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Lemongrass Oil Manufacturing Project
In this business plan, we provide great information about Lemongrass oil business plan. Lemongrass is an aromatic plant that grows in many tropical and subtropical regions of southeast Asia and Africa. Many species called an East Indian lemongrass or Malabar or Cochin Grass, because of its origin in Indo-Burma region and its native to India, Sri Lanka, Burma and Thailand in India, commercial cultivation of this plant in different states like the Western Ghats (Maharashtra and Kerala), Karnataka, UP, Tamil Nadu, UP and foothills of Arunachal Pradesh and Sikkim.
Leaves and flowering tops of lemongrass are used to produce Lemongrass oil using the distilled method. This oil has a pungent lemon-like odour produce due to high citral content of around 75-90% which is used as a basic raw material for synthesis of β-ionones which is used for the formation number of useful aromatic compounds and Vitamin-A. Lemongrass oil is the main substitute for ‘Çod Liver Oil’. The important quality checking measure is citral content and its solubility in alcohol. This is also an important ingredient in toiletry products like soaps, bath salts, detergents, cosmetics, room fresheners etc. Here in this business plan, we try to explain how to start a small scale lemongrass oil manufacturing business.
This oil is reddish-yellow to reddish-brown colour with a strong lemon odour and highly used in pharmaceutical preparations, like pain balm, disinfectants, and mosquito repellent creams.
Lemongrass oil Market Potential and Export
In the early fifties, India produced around 1800MT per annum of lemongrass oil and a big monopoly in production and world trade but the situation is changing now as other countries like China, Mexico, and Bangladesh start cultivation of lemongrass over large areas. Currently, world production of lemongrass oil is 1300MT per annum. Litsea Cubeba, faster growing and rich in citral is the substitute for lemongrass which is produced by China to produced 600MT citral and limits the scope of lemongrass oil. This is an important essential oil and the demand for aromatic cosmetics increasing day by day, therefore demand for this oil is also increasing. As well as awareness about the advantages of essential oils is also increasing in the Indian population. Moreover, mass consumers are also conscious these days of the harmful effects of chemical cosmetics and personal care products.
But globally India is the major producer of this oil. Some other major importers are Western Europe and North America. Due to the higher demand for this oil, cultivation area is also increasing and farmers showing more interest in producing lemongrass. In this situation, starting a lemongrass oil manufacturing business is a financially fruitful project for a business man in India.
Lemongrass Oil Business Registration
In the initiative of making lemongrass oil, your first step is registering your business with the company’s register with ROC or alternative you can create proprietorship, partnership, LLP or One Person Company.
You have to get a trade license from Local Municipal Authority and Udyam Registration on online portal of Ministry of Micro, Small, Medium Enterprises.
In addition to above, apply for GST Registration. Also, you must be apply for FSSAI license, if you want to use this oil for flavouring the food.
Lemongrass Oil Manufacturing Plant Setup & Machinery
This is very important to start your production house nearby lemongrass plantation field so that you can easily procure raw material. Although, check the utilities like electricity supply and water availability and transportation facilities for good work, for small scale industry, 1000sq Ft area is sufficient later you can increase the area for storage purpose.
- Evaporator Vessel
- Florentine flask
- Steam boiler
- Pump( condensate)
- Pump( cooling water)
- Cooling tower
Lemongrass Oil Manufacturing Process & Raw Material
Drying and distillation method used in which grass is wilt for24hours to reduce its moisture content by 30% and oil yield improves. For oil extracting, steam distillation is preferred for production. The Main factors that influence oil production during distillation are
- Storage of the harvested herb
- Treatment of the material
- Method of distillation
Now process start by introducing steam in a boiler and then steam pass into the vessel which contains leaves and water. Now place the leaves on a grid that is kept at some distance above water that fills the bottom of the vessel. Here the vaporization process start and water indirectly vaporized with the help of steam flowing in a pipe coil submerged in the water. The essential oil present in the oil glands, oil sacks and glandular hairs of the plant therefore, it is necessary to cut leaves into small pieces to expose as many oil glands as is possible.
Immediate oil distillation is required to avoid oil loss and for this water vapour and distilled oil coming from the evaporator vessel is recovered in a separate water cooled condenser. Now separate the mixture coming out of the condenser by decantation in a Florentine flask. This process takes around 3 to 4 hours. To increase the citral content, it is advisable to dip the chopped lemongrass in a solution of sodium chloride of concentration 1-2% for 24 hours before distillation. The recovery rate of oil from the lemongrass is 0.5-0.8 percent.
Now the oil floats at the top from where it can separate easily. Although, water still contains some soluble parts of oil and it is sent back to the evaporator to take out more oil.
Using a simple filtration method, the insoluble particles present in the oil are removed by mixing with anhydrous sodium sulphate and keep it overnight for 4-5 hours and if found due to rusting colour changes then it is clean using steam rectification process.
The mainly raw material used for lemongrass oil is lemongrass and this plant grows well in soils, which is not suitable for richer production plants. Sandy and dry soil yield more oil and oil of higher citral content than the plants which grow in fertile soil.
Lemongrass plant life cycle is 6 to 8 years and mainly oil yield reaches its maximum during the fourth or fifth year and annual average value between 15 and 20 kg/ha with three crops per year. The ratio of oil to leaves is 0.348% and about 288kg lemongrass leaves are required to produce 1 kg of essential lemongrass oil.
Storage and Packing of Oil
Using glass bottles or stainless steel or aluminium or galvanized iron, depending on oil quantity you can store oil. Whatever container is used but it is kept in mind that oil-filled up to the brim and containers kept away from direct heat and sunlight and always stored in cool or shaded places.
Lemongrass Oil usage
- This is a source of citral and used in different products like deodorants, waxes, polishes, detergents and insecticides etc.
- Lemongrass oil is used in the preparation of perfumes for soaps, hair oils, scents, and medicines.
- This oil has antibacterial properties.
- For the preparation of Vitamin A, basic raw material Ionone is used in this which is prepared from the citral present in lemongrass oil. Ionone is also used in different types of confectionery and liquor. Ionone can be prepared directly from the lemongrass oil or citral obtained from the lemongrass oil.
- The lemongrass oil and leaves are use for the preparation of medicines. Also considered an important plant for Ayurveda medicine practice.
- Lemongrass is use for kill germs and act as a mild astringent. It is used for high blood pressure, pain, cough, fever, common cold and exhaustion.
Marketing and advertisement strategies of lemongrass oil
It is easy to enter this market and sell your product, as a market for this oil is already high. But to increase your sales and for future business, follow market techniques to defeat your competitors and start advertising your product with the brand name to remember your product. Brand name creativity increases productivity.
Also active on social media like Facebook, Whatsapp, Instagram for your product promotion and try to sell product through online websites or apps like flipkart, amazon as these are in demand. Advertise through local newspapers, magazines and electronic media platforms. Install billboards in different locations. Usage of fix banners wherever it is necessary to increase your customers.
Project Report Format
In our project report format, we cover technology details, its diagrams, flow chart etc.. as and when required or deemed fit to include. Also, prepare in-depth financial calculations including CMA which is necessary for the Investor/bank.
Key Points Cover in Details Project Report on Lemongrass Oil Manufacturing
As mentioned above, Lemongrass Oil Manufacturing Detail Project Report (DPR) is a complete package that contains everything that requires getting funds up to 25 Crores (Twenty Five Crores). Checkout our DPR sample to make your vision more clear. Usually, the Detailed Project Report (DPR) is needed when you apply for a bank loan or Government scheme. Project Report Bank aims to create the reports accurately from the start and make sure that businessmen get the right value and results from the reports.
The following are the key points we generally covers while making DPR, whichever relevant to your business :-
- Introduction to Project and Industry
- Executive Summary
- Profile of the business in the country
- Project Evaluation – Social Angle
- Analysis of basic variables
- Socio- Economic Advantage
- Impact on environment
- Foreign Trade Income
- Value addition
- Import replacement
- Technology assimilation and so on
- Present condition of the business
- Consumer Inclinations
- Market Prerequisites
- Market Portions
- Distribution Channels
- Market Qualities of the Item
- Export Possibilities and Global Market
- Marketing and selling game plans
- SWOT Analysis
- Particulars Of Existing / Proposed Bank Credit Facilities (Form – I)
- Projected Profitability Statement ( Form – II)
- Projected Balance Sheet (Form – III)
- Comparative Operation Statement (Form – IV)
- Maximum Permissible Bank Finance MPBF – (Form – V)
- Cash Flow Statement – (Form – VI)
Monetary Projections Details Contains:
- Cost of Project & Means of Finance
- Details of Raw Materials
- Details of Utilities
- Human Resources Planning
- Technical Manufacturing Business Process
- Assumptions in monetary projections
- Projected Sales & Production
- Cost of Production and Profitability
- Fund Flow Statement
- Working Capital Cycle
- DSCR – Debt Service Coverage Ratio
- BEP – Break Even Point Analysis
- IRR – Internal Rate of Return
- ISCR – Interest Service Coverage Ratio
- Calculation of payback period
- Debt to Equity Ratio
- Working Notes for Monetary Projections
- EBIT – Earnings before interest and taxes
- EBITDA – earnings before interest, taxes, depreciation, and amortization
- Cash Burn Rate
- Discounted Cash Inflow & Outflow
- NPV – Net Present Value
- Net Worth
Report Size : 40 – 50 Pages,
In which, Financial Projections : 18 – 20 Pages
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Lemongrass Oil Manufacturing business plan
A clear Lemongrass Oil Manufacturing Project Report is crucial for your success as an entrepreneur. Therefore, you also wish to contemplate some important, like your initial costs, your target market, and how long it’ll see you interrupt even. Also, draft a proper Lemongrass Oil Manufacturing Project Report that describes your expected income, product and repair lines, expansion plans, and other details of your business. Because, a well-drafted project report will facilitate you in applying for any bank loan. Therefore, you can get a well-draft project report from our website www.projectreportbank.com
Conclusion for the lemongrass oil business to make good money
The manufacturing of oil from lemongrass is a good business opportunity and highly profitable if one does not compromise with quality. The above benefits and harms explain how to start this lemongrass oil extraction business to make huge money.
Q1. What is the basic cost to start a lemongrass oil extraction business for making huge money?
Ans: The cost may vary from small scale business to large scale but starting investment for this business is 21 lakhs to 25 lakhs and following investments required:
- Premises Rs 2,00,000 to Rs 2,50,000
- Registration and licence cost Rs 1,50,000 to Rs 2,00,000
- Machinery cost Rs 5,00,000 to Rs 5,50,000
- Water and electricity cost Rs 90,000 to Rs1,00,000
- Marketing and advertisement charges Rs 2, 00,000 to Rs 3, 00,000.
- Manpower Rs 2,00,000 to Rs 3,00,000
- Other expenses Rs 1,00,000 to Rs 1,50,000
Q2. What is the starting cost of lemongrass oil?
Ans: The minimum cost for 15ml lemongrass oil is Rs 300 to Rs 350 and vary in different brands. This oil is available online and in stores.
Q3. How to use lemongrass oil?
Ans: Before applying this oil, one must do a skin patch test on a small area of skin and wait for 24 hours to see the reaction on your body. Always use this oil in diluted form only. Never go for undiluted oil.
Q4. What are the side effects of lemongrass oil?
Ans: Lemongrass oil causes allergic reactions if not used in proper form. These are the tips to follow:
- These oils are not use near eyes and mucous membranes.
- Away from children and pets.
- Do not ingest essential oil.
- Wash the hands properly after using it.