Do you want to start a cashew nuts processing plant? Find here a stepwise guide to starting a cashew nut processing business with low investment.
Small-scale cashew nut processing can be initiated at any location considering the availability of raw material. Dried and fried cashew nut possesses a pleasant taste and flavour. They are mostly eaten fried and are sometimes salted or sugared. They are used in large quantities by sweet meat dealers and confectioners.
More than 70 % of the cashew nut production of India is from the West Coast, Ratnagiri, North Kanara, and Malabar districts in Madras, Cochin, and Travancore. Given the raw materials and the right incentives, the industry can generate export to the extent of 1000 crores by this century and provide the type of growth needed in the national economy.
10 Steps to Start a Cashew Nut Processing Business in India
1. Understand the Market Potential
Before actually starting a cashew nut processing venture, it is advisable to conduct a comprehensive market analysis. Try to identify the potential demand, consumer preferences, and existing competition. Furthermore, analyze market trends, pricing strategies, and market entry points to develop a clear understanding of the market landscape.
Also, you need to determine the target market segments. It can be retail consumers, hotels, restaurants, and export markets.
2. Create a Cashew Nut Business Project Plan
Creating a comprehensive business project plan plays a key role in the overall success of the cashew nut processing business. This plan will work as a roadmap to guide you through the various stages of starting and running your venture.
Some of the chapters you must include in your cashew nut plant project plan are the following:
- Executive Summary
- Market Analysis
- Business Structure
- Legal and Regulatory Compliance
- Product Offering
- Operations & Factory Setup
- Supply Chain Management
- Marketing and Sales Strategy
- Financial Projections
- Risk Assessment and Mitigation
- Implementation Plan
3. Legal Requirements and Registrations
It is essential to comply with legal requirements and obtain the necessary registrations to start and run a hassle-free cashew production business in India. Select an appropriate business entity and register your business.
It can be a sole proprietorship, partnership, or private limited company. In addition, you will need to procure licenses and permits. It includes FSSAI registration, GST registration, and any other specific permits required by local authorities.
4. Select a Business Name
Find a catchy and attractive name for your cashew nut business. It is advised to select a business name that can grow with your business. And also accommodate future expansions or diversification.
It must be mentioned here that before finalizing a business name, check if the desired domain name and social media handles are available. Also, search the trademark database to get rid of any future trademark conflicts.
5. Arrange Funds
You will need to invest a reasonable amount of money to start a cashew nut processing plant business. If you are short in budget, make the necessary arrangements for arranging the extra amount. Some of the popular ways of arranging funds are getting business loans from banks, government-backed funding schemes, private investors, or taking a financial partner.
6. Procuring Raw Cashew Nuts
To start a cashew nut processing business, you need a steady supply of raw cashew nuts. You can procure them from domestic suppliers or import them. Evaluate the quality and reliability of potential suppliers and establish long-term partnerships. Develop a system for quality evaluation and selection based on factors such as size, moisture content, and overall appearance.
7. Cashew Nuts Processing
The raw cashew nuts are procured from local farmers and local markets. These cashew nuts are dried in the sun for a period of two days and are then stored in gunny bags for processing throughout the year.
Steam Roasting → Shell Cutting → Peeling → Grading → Packing → Despatch.
8. Setting up the Processing Unit
Choosing a suitable location and establishing a well-equipped processing plant is critical for the success of your cashew nut processing business. Consider variables like as closeness to raw material suppliers, utility and power supply availability, and compliance with local legislation. Create an effective workstation arrangement to ensure smooth operations and safety precautions are in place.
9. Cashew Nuts Processing Plant Project Cost Synopsis
- Plant Capacity: 1 MT per day
- Working Capital: Rupees 26 Lakhs
- Plant & Machinery: Rupees 13 Lakhs
- Total Capital Investment: Rupees 167 Lakhs
- Break-Even: 29.78%
- Return: 58.43%
The actual cost of the cashew nut processing plant project may deviate from the change of any of the assumptions. You can modify the project capacity and project cost as per your requirement.
10. Marketing and Distribution
Create a well-defined marketing strategy to promote your cashew nut products effectively. Identify your target customers and tailor your marketing efforts accordingly. Utilize a mix of online and offline marketing channels.
Creating a website is a must nowadays. In addition, explore social media platforms, trade fairs, and collaborations with distributors. Also concentrate on developing strong distribution networks to reach retail outlets, hotels, restaurants, and potential export markets.
What is the cost to start a cashew nut processing business in India?
The cost and investment needed to set up a cashew nut processing business obviously will vary depending on the production capacity, location of the plant, and quality of machinery. On average, the initial cost to start a small-scale cashew nut processing plant will be in the range of Rs. 10 Lacs to Rs. 25 Lacs.
Is Cashew Nuts Processing Business Profitable?
The dried and fried cashew nut industry in India has the highest rate of productivity in the world. The demand for cashew nuts is gradually increasing, whereas its supply is limited. India is the leading producer, processor, consumer, and exporter of cashew nuts in the world. It is one of the important agricultural commodities exported from India to many countries in the world.
Are there any government schemes or subsidies available for cashew nut processing businesses in India?
Yes, the Indian government through various schemes and subsidies is helping new entrants in the cashew nut industry. Some of the schemes that you can avail of are Credit Linked Capital Subsidy Scheme (CLCSS), the Prime Minister’s Employment Generation Programme (PMEGP), and the Agricultural and Processed Food Products Export Development Authority (APEDA) schemes.
What are the major challenges in the cashew nut processing business?
Yes, there are several challenges in running a cashew nut processing business. Some of them are listed below:
- Fluctuating raw material prices
- Maintaining consistent quality standards
- Ensuring efficient supply chain management,
- Dealing with market competition.
Hence, it is advisable for new entrepreneurs to remain to updated with industry trends. In addition, you must be able to innovate to overcome the changing market dynamics.
Rupak is the founder of MUVSI. He is a small business consultant by profession. His mission is to make people know how to make money and understand personal finance for a better living.