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PROJECT PROFILE

A PACKHOUSE FOR FRUITS AND VEGETABLES

PROJECT AT A GLANCE

Scale of operation - 3,000 MT/Year

Project Cost - Rs. 44.00 Lakh
Annual Income - Rs. 36.00 Lakh
Net Profit - Rs. 09.50 Lakh

1. INTRODUCTION

Farmers of Uttar Pradesh, despite excellent quality farm production in

large volume, are deprived of better prices of their produce. A major
factor for this phenomenon is improper post-harvest management of the
commodities. In case of fruits and vegetables, this is much more
significant. Despite a good potential, our farmers are also not able to
enter in the export market due to non-availability of adequate
infrastructural facilities like a packhouse, a grade house/cool house and
cool chains.

Fruits and vegetables being highly perishable have to be processed or

consumed very fast to avoid the losses. Fresh fruits and vegetables are
collected near the harvesting centre, cleaned to remove dirt, surface
microflora and spoiled portions and graded according to weight/size,
given treatments to reduce spoilages and the weighed quantities packed
in assorted consumer packs. The commodities will be available to the
consumer in the fresh form in an attractive and convenient form. Also,

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the producer will get the reasonable returns with minimum possible
losses due to spoilage.

Importance of a suitable packhouse for fruits and vegetables cannot be

overemphasized. Maharashtra, Andhra Pradesh and Punjab have already
constructed packhouses for domestic as well as export market use. In
Uttar Pradesh, one packhouse for Mango is under construction, at
Rehmankhera, Lucknow with Mango as major produce but will be used
for other fruits and vegetables also in spare time.

2. FUNCTIONS

A packhouse facilitates sorting of fresh produce, protection against

deterioration by employing and making the produce better presentable
due to grading and packaging in suitable lots.

In a way, a well-designed packhouse can reduce losses considerably and

the saving thus achieved is directly an addition to National Income.
Fruits and Vegetables are prone to losses on account of water loss
resulting in weight loss and loss of textural quality, mechanical damage
like bruises, cuts, crushing etc., physical loss due to continued growth
after harvest like rooting, sprouting, shoot development etc. and many
other ways of losses. It is estimated that improper handling causes about
30-40% loss in fruits and vegetables. Further a properly sorted, graded
and packed material fetches better prices in the market and has
improved shelf life.

For export marketing of fruits and vegetables (by ship transportation in

cold conditions/reefer containers) where apart from the normal operation
of the centre for domestic marketing (like sorting, washing, grading,
treatments) to reduce spoilage, maintenance of cold chain enables to

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achieve desired extended storage life of fruits/vegetables till the product

reaches distant foreign market by sea.

All these factors, which contribute towards the quality deterioration, can
be controlled by packhouse operation by using the appropriate method
and technology.

3. SCOPE

The pattern of consuming fresh fruits and vegetables is changing rapidly.

This has contributed to the rise in demand for fresh fruits and
vegetables. In the conventional practice, fruits and vegetables arrive in
regulated markets and market centers for sale. After arrival the product
is auctioned as such to retailers. In this process severe damages occur to
the commodity. Hence, there is a need to implement scientific methods of
handling and storage for conserving the losses and minimizing the
damages. Good quality, graded, trimmed and unit packed fruits and
vegetables will find a good market in the domestic as well as export
markets.

Commodities like onion, brinjal, beans, potato, tomato, capsicum, ladys

finger, mango, litchi, guava, banana, apple, plum and peaches have a
very good market potential. Graded and quality produce is selected for
export/domestic market and the remaining may find a place in
processing industry.

Mango and grapes have been export items from India mainly from
Maharashtra. Destination of export of mango is UAE, Saudi Arabia,
Kuwait, UK and Bangladesh. Mango, beans, okra and other vegetables
grown in the State are having high export potential. Export market at
present is in Gulf countries and can be created in other developed
countries also. Export potential for fresh fruits and vegetables is

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unlimited. Hence, this opportunity has to be utilized by availing facilities

for export.

4. LOCATION

The packhouse should be located at a place where there is good

production of the commodities for which packhouse is proposed to be
constructed. Proximity of market or shipment centre should be kept in
mind in deciding location of a packhouse without losing the importance
of locating it near centre of production. Availability of infrastructure like
road, electricity and water should be ensured.

5. SIZE OF UNIT

It is determined on the basis of surplus available for marketing. This

profile has been prepared for handling 10,000 MT materials comprising
of 6, 650 MT fruits, 3,000 MT vegetables and 350 MT flowers. Out of this,
2360 MT are expected to go to export market and rest 7640 MT in
domestic market. The capacity of pre-cooling chamber is 10 MT and that
of cold storage 100 MT. The unit will be operated in 2 shifts of 7 hours
each handling 40 MT material daily for 250 days in a year. A typical mix
of produce and their quantity is given in following table :

Commodity Export, (MT) Domestic, (MT) Total, (MT)

A. Fruits
Mango 910 3640 4550
Apple 210 840 1050
Ber 140 560 700
Makoi 70 280 350
(Cape
Gooseberry)
Total 1330 5320 6650

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B. Vegetables
Potato 480 120 600
Okra 120 480 600
Green peas 120 480 600
Tomato 60 240 300
Others 180 720 900
Total 960 2,040 3,000
C. Flowers 70 280 350
Grand Total
2360 7640 10,000
(A + B + C)

6. OPERATION

Typical operations of the proposed pack house are as under :

Unloading/Receiving the produce

Stem cutting, latex removal for mango (Water Flume System)
Inspection /Sorting
Hot water treatment
Washing with detergent/fungicides
Pre drying/Surface drying/Soaking
Wax application/surface coating
Surface Drying
Grading by size, weight or colour
Packing
Ripening
Pre-cooling
Cold storage
Dispatch

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7. TECHNOLOGY

Fruits, vegetables and flowers are highly perishable in nature and the
post-harvest losses have been reported to be 30 - 40 % due to inadequate
handling and storage facilities and lack of post-harvest infrastructure.
The storage disorders are of different types like mechanical, physiological
and microbial.

The storage life of commodities is mainly governed by the following

factors:

1) Prevailing orchard conditions (climatic and cultural practices)

2) Variety and stage of maturity at harvest
3) Incidence of infection at the time of harvest
4) Method of picking, handling and extent of damage
5) The interval between harvesting and storage
6) Rate of cooling, storage temperature and RH condition
7) Pre-packing treatments, size of package, quantity per package
8) Air distribution in the storage rooms, and
9) Sanitation in the storage rooms

Fresh fruits and vegetables are subject to continuous change after

harvest and therefore post-harvest losses in fresh produce cannot be
stopped, but can be slowed down within certain limits. All fresh fruits
and vegetables are high in water content and thus are subject to
desiccation (wilting, shriveling) and to mechanical injury. They are also
susceptible to attack by bacteria and fungi, resulting in pathological
breakdown.

In a packhouse fruits/vegetables are quickly washed, sorted, graded,

packaged and stored at controlled temperature thereby increasing the
value of goods and its shelf life.

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Main components of a packhouse are as under :

The packhouse building
Mechanized Waxing, Washing, Grading, Packaging line of 3 MT per
hour capacity.
Pre-cooler having capacity of 10 MT, in batches.
Cold storage of 100 MT capacity in four independent chambers,
with independent controls, this is a transit storage facility.
Ancillary material handling equipment: hydraulic truck, forklift,
pallet marking, pallet strapping machine, labeling etc.
Plastic crates, harvesting kits, stem cutting equipment etc.
Diesel Power Generator set and room, Water storage facilities,
Drainage facilities, Administration room etc.

8. PACKAGING

Wooden Boxes : Generally, fruits like apples are packed in wooden boxes
for domestic marketing. The box is lined inside with newspaper sheets.
The fruits are initially padded with wood wool/intervening layers. Paper-
wrapped fruits are arranged in each layer; the top layer is covered with
paper by bringing together the over-hanging flops. The top is then nailed
on. The box is further reinforced externally by clamping with a tight 14-
16 gauge steel wire for distant domestic markets. These boxes are
transported by road or rail to distant places. In view of the high
occurrence of mechanical damages wooden boxes are not recommended
for packaging.

Trays : Fruits are also packed in paper pulp trays. These trays are then
placed in boxes/cartons.

Corrugated Fiber Board (CFB) Cartons : Corrugated fiberboard cartons

are used for domestic as well as export market purpose. They can

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withstand transport hazards. They cause minimum bruise damage (3.2

3.4 %) in comparison to wooden boxes. Boxes to hold 5 Kg/10 Kg of
fruits are recommended for packaging. Intermittent holes are made on
the sides of CFB boxes to create ventilation. Tissue papers, newspapers,
bubbled plastic sheets are used as cushioning materials. Individual
fruits may be wrapped with tissue papers/plastic films, sulphur guard
paper used for fruits like grape, individual fruits or their bunches are
isolated from each other to minimize transport hazard by fiberboard
partitions in the corrugated fiberboard boxes.

Palletizing : Packed CFB boxes segregated as per grades are stacked on

to unitized pallets.

9. QUALITY CONTROL

The fruits and vegetables are graded on the basis of quality attributes
(colour, size, freedom from defects, acidity, total soluble solids sugars
texture, flavour, etc.) for selecting the market (export or long distance
metropolitan cities or towns/local market or processing industry).
Temperature and humidity conditions in pre-cooling rooms, cold storage
halls, reefer containers should be strictly monitored throughout the post-
harvest operations.

Graded fruits are to be of uniform size and colour, free from defects like
blemishes, diseases etc., applications of wax should be uniform,
packaging materials should conform to BIS standards. Quality control
laboratory should be equipped with instruments/facilities to ensure that
graded fruits meet the quality requirements.

For export market, the graded packed fruits should conform to buyers
standards/international specifications (EEC/Codex standards).

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10. PROJECT COST

Sl. Particulars Quantity Rs. in lacs

No.
(1) Land and Building 50.00

(Complete with 1500 Sq. m

built area)
(2) Machinery & Equipment

(a) The Processing Equipment

Processing Line 77.00

Pre-cooling, cold store, ante 60.00
room etc. with all accessories
(b) Ancillary Equipment

Hydraulic Pallet Trucks 2 04.00

Pallet Marking Machine 2 00.40
(c) Ancillary Accessories/
equipment

Lab Equipments 02.00

Weighing Scales Capacity 300 5 00.80
Kg. each
(3) The Utilities

Water Tube well 1 02.00

Water storage tank capacity 1 02.50
25,000 litres
Generator sets (125 KVA + 2 1 Set 06.20
Nos. of 25 KVA each)
Total Machinery, Equipment & Utilities 154.90
(4) Prel. & Pre-operative Expenses 2.50
(5) Margin for Working Capital 2.24
Total Project Cost 209.64

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11. MEANS OF FINANCE

Sl.
Particulars Amount Rs. (Lakh)
No.
1. Term Loan from bank @ 75 % of the cost 157.00
2. Own Contribution 52.64
TOTAL 209.64
Cash Credit facility @ 75 % of Working
6.80
Capital
REPAYMENT SCHEDULE
(i) Gestation period One year
(ii) Amount of Repayment
a) 2nd year 7.00 + accumulated
interest
b) 3rd 8th year 25.00
(iii) Mode of Repayment Suitable quarterly
installments
(iv) Payment of Interest As and when applied

12. MANPOWER REQUIREMENT

Amount, lakhs of
Particulars No. SALARY PER MONTH
Rs.
Engineer cum
1 10,000 1.20
manager
Foreman 2 8,000 1.92
Mechanic 1 6,000 0.72
Store keeper
2 5,000 1.20
cum clerk
Skilled labour 8 4,000 3.84
@ Rs. 70 per day for 300
Unskilled labour 8 1.68
days
Total 10.56

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A provision of 10% increase every successive year on account of

increment and fringe benefits has been made.

13. POWER AND UTILITIES

Load Required 175

No. of shifts 2
No. of hours/shift 7.5
No. of working days per year 250
Rate of power/unit (Rs.) 5.25
Demand charges (Rs.) 90
Cost of power at installed capacity
21.21*
(Rs. in lakh)
*
Sl.
Load Amount, Rs.
No.
1. Pre-cooler 12 x 250 x 60 KW = 1, 80,000
2. Cold store 8 x 250 x 20 KW = 40,000
3. Grading line 12 x 250 x 20 KW = 60,000
Ancillary like motor, 16 x 250 x 20 KW = 80,000
4.
lighting etc. + 8 x 50 x 20 KW = 8,000
Total Consumption = 3,68,000 KWH
Charges 3,68,000 x 5.25 = 19,32,000
Load charge 90 x 175 x 12 = 1,89,000
Total Charges Rs. 21.21 lakh

14. WORKING CAPITAL REQUIREMENT

Sl. Amount, (Rs.
Particulars Period
No. Lakh)
1. Consumables 1 month 1.25
2. Packaging cartons 5 days 4.17

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3. Remaining expenses 1 month 3.62

TOTAL 9.04
Cash credit from Bank @ 75% 6.80
Margin for Working Capital 2.24

15. PROFITABILITY

Annual income

The packhouse is to operate on custom basis. It will charge a certain rate

for the service. This rate is completed at the cost of operation plus mark
up of 37 %. For this profile, the amount of annual income thus
calculated comes to Rs. 370 lakh.

Annual running expenses

Sl.
Particulars Amount Rs. (Lakh)
No.
Cost of consumables like wax, fungicide
1. 15.00
etc.
2. Packing cartoons 208.32
3. Salary and wages 10.56
4. Power and utilities 21.21
5. Repair and Maintenance 3.60
6. Office Administration including publicity 10.00
7. Interest on Cash Credit @ 15.0 % 1.02
TOTAL RUNNING EXPENSES 269.71

Operating Profit Rs. 100.29 lakh

The unit is proposed to be operative to the extent of 70 % of its capacity

in 1st year and reach 100 % in 4th year with 10 % rise every year after 1st

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year. Year wise profitability has been worked out in Annexure 1. In 4th
year when the unit reaches 100 % of its capacity, the post tax profit is
Rs. 41.11 lakh. Average DSCR, B : C Ratio and IRR are 1.79, 1.17 and
37 % respectively.

16. SUPPLIERS OF PLANT AND MACHINERY

1. M/S Voltas limited 2. M/S Blue Star Limited

Dr. Ambedkar Road Block 2-A, DLF Corporate Park
Mumbai 400033 DLF Qutab Enclave, Phase - III
Maharashtra Gurgaon - 122002
Email : akjoshi@voltasltd.com Email : neeraj.seth@bluestarindia.com

3. M/S M.S.Kold Hold Industries 4. M/S Lloyds Insulation India Limited

7/15 Kirti Nagar, 386, Vir Savarkar Marg Prabhadevi
New Delhi 110015 Mumbai - 400025
Email : distribution@koldhold.com Maharashtra
Email : vpmunjal@bom8.vsnl.net.in

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Annexure - I

YEAR WISE PROFITIBUILITY AT DIFFERENT LEVELS OF OPERATION

Amount in Rs. lakh
Sl.
Particulars Year
No.
1 2 3 4 5
1. Capacity Utilization, % 70 80 90 100 100
Consumables and
2. 156.32 178.66 200.99 223.32 223.32
Packaging Material
3. Salary & Wages 10.56 11.62 12.78 14.06 15.46
4. Power & Utilities 14.85 16.97 19.09 21.21 21.21
5. Maintenance 3.60 3.96 4.36 4.79 5.27
Administrative
6. Expenses including 10.00 10.00 10.00 10.00 10.00
Publicity
Interest on Cash Credit
7. 00.71 0.82 0.92 1.02 1.02
@ 15 %
8. Depreciation 43.75 33.56 25.85 19.99 15.54
9. Interest on term loan 18.84 24.44 20.63 16.88 13.13
10. Operating Cost 258.64 280.02 294.60 311.26 304.95
11. Custom Charges 259.00 296.00 333.00 370.00 370.00
12. Profit before Tax 00.37 15.98 38.40 58.74 65.05
13. Taxes @ 30 % 00.00 04.80 11.52 17.62 19.52
14. Profit after Tax 00.37 11.19 26.88 41.11 45.54
15. Add back Depreciation 44.12 44.75 52.73 61.11 61.08
16. Principal Repayment 00.00 07.00 25.00 25.00 25.00
17. DSCR - 01.75 01.61 01.86 01.95
18. Average DSCR 1.79
19. B : C Ratio at 12 % discount rate 1.17
20. IRR 37 %

CES_PDF-2, 08/08/02

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