MUSHROOM PROCESSING1.0 INTRODUCTION Mushrooms are gradually becoming popular as they are rich in minerals and vitamins and very low on fat and sugar. Fresh mushrooms have very limited life and hence they need to be consumed within few hours. But processing and canning increases their shelf life to few months. Mushrooms are used to make soups, pickles, vegetables etc. and they are also used as additives in many food preparations. As a matter of fact, they are considered as a vegetarian delicacy all over the world and their consumption is increasing in India as well. Their household use is picking up but they are consumed in large quantities in star hotels and restaurants. Hence, firm tie-up with some of them is advisable. 2.0 PRODUCT 2.1 Applications Mushroom is an exotic and nutritious source of vegetarian food and is also easy to digest. It is considered as a suitable substitute for meat and eggs. There are many varieties of mushroom and most of them are edible. It is a universal product and UP has been considered as a likely location. 2.2 Availability of know-how and Compliances CFTRI, Mysore, has successfully developed the technical know-how. Compliance under the PFA Act is mandatory. 3.0 MARKET POTENTIAL Mushrooms are very popular in most of the developed countries and they are becoming popular in many developing countries like India. Applications and market for mushrooms is growing rapidly in India because of their nice aroma, nutritious values, subtle flavour and 169 Fresh mushrooms have very limited shelf life but processed and canned mushrooms have fairly long shelf life and can be sold even at far off places.000 30. sealed and processed under pressure for around half an hour.000 2. Hence plain cans and brine of 2% salt and 0. Then they are dehydrated in drier and packed.000/. Land may cost Rs.2% citric acid are used for packing. 4.whereas cost of construction could be Rs. 2. 1 1 1 1 1 1 2 -Total Price (Rs. moisture content in fresh mushrooms and moisture required in the final product. average yield is taken at 25%.000 15. Star hotels. The product can be sold even through departmental stores. Hand Flanger etc. Yield of final product depends up on the quality of dryer.000 170 .2 Machinery A thorough market survey would help to arrive at the proposed processing capacity.000 70.50. Assuming daily capacity of 1 ton or annual capacity of 300 tonnes considering 300 working days would require following machines: Item Baby Boiler Tray-type Dehydrator Can Seamer Can Reforming with Rubber Rollers. It is advisable to pre-treat fresh mushrooms in a solution containing brine to prevent discolouration.50 lacs. Many exotic food preparations like soup. But they are still considered as up-market product and their consumption is limited to urban and semi urban areas.mtrs. are made from them.0 CAPITAL INPUTS 5. certain caterers are the bulk consumers and a firm tie-up for regular supply with some of them is advisable. 5. Exhaust Box with electric Motor Steam Jacketted Kettle Weighing Scales Laboratory Equipments Qty. Hence. pickles etc. vegetables. super markets etc. 60. They are also used for garnishing.000 5. The cans are exhausted at 19O C for 7-8 minutes.special taste. is adequate. exclusive restaurants.0 MANUFACTURING PROCESS Fresh mushrooms are washed in cold water and then blanched in boiling water for around 34 minutes.000 20.) 60. with built-up area of about 100 sq.1 Land and Building Land measuring around 200 sq. to prepare many varieties of gravy and for stuffing several food preparations.000 25.mtrs. 5. manufacturing process employed.000 25. Packing is very critical as formation of moisture contaminates mushrooms very quickly. 1 Land and Building Area (Sq. shall be required for which a provision of Rs. Salt and citric acid will be required in small quantities.000/.000 Period (in months) 2 1 4 1 Total Monthly Salary (Rs.4 Utilities The power requirement will be 30 HP and everyday water requirement shall be 1000 ltrs.5. installation and trial runs 8.000 2. 5.000 2. storage racks. Prior arrangements with some cultivators for regular supply must be made. 40. 6.50. Cans of appropriate size.000 3.0 DETAILS OF THE PROPOSED PROJECT 8.500 5. 5.) 4. Shelf life of fresh mushrooms is few hours and hence the location has to be very close to the cultivation area.0 MANPOWER REQUIREMENTS Particulars Skilled Workers Helpers Salesman Nos.250 2.250 1. lables and corrugated boxes would form packing materials. 2 4 1 Monthly Salary (Rs.) 60.500 Total 7. SS utensils etc.is made.0 TENTATIVE IMPLEMENTATION SCHEDULE Activity Application and sanction of loan Site selection and commencement of civil work Completion of civil work and placement of orders for machinery Erection. packing tables.) 2.000 Particulars Land Building 171 .Mtrs) 200 100 Total Cost (Rs.500 12.10.5 Raw and Packing Materials The most crucial raw material will be good quality fresh mushrooms. Future planning may include mushroom cultivation for captive consumption.3 Miscellaneous Assets Some other support assets like furniture and fixtures. etc.50 2.30 1. 2.2 Machinery Machinery worth Rs.05 0. 40.45 1.6 Cost of the Project & Means of Financing Item Land and Building Machinery Miscellaneous Assets P&P Expenses Contingencies @ 10% on Land and Building & Plant & Machinery Working Capital Margin Total Means of Finance Promoters' Contribution Term Loan from Bank/FI Total Debt Equity Ratio Promoters' Contribution (Rs. 8.35 0.33 : 1 30% 172 .55 0. in lacs) Particulars Stock of Packing Material Stock of Finished Goods Receivables Other Expenses Period 1 Month 1 Month 1 Month 1 Month Margin 30% 25% 25% 100% Total Total 0.10 Promoters 0.5 Working Capital Requirements As against the processing capacity of 300 tonnes. intereast during implementation. registration.50 Bank 0.4 Preliminary & Pre-operative Expenses A provision of Rs.60 0. 8.000/.50 -3.55 2.00 8.15 1.40 0. in lacs) Amount 3.10 2. 8.is adequate under this head as explained earlier.65 1.is made towards pre-production expenses like market assessment.40 8.20 0. trial runs.50 0.000/. the plant is expected to run at 60% in the first year which would call for following working funds: (Rs. 60. establishment and administrative charges.8.30 4.55 1.55 6.55 2.40 8.3 Miscellaneous Assets A provision of Rs.50 lacs shall be required as discussed earlier. 80.30 2. 9.25 9. Govt. in lacs) Product Tinned Mushrooms Qty. (Tonnes) 150 -1. 9. in lacs) Product Fresh Mushrooms Salt. of India. Citric Acid etc.0 PROFITABILITY CALCULATIONS 9. (Tonnes) 75 Price/Ton (Rs.50 26.40 9. 9.4 Utilities Expenditure on utilities at 100% activity level would be Rs.00 0.Financial assistance in the form of grant is available from the Ministry of Food Processing Industries.000 -Rs.1 Production Capacity & Build-up As against the rated processing capacity of 300 tonnes.60 5. 9.000 Sales Value 41. Hence.500 -- Price/Ton (Rs. Cans Cartons.6 Interest Interest on term loan of Rs 6.5% of total sales.000/-. Labels etc.00 lacs is computed @ 12% per assuming repayment in 3½ years including a moratorium period of 6 months whereas it is computed @ 14% per annum on working capital loan from bank. capacity utilisation in the first year is assumed to be 60% and thereafter 75%.) 55.76.5 Selling Expenses It is advisable to enter into long term supply arrangements in bulk. This would reduce packing expenses considerably apart from savings in the commission to be paid to retailers. 9. Qty.7 assets.3/Tin -Total Value 18.3 Raw and Packing Materials Required at 100% (Rs. towards expenditure on technical civil works and plant and machinery for eligible projects subject to certain terms and conditions.) 12.2 Sales Revenue at 100% (Rs. Depreciation It is calculated on WDV basis @ 10% on building and 20% on machinery and miscellaneous 173 . average selling expenses are considered to be 7. 83 2.43 0.35 1.02 3.0 PROJECTED PROFITABILITY (Rs.45 0.55 5.48 1.15 0.32 0.80 0.24 0.18 1.98 55% 174 .40 0.77 0.69 3.32 5.75 2nd Year 75% 30.80 1st Year 60% 24.75 19.15 1.30 0.36 2.60 25.30 0. A Particulars Installed Capacity Capacity Utilisation Sales Realisation B Cost of Production Raw and Packing Materials Utilities Salaries Stores and Spares Repairs & Maintenance Selling Expenses @ 7.24 0.95 2.44 0.43 4.85 0.5% Administrative Expenses Total C Profit before Interest & Depreciation Interest on Term Loan Interest on Working Capital Depreciation Profit before Tax Income-tax @ 20% Profit after Tax Cash Accruals Repayment of Term Loan 15.00 0.85 0. in lacs) Amount 24.65 0.50 1.150 Tonnes --- 11.0 BREAK-EVEN ANALYSIS No [A] [B] Particulars Sales Variable Costs Raw and Packing Materials Utilities (70%) Salaries (70%) Stores & Spares Selling Expenses (70%) Admn Expenses (50%) Interest on WC [C] [D] [E] Contribution [A] .85 0.78 0.90 19.71 1.40 0.95 --.61 0.43 (Rs.10. in lacs) No.[B] Fixed Cost Break-Even Point [D] ÷ [C] 15.75 3.60 1.43 2.48 20.54 0. 37 0.0 [A] LEVERAGES Financial Leverage = EBIT/EBT = 3.14 4th Yr 4.00 2.87 3rd Yr 4.94 ------------------------------.14 2.11 0.25 2nd Yr 3.42 Operating Leverage = Contribution/EBT = 5.14 2.22 = 0.02 0.45 = 1.55 ---------------------------- 175 .06 3.00 2.49 ÷ 2.39 0.45 = 2.61 1.00 1.06 4.61 3.31 0.71 0.00 2.2.22 Degree of Total Leverage = FL/OL = 1.14 4.78 0.06 2.42 ÷ 2.40 2.40 1.40 4. in lacs) Particulars Cash Accruals Interest on TL Total [A] Interest on TL Repayment of TL Total [B] DSCR [A] ÷ [B] Average DSCR 1st Yr 2.64 [B] Debt Service Coverage Ratio (DSCR) (Rs.61 2.16 0.43 ÷ 2.12. HP 176 .11 1. PB No.82 8. (Rs.13 1. 3.26 1.61 7. Kanpur Lyalpur Engg. C-127.58 28% 2. Dist.11 2.41 The IRR is around 24%. in lacs) Year 1 2 3 4 Cash Accruals 2.75 1. Gaziabad Cowel Can Ltd.96 32% 2.41 2.92 1.55 lacs. Mayapuri Industrial Area.82 24% 2. 8. 25400407/02631 2. Solan. SP Engg Works.78 3. New Delhi-110064 Tel No. 4. Nagpal Brothers.. Some of the machinery and packing material suppliers are: 1.71 4.42 7. Co.17 2.02 4. PO Barotiwala.[C] Internal Rate of Return (IRR) Cost of the project is Rs. 218.31 14. 8. Phase II. PB No.24 2.