  • Detailed project report preparation
  • Support in project execution

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Plastic Pipes– Business Opportunity

Indian plastic pipes industry size is estimated at around 2.5 million tonnes per annum. There are around 600 manufacturers of pipes, with the top 20 players accounting for 60 per cent of the market, and small players for the remaining 40 per cent[1].

While large manufacturers make the pipes needed for all domestic, agricultural and industrial applications (such as casing pipes, bore well column pipes, electrical & telecom ducts, agricultural pipes), smaller one’s manufacture pipes needed for last mile connectivity. These include plumbing systems, irrigation systems, electrical conduits and conduit fittings, mostly made of HDPE, LLDPE and PPR as explained in the table below.

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The Government spend on agriculture sector and irrigation schemes continues to be the main driver of pipes. For instance, Mission Bhagiratha, Telangana government’s initiative to provide piped water supply to every household in the state has given impetus to the pipe industry here. Apart from the main trunk pipelines for about a length of 5,000 km, the mission requires secondary pipelines, stretching over 50,000 km. These secondary pipelines will carry water to tanks in villages from where a village-level pipeline network extending 75,000 km will supply water to households in the state. The village level pipelines specifically require HDPE pipes[2].

Market:

In value terms, the Indian plastic pipes market stands at INR 22,000 Crores[3] and is forecast to grow at a CAGR of 10%. The market is dominated by PVC pipes that account for more than 70% (see figure 1)

Figure 1: The figure below depicts the polymer share of plastic pipes and fittings industry

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Apart from national level players such as Astral Poly Technik Limited, Supreme group of companies, Finolex industries, there are a large number of local companies, as shown in the Table 2. The local companies have strong dealer network in their region.

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Process &Technology:

Manufacturing process can broadly be divided into: mixing, extrusion, pipe sizing and down streaming. The extrusion line is customised to users’ needs, and the most important parameter is pipes’ diameter and wall thickness. 

  1. Formulation & mixing: This is required for PVC but not for any of the above-mentioned material.
  2. Extrusion: Single screw (compulsory for HDPE and LLDPE) and Twin-screw extrusion (TSE). According to the experts, if quality is imperative, one must use TSE, as it can work even without the impact modifiers and flow promoters.
  3. Pipe sizing: This can be in two ways; a) Pressure sizing, which is suitable for higher diameter pipes and b) Vacuum sizing, which is suitable for lower diameter pipes.
  4. Down streaming: This includes a number of functions such as cooling the pipes, cutting the pipes, Socketing and printing. 

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Budget:

The entry level plant (One extrusion line for manufacturing pipes for construction and irrigation industry of capacity about 100 Kg per hour) can be set up in INR 3 Crores including land, building, and working capital. Requirements for working capital would be large due to large raw material inventory and dealer credit.

Table 3 gives typical cost of machinery, which may change according to the specifications such as wall thickness and diameter of the pipes.

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How Can We Help You?

If you are interested in setting up a pipe extrusion unit, we can assist you. Our services include

  1. Market & Financial viability assessment
  2. Technical consultancy
  3. Detailed project report preparation
  4. Support in project execution 

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[1] Source: Finolex’s MD, Saurabh Dhanorkar interview with DNA – May, 2016

[2]Source; Livemint news article – August, 2016.

[3]Source: HDFC securities – initiative coverage –  May, 2017

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Business Opportunity: Pre-Stressed Concrete Sleepers

PSC sleeper refers to steel reinforced concrete sleeper, commonly used on railway tracks. Besides Indian Railways, power plants, refineries and cement plants also use sleepers for their rail tracks. Demand driver

Indian Railways has a network of over 65,000 kilometers encompassing length and breadth of the country.  The growing population and increasing economic activity has resulted in over-utilization of its existing network.  So much so that the trunk routes of the railways comprising merely 16% of the network carry about 50 percent of the work load. The Indian railways has been routinely upgrading its network (see Table 1), however the capacity upgradation has been far below the actual requirements and the network continues to remain congested.

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The pace of railway infrastructure upgradation has picked up over the past one year, driven by the government’s initiatives to improve quality and safety of Indian railways. The Railways has committed to building 7 kms of infrastructure per day in 2016-17, which will increase to 13 Kms per day in 2017-18 and 19 kms per day in 2018-19.  Railways have identified following priority projects (See table 2) to be taken up in the medium term.

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In addition to these, Indian Railways has also proposed to create a high speed corridor network of around 10,000 kilometers. In light of the above mentioned plans, the railways are likely to develop at least 5000-8000 kilometers of rail network per year, almost 30-40% more than in the past. Assuming that per kilomer of rail would need 1600 sleepers, these plans are likely to result in an annual demand of about 1.3 crore of sleepers.

Key suppliers

The sleeper industry is dominated by a few players who are present across the country. The current capacity of the industry is around 1 crore sleepers per annum. More details on the players are provided below.

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Given the expected increase in demand by 30% to 40%, there seems to be enough room for new capacities to come up. However, one needs to analyze the regional demand and supply balance carefully.

Govt approvals and Budget

Setting up a railway sleeper unit would require approvals from Railway RDSO (Research Design and Standards Organization) as well as the Zonal Railway office.

The process of manufacturing the PSC entails strengthening of concrete, casting it into pre-defined mould and curing it. There are two popular technologies: Long line and Short bench manufacturing, with short bench manufacturing being more popular in India.

The budget requirements for a capacity of 3-4 lakh sleepers per annum could be upwards of Rs. 15 crore. Further, one needs to consider the cost of the land, the sleeper plant would need to be located in the vicinity of a railway station for the ease of transport of sleepers.

How can we Help You?

We can help you assess techno economic feasibility of a sleeper manufacturing plant including the market assessment, regulatory compliance framework, capital requirements, machinery evaluation and profitability and return on investment.

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Business Opportunity: Organic Fertilizers

Organic fertilizer is a mixture of decayed organic matter. It is usually made by gathering plant material such as leaves, grass clippings, and vegetable peels and animal waste into a pile or bin and letting it decompose with the help of earthworms, fungi or bacteria. Organic compost contains essential macro and micro nutrients for plants, often absent in synthetic fertilizers. Compost releases nutrients slowly over the cultivation period, which helps plants soak those nutrients better and make a healthy food in our plates.

The demand for organic fertilizers is rising in India as well as internationally due to increasing awareness of organic farming and sustainable agricultural practices. The market size for organic fertilizers in India stands at 2547 lakh metric tonnes as of FY 2015-16.[1]

The major consumers of organic fertilizers are horticulture farmers, farmers of export oriented crops, farmers of crops such as ginger and turmeric and urban households that use compost for their home gardens.

What are different types of organic Fertilizers?

As per the Fertiliser Control order, 1985, the organic fertilisers can be divided into three categories:

Vermin compost: Most popular form of organic fertiliser, made by decomposing the organic material with the help of Vermi, FCO has specified guideline in terms of nutrient percentage, moisture levels etc

City compost: The compost made from city waste, including household waste, municipal waste etc.

Organic manure: Compost made from animal and plant waste (including the vermi and city compost). Manure typically has higher organic content vis a vis other organic fertilisers.

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What is the market?

The market has two segments:

Horticulture farmers: Farmers growing fruits and vegetable crops use compost to reduce chemicals residue from their crops. Further, these crops are relatively more profitable vis a vis traditional field crops such as paddy, cotton and hence can afford to purchase organic compost. This segment is dominated by large fertiliser companies who have the dealer network and sales force required to reach the farmers. Below are the large players in Andhra Pradesh and Telangana.

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Nurseries: This segment has a lot of small and medium enterprises. Here the product packaging is important. Some of the players in this segment also sell only through online network.

How to get started with manufacturing of organic compost?

One needs to have a detailed understanding of the processes involved in manufacturing, marketing and selling the compost.

It’s not a very capital intensive business and hence capital requirements are not very large. One does not need many plants and equipment’s except for pits /wilgrows to dump the waste, shredder and a palletising machine. The main cost of establishing will be land and labour. A unit of capacity to process 20-30 tonnes of waste per day can be set up within a budget of INR 50 Lakhs.

The compost is also made as a by-product of a biogas plant. The biogas plant converts the organic waste into bio gas through anaerobic digestion and produces a slurry, which can be dried and used as compost.

Government incentives

There are a number of incentives available to manufacturers and farmers. It can broadly be categorized as incentives for farmers and incentives for entrepreneurs as given below.

Farmers are offered organic fertilizers at a subsidized cost

Entrepreneurs are offered incentives to set up compost manufacturing facility. For example, under National Program for organic farming, manufacturers of compost from vegetable waste are offered a subsidy of 33% of the cost of project.

Challenges
  • The market is still in its formative stage and awareness of the benefits of organic compost has just begun to spread across farmers and farmer groups.
  • Reliable Data on organic input market is not present.
  • Organic system of farming is far more expensive than doing farming using chemical fertilisers
  • The economics depend on the waste procurement cost, so those have to be tightly controlled

How can we help?

We can help you set up a compost manufacturing unit through a number of services including

  • Market viability assessment
  • Technical consultation and
  • Project execution support.

[1] Source: National Centre for Organic Farming

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Business Opportunity: Injection Moulded Products

The injection moulding technology is used for mass production of plastic products. Plastic material, in the form of granules, is melted and injected under pressure to fill a mould to create different types of rigid shapes.

Injection moulding is a popular way of manufacturing both industrial as well as household products. The most common examples of injection moulded products include PET bottle caps, plastic containers, parts of washing machine, cooler and agricultural pipe fittings.

The table below enlists a number of products that can be made through injection moulding.

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Markets

The PET preforms and bottles/container segment is more crowded as compared to industrial/agri components. The quality specifications of industrial components are more stringent vis-a-vis household segment and therefore require more investment in machinery and experience in plastic technology.

The players in the injection moulding market can be divided into the following categories –
  1. Manufacturers who also market their products: For example, Plast-O-Pack India, Mumbai manufactures and markets various designer house hold products such as microwave containers, pencil boxes, fridge bottles, containers and corporate gift items.  Bangaru Irrigation systems, Telangana manufactures and markets the sprinklers and drips and other irrigation system components.
  2. Contract manufacturers: These players manufacture goods or rigid packaging material for others. In contract manufacturing, there are two models: A) complete job work price model, and B) conversion only price model.

Under the conversion price model, the clients provide the raw material (resins/pellets) and they are billed only for conversions of resins to products, thus protecting injection/blow moulding companies from price fluctuations of the raw material. The clients in such cases usually demand stringent quality standards. However, this consumer segment is difficult to enter for a new injection moulding company as the clients specifically look for imported machinery, in house testing facility and large operational capacity.

Some of the Hyderabad based contract manufacturers include Baba Group of companies (clientele includes Asian paints, Berger paints).  Innocorp Ltd. (clientele includes furniture brands such as Neelkamal and Polyset). Nano polymers (clientele includes Neelkamal, Wipro, HBL, Acme, Asian paints).

PROCESS & TECHNOLOGY

Figure 1: Process flowchart

injection molding process
Injection machine is the heart of the whole process, as it is responsible for turning resins into melted free-flowing liquid and injecting the same into mould cavities.  The capacity of the machine is measured in terms of the pressure it exerts to inject the melted material into the mould and it is measured in either Tonnes or KiloNewton. The capacity of the machine may also be referred to as “shot weight”. Basically, Shot weight/ Injection rate of any machine is the grams of the melted raw material injected to the mould at one shot of pressure. The popular injection moulding machinery suppliers in India include Windsor Machines Ltd., Ferromatik Milacron India Pvt. Ltd., Haitian Huayuan Machinery (India) Pvt Ltd, etc.

Moulds are the most critical part of the process, apart from the injection machine. Mould designs are critical for the shape and texture of the output and also for ascertaining the required injection rate and consequently the capacity of the machine.  Mould designs are typically mentioned in terms of cavities. As such, higher the cavity, higher the production speeds.

BUDGET

While   minimum budget to start an injection moulding unit would be more than Rs 3 Crores, including land, building, and working capital, the overall cost of plant would depend on the quality standards and complexity of the final product. The cost of an injection moulding unit has four components: injection moulding machine, blow moulding machine, auxiliary equipment and working capital. Moulds are the costliest part of the plant, more so because for each different shape, a different mould will be required and the moulds are priced based on the number and complexity in design of the cavities.

The table below depicts a sample plant cost for making containers, the process involves injection moulding as well as blow moulding.

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How Can We Help You?

If you are interested in setting up an injection moulding unit, we can assist you in starting one. Our services include

  1. Market & Financial viability assessment
  2. Technical consultancy
  3. Detailed project report preparation
  4. Support in project execution

Reach Us

Call us @ 800 888 4932,

Write to us- bchhatre@finetrain.com

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HOW TO SELECT RIGHT PACKAGING FOR YOUR READY TO EAT PRODUCTS

For ready to eat products, packaging plays a vital role in preserving the quality of food, extending its shelf life and making it look attractive. With the upsurge in demand for ready to eat foods, the packaging technology is continuously evolving to facilitate customer convenience, minimize processing and keeping the product as natural as possible. This blog discusses different packaging technologies and their suitability to your product as well as budget.

Packaging Technology:

The choice of packaging technology depends on the nature of food (Acidity level, moisture content), expected shelf life (few weeks, months, years) and the conditions in which it would be stored (Room temperature, frozen).  As such the packaging technology for ready to eat foods can broadly be divided into three categories.

Thermal Heating: Food is packed in pouches/containers and heated to high temperature. The thermal heating can be done through different technologies including Retort, MATS and Hot fill & pasteurization.

MAP (Modified Atmosphere Packaging):  Filled and packaged product is exposed to UV and then MAP sealed. MAP sealing refers to removing the air from the pack and replacing it with a combination of nitrogen and carbon dioxide that can extend the shelf life of the food.

ASEPTIC: The product and package/container are sterilized separately first and then product is packed and sealed in sterile conditions.

More details on the packaging technology are available in picture 1.

Picture: 1 
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Source: Printpack Packaging Supplies (India) Pvt Ltd.

Costs

The cost of packaging   has two elements; fixed cost of the equipment and cost of the packaging material (cups/pouches). The fixed cost varies significantly across technologies as can be seen below.

Pic 2: Cost of packaging Technology

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The cost of packaging material depends on the shape and weight of the packaging container. As such the cost of packaging material does not depend on the technology that is being used for packaging.

How can we help?

Are you looking to set up a ready to eat/convenience food unit, we can

  1. Help you understand the market, technology, capital and operating costs
  2. Prepare the project proposal and assist you in obtaining bank funding
  3. Technical consultation to assist you identify right machinery, packaging material providers

Reach Us

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Write to us- bchhatre@finetrain.com

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Business Opportunity in Ginger Processing

Ginger, one of the most important spice crops in India, is known for its aromatic and medicinal properties. Ginger is used as a flavouring agent in many food items.  Ginger powder and oil are extensively used in herbal medicines.

India is the largest ginger producer in the world, accounting for nearly 40 per cent of world’s production. In India, Assam is the largest cultivator, followed by Gujarat and Karnataka.  In Telangana, ginger grows in Medak district. India produces 3.85 Lakh tonnes[1] of ginger per annum and most of which is domestically consumed.

Pic 1: State wise breakup for ginger production in India 
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NOTE: Other states include Arunachal Pradesh, Meghalaya, Sikkim, Orissa, Mizoram, West Bengal, Uttaranchal, Kerala, Andhra Pradesh and Telangana.

Ginger Processing Technology

Ginger can be processed into three products; ginger powder, paste and ginger oil. The ginger oil manufacturing is typically not taken up by small businesses as it requires large capital investment towards oil distillation and oleoresin extraction plant. The ginger processing machinery is explained below.

Pic 2: Ginger processing Machinery 

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Key Players in Telangana

Ginger paste and powder: There are a number of manufacturers including national players such as Priya, Aachi, Mother’s, Smith & Jones, Hommade, and Eastern as well as local manufacturers. Some of the local brands include Capital, Red Boss, Mega Rose, Mayuri, MSR, Surya etc. These products are available in packing sizes of 50 grams to 1 kg.

Ginger oil: There are not many local players. Ginger oil manufacturers are largely based in Kerala. 

Budget

The capital requirements for ginger processing plants is discussed below.

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How Can We Help

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

Reach Us

Call us @ 800 888 4932,

Write to us- bchhatre@finetrain.com

Visit us- www.finetrain.com

[1] http://agriexchange.apeda.gov.in/Market%20Profile/one/GINGER.aspx

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E-WASTE RE-CYCLING – BUSINESS OPPORTUNITIES

E-waste typically includes discarded computers and components, cathode ray tubes (CRTs), printed circuit boards (PCB), mobile phones, headphones, wires & cables, and white household goods such as liquid crystal display (LCD), plasma TVs, ACs, refrigerators etc.As per Industry body ASSOCHAM, India’s e-waste generation is likely to increase by nearly three times, from the existing 18 lakh MT per annum to 52 lakh MT per annum by 2020 at a compound annual growth rate (CAGR) of about 30%[1].

Figure 1: E waste across cities and categories

Despite increasing number of registered recyclers/dismantlers in the country and large volume of E-waste generated, only about 5% of it is processed through formal sector. The remaining is either donated or goes to Kabadiwallas.For example, although Hyderabad generates about 32 000 metric tonnes of E-waste annually[2] the formal sector recyclers whose combined capacity is only around 20,000 tonnes do not get adequate waste.

[1]Source: The Hindu – article dated at June, 2016
[1]Source: ASSOCHAM-Frost & Sullivan study, April, 2016

The biggest e-waste recycling market in India is Delhi and approximately 30% to 40% of the e-waste in India lands there.

Process:

E waste recycling process can be divided into two parts; separation and size reduction of metals (aluminium/copper/steel) & plastics andextraction of precious metals. Majority of Indian E waste companies do not have refinery/precious metal recovery facility, due to high capital cost (over INR 8 crores for refinery of 1 tonne per day) and lack of adequate waste availability.

Figure 2: E Waste Dismantling Process

The quality of e waste also plays a big role in deciding the nature of recycling facilities. For example PCB (Printed Circuit Board) around which the business of E waste recycling revolves can be divided into various grades depending on the gold content. As per Umicore, a precious metal refinery in Belgium, the PCBs can be divided into four grades (Table1)

Table 1: Grades of Printed Circuit Boards
PCB  GradesAvailable in
low value (Gold content of 50 PPM or lessTV-boards, monitor boards, printer boards, cordless phones, calculators, shredded bulk material after Al-/Fe-separation  etc
medium value ( gold content of minimum 100 ppm)PC-boards, laptop-and handheld-computer circuit boards, etc.
high value (gold content of 200 ppm ore more)Circuit boards from mainframes, mobile phones, ICs, MLCCs
Source: www.umicore.com

Whilerefining is useful for high grade PCBs, for low/medium grade PCBS manual dismantling coupled with extraction of copper is a more viable option.

Current Players:

The total number of registered E-waste recyclers in India is 178[3]., whereas Hyderabad has 5[4].  Some of the large players are as under

[3]Source: List of Registered E-Waste Dismantlers/Recyclers in the country (as on 29-12-2016)
[4]Source: Telangana State Pollution Control Board

Table 2: National E-Waste Recyclers – India
NameHead QuarterActivitiesCapacity (MT/Yr.)Date of Est.
Auctus E-recycling solutions P Ltd.NoidaDismantling, Metal-Nonmetal separations, Plastic recycling218002011
E- IncarnationMumbaiData security, Refurbishing, Metal- Nonmetal recovery and disposal30002010
E-ParisaraaPvt. Ltd.BangaloreData destruction, Dismantling, & Precious metal extraction8820September, 2005
Earth SenseHyderabadDismantling, Segregation & Disposal> 40002000
Eco Centric Management P. LtdMumbaiE-waste management, CSR initiatives -donations, refurbishment.2500January, 2011
Eco Recycling Ltd. (ECORECO)ThaneE-waste recycling, EPR implementation72001994, Formerly InfotrekSyscom
Greenspace Eco ManagementDelhiDismantling, Refurbishing, Take back programs, etc.600002007
Ramky ewaste recyclingHyderabadCollection, Dismantling, Metal- Nonmetal recovery and Disposal10000
TES AMM IndiaKancheepuramE Waste Recycling, Takeback program300002005

 Capital Expenditure (CAPEX) for various options:

E waste recycling chain begins with a collection centre, which can be set up for Rs. 10 lakhs. However,standalone collection centres are not encouraged to register, unless they are being set up by a recycler/refurbished or an electronic product manufacturer.  A collection centre combined with a dismantling unit can be set up for around Rs. 45 lakhs.  In India, recycling is restricted to separation of Metal and Non-metal and granulation, as the technology for extraction of precious metal is not economical.

Figure 3: Capex required for Setting up aE waste processing unit

Regulatory requirements:

The industry is governed by e waste rules which specify the approvals and infrastructure requirements. The approvals need to be obtained from State pollution control body.

Table 3: APPROVALS
List of Approvals RequiredAuthorising BodyRemarks
CTO – Consent to OperateTelangana State – Pollution Control BodyThese are considered as pre-operations & establishment approvals.
CTE – Consent to Establish
One time authorisationSuch approvals also often have a validity period.
Certificate of registration & Proof of installed capacityDistrict Industries Centre.This is a common certificate of registration under any industry and serves as pre-requisite for approvals mentioned above.
Table 4: A GLANCE AT E-WASTE MANAGEMENT RULES (2016)
ParticularsCollection centresDismantling unitsRe-cyclersRefurbishers
Who can establishProducers/Refurbishers/Dismantlers/Recycler, standalone collection centre are not allowedAny Individual, Company, Society, they must have agreement with e waste generators/producers to procure e waste
ParticularsDismantling unitsRe-cyclersRefurbishers
Restrictions on certain operationsDismantling units are not allowed Shredding or Leaching of; Circuit Boards, Lamps, Cathode ray tubes CRTs, LCDs and Plasma TVs.None provided necessary infrastructure is in place. Not defined
Area required (per tonne of capacity)300 Sq. Metres.500 Sq. Metres150 Sq. Metres

Profitability:

The profitability of e waste recycling company depends on its access to waste and cost of waste. Cost of waste accounts for around 75-85 per cent of total cost of operations. The revenue depends on the quality of waste collected by the company. For simple dismantling operations, the estimated cost of waste and recovery per tonne is as under:

Table 5: Unit Economics of Dismantling 1 Tonne assorted E-waste
Sl.No.Material% Composition (by weight) Price INR/KGValue (INR)
1Mild Steel0.23153,450
2Stainless Steel0.08151,200
3Glass0.275.001,350
4Plastics0.2710.002,700
5Copper wire0.032006,000
6Aluminium0.03902,700
7Other material including precious material0.081008,000
8Hazardous Material0.01
 Overall value (INR)25,400
 Cost of waste (INR)20,000
 Gross Profit (INR)5,400
Source: Paper on Sustainable Electronic Waste Management and Recycling Process by S. Chatterjee, Department of Information Technology, Published in American Journal of Environmental Engineering, 2012

Other than the raw material cost, which has been discussed above, rentis another significant cost,Assuming a dismantling capacity of 5 tonnes per day, the area requirement @ 300 square meter per tonne of waste is 1500 square meters and rent can be up  to INR  3-5 lakhs per annum. Further, there are other fixed overheads such as labour and interest.   As such,one needs to process at least 3-5 tonnes per day, just to recover the costs.

Opportunities for a new enterprise

The e waste sector has grown at a slow pace over the last five years, largely due to lack of awareness about e waste rules,  absence of strict guidelines for disposal of e waste and challenges from the informal sector recyclers who are able to offer a better price for the waste. However, the regulations around e waste are expected to tighten and would bring unorganised sector into mainstream.

While opportunities for e waste recycling are only expected to increase in future, profitability would depend on the value addition done by the enterprise.  Therefore, aspiring e waste companies would also need to build skill sets in e waste segregation and in identifying reusable waste. We believe that

  1. Dismantling can be a profitable option if you are able to establish a network of waste collection centres and develop skill sets to identify reusable waste
  2. Setting up a refurbishing centre, where salvaged computers/phones can be repaired using new or old components should also be attractive.
  3. Recyclers would need a large network of collection centres or need to import waste to ensure capacity utilisation

How we can help you?

We can help you set up E waste recycling unit through a number of services including

  • Market viability assessment
  • Technical consultation and
  • Detailed project report preparation

Reach Us

Write to us: bchhatre@finetrain.comadmin@finetrain.com

Call us: 800 888 4932 /9032398367

Visit us: www.finetrain.com

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