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How to Start Small Scale Groundnut Oil Processing Business

Do you want to start a small-scale groundnut oil production business? This article includes a sample groundnut oil processing project profile with machine details, production process, cost, and profit.

Groundnut kernel contains 50-55% of the oil. Groundnut oil is an important edible oil throughout the world. The oil has good nutritional value. And it doesn’t create any cholesterol problems. Hence, it is a popular cooking medium.

Apart from cooking, the product is a very essential ingredient in the bakery and confectionery industry. The oil is used as a substitute for olive oil and other edible oils, soaps, salad and cooking oil, mayonnaise, and margarine. Apart from the domestic market, groundnut oil has the tremendous export potential also.

Hence, starting a groundnut oil production business is a highly profitable venture for entrepreneurs who want to start a business in the edible oil industry.

10 Steps for Starting Groundnut Oil Manufacturing Business

#1. Market Analysis

In India, Gujarat holds the first position in producing groundnut oil. The state shares  9% of the groundnut production of the world and 25 to 30% of India. The country’s overall groundnut oil production depends on raw groundnut production.

Read: Top Small Scale Manufacturing Business Ideas

However, the demand for groundnut oil depends on population and income. As a product targeted to a segment of the market groundnut oil will be more dependent on income. Also, you need to check the packaging of the existing manufacturing companies that are established in the market. Actually, the market analysis helps you in making decisions and providing inputs in preparing the business plan or project report.

#2. Groundnut Oil Production Project Report

The second step is preparing the project report. You must prepare a customized project report according to your need. The project report consists of two major parts. These are technical analysis and financial aspects. And the formation of the two specific parts depends on each other.

In the technical part, you need to mention the plant capacity, manufacturing technology know-how, production process, raw materials quality control measures, and your business objective with mission and vision. The financial aspect contains the fixed cost, working capital, projected sales revenue, ROI, and the break-even.

A project report helps in getting finance from financial institutions including banks. Also, it helps in taking off the project with fewer mistakes.

#3. Arrange the Finance

After preparing the project report, you will need to arrange the finance. If you want to initiate the business with your own fund it’s well. Otherwise, you will need to arrange the fund from banks or venture capital firms.

Generally, banks provide different types of customized loans depending on your specific requirement. If you only need finance for purchasing machinery, then you can apply for machinery hypothecation. If you want only working capital, then banks provide cash credit or overdraft facilities. However, you can also apply for total project finance.

#4. Business Registration & License

In starting this type of business, business registration is a must. Depending on your management and investment pattern, you can form an LLP or Pvt. Ltd or Ltd company.

Suggested Read: How to Register a Company in India

Only after the registration, you can apply for MSME Udyog Aadhaar Registration, Trade License, and Business PAN Card. Open a current bank account for the transaction. Apply for FSSAI registration and AGMARK. Finally, apply for the BIS registration.

#5. Select a Location for the Unit

Next, you will need to determine a space for the manufacturing operation. Generally, oil milling needs a moderate covered space area. Also, it depends on the unit size and quantity of production output you want. For a small or medium scale unit, you will need 1000 sq Mtr of covered space. Keep 500 Sq Mtr for the production area, and the rest you can use for storage, packaging, and official work.

The location must have an electricity facility and water supply. In starting a groundnut oil production business, it is advisable that you start the unit at a rented space. Also, you can avail long-term lease facility in the industrial zones.

#6. Establish the Plant

After determining the space, you will need to establish the unit. If you are able to manage a covered space it’s good, otherwise, you can build the shade with color-coated steel roofing sheets. Generally, the sheet companies help in design, development, manufacture, and erection.

In addition to that, you will need a floor plan. And according to the machinery installation plan, you will need to do the electrical wiring. Also check, what type of furniture and fixture you need to run the production.

#7. Procure the Machinery

Procuring the right machinery is highly crucial in this business. You can find a lot of oil milling machinery supplying companies in India and even in the international market. Before placing the final order, compare the rates and customer feedback. Some of the basic required machines are

  • Seed cleaning unit
  • Dust Blower
  • Cyclones
  • Hammer Mill
  • Screw conveyor
  • Bucket elevator
  • Roller crusher
  • Screw press
  • Filter press
  • Holding tank
  • Pumps
  • Neutralizer
  • Bleacher
  • Vacuum pump
  • Condenser
  • Deodorizer
  • Water treatment Set
  • Boiler

#8. Recruit Manpower

Groundnut oil production is a labor-intensive business. Also, you need manpower for official work and distribution. However, the specific manpower recruitment depends on the specific business model. Here, we put a list of basic requirements.

  • Production and technical head
  • Accountant
  • Machine operator
  • Storekeeper
  • Semi-skilled plant worker

#9. Procure Raw Materials

In this business, the main necessary raw material is shelled groundnut. And you will need to ensure the regular availability of this item. Also, you will need to procure caustic soda and bleach earth in a specific quantity.

Other cost-intensive raw materials are packaging consumables. Generally, groundnut oil comes in two different packaging. Either in the poly pouch or in the plastic bottles. also, you will need to provide different quantity packaging.

#10. Groundnut Oil Production Process

For oilseeds with high oil content such as groundnut, first, you will need to apply the mechanical pressing and extract over 85% of the oil. And you can extract the remaining oil from the expeller cake with solvent.

However, solvent extraction is more appropriate for large-scale processing than small-scale edible oil plants. Therefore, the mechanical pressing technology is more perfect in small and medium scale op[eration.

Generally, the groundnut oil production process contains three basic stages. These are seed preparation, pressing, and crude oil refining.

The seed requires undergoing a thorough cleaning process to remove sand, stalk, plant debris, and any other foreign matters by rotary or table sieve. After cleaning, the seeds are ready for efficient oil recovery by pressing.

The stages involve the size reduction of the seeds by breaking them and then conditioning the seeds by adjusting their moisture content and temperature. Then, you need to convey the prepared seed to the screw pressing machine. Here, it gets pressed by the action of the worm and outer shell. Then, you need to clarify the crude oil in a settling tank.

After filtering through the filter press, you need to pass the crude groundnut oil to the refinery. In the refinery, it passes through three steps including neutralization, bleaching, and deodorization. The plant requires a containment vessel for the collection and treatment of wastes to be generated in the process.

If you want to start a business that has the potential to earn long-term revenue, then groundnut oil production is just a perfect business for you.