Executive Summary

The city Jodhpur is known on the world trade map for its handicrafts as well as for
rich heritage. The city is main hub of western Rajasthan. In terms of agriculture, in
this region mainly spices are being cultivated at large scale. Two spices, chilly and
cumin are largely being cultivated in this region.

In the world trade where export from India is increasing continuously then definitely
we can think about the export of spices from Jodhpur. This report is prepared to find
out the feasibility for setting up of a chilly powder processing unit in Jodhpur.

In report main focus is on chilly which is being produced in the Jodhpur region. For
the same purpose we have studied the spiced overview at national level and also full
details of all chilly to find out the possibility to set up a chilly powder processing.

For the same we have studied the local chilly powder processing industries, so as to
find out the cost factor and the profitability of the unit. The report includes our
findings of the manufacturer survey and customer survey with statistical analysis. In
the end we have suggested some measures to improve the condition of the chilly
powder processing units along with the financial detail of a small chilly processing
plant.

1
 Objective

To find out the feasibility for setting up a chilly powder processing unit in Jodhpur.

Defining the objective:-

Economy of Rajasthan depends upon agriculture and Jodhpur has a substantial

contribution to it in terms o spices. The project given to us talks about the agro- based
industries, their feasibility and profitability. Agro- based industries are classified in
various categories like milk processing, vegetable processing, spice processing etc.
Jodhpur is famous for its chilly production so while considering the project given to
us and the Jodhpur scenario we have decide to find out the feasibility for setting up a
chilly processing unit in Jodhpur.

2
 Research Methodology

 Research Design

Selective study has been carried out with survey conducted in the forms of –

 Literature Survey

 Books
 Data Collection Technique

 Collection of Primary Data

Primary data has been collected using the interview method.

 Interaction with farmers and traders.

 Interaction with Officers of CAZRI.

 Sample Size

 Manufacturers : 8 units

 Customers : 100 (data universe 15,00,000)

 Collection of Secondary Data

Secondary Data has been collected in the form of

 Catalogues and Reports of chilly

 Websites

3
 Product Profile: Spice & Culinary Herbs
The consumption of individual spices depends on the popularity of particular cuisine.
It is influenced also by the structure of food industries. Where food industries have
developed for the production of ethnic and oriental foods, in response to the trend
towards the higher consumption of prepared foods and ready made meals for
convenience, the usage of oriental spices will tend to be higher. Otherwise, in the
developed countries, there is always likely to be bakery and confectionery industries
and these are likely to focus on the spices used in western cuisine.

In developed countries, another important factor determining the level of consumption

of spices in general and individual spices in particular, is the cuisine produced by the
catering industry in the shape of canteens, fast food outlets, other take away ( to go)
facilities and restaurants. Where ethnic catering comes to dominate, as has occurred in
the UK and parts of US, the consumption of spices tends to be higher and the
consumption of spices used in that cuisine especially so.

At present, the thousand sector is the main consumer of spices in developing

countries. But in developed countries, the industrial sector is taking precedence. The
principal users of spices and herbs in all developed markets can be divided in the
three different user segments, 55% - 60% of the total usage is consumed by the
industrial sector, the retail sector consumes 35% - 40% and the catering sector 10 % -
15%. In most markets the ratio is moving towards higher relative usage by the
industrial sector, reflecting the growing popularity of ready-made and prepared foods,
driven by higher female participation rates in the workforce.

4
 World Market Trend
Annual world imports of spices over the past five years averaged 500,000 tons, valued
at US$2.3 billion. Imports have recorded strong growth averaging 8.5% a year over
the past five year. Therefore, this growth rate is a good indicator of the growth of
consumption of spices.

The main cause of the growth of consumption of spices has been the increasing trend
towards eating ethic or oriental foods in the developed countries, the growth in
consumption of ethnic and oriental food has been spurred by the larger number of
people traveling abroad and replicating their favorite new dishes at home, the
influence of their growing ethnic communities as well as a general trend to eat a
greater variety of foods. The usage of spices and herbs by consumers is increasing
also because they are appreciated as completely natural, rather than artificial,
additives.

The developing countries are responsible for the vast majority of spices consumed
world- wide 95 % of the world’s spices are grown in the developing countries and the
majorities are consumed in- country. As disposable incomes rise in these countries,
their populations are able to afford greater quantities and varieties of spices.

Import markets are concentrated. The two largest markets, EU and USA, purchased
over half the world’s exports between 1995 and 1998 (32.1% and 22.5%
respectively). The following five importing countries took another quarter of the
world’s export, Singapore (8.7%). Japan (8.5%), Canada (2.8%), Malaysia (2.5%),
and Mexico (2.2%).

By far the most important spices for the most developed country markets in quantity
and value terms are pepper and capsicum/ paprika. Imports of the former are in excess
of US$1 billion in value and latter close to US$ 400 million. Pepper is used in all
types of cuisine whilst paprika in gaining ground because of the trend towards ethic
foods. Other important spices that also find wide application are ginger, cinnamon,
nutmeg, caraway, thyme, bay, etc. Spices that have grown in popularity as a result of
the trend towards ethnic and oriental foods are coriander, cumin, turmeric and cloves.

5
Chilly in India
Chilly is the universal spice of India. It is cultivated in all the States and Union
Territories of the country. The important States growing chilly are Andhra Pradesh,
Orissa Maharashtra, West Bengal, Karnataka, Rajasthan and Tamil Nadu. Andhra
Pradesh alone commands 46 % of the chilly production in India. As per the latest
statistics, India produced 8,00,100 tonnes of dry chilly from an area of 9,30,000
hectare.

Chilly has two important commercial qualities. If some varieties are famous for red
colour because of the pigment Capsanthin, others are known for biting pungency
attributed by capsaicin. India is the only country rich in many varieties with different
quality factors.

While consumption of chili is the highest in India, maximum export is also from this
country. India made the record of 51,900 tonnes of chili in 1996-97. Oleoresin of chili
with low, medium or high pungency is also exported in large qualities. Chili powder
is another important item of export. Indian chili and its product are brought by a
number of countries. Important among them are Sri Lanka, Bangladesh, South Korea
and USA for dry chili and USA, Germany, Japan, UK and France for oleoresin. India
can supply chili in whole, crushed, powder or oleoresin forms in consistent colour and
required pungency.

Red Chilly Profile

General Characteristics

 Chilies belong to the genus capsicum, under the solanaceae family and are
believed to have originated from South Africa.

 Chilies are valued principally for their high pungency and colour.

 Chili forms an indispensable culinary spice in several parts of the world. It is

used in beverages and in the preparation of medicines.

6
 Supply Characteristics

 India is the world largest producer, consumer and exporter of chilies in the
world. India also has the largest area under chilies in the world. Chilies are
the most common spice cultivated in India. It is estimated that India
produced 1060345 tons of dry chili from an area of 8,84,183 hectares in
2003-2004.

 Almost all the states of India produce the crop. The important chili
growing states of India are Andhra Pradesh (46%), Karnataka(15%),
Maharashtra, Madhya Pradesh, Orissa, West Bengal, Rajasthan and Tamil
Nadu.

 Chilies can be grown during the entire year at one or the other part of the
country. However, the major arrival season extends from February to
April. The crop planting starts from August and extends till October.
While, the harvesting begins from December with 5% of the arrivals
usually reported in this month. The peak arrivals are reported in February
to March.

 There are several varieties of chili cultivated in India. The most popular
among these are Sannam, LC 334, Byadgi, Wonder Hot Jwala etc.

 The major chilly growing districts of Andhra Pradesh are Guntur,

Warangal, Khammam, Krishna and Prakasham.

Demand Characteristics

 India is the largest consumer of chili in the world. Around 90 % of

India’s production is consumed within the economy.

 It is estimated that around 25 – 30 % of the chilly crop is used for

powder preparation, with the branded chilly powder manufactures
accounting for around 5 % of the total volume.

 India exports around 80000 – 1 lakh tons of chilies a year.

7
  India exports chilies in the form of dried chilies, chilly powder, picked
chilies and chilly oleoresins.

 The export of chilies in 2002-2003 was worth Rs.315 crores (US $

65.6 million). The total quantity exported was 81000 tons.

 Indian chili is mainly exported to USA, Sri Lanka, Bangladesh, the

Middle East and the Far East.

Trade Characteristics

 Well – established spot markets at Guntur, Warangal, Khammam

in Andhra Pradesh, Raichur, Bellary in Karnataka are the major
price reference points, as these are based at the production centres.

 The trade channel involves several members viz., a village level

trader, commission agent, wholesaler, retailer, agents for exporters
and exporters. The commodity changes hands several times,
exposing all these members to price risk.

 Guntur is Asia’s largest market for chilies. Normally, about 80 lakh

to 1 crore bags of chilies, weighing approximately 35 to 50 kgs is
traded during the season at Guntur market alone. The marketing
season begins the first week of February, peaks during the month
of April and closes by the middle of May.

 The market players estimate that trade worth nearly Rs 500 crores
takes places in Guntur during season. During the peak arrival
period around 0.8- 1 lakh bags of 35-50 kg os traded daily.

 Around 35-40% of the crop that arrives at Guntur, is estimated to

be stored in the cold storages present at Guntur and surrounding
areas.

Market Influencing Factors

 The commodity displays high volatility, with the prices heavily

dependent on season, production in different producing tracts

8
 spread across the country, demand from exporters and the stock
available at the cold storages.

 The prices of the major chilly varieties sold in the country are
correlated with each other. As a result, the players in other
varieties can also hedge their risks through this single variety.

Production and Supply

In India chilies are grown in almost all States of the country. The important States
growing chilies in terms of production are Andhra Pradesh (49%), Karnataka (15%),
Orissa (8%), Maharashtra(6%), West Bengal (5%), Rajasthan (4%) and Tamil
Nadu(3%). The total production in the country is around1018000 tons (dry) from
915200 hectare in the country (1999-200). The average productivity in the country is
around 1112 kg/ha Andhra Pradesh has the maximum productivity of1948 kg/ha
followed by Punjab (1607 Kg/ha). Productivity is the lowest in Himachal Pradesh
(270kg/ha).

International Marketing

India has immense potentially to grow and export different types of chilies required
by various markets. The estimated current world import of chilly is 1 lakh tones,
22.22% of total world import of spices. In eighties, around 1% of the total production
only exported. This is mainly because of high domestic consumption. In recent years
around 2.75% to 7.50% of total production exported against the proposed target for
chilly is 15 million tones. During the year 1999-2000, 64776 tonnes of chilly worth
Rs.250.66 crores were exported. Though there was growth in exports in terms of
value by 8% , the quantity exported declined by 4.8% from the all the time record
export 68019 during the crop year 1998-99. Oleoresin of chilly with low, medium or
high pungency is exported in large quantities. Chilly powder is another important item
of export. Other chilly products include chilly seed, chilly fresh, capsicum genus and
its products are bought by a number of countries among them are:

Dry chilly – Sri Lanka, Bangladesh, South Korea, Chilly Oleoresin – USA, Germany,
Japan, UK and France.

9
Other exporters

The other main exporters are South Africa ( South Africa, Malawi and Zimbabwe)
China, Pakistan and Mexico is other major producing exporting countries. These are
mostly low or medium pungency varieties like Indian S4 chilies, Tiesin Chinese
chilies or Pakistan Dandicut chilies. Malawi, Zimbabwe and Uganda export limited
quantities of the highly pungency “East African Birdseye type, China and export
some high pungency types (Fukien). Europe, USA and Far East markets like Sri
Lanka, Malaysia, Korea and Japan are the major export market for chilies. India faces
competition mainly from China and Pakistan who offer chilies at low prices in
international markets.

Imports

Imports of chilies can only be estimated as import statistics combine them with
paprika and pimento. Imports as whole chilies have fallen in the world markets as
exports of chilly powder and oleoresin have grown. There are a number of factories in
India, Pakistan and China set up in collaboration with multinational spice companies
which are now able to produce chilly powder to meet EC and ASTA hygiene
standards. Among the European Union countries, UK is by far the most important
importer of chilies, reflecting its colonial heritage and large ethnic community, while
the Netherlands the second highest importer.

Prices

Prices of both whole chilies and chilies powder vary greatly depending on cleanliness,
pungency, colour, and appearance of the product. Generally 0.7% capsaicin is the
minimum level for the extraction market. Product with more than 1.0% fetches a
premium. Prices for high pungency chilies (i.e. East African Bird eyes) are typically
in the range of US$ 2000 to US$ 3000/tonne. Low to medium pungency Indian
chilies (0.3 to 0.5% capsaicin) fetch between US$ 1,200 to US$ 1400 per tonne.

Demand and Opportunities

The world demand is expected to go up to 1, 39,000 by 2012, consequently there

expected to be great scope for export of chilies. Demand growing for value added
products using chilies such as chilly paste, curry powders and other sauces for the
convenience food industry. Some of these are produced at origin but stringent hygiene

10
and quality control level must be maintained. In the extraction industry, there is
always demand for high capsaicin content (over 1%) chilies, as this offers extractors a
direct saving on units costs of extraction.

The best opportunities for new suppliers in production of selected varieties of high
capsaicin chilies for the extraction market and in supplying niche retail market for
selected high color high pungency whole chilies.

Agriculture in Rajasthan – An Overview

Rajasthan is basically an agrarian economy. Most of its population lives in small
villages and dhanies. It has a wide range of agro-climate region from very low rainfall
in western part to high rainfall in south and southeastern parts of the state. Major part
of state is however, is covered by arid and semi-arid climatic conditions which have
characteristic low, erratic and uneven distribution of rainfall associated with lack of
other water-resources for irrigated farming. Growing of only one rain fed crop in
Kharif season that too associated with high risk has led to dependence of village
community on livestock. Harsher the climatic conditions, higher were the shift
towards Animal Husbandry. Due to low capital investment capacity, lesser
availability, lesser availability of agriculture credit and lack of adequate infrastructure
facilities like roads, power, etc. farming system was more subsistence oriented than
the commercial farming

Food grains

There has been considerable increase in food grains production in the State. Rajasthan
today is ranked as the 6th largest food grains producer in the country. The production
of food grains has increased to 149.83 lac MT during 2007-2008 139.33 lac in 2004-
2006. The State is first in production Guar, Bajara, Moth, Rapeseed & Mustard,
Coriander and Cumin: second in Barley, and is at third position in the production of
Soya bean in the country.

 Productivity has increased from 972 kg/ha(2002-03) to 1499(2006-08)

 The production has increased from 1073000 MT to 1627000 MT between

2002 and 2007.

11
  The per capita gross availability of food grains (cereals & pulses) is 225.89
kg/head and the net availability is 195.36 kg/head, which are more than
enough to feed a population of 5.6 crores of Rajasthan State.

Pulses Productin

The production of pulses has increased from 7.61 lac tones from first plan to 25.6 by
the end of 11th period. Today Rajasthan stands first in the production of Moth and
second in Kharif Pulses at the National Level. The per capita gross availability of
pulses is 29.74 kg/head and the net availability is 26.05 kg/head.

Oilseed Production

The major increase in the seed production has been from Soya bean and Mustard
crops. Rajasthan stands first in Mustard Production and third in Soya bean. The per
capita gross availability of oilseeds is 55.97 kg/head and the net availability is 49.98
kg/head.

Guar Production

India is the largest producer as well as exporter of Guar in the world, and 80% of such
production is in Rajasthan.

Cotton Production

The Cotton Production in the State has increased considerably to reach a peak of
10.86 lac bales during the IX plan. The significant achievement has been the increase
in productivity of Cotton from meager 116 kg/ha. During first plan to 537 kg/ha by XI
plan period.

Horticulture Development

Rajasthan, with its diverse agro-culture conditions, favors growing of a large number
of Horticulture crops like fruits, vegetables, root & tuber crops, spices, flowers and
medicinal and aromatic plants. The strength of Rajasthan in respect of Horticultural
crops lies in its being as first in the country in respect of production of seed spices
Coriander (50-55%), Cumin(56-58%) and Fenugreek (50-80%), Mehndi production
and second position in respect of total spices production, after Andhra Pradesh as well
as second in Isabgol production, after Gujarat. It holds third place in Citrus Fruits,

12
mandarian(Oranges) production, fourth in sweet Oranges ( Mosabmi) and the
production of the best quality of Kinnow.

Greater Stress on Agro-Processing

Ensuring greater support and stability in the production of agricultural and

horticultural crops, expanding agricultural marketing network including value
addition in the farm sector the State has stimulated forwarded linkages in agro-
processing. Based on the competitive advantage of various commodities in different
agro-climatic zones, three Agri Export Zones have been established at Jodhpur, Kota
and Sriganganagar as under:-

Jodhpur: Guar, Moth based food products, Mehndi and Seed Spices including
Mathania Chilles.

Kota: Coriander and Medicinal Plants

Sriganganagar: Citrus fruits.

13
Agro- Based Industries
These are the industries which are agriculture output as their input (raw material) to
produce finished products for eg. Chilly powder processing unit, Milk processing etc.

The Agro sector is relatively a new sector and development of this sector is
comparatively a recent phenomenon. This sector form a substantial part of industries
in state as about 10,000 unit are working in small scale and tin sector and 74 have
come up in medium and large scale sector.

The agro and food processing sector offer scope for development of several industries
such as solvent extractions, oleo-resins, kinnow / orange juice, malt extracts,
floriculture and a host of other items. Besides these items like mushrooms, tomato
processing, other processing industries based on mango, ber , pomegranate and other
vegetable like onion, potato, garlic and chilly. Industries based on herbal and
medicinal plants, sheep, goat buffalo meat processing, poultry and poultry products
and non edible oil processing industries have bright export prospects. The state
government on its parts, is alive to the needs of this sector wit regards to training,
technology up gradation, improvement in infrastructural facility and a progressing
Government policy with these measures, along with support from central government
and the coordinated efforts of various institutions working in the field of agro and
food products. It is expected that this industries will come to occupy its due place in
the agro industrial development of Rajasthan.

Commodity Wise Arrivals in All KUMS / APMC’s of Rajasthan ( Quantity in

Quintals)

COMMODITY
No. 2003-04 2004-05 2005-06 2006-07 2007-08
NAME
CEREALS
1 WHEAT 122470329197889 8731529 3383487 14749064
2 BARLEY 2341775 1693466 1783053 1787509 2901865
3 JOWAR 848950 561030 504443 581874 551852
4 BAJRA 5006363 3218127 2294189 4250173 4998164
5 MAIZE 3935175 2533764 1513190 2045003 3582642
6 RICE 1458598 1478735 1903229 1886900 2594217

14
 TOTAL
  2583789318683011167296332053494629377804
CEARALS

PULSES
1 GRAM 1330516 2009760 1429546 856290 2063039
2 URAD 745841 203523 135521 97163 3444348
3 MOONG 1252433 664091 434166 656733 1478942
4 MASOOR 44503 43202 56191 44987 32288
5 MOTH 1036400 1084457 1056377 534730 816079
6 ARHAR 21628 49668 47526 45256 33623
7 CHAULA 313532 173275 147425 186130 227061
8 PEA 11773 13453 18348 27591 7107
OTHERS
9 22664 31383 28875 21888 21143
PULSES
TOTAL
4779290 4272812 3353975 2470768 5023630
PULSES

OIL SEEDS
1 MUSTARD 1321056015960832251563332348744825540140
2 TIL 388864 258106 316765 455474 638642
3 SOYABEAN 4308477 3899686 6382828 6366922 8802614
4 TARAMIRA 231872 226216 312727 124226 138133
5 ALSI 7104 5894 6374 6743 3325
6 ARANDI 177142 338587 367982 281676 228881
7 GROUND NUT 1731109 2379590 2181600 2055360 2117333
8 SUN FLOWER 628 0 36723 0 0
9 RAIDA 0 0 0 0 0
OTHER OIL
10 56 0 2308 3339 987
SEEDS
TOTAL OIL
2005581223068911327636403278118837470055
SEEDS

SPICES
1 DHANIA 1276384 1895101 2015899 2052688 1587265
2 JEERA 104926 105676 82014 131131 64989
3 METHI 334407 339835 218796 114918 215020
4 AJWAINE 28121 51301 43101 55107 41471
5 SAUNF 22162 49218 37069 28385 43081
6 RAI 227 327 102 143 945
7 CHILLY 452255 434480 861321 324101 404216
TOTAL
2218482 2875938 3258302 2706473 2356987
SPICES

OTHER COMM.
1 NARMA 1641990 2720772 2477988 2549573 2680309
2 KAPAS 1155424 1232158 940411 919178 1200280
3 WOOL 179798 195579 170495 202964 174646

15
 4 GUR 2497250 2089561 1948134 1906989 2129505
5 SUGAR 8139433 8091652 8293485 9977165 9548762
6 KHAND 344000 214621 234502 105545 186793
7 ISABGOLE 71923 44774 79303 24198 89545
8 DESHI GHEE 312013 343385 346106 478498 531763
9 POSTA 9214 9500 8567 13316 6369
10 FRUIT & VEG. 1436273114886281148126691623535416540374
11 MEHANDI 269892 282253 408390 406316 377915
LAHSUN
12 216928 161151 210425 122706 120142
(GARLIC)
13 WOOD 600050 585429 542702 518595 494259
14 GWAR 3298224 2548433 2936989 3052517 5530675
OTHER
15 5324 4483 31257 167433 255512
COMM.
TOTAL
OTHERS 3310419433410032334414233668034739866849
COMM.

STATE TOTAL 85995671823107048954697395173722114095325

Chilly

Unlike most other tropical spices, chilies are easy to cultivate and hence are cultivated
in almost all the parts of world, especially in regions with tropic climate. Among the
main producer of chilies has an important standing.

Chilies as compared to other spices were easy to cultivate and hot and humid climate
in tropical regions, glowing hot desert of Northern India and extreme cold and dry
seasons of the Himalayas in Tibet were perfect for its growth.

In India the states of Andhra Pradesh, Orissa, Maharashtra, West Bengal, Karnataka,
Rajasthan and Tamil Nadu are the major chili producing areas and no country in the
world has no much area and production of chili as India.

Chilies have two important commercial qualities as some varieties are famous for red
color because of the pigment Capsasthin while other are known for biting pungency
attributed by capsaicin.

16
While consumption of chili is the highest in India, maximum export is also from this
country and India made the record export of 60.900 tonnes of dry chili in 1999-2000.

Indian Chili and its products are brought by a number of countries. Important among
them are Sri Lanka, Bangladesh, South Korea and USA for dry chili and USA,
Germany, Japan, UK and France for oleoresin.

17
Chilly in Rajasthan
Chilies are grown in most of the stat in India. Rajasthan is one of the major producer
and it occupied the 6th and 7th

Common Name Lal Mirch

Main growing District in Jodhpur , Ajmer , Bhilwara , Pali , Sikar , Bharatpur ,

Rajasthan Swaimadhopur

Area under cultivation in 2003- 2004- 2005- 2006- 2007-

Hectors 2004 2005 2006 2007 2008

38003 30987 32694 20412 25278

Production (M.T) 44548 332023 49029 15003 29680

Season Sowing February-March and June –July

Time

Harvest Round the year, Main Crop – Nov – Jan

ing
Time

Domestic Marketing Centres Jaipur, Jodhpur , Ajmer , Tonk , Bharatpur, Udaipur,

Bikaner, Jaitaran, Dhopur, Alwar, SawiMadhopur

Export USA, E.U, Middle East, South East Asia

Uses Commonly used in Kitchen

Rajasthan produced around 33023 M.T. of chilies in 30987 hects.

Chilies are exported in bulk, in powder form, and as oleoresin color and pungency are
important characters and there are wide variations in demand by various countries.
The food habits of Arab are similar to that of India and they require pungent chilies.
In contrast European countries are more interested in color and less pungency. In the
food industries of these countries it is used in oleoresin. Now there is a demand of
powder of green chilies in European and there is a need to exploit this demand.

18
Data Analysis and Interpretation

Customer Survey

Sample size n = 100

Q1: How do you get chilly powder?

a) Process it at home b) Purchase it from the market

Responses for option a) = 16 Responses for option b) = 84

p is the proportion of customer for option b) = 84/100 = .84

q is the proportion of customer for option b) = 16/100 = .16

H0 : pH0 = .75

H1: p > pH0 = .75

pH0 is the assumed proportion for hypothesis testing

The null hypothesis is that the proportion of people who purchase it form market is
equal to .75

The alternative hypothesis is that the proportion of people who purchase it from
market is more than .75

qH0 is ( 1- pH0)

19
Standard deviation (ơ) = PH0 qH0 / n

= .75 * .25 / 100

= 0.433

Z = p - PH0 .84 - .75

_______ _______ = 2.07

σ .0433

Table value at significance level (α).0.5 is 1.65 but our z value is 2.07 which is greater
than the table value hence we will reject the null hypothesis and conclude that the
majority of the people prefer to purchase the chilly powder from the market.

20
Q2. If you process it at home from where do you get raw chilies ?

a) Mandore krishi mandi b) Siwanchi gate c) Any other area……………

a) = 2 b) = 8 c) = 6

Raw chilly procurement

2
6
Mandore krishi mandi
Siwanchi gate
Any other area
8

Q.3 If you purchase it from the market, do you purchase?

a) Branded b) Locally processed

Responses:-

a) 24 b) 60

Here the people who process chilly powder at home will not be considered.

Here sample size (n) is 84

p is the proportion of customer for option a) = 24/84 = .285

q is the proportion of customer for option b) = 64/84 = .714

H0 : pH0 = .40

H1: p > pH0 = .40

pH0 is the assumed proportion for hypothesis testing

21
The null hypothesis is that the proportion of people who purchase branded chilly
powder is equal to .40

The alternative hypothesis is that the proportion of people who purchase branded
chilly powder is less than .40

qH0 is ( 1- pH0)

Standard deviation (ơ) = PH0 qH0 / n

= .40 * .60 / 100

= .0534

Z = p - PH0 .285 - .75

_______ _______ = - 2.15

σ .0534

Table value at significance level (α).0.5 is -1.65 but our z value is -2.15 which is less
than the table value hence we will reject the null hypothesis and conclude that the
proportion of people who prefer to purchase branded chilly powder is equal to .40 i.e
majority of people prefer to purchase the locally processed chilly powder from the
market.

22
Q.4 If you go for branded chilly powder, out of these which brand do you buy?

a) MDH b) PCM c) Goldi d) Everest e) Badshah f) Ramdeo

g) any other………...

Responses:-

a) 8 b) 1 c) 0 d) 9 e) 0 f) 6

g) 0

Sample Size = 24

9
9 8
8
7 6
6
5
4 Series1
3
2 1
1 0 0 0
0
MDH PCM Goldi EverestBadshahRamdeo Any
other

These results shows that people are inclined to purchase MDH and Everest red chilly
powder. Ramdeo is also in preferred by many people in Jodhpur who go branded
chilly powder.

23
Q 5 . If you purchase locally processed powder from where do you purchase?

a) Direct from the manufacturer b) Retail shop

Responses:-

a) 41 b) 19

Here people who go for branded chilly powder will not be considered hence sample
size(n) will be 60

p is the proportion of customer for option b) = 41/60 = .68

q is the proportion of customer for option b) = 19/60 = .31

H0 : pH0 = .57

H1: p > pH0 = .57

pH0 is the assumed proportion for hypothesis testing

The null hypothesis is that the proportion of people who purchase chilly powder from
manufacturer is equal to .57

The alternative hypothesis is that the proportion of people who purchase chilly
powder directly from manufacturer market is more than .57

qH0 is ( 1- pH0)

24
Standard deviation (ơ) = PH0 qH0 / n

= .57 * .43 / 60

= 0.639

Z = p - PH0 .68 - .57

_______ _______ = 1.721

σ .0639

Table value at significance level (α).0.5 is 1.65 but our z value is 1.72 which is higher
than the table value hence we will reject the null hypothesis and conclude that the
proportion of people who refer to purchase chilly powder directly from the
manufacturer is equal to .57 i.e. majority of the people prefer to purchase the locally
processed chilly powder directly from the manufactures.

25
Q6. What is approximate cost per kilogram of chilly powder incurred by you?

Interpretation:-

From the sample of 100 households we have gathered a mean (μ) price of Rs 60/ per
kilogram of chilly powder

μ = ∑ / n = 6000/100 = 60.00

∑ X represents the sum of all prices mentioned by the housewives n is the sample size
is

s = ∑(X- μ)

= 363205 – 357484.41 / 99

57.78

= 7.60
Hence we can say that average cost of per kilogram of chilly powder incurred by a
household in jodhpur is between range of Rs. 62 to 78

26
Manufacturer Survey

Sample Size (n) = 8

Average price of chilly
From the sample we gathered a mean (μ) 42.37 per kilogram of chilly powder

μ = ∑ / n = 339/8 = 42.37

∑ X represents the sum of all prices mentioned by the manufactures n is the sample
size i.e. 8

Standard deviation of the sample is

s = ∑(X- μ) / n - 1

= 14397 – 14365.125 / 7

4.553

= 2.133
Hence we can say that the average cost of per kilogram of raw chilly incurred by a
manufacturer in Jodhpur the range of Rs. 40.24 to 44.50.

27
Average cost of processing per kilogram of chilly into powder

From the sample we gathered a mean (μ) price of Rs 9 per kilogram

μ = ∑ / n = 72/8 = 9

∑ X represents the sum of all prices mentioned by the manufactures n is the sample
size i.e. 8

Standard deviation of the sample is

s = ∑(X- μ) / n - 1

= 654 – 648 / 7

0.857

= 0.924

Hence we can say that the average cost incurred by the manufacturer to process one
kilogram of chilly into powder is between range of Rs 8.075 to 9.925.

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 Processing Chart
Raw chilly

Drying (if required)

Breaking cap

Plouvisier

Grinding

Polishing

Packaging (optional)

 If moisture content is high drying of chilies is required otherwise the

manufacturer purchases already dried chilies.

 Manufacturing cost depends upon the moisture content if it is high the cost
increases.

 Polishing is done by edible oil like mustard oil or soybean oil has permitted
4% use of oil in 100 kg

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 Findings
 Every unit procures raw material from Mandore Krishi Mandi.

 Mean price for purchasing one kilogram of raw chilly is Rs 42.

 They all are members of Jodhpur Mirch Masala Association.

 Every unit was established by self financing i.e. no one as take any loan to set
up the unit.

 They offered 8 to 10 margins to retailers and wholesalers.

 Every unit has substantial counter selling i.e. directly from the unit but they
also supply to retailers and wholesalers.

 They have plouvisier with a capacity ranging from 10 H.P. ( horse power) to
20 H.P. motor. The efficiency of a 10 H.P is around 125 kgs of chilly powder
in one hour

 The daily operating cost varies according to the production of various spices.

 Raw chilly prices may fluctuate due to seasonal variations and climatic
conditions, they are also affected by prices of Guntur mandi (Andhra Pradesh).

 From our sample we found that 84 households prefer to purchase chilly

powder from market rest 16 process the same at home.

 Out of those who purchase it from market 24 goes for the branded chilly
powder and rest 60 purchase the locally process chilly powder.

 Those who purchase locally processed chilly powder 41 prefer to purchase

directly from manufacture.

 The mean price a household spend for buying one kilogram of chilly powder
is Rs 60.

 In customer survey housewives who opted for the chilly processing at home
gave the reason that processing at home gives much more pure and hygienic
chilly powder and the proportions of housewives who opted for it was quite
acceptable the reason to associated with this fact tha Janies and large families
prefer processing chilly at home.

 People generally prefer to purchase chilly powder directly from manufactures

the general reason associated was to avoid the middle man so to prevent
adulterations.

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Adulteration

o An inferior quality of raw chilly is available in the market know as

“patta” it is generally dead or last years stock which is available at very
low prices. Manufactures purchase this variety and while processing at
the time of polishing they do intensive polishing to provide high luster
and then they sell it in the market with same price

o At times brick powder is also added in the chilly powder,

manufacturers even add the cap of the dry chilies in the grinder which
they pick before processing, so as to increase output.

o Government has only permitted the use of 2 % edible oil in the

polishing process but the manufacturers generally exceeds the limits.

31
 Recommendations
 Adulteration should be checked:- Strict measures should be implied
as quality inspections by “KUMS”(Krishi Upaj Mandi Samiti)

 Edible oil percentage in polishing should be reduced. Government

has permitted to use only 2 % oil for polishing but the
manufactures are using 4 % this should be checked.

 Direct procurement of raw material from the fields. We have found

out that it cost around Rs. 12 per quintal as transportation cost if
manufacturer buy raw material directly from Mathania this will be
beneficial for those who have large productions.

 Improved method of drying should be adopted. There is a solar

dryer available at CAZRI ( Central Arid Zone & Research
Institute.) Manufactures can use solar drying technique rather than
the traditional sun drying on the floor this will prevent mixing of
raw material.

 Trader should be made aware of the export opportunities by the

Government.

32
 Financial Detail for a New Unit

Small setup :- chilly processing unit

Cost of Capital Investment

Initial Investment Rs

Machinery 100000

Shade 7000

Total 107000

Operating Expense Rs / month

Wages 3500

Material cost 67800

Variable Cost 14400

Lease Rent for land 2500

Total operating expenses 88200

Output Kg’s 1600

Operating Cost / Kg 55.12

Selling Cost/ kg 63.00

PBDIT/ kg 7.88

Deprication p.a 10700

Deprecation charges/ kg 0.54

PBT / kg 7.34

Tax 3.2

NOPAT/ kg 4.14

Cash Profit /kg 4.68

Cash profit / year 90000

(rounded
up)

33
34
 Conclusion
After going through the extensive survey both secondary and primary we can
conclude that there is a possibility for setting up a chilly powder processing unit in
Jodhpur. Since the production of chilly is good due to arid climate of the city and
people of jodhpur also prefer to purchase locally processed chilly powder there are
a good scope for setting up the unit.

To set up the unit the initial investment is low and the returns are high as seen in
the financial plan. People prefer to purchase directly from the manufacturer.
Hence we can say that setting up of a chilly powder processing unit in Jodhpur is
feasible.

35
 Bibliography

Books Used

 Pruthi J.S.( Dr), “ Major Crops of India” ( Fourth Edition 2005)

 Pruthi J.S. ( Dr), “ Minor Spices and Condiments” ( Second Edition Year
2002)

 Small Scale Industries, Deepak Mehta ( Nineth Edition Year 2005)

Websites

 www.indianbusiness.nic.in/indian-states/rajasthan/advantages.htm

 www.indianspices.com

 www.agricultural-industry-india.com

 www.investrajasthan.com

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