Introduction
Neem oil is a vegetable oil pressed from the fruits and seeds of neem , an evergreen tree which is endemic to the Indian subcontinent and has been introduced to many other areas in the tropics. It is perhaps the most important of the commercially available products of neem for organic farming and medicines. The business idea aims at production of 200 Litres of neem oil per day thus 62,400 litres annually. The revenue potential is estimated at US $ 561,600 annually with a total capital investment of US $ 6928. The project is also estimated to yield a net profit of 10%
Plant Capacity
The plant has a minimum capacity of 200 Litres of neem oil per day.
Production Process
The oil can be obtained through pressing (crushing) of the seed kernel through cold pressing. It can also be obtained by solvent extraction of neem seed, fruit, oil cake or kernel.
Scale of Investment
Capital Investment Requirements in US$
| Capital Investment Item | Units | Qty | @ | Amount |
|---|---|---|---|---|
| Storage bins | No | 3 | 71.5 | 214.5 |
| Solvent Extraction plant | No | 1 | 2322.1 | 2322.1 |
| Boiler | No | 1 | 3020.6 | 3020.6 |
| Feed bins | No | 3 | 163.9 | 491.7 |
| Neem oil storage unit | No | 1 | 880 | 880 |
| Total | 5,871 | 6928.6 |
Production and Operation Costs in US$
| Cost Item | Units | @ | Qty/ day | Pdn Cost/ day | Pdn Cost/ mth | Pdn Cost/ Year1 |
|---|---|---|---|---|---|---|
| Direct costs3: | ||||||
| Neem seed | Kgs | 15 | 100 | 1500 | 39,000 | 468,000 |
| solvent | Litrs | 10 | 5 | 50 | 1300 | 15,600 |
| Packing materials | No | 0.1 | 150 | 15 | 390 | 4,680 |
| Subtotal | 40,690 | 488,280 | ||||
General costs (Overheads)
| Labour | 300 | 3,600 |
|---|---|---|
| Utilities | 300 | 3,600 |
| Selling and Distribution | 100 | 1,200 |
| Administrative expenses | 150 | 1,800 |
| Shelter | 300 | 3,600 |
| Depreciation (Asset write off) Expenses | 131 | 1,575 |
| Sub-total | 1,281 | 15,375 |
| Total Operating Costs | 41,971 | 503,655 |
- Production is assumed for 312 days per year.
- Depreciation assumes 2 year life of assets written off at 50% per year for all assets.
- A production Month is assumed to have 26 days.
Project Product Costs and Price Structure
| Item | Qty / day | Qty/yr | @ | Pdn/yr ($) | UPx | T/rev($ |
|---|---|---|---|---|---|---|
| Neem oil | 200 | 62,400 | 8.1 | 503,655 | 9 | 561,600 |
| Total | 62,400 | 503,655 | 561,600 |
Profitability Analysis Table
| Profitability Item | Per day | Per Month | Per Year |
|---|---|---|---|
| Revenue | 1,800 | 46,800 | 561,600 |
| Less: Production and Operating Costs | 1,614 | 41,971 | 503,655 |
| Profit | 186 | 4,829 | 57,945 |
Market Analysis
Neem has become the favorite of business firms abroad which firms are now buying tonnes of seeds to produce Neem-based biopesticides. With the medicinal value attached to Neem trees, neem oil can be used in different cosmetics industries.
