Orissa Cashew Plant

The operation of a semi-automatic cashew nut processing plant is to be built on 1.17 acres of land owned by the company in Nayagarh District of Odisha state.


Background


Cashew (Anacardiumoccidental), a native of Brazil, was introduced in India during the later half of the Sixteenth Century for the purpose of afforestation and soil conservation. From its humble beginning as a crop intended to check soil erosion, cashew has emerged as a major foreign exchange earner next only to tea and coffee. Cashew nut is one of the important nuts grown in the world and ranked first. Among various nuts such as hazelnuts, almonds, etc., cashew nut enjoys an unenviable position and it is an unavoidable snack in all important social functions especially in the western countries.

India is the third largest producer and exporter of cashew in the world next only to Vietnam and Nigeria. It is the second largest consumer of cashew and also the biggest processor with highest acreage under the crop. The current cashew production of the country accounts for 23.0% of the global production. A large number of small and marginal farmers, especially living on the coastal belts of India, depend on cashew for their livelihood.


Project Introduction


Karnataka-based cashew processing and export firms are exploring the possibilities of setting up cashew processing units in Andhra Pradesh and Orissa as part of their expansion plans. AP and Orissa are among the top five producers of raw cashewnut in the country, accounting for 17 and 11 per cent of production respectively.

Karnataka, that accounts for just 10 per cent of the country’s production, has developed Considerable expertise in cashew processing with locally-developed machineries.

According to the Karnataka Cashew Manufacturers Association (KCMA), AP and Orissa were once considered the export baskets of the country.
“There is tremendous potential of increasing cashew nut production in the two states, which lack modern practices to grow and process cashews.
CEPCI has proposed to increase the raw nut production to 4 lakh tonne in Andhra Pradesh, 3.5 lakh tonne in Orissa and at least 2 lakh tonne in Tamil Nadu by 2020.

The project should be preferably located in a place having sufficient raw materials, uninterrupted supply of power and labour. Therefore Daspalla in Nayagarh district is suitable for the establishment of the processing unit. The location has been choosed because of its connectivity to the major raw cashew nut producing districts of Odisha.Apart from that Nayagarh district is also one of the major cashew nut producing districts and there is no processing unit available in the district.


Health & Nutrition


Health Benefits of Cashew Nuts

  • Cashews are high in calories. 100 g of nuts provide 553 calories. They are packed with soluble dietary fiber, vitamins, minerals and numerous health-promoting phyto-chemicals that help protect us from diseases and cancers.
  • They are rich in “heart-friendly” monounsaturated-fatty acids like oleic, and palmitoleic acids. These essential fatty acids help lower harmful LDL-cholesterol while increasing good HDL cholesterol. Research studies suggest that Mediterranean diet, which is rich in monounsaturated fatty acids help to prevent coronary artery disease and strokes by favoring healthy blood lipid profile.
  • Cashew nuts are abundant source of essential minerals. Minerals, especially manganese, potassium, copper, iron, magnesium, zinc, and selenium are concentrated in these nuts. A handful of cashew nuts a day in the diet would provide enough of these minerals and may help prevent deficiency diseases. Selenium is an important micronutrient, which functions as a co-factor for antioxidant enzymes such as Glutathione peroxidases, one of the most powerful antioxidants in the body. Copper is a cofactor for many vital enzymes, including cytochrome c-oxidase and superoxide dismutase (other minerals function as co-factors for this enzyme are manganese and zinc). Zinc is a co-factor for many enzymes that regulate growth and development, gonadal function, digestion, and DNA (nucleic acid) synthesis.
  • Cashews are also good in many essential vitamins such as pantothenic acid (vitamin B5), pyridoxine (vitamin B-6), riboflavin, and thiamin (vitamin B-1). 100 g nuts provide 0.147 mg or 32% of daily-recommended levels of pyridoxine. Pyridoxine reduces the risk of homocystinuria, and sideroblastic anemia. Niacin helps prevent “pellagra” or dermatitis. Additionally, these vitamins are essential for metabolism of protein, fat, and carbohydrates at the cellular level.
  • Further, the nuts are also carrying a small amount of zea-xanthin, an important pigment flavonoid antioxidant, which selectively absorbed into the retinal macula lutea in the eyes. It is thought to provide antioxidant and protective UV ray filtering functions and helps prevent age-related macular degeneration (ARMD) in the elderly.

Nutritional facts on cashews

 Nutrient Units Value
Calories Kcal 570
Protein g 15
Total Fat g 46
Saturated Fat g 9
Monounsaturated Fat g 27
Polyunsaturated Fat g 8
Linoleic acid (18.2) g 7.66
Linolenic acid (18.3) g 0.16
Cholesterol mg 0
Carbohydrate g 33
Fiber g 3
Calcium mg 45
Iron mg 6.00
Magnesium mg 260
Phosphorus mg 490
Pottasium mg 565
Sodium mg 16
Zinc mg 5.60
Copper mg 2.22
Manganese mg 0.83
Selenium mcg 11.70
Thiamin mg 0.20
Riboflavin mg 0.20
Niacin mg 1.40
Pantothenic acid mg 1.22
Vitamin B6 mg 0.26
Folate mg 69
Vitamin K mcg 34.70
Tocopherol, alpha mg 0.92
Tocopherol, beta mg n/a
Tocopherol, gamma mg n/a
Tocopherol, delta mg n/a
Total Phytosterols mg 158
Stigmasterol mg n/a
Campesterol mg n/a
beta-stiosterol mg n/a
Lutein + Zeaxanthin mcg 23
Source: USDA National Nutrient Database for Standard Reference, Release 17, 2004
g = gram , mg = milligram; mcg – microgram

Processing System


Traditionally the various processing operations were performed manually by experienced semi-skilled workers. This is still the case in India, which is the world’s largest producer of cashew kernels. Since the 1960s, various mechanized pieces of equipment have been developed and are available in several countries. The processes that have been mechanized are roasting, cashew nut shell liquid extraction and shelling. For the most part, the cleaning of raw materials and sizing and kernel grading have remained labour intensive manual operations.
There are significant differences in investment requirements, labour skills, health requirements and levels of efficiency between the Indian manual technology and the medium to large-scale mechanical and semi-mechanical operations. In general the Indian processing system involves lower investment and variable costs and achieves far greater efficiency in terms of kernel material yield and the proportion of whole kernels extracted. However this system requires large numbers of experienced workers.

Stage 1: DRYING

Raw cashew nuts are properly dried in order to remove excess moisture. These raw nuts are usually kept in open yard and are dried in sun for 2/3 days. The nuts are rolled over on regular basis in order to ensure both sides drying. After this procedure is over, the dried cashew nut are collected and thereafter packed in bags for the purpose of long storage

Stage 2: ROASTING

The second stage of processing is Roasting; Here we heat the cashews with high pressure/temperature steam. The roasting time depends upon the characteristic of raw cashew nuts.

Stage 3: CUTTING

Raw cashew nut has a unique kidney shape. Moreover, the outer shell of raw cashew nut is very hard to crack. The shell contains a liquid called CNSL, which can be very dangerous if not properly handled. We use a specially designed hand and leg operated cutting machines to cut raw cashew nuts. The operations are predominantly manual. The raw cashews are carefully cut to ensure that there are minimum broken.

Stage 4: HOT CHAMBER

In this stage, cashew kernels are heated to 70-85 degree centigrade. The main purpose of this heating is to eliminate moisture and gumming between cashew kernels and adhering test. We use a specially designed chamber to heat the cashews so that, the temperature control can be attained accurately.

Stage 5: PEELING

We use a specially designed chamber to heat the cashews so that, the temperature control can be attained accurately. Cashew Kernels are blanched using a small knife. The adhering testa (husk) is carefully removed ensuring minimum damage to the cashew kernels. Due to unique shape of the cashews, the process is mostly manual. However automatic peeling machines are developed and we are proposing to install the automatic machine.

Stage 6: GRADING

Cashew Kernels are graded according to their size, colour, appearance etc. There are more than 25 grades of cashews. These grades are standardised by CEPCI.

Stage 7: PACKAGING

Cashew Kernels are fumigated before packing. Then, it is passed through a cleaning line, where dead insects, foreign particles, if any are removed. Finishing touches are given to grades by removing lower grades.
Cashew kernels are packed in controlled atmosphere. Ambient air is removed and replaced with CO2 and Nitrogen gasses


Production and Marketing


The plant will be able to process 4,500 Bags of raw cashew nuts (80 kgs) each in a year i.e. on an average 15 bags each for 300 working days in a single shift of 8 to 12 hours in a day. On processing of 360,000 Kgs of raw nuts, different grades of finished cashew nuts of 103,500Kgs will be produced.

Grades Quantity(Kgs)
W 180 4,500
W 210 11,250
W 240 18,000
W 320 18,000
W 400 13,500
JH 15,750
KK 4,500
LWP 6,750
OTHERS 11,250
TOTAL 103,500

 


Organizational Structure


The proposed organization map is as described below. This organization map serves the business needs as the production would grow in future to attain a sizeable volume for export as well as domestic markets.
The organization structure as depicted below indicates:

  • A Project Manager is to set up the entire operation and head the business in future. He/she would be supported by a production manager and a supervisor responsible for day to day production. He/she would also be responsible for marketing of the different products.
  • Production Manager shall be appointed to manage the production activity on day to day basis.
  • The Stores Manager will assist the production manager in the smooth production process of the factory.
  • Production Manager will be supported by the workers.

Proposed organizational structure


Financial Analysis


The investment envisaged for the proposed business model is around INR 125 Lakhs i.e. INR 100 Lakhs for Capital Expenditure (Fixed Capital) and INR 25 Lakhs for Margin Money for Working Capital (excluding cost of land). The major costs here are plant and machinery required for cashew nut processing and factory shed. Rest investment cost is on account of stock of raw materials i.e. working capital.

A PROJECT COST   Amount in INR Lakhs
1 Site Development including Boundary 01.50
2 Technical Civil  Works 28.68
3 Plant & Machinery (Indigenous) 62.85
4 Contingencies 2.50% 02.33
5 Pre-operative Expenses 00.75
6 Interest During Construction period 03.90
7 Margin Money for Working Capital 25.00
  TOTAL   125.00

It is assumed that 48% of the capital requirement would be financed through debt and 52% would be met through equity infusion. The business model would require total fund to the tune of INR 125 Lakhs which would consist of capital cost of INR 100 Lakhs plus margin money for working capital of INR 25 Lakhs.

Particulars In INR Lakhs Share (%)
Equity Capital 65.00 52
Term Loan from Bank 60.00 48
Total 125.00 100

The model consists of two revenue streams: Sale of Cashew Nuts and Cashew Nut Shells i.e. covers.

At the end of 5th year, revenue is projected at INR 639.47 Lakhs, comprising the following:

  • Cashew Nut Sales : (INR 609.43 Lakhs)
  • Cashew Nut Shell Sales : (INR 30.04 Lakhs)

Strength, Weaknesses, Opportunities and Threats (SWOT) Analysis


Strengths:

  • Availability of abundant and cheap manpower.
  • Priority for cashews in government strategic plans
  • Existence of new plantations
  • Capital Investment subsidy for processing unit

Weaknesses:

  • Non-availability of adequate skilled labour.
  • Poor marketing linkage and poor market infrastructure.
  • Poor post-harvest management infrastructure.
  • Poor economic condition of the farmers.

Opportunities:

  • High demand for Odisha Nuts in North India
  • Rise in global demand (5%)
  • Possibility to increase yield
  • Possibility to integrate crops
  • Existing innovations badly used
  • Processing brings added value
  • Existence of banks/ financial institutions for agricultural activities
  • Availability of arable land
  • Support from technical and financial partners
  • Grower enthusiasm

Threats:

  • Uncertainty in weather conditions and frequent occurrence of natural calamities like flood, cyclone and drought.
  • Organisations of growers and stakeholders barely functional
  • Difficult access to cashew-specific financing
  • Difficult access to specific inputs
  • Low plantation productivity
  • Poor knowledge of market access rules
  • Lack of reliable statistics
  • Absence of appropriate credit
  • Exporter monopoly of the market
  • Nut quality affected by uncontrolled inflows
  • Difficult regulation of the local market
  • Trading in raw nuts more lucrative than processing
  • Failure to monitor trading system (fixed price)
  • Labour-intensive
  • Exploitation by middlemen in the market chain.
  • High incidence of pest and diseases.