4 1 project repoproject_report-potato_flakes_mfg.pdrt-potato flakes mfg
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Project_Report-Potato_Flakes_Mfg.pdTRANSCRIPT
Project Report on Potato Flakes Processing
Prepared for
GUJARAT AGRO INDUSTRIES CORPN. LTD.
Report Contents
Sr. No. Title P No.
Executive Summary 1
1 CHAPTER : 1 Introduction
1.1 About Gujarat Agro Industries Corporation 12
1.2 Growth in Potato Cultivation in Gujarat 13
1.3 Project Background 14
2 CHAPTER : 2 Market Analysis
2.1 Description of Products and Its Variants 15
2.2 Quality Parameters 15
2.3 End Uses of Potato Flakes 16
2.4 Benefits of Potato Flakes 17
2.5 Present Domestic Industry Status 18
2.6 Marketing Channels 20
2.7 Major Potato Flakes Users in India 20
2.8 Price of Potato Flakes 21
2.9 Potential for Potato Flakes 22
2.9.1 World Export of Potato Flakes 22
2.9.2 Word Import of Potato Flakes 23
2.9.3 Imports of Potato Flakes by India 24
2.9.4 Exports of Potato Flakes by India 24
2.9.5 Import of Potato Flakes By Neighbouring Country 26
2.10 Domestic Market Potential 27
3 CHAPTER : 3 Potato Production & Availability For Processing
3.1 Potato Nutritional Facts 30
3.2 Global Production Trends 31
3.3 Potato Production In India 31
3.4 Suitability of Indian Potato Varieties For Processing 32
3.5 Areas suitable for cultivation of processing varieties 35
3.6 Experience with Exotic Varieties 35
3.7 Potato Production In Gujarat 36
3.8 Potato Storage Facilities In Gujarat 38
3.9 Potato Prices 39
3.10 Potato Contract Farming In Gujarat 40
4 CHAPTER : 4 Process & Technology
4.1 Process Description for Potato Flakes 42
4.2 Process Flow for Potato Flakes 47
4.3 Input-output ratios in selected mfg. Process 48
4.4 Suppliers of Plant & Machinery And Technology 49
I
5 CHAPTER : 5 Infrastructure, Utilities & Manpower
5.1 Project Location 50
5.2 Comparative Advantage in Gujarat 51
5.3 Requirement of Land 52
5.4 Requirement of Utilities 52
6 CHAPTER : 6 Operation & Management of the project
6.1 Project Management 53
6.2 Manpower Requirement 53
7 CHAPTER : 7 Regulatory Requirements & Govt. Support
7.1 Regulations - Food Laws, Environment 55
7.2 Compliance with norms of Pollution Control Board (PCB) 55
8 CHAPTER : 8 Business Plan & Project Implementation
8.1 Key Features of The Plan 61
8.2 Project Implementation Schedule 62
9 CHAPTER : 9 PROJECT COST & FINANCIAL ANALYSIS
9.1 Estimation OF Capital Cost for all Project Components 63
9.1.1 Preliminary & Pre-operative Expenses 63
9.1.2 Land & Site Development 63
9.1.3 Civil Cost 64
9.1.4 Plant and Machinery Cost 64
9.1.5 Electrical and Utilities Equipment 65
9.1.6 Office Equipments 66
9.1.7 Contingency 66
9.1.8 Estimation of Working Capital Requirements 66
9.1.9 Summary of Project Cost 67
9.2 Means of Finance 67
9.3 Profitability Assumption 68
9.4 Financial Indices 70
9.4.1 IRR Calculation 70
9.4.2 Payback Period 71
9.4.3 BEP Calculation 71
10 CHAPTER : 10 SOCIO-ECONOMIC BENEFITS OF THE PROJECT 74
11 ANNEXURES
I Projected Profitability Statement
II Quotation of Plant & Machinery ( BMA)
III Plant Layout
IV Production Trends in Gujarat
II
V Country-wise Import of Potato Flakes
VI Country-wise Export of Potato Flakes
III
A Project Report on Potato Flakes Processing
EXECUTIVE SUMMARY Sl PARTICULARS No.
A. Project Details
1 Name of the project
2. Name of the applicant/ agency (beneficiary) with complete address and contact details
3. Name of the Controlling Department/Ministry
4. Whether registered with APEDA, if yes, RCMC No. & date.
5. Main Business of the Agency
6. Experience in implementation and operation of such Projects
7. In case of state govt. agency, whether the project has been approved by the concerned state Govt. Department.
8 Details of Project Consultant
9. Mode of Operation after commissioning of the Project (whether self /lease /PPP or otherwise)
10. In case of self operation whether availability of adequate trained manpower has been ensured. Give details
11. Details of such projects in the Government sector already
Project for setting up manufacturing facility for potato flakes at Dehgam District : Gandhinagar, Gujarat
Gujarat Agro Industries Corporation Limited ( Govt. of Gujarat undertaking) Khet -Udyog Bhavan, Opp. Old High Court, Navrangpura, Ahmedabad-380 014
Ministry of Agriculture, Government of Gujarat, Gandhinagar.
GAIC is a virtual office of APEDA for Gujarat
Promotion of Hi-Tech Agriculture, Agro/ Food Processing and allied activities in the state
GAIC has successfully implemented many GoI and GoG assisted projects in the state, related to post harvest infrastructure, value addition and manufacturing of agri-inputs. The list of projects implemented and under implementation is provided in the DPR. The implemented projects are operating successfully under PPP model. GAIC is also setting up a modern 5,000 tons capacity bulk potato store with Dutch Technology at Deesa. This will be very helpful in storing “Sugar Free” potato for proposed project of potato flakes.
Govt. of Gujarat is supporting it, a copy of the letter attached.
Dynamic Agri & Foodbiz Consultants Pvt. Ltd, Ahmedabad
Lease or suitable PPP model by appointing Project Operating Partner.
Not Applicable
No
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A Project Report on Potato Flakes Processing
existed in the district
13. Location of the Project
14. Whether the land on which the project is to be commissioned is in the possession of the agency. Please provide documentary evidence.
B. Export Potential
15. Identified agriculture products for the project
16. Location Advantage
17. Annual Production of the produce (raw material) in the District
18. Production of the target produce in the State and also from the cluster of Districts
19. Targeted annual produce to be used as throughput in the facility
Dehgam District : Gandhinagar, Gujarat
Yes, land available with Department of Horticulture in their Nursery at Dehgam. The required piece of land will be made available to GAIC.
Potato Flakes and value added snacks mixes made from potato
Gujarat grows best quality processing varieties of potato due to suitable agro climatic conditions, adoption of required practices by the enterprising farmers of the state and willingness for contract farming. The global leading French Fries processor McCain, has set up plant in Gujarat after carrying out trials all over the country. The processing varieties for chips and french fries contain high dry matter content (more than 20% whereas table varieties have 15-18%). The undersize potatoes of these varieties like Chipsona-II & III, Lady Rosetta, Kennebec are difficult to sell in market for table purpose and price realization is very poor, however, this potato is very good for making flakes due to high dry matter content. The potato storage infrastructure is excellent in the state. GAIC is also implementing a “High-Tech” potato cold store with Dutch Technology for storing 'Sugar Free' potato for an extended period at Deesa In North Gujarat.
Gujarat has very good industrial and social infrastructure. The demand for flakes within Gujarat is more than 3,000 tons which is highest in the country and there is increasing demand from exporters based in Gujarat.
Production of potato in Sabarkantha cluster is around 5.48 lakh tons and production in the nearby other two clusters i.e Banaskantha is 9.24 lakh tons and Kheda Cluster is 3.63 lakhs tons
Production of potato in state is 18.82 lakh tons. The major potato production areas are within a radius 125 kms
The annual requirement of potato at full capacity utilization will be about 22,000 tons which is about
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on daily or weekly or monthly basis
20. Target beneficiaries/users and what benefit they will be accruing and also socio economic benefits?
21. Qty of final produce being currently exported from the State
22. International markets to which the produce is currently being exported
23. Projections of export through the commissioned project in quantity and value for the next five years.
24. Target international markets 25. Briefly explain as to how the
produce will be consolidated
1.5% of production in the major clusters of potatoes around the proposed location of Dehgam .
� Farmers will be the major beneficiaries as they will be in a position to conserve the potato when prices are unfavorable. This year a large number of farmers had to simply throw away potatoes for want of processing facility. Some of them sent potatoes to units in UP and Punjab for processing and due to high freight cost their realization was very low. As per the Press Reports the farmers of the state lost Rs.700 crores this year due to wastage of potato.
� About 22,000 tons of potato can be conserved into value added product which has shelf-life of more than one year in ambient condition which will provide sufficient time to farmers to look for a market and will not have to go in for distress sale of fresh potato. About 1,000 farmers will be benefited
� Exporters will be in a position to export potato flakes as there are tremendous opportunities in global market. The Gujarat based exporters had inquiries for large quantities last year but could not get the required material due to insufficient production capacity in the country.
�
Exporters based in Gujarat (Natural De-hydrated Vegetables) exported around 500 tons of flakes sourced from other states. The exporters had orders of much more quantity but supply was a constraint.
From India exports are taking place Gulf Countries, SARC Countries, Russia and Ukraine, etc.
Qty-tons, 2014 2015 2016 2017 2018 Value-Rs. Crs.
Quantity 1176 1361 1447 1532 1618
Value 7.41 8.57 9.12 9.65 10.19
Gulf Countries:- Oman, UAE, Qatar, Kuwait, Saudi Arabia and Bahrain.
SARC Countries:- Sri Lanka, Pakistan, Nepal, Bangladesh.
South-East Asian Countries:- Malaysia, Indonesia, Thailand, Philippines, Singapore
The selected Project Operating Partner (POP) will organize cultivation of contract farming within the
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(backward linkages) and marketed/ exported (forward linkages) through which port of the country
26. Installed capacity of the facility in MTs (per hour/per day)
27. Maximum capacity of the facility (per hour/per day)
C. Project Cost Outlay
28. Total Cost of the Project
29. Total Capital Cost
30. Source of Funding
31. Whether any appraisal has been done through financial institution, if yes, please provide the appraisal note
32. Civil work details
Components
Land Development
Land Cost
Site Developments
Fencing
cluster area for cultivation of processing varieties like Chipsona and LR in 1,000 ha. The POP will also be in touch with farmers and traders of processing varieties of potatoes and buy from them “Out of Specs” (undersize, cuts and with other minor defects). The potato will be stored in up- graded cold stores in the state with provision for CIPC treatment to keep it “Sugar Free” and fit for processing.
The product will be exported from the Kandla, Mundra and Pipava ports.
500 Kgs /hour about 12 MT per day
Plant will be operated for about 285 days in a year with a daily output of approximately 12 tons.
Rs. 1964.65 lakhs
Rs. 1663.27 Lakhs (Excluding land and Pre-op. exp)
Source Rs. Lakhs
Contribution from State Govt. 264.55
APEDA 1000.00
Any other Source- RKVY Loan 700.00
Total 1964.65
No.
Size, area in Unit cost No. of Cost sq. mtr units
(per sq. Rs. Lakhs mtr)
12000 1100 132.00
12000 250 30.00
500 3500 17.50
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Internal Road ( 7 Mtr wide ) 2800 1200 33.60
Storm Water Drains ( CC drain 250 4000 10.00 with cover slab, recharging wells, cross drainage work, Culvert at entry, Collection of storm water drain tank)
Landscaping 5000 200 10.00
Signage LS LS 1.00
Tube well LS LS 7.00
25 10000 2 2.50 Security Cabin/ Time office Cabin
Total Cost of land & site 243.60 development
Main Building Size, area in Unit cost No. of Cost sq. mtr units
(per sq. Rs. Lakhs mtr)
Process hall 1500 10000 1 150.00
Potato reception area 300 6000 1 18.00
Store 200 9000 1 18.00
Laboratory 20 11000 1 2.20
Office 100 11000 1 11.00
Milling and Packaging section 150 9500 1 14.25
Workers amenities 40 8000 1 3.20
Electrical room 20 7000 1 1.40
Boiler room 100 7000 1 7.00
Foundations 20 11000 1 2.20
Total cost of civil work 2450 227.25
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33. Plant & Machinery including Electrical
Components Technical Unit No. of Cost details, capacity, Cost units
specifications, (Rs. etc. Lakhs)
1 Potato reception line ( Imported ) 500 kgs/ hour with 854.76 1 1021.32
abrasive pealing drum
2 Supporting machinery to potato -- 5.00 5.00 reception line
3 Silo, Packaging, Weighing & SS Silo of 20 tons 20.00 1 20.00 Stitching capacity, bag filler
and stitching machine
4 Laboratory Equipment Basic chemical 10.00 1 10.00 test, micro- biological test, weight in water machine for potato quality
5 Plat forms Waking platforms 20.00 1 20.00 for blancher, drum, other machines made of MS as per the drawing supplied by machinery supplier
6 Pipelines fittings, plumbing etc. SS pipelines as 15.00 1 15.00 per the drawing by supplier
7 Stores and material handling Bines, etc for 5.00 1 5.00 equipment storage of
chemicals
9 Racking system MS racks for 10.00 1 10.00 packaging and raw material
10 Plastic pallets For carrying up to 0.02 100 2.00 1 ton finished products
11 Manual pallet trucks 1-2 tons capacity 0.25 8 2.00
12 Trolleys etc. MS trolleys for 0.10 10 1.00 internal
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movement of potato and finished product.
13 Misc. 10.00
Total Cost of plant & 1121.32 machinery
Components Technical Unit No. of Cost details, capacity, Cost units
specifications, (Rs. etc. Lakhs)
Utilities Equipments
1 Steam boiler and Chimney Multi-fuel boiler of 70.00 1 70.00 5 tons/ hour
2 Water chiller 5,000 LPD/ hour 15.00 1 15.00 at 10 degree
3 Air compressors 10 HP 3.00 1 3.00
4 Water storage tank-Overhead 3 lakhs Ltr -- 30.00
5 ETP For given BOD/ 60.00 1 50.00 COD load and about 1 lakh litter per day capacity effluent.
6 Installation and Misc. Local fabrication 10.00 1 10.00 work etc.
Total Utilities Equipments 178.00
Electrical Equipments
1 Power Distribution network 200 KVA 10.00
2 As per 10.00 LS 10.00 Cabels fittings, external lighting requirement
3 As per drawing of 5.00 LS 5.00 PLC, Instrumentation etc. suppliers
4 Gen Set 200 KVA 15.00 1 15.00
Total Electrical Equipments 40.00
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Office Furniture & Equipment
1 Work stations Modular furniture 0.33 15 5.00
2 Furniture with 5.00 1 5.00 table and 10
Meeting room furniture chairs
3 Latest PC/Laptop 0.25 10 2.50 with LAN
PC/Laptop systems.
4 Projector, TV etc. LCD TV 1.00 1 1.00
5 Steel racks and 1.00 1 1.00 Filling, cabinets etc. cabinets
6 AC, Fans etc. 2 AC + 6 Fans 2.00 2.00
7 EPBX Systems, 1.00 Communication system, IT others
Total of office Furniture 17.50
D. Financial Outlay
35. Key Financial Details
Profitability Statement for the project for next 5 years
Rs. In Lakhs
2014 2015 2016 2017 2018 2019 YEAR
Income from Sales 1633.88 1891.80 2010.58 2128.73 2249.00 2258.75
Income from Sales of Starch 15.39 16.42 17.44 18.47 19.49 19.49
Income from Sales of Empty Bag 8.66 9.23 9.81 10.39 10.97 10.97
Closing stock of Finished Goods 120.65 129.10 137.63 146.28 155.06 156.68
Opening Stock of Finished Goods 0.00 120.65 129.10 137.63 146.28 155.06
Gross Income 1778.58 1925.90 2046.36 2166.24 2288.24 2290.83
Variable Expenses
Raw Material Consumption 1014.60 1082.22 1149.85 1217.53 1285.16 1285.16
Other Ingredients Cost 38.48 41.04 43.61 46.17 48.74 48.74
Packaging Cost 25.65 27.36 29.07 30.78 32.49 32.49
Power Cost 38.48 41.04 43.61 46.17 48.74 48.74
Fuel Cost 179.55 191.52 203.49 215.46 227.43 227.43 Consumables Cost (Chemicals, Lubri., Det.) 12.83 13.68 14.54 15.39 16.25 16.25
Manpower Cost 101.22 111.34 122.47 134.72 148.19 163.01
Marketing Exps 5.39 6.24 6.63 7.02 7.42 7.45
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Development of Backward Linkages 10.00 11.00 12.10 13.31 14.64 16.10
Repair & Maintance 16.63 18.29 20.12 22.13 24.34 26.77
Misc. Manufacturing Cost 5.00 5.50 6.05 6.66 7.33 8.06
Interest on working capital 8.81 19.36 20.62 21.88 23.17 23.36
Cost of Production (b) 1456.64 1568.59 1672.16 1777.22 1883.90 1903.56
Contribution 321.94 357.31 374.20 389.02 404.34 387.27
Fixed Expense
General Admin Exps. 72.38 79.62 87.58 96.34 105.97 116.57
Insurance 6.24 6.27 6.30 8.08 8.11 8.12
Depreciation 83.41 83.41 83.41 83.41 83.41 83.41
Amortization 5.77 5.77 5.77 5.77 5.77 5.77
Sub Total 167.80 175.07 183.06 193.60 203.26 213.87
Profit before Taxation 154.14 182.24 191.14 195.42 201.08 173.40
Provision for Taxation 0.00 0.00 0.00 0.00 0.00 42.47
Net Profit after tax 154.14 182.24 191.14 195.42 201.08 130.93
Cash Flow Projections for next 5 years
Rs. In Lakhs
2014 2015 2016 2017 2018 2019
A: Sources of Funds
PAT 154.14 182.24 191.14 195.42 201.08 130.93
Depreciation+ W/o of POP exp 89.18 89.18 89.18 89.18 89.18 89.18
Increase in Bank Borrowing 135.54 13.38 9.66 9.76 9.88 1.47
Increase in Creditors 35.78 4.05 4.05 4.05 4.05 2.50
414.64 288.85 294.03 298.41 304.19 224.08
B: disposition of funds
Increase in CAPEX 0.00 0.00 0.00 0.00 0.00 0.00
Increase in Current Assets 223.08 25.82 20.09 20.21 20.40 7.02
Increase in Non C. Assets 0.00 100.00 50.00 100.00 0.00 0.00
223.08 125.82 70.09 120.21 20.40 7.02
C: Opening Balance 0.00 191.56 354.59 578.53 756.73 1040.52
D: Net Surplus(a-b) 191.56 163.03 223.94 178.20 283.79 217.06
E: Closing Balance 191.56 354.59 578.53 756.73 1040.52 1257.58
IRR 12.08%
BEP BEP at Installed Capacity- 39.09%, Cash BEP at Installed Capacity- 18.32%
Payback Period Eight years.
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E. Other Information
36. Project Implementation period in case of approval (in months)
Activities Starts from Feb'2012 1 2 3 4 5 6 7 8 9 10 11 12
1 Submission of DPR
2 Approval by APEDA
3 Selection of Partner
4 Land and its development
5 Detailed Engineering Negotiation and selection of
6 Vendors
7 Award of 'Turn Key' contract Securing temporary power
8 supply
9 Civil works
10 Order of Imported Machinery
11 Order of Indian Machinery
12 Installation of Machinery
13 Recruitment of key staff
14 Regulatory compliance
15 Commissioning trials
16 Procurements Activities
17 Market Dev. Activities Plant will be commissioned in Feb'2013
37. In case of cold chain
infrastructure e.g. pre-
cooling and cold storages,
please certify Whether
National Horticulture
Board Norms on all civil
constructions, Insulation
and refrigeration, etc have
been followed for
preparing the estimation
38. Please certify that all
necessary approvals from
the Government and
concerned agencies have
been taken for
Not Applicable
The project is to be implemented by State Government
Agency, no difficulty is foreseen.
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implementation of the
project.
39. Details on Availability of
uninterrupted Power to the
Project
40. Environmental issues of
the project and their
redressal
41. Any other detail relevant to
the Project.
Power availability in Gujarat is good and uninterrupted
power supply available to Food Processing Industry with
continuous process. Requirement of power is only 150
KVA and no difficulty foreseen. As a backup provision of
DG Set is made.
No harmful chemical residues, starch can be recovered
ETP will be installed for treatment and after that water
can be used for irrigation purpose.
In spite of the fact that there is a good availability of
processing varieties in Gujarat, there is not even a single
potato flakes manufacturing unit in the state and APEDA
is requested to support this endeavor. A large numbers of
potato farmers want to switch over to cultivation of
processing type of potato varieties by working with potato
processing companies as the prices offered by them are
remunerative and they would have assured buy back
therefore the processing of potato particularly for export
oriented potato flakes needs to be promoted in the state.
There is global trade of 2.9 lakh tons of potato flakes
annually and it is further growing, India being second
largest producer of potato can seize this opportunity and
exports from Gujarat will be very competitive in the target
markets due to proximity to ports.
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1. Introduction
1.1 About Gujarat Agro Industries Corporation
Gujarat Agro Industries Corporation (GAIC) was set up in 1969 under the Companies Act, 1956, GAIC acts as a facilitator and nodal agency for implementation of various schemes of Government of Gujarat and Government of India The basic objectives of GAIC are:
� To accelerate demand-based production of agro-products and develop agro
industries in the new global agricultural environment
� To enhance the productivity of crops in a sustainable manner and give Gujarat a
competitive edge through an integrated approach to agriculture
� To increase the levels of return to farmers by promoting value additions
� To reduce wastage of agro products and increase the overall income of farmers
� To establish a significant position for Gujarat in the global market by creating
backward and forward linkages between agriculture and industry.
In order to achieve these objectives, GAIC has a state-wide network of agro centers
reaching the remotest corners, which streamlines the timely supply of agricultural inputs, equipment and services to farmers at reasonable rates.
GAIC is focused on promoting use of renewable energy by implementing Bio-gas Programme through its field officers, SEBGS (Self-employed Bio Gas Supervisors) and Non Government Organizations. Their overall scope of work includes selection of beneficiaries,
supervision, installation and commissioning of the plant and providing after-sales services up to
3 years.GAIC functions as a facilitator for State Government’s Agro Industrial Policy and provides subsidies and other incentives as per the policies.
GAIC is also acting as Nodal Agency for Central Government / Agencies like Ministry of
Food Processing Industries, APEDA and SAFC. In the recent past GAIC has implemented a
number of projects related to post harvest infrastructure,value addition & manufacture of
agri-inputs as mentioned below :-
Implemented Projects
� Integrated Pack House for Fruits & Vegetables at Naroda, Ahmedabad under RKVY
Scheme
� Centre for Perishable Cargo Project at Sardar Vallabhbhai Patel International Airport,
Ahmedabad under RKVY Scheme.
� Banana Pack House at Jhagadia, Dist. Bharuch along with two Collection Centres
under APEDA and GOG.
Under Implementation Projects
� Hi-Tech Cold Storage for Potatoes at Deesa, Dist. Banaskantha. Under RKVY.
� Irradiation Plant for Fruits and Agro products at Bavla, Dist. Ahmedabad under RKVY �
Cold Storage for Onion and its Value Added Products at Mahuva-APMC, Dist.
Bhavnagar Under APEDA
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� Rice Flakes Unit at APMC Kosamba, Dist Surat under RKVY
� Liquid Bio Fertilizer Plant at Naroda, Dist. Ahmedabad under RKVY
Implemented 4 Cold Storages for Tribal Development Department, Government of Gujarat
(Only implementing Agency) � 100 MT Cold storage at Bartad, Dist. Navsari
� 100 MT Cold storage at Jhagadia, Dist. Bharuch
� 75 MT Cold Storage at Nana Pondha, Dist. Valsad
� 75 MT Cold Storage at Itwada, Jetpur-Pavi, Dist. Baroda 1.2 Growth in Potato Cultivation in Gujarat
Gujarat has achieved highest growth in agriculture among all the states of India during last
decade and the major contribution has been through fast growth in horticulture sub-sector.
Potato is an important horticultural crop in Gujarat with production jumping to 18.8 lakh tons
from 11 lakhs ton during a short span of last five years. Potato is a mainstay of rural
economy in North Gujarat Even though in terms of volume Gujarat ranks after UP, West
Bengal, Panjab and Bihar but it has a unique importance of being the state capable of
producing good quality processing varieties of Potato. The multinational companies like
Pepsi and McCains carried out trials all over the country for years and finally zeroed in on
Gujarat due to suitable agro climatic conditions (soil type, day length, night and day
temperature etc) in the state. The farmers have quickly taken up cultivation of new varieties
as per market needs, adopted the required package of practices and are reaping the
benefits with highest productivity within country and better price realisation due to better
quality. While McCain has set up Potato processing unit in Gujarat, the other major
manufacturers of Wafers like Pepsi, ITC, Parle, Haldirams, Balaji are largely sourcing
Potatoes from Gujarat. The ‘French Fry’ units Satnam Agri Processing at Punjab and
Golden Fries at Coimbatore are also dependent upon supplies from Gujarat. Substantial
quantities of potato is exported from India is of Gujarat origin. In spite of the fact that the
production of processable varieties of potato is highest in India there is not even a single
potato flakes manufacturing unit in the state whereas there is one in Punjab, one in UP and
three in West Bengal. Further, farmers of Gujarat are happy with cultivation of processing
type potatoes with contract farming with companies and not only are they getting
remunerative price but also an assured market. More farmers are willing to join contract
farming programme to get insulated from volatality of the market. During the year 2011 there
was a bumper crop in the country and due to adequate storages facilities in the state the
farmers were in a position to store the additional production and there was not much panic
during the harvesting period of March. Subsequently it was realised that the stock in stores
was much more than the requirement of markets of Gujarat and it was not possible to send
it to other states due to competition from Uttar Pradesh, Madhya Pradesh and Punjab who
are the traditional suppliers of two neighbouring states of Maharashtra and Rajasthan as a
result the prices nosedived to Rs 2/kg in November when the cold storages shut their
operations and fresh crops from Punjab starts coming in. A few traders from Gujarat
dispatched about 1,000 tons of potato to flakes factories in Uttar Pradesh and Punjab,
however, the realization was very poor due to very high freight cost, in such a scenario an
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urgent need for conserving the potato in form of value added potato flakes is felt, the flakes
can be stored at ambient conditions for up to one year and there is not only huge global
market, but fast growing domestic market as well. The conservation of potato at the time of
excess production will help in stabilisation of the price and sustained interest of farmers in
continuing cultivation of potato which is most remunerative rabi crop for them.
1.3 Project Background
APEDA among its various promotional schemes has a scheme for Infrastructure
Development for establishment of common infrastructure facilities by any state governments or
Public Sector agency like Airport Authority of India or Port Trust etc. Under the scheme
assistance is given as 100% grant except the land which is to be provided by implementing
agency. Considering the plight of potato farmers of the state GAIC has approached APEDA to
support the project under 'Common Infrastructure Development Scheme'.
GAIC has engaged Dynamic Agri & Foodbiz Consultants Pvt. Ltd for preparation of a
Detailed Project Report on processing of potato flakes. The consultants have experience of
preparing similar project reports and knowledge of domestic and global trade of potato
flakes. The DPR has been prepared after consultations with various stakes holders like,
farmers, traders, cold store owners, exporters and bulk users. The project cost estimates
have been worked out on the basis of quotations received from a leading Dutch supplier of
plant & machineries for similar projects in India and cost of other project cost components on
the basis of similar projects in India. For profitability analysis the prevailing prices of flakes
and potato have been assumed and other operating costs as per the industry norms. The
Consultants have examined global production of potato and trade of potato flakes in order to
assess strategic long term advantages to India and identification of target markets.
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Chapter-2 Market Analysis
In this chapter the detailed description about potato flakes, its quality parameters, end uses and
overview of global trade, domestic market and potential have been presented.
2.1 Description of Product and its Variants
The potato flakes are conserved form of potato and can be conveniently used as a substitute
for boiled potato. The rehydration property of flakes is very good and product looks like
mashed boiled potatoes. Potato flake is perhaps the most popular dehydrated potato product
used. The other related products are potato granules (manufactured using a different drying
process where in potato cells are preserved), potato flour which is made from potato flakes
by milling. The technical differences between different variants are given below:
INSTANT MASH, this is called a high quality flake, normally easy to recognize due to the
flake parts in it. The flakes are normally very dry, thick and have low free starch content. By re-
hydration a mash will be formed equal to fresh made mash. This is a product for direct
human consumption.
FLAKES, are used as the raw material or the additive in frozen mashed potato products like
potato croquettes,patties,nuggets, normally requires a higher free starch content, because it is
used a gluing agent. Flakes are used in the snack food industry as a raw material the
major use in India is 'Aloo Sev'. The users normally want to have a thin flake with high
moisture content and high free starch content.
FLOUR, is used in the bakery industry, as a bread improver is normally a very fine milled
flake, due to the milling the free starch content is higher than normal, but also the effect in
reaction with the yeast is important.
2.2 Quality Parameters
The quality parameters of generally traded potato flakes are furnished in Table-I:
Table-1 Quality Parameter
Consistency of product Moisture < 8 %
Additives < 1,5 %
Thickness 0,5 mm
Product size Adjustable from 0,5 - 6 mm quadrangle
Additives Glycerol mono-palmitate/stearate (0,1 0,5 % of dry matter).
Anti-oxidant (Butyl 4 hydroxyanisol), (0,05 - 0,1 %, based on
dry matter cooked potatoes).
Citric acid/ ascorbine acid
Acid Sodium Pyro Phosphate (SAPP) (0,1 - 0,15 % based on
cooked potatoes)
Sulphite (SO2), 400 ppm max. on the basis of dried matter for
the dryer
Packed in Big bags (1 m3).
Bags 10 till 25 kg (pre-formed paper bags 3 or 4 layers
with plastic liner; or woven bag with liner; or PE or PP bag;
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or bag made from tubular film PE / PP).
Shelf live Approximately 1 year.
Quality requirements Water absorption : 4.5:1 - 5.5
Bacteriological status :
Count plate < 15.000 ppm
Coliform < 10 ppm
Staphylococcus< 100 ppm
Salmonella 0 ppm
Yeast + fungus < 100 ppm
Black points : max. 40 per 100 cm2
).
2.3 End Uses of Potato Flakes
Potato flakes have a vast application and through experiments new uses of potato are being
developed. In foreign countries the product is generally used for the following end uses.
� Instant Mashed potatoes - The flakes are mixed with warm milk or water for making
instant mashed potatoes which is one of the common items for a continental breakfast.
� Extruded and other snacks - Fabricated snacks (Pringle, Potato sticks), Croquettes,
Pasta.
� Bakery industries - Used as anti stalling agent to slow the drying effect and to improve crust
colour.
� Meat Processing - In recipes like minced mutton balls, fish cutlets, meat/chicken
nuggets etc. Potato flakes are used as extender and binder.
� As thickener - Creamy frozen desserts, gravies and chocolate milk
� Soups & Premixes - As a thickener in ready to use soup powders, gravies and other food
premixes.
� Formed products - Patties, Cutlets etc.
� Instant Noodles etc. - For instant noodles, dried powdered mixes for sauces and stews.
In India potato is used for wide varieties of food which are quite different from other
countries. The application of potato flakes has been developed successfully for a number of
products and culinary experts are continuing their efforts in developing many more
applications. The major end uses in India are:
� Indian snacks - Aloo Bhujiya, Non -cereal snacks
� Formed products - Aloo Tikki, Cutlets, Aloo Bonda
� Premixes - Aloo Paranthas mix, Hara bara Kabab,Dosa mix, Pav Bhaji mix etc.
New uses like “Halwa mix” has also been developed.
With fast growth in Pet Food Industry potato flakes is also considered as one of the
ingredient depending upon its cost effectiveness. Since potato flake is having a very high
content of carbohydrates, minerals & vitamins. It is considered a very good ingredient in the pet
food formulations. C grade of potato flakes which are not considered fit for human
consumption are used for this purpose.
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Potato flakes can be used anywhere where mashed potatoes can be used. Table -2 outlines
the suitability of dehydrated potato products for the various uses compared to corn, wheat or
tapioca.
Table 2 - Suitability of Dehydrated Potato Products for various uses
Dehydrated Potatoes Corn Wheat Tapioca
Indian Snacks * * *
Flour Noodles & Chinese Noodles * * **
Dry Powdered Mixes * * **
Extruded Snacks * * **
Biscuits * * **
Meat Products ** ** **
Soups ** ** *
Surimi (Fish Products) * ** *
Symbols : * Not very appropriate, ** Appropriate, *** Very appropriate
2.4- Benefits of Potato Flakes
Around the world, potato flakes, flour and granules are used to make fabricated potato chips
and sticks, and are combined with other flours to form pellet based snack foods in any shape
and size. These products are particularly desirable among snack food manufactures for their
ease of use, low cost, and preferred taste. In India use of potato flakes has started for many
applications. The associated benefits with these products are:
� Convenient- The storage of dehydrated potato products is very easy in comparison to
fresh potatoes. They are also easy in use, good in solubility and cost effective.
� Cost-efficient - Dehydrated potato products have no specific storage requirements,
making them perfect for use in any climate. When used as an ingredient in baked goods,
dehydrated potato products also promote longer shelf life by retaining moisture. Reduced
spoilage is a cost-saving returned directly to the retailer or manufacturer. Lastly, without
a need for refrigerated containers, shipping costs for dehydrated potato products are low.
� Nutritious - Fresh potatoes are an excellent source of protein, potassium, calcium, iron,
vitamin C and other important vitamins and minerals. Moreover, dehydrated potato
products are easily fortified with extra vitamins and minerals to further enhance their
nutritional benefits. Importantly, dehydrated potato products are perfect for use by
individuals with allergies to wheat (one of the most common food allergies) and gluten
intolerance.
� High Quality -High quality end products are processed due to low bacterial count of
potato flakes and consistent quality.
� Hygienic -Using potato flakes in place of fresh potatoes is more hygienic in quick service
restaurants, processing facilities and other places of use.
� Consistency - Potato flakes assure consistent quality of the end product due to fixed
quality parameters while in case of fresh potatoes quality cannot be consistent and
would result in inconsistency end products.
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� Use in off season -There is defined period of availability of fresh potato although
availability is extended due to storage in cold storages by another 6-7 months, there is a
period of 3-4 months when availability of the product is not good and quality is also poor.
The potato flakes offer the advantage of use round the year.
� Use in Non-potato producing areas -Potato flakes are very helpful for consumer in
non-potato producing areas like Southern states of Kerela, Tamilnadu, Andhra Pradesh
and Karnataka where the availability of fresh potato is at a very high price due to high
logistic cost and losses due to limited shelf-life of fresh potato.
Due to above reasons the demand for flakes is growing tremendously in India as well as all over
the globe.
2.5 Present Domestic Industry Status
Potato flakes manufacturing is hardly fifteen years old in India. The first unit in the country
was set up at Nagpur by a fast food chain ‘Dosa King’ at Nagpur for captive utilisation as a
filling for Dosas. But the project ran into problems due to handling difficulties with Dosa
making machines and the company could not set up the chain. As such Nagpur is not a
potato producing location and the company was not keen on running the unit, besides, the
size of domestic market for potato flakes was hardly 50-100 tons and catered by importers.
The demand for potato flakes in the country started increasing with the entry of Fast Food
Chains/Quick Service Restaurants like Mc Donalds, KFC, Pizza Hut etc. in late 90’s. These
companies require flakes for preparation of formed products with consistent quality round the
year for supplies to their restaurants. The processors like Vista Foods came into existence
and the demand for flakes had risen to a level of about 500 tons annually. Further, the
introduction of extruded snacks in the country also contributed in growth of flakes demand.
Some 15 years back a unit called Potato King was set up in West Bengal which was
followed by 4 more units in the country. A brief description of the units is given below.
1) Potato King it is located at Bankura, WB and commissioned in 1997. The project was
set up using second hand plant, the unit could never produce quality product and due
to lack of focus on this project the promoters were never considered a serious player.
The company doesn’t have any back end, the plant is operated only at the time of
harvest of potato when prices are low and some times on rejects from the cold
storages when low price potato is available. The company has reputation of low
price low quality. The capacity of the unit is about 15TPD but it is understood that the
utilization of the capacity is poor. The company produces about 1200-1500 tons in a
year. In the year 2011 the company has done better due to unexpected export
demand as a result of failure of crop in China & Europe.
2) Merino Industries Ltd. Hapur, U.P, the unit was set up by Merino Industries known
for laminates in the year 2004. The company was already in potato business and
had cold storages in Meerut. The company went in for expansion within 2 years of
commissioning its plant. The present capacity of the company is about 14.5 TPD.
The company is price and quality leader in the market and marketing highest volume
i.e about 3400-3600 tons annually. As company has achieved a capacity utilization of
100% the company is setting up another plant with a capacity of 7.2 TPD
expandable to 14.4 TPD which is likely to be commissioned in Feb 2012.
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3) Satnam Agri Processing Ltd., Jallandhar, Punjab, it is a joint venture project of
Punjab Agro Industries Corporation and a leading potato grower Mandeep Farms in
Punjab. It is multipurpose unit with provision for processing Frozen French fries, IQF
Vegetables and Flakes and the unit was commissioned in the year 2007. The
capacity of the flakes line is 12 TPD. The annual production of the company is
estimated between 1200-1500 tons annually. The company is not performing well as
the lines for frozen products are generally underutilized and there are financial
difficulties. The company has not been able to establish its brand and marketing
network.
4) Ascon, Hoogly it is a joint venture project between a French company and Pailan
Group of WB who are into education, construction and etc. The unit was set up in the
year 2007 as a 100% EOU but is reported to be not performing well. The unit has no
plant backend, the export sales are erratic and there are management problems.
Two years back the company launched flakes in consumer packs under the brand
“Pota” for domestic market. As per industry information the functioning of unit is quite
erratic and last year’s production is estimated between 1400-1600 tons.
5) Basukhinath Food Processor, Kharagpur, the unit was set up by promoter
experienced in contract cultivation and storage of potato. The plant has capacity of
12 TPD and was commissioned in Sept- Oct’2010. The unit is doing extremely well
and in the year 2011-12 its utilization is expected to be 100%. In the year 2010-11
the reported production was 1500 tons. Current year’s production is estimated
between 2400-2800 tons and company is considering expansion.
The current status of Indian Potato Flakes Industry is summarized in Table-3
Table-3 Indian Potato Flakes Industry
Sr Name of Cap Estimated Remarks
No Unit KG/HR production 2011
1 Merino, 600 3400-3600 Leader in price, quality, sales going
Hapur for expansion.
2 Satnam, 500 1200-1500 Multi product unit, frozen section
Jalandhar not doing well, over-capitalized.
Financial problems
3 Basukhinath, 500 2400-2700 Doing very well in first year itself,
Kharagpur planning for expansion.
4 Potato king, 600 1200-1500 Processes only in season ,no back
Kolkotta end problem of raw material
5 Ascon, 500 1400-1600 Joint venture EOU, less focus on
Hoogly domestic market, no back end
9600-10900
The current level of annual production in the country is around 10,200 tons.
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2.6 Marketing Channels
The potato flakes is more or less like an Agri-commodity and sold in bulk on the
consideration of price and quality. The export is entirely dependent upon International prices
and India’s competitiveness as such India’s quality is acceptable in foreign markets now.
The marketing channels for the potato flakes are as follows:
1) Exports - Direct export or through merchant exporters. The present share of this
category is estimated at around 10%.
2). Domestic Bulk users/processors - The major bulk users of potato flakes like
manufacturers of Aloo Bhujia, Formed products etc. are buying directly from the
manufacturers. The popular companies include Haldiram, Vista Foods, Mc Cains. At present
this category of bulk users’ accounts for about 75%-80% of country’s consumption of potato
flakes.
3). Wholesale trade - Some companies have also appointed state level wholesalers/traders for
catering to needs of QSRs, Small Food Processing Units, Caterers, Restaurants and other
end users. The present share of this channel is estimated at 5%-10%.
4). Retail market - Marino has developed branded consumers packs also (Vegit) for
premixes for product variants like Aloo Veg Cutlet Instant Mix, Aloo Jhatpat Tikki Instant Mix,
Aloo Yummy Cheese Balls Instant Mix, Mazedar Aloo Bonda Instant Mix, Aloo Harabara
Kebab Instant Mix, Pav Bhaji Instant Mix, Aloo Nutri Soya Roll Mix, Aloo Veg Burger Patty
Instant Mix, Aloo Subz Shammi Kebab Instant Mix. The product is distributed like FMCG by
appointing distributor network and also through organised retail. At present the share of this
segment hardly 5% but holds lot of potential.
Looking at the above it is very clear that the product can be sold through close interaction with
the bulk users and keeping in view their quality needs and commercial consideration.
However, as a long term strategy manufacturing of value added consumer products and
promoting a brand would also be desirable.
2.7 Major Potato Flakes Users in India
The list of major buyers of potato flakes in India is given in table-4 below.
Table-4 Major Users of Potato Flakes in India
Major Users of Potato Flakes in India Estimated Demand
2011-12 tons
1 Haldiram ( Noida) 1400
2 Shivpur Industries 1000
3 Balaji 1200
4 Fritolays 700
5 Haldiram (Nagpur) 600
6 Haldiram (Kolkota) 400
7 ITC 500
8 HUL 400
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9 Nestle 400
10 Vista Foods 400
11 McCain 300
12 Others 1700
Sub Total 9000
As can be seen from above table that 80% of the total consumption of flakes in India is
accounted by eleven companies. The end users have confirmed that their requirement is
increasing and many more big players are expected as there is growth of snack
manufacturers in the organized sector.
As far as geographical distribution of the sales of potato flakes is concerned Northern India
and Western India have higher share as the manufacturers of snacks have production base in
these regions. In Gujarat there is requirement of more than 2,500 tons due to presence of
Balaji, McCain and other snack manufacturers besides there are exporters based in Gujarat
who have regular inquiries for potato flakes and last year they exported more than 800 tons by
sourcing from other units in the country. According to Mr. Riaz Meghani of Natural De -
Hydrates the company had requirement of more than 1,500 tons but due to capacity
constraints in India they could hardly get 800 tons
2.8 Price of Potato Flakes
The prices of flakes are also quite volatile due to linkage of price with the fresh potato price
and more over as processing of flakes in India is till November end the price starts rising
from November onwards till beginning of next manufacturing season in February- March. It
has been observed from the market that there are four price points in the domestic industry as
explained below.
� Bulk Buyers :- Manufacturers like Haldiram, Balaji, Vista Foods, etc who have annual
requirement of about 500 tons annually and try to enter into annual contracts so as to
have idea of their cost of manufacturing and assured supply throughout the year. The
manufacturers of the potato flakes also preferred such contracts as they want
assured utilization of their plants. Last year the bulk contracts for good quality flakes
were between Rs.70-75 per kg in bulk packs depending upon payment terms. Some
bulk buyers do make advance payments to help manufacturers to invest in potato
stocks.
� Small Buyers:- There are a numbers of small players who are not sure of their annual
requirement and are not in a position to stock high quantities and buy month to
month basis on prevailing market prices. Last year prices varied from Rs.75 to 90 per
kg. This players buy directly from the manufacturers or their sales agents.
� Retail Buyers :- Merino Industries has come out with the retail pack under the brand
name “VEGIT” for a variety of variants like Aloo Paratha Mix, Cullets Mix, etc,
ASCON of Hoogly has also come out with brand “POTA” for half a kg plain potato
flakes. The prices of retail pack are Rs. 120-150 per kg .
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� Export Buyers:- The export price for merchant exporters or direct export by the
manufacturers last year has been in the range of Rs.65-75 kg depending upon the
payment terms and quality.
2.9 Potential for Potato Flakes
While potato flake is quite an established product in the global market, it has tremendous
potential in the domestic market. In this section the potential for export and domestic market has
been analysed.
2.9.1 World Export of Potato Flakes
In this section and overview of global trade of potato flakes is presented. Looking at the
statistics of the recent past the volume of the global trade is around 2.96 lakhs tons valued at
around 383 million USD which indicates opportunity for India as India is 2 nd largest producer
of potato in the world. The trade has been historically controlled by US and European
countries like Germany, Netherlands, Belgium and France. However, China has very
successfully entered this market and established itself among the top 10 countries. Even
countries like Bangladesh have presence in the global trade. The export from major potato
flakes producing countries along with their trade partners is given in Table-5 below.
Table 5 - World’s Export of potato flakes in (2007-10)
( Qty in thousand tons & value in US$ thousands)
2006 2007 2008 2009 2010 2010
Country Qty Qty Qty Qty Qty Value
Italy, Malaysia, Belgium,
Germany 65.64 72.23 74.95 80.97 83.29 101,828 USA
Italy, Belgium,
Netherlands 43.61 49.93 48.06 38.77 53.95 63,927 Germany, France
Belgium 28.33 35.39 33.22 41.64 49.74 63,074 France, Italy, Spain UK
Mexico, Japan, Canada,
USA 55.48 58.29 36.76 41.64 48.33 63,407 Australia
Germany, Philippines,
Denmark 10.25 11.02 12.03 14.27 15.75 16,971 UK, Italy
USA, Mexico, Argentina
Canada 3.97 14.14 6.92 7.48 10.26 16,971 Guatemala
Austria, Czech
Poland 8.43 5.10 6.33 7.19 7.39 8,704 Republic, Israel
Libyan Arab Jamahiriya,
Egypt 2.76 4.64 6.95 19,409 Sudan, Palestine
Spain, Italy, Chile,
France 6.34 6.75 4.44 6.10 4.61 8,458 Belgium
Iran, Jordan, Tunisia,
Lebanon 0.00 0.08 1.29 2.67 3.33 4,488 Yemen, Egypt
Top Ten
Countries 222.05 252.92 226.75 245.37 283.58 367,237
Rest of World 41.50 33.98 14.62 20.47 13.00 15,973
Total 263.55 286.90 241.37 265.85 296.57 383,210
Source : www.trademap.org HS Code 110520
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The average per ton CIF value of potato flakes is 1.29 USD / kg.
2.9.2 World’s Import of potato flakes
The details of major importing countries along with their sources of import are given in the
Table-6 below.
Table 6 - World’s Import of potato flakes in (2007-10)
( Qty in thousand tons & value in US$ thousands)
2006 2007 2008 2009 2010 2010
Country Qty Qty Qty Qty Qty Value
29.56 30.08 28.81 26.54 29.24 Germany, Belgium, Italy 36,465 Netherlands
2.68 3.78 9.59 18.63 27.27 Canada, Germany, USA 35,231 Spain
Germany,
16.56 21.75 25.10 25.59 21.13 Netherland, UK 28,995 Denmark
Belgium,
14.68 13.23 13.96 13.64 17.00 Netherland, France 29,054 Germany
22.63 17.90 12.81 16.18 16.95 USA, Germany, Mexico 23,003 Denmark
19.53 20.59 17.52 18.24 16.70 USA, Germany, Japan 25,853 China
10.26 11.17 12.42 11.75 14.02 Germany, Spain 19,944 Netherland, Belgium
37.21 30.88 25.48 49.96 13.66 Netherland, Belgium 15,285 Germany, Poland
9.88 13.42 7.34 8.18 9.23 Netherland, Germany 11,610 Belgium, Denmark
4.91 5.23 5.75 6.20 8.45 Germany, China, Malaysia 10,097 Netherland
Top Ten 162.98 162.80 153.02 188.70 165.21 Countries 235,537
89.25 100.50 92.73 106.14 136.68 Rest of World 149,522
252.22 263.30 245.75 294.83 301.89 Total 385,059
Source : www.trademap.org HS Code 110520
While the international trade is generally among the European and American countries,
China has been able to enter important market of Japan & Russia and even Bangladesh is a
regular supplier to Belgium. The average per ton CIF value of potato flakes is 1.28 USD / kg. Dynamic Agri & Foodbiz Consultants Pvt. Ltd
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2.9.3 Imports of Potato Flakes by India
India is importing small quantity of potato flakes as can be seen from the Table-7 below. This
import seems to be of some specific formulation or at the times when domestic supplies is poor
(Nov -Jan.) and prices are high.
Table 7 - Imports of Potato Flakes by India in 2006 -10 ( Qty in tons) Sr. No. Country 2006 2007 2008 2009 2010
1 China 0 0 0 54 96
2 France 0 0 0 0 54
3 Italy 13 6 17 11 30
4 Lebanon 71 68 93 42 20
5 Netherlands 0 0 0 0 16
Top Five Country 84 74 110 107 216
Rest of World 79 95 153 108 38
Total 163 169 263 215 254
Source : www.trademap.org HS Code 110520
2.9.4 Export Potential from India
The average export from India during last three years was around 300 tons. The exports
from India during last 6 years are given in the following Table-8.
Table 8 - Exports of Potato Flakes from India in 2006 - 10 (Qty in tons) Sr. No. Country 2006 2007 2008 2009 2010 % Share
Qty Qty Qty Qty Qty
1 China 0 0 0 0 81 33.20
2 Oman 22 98 206 141 39 15.98
3 Indonesia 76 873 0 0 38 15.57
4 United Arab Emirates 65 100 39 7 27 11.07
5 Israel 0 0 0 0 14 5.74
Top Five Countries 163 1071 245 148 199 81.56
Rest of World 161 605 85 154 45 18.44
Total 324 1676 330 302 244 100.00
Source : www.trademap.org HS Code 110520
From India some exporters are exporting dried potato also which includes de-hydradated
potato cubes and the quantity exported during 2010-11 was 1768 tons. It is believed that
some exporters may also be exporting potato flakes under the HS Code-7129060 which is
meant for dried potato.
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2.9.5 Import of neighbouring countries of India
Import of Gulf Country
The Imports of potato flakes by neighbouring countries of India and other countries with
whom India has bi-lateral trade treaties are presented in Table-9 as these countries could be
targeted for export from India.
Table 9 - Import of Potato flakes in Gulf Countries (2006 - 10) ( Qty in tons) Sr. No. Country 2006 2007 2008 2009 2010
Qty Qty Qty Qty Qty
1 Oman 1961 1726 2264 2204 1816
2 UAE NA 887 493 *542 *596
3 Kuwait 92 157 142 *156 *172
4 Qatar 389 68 28 *31 *34
5 Saudi Arabia 628 609 NA NA 447
6 Bahrain 103 24 131 493 644 * Estimated Source : www.trademap.org HS Code 110520
The total import by Gulf countries is around 3000-3500 tons annually.
Import of SAARC Countries
The import of potato flakes by SAARC countries is about 1500 tons annually and
Bangladesh has major share in it. Even though Pakistan may not directly import from India the
export can be affected via UAE as is happening in case of dehydrated vegetables. The details
are given in Table-10.
Table 10 - Import of Potato flakes in SAARC Countries (2006 - 10) ( Qty in tons)
Sr. No. Country 2006 2007 2008 2009 2010
Qty Qty Qty Qty Qty
1 Sri Lanka 444 431 208 284 285
2 Pakistan 1794 969 162 390 287
3 Bangladesh 198 379 *417 *459 *505
4 Maldives NA 3 14 14 *20
5 Nepal NA NA NA 109 119
*Estimated Source : www.trademap.org HS Code 110520
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South-East Asian Countries
South-East Asian Countries as a target market for potato flakes, is imported 16917 tons of
potato flake in the year 2010 shown in Table-11.
Table 11- Import of Potato flakes in South-East Asian Countries (2006-10) ( Qty in tons) Sr. No. Country 2006 2007 2008 2009 2010
Qty Qty Qty Qty Qty
1 Malaysia 4911 5229 5754 6204 8447
2 Indonesia 3879 4858 2973 3995 4761
3 Thailand 1145 1575 1469 2121 2576
4 Philippines 423 671 1546 1228 875
5 Singapore 182 246 205 232 258
Total 10540 12579 11947 13780 16917
Source : www.trademap.org HS Code 110520
Considering above statistic India has a big market around it and rather than entering very
competitive European market the focus could be on the above mentioned countries
2.9.5 Import of Potato Flakes By Neighbouring Country
In the current year (2011) there have been a large numbers of inquiries to Indian
Manufactures and due to lack of facility in the country and increasing domestic demand the
Indian Manufacture could not seize the opportunity. It is estimated that India’s export of
flakes this year would be 1,500 tons whereas we could have exported more than 10,000 this
year looking at global trade of 2.9 lakhs tons. Due to inadequate processing facilities in India,
the buyers from other countries are not taking India seriously and in the past they have
found Indian supplier unreliable. Due to proximity to markets, advantage in freight cost,
existing trade links and bi-lateral treaties India can be very competitive in Gulf Countries,
SARC Countries and South-East Asian Countries. An analysis of the potential to this market
is presented in the Table- 12
Table- 12 Potential Export Market (Qty in tons) Sr. Country 2011 2012 2013 2014 2015 2017 2018
No Est. Est. Est. Est. Est. Actual Est.
1 Gulf Countries 3709 3894 4089 4293 4508 4733 4970
2 SARC Countries 1198 1258 1321 1387 1456 1529 1605
3 South Asian Countries 16917 17763 18651 19584 20563 21591 22671
Total 21824 22915 24061 25264 26527 27853 29246
Feasible Market
Share 15% 17% 20% 22% 25% Feasible Export 3609 4295 5305 6128 7312 Volume
It will not be difficult at all to capture 15-25% share of the above markets.
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2.10 Domestic Market Potential
The various end uses of the potato flakes are given in para 2.3. According to trade estimates
about 5% of the fresh potato sold by wholesalers and retailers is used for making potato
based products like Aloo Bhujia, Dosa, Samosa, Cutlets, Aloo Tikki, Aloo Parantha, Pav
Bhajji,Patties etc. Considering that if 50% of country’s production is traded the amount of
potato used for making these products would be about 8 lakhs tons which is equal to about
1.2 lakhs tons of potato flakes which shows tremendous potential for this product. As potato
flakes after rehydration are as good as freshly boiled potato the use of flakes is bound to
grow rapidly with increased availability, further the use of flake is convenient and product
offers a consistent quality.
The current level of production in India is about 10,200 tons annually. Considering export of
about 1500 tons annually and import of 300 tons about 9000 tons is consumed in the
domestic market. The growth drivers for the potato flakes are
� Growth in Quick Service Restaurants :- A fast growth has been witnessed in India by
the foreign Fast Food Chains like Mc Donald, Pizza Hut, KFC, Wimpy etc. A number of
Indian companies have also adopted this model and companies like King Burger, Nirula,
Haldiram, Goli Vada,Chattakas,Havfun, Bikanerwala and many other regional players
are expanding the network of their outlets at a fast pace.
A fast growth in expected in fast food chains, star hotel, pub & bars, catering in trains,
railway station and air ports in India which is expected to spur growth of processed
snacks like chips. The projective growth of Quick Service Restaurant and Star hotel is
given in Tables- 13
Table-13 Quick Service Restaurants (QSRs) in India
QSR Outlets Expansion
Café Coffee Day 900 20-25 cafes/ month
Dominoes’ Pizza 220 300 by 2012
McDonalds 255 500 by Dec 2015
Pizza Hut 175 200by 2012
US Pizza 100 500 by 2012
KFC 150 1000 by 2014
Yo-China 80 200 by 2012
Barista 200 250 by 2012
Subway 165 200 by 2012
Chick 50 100 by 2012
Wimpy 50 100 by 2012
Some new chains like Pizza Express by Bharti Group and one by Reliance group are
also expected soon.
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� Growth in Star Hotels : -Summary of numbers of hotel in India is furnished in Table-14
Table-14 Category wise no. of Hotels in 54 major locations in India
Type No. of Hotels
Heritage 54 54
5 Star Deluxe 81 81
5 Star 79 79
4 Star 102 102
3 Star 290 290
2 Star 163 163
1 Star 48 48
Unclassified/ Approved 369 369
Licensed 7515 7515
Total 8701
Source: Ministry of Tourism Report - 2008
� Modern processing technology of Ethnic Snacks : - The production of potato
based snacks like Aloo Tikki, Aloo Bhujia etc. were fragmented and preparations
were at home scale level. During last 10 years a consolidation has been witness
which is facilitated by use of automated lines and modern packaging for making
snacks. With appropriate marketing and brand creation there are many well known
brands are Aloo Bhujia, Extruded Snacks and same as expected for Aloo Tikki etc.
� Emergence of Cold Chains : - With increasing availability of cold chains and their
reach to small town has made distribution of frozen food products easy in India and
there are many success story like Ice Cream, Frozen Peas, French Fries etc. Same
channels are being used by the manufactures of Aloo Tikki etc. for marketing of the
products.
� Product Innovation :- It has been mentioned earlier that potato flakes can be put to
several uses like freshly boiled potato and will have many advantages like
convenience, consistency in quality, easy availability and cost efficiency. As India is a
vast country with different regional food habits there is tremendous scope for
development of “Ready to Use” premixes like Pav Bhaji mix, Dosa mix, Halwa mix
etc.
Considering the above factors the growth rate in the domestic market is estimated at 15 -
25% annually for at least another 10 years and the consumption of potato flakes in India is
estimated at 26000 tons in the year 2018 as can be seen from Table-15 below.
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Table 15 - Projected demand for potato flakes in India.
2011 Gro 2012 2013 2014 2015 2016 2017 2018
Sr. Major end use % Present wth Projected sale in MT
No. category Shar Share rate e (tones) (%)
1 Aloo Bhujia 61 5500 15% 6325 7274 8365 9620 1106 1272 14630
3 2
2 Formed products 18 1600 20% 1920 2304 2765 3318 3982 4778 5734
(Processors, Fast
Food Service)
3 Dry mixes, Retail 2 200 20% 240 288 346 415 498 598 718
(Pav Bhaji, Aloo
Bonda etc.)
4 Extruded Snacks 8 700 20% 840 1008 1210 1452 1742 2090 2508
5 Other ( Mashed 11 1000 15% 1150 1323 1521 1749 2011 2313 2660
potato, Soups,
Ketchup etc.)
Total 100 9000 12197 14207 16554 19296 22501 26250
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Chapter-3 Potato Production & Availability for Processing
3.1 Potato Nutritional Facts
The potato is the most popular food crop cultivated in the world and area under its cultivation
is 4th largest following rice, wheat and maize. It is a starchy, tuberous crop from the perennial
Solanum tuberosum of the Solanaceae family. In certain countries due to high level of
carbohydrates it is a staple food. The potato also includes other important ingredients of
human diet which can be seen in the Table-15 below.
Table 16 - Nutritional value of Potato Nutritional value per 100 g of raw Potato
Energy 321 kJ (77 kcal)
Carbohydrates 19 g
Starch 15 g
Dietary fiber 2.2 g
Fat 0.1 g
Protein 2 g
Water 75 g
Thiamine (Vit. B1) 0.08 mg (6%)
Riboflavin (Vit. B2) 0.03 mg (2%)
Niacin (Vit. B3) 1.1 mg (7%)
Vitamin B6 0.25 mg (19%)
Vitamin C 20 mg (33%)
Calcium 12 mg (1%)
Iron 1.8 mg (14%)
Magnesium 23 mg (6%)
Phosphorus 57 mg (8%)
Potassium 421 mg (9%)
Sodium 6 mg (0%)
Considering importance of potato in human diet and requirement round the year and also at
places where potato is not cultivated processing of potato has assumed a great importance.
While there are many ways of preserving and processing potatoes - french fries, wedges
etc. in frozen form and dehydrated products like potato flakes, granules, potato dices and
spray dried powder etc.: the most of potato is processed in form of French fries and potato
flakes.
In this chapter a macro view of global production of potato India’s positions, National level
production of potato with state wise statistics is presented. A detailed analysis of the raw
material availability at the project location is given in this chapter.
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3.2 Global Production Trends of Potato
India occupies 3rd position in the world in potato production. With increasing productivity of
potato in India and also area under cultivation (due to remunerative prices to farmers) India is
likely to overtake Russian Federation to occupy 2nd position. The production trend of potato
in top 10 potato growing countries is given in Table-16.
Table 17 - Trends in production of potato in major producing countries
( Production in MT Thousand )
Sr. No. Country 2005 2006 2007 2008 % Share
1 China 70907 54076 64837 70839 22.55
2 Russian Federation 37280 38573 36784 28874 9.19
3 India 28788 29175 28600 34658 11.03
4 USA 19462 19713 20373 18627 5.93
5 Ukraine 19229 19467 19102 19545 6.22
6 Poland 11624 10031 11791 10462 3.33
7 Germany 10369 8982 11644 10369 3.30
8 Belarus 8185 8329 8744 8749 2.79
9 France 6777 6363 7183 6872 2.19
10 Netherlands 6605 6240 6870 6923 2.20
Sub total 219226 200949 215928 215918 68.73
Rest of world 105880 104697 107615 98222 31.27
Total 325106 305646 323543 314140 100.00 Source: UNComtrade
It is interesting to note that the major potato flakes importing countries i.e. Belgium, Italy, UK
and Japan are not one of the important producers of potato therefore, would always be
dependent upon potato producing countries which offers India a good opportunity to build -up
exports.
3.3 Potato Production in India
Potato is most important vegetable crop in India accounting for 20-25% of area under
cultivation of vegetables. The crop is grown largely in the Rabi season in major production
areas in UP, West Bengal, Bihar, Gujarat and Punjab. In Karnataka and hilly states of
Himachal Pradesh and Uttrakhand it is grown in other seasons also. The state wise
production of potato in India is given in the Table-18.
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Table 18 - State- wise production trends of Potato in India Sr. STATE
No
1. Uttar Pradesh
2 West Bengal
3 Bihar
4 Punjab
5 Gujarat
6 MP
7 Assam
8 Jharkhand
9 Haryana
10 Karnataka
Subtotal
Rest of India
TOTAL
2006-07 2007-08
Area Prod.
Prod. Area
478 10538 505 11095
408 5052 401 9901
323 5741 316 6020
77 1313 79 1477
50 1340 65 1494
49 648 50 650
78 505 79 515
38 360 40 377
22 342 20 352
66 682 68 572
1587 26520 1622 32453
156 2080 173 2205
1743 28600 1795 34658
2008-09 2009-10
Area Prod.
Prod. Area
527 10810 541 13447
401 9901 370 8880
310 5034 314 5387
81 2001 83 2117
57 1449 60 1657
66 883 61 608
80 669 87 590
38 359 38 573
23 490 23 495
72 606 81 460
1655 32202 1657 34214
178 2270 178 2363
1834 34472 1835 36577
%
Share
36.76
24.28
14.73
5.79
4.53
1.66
1.61
1.57
1.35
1.26
93.54
6.46
100.00
Source- National Horticulture Board,
Gujarat ranks fifth in potato production in India and the productivity is the highest than
national average and the increase in the production in recent years is due to productivity
gains. The state has unique position of producing very good quality of processing type of
potato varieties and has attracted major processing companies who have set up
manufacturing base or are sourcing potato from the state. For sake of comparison the data in
the above table is given up to 2009-10 however, the reported production in Gujarat in
2010-11 was 18.81 lakh tons.
3.4 Suitability of Indian Potato Varieties for Processing
All potato varieties are not suitable for processing. The tuber dry matter and reducing sugar
content of potatoes are the two most important parameters in selecting raw material for
processing as these determine the yield, texture and quality of processed potato products.
High levels of reducing sugars results in dark color of fried products. Thus the potatoes
required for processing need to have tuber dry matter in the range of 21 -23% and reducing
sugars below 250 mg per 100 gm fresh weight of tubers. Round to oval potatoes are
preferred for the preparation of chips and long tubers for the french fries. The relationship
between tuber dry matter and use of the potato is given in Table-19.
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Table 19 - Relationship Between Tuber Dry Matter and Optimum Use
Specific Gravity Dry Matter, % Texture Typical Uses
Below 1.060 (very low) Below 16.2 Very soggy Pan frying, salads, canning
1.060-1.069 (low)
16.2-18.1 Soggy Pan frying, salads, boiling, canning
1.070-1.079 medium)
1.080-1.089 (high)
Above 1.089 (very high)
18.2-20.2
20.3-22.3
Above 22.3
Waxy
Mealy, dry
Very mealy or dry
Boiling, mashing; fair to good
for chip processing and canning
Baking, chip processing, frozen
french fry processing; some cultivars tend to slough when boiled Baking, frozen french fry processing, chip processing; tendency to produce brittle chips & to slough when boiled
In the country, all the potato varieties are not process able. Therefore, a surplus in potato
production does not per se imply a surplus in material availability for the processing industry.
Given the increased interest in India by important food processors and food service
companies, specific development has been in place for nearly 15 years to release varieties
that are not only suitable for needs such as chips, flakes and french fries but also have
reasonably good yield to provide economic returns to the farmers.
The country’s premier research institute dedicated to R&D on potato, The Central Potato
Research Institute (CPRI) has released 5 varieties that are considered suitable for
processing, of which two-Kufri Chipsona I, Kufri Chipsona II were released that were
exclusive for processing.
Variety - Kufri Chipsona I
Maturity : Medium (90-110 days)
Yield potential : 40 t/ha
Dormancy : Medium (6-8 weeks)
Diseases : Resistance to late blight
Processing quality : Easy to cook, Waxy texture, Mild flavor, Free from discoloration after
cooking, High dry matter, Low reducing sugars and low phenols, The
variety is highly suitable for making chips, french fries and flakes.
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Variety - Kufri Chipsona II Maturity : Medium (90-110 days)
Yield potential : 40 t/ha
Dormancy : Medium (6-8 weeks)
Diseases : Resistance to late blight
Processing quality : Easy to cook, Waxy texture, Mild flavor, Free from discoloration after cooking, High dry matter, Low reducing sugars and low phenols, The variety is highly suitable for making chips, french fries and flakes.
Characteristics of process able varieties in India are given in below Table-20.
Table 20- Characteristics of Indian processing potato varieties
Name Duration and adaptability Dry Reducing Suited for
matter sugars
Kufri Jyoti 90-100 days; hills, plains and 18-21 % 106-275 Chips, flour,
plateau region flakes
Kufri Lauvkar 80-85 days; plateau region 18-20% 200-250 Chips, flakes
Kufri Chipsona I 100-110 days; Indo-Gangetic 21-25% 45-100 Chips, flakes,
plains, central plains French fries
Kufri Chipsona II 100-110 days; Indo-Gangetic 21-25% 44-93 Chips, flakes
plains, central plains
Kufri 70-80 days; Gangetic plains, 19-20% 250-324 Tikki, wedges,
Chandramukhi central plains chips
Source : CPRI, Shimla
Kufri Chipsona I & II are suitable to be grown even in the different northwestern plains
characteristic of low dry matter and reducing sugars. They are flexible for planting at different
points during the long season, normal, late crop, spring crop and late spring, enabling
extended availability period to suit processors needs without storage.
They yield acceptable dry matter more than 20% and acceptable product color in all
important regions, northeastern plains, central plains and northwestern plains, besides a
good tuber yield of 25-35 tons per ha. It is understood that Kufri Chipsona III has also been
released and field trials have been successful
It is understood that CPRI has also release a variety Kufri Frysona specifically for french
fries processors. The potato of this variety is oval in shape and has the required length.This can
also be used for chips processing.
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3.5 Areas suitable for cultivation of processing varieties
Location suitable for cultivation is based on the average minimum temperature in crop
season and in the last 30 days of growth in the field, which impact the tuber formation and
maturity period of the variety in the given agro climate conditions.
Areas with average minimum temperature more than 12° C result in dry matter above 20%
and are most suitable for processing. Even though the Indo Gangetic and Northwestern
plains are suitable areas for the potato cultivation from all other parameters like soil, climate,
water availability etc. but on account of low temperature for short period, the level of dry
matter used to be low. But now varieties like Chipsona I & II are available which are suitable
for Northwestern plains also. And potato with high dry matter is available for processing from
these areas. According to Dr. N. Patel of Dantiwada Agricultural University the trials of
Chipsona in the Deesa area have shown very good results and farmers would be interested
in taking up commercial cultivation through contract farming. The trials for Kufri Fry Sona
also need to be conducted in the area to determine its performance.
Prior to the introduction of the Chipsona varieties, processing industry’s needs were being
met only from four locations - Deesa, Malwa (MP), Badayun (UP) and Nagrota (HP),
aggregating to less than 40,000 hectare, less than 4% of the total potato acreage in the
country. The share of Deesa is highest and cultivation of processing varieties has started
taking place in other potato producing areas in Gujarat like Dehgam and Kheda also. At
present Gujarat is the major producer of processing type of potato and this will be of
advantage to the companies planning to set up potato processing unit in the state.
3.6 Experience with Exotic Varieties
Indian conditions are considerably different from the temperature climate in other important
potato growing nations. The development of processing grades has also involved extensive
testing of exotic varieties from Europe and US to determine performance under subtropical
conditions and identify the extent of their adaptability in India.
The results of all experiments till date suggest that existing highly successful varieties in
other countries have not produced satisfactory result in the trials conducted by CPRI, but
with the new agronomic approach even exotic varieties can perform well. To suit our needs,
some of exotic potato varieties like Atlantic, Frito lay hybrids 1533 are being used for chip
processing by leading MNC processors. There are certain limitations on local adaptation of
exotic varieties due to agro climatic influences. Therefore, initiatives at the cultivation level will
need to be based on investment in development of new indigenous varieties in the ICAR
program or through private research programs.
Private research in potato is presently restricted in so far as import of germ-plasm and true
seed potato is concerned. The seed policy and the Plant Seeds and Fruits (Control of import
into India) Order allows the import of potato seed only through the CPRI to obtain their
germplasm requirements for further propagation. The CPRI release imported consignments
only after growing them for 3 years under controlled conditions.
Past experience indicates that private research programs have invariably not succeeded, for
reasons not fully known. However, a few important food-processing companies have
engaged in collaborative research with CPRI itself to develop specific varieties for their own
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use. PepsiCo, US and Agrico, the Netherlands, have ongoing programs under which the
sponsors will share the commercial results with the CPRI in a pre-agreed manner as outlined in
the respective agreements. Imported germ-plasm and parent lines will also be supplied to CPRI
under such ventures with strict intellectual property provisions.
3.7 Potato Production in Gujarat
An increase in area under potato cultivation & production can be seen in the Table -21, in
Sabarkantha the increase in area has been more than 70% in a short span of last three
years. This has occurred due to increasing demand for processing varieties from the area
and increase in income of farmers by cultivation of potato. Some progressive farmers have
started contract farming with companies like McCain , Balaji & Pepsi and are having good
returns.
The top five potato producing district in Gujarat is presented in Table-21 given below.
Table-21 District wise Potato production trends in Gujarat
Area in 000 Ha., Production in 000 M.T. 2008-2009 2009-10 2010-11 % of state
Area Prod. Area Prod. Area Prod. production
Banaskantha 28.0 784.0 28.5 826.5 29.8 923.8 49.1
Sabarkantha 5.0 150.0 6.3 189.6 8.8 272.3 14.5
Anand 5.8 145.0 6.0 198.0 6.1 193.6 10.3
Gandhinagar 4.3 132.1 4.4 145.4 4.8 160.8 8.5
Kheda 6.5 97.3 6.8 136.3 7.3 153.2 8.1
Top Five District 49.5 1308.4 52.0 1495.8 56.7 1703.8 90.5
Rest of District 7.4 140.4 8.1 161.2 8.6 178.0 9.5
Total State Production 57.0 1448.8 60.1 1657.0 65.3 1881.8 100.0
Source :- http://agri.gujarat.gov.in/hods/dir-horticulture.htm
Even though Gujarat accounts for about 5.4% of national production of potato it has a
unique status of being a preferred destination for the processors and exporters. For the
manufacture of potato wafers a size of more than 45 mm is preferred by the processors,
besides, high total solids (>18%) and low reducing sugar. The farmers of Gujarat by
adopting the required package of practises are in a position to deliver the potato of required
specifications. Similarly for processing of french fries, special varieties of potato having a
length of more than 75 mm and high solids as well as low sugar are required. These
varieties are cultivated in Gujarat only. The MNCs like Pepsi & Mc Cains have done trials all
over the country and have found Gujarat and parts of M.P. only suitable for cultivation of
processing varieties of potato due to factors like suitable soils, day length, day & night
temperature, and availability of irrigation facilities. These companies have worked with the
farmers for many years and have also started contract cultivation due to their specific
requirements. Varieties like Kennebec, Shepody & Santana have been introduced by Mc
Cains for processing French Fries and other potato products and Pepsi has introduced
Atlanta and Lady Rossetta for processing of Wafers. The farmers have reported high profits
as their yields of potato have increased up to 40 tons/hectare due to the good quality seed
and technical services provided by these companies. In fact Mc Cains have also set up their
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processing unit in Gujarat considering good availability of potato. The other companies like
Pepsi, ITC, Parle, Haldiram & Balaji are sourcing large volume of potatoes for the processing
of wafers from Gujarat. Most of the potato exported from India is also of Gujarat origin.
The production of potato in Gujarat is confined to three clusters accounting for almost 98% of the state’s production as shown in Table-22 Table-22 Cluster-wise Production
Production in 000 M.T
Cluster District Total Cluster % state
production production production
Cluster-I Banaskantha, 923.8 923.8 49.09
Cluster-II Sabarkantha, 272.3
Cluster-II Gandhinagar 160.8
Cluster-II Mehsana 115.5 548.7 29.16
Cluster-III Kheda, 153.2
Cluster-III Anand 193.6 363.3 19.31
Cluster-III Baroda 16.5
1835.8 97.6
Source :- http://agri.gujarat.gov.in/hods/dir-horticulture.htm
The maximum cultivation of processing varieties is in Cluster-I comprising of Sabarkantha,,
Mehsana and Gandhinagar. This is due to presence of McCain in Mehsana, logistically
convenient location for processors and skilled farmers and their good experience in contract
farming with the companies.
Gujarat is the best not only in term of productivity but also in terms of quality. The table
varieties of ‘Kufri Badasha’ and ‘Kufri Lavkar’ have good size, color and luster and are
preferred not only by exporters but domestic customers in other states like Maharashtra and
Southern states also. During last two years a significant volumes of fresh potato have been
supplied to Mumbai, Pune, Trichy, Mudhurai, Kochi and Hyderabad. Farmers of Gujarat
have started cultivation of early varieties of potatoes ‘Kufri Pukhraj’& ‘Kufri Pushkar’ which
are available to customers from end of January to February when stocks of stored potatoes
are over.
Cultivation of Processing type of varieties
The large production and availability of potato is not quite relevant for processing. In India,
more than 95% potato is cultivated for table purposes and as this potato has less dry matter
it is not suitable for processing. The table varieties popular in the country include Kufri
Bahar, Kufri Jyoti, Kufri Pukhraj, Kufri Badshah and Kufri Labkar, etc which are very popular
among the farmers. The processors had to do lots of research for development of suitable
processing varieties including import of cultivars from Europe. The companies like Pepsi,
ITC, McCain have done lots of research in India on identification imported varieties suitable
to Indian climatic condition and which are suitable for processing. The center potato
research institute has also developed processable variety looking at the requirement of the
processors. The requirement of processing varieties is gradually increasing and at present it
is estimated around 6.6 lakhs ton annually as shown in Table-23.
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Table 23 - Demand for Potato by Processing Industry
(000’tons)
Sr. Name of Unit Product Estimated Expected
No. Potato demand growth %
1 Pepsi Wafers 200 10-Aug
2 ITC Wafers 50 10-Aug
3 Parle Wafers 60 10-Aug
4 Balaji Wafers 60 10-Aug
5 McCain French Fries, Tikkies 50 20
6 Satnam Agri Potato Flakes, French Fries, 20 20
Tikkies, etc
7 Golden Fries French Fries 10 20
8 Merino Potato Flakes 40 20
9 Simplot French Fries 20 20
10 Basukhinath, Potato Flakes 20 20
11 Eskon Potato Flakes 10 20
12 Potato King Potato Flakes 10 20
13 Others Wafers, Flakes, Tikkies, etc 150 15
Total 700
The processable varieties of potato are generally cultivated through contract farming
organized by the companies like Pepsi, Mc. Cain , Marino, Balaji, etc. Keeping in the view of their
specific requirement at present most of the cultivation is done in states like Gujarat, MP, UP and
WB. It is understood that climatic conditions of Gujarat are suited best and more than 30% of
potato is sourced by the processor from Gujarat. From farmers’ perspective as cost benefit
ratio of growing potato is better than other alternative crops in the area, the cultivation of
potato is likely to continue increasing in the near future.
The processors of wafers and french fries use specific sizes of potatoes - for wafers 45-
70 mm. and for fries > 70 mm. only where as farmers like to realize a good price on their
entire production. Since the processing varieties are also suited for processing of
flakes about 25-30% of the production can be used for processing flakes which will be of
great advantage for the unit.
3.8 Potato Storage Facilities in Gujarat
At present there are 217 potato cold storages in the state of Gujarat and another 5-6 stores
are reported under construction. The cold stores are according to the production of potato
and maximum cold stores are in Banaskantha as can be seen from the Table-24
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Table 24 - Area wise number of cold storages and Potato storage capacity in Gujarat Sr. Area No. of cold Potato storage
No storages capacity bags in lakhs
1 Banaskantha 76 100
2 Mehsana, Gandhinagar & Sabarkantha 42 65
3 Kheda, Anand &Baroda 54 40
4 Ahmedabad 15 5
5 Saurashatra 20 6
6 Surat 07 -
Total 217 216
Source: The Gujarat cold storage owners’ association
Out of the some 217 cold storages 10-15 have facilities for storage of processing type of
potatoes which are generally booked by processors/traders. These cold storages are having
some of facilities like CIPC fogging for maintaining low level of sugar. Considering increase in
requirement for processing type of varieties and special storage conditions required for the same
GAIC decided to set up a ‘Hi-tech’ cold storage at Deesa for bulk storage of
processing varieties. 3.9 Potato Prices
The price of potato would be a critical factor in determining the viability of the project. The
prices of potato fluctuate in a wide range due to factors like production, storage capacities and
demand. In a particular wholesale market the price is affected by arrival of fresh potato on a
particular day. Generally the prices are low in a harvesting season (Feb. - Apr.) as some
farmers are not keen on the storage of potato. Potato future contracts are there in the national
futures exchanges MCX, NCDEX and NMCE which also influence in price discovery.
The trends in arrival for last 4 years of potatoes of Deesa origin in Ahmedabad APMC are
given in graph below.
Potato Deesa arrival in Quintal (2006 - 2009)
The trends in prices for last 4 years of potatoes of fair average quality of Deesa origin in
Ahmedabad APMC are given in graph below.
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Potato Deesa price (Min.) in Quintal (2006 - 2009)
While the price of table potato fluctuate keeping in view factors like production in the state and
country storage capacity, demand from local markets and neighboring states and export
markets. During last year the potato prices fluctuated from Rs. 5-6 per kg in March to Rs.2-3 per
kg in November. The prices nosedived to Rs.2 per kg in November due to excess stock in the
cold stores, end of cold store season deteriorating quality and arrival of fresh potato. The
traders and farmers of Gujarat could not sell in the neighboring of Rajasthan and
Maharashtra due to strong presence of traditional suppliers of UP, MP and Punjab. Due to the
factors, farmer and traders of Gujarat had to incur heavy losses.
Interestingly the price of processing type of potato was not affected. While the price of table
varieties was Rs.2-3 per kg in November it was around Rs.20 per kg for processing varieties of
chips like LR and Chipsona. This trend has been witnessed during last 4-5 years in the
Gujarat and increasing number of potato farmers are willing to switch over cultivation of
processing type of potato.
3.10 Potato Contract Farming In Gujarat
The cultivation of processing type of potato is generally promoted by leading processing
companies under contract farming. The list of companies active in Gujarat and price paid by
them is given in the Table-25 below.
Table-25 Potato Contract Farming In Gujarat
Sr. Company Varieties Use Annual Assured Remarks
No Approx price
qty (MT) (Rs/ Kg)
1 McCain Kennebek, French Fries 50,000 6.50- Subject to
Shephody, 7.50 quality specs
Santana, and market
Innovator linked
incentives.
2 Balaji LR, Chipsona Wafers 60,000 6.0-6.50 -do-
3 Pepsi* LR, Chipsona Wafers 50,000 6.0-6.50 -do-
4 ITC* LR, Chipsona Wafers 25,000 6.0-6.50 -do-
5 Himalaya * LR, Chipsona French Fries 10,000 6.0-6.50 -do-
6 Hyfun LR, Chipsona French Fries 8,000 6.0-6.50 -do-
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Foods
7 Others LR ,Chipsona Wafers 20,000 6.0-6.50 -do-
*contract farming through traders
It is estimated that about 2 lakhs ton of processing type of potato which is approx
10% of state’s production is cultivated through contract farming. Due to assured
market and better price increasing numbers of farmers are showing interest. As the
processors require potato of certain size (more than 45 mm) and without any defect
about 20-25% of the potato is available for flakes units as it has high dry matter and size
does not make difference for processing flakes. Dynamic Agri & Foodbiz Consultants Pvt. Ltd
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Chapter-4 Process & Technology
There is a distinct process of dehydration of potatoes for the manufacture of flakes which is
different from dehydration of other vegetables. As the product is required to have good
aroma, taste and rehydration properties so as to function like freshly boiled potatoes a
process of a quick thermal drying has been developed. As the processing of the potato is
concentrated in USA and European countries like the Netherlands, Italy, Belgium, Poland
etc. the technology was developed in these countries. In India food processing industry is in
the stage of infancy and hardly 1-2% of fruits and vegetables are processed as compared to
more than 70% in USA & European countries. In case of potato although wafer processing
started some 20 years back and there are several units now, the potato flakes processing
has started recently and there is dependence upon foreign suppliers for plant and
machinery. As a few companies have started fabricating equipment for wafers processing
the machinery for receiving of potatoes washing, cutting, blanching can be sourced from
India and critical machinery like steam peeler& drum dryer will only need to be imported.
The process for the manufacture of potato flakes is given below that will indicate the
requirement of processing equipment.
4.1 Process Description for Potato Flakes
A. Reception, de-stoning, washing and peel removal
The line is assumed to be fed with potatoes in bulk boxes, of one ton contents each in
foreign countries; however, in India the potatoes will be received in gunny bags or loose
potatoes in trolleys. The bags are tipped in the elevator or directly into dosing hopper, which
brings the product into the line. The product is conveyed up with an inclined belt elevator to the
cyclone de-stoner. In the cyclone de-stoner the product comes in spiral water movement, stones
and heavy particles will sink against the current into the stone collecting chamber. The
potatoes are floating over to the drum washer. The stones are taken out continuously by belt or
have to be done by hand once in a while.
The drum washer is cleaning the potatoes with water from the cyclone de-stoner and the
rubbing effect against each other. The used water is circulating to the de-stoner for a closed
loop. Fresh water is adding at the end of the washer. From the water collecting bin an
overflow for dirty water is available.
To make flakes from potatoes it is important that the dry matter content of the raw material is
as high as possible. Potatoes with a low dry matter contents requires too much energy to dry
and supply too less end product. For that reason it is right to install a density separator in the
line between washer and peeler. This unit will remove all potatoes with a lower dry matter
contents than set. Also floating debris will be taken out of the line. Normally the potatoes will
have a proper dry matter contents, and procurement will be done after testing the quality at
farm level or from the farms which company will contracted for farming. It is however,
desirable to have a density separator (brine grader) in order to separate the low density
potatoes.
From the brine grader, the product is collected in a screw conveyor to bring the product to
the peeler. In the flake processing two different peeling methods are used. The peeling result
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of the peeling part of a flake line is not important. A peel removal from the tubers of about 70 to
80% is found sufficient enough.
It is an economical choice. For smaller lines the investment in an abrasive peeler is much
lower than a steam peeler installation. The peel losses are higher.
The small-scale lines have a batch abrasive peeler. The peel is removed mechanically and
water is used to remove the peel from the tuber and the peeler. The peel waste is
discharged and fed to a screw press-dewatering unit, peel can be collected in waste bin, and the
water goes in the floor gutter. This water contains still a lot of organic matters.
The larger scale lines have a standard steam peeler, the peel losses are less than with
abrasive peeling. Steam peeling means that the potatoes are brought under pressure by
means of steam and by means of the steam heat, the outer layer of the product is heated
above atmospheric boiling temperature. Then the pressure is released rapidly, so the potato
cell moisture starts boiling and rubs the cell wall. The skin will hang loose around the tuber.
In the dry brush machine this loose skin is brushed away. The dry removal gives relative dry
peel waste, which is directly usable as cattle feed. This matter can be pumped to the waste bin
outside the processing room.
The last part of the dry brush machine is equipped with thinner hair and a water spray above to
rinse the potatoes from the last loose parts. This water with small pieces has a separate funnel
with discharge in the floor drain.
Finally the product passes an inspection belt to remove all foreign objects, green potatoes and
too much damage or rotten potatoes. For larger lines 3 and more drums it might be useful
to install an optical sorter installation with a laser unit to separate the foreign matters and bad
potatoes from the line and save an inspector.
B. Cutting, blanching and cooking
The product is collected in a vertical screw to bring the product in a bunker with dosing
screw. This hopper has a buffer for at least 5 minutes to cope with fluctuations in the feed.
The dosing screw brings the product to the weigh belt to set the line capacity according the dry
matter content of the raw materials. The weigh belt brings the product immediately into the
slice cutter. The cutting machine cuts the potatoes in slices of 10 to 15 mm.
It is advisable to have a measuring device in the line to control the in feed of the line and
also therewith the efficiency of the dryers. A weigh belt is one of the best measuring devices
there is with a high reliability. Whole peeled potatoes are easy to store and to dose, slices
are easy to store but more difficult to dose, blanched and cooled product should not be
stored not even for a few minutes, to keep the product properties as equal as possible.
Cooked product cannot be stored and to dose is a disaster.
During cutting unfortunately some small debris is made and some potato cells are broken
and starch is released. Most of the time free starch is not desired in the blanching and
cooking step.
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To remove the free starch and the small cutting threads there are two options, for the smaller
lines the use of a sliver remover is a good option with a spray-bar with water above to
remove the starch the small pieces are falling between the rolls. The water is collected in a
rotary screen with water buffer and a circulation pump back to the spray nozzles.
For the larger lines, product is collected in a small water flume to bring the product into a
slice washer. This is a rotating perforated drum in a shallow water bath; the end of the drum is
equipped with flights and is contracting so the product is discharged above water level . Direct
into the blancher. The overflow water of the washer is fed to the rotating screen to remove
the debris from the water and a circulating pump for the flume system.
Optional equipment can be used for a starch recovery system for the wash system, including a
pump filter and starch cyclone.
The blancher is a so-called pre-cooker where the starch in the potato cells is pre-gelatinised
in 20 to 25 minutes with water of 65° to 70° C. The product is then immediately conveyed
into the cooler where the product is cooled down till 25° C core temperature, to retro-gradate
the starch, and more important to reinforce the cell wall but make them permeable as well.
So that during cooking the mechanical forces are not rupture the cells and dry matter is kept
in the cells.
For some kind of flakes the amount of free starch in the flakes should be high, then the
blanching step is or reduced a lot or completely deleted from the process (filled with cold
water and only a transport unit.)
There are two types of blanchers suitable for this work, drum blanchers and horizontal screw
blanchers. The drum blancher is a perforated drum rotating on wheels at the entrance
discharge neck, submersed in water. The water is pumped around and is steam heated by
injection in the water.
The screw blanchers are a hull filled with water and a perforated screw is moving the product
through the blancher, hot water is injected on several places in the hull, therefore a
circulation system is available. To take the product out of the water a Ferris wheel is used.
Steam is injected in the water of the circulation system.
The cooler is a counter current drum cooler, mainly chosen because it uses the minimal
amount of cooling water. The water enters at the product discharge end and is moved
through the drum to the product entrance side where it is separated from the product. The
cooler is a closed cylinder running on trunnion wheels. In the cooler are circular chambers
made with a product water separation and switch.
From the cooler, the product is pumped to the cooker that is placed at a high level. This
pump system has a closed loop and includes a parabolic dewatering screen. The cooker can be
of various types. Some producers prefer belt cookers, while other rather use screw
cookers. Both options are possible. We prefer to use single screw cookers, due to the
simplicity of the machine. For larger lines the screw cookers become too large and two of
them are placed in line, alternatively a twin-screw cooker can be used as well. These units
require less diameter and length than single screw cookers.
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The cooker is a machine that is directly heated by steam, at which steam is transported
through the product. Any condensate at the bottom of the machine is separated from the
product. Depending on the kind and variety of potato, the cooking time varies between 30 to
40 minutes. To prevent steam escaping from the cooker the product in feed is equipped with
a lock. At the same time the out feed is sealed by the rising screw that has been fit directly to
the cooker.
C. Drying
The additives are prepared in mixing tanks and pumped to the feed screw, in which they are
immediately mixed with the product. The mash is fed to the drum, in case of one drum this is
straight on; by two drums the dividing screw has an opening with dividing valve in between
which is movable, the movement is controlled by two measuring units in the drum dryer feed
screw. For a three, four and six drums line this is done in an equal way.
At this stage, potato mash is transported with a screw to the drum dryer. At the drum dryer,
the potato mash is divided over the width of the dryer. To bring the product on the drum
dryer, a first applicator roll is installed to roll the product equally and to bring the product in
contact with the hot drum.
A thin product layer stays on the drum; the major part of the product is collected on the
applicator rolls, and these rolls should be completely covered with product. The dry product on
the drum has high adhesive forces to attract product from the applicator rolls to form the
desired potato flake film. For this purpose 5 applicator rolls are available.
The uncooked and black parts, including peel remnants, adhere with difficulty to the drum
and stay thus on the applicator rolls and can be extracted from the drum and put away as
waste.
The product is fed in at the upper side of the drum and divided by means of applicator rolls
over an angle of 135°. This part is the application part, the product is heated and 50% of the
water is evaporated. Afterwards, the product runs under the drum and is scraped off the
drum at an angle of 300° (perimeter degrees). Underneath the drum the temperature of the
flake stays at about 100°C, when it comes up the temperature of the flake will rise and the last
moisture is removed.
If the process goes smoothly, the potato mash will leave the drum as a flake film just in front of
the knife. This means that the temperature of the drum and the dry matter content of the potato
flakes are correct. The dry product comes off the drum and falls into a vertical screw with break
plates that break the potato film in pieces.
The drum dryer is a cast iron drum, optional flame spray coated with stainless steel. This
makes the drum look much more handsome, furthermore by regular stopping and starting
fewer products losses are found. Also less metal particles are found back in the product. The
frame of the drum itself is made of stainless steel as all other parts of the drum drier are.
The applicator rolls become filled with “dirt” this has to be scraped off; this can be done
automatically but lead most of the time till too high losses of good product. The alternative is
a manual pneumatically operation of the scrapers at the applicator rolls. On the bottom
applicator roll the material should be very poor and once in a while scraped off and is
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available as waste (cattle feed). By lines of more than two drums it is possible to pump all
waste to one drum, which produces a different kind of flakes (higher allowance of black
spots and free starch). This will improve the yield of the line.
The drum dryer is controlled by means of the steam pressure in the drum, the condensating
steam determines the surface temperature of the drum.
D. Inspection and milling
With a pneumatic transport system the product is moved to the inspection table for manual
visual inspection. The product passes a magnet to remove eventually metal parts prior to
entering the miller. Several sizes of screen can be placed for different kind of flake use.
E. Storage and packing
The milled product is moved to the storage hopper by means of a bucket elevator. This
storage bunker is only required to equalize the final moisture content of the flakes and to be
able to do the packaging in another rhythm than the production. The product is collected in a
silo. Under the silo an out feed unit is mounted, which takes the product into a bulk weigher for
the weighing of bags from 10 to 25 kg. Dynamic Agri & Foodbiz Consultants Pvt. Ltd
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4.2 Process Flow for Potato Flakes
The process of potato flake manufacturing is summarised in the flow chart below:
Reception of Potatoes Cooling at 25° C
De-stoning Cooking (30-45 min.)
Washing Mixing of additives
Density separators Drum drying
Steam peeling Inspection of dried flakes
Dry peel by brush machine Magnet removal of metal particles
Inspection belt (Optical sorter) Milling of flakes from screen
Weighing belt Equalization of moisture
Slice cutter Stored in silo
Slice washer (removal of starch) Packaging
Blancher for 20 to 25 min. (65° C to 70° C) Dynamic Agri & Foodbiz Consultants Pvt. Ltd
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4.3 Input-Output Ratios in Selected MFG. Process
The potato with the dry matter content of 20% will give a yield of 15.4% as shown in the
chart below:
PROCESS FLOW CHART & MASS BALANCE
INFEED
CLEANING 0.5%
PEELING 8%
INSPECTION 1.5%
CONTROL FEED
CUTTING 2%
BLANCHING 2%
COOLING +1%
HYDRO TRANSPORTING
STEAM COOKING
RICING MIXING
DRUM DRYING 82.0%
PARTICLE SIZING 1%
PACKAGING
INFEED
100 Kg.
100 Kg.
99.5Kg.
90.0
90Kg.
90Kg.
88.0 Kg.
84 Kg.
85.0 Kg.
85.0Kg.
85.0 Kg.
85.5 Kg.
15.53 kg.
48
MASS BALANCE
100 Kg.
99.5 Kg.
91.50 Kg.
90 Kg.
90 Kg.
88.0 kg.
84.0 kg.
85.0 kg.
85.0 Kg.
85.0 Kg.
85.5 Kg.
15.53 kg.
15.40kg.
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4.4 Suppliers of Plant & Machinery and Technology
Efforts have been put in to identify the manufactures of potato flakes processing equipment
world over. There are only a few reputed companies who offer the entire line or certain
critical machinery like drum dryer and steam peeling. Since potato processing plants are
concentrated in Europe, the technological development has taken place in countries like
Netherlands and Germany. The companies in Netherlands have taken a lead and some of
the companies have a dominant market share. Of late potato flakes manufacturing has
started in China also in a big way and a few Chinese companies have started fabricating the
equipment in collaboration with European companies. As a few companies in India have also
started supplying the wafer processing plants the fabrication of some potato handling
machinery has also started in India. The information is summarized in the Table-26 below.
Table 26- Country wise major suppliers of potato flake manufacturing plants
S No. Country Company Name Equipment
1 The Netherlands BMA Entire flake line
2 The Netherlands Kirmeko Entire flake line
3 The Netherlands Gouda Processing
Solutions
4 The Netherlands Tummers
5 China Sino-German Technology
Development Co.
6 China China Light Industry
Machinery Association
7 China China National Packaging
and Food Machinery
8 China Sinmore Enterprises Ltd.
9 USA Aeroglide-National Drying
Corporation
10 Germany EIMA
11 India Oditin Food Solutions
Limited, Indore
12 India Wintech Taparia
13 India Flavorite PPM
Technologies
Drum dryer
Potato peeling, Blanching & Drum
dryer
Entire flake line
Entire range of potato processing
equipment
Entire range of potato processing
equipment
Entire range of potato processing
equipment
Potato handling and drying
equipment
Complete line of potato flakes
Potato handling and drying
equipment
Potato receiving, washing,
blanching and cooking lines
Potato receiving, washing,
blanching and cooking lines
For budgeting purposes quotations of BMA of The Netherlands which is having three lines in
India has been considered.
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Chapter-5 Infrastructure, Utilities & Manpower
5.1 Project Location
GAIC has identified land at Dehgam, in Gandhinagar district which is near the major
production area of potato particularly the processing varieties. The plot belongs to State
Dept of Horticulture and was being used as a Nursery. It will be possible to get required land of
12,000 mtrs in this plot. This plot is right on the National Highway and has very good
connectivity with Gandhinagar, Ahmedabad and Sabarkantha.
Potato Clusters
Project Location
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5.2 Comparative advantage in Gujarat
In the long run potato flakes will behave like a typical Agri-commodity. The price will depend
upon the cost of raw material, stocks of flakes with the processors, production of potatoes
not only in India but in the world market. Therefore, the success of the project would hinge
on basics of any business that is efficiency in purchase of raw material and processing and
marketing efficiency. In this regard Gujarat has many advantages as given below.
Better Quality Raw material :- Gujarat is among top five potato producing states and as
explained in Chapter-III, the quality of potato cultivated specifically for processing is better in
terms of dry matter content, colour, etc which are desirable traits for potato required for
flakes
Low price raw material :- As mentioned in Chapter 3 about 2 Lakhs tons of processable
varieties like LR, Chipsona, Kennebec, Santana, Shephody, etc is cultivated in Gujarat and
out of that about 20-30% is undersize which is not used by processor of french fries and
wafers / chips but has high dry matter contents these undersize potatoes does not find any
buyers in the fresh market as customers not only prefer big potatoes but also varieties like
“Badshah” and “Lavkar” therefore, these potatoes is available at a price between Rs.2 -3 per
kg.
Proximity to ports :-The ports like Kandla, Mundra and Pipavav are close to the proposed
location of the project which will offer a comparative advantage for the export markets.
Trade Links :- A number of agri commodities / food ingredients like de-hydrated onion,
mango pulp, Isabgul, Guvar gum, Spices are being exported from Gujarat and the exporters
based in the state have very good connections with importers of other countries. It has been
told by the exporters that they generally inquiries for potato flakes but due to non -availability
cannot take up the order.
Good Availability of Social and Industrial Infrastructure :- Gujarat can boast of excellent
industrial infrastructure and social amenities which is attracting investment in all the sectors.
There is good availability of required power, water, manpower, etc for the industry.
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5.3 Requirement of Land & Building
The requirement of land for the project is about 12,000 sq. mtrs for construction and a built
up areas of 2,450 sq. mtr is required besides a lot of space is required for parking of trucks,
ETP, and other utilities. The required land will be available with State Dept of Horticulture.
5.4 Requirement of Utilities
The line requires the supply of steam, fresh water for washing potatoes, cold water of
drinking quality and compressed air for control equipment and for pneumatically movement,
besides electricity supply for running all the process and utility equipments.
Steam:- The requirement of steam is about 5000 kg / hour out of which 80% is of 13 bar
pressure.
Power Requirement:- The total electrical load requirement is estimated at 150 KVA. Since, it is
a continuous process and the supply of uninterrupted supply is desirable it is planned to have a
Generator set of 150 KVA capacities.
Water:-The requirement of water will be 12,000 litres/ hour for processing and boiler. The
water is also required for chilled water line for cooling blanched potatoes however, this water can
be re-circulated. Besides, water would be required for cleaning of the plant and workers use.
The daily requirement for water would depend upon treatment of the waste water and
recirculation of the same however, a minimum quantity of 2,00,000 would be required and it is
planned to set up and water tanks of 2 lakhs litres /day capacity.
Compressed Air:- The compressed air will also be required for operating some machines.
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Chapter-6 Operation & Management of the project
6.1 Project Management
The project will be implemented by GAIC who will award the contract for construction on
“Turnkey” basis by following the selection through competitive bidding process. The project
will be managed under Public Private Partnership (PPP) model wherein project will be set
up by GAIC and managed & operated by an experienced Project Operating Partner (POP).
The selected POP should have experience in handling potato value chain, managing potato
post harvest infrastructure, availability of professionally qualified staff with the organization.
It is recommended that GAIC may select a the POP at the time of implementation of the
project itself so that, the company’s professional inputs will be available during construction
and erection stage and there will not be any issue at the time of handing over the assets to
the POP. The unit may be leased to the selected partner company for a period of 5 years or
as per the best negotiated terms through a process of competitive selection process.
6.2 Manpower Requirement
Success of any project also depends upon the quality of manpower employed. No difficulty is
envisaged in recruitment of the experienced staff. The services of the suppliers of process
equipment will be utilized in training of key personnel of production and maintenance
departments. Considering nature of the business and requirement of the manufacturing unit the
man power requirement has been worked out as per the Table-27 below.
Table 27- Man power requirement for potato flake unit
Per Month Nos. of Annual
Manpower Cost Salary Employee Salary
1 General Manager 1.20 1 14.40
2 Production Managers 0.60 2 14.40
3 Procurement Manager 0.60 1 7.20
4 Maintenance Engineer 0.60 2 14.40
5 Marketing Officer 0.50 1 6.00
6 Finance Manager 0.50 1 6.00
7 Quality Control Officer 0.40 2 9.60
8 HR Executive 0.40 2 9.60
9 Boiler operator 0.20 3 7.20
10 ETP Operator 0.15 3 5.40
11 Potato receiving 0.08 3 2.88
12 Wet area 0.08 9 8.64
13 Additive preparation 0.08 3 2.88
14 Drying area 0.08 6 5.76
15 Milling and Packaging 0.08 9 8.64
16 Dispatch/store 0.08 6 5.76
17 Boiler and Misc. 0.07 6 5.04
18 Unskilled Labour 0.06 15 10.80
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Total Employee Cost 5.76 75 144.60
-- Variable Employee Cost @ 70% 101.22
-- Fixed Employee Cost @ 30% 43.38
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Chapter-7 Regulatory Requirements & Government Support
7.1. Regulations - Food Laws, Environment
The following commercial approvals / registration are required to obtained..
� Registration with District Industries Centre
� Registration under Factories Act.
� Registration with FSSAI
� Registration for VAT
� Trader’s Licence from APMC
� Import -Export License
� NOC from the state pollution control board.
7.2 Compliance with norms of Pollution Control Board (PCB)
While above said licences and registration can be obtained as a matter of routine but there are
stringent rules for compliance as far as Pollution Control Board is concerned. A detailed note is
given below on treatment of the waste water in the plant.
Process Waste Water and its Treatment Potato Chips manufacturing process generates
organic wastes and proper treatment is necessary to minimize its undesirable impact on
environment. The quantity of the effluent and its composition is dependent upon the use of
processing method and equipment as can be seen the Table-28.
Table-28 Wastewater Quality in the Different Applied Peeling Methods in Potato
Processing Plants
Parameters Abrasion
Flow (litre/ton, raw potato) 3000
BOD 8kg/ton (4000 ppm)
COD -
Total solids -
Volatile solids -
Suspended solids 40 kgs/ton (18,000 ppm)
Ph -
It is difficult to generalize the quantities of wastewater produced by specific operations, due to
the variation in process methods. Many references and studies in this respect show wide
variations in water usage, peeling losses, and methods of reporting the waste flow.
Processing involving several heat treatment steps such as blanching, cooking, and steam
peeling, produces an effluent containing gelatinized starch and coagulated proteins. The
composition of the effluent of a potato processing plant is given Table-29.
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Table 29- Composition Percentage of Potato Waste Solids
Component Amount (%)
Total organic nitrogen as N 1.002
Carbon as C 42.200
Total phosphorus as P 0.038
Total sulfur as S 0.082
Volatile solid 95.2
Depending on the abovementioned characteristics of potato processing wastewater, the
following should be highly considered:
� Potential methods for reducing the load of waste production including in-plant
measures for water conservation, by product recovery, and water recycling.
� Choosing the wastewater treatment systems that take into account the wide variations
of wastewater compositions, due to wide variation in potato processing steps and
methods, in order to reduce the wastewater contaminants for meeting in-plant reuse or
the more stringent effluent quality standards required in the potato processing industry.
Treatment Methods
Wastewater from potato processing plants contains mainly carbohydrates such as starches,
sugars, pectin, as well as vitamins and other components of the cell wall. About 75% of the
total organic matter is soluble; therefore, it cannot be removed by mechanical or physical
means. Thus, biological and chemical oxidations are the preferred means for wastewater
treatment.
Waste Treatment Processes
An integrated waste treatment system usually consists of three phases: primary treatment,
secondary treatment, and advanced treatment. Primary treatment involves the removal of
suspended and settle able solids by screening, flotation, and sedimentation. Secondary
treatment involves the biological decomposition of the organic matter, largely dissolved, that
remains in the flow stream after treatment by primary processes. Biological treatment can be
accomplished by mechanical processes or by natural processes.
The flow from the biological units is then passed through secondary sedimentation units so that
the biological solids formed in the oxidation unit may be removed prior to the final
discharge of the treated effluent to a stream. When irrigation is used as the secondary
treatment system, bacteria in the topsoil stabilize the organic compounds. In addition, the soil
may accomplish removal of some ions by adsorption or ion exchange, although ion exchange
in some soils may fail. In all cases, great importance should be given to the steps that contribute
to reducing the waste load in the plant itself. As for the industrial wastewaters, most of them
require equalization (buffering) and neutralization prior to biological treatment, according to the
characteristics of the resultant effluents.
Advanced waste treatment is needed in many cases to remove pollutants that are not
removed by conventional secondary treatment. Advanced treatment can include removal of
nutrients, suspended solids, and organic and inorganic materials.
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Currently, different treatment units are combined as a highly effective system for the
secondary (biological) treatment that covers both anaerobic and aerobic processes. Note that
it is quite acceptable and applicable that wastewater after pre-clarification (screening and
primary treatment) can be discharged into the public sewer system to be treated together
with sewage water in the municipal treatment plants.
The following describes in detail the current wastewater treatment units and subsystems.
� In-Plant Treatment
Minimizing waste disposal problems requires reduction of solids discharged into the waste
stream and reduction of water used in processing and clean-up. To reduce the solids carried to
waste streams, the following steps should be undertaken:
� improvement of peeling operation to produce cleaner potatoes with less solids loss; �
reduction of floor spillage;
� Primary Treatment
Sedimentation is employed for the removal of suspended solids from wastewater. After
screening, wastewater still carries light organic suspended solids, some of which can be
removed from the wastewater by gravity in sedimentation tanks called clarifiers. These
tanks/clarifiers can be round or rectangular, are usually about 3.5 m deep, and hold the
wastewater for periods of 2 to 3 hours. The required geometry, inlet conditions, and outlet
conditions for successful operation of such units are already known. The mass of settled
solids is called raw sludge, which is removed from the clarifiers by mechanical scrapers and
pumps. Floating materials such as oil and grease rise to the surface of the clarifier, where
they are collected by a surface skimming system and removed from the tank for further
processing.
Potato Wastewater Treatment
There are various methods of treating the potato waste water which have been summarized in
Table-30
Table 30-Treatment Units, Unit Operation, Unit Processes, & Systems for Potato
Processing
Treatment unit or
Subsystem
In-plant
Pre-treatment
Primary treatment
Equalization
Unit operation/unit process/ Remarks
treatment system
Conservation and reuse of water
Reduction of waste flow and load
Process revisions & control
New products
Screening (mesh size: 20 - 40 per inch) 10-25% BOD5 removal
Sedimentation 30-60% BOD5 removal
Flotation 20-60% COD removal
Earthen ponds
Balancing tank/buffer tank Constant flow and
concentration
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Neutralization Conditioning tank pH and temperature corrections
Secondary 80-90% BOD5 removal treatment
1. Aerobic processes Natural systems
a)Irrigation land treatment
b) Stabilization ponds and aerated
lagoons
c)Wetland systems
Activated sludge
Rotating biological contactors
Trickling filters
2. Anaerobic Up flow anaerobic sludge blanket
processes (UASB) reactors
Expended granular sludge bed (EGSB)
reactors
Anaerobic contact reactors
Anaerobic filters and fluidized-bed
reactors
Advanced Micro straining
treatment
Granular media filtration
Chemical coagulation/
Sedimentation
Nitrification-denitrification
Air stripping and ion exchanging
Membrane technology (reverse
osmosis, ultra filtration)
70-80% COD removal
80-90% BOD5 removal
70-80% COD removal
90-95% BOD5 removal
90-95% COD removal
(Sometimes .95%)
Water volume can be reduced by reusing process water, with several advantages. First, the
size of wastewater treatment facilities can be decreased accordingly. Secondly, with
concentration of the waste, the efficiency of a primary settling tank is increased. In the final
processing stages, chlorinated water should be utilized to prevent bacterial contamination of the
product. Other steps to reduce wastewater volume include alternate conveying methods of
transporting potatoes other than water fluming, improved cleaning facilities for equipment and
floors (high-pressure nozzles, shut-off nozzles for hoses), collecting clean waste streams,
and discharge to natural drainage or storm water systems.
The Figure below depicts the generation of waste in french fries manufacturing unit at
different points and treatment of the same.
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By Product Usage
Various by products are usable as described below
I. Potato Peels
Potato peels provide a good source of dietary fiber, particularly when processed by a lye -
peeling technique. Potato peels contain 40 g dietary fiber/100 g dry matter, depending on the
variety of potato processed and the method of peeling. Application of extruded and
unextruded potato peels as a source of dietary fiber in baked goods has been evaluated. In
USA acceptable muffins were made with a 25% replacement potato peel for wheat flour.
Potato peels were also found to prolong muffin shelf-life by controlling lipid oxidation.
Extrusion cooking of potato peels affects the colour of baked goods, and some physical and
chemical properties of the peels. Potato peels have also been used in limited quantities in a
commercial snack food potato skin type product.
II. Potato Processing Wastes as Soil Conditioner
Potato processing solid wastes are often applied to agricultural land as a disposal medium.
Research supports this method. Solid potato processing wastes containing nitrogen are
obtained by filtering or centrifuging the settled solids from the primary clarifiers. Wastes are
applied to land and used for crops, which utilize the applied nitrogen. The soil does not
accumulate the nitrogen or other organic waste and becomes increasingly fertile with
continued wastewater application. Applying wastewater and solid wastes from potato
processing provides an effective method of applying reusable nutrients that would be
otherwise wasted, and thus reduces pollution levels.
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III. Potato Wastes as Substrate for Organic Material Production
Potato wastes have also been evaluated as a potential source from which to produce
acetone, butanol, and ethanol by fermentation techniques. This application of biotechnology in
membrane extraction resulted in a procedure to extract a bio fuel that utilizes potato
wastes as a renewable resource.
IV. Cattle Feed
Filter cakes and dry potato peels are used as an excellent carbohydrate source in cattle
feed. Using potato wastes instead of corn in cattle feed does not affect the metabolic state or
milk status of the cattle. Typically, potato wastes are fed in a dry, dewatered form. The use
of wet potato wastes in cattle feed has been investigated to reduce drying expenditures. Wet
potato processing wastes can be introduced into cattle feed up at to 20% without negative
results
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Chapter-8 Business Plan and Project Implementation
8.1 Key Features of Plan
It is proposed to set up an economic sized project with following key features:
A. Production Capability - Potato flakes with international quality standards and value
added premixes for export and domestic market.
B. Capacity of the Project - 500 kgs. /hour approximately 3420 tons /annum, assuming
that plant will be run for 285 days in a year.
C. Sources of Plant and Machinery - Most of the machinery will be sourced from
Internationally renowned companies and only platforms, utility equipments will be sourced
from domestic companies
E. Contract Farming - The availability of right kind of raw material is very critical for the
success of this project and company would focus on this aspect.POP would enter into an
agreement with a group of farmers for cultivation of potatoes for processing. The company will
have a potato development department headed by a qualified professional who will
provide technical services to the farmers, seed for high yielding and having dry matter of
more than 20%. The contract farming activities would be under taken in 1,000 ha. of land with
development of three clusters of farmers in district of Sabarkantha, Mehsana,
Gandhinagar and Banaskantha. The farmers would be selected on the basis of land holding,
irrigation facilities, level of skills etc. The company will also keep in touch with farmers and
traders of processing type of potatoes in the major production areas of the state in order to
procure under size potato from them.
G. Storage of Raw Material - POP will enter into agreements with short listed cold storages for
storage of potato using CIPC to ensure availability of raw material round the year.
H. Marketing Plan - The build-up of the sales will be as given in the Table-31.
Table 31- Projected sale of potato flakes Qty in tons
Product 2014 2015 2016 2017 2018 2019
-- Annually Contracted Sales ( 235 272 289 306 324 325 10% of total sales) -- B 2 B Sales ( 40% of total 940 1089 1157 1225 1294 1300 sales)
-- Export Sales ( 50% of total 1176 1361 1447 1532 1618 1625 sales)
2351 2722 2893 3063 3235 3249 Total Qty Company’s share in domestic 1175 1361 1446 1531 1618 1625 market
India's Projected Demand 12197 14207 16554 19296 22501 26250
9.63 9.58 8.74 7.93 7.19 6.19 Company's Share (%)
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The company will focus on major institutions who are having large bulk requirement like
Haldiram, Vista Foods, ITC, Pepsi, etc. To start with the company would focus on bulk sales
and initiate product and market development activities. In the initial years the bulk sale is
expected to be 40% of its sale. The company will promote its own brand and also create a
marketing network for selling range of its products.
8.2 Project Implementation Schedule
The implementation of the project in shortest possible time is very important to avoid cost
escalation and projected generation of revenue. It is expected that the project would be
commissioned within a period of 12 months as can be seen from following schedule.
Implementation Schedule
Activities Starts from Feb'2012 1 2 3 4 5 6 7 8 9 10 11 12
1 Submission of DPR
2 Approval by APEDA
3 Selection of Partner
4 Land and its development
5 Detailed Engineering
6 Negotiation &selection of Vendors
7 Award of 'Turn Key' contract
8 Securing temporary power supply
9 Civil works
10 Order of Imported Machinery
11 Order of Indian Machinery
12 Installation of Machinery
13 Recruitment of key staff
14 Regulatory compliance
15 Commissioning trials
16 Procurements Activities
17 Market Dev. Activities Plant will be commissioned in
Feb'2013
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Chapter-9 Project Cost & Financial Analysis
In this chapter the details of project cost have been worked out on the basis of offers
received from the plant and machinery suppliers, civil contractors, and inputs from
knowledgeable persons. The financial analysis has been carried out taking into
consideration the prevailing prices of potato flakes, raw potatoes and other operating cost as per
the industry norms.
9.1 Estimation of Capital Cost for all Project Components
9.1.1 Preliminary & Pre-operative Expenses
The pre-operative expenses of the project are summarized in the table-32 below
Table -32 Preliminary & Pre-operative Expenses
Particular Rs. Lakhs
1 Statutory Approval Expenses 1.00
2 Electricity Deposit 15.00
3 Consultancy Fees ( PMC/ Consultancy) 31.68
4 Travelling Exps. 5.00
5 ISO / HACCP Certification 5.00
Total 57.68
The major expenditure under this cost head is electricity deposit, consultancy fees and
salary during construction for the project.
9.1.2 Land & Site Development
The developed piece of land will be provided by Govt. of Gujarat however, the cost for the
same has been budgeted as per the details given in table-33 below
Table 33 - Land and Development cost
Land & Site Development (Area in mtr) (Rate / mtr) Total
1 Land 12000 1100 132.00
2 Site Developments 12000 250 30.00
3 Compound Wall 500 3500 17.50
4 Internal Road (7 Mtr wide ) 2800 1200 33.60 Strom Water Drains ( CC drain with 250 4000 10.00 cover slab, recharging wells, cross drainage work, Culvert at entry,
5 Collection of storm water drain tank)
6 Landscaping 5000 200 10.00
7 Signage LS LS 1.00
8 Tube well LS LS 7.00
9 Security Cabin/ Time office (2 Nos) 25 10000 2.50
Sub Total 243.60
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9.1.3 Civil Cost
The rate of construction is considered as per prevailing market rate and similar project. The
details on working areas have been provided by supplier of plant & machineries and
consultant’s knowledge of similar project in India. The estimates of civil cost are given in
table-34 below.
Table 34- Civil Works Cost Particular Area / Rate per Rs.
sq.mtr sq.mtr Lakhs
1 Process hall 1500 10000 150.00
2 Potato reception area 300 6000 18.00
3 Store 200 9000 18.00
4 Laboratory 20 11000 2.20
5 Office 100 11000 11.00
6 Milling and Packaging section 150 9500 14.25
7 Workers amenities 40 8000 3.20
8 Electrical room 20 7000 1.40
9 Boiler room 100 7000 7.00
10 Foundations 20 11000 2.20 2450 227.25
9.1.4 Plant and Machinery Cost
In order to keep the project cost low only critical equipment will be imported and rest of the
plant & machinery will be purchase from domestic suppliers. The drum dryer will be imported
under EPCGs scheme where in only 3.25% custom duty will be payable and company would be
in a position to achieve the required export sales. The summary of cost towards plant &
machinery is given in Table-35.
Table 35- Plant and Machinery
Plant & Machinery
Basic Rs. lakhs
Particular cost
Imported Plant
Cost of imported plant (in Euro) 15.00
Euro Rate 65.00
Total Cost 975.00
Custom duty (%of Basic cost) 3.25% 31.69
Handling & Freight Charge (%of Basic cost) 1.50% 14.63
Total landed cost of imported plant A 1021.32
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Indigenous plant
Qty Rate Total
1 Potato reception line 1 5.00 5.00
2 Silo ( 20 ton) , Packaging, Weighing & Stiching 1 20.00 20.00
3 Laboratory Equipment 1 10.00 10.00
4 Plat forms 1 20.00 20.00
5 Pipelines fittings, plumbing etc. 1 15.00 15.00
6 Misc. 1 10.00 10.00
7 Stores and material handling equipment 1 5.00 5.00
7 Racking system 1 10.00 10.00
9 Plastic pallets 1 2.00 2.00
10 Manual pallet trucks 1 2.00 2.00
11 Trollies etc. 10 1.00 1.00
12 Potato reception line 1 5.00 5.00
Total cost of Indigenous Plant 100.00 Total cost of plant & machinery 1121.32
9.1.5 Electrical and Utilities Equipment
The requirement of utilities has been worked out in consultation of suppliers of plant &
machineries and cost estimated as per quick feedback from the suppliers. The summary of
electrical and utilities equipments is provided in table-36
Table 36- Electrical and Utilities Equipment
Particular Qty Total
Utilities Equipments
1 Steam boiler and Chimney 70.00
2 Water chiller 15.00
3 Air compressors 3.00
4 Water storage tank 30.00
5 ETP 50.00
6 Installation and Misc. 10.00
Total Utilities Equipments A 178.00
Electrical Equipments
1 Power Distribution network 10.00
2 Cables fittings, external lighting 10.00
3 PLC, Instrumentation etc. 5.00
4 Gen-set 15.00
Total Electrical Equipments B 40.00
Total Utilities & Electrical Equipments ( A+B) 218.00
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9.1.6 Office Equipments
The basic office furniture and equipment cost has been considered as per prevailing market
prices. The summary is given in table-37 below.
Table-37 Office Equipments
Office Equipments Rs. lakhs
1 Work stations ( 15 Nos) 5.00
2 Meeting room furniture 5.00
3 PC/Laptop (10) 2.50
4 Projector, TV etc. 1.00
5 Filling, cabinets etc. 1.00
6 AC, Fans etc. 2.00
7 Communication system, IT 1.00
Total 17.50
9.1.7 Contingency
The provision for contingency has been kept 5% of the project cost excluding land & site
development cost and preliminary & pre operative expense so as to provide for price
escalation, un-foreseen expenses and exchange rate for imported equipment.
9.1.8 Estimation of Working Capital Requirements
The working capital will be arranged by POP and the margin money for the same has not
been included in the project cost however, for understanding the requirement of working
capital the details have been worked out and presented in Table-38 Rs. Lakh
Month 2014 2015 2016 2017 2018 2019
Raw Material 0.25 21.14 22.55 23.96 25.37 26.77 26.77
Packing Material 1.00 2.14 2.28 2.42 2.57 2.71 2.71
Consumables 1.00 1.07 1.14 1.21 1.28 1.35 1.35
Finished Goods 1.00 120.65 129.10 137.63 146.28 155.06 156.68
Sundry Debtors-D 0.50 68.08 78.83 83.77 88.70 93.71 94.11
Total Curr. Assets 213.08 233.90 248.99 264.20 279.60 281.62
Sundry Creditors 0.25 23.28 24.83 26.38 27.93 29.48 29.48 Total WC requirement 189.80 209.07 222.61 236.27 250.12 252.14
Bank Borrowing 135.54 148.92 158.58 168.34 178.22 179.69 Margin Money for WC 54.26 60.15 64.03 67.93 71.90 72.45
The total working capital requirement in the first year of operation will be Rs.189.80
lakhs and the same will be from bank borrowing of Rs. 134.54 lakhs land POP’s
contribution towards margin of Rs. 54.26 lakhs Dynamic Agri & Foodbiz Consultants Pvt. Ltd
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9.1.9 Summary of Project Cost
From the above cost components, the project cost has been summarized in table-39 below.
Table 39- Project Cost Summary Cost Of Project Rs. Lakhs
Land and Site development 243.60
Building 227.25
Plant and Machinery 1121.32
--Imported 1021.32
--Indigenous 100.00
Utilities 218.00
Office equipments 17.50
Contingencies @ 5% 79.20
Preliminary and Pre-operative 57.68
Total Cost of Project 1964.55 9.2 Means of Finance
The project will be supported by APEDA under Infrastructure Development Scheme for
Export Oriented Project subject to a limit of Rs.1000 lakhs. Under RKVY Scheme an
assistance of Rs. 700 lakhs will be provided and remaining amount of Rs. 264.55 Lakhs will be
funded by GAIC. Considering above the financial structuring of the project has been shown
in Table-40.
Table 40 - Means of Finance
Particular Rs. Lakhs
Contribution from GoG 264.55
RKVY Loan 700.00
APEDA Assistance 1000.00
Total Means of Finance 1964.55
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9.3 Profitability Analysis of the Project
A detailed profitability analysis of the project has been done for a period of 6 years. The
major assumptions underlying profitability analysis are given here under:
1. Capacity of the plant worked out on the basis of drying capacity of drum - 500 kgs
/hours and 12 tons per day considering 285 working days it would work out to about
3420 tons.
2. Projected sales estimated on the basis of growth, locational advantage for domestic and
export markets as per the details are given in Table-31.
3. Input Output ratio considered 6.75 kgs potatoes per kg of flakes on the basis of process
losses and dry matter content in the local varieties. It is possible to bring down the ratio
to 6.50 kgs. potato /kg of flakes.
4. Price of potato flakes ex factory net of taxes Rs. 72 /kg in annually contracted sales(
10% of total sales), price of B2B sales is assumed as Rs.77/ kg ( 40% of total sales) and
price of export sales is assumed as Rs.63/ kg (50% of total sales). The current market
price is 1200-1250 USD / ton in neighbouring countries. The price in domestic market
was in range of Rs.75 to Rs. 100 /kg in the year 2011. Current market price Rs. 75 to
Rs.80 per kg., a low sales price assumed as entry strategy and achievement of good
capacity utilisation.
5. Purchase price of potato Rs. 5.86 per kg ex factory (weighted average annual price) as
shown in Table-41 below.
Table-41 Landed Cost Calculation Months Basic Cost Freight Cold Freight- Storage Total Utilization
Price Bag to Cold Store + to Losses landed Index store CIPC factory cost
Charges
January 4.50 1.00 5.50 500 2750 February 4.00 0.20 0.70 4.90 500 2450 March 3.50 0.50 4.00 2100 8400 April 3.50 0.20 0.50 0.70 0.40 0.10 5.40 2100 11340 May 3.50 0.20 0.50 1.40 0.40 0.14 6.14 2100 12894 June 3.50 0.20 0.50 1.40 0.40 0.17 6.17 1750 10798 July 3.50 0.20 0.50 1.40 0.40 0.20 6.20 1750 10850 August 3.50 0.20 0.50 1.40 0.40 0.22 6.22 1750 10885 September 3.50 0.20 0.50 1.60 0.40 0.26 6.46 1650 10659 October 3.50 0.20 0.50 1.60 0.40 0.29 6.49 1500 9735 November 3.50 0.20 0.50 1.60 0.40 0.32 6.52 1500 9780 December 3.50 0.00 0.50 0.00 2.00 0.24 6.24 500 3120 Total Cost 70.24 17700 103661
Average Price 5.86
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6. Ingredients added are
� Glycerol mono-palmitate/ stearate (0,1 - 0,5 % of dry matter).
� Anti-oxidant (Butyl 4 hydroxyanisol), (0,05 - 0,1 %, based on dry matter cooked
potatoes).
� Citric acid/ ascorbine acid (0,1 - 0,2% of dry matter).
� Acid Sodium Pyro Phosphate (SAPP) (0,1 - 0,15 % based on cooked potatoes).
� Sulphite (SO2), 400 ppm max. on the basis of dried matter for the dryer.
The cost is estimated at Rs. 1.50 /kg.
7. Packaging material - Bags 20 to 25 kg (pre-formed paper bags 3 or 4 layers with plastic liner;
or woven bag with liner; or PE or PP bag; or bag made from tubular film PE / PP). The estimated
cost is Rs. 1.00 per kg including printing and stitching etc.
8. Salary as per table-27 estimated manpower requirement with 15% annual increase.
9. Fuel (lignite or husk)as per consumption norms of boiler, estimated cost Rs. 7.00 per kg of
flake.
10. Electricity consumption as per use of the installed capacity of motors and electricity
installations. Electricity rate Rs. 5.5 /unit, estimated cost Rs. 1.5/kg. of flake.
11. Insurance of fixed asset and stock @ of 0.35% /year.
12. Interest rate & financial terms :- Working capital interest has been considered at 13.0%
13. 100% income tax exemption for first 5 years and 30% for next 5 years as per section
80ib
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9.4 Financial Indices
The Project will be highly profitable as can be seen from the following financial indices
9.4.1 IRR Calculation
The IRR for the proposed project has been worked out at 12.08% for 20 years operation.
The IRR calculation is furnished in table-42
Table- 42 IRR Calculation
IRR Calculation Out Flow Inflow
1964.55 -1964.55
1 2014 243.32 243.32
2 2015 271.42 271.42
3 2016 280.32 280.32
4 2017 284.60 284.60
5 2018 290.26 290.26
6 2019 220.11 220.11
7 2020 220.11 220.11
8 2021 220.11 220.11
9 2022 220.11 220.11
10 2023 220.11 220.11
11 2024 220.11 220.11
12 2025 220.11 220.11
13 2026 220.11 220.11
14 2027 220.11 220.11
15 2028 220.11 220.11
16 2029 220.11 220.11
17 2030 220.11 220.11
18 2031 220.11 220.11
19 2032 220.11 220.11
20 2033 220.11 1626.52
IRR 12.08 salvage value of Rs. 1406.41 lakhs is considered
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9.4.2 Payback Period
The payback period of the project is approx Eight years as can be seen from the table-43
below.
Table-43 Payback Period Calculation Year Project Cost Cumulative Cash
Accruals
1964.55 1 2014 243.32 2 2015 514.74
3 2016 795.06
4 2017 1079.66
5 2018 1369.92
6 2019 1590.03
7 2020 1810.14 8 2021 2030.25
9.4.3 BEP Calculation
The BEP and cash BEP in the first year comes at 39.09% 18.32% which is satisfactory. The
calculation of breakeven point is furnished in table-45.
Table- 39 BEP Calculation
BEP Calculation 2014 2015 2016 2017 2018 2019
Capacity Utilization 75% 80% 85% 90% 95% 95%
Net Sales (A) 1778.58 1925.90 2046.36 2166.24 2288.24 2290.83
Variable costs
Raw Material Consumption 1014.60 1082.22 1149.85 1217.53 1285.16 1285.16
Other Ingredients Cost 38.48 41.04 43.61 46.17 48.74 48.74
Packaging Cost 25.65 27.36 29.07 30.78 32.49 32.49
Power Cost 38.48 41.04 43.61 46.17 48.74 48.74
Fuel Cost 179.55 191.52 203.49 215.46 227.43 227.43
Consumables Cost (Chemicals, Lubri., Det.) 12.83 13.68 14.54 15.39 16.25 16.25
Manpower Cost 101.22 111.34 122.47 134.72 148.19 163.01
Marketing Exps 5.39 6.24 6.63 7.02 7.42 7.45 Development of Backward Linkages 10.00 11.00 12.10 13.31 14.64 16.10
Repair & Maintance 16.63 18.29 20.12 22.13 24.34 26.77
Misc. Manufacturing Cost 5.00 5.50 6.05 6.66 7.33 8.06
Interest on working capital 8.81 19.36 20.62 21.88 23.17 23.36
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Provision for Taxation 0.00 0.00 0.00 0.00 0.00 42.47
Total Variable Cost (B) 1456.64 1568.59 1672.16 1777.22 1883.90 1946.03
Fixed Costs
General Admin Exps. 72.38 79.62 87.58 96.34 105.97 116.57
Insurance 6.24 6.27 6.30 8.08 8.11 8.12
Interest on Term loan 0.00 0.00 0.00 0.00 0.00 0.00
Depreciation 83.41 83.41 83.41 83.41 83.41 83.41
Amortization 5.77 5.77 5.77 5.77 5.77 5.77
Total Fixed Cost ( C.) 167.80 175.07 183.06 193.60 203.26 213.87
Contribution (D=A-B) 321.94 357.31 374.20 389.02 404.34 344.80
BEP at Installed Capacity 39.09 39.20 41.58 44.79 47.76 58.93
Cash BEP at Installed Capacity 18.32 19.23 21.33 24.16 26.80 34.35
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Chapter-10 Socio-Economic Benefits of the Project
The project will have tremendous socio-economic benefits some of which are highlighted
below:
Value addition to horticultural produce :- At present only 1-2% of fruits and vegetables
produced in India are processed and value addition is very poor. Through this project not
only potato will be conserved there will be opportunity for processing value added products like
pre-mixes for Aloo Tikki, Samosa, Dosa etc. For the retail market medium sized potatoes are
preferred and manufactures of wafers also prefer medium to large size (45 -70 mm) as a result
small and extra large get sold at a very low price. This project will be using these types of
potatoes and value addition will be substantial.
Reduction in post-harvest losses:- Due to imbalance in production, storage and demand of
potato the loses are sometime very high and price realization to farmer is very low. As per an
estimate up to 15-20% of potato production is wasted as post harvest loss. After
harvesting the surplus potato can be conserved in the form of potato flakes. The increase in
processing will reduce post harvest losses and benefits to the economy.
Creation of additional jobs:- The project will create 100 direct jobs in the manufacturing
facility and many more indirect jobs will be created in storage and transportation of potatoes
and trading of finished products.
Stable and remunerative price to farmers:- At present there is a wide fluctuation in the
prices of potatoes due to demand and supply factors. Particularly in the years of abundant
production the prices crash due to lack of processing and storage facilities. This project will
have facilities to process 22,000 tons of potatoes which will help in stabilisation of prices.
About 1,000 farmers joining the contract farming programme will get insulated from the
market fluctuation and risk and shall have benefit of remunerative as well as assured price.
Export Earnings:- There will be additional export earnings of Rs.7.41 Crore in the first year
and increasing to Rs.10.24 Crore in sixth year of project operation. The total export earnings
during six years will be Rs.55.18 Crore.
In view of such socio economic benefits of the projects it is hoped that APEDA would
support this project.
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