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Model Bankable Projects

   
   
 

Fisheries

 
IQF Processing Unit
 

Introduction

India till the year 1986 was exporting fish products by using conventional type of freezing wherein the products were generally packed in blocks of 2 kgs. by block freezing.  The disadvantages of block freezing are that the product looses its identity and the consumer is forced to buy the product in bulk.  In cases where reprocessing is involved the quality of end product is affected.  Hence these factors necessitated the introduction of individually Quick Frozen Products.  Direct production of IQF products eliminates reprocessing and the drop loss during thawing and refreezing is considerably reduced.  The preference of the individual consumer in importing countries is also towards IQF products as he can avoid purchase in bulk packages.  The IQF products fetch a better price in the international market.  IQF technology was introduced in developed countries as far back in 1965 and India could make a beginning in this regard only in 1986.

Scope for establishing IQF units

At present 50 IQF units are operating in India.  The scope for establishing more number of IQF unit is bright.  At present only 15% of the total shrimp products exported out of India are in IQF form.  Shrimp products are the major item among the marine products exported from India.

Since the preference in importing countries is towards IQF products and also there is value addition if the products is IQF,  it can be assumed that scope exists for establishing new units. A large number of brackish and fresh water prawn farms have been established. The additional quantity of prawns produced by these farms may also require IQF facility.

Variety of IQF exported from India

The major varieties of IQF products which are exported include shrimp, cuttle fish, lobsters and fishes as per details given below :-

I            Marine shrimp

(a)        Headon white/brown/tiger
(b)        Headless white/brown/pink/flower/tiger
(c)        Peeled and deveined
(d)        Peeled and undeveined
(e)        Peeled and cooked
(f)         Cooked and peeled
(g)        Fan tail - round deveined

II         Head on scampi

III        Lobsters

(a)        Rock lobster tail
(b)        deep sea lobster tails
(c)        Sand lobsters/slipper tails

IV        Cuttle Fishes

(a)        Whole cleaned
(b)        Fillets (flat or rolled)

V         Squids

(a)        Stuffed squid tubes
(b)        Squid tubes with tentacles
(c)        Squid rings

VI        Fishes

Red snappers, millets, promfrets, seer fish etc.

VII      Crabs

(a)        Cooked whole mud crab
(b)        Raw whole mud crab
(c)        Dressed crab
(d)       Crab meat

Location of the project

The site for location of the IQF units has to be selected carefully after conducting a proper survey of the existing IQF units, their capacity utilisation, need for further units etc.  It will be useful if the assistance of MPEDA offices is taken for selection of the suitable site.

Technical parameters

A list of technical suggestions for establishment and operation of an IQF unit are indicated in Annexure I.  It is also suggested that an outside agency like MPEDA may also be consulted in the matter.

Borrower's profile

Complete details of the entrepreneurs, partnership firm like registered company or qualification and experience of the promoters, net worth of the borrowers, other activities undertaken by them etc. have to be furnished.

Physical and financial outlay

Details of the physical and financial outlay involved for setting up of an IQF unit of 2500 metric tonnes capacity is furnished in Annexure II.  It can be seen therefrom that the total cost including working capital expenses (60% capacity utilisation during 1st year) works out to Rs.1430.00 lakh.  While submitting the project to the banks for sanction of loan, entrepreneurs are expected to submit detailed plan and estimates for all the civil works to be undertaken as also invoices of various items to be purchased from the suppliers.

Margin money and bank loan

The entrepreneur has to bring in 25% of the project cost out of his own resources and the balance of 75% will be provided by banks as bank loan.  However, NABARD could consider providing margin money assistance in suitable and eligible cases as per the guidelines contained in circular No.DPD.67/92-93 dated 24/02/1993.

Rate of refinance

NABARD refinance is available for setting up of IQF processing unit provided the same is technically feasible and financially viable.  In view of priority attached to exports NABARD is agreeable to provide refinance as per existing norms.

Financial viability

For  working out the income and expenditure from the IQF unit the following assumptions have been made:-

 

1

Number of working days

250

2

Number of shifts per day

3 shifts (each shift of 6 hrs operation with one hour for defrosting and one hour for reaching ambient temp. of 400C

3

Capacity utilisation

1st year - 60%

2nd year - 70%

3rd year - 80%

onwards

4

Product composition at 80% utilisation (2000 tonnes of end product)

1. Prawns (60%)-1200 tonnes

2. Fishes (25%) 500 tonnes

3. Cuttle fish/squids (10%) 200 tonnes

4. Lobsters (5%) 100 tonnes

5

Expected life of plant and machinery

10 years

 

 

It is assumed that there will be 4 operating cycles in a year.

The financial analysis has been shown in Annexure III.  Results of the analysis are as under:-

(i)         NPW at 15% DE - Rs.1770 lakhs
(ii)        BCR at 15% DF - 1.11
(iii)       IRR is more than 50%

Marketing

At present the Indian exports in IQF products comprising mainly shrimps are exported to EEC, USA etc. With proper product diversification it would be possible to explore other world markets.

Interest rate 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% per annum.

Interest rate for refinance from NABARD

As per the policy circulars of NABARD issued from time to time.

Repayment period

As can be seen from Annexure IV the borrower will be able to repay the bank loan in 6 years with a moratorium of one year on principal, interest on the loan will be collected from first year itself.

Working capacity

Banks sanctioning term loan for setting up the unit should also make arrangements for availability of working capital loan to enable the borrower to run the unit smoothly.

Security

Banks may take a decision as per RBI guidelines.

ANNEXURE I

Technical suggestions for establishment and operation of an IQF unit

Principal of IQF production and types of plant

Individual quick freezing generally takes place in two stages.  In the first stage the product is partly frozen to a pre-determined point and fluidized to the semi-weightless stage of the product by partially suspending it in the air in the second stage.  In the process the velocity and pressure of air is adjusted to ensure ultra rapid freezing in IQF form.  Based on the mechanical structures used for the conveyance of the raw materials, IQF machinery can be of two types.

            i)  Conveyor type where the air flow is from top to bottom or vice versa and
            ii)  Spiral type

The refrigerant used can be Ammonia, Liquid Nitrogen, Freon (Refrigerant-22) or brine based on which modification would be made in the machinery.

Criteria for selection of plant site

1. Nearness to landing centre/shrimp farm is of paramount importance for getting fresh raw materials in adequate quantities.
2. Uninterrupted power supply.
3. Easy accessibility for free flow of raw material and finished product.
4. Adequate supply of fresh water.
5. Availability of skilled and unskilled labour

The process

Stage - 1  Receipt of Raw material

The raw materials are subjected to preliminary inspection then iced and stored till processing.

Stage - 2  Cleaning finished products

The raw materails are de-iced, cleaned and made in the form in which the ultimate product ought to be e.g. fillets, headon,headless etc., washed and weighted.

Stage - 3   Processing

The raw material is loaded on to the conveyor and the process is continued till the core temperature is below - 180C.  The product is glazed and packed in vaccum formed packs.

Stage - 4  Storing

The product is stored at -200C till shipment.

Note : Weight loss during thawing should be adequately compensated by adding additional weight at the time of freezing.  The quantum of drip loss is a factor of size and variety of the raw materials to be processed.

Some conditions for ensuring better quality products

1. The temperature inside the freezing tunnel should be maintained constantly below - 400C. The refrigeration machinery should be capable of maintaining the air temperature below - 400C even when the raw material is fed.

2. Defrosting should be done preferably after 5-6 hours of continuous operation of the plant. After defrosting the raw material should be fed only when the air temperature is below - 400C to ensure a core temperature below - 200C.

3. All parts coming in contact with the product should be corrosion-resistant preferably of stainless steel.

4. The freezing time depends on the thickness of the raw material.  The thicker the product, longer will be the freezing time.  In order to freeze various types of products the freezer should be equipped with a variable conveyer speed control ranging from 5-50 minutes (stopless).

5. The IQF unit is to be installed in an air conditioned room so that the temperature of the product fed to the conveyor will not rise.

6. The IQF outlet should be preferably in the anteroom of the cold storage, so that grading and packing can be done in the anteroom and the product can be transferred to cold storage without much delay.

ANNEXURE II

Estimated physical and financial outlay involved for setting up of an

IQF unit of 2500 MT capacity ( Illustrative )

A. Capital cost

 

Sr.No

Items of Investment

Rs.lakh

1

Plant and Machinery IQF unit (10 tons per day)

 

 

i) Spiral belt freezer (double belt)

100

 

ii)Refrigeration system (Kirloskar compressor 150 HP)

7

 

iii) Other accessories

30

2

Cold storage-300 ton capacity (3 compartments of 100 ton capacity each)

40

3

Civil construction - Plantroom, anteroom, processing room, labour room, lab, office, changing rooms,labour quarters etc., as per EU norms.

150

4

Diesel Generator (380 KVA)

20

5

Miscellaneous equipment's like washing, grading table, filleting machine, air curtain, air conditioning, lab equipments, jet washers, packaging unit etc.

10

6

Refrigerated Van (2 refrigerated vans of 5 ton capacity each)

15

7

Electrification

15

8

Fresh water and water conveyance structure like pipe, piping pumps etc.

7

9

Water treatment plant 9800 lit per hour

10

10

Miscellaneous

6

 

Total

410

B. Recurring Expenses

 

Assumptions

 

1

Cleaning & Processing loses for

 

 

a) Shrimp

20% by weight

 

b) Quality fishes

10% by weight

 

c) Lobsters

40% by weight

 

d) Cuttle fish / squid

25% by weight

2

Average drop loss for IQF product

5% max

Computation of recurring expenses

(Rs. in lakh)

 

1

Cost of Raw material

 

 

i)  Shrimp - 1600 ton @ Rs.200/kg

3200.00

 

ii)  Fish - 600 ton @ Rs.50/kg

300.00

 

iii) Cuttle fish/squids -145 ton @ Rs.50/kg

72.50

 

iv)  Lobsters- 185 tonnes @ Rs.125/kg

231.25

2

Power, Refrigerant/Fuel @Rs. 15 lakh per month (avg. for 12 months)

180.00

3

Salary and wages for skilled and unskilled workers

6.00

4

Administrative expenses (establishment & salary)

3.60

5

Packaging & marketing expenses @ Rs.500/ton(approx.)

10.00

6

Repair and maintenance (10% of the cost of plant and machinery)

41.00

7

Miscellaneous expenses (1% of items 1-5)

40.00

 

Total

4084.35

Say Rs. 4085 lakh

C.Income of maximum production

(Rs. in lakh)

 

1

Sale of 1200 ton of shrimp @ Rs.300/kg

3600

2

Sale of 500 ton of fish @Rs.100/kg

500

3

Sale of 200 ton of Cuttlefish/squids @ Rs.150/kg

300

4

Sale of 100 ton of lobsters @ Rs.250/kg

250

 

Total

4650

Total Project Cost = Capital cost + Recurring Cost for the first operating cycle

410+1020= Rs.1430 lakh

Margin money @ 25% = Rs.358 lakh

Total financial assistance = Rs.1073 lakh

ANNEXURE III

STATEMENT SHOWING FINANCIAL ANALYSIS FOR

AN IQF UNIT OF 2500 M.T. CAPACITY (Illustrative)

(Rs. lakhs)

 

 

I Year

II Year

III to X Year

 

Financial Analysis

 

 

 

A

Cost

 

 

 

1

Fixed cost

410

                   

                  

2

Recurring cost

2451

2860

3268

 

Total cost

2861

2860

3268

B

Benefits

2790

3255

3720

C

Net Benefits

-71

396

452

 

Present worth of cost at 15% DF

2488

2162

11088

= 15738

 

Present worth of benefits at 15 % DF

2426

2461

12622

= 17509

 

NPW

1771

 

 

 

Benefit Cost Ratio

1.11:1

 

 

 

IRR

>50%

 

 

ANNEXURE IV

STATEMENT SHOWING REPAYMENT OF PRINCIPAL
AND PAYMENT OF INTEREST (ILLUSTRATIVE)

Total Project Cost = Capital cost + Recurring Cost for the first operating cycle

410+1020= Rs.1430 lakh

Margin money @ 25% = Rs.358 lakh

Total financial assistance (Bank Loan) = Rs.1073 lakh

(Rs.lakhs)

Year

Bank loan O/S at the beginning of the year

Net Income

Repayment

Net surplus

 

 

 

Interest@ 12 %

Principal

Total

 

1

2

3

 

5

6

8

1

1073

2790

129

 

129

2661

2

1073

396

129

215

344

52

3

858

452

103

215

318

134

4

643

452

77

215

292

160

5

428

452

51

215

266

186

6

213

452

26

215

239

214

 
 
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