BUSINESS IDEA FOR ESSENTIAL OIL PRODUCTION
This project is for extraction of oil from various oil bearing plants and grasses such as: Eucalyptus, cinnamon ginger, lemons neto etc. Essential oil is highly volatile and is essentially carried away by steam without undergoing decomposition. Essential oils are produced for use in medicine and perfume manufacture, and for other industrial purposes.
The project requires an estimated fixed capital of US$ 28,700 and operating costs of US$ 288,803 generating TR of US$ 505,440 in the first year of operation.
Production Process and Capacity
The leaves are stacked in the extractor and the boiler pressure is maintained at 40 pai and distilling may vary from 3hrs to 18 hours depending on the species being distilled. The leaves are subjected to the steam and oil is extracted as it goes up in the steam. Water is separated through fractional distillation. If eucalyptus leaves are used, 80kgs of oil would be expected to be generated from one hectare. Oil yield may vary from plant to plant or from stuff used such as lemons.
Capital Investment Requirements in US$
|Capital Investment Item||Units||Qty||@||total|
|Fractional Distillation with Condenser||No||1||5,000||5,000|
|Steam generating tank||No||1||12,000||12,000|
|Furniture & Fittings||No||–||–||1,000|
Production and Operating Costs in US$ (a)Direct materials, Supplies and Costs
|Cost Item||Units||@||Qty/ day||Pdn Cost/ day||Pdn Cost/ mth||Pdn Cost/yr|
|Fresh Leaves and twigs||Tones||650||1||650||16,900||202,800|
General Costs (Overheads)
|Selling and Distribution||369||4,428|
|Cleaning and Toiletries||63||756|
|Total Operating Costs||24,067||288,803|
- Production costs assumed 312 days per year with daily capacity of producing 600 litres of essential oil.
- Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
- Direct costs include: materials, supplies and other costs that directly go into production of the product.
- Total monthly days assumed are 26-days.
- The valuation currency used is United States Dollars.
Essential oil is a vital item in pharmaceutical and perfume manufacture; as well as other industrial uses. The industrial development in the country is a healthy atmosphere for this project as it guarantees the market. There is great potential for export to the highly industrialized world.
Project Product costs and Price Structure
|Item||Qty/ day||Qty/yr||@||Pdn Cost/ yr||UPx||Total Rve|
Profitability Analysis Table in US$
|Profitability Item||Per day||Per Mnth||Per year|
|Less: Production and Operating Costs||925.7||24,067||288,803|
Government Facilities and Incentives
There are no taxes imposed on exports and any VAT input is claimed and reimbursed by the tax body as a way of encouraging and facilitating exporters.