Storage I Cleaning I Dehulling I Grinding or rolling I Heating I Pressing -- oil cakes I Refining -- impurities I Purified Edible Oil Description of sequence operations: Storage: The seeds, nuts, or plant tissue containing the oil must be properly stored and prepared for extraction to maintain the high quality of the final product. If the oil bearing material is dry, it must be stored so that it remains dry for optimal extraction and quality of the oil. If the oil bearing material is wet- plant tissue, it should be processed for oil extraction immediately after harvest so that the storage time is kept to a minimum. Oils in the presence of water deteriorate rapidly, forming free fatty acids and rancid off-flavors. Cleaning: After the oil bearing material has been taken out from storage, the first step in preparing them for oil extraction is to clean them. Cleaning is done so that the oil is not contaminated with foreign materials and that the extraction process can proceed as efficiently as possible. During the process inspection of the seeds is carefully done to remove stones, sand, dirt and spoilt seeds. Dry screening technique is often used to remove all material that is over or under sized. Some times washing is also resorted to but it must be avoided as the plant tissue will have to be dried at a later stage. Dehulling: During the process the outer seed coat of the oil seed is removed. A power operated dehuller is generally used for the operation. Removal of the outer seed coat is necessary as it does not contain oil and inclusion of it in the unit operations makes the oil extraction process less efficient. Some seeds such as groundnut can be shelled by hand. Some other such as sun flower seeds, are usually hulled in machines. Still others, like safflower and colza, cannot be shelled. Grinding or rolling: Seed is not usually pressed whole, since oil extraction is more efficient if the seed is in smaller particles. Herein lies the relevance of the grinding process. Grinding is the process for reducing the particle size. Small motor powered hammer mills are used for the unit operation. Another alternate process used for reduction of particle size is rolling the oilseeds to produce flakes for oil extraction. Many large scale commercial plants find this the most effective approach. With large oilseeds it may be necessary to grind the seed first, and then put the pieces through the flaking rollers. Heating: It is the final step for preparing the raw material for oil extraction. Heating leads to increased oil yield. Heating helps in killing those enzymes present in the plant tissue which have a deteriorating effect on oil quality. Moreover, if oilseed cake is to be used for feed or feed, heating is useful as it increases protein availability. Sometimes oil bearing material is pressed without being heated . Oil extracted in this way is called cold press oil. Pressing: During processing, the conditioned oil seeds/ oil bearing material is pressed using a lever press, hydraulic press or a mechanical expeller to remove the oil. Refining: The process is used when lower quality feed stock is used for oil extraction. It helps in removing undesirable cloudiness, color and flavor from the extracted oil. Status of Vegetable Oil Industry in India: The status of the Vegetable Oil Industry in the country in FY 2001-02 is summarised below: Table-IV Vegetable oil Industry Data in the country for FY 2001-02:
| Type of Vegetable Oil Industry | No. of Units | Annual Capacity ( Lakh Metric Tonnes) | Capacity Utilization |
| Oilseed Crushing Units | 1,50,000 (Approx.) | 425 (In terms of Oil Seeds) | 10 - 30 % |
| Solvent Extraction Units | 742 | 356 (In terms of Oil-bearing material) | 46 % |
| Refineries (attached with Vanaspati units) | 100 | 18 (In terms of Oil) | 30 % |
| Refineries attached with solvent extraction plant | 300 | 25 (In terms of Oil) | 35 % |
| Vanaspati Units | 230 | 59 ( In terms of vegetable oil production) | 41% |
(Source: Directorate of Vanaspati, Vegetable Oil and Fats) Oil seeds crushing units include crushing units in the small scale / unorganized sector as also in the organised sector. The capacity utilisation generally ranges from an average of 10% for the ghanis (small scale sector) to around 30% in case of the expellers in the organised sector. Some of the important reasons for low capacity utilization in the oilseed processing industry in the country is as follows: Unrestricted growth of the industry consequent upon de-licensing of the vegetable oil industry has lead to creation of capacity totally incommensurate with availability of raw materials. Use of obsolete technology. Presence of very low margin because of stiff competition, inefficiency of operations etc. Speculative nature of the trade in the sector. Fragmentation of capacities, poor scale economies, large idle capacity.
Legal and regulatory Framework Governing Oil Seed Processing Industry: Some of the important regulatory mechanism governing the oilseed processing industry in the country are as follows: 1. Edible Oils Packaging (Regulation) Order, 1998 2. Vegetable Oil Products (Regulation) Order, 1998 3. Solvent Extracted Oils, De-oiled Meal and Edible Flour (Control) Order, 1967 4. Pulses, Edible Oilseeds and Edible Oils (Storage) Control Order, 1977 These Control Orders provide for "in-process" surveillance in respect of the quality, packaging, labelling, production, oils used in vanaspati, etc. through regular inspection of the manufacturing processes, factory records, drawal of samples, etc. 
Need for improved edible oil expellers: The average oil recovery percentage in traditional oil ghanis is between 20-25%. Due to low recovery, wastage and process losses in the form of residual oil content in the deoiled cakes is also quite high. The residual oil content in the oil cakes is to the tune of 12-14%. Drudgery during the unit operation is also an important factor which accentuates the problem. Storability and shelf life of the oilcakes is also of a shortened duration in case of ghanis. Therefore there is an immediate need for technological improvement of the ghanis so that oil recovery percentage and the process losses are minimized. Tapering screw type mechanical oil expellers suitably meet the requirement. The oil recovery percentage in case of mechanical oil expellers is around 35-37%. The residual oil content in the oilcakes is between 6-8%. The energy requirement for unit oil extraction is comparatively low in this case of mechanical oil expellers than traditional ghanis. Handling and storage of oilcakes obtained from mechanical oil expellers is much more convenient than the same obtained from traditional ghanis. Development of small scale edible oil extracting units using improved mechanical oil expellers is yet to take a proper shape. In the absence of village level edible oil processing unit, the farmers have to travel great distances for selling the cleaned and graded rapeseed/ mustard seed. This leads to increased transportation and handling losses. Thus there is a need to develop suitable cleaning, grading, storing cum village level edible oil processing facility for bringing about noticable development of the sector. Value addition and generation of gainful and sustainable employment opportunities are the other possible benefits arising out of this agro processing industry.
Investment components of an improved rapeseed/ mustard oil expelling unit: The various investment components of a modern 240 MT/annum of rapeseed/mustard seed processing plant are as follows: Land and site development: The land requirement for establishing an improved rapeseed/ mustard oil expelling unit will depend upon the installed capacity of the unit and the method of drying and conditioning of the seeds prior to the oil extraction process. Generally 0.50 acre of non agricultural land is required for establishing an improved rapeseed/ mustard oil expelling unit having an installed processing capacity of 240 MT /annum. The land should be with proper elevation. Low lying areas should be avoided, else proper land filling, compaction and consolidation should be done. Availability of suitable drainage facility, road linkages and communication facility should also be ensured. The layout of the edible oil processing plant should be done in a manner that helps in smooth operation of various unit operations in tandem to bring about optimal capacity utilization. Additional area will be required for sundrying and conditioning of the rapeseeds/ mustard seeds. The model tentative cost of land and land development charges has been considered at Rs. 2.50 Lakh ( Rs. 1.00 Lakh being the cost of the land and the remaining Rs. 1,50,000/- being the cost incurred for site development such as construction of fencing, internal roads and drainage system etc.) Civil construction: Various civil structures required are as follows: 1. Raw material storage unit 2. Finished goods storage unit 3. Processing area 4. Office cum administrative space 5. Store room for oil cakes 6. Machinery spare parts store room 7. Toilet cum space requirement for 8. Miscellaneous space (Drying Platform) The size and civil cost of these structures depend on the production capacity of the project . The civil structures and estimated cost for the model rapeseed/ mustard oil expelling unit is as follows: Civil Structures
| | | | | ( Rs. Lakh) |
| S.No. | Item | Quantity ( in sq.m) | Unit Cost (Rs./ sq.mts.) | Total Cost |
| 1 | Raw material storage unit | 50 | 3,500 | 1.75 |
| 2 | Finished goods storage unit | 50 | 3,500 | 1.75 |
| 3 | Processing area | 30 | 3,500 | 1.05 |
| 4 | Office cum administrative space | 50 | 3,500 | 1.75 |
| 5 | Store room for oil cakes | 50 | 3,500 | 1.75 |
| 6 | Machine spare part store room | 25 | 3,500 | 0.88 |
| 7 | Toilet cum space requirement for sanitation | 15 | 3,500 | 0.53 |
| 8 | Miscellaneous space (sun drying) | 100 | 1,500 | 1.50 |
| 9 | Total | | | 10.95 |
Technology: ICAR institutes, State Agricultural Universities, research institutions have developed suitable technologies for extraction of edible oil using mechanical oil expellers. Some of the important institutes are CFTRI , Mysore, GBPAU, Pantnagar, TNAU etc. It is desired that technical assistance for installation and operationalization of the expellers and associated machinery is sought from well established manufacturing agencies having proven track record. Provision for training of machine operators and back up support may also be ensured. Plant and Machinery: The details of the nature and type of plant and machinery, their capacity, power consumption, level of automation varies upon the market needs, nature and type of the end products and the investment capacity of the entrepreneur. The details of plant and machinery for the model project are as follows: Plant & Machinery
| | | | | | | (Rs. Lakh) |
| S.No. | Particulars | Quantity (Nos.) | Power requirement (HP) | Capacity of the machine | Rate (Rs.) | Amt.
(Rs. Lakh) |
| 1 | Pre cleaner for cleaning the oilseeds | 1 | 1 | 300 kg/ hr | 18,000 | 0.180 |
| 2 | Cans and trays for handling oilseeds | 5 | | 20 kg handling capacity per tray | 2,000 | 0.100 |
| 3 | Batch type solar dryer | 2 | | 100 kg/hr | 15,000 | 0.300 |
| 4 | Tapering screw type mechanical oil expeller having a capacity of 100 kg/ hr with 10 HP AC - 3 phase motor | 1 | 10 | 100 kg/ hr | 85,000 | 0.850 |
| 5 | Filter press | 1 | 5 | 100 kg/ hr | 25,000 | 0.250 |
| 6 | Steel drums for storing edible oil and sedimentation of impurities | 20 | | 50 kg holding capacity per steel drum | 3,000 | 0.600 |
| 7 | Measuring cans of various capacities | | | Lumpsum | 15,000 | 0.150 |
| 8 | Weighting balance | 1 | | 5 kg capacity | 3,500 | 0.035 |
| 9 | Funnels for filling moulded poly carbonate bottles | 6 | | 2 bottles / minute | 100 | 0.006
|
| 10 | Moulded polycarbonate bottle capping cum sealing machine | 1 | 1 | 12 seals / minute | 5,000 | 0.050 |
| 11 | Electricals ( internal lighting and other purposes) | | 3 | | Lumpsum
| 0.500 |
| 12 | Taxes and duties (@5% -against sales tax declaration) | | | | Lumpsum | 0.090 |
| 13 | Packing and forward charges | | | | Lumpsum | 0.050 |
| 14 | Erection and commissioning charges | | | | Lumpsum | 0.250 |
| 15 | Total | | 20 hp | | | 3.411 |
Electrical and other items: The various machines have to be connected to electrical motors of suitable power ratings for supplying power to them. Accordingly AC -3 Phase motors of different power ratings, varying from 1 HP to 10 HP will be required for powering the various unit operations of the improved rapeseed/ mustard oil processing unit. The total cumulative rating of all these motors will be in the vicinity of 20 HP. The cost of the electrical motors have been included along with the cost of plant and machinery. However, a cost of Rs. 50,000/- has also been considered for internal wiring and associated electrical work. Miscellaneous fixed assets:
A cost of Rs. 1.50 Lakh under miscellaneous fixed assets has been considered for meeting the expenses for office furniture, office equipment, fixtures, firefighting and first aid equipment etc. Utilities: Power The total connected load for the aforementioned unit will be in the tune of 20 HP or 14.92 kW. Accordingly a a suitable power connection of 20 KVA is required. Water Water requirement by the unit is minimal and may be in order of 500 litres /day. The same will be mostly required for domestic comsumption purpose. A suitable source of water supply may be arranged. Standby diesel engines, generator sets and other utilities Suitable standby power arrangement (DG sets of 20 KVA) may be made under the project. Accordingly a cost provision of Rs. 1 lakh has been made. Provision for fire fighting: Necessary provision for fire fighting equipment may be made while installing the unit. Provision for the same has been made under the miscellaneous fixed assets head. Provision for Insurance: Necessary provision for insurance may be made while installing the improved rapeseed/ mustard oil processing unit. Accordingly a provision for insurance @ Rs. 25,000/- per annum (lumpsum) has been made. Contingencies: A 5% contingency provision is made for unforseen expenses. Organizational setup: A minimum of four permanent employees: one accountant cum store keeper, two plant operators and one watch and ward person are required for the unit. Besides one skilled and 5 unskilled workers are required under the scheme. Eligibility of borrowers: The borrowers can be proprietary and partnership firms, cooperatives, joint stock companies, corporations, APMC boards, growers associations , NGOs, PVOs etc. Repayment: The repayment schedule has been calculated considering the tenure of term loan to be 9 years , inclusive of a grace period of 1 years. However, banks are free to decide upon the repayment schedule depending upon the net cash flow statements and availability of adequate coverage to repay the term loan installment. Interest rates for ultimate borrowers: Banks are free to decide the rate of interest within the overall RBI guidelines. However, for working out the financial viability and bankability of the model project, we have assumed the rate of interest as 12% p.a. Interest rate for refinance from NABARD: As per the circulars issued by NABARD from time to time Security: Banks may take a decision as per RBI guidelines Results of financial analysis are as under: The financial analysis of the investment on the improved rapeseed/ mustard oil processing unit having an installed capacity of 240 MT/ annum has been attempted and is placed from Annexures I to VIII. The project has a margin money component of 25% with the rate of interest on term loan and working capital as 12% p.a. and 13% p.a. respectively. For this project, the financial indicators of the investment are as under: Net Present Value @ 15% DF (NPW) = Rs. 8.98 lakh Internal Rate of Return (IRR) = 27.55 % Benefit Cost Ratio (BCR) = 1.05:1 Average Debt Service coverage Ratio (DSCR) = 1.61:1 | 
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