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AN ECONOMIC STUDY OF PROCESSING OF MANGO FRUITS IN CHITTOOR DISTRICT OF ANDHRA PRADESH
By
K.ARUN KUMAR B.Sc. (Ag.)
PROJECT REPORT SUBMITTED TO THE
ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE DEGREE OF
MASTER IN AGRIBUSINESS MANAGEMENT
DEPARTMENT OF AGRICULTURAL ECONOMICS AND BUSINESS MANAGEMENT
SRI VENKATESWARA AGRICULTURAL COLLEGE ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY
TIRUPATI – 517 502 (A.P)
JULY, 2010
CERTIFICATE
This is to certify that Mr. K. ARUN KUMAR has satisfactorily prosecuted
the course of research and that the project report entitled “AN ECONOMIC
STUDY OF PROCESSING OF MANGO FRUITS IN CHITTOOR DISTRICT
OF ANDHRA PRADESH” submitted is the result of original project work and is
of sufficiently high standard to warrant its presentation to the examination. I also
certify that the project report or part thereof has not been previously submitted by
him for a degree or diploma of any university.
(Dr. S.SUBBA REDDY) Place: Tirupati Chairman of the Advisory Committee Date:
CERTIFICATE
This is to certify that the project entitled “AN ECONOMIC STUDY OF
PROCESSING OF MANGO FRUITS IN CHITTOOR DISTRICT OF
ANDHRA PRADESH” submitted in partial fulfillment of the requirements for the
degree of MASTER IN AGRIBUSINESS MANAGEMENT of S.V Agricultural
College, Acharya N. G. Ranga Agricultural University, Tirupati is the record of the
bona fide project work carried out by Mr. K. ARUN KUMAR under our guidance
and supervision. The Student Advisory Committee has approved the project report.
No part of the project report has been submitted by the student for any other
degree or diploma. All the assistance and help received during the course of
investigation have been duly acknowledged by the author of the project report.
(Dr. SUBBA REDDY) Chairman of the Advisory Committee Project report approved by the Student Advisory Committee Chairman Dr. S. Subba Reddy
Coordinator of MABM Department of Agricultural economics S.V.Agricultural College Tirupati-517502.
Member Dr. T.V.N.Sastry Professor Department of Agricultural economics. S.V.Agricultural College Tirupati-517502.
CONTENTS
Chapter Title Page No.
EXCUTIVE SUMMARY
I INTRODUCTION
II METHODOLOGY
III RESULTS AND DISCUSSION
IV SUMMARY, CONCLUSIONS AND SUGGESTIONS
BIBLIOGRAPHY
LIST OF TABLES
TABLE NO. TITLE PAGE
NO.
1.1 Area, Production and Productivity of mango in World, India, Andhra Pradesh and Chittoor.
3.1 Investment particulars of Sri Varsha food products India Ltd., mango processing unit
3.2 Costs of processing of Totapuri mango tonnes
3.3 Cost and returns per tonne of mango pulp
3.4 Break-even analysis (BEA) for mango processing by Sri varsha food products India Ltd.,
3.5 Financial efficiency measures
ACKNOWLEDGMENTS
Accomplishment of this thesis is the result of benevolence of Almighty, benediction of my teachers, love of my parents and impetus of my friends.
I consider it a great privilege to work under the able and highly exceptional guidance of my Major Advisor Dr.S.Subba Reddy, Coordinator MABM Programme, Department of Agricultural economics, Tirupati. I feel elated to express my deep sense of gratitude for his affectionate guidance, unending benevolence and constant encouragement throughout the period of study. His yeoman service during drafting and editing of this project report was of immense value. I wish to thank his from my heart of hearts.
I accord my sincere thanks to Dr.P.Raghuram, Professor & Head, Department of Agricultural economics. S.V.Agricultural College,Tirupati Sri B.Pratap Reddy,Assistant Professor and Smt I.Bhavani Devi, Assistant professor,Department of Agricultueal Economics, Tirupati for their constant encouragement, guidance and suggestions, with out which the project would not have progressed smoothly .
It’s my previlage to convey my deep sense of gratitude to Dr.T.V.Neelakanta Sastry, Professor, Department of Agricultural economics, S.V.Agricultural College, Tirupati for his keen interest, acquiescence, benign attitude and valuable suggestions.
I extend my heartfelt thanks to, Mr.V.Umapathi director business, Sri Varsha food products India limited Renigunta. I sincerely thank him for orienting me into logical line of thinking and rationalizing during the course of present investigation.
I am greatly beholden of vocabulary and owe a deep sense of honour to my beloved Parents Sri K.Gunteppa and K.Lakshamamma for their love and dedicated efforts in shaping my career since childhood.
My heartiest love and affection are always due to my best friends Naveen, Balaji, Janardhan their joyful company.
I feel in dearth of diction to express my sincere thanks to all my classmates and to my seniors for their cooperation. Place: Tirupati (K.ARUN KUMAR) Date:
DECLARATION
I, K. ARUN KUMAR hereby declare that the project report entitled “AN
ECONOMIC STUDY OF PROCESSING OF MANGO FRUITS IN
CHITTOOR DISTRICT OF ANDHRA PRADESH” submitted to,
S.V.Agriculture College, Tirupati, Acharya N. G. Ranga Agricultural University
for the degree of MASTER IN AGRIBUSINESS MANAGEMENT is the result of
original project work done by me.
Place: Tirupati (K. ARUN KUMAR)
Date:
Name of the Author : K. ARUN KUMAR
I.D.No. : TMABM/08-01
Title of the Project : AN ECONOMIC STUDY OF PROCESSING OF MANGO FRUITS IN CHITTOOR DISTRICT OF ANDHRA PRADESH - A CASE STUDY OF SRI VARSHA FOOD PRODUCTS INDIA LTD.,
Degree : MASTERS IN AGRIBUSINESS MANAGEMENT
Faculty : AGRICULTURE
Department : AGRICULTURAL ECONOMICS AND BUSINESS
MANAGEMENT
Major Advisor : Dr. SUBBA REDDY
University : ACHARYA N.G. RANGA AGRICULTURAL
UNIVERSITY Year of submission : 2010
EXECUTIVE SUMMARY
The project entitled “An economic study of processing of mango fruits in
Chittoor district of Andhra Pradesh - A case study of Sri Varsha food products India
Ltd.,” was taken up with the following objectives.
1) To study and analyze the cost and returns of processing of mango fruits per tonne
product.
2) To evaluate the performance of Sri Varsha foods products through SWOT
Analysis.
3) To identify the problems and suggest suitable remedies for efficient functioning of
factory.
The study pertaining to the evaluation performance of Sri Varsha food products
India Ltd was carried out in S.N. Puram village of Chittoor District of Andhra Pradesh.
Hence all the required data were collected from the records maintained by the factory.
Details regarding the processing of mango fruits per tonne of processed product
were obtained from the records the factory. Relevant processing data such as problems
and marketing aspects were collected randomly from 30 traders and 90 farmers from
eight villages who are involved in such activities. Total costs include fixed costs and
variable costs per tonne of mango processed products. SWOT analysis which measures
strengths, weaknesses, opportunities and threats faced by the factory were collected
from the factory records and analyzed. Problems were identified and finally solutions to
the problems were suggested.
The major findings of the study are
1. Break even analysis at the existing level indicated that processing unit registered
Break Even Output (BEO) 2040.9 tonnes of pulp.
2. The net returns were found to be with Rs.4951.6 per tonne of pulp.
3. Cost of processing per tonne of mango pulp amounted to Rs.49965.5 for this unit.
4. Operating ratio and gross ratio were higher for Sri Varsha mango processing unit
with 0.94 and 0.96.
5. Current ratio and current liability ratio were higher for this processing unit 2.04 and
0.43, whereas working ratio was 2.46. If the ratio is greater than one, it could be
presumed that the factory had sufficient current assets to meet current obligations. A
current ratio of roughly two was considered to be a satisfactory figure.
6. Net capital ratio and equity value ratio were 2.63 and 0.60 respectively for this unit,
whereas debt equity ratio was 0.61.
7. Capital per unit of gross income was 0.44, whereas rate of capital turnover was 124.7
and Input-output ratio was 1:1.07.
8. BEO was lower for the processing unit, whereas margin of safety was higher for this
unit.
9. Sri Varsha food processing was also provided with good infrastructure facilities.
10. The location was well suited to the factory for the availability of water, for
processing and accessibility.
Suggestions made to the company
At present Sri Varsha food products India Ltd., Chittoor District was using
Totapuri mango to make pulp and other beverages for meeting the demand in domestic
and export markets. Hence, in this context the other popular varieties of export viz.,
Alphanso from Maharashtra and Banganapalli from Krishna district were made popular
with all the technical support encouraging state and central government policies on food
related industries.
At present in mango production pests (stone weevil and fruit fly) and diseases
(anthracnose) were increasing and posing lot of problems both in production and
marketing. Hence, IPM technology should be geared up adequately to stop these
problems with adequate staff and services of AEZ.
There is need to reduce post harvest losses by using grading and standardization
techniques and use of plastic crates in transportation and storage.
There is a need to:
Improve the linkages between farmers and processing units, reduce the handling
losses which nearly constitute to 15 percent, improve the availability of research by the
factory, improve the factory with good testing and research facilities, develop the
technical knowledge of local manpower, reduce the losses of recovery of pulp from the
slice, lack of required number of perforated plastic crates to facilitate efficient storage
of raw fruits and minimizes fruit spoilage and adequate investment is required to
construct durable storage structures in place of thatched sheds.
CHAPTER – I
INTRODUCTION
1.1 MANGO: AN OVERVIEW:
India secured prestigious second position in the production of fruits next to
Brazil in the world with average annual production. This was due to India’s ideal
soil conditions and congenial climate. India contributes to more than 12 per cent of
world fruit production. Among the fresh fruits grown in India, mango continued to
dominate the other fruits in fruit basket with 37 per cent share in the total export
earnings of fresh fruits from India1 .
In India, mango is supplied from March to mid August. The North Indian
cultivars are alternate-bearers, whereas South Indian ones are generally regular-
bearers. About 20 varieties are being grown commercially in south India. They are :
Alphonso, Banganapalli, Bombay Green, Chausa, Dashehari, Fazil, Gulab khas,
Himsagar, Kesar, Kisenbhog, Langra, Mankurad, Neelum, Pairi and Totapuri.
Mango is being grown in almost all the States viz., Andhra Pradesh, Uttar Pradesh,
Bihar, Karanataka, Maharashtra, West Bengal and Gujarat. All these States together
contributed for about 82 per cent of the total production in India.
1 The Hindu Survey of Indian Agriculture S.D. Shikhamany and G.S.R. Murti 2009, P:145.
1.1.1 Current economy in the India:
In the world production, India produced nearly 127.5 lakh tonnes of mango
on an average per annum, which was approximately 47.2 per cent of total world
production. Mango occupied 23.09 lakh hectares in India, which constituted nearly
52.4 per cent in the world area under mango. In India, Andhra Pradesh ranked
second in mango area, which was next to Uttar Pradesh, but with regard to
production Andhra Pradesh secured first position (approximately 39 lakh tonnes).
Uttar Pradesh and Bihar followed next occupying second and third position. In terms
of productivity 8 tonnes of mango per hectare were obtained from Andhra Pradesh
on an average as against 7.1 tonnes per hectare of India’s average productivity of
mango (Table 1.1).
Table 1.1: Area, Production and productivity of mango in world, India, Andhra Pradesh and Chittoor district:
Sl. No. Particulars
Area (Lakh hectares)
Production (Lakh tonnes)
Productivity (Tonnes/ hectare)
1. World 40.9 (100.00)
290.00 (100.00)
8.00 (100.00)
2. India 23.09 (56.4)
127.50 (44.01)
5.5 (68.75)
3. Andhra Pradesh 4.97 (21.5)
39.17 (30.7)
8.00 (142.67)
4. Chittoor District 0.59 (12.02)
4.87 (12.5)
8.00 (100.00)
Source: Horticulture, Government of Andhra Pradesh, P.54.2009-2010.
With regard to area, production and productivity in Andhra Pradesh, Krishna
District secured first rank with the area of 62930 hectares and annual production of
516026 tonnes. Chittoor district was the next important District in Andhra Pradesh
and occupied an area of 59380 hectares with the production of 486916 tonnes. The
third rank attributed to Adilabad District with the area of 54011 hectares with annual
production of 442890 tonnes. Other Districts were of minor importance with regard
to area and production of mango.
Mango fruit utilization begins from its raw stage to chutney, pickles and
drinks which are prepared out of it. Ripe fruits are consumed in various forms like
desserts, squashes, syrups, nectar, jams, jellies and mango leather. It is an
outstanding source of vitamin-A and good source of vitamin-C, besides it has many
minerals and other vitamins.
The demand for mango fruits and its pulp in the country and abroad is
increasing day-by-day. This earns sizeable amount of foreign exchange through its
exports. Major importers of Indian mangoes were Bangladesh (33.76%), UAE
(27.21%) and Saudi Arabia (6.83%) and U.K (4.95%). The export earnings of
mango pulp also increased from Rs.57.98 crores in 1993-1994 to Rs.241.99 crores.
Mango pulp was also exported to the U.K, U.S, Canada, Saudi and Middle East.
Nine Agri Export Zones (AEZs) are functioning exclusively for mango
exports in the country since 2003. Out of these, two AEZs are working in each State
viz., Uttar Pradesh, Maharashtra and Andhra Pradesh, one AEZ each in West
Bengal, Gujarat and Tamil Nadu States. These are taking up mango promotion
programmes both in areas of production and export marketing of mango in India and
abroad.
1.1.2 Objectives of the study:
Besides being a rich source of nutrients, cultivation of mangoes brings higher
income to the farmers. It is possible to have value addition through processing,
which in turn, offers vast opportunities for employment and income generation. The
processing of mango fresh fruits into pulp is an important agri-business in Chittoor
district and hence the Agri Export Zone is located in this District for exporting
mango pulp and fresh vegetables. The present study was undertaken with the
following specific objectives:
1. To study and analyze the cost and returns of processing of mango fruits per
tonne of product.
2. To identify the problems and suggest suitable remedies for efficient
functioning of factory.
3. To evaluate the performance of Sri Varsha foods products through SWOT
Analysis.
1.1.3 Scope of the Study:
Indian Fruit Processing industry is very huge with many players. There are some
very big Multi National Companies in the market along with a number of
domestic and small scale companies. The mango fruit is processed and marketed
by a number of companies in the country. This study aims to identify the
problems and suggest suitable remedies for efficient functioning of factory. The
study is also aimed at to evaluate the performance of Sri varsha foods products
through SWOT Analysis.
1.1.4 Limitations of the Project:
The study was conducted over a limited period of time with a limited size of
sample and hence suffered from drawbacks. The conclusions drawn are applicable to
that area and the areas with similar conditions. The necessary data required to
compute costs and returns from processing were obtained from the processors who
were generally suspicious for fear of taxation. However, they were told about the
purpose of the study and obtained accurate information.
1.1.5 Plan of the project:
The Project is presented in four chapters. The first chapter deals with the
introduction, highlighting the importance of mango processing and mango
processing industry along with objectives, scope and limitation of the study. The
second chapter deals with selection of mango processing unit, collection of data,
analytical tools employed and concepts adopted for the study. The third chapter
encompasses a critical analysis of the Results and discussions. The final chapter
presents the summary and conclusions of the study.
Company profile
Sri Varsha food products India ltd established in 2004 brings forth a variety
of fresh fruit pulps and concentrates like guava fruit pulp, totapuri mango pulp, red
papaya pulp, tomato paste etc. fruit pulps concentrates are used extensively in the
food industry for the manfacture of jams, juices etc.company is flourishing and
progressing the rapid growth of company has been made possible because of the
hard work and guidance managing director, Mr K.Viswanatha naidu. Company is
certified with ISO 9001:2008 and applied forISO 22000:2005 certification.
Company successfully extended clientele in China, Germany, gulf countries,
Netherlands Nepal, Nigeria and Russia, The factory have a spacious and well
maintained ware house spred in 40000 sq ft and semi finished godowns
about15000.sqft.
Infrastructure:
Its up to date infrastructure is supported by a strong and well equipped
technical units.
1.covered finished godowns-40000 sq ft
2.semi covered finished godowns-15000sq ft
3.Ripening chambers-250000sq ft
4.Ripening shed – 30000sqft
5.Main processing building -12000 sq ft
6.Administrative building-4000 sq ft
It has modern canning facility,laminarairflow, autoclave,incubator, hot air
oven, refractometer, colony counter, Ph meter, Binocular microscope with ultra
model online & micro biology central lab.
Quality.Assurance:
It provides customers with natural, fresh and aseptic fruit pulps and concentrates. It
has well resourced team of experts who pay special care toward maintaining the
hygiene and purity of fruit products. With in span of 6 years, it has earned a special
place among the top most exporters and manufacturers of fruit pulps, concentrates
and tomato pastes. It has team of technical experts who have improvised new
techniques in order to increase productivity. The organization aims at providing
clients with high grade quality fruit products at reasonable prices. It has successfully
been able to please the clients with quick and safe delivery of fruit items. It was one
of the chief mango concentrate and mango pulp exporters from India.
Range of mango pulp and concentrate like:
Mango
1.Alphanso mango pulp
2.Raspuri mango pulp
3.Totapuri mango pulp
3.Totapuri concentrate
The mango pulp produced by it was available in bottles tetra packs and in
various quantities and could be altered as per the demands of the clients. They were
ensured to be aseptic and rich in all the natural vitamins and minerals
Guava
Guava pulp was made from natural guava fruit to be free from rot or pests. It
is offering a wide range of natural guava pulp like
1. Pink guava pulp
2.White guava pulp
3.White guava concentrate
Guava concentrates and pulp were widely used in manufacturing of jams, juices, etc.
Papaya
It was considered to be one of the foremost manufacturers and exporters of
papaya pulp and concentrate in India. It has offered a variety of papaya fruit pulp
like:
1. Red papaya pulp
2. Red papaya concentrate
3.Yellow papaya pulp
4. Yellow papaya concentrate
The papaya pulp is widely used in the manufacturing of various food items
like jams, juices, pickles, etc. papaya pulp has the flavor, nutrition and essence of
the natural papaya fruit.
Name of the Author : K. ARUN KUMAR
I.D.No. : TMABM/08-01
Title of the Project : AN ECONOMIC STUDY OF PROCESSING OF MANGO FRUITS IN CHITTOOR DISTRICT OF ANDHRA PRADESH - A CASE STUDY OF SRI VARSHA FOOD PRODUCTS INDIA LTD.,
Degree : MASTERS IN AGRIBUSINESS MANAGEMENT
Faculty : AGRICULTURE
Department : AGRICULTURAL ECONOMICS AND BUSINESS
MANAGEMENT
Major Advisor : Dr. SUBBA REDDY
University : ACHARYA N.G. RANGA AGRICULTURAL
UNIVERSITY Year of submission : 2010
EXECUTIVE SUMMARY
The project entitled “An economic study of processing of mango fruits in
Chittoor district of Andhra Pradesh - A case study of Sri Varsha food products India
Ltd.,” was taken up with the following objectives.
1) To study and analyze the cost and returns of processing of mango fruits per tonne
product.
2) To evaluate the performance of Sri Varsha foods products through SWOT
Analysis.
3) To identify the problems and suggest suitable remedies for efficient functioning of
factory.
The study pertaining to the evaluation performance of Sri Varsha food products
India Ltd was carried out in S.N. Puram village of Chittoor District of Andhra Pradesh.
Hence all the required data were collected from the records maintained by the factory.
Details regarding the processing of mango fruits per tonne of processed product
were obtained from the records the factory. Relevant processing data such as problems
and marketing aspects were collected randomly from 30 traders and 90 farmers from
eight villages who are involved in such activities. Total costs include fixed costs and
variable costs per tonne of mango processed products. SWOT analysis which measures
strengths, weaknesses, opportunities and threats faced by the factory were collected
from the factory records and analyzed. Problems were identified and finally solutions to
the problems were suggested.
The major findings of the study are
1. Break even analysis at the existing level indicated that processing unit registered
Break Even Output (BEO) 2040.9 tonnes of pulp.
2. The net returns were found to be with Rs.4951.6 per tonne of pulp.
3. Cost of processing per tonne of mango pulp amounted to Rs.49965.5 for this unit.
4. Operating ratio and gross ratio were higher for Sri Varsha mango processing unit
with 0.94 and 0.96.
5. Current ratio and current liability ratio were higher for this processing unit 2.04 and
0.43, whereas working ratio was 2.46. If the ratio is greater than one, it could be
presumed that the factory had sufficient current assets to meet current obligations. A
current ratio of roughly two was considered to be a satisfactory figure.
6. Net capital ratio and equity value ratio were 2.63 and 0.60 respectively for this unit,
whereas debt equity ratio was 0.61.
7. Capital per unit of gross income was 0.44, whereas rate of capital turnover was 124.7
and Input-output ratio was 1:1.07.
8. BEO was lower for the processing unit, whereas margin of safety was higher for this
unit.
9. Sri Varsha food processing was also provided with good infrastructure facilities.
10. The location was well suited to the factory for the availability of water, for
processing and accessibility.
Suggestions made to the company
At present Sri Varsha food products India Ltd., Chittoor District was using
Totapuri mango to make pulp and other beverages for meeting the demand in domestic
and export markets. Hence, in this context the other popular varieties of export viz.,
Alphanso from Maharashtra and Banganapalli from Krishna district were made popular
with all the technical support encouraging state and central government policies on food
related industries.
At present in mango production pests (stone weevil and fruit fly) and diseases
(anthracnose) were increasing and posing lot of problems both in production and
marketing. Hence, IPM technology should be geared up adequately to stop these
problems with adequate staff and services of AEZ.
There is need to reduce post harvest losses by using grading and standardization
techniques and use of plastic crates in transportation and storage.
There is a need to:
Improve the linkages between farmers and processing units, reduce the handling
losses which nearly constitute to 15 percent, improve the availability of research by the
factory, improve the factory with good testing and research facilities, develop the
technical knowledge of local manpower, reduce the losses of recovery of pulp from the
slice, lack of required number of perforated plastic crates to facilitate efficient storage
of raw fruits and minimizes fruit spoilage and adequate investment is required to
construct durable storage structures in place of thatched sheds.
CHAPTER – II
METHODOLOGY
This chapter presents procedural outlines adopted in, method of data
collection and analytical techniques used in attaining the stated objectives of the
study. The contents of this chapter are presented under the following convenient
headings.
2.1 SELECTION OF MANGO PROCESSING FACTORY
2.2 COLLECTION OF DATA
2.3 METHODS OF COMPUTATION
2.4 TECHNIQUES OF ANALYSIS
2.5 CONCEPTS AND TERMS USED IN THE STUDY
2.1. SELECTION OF MANGO PROCESSING FACTORY:
Sri Varsha Food Products India limited was selected for the study.
2.2 COLLECTION OF DATA:
Secondary data pertaining to the description and agro-economic aspects of
the study area were collected from Srivarsha food products India, Chittoor.
From the processing factory, the details like ownership, pattern of
investment, labour use, processing costs, methods of packing of pulp, techniques
of production, etc., were collected. Every effort was made at the time of survey to
convince the respondents informing them that the present survey was purely for
academic research and not for any other purpose. The data collected pertained to
agricultural year, 2009- 2010.
2.3 METHODS OF COMPUTATION:
An economic analysis of these enterprises necessitates proper estimation
of the cost of inputs, input services and the valuation of output. The procedures
followed in computing the processing and marketing costs of mango are
described below.
2.3.1 Processing:
The data regarding the costs and returns from mango processing were
collected from the factory through a well structured schedule and personal
discussion. The processing costs were categorized into variable costs and fixed
costs and later these items of costs were apportioned per tonne of product/season.
2.3.1.1 Variable costs:
The costs incurred for the purchase of raw fruits, human labour,
chemicals, coal, diesel and lubricants, electricity charges repairs and maintenance
charges, incidental charges viz., stationary, printing, telephone, telegram and
postage and interest on working capital were considered as variable costs. These
were assessed first for entire firm and then apportioned to one tonne of mango
pulp per season.
2.3.1.2 Fixed costs:
These costs include depreciation on building, machinery and equipment,
salaries of permanent employees, rents, bonus to staff, medical expenses to
workers and all prepaid expenses viz., taxes, insurance, license, and interest on
fixed capital. These were assessed first for entire firm and then apportioned to
one tonne of mango pulp.
2.3.1.3 Raw fruits:
Raw fruits for processing were brought from various sources viz., directly
from producers, local wholesalers, wholesalers at regulated market yard and from
distinct wholesalers. Depending on these sources (from producers to distant
wholesalers), the cost of raw fruits varied from Rs.16000 to 17000 per tonne of
mango fruit.
2.3.1.4 Coal, diesel and lubricants:
Market price formed the basis to estimate the cost of coal, diesel and
lubricants. Market price for one tonne of coal was Rs.3600 and for one litre of
diesel it was Rs.39.50
2.3.1.5 Cans (or) tins and barrels (or) drums:
Based on marketing of pulp the prices of empty cans and barrels varied.
For exporting pulp to other countries, the price of each can was Rs.25 and each
barrel price was Rs.1300 and for domestic consumption the price of each can was
Rs.39 and each barrel was Rs.1600, which included 16.32 per cent central excise
duty, 4 per cent central sales tax (CST) and 12.5 per cent Andhra Pradesh
Government Sales Tax (APGST).
2.3.1.6 Repairs and maintenance charges:
Repairs and maintenance charges of machinery, building, effluent
treatment plant and vehicles used in the processing of mango were computed on
the basis of actual amount incurred by the processors.
2.3.1.7 Interest on working capital:
It was estimated at the rate of 13.5 per cent per annum (the rate at which
commercial banks advance short term loans).
2.3.1.8 Depreciation:
Annual amount of depreciation on all assets owned by the processors was
calculated following the straight line method.
Original cost of the asset – Junk value at the end
Annual amount of deprecation = ________________________________________________________________
Useful life of asset
2.3.1.9 Interest on fixed capital:
It was charged at the rate of 13.5 per cent on the value of fixed assets
(excluding land) such as building, machinery, equipment and effluent treatment
plant.
2.4 TOOLS OF ANALYSIS:
For convenience the tools of analysis are divided into 4s sections. These
are:
2.4.1 Break even output (BEO) analysis
2.4.2 Financial efficiency measures
2.4.3. swot analysis
2.4.1 Break-even output (BEO) analysis:
A break-even analysis is the determination of the functional relationship
of total revenue and total costs to output rate and the derivation of functional
relationship of profit to output. When actual costs are segregated into fixed and
variable costs, any variation in quantity of output would cause a change in
variable costs and inturn, on the contribution and profit. The management has,
therefore, to know the effect of such an increase in output on its profits and the
study of cost volume profit relationships enables management to plan for profits.
A break-even analysis chart can be defined as a chart which shows profit
or loss at various levels of activities. The level at which neither profit nor loss is
incurred is called the break-even point. A processing unit is said to be at break-
even point, when its total costs are equal to total revenue i.e. when the
contribution margin is exactly equal to the fixed costs. The appropriate formula
to estimate the break-even output is
Total fixed costs of the unit
Break-even output = __________________________________________________________
of pulp (in tonnes) (selling price per tonne pulp – variable cost per tonne pulp)
2.4.2 Financial efficiency measures:
2.4.2.1 Cost ratios:
These ratios provide information to the manager to decide whether the
existing costs of the business firm are higher or lower. These ratios indicate what
proportion of gross income is spent for meeting different types of expenditure.
These ratios are:
unit processing the form income Gross unit processing the on expenses Operating ratioOperting
unit processing the from income Gross unit processing the on costs Fixed ratio Fixed
unit processing the from income Gross unit processing the on costs Total ratio Gross
2.4.2.2 Solvency ratios:
These ratios measure the degree of financial safety (solvency) and
liquidity of comparable business firms at a point of time. These ratios include.
unit processing of sliabilitie Currentunit processing of assets Current ratio Current
unit processing of sliabilitie teintermedia sliabilitie Current
unit processing of assets teintermedia assets Current ratioWorking
unit processing of sliabilitie Total unit processing of assets Total ratio capital Net
Net worth or equity:
Net worth is the surplus of total assets over the total liabilities
Net worth = Total assets of processing unit – Total liabilities of processing unit
unit processing ofequity sOwner' unit processing of sliabilitie Total ratioequity - Debit
unit processing ofequity sOwner'unit processing of sliabilitie Current atioliabilityr Current
unit processing the from assets of Value unit processing ofequity sOwner' ratio valueEquity
2.4.2.3 Capital ratios:
Capital per unit of gross income:
It is computed by dividing total capital invested with gross income
unit processing the from income Gross unit processing the on invested capital Total
Rate of capital turnover:
It indicates the gross income obtained from the processing unit for every
hundred rupees of investment made in the form of total costs.
100 unit processing the on investment of value Total
unit processing the from income Gross turnover capital of Rate x
Input – Output ratio unit processing from returns Gross
unit processing of costs Gross
Net income per tonne:
To compute this ratio we require information on (1) gross income of the
processing unit (2) total cost on the processing unit and (3) total tonnes processed
in the processing unit.
processed tonnes of number Total unit processig the from income Net tonne per income Net
2.4.3 SWOT ANALYSIS OF MANGO PROCESSING IN SRI VARSHA
FOOD PRODUCTS INDIA LTD IN CHITTOOR DISTRICT:
Factors influencing the strengths, weaknesses, opportunities and threats of
the factory were identified and analysed with the help of SWOT Analysis.
2.5 CONCEPTS AND TERMS USED IN THE STUDY:
2.5.1 Processing:
The processing activity involves a change in the form of the commodity.
Processing converts the raw material and brings the products nearer to human
consumption. It is concerned with the addition of value of the product by
changing its form.
2.5.2 Canning:
It is essentially a batch or a semicontinuous process where in raw food is
filled into containers (typically metal cans) and subjected to heat treatment and
held at that temperature for a specified period sufficient to inactivate all the
microorganisms present in the food. The thermal sterilization of foods by
canning has been widely accepted method for preserving food. In canning mango
pulp was filled in cans with a capacity of 3.1 kg.
2.5.3 Aseptic packing:
The term aseptic can be defined as the complete absence of any living
microorganisms. But in the food industry, it only refers to the condition in which
the food is packaged in an environment, free from viable microorganisms of
public health significance, capable of growing in the food under normal handling
and storage conditions. In aseptic packing pulp was packed in barrels or drums
with a capacity of 215 kg. It overcomes some of the major disadvantages of the
process of canning.
2.5.4 Cost of processing:
Cost of various inputs and input services used for processing of pulp in a
processing unit were split into variable costs and fixed costs.
2.5.5 Variable costs:
Costs associated with using variable resources viz., raw fruits, coal, oil and
fuel, diesel and lubricants, tins, barrels, chemicals, labour charges, incidental
charges, repairs and maintenance charges and interest on working capital in
processing of mango fruits.
2.5.6 Fixed costs:
Costs associated with the owning of fixed assets / capital items. These
include (i) depreciation on buildings, machinery and effluent treatment plant (ii)
prepaid expenses such as insurance and license fees, rents and charges and (iii)
bonus and salaries to permanent employees, medical expenses to workers etc.
2.5.7 Gross returns:
It is quantity of output expressed in monetary terms.
2.5.8 Net returns:
It is the difference between gross returns and total costs.
CHAPTER – III
RESULTS AND DISCUSSION
In this chapter an attempt is made to discuss the results obtained from the
study. The important findings are presented and discussed under the following
heads.
3.1 To study and analyze the cost and returns of processing of mango fruits per
tonne of product.
3.2 To evaluate the performance of Sri Varsha food products through SWOT
analysis.
3.3 To identify the problems and suggest suitable remedies for efficient functioning
of factory.
.
3.1 TO STUDY AND ANALYZE THE COST AND RETURNS OF
PROCESSING OF MANGO FRUITS PER TONNE OF PRODUCT.
3.1.1 Methods and mechanisms of processing of mango pulp in Sri Varsha Food
Products India ltd Chittoor District.
Mango processing units in Chittoor District predominantly processing of
Totapuri (Banglora) mango and the average yield of mango pulp was 50 per cent.
3.1.1.1 Selection of mango fruits for processing
Fresh, ripe but firm and evenly matured fruits were selected for processing
purpose. The selected fruits were free from pest attack and diseases. They had no
blemishes and malformation. In general, over ripened fruits were omitted. Similarly,
under ripe fruits would shrivel and become tougher in processing activity, and hence
unselected.
3.1.1.2 Transportation and unloading of fruits
Processors had taken all the necessary care in transportation, unloading and
keeping them in thatched sheds to minimize the losses in these activities. The
selected raw fruits were brought in trucks / Lorries and stored in thatched sheds and
then covered with paddy straw to make them ripen quickly. As and when fruits were
ripening, they were taken out from lot and used for processing.
3.1.1.3 Sorting and grading
Ripened fruits free from pests, diseases and blemishes were graded manually
before washing the fruits.
3.1.1.4 Cleaning and washing
The graded fruits were washed with water either by immersing or agitating in
water. Whereas in aseptic packing the graded fruits were first washed with 5 to 7 per
cent chlorinated water, followed by fresh water.
3.1.1.5 Cutting
Washed fruits were cut into slices manually removing the mango stone. The
damaged and rotten fruits hither were separated. The fresh slices were sent to pulper
through belt conveyor. From the belt conveyor the fresh slices were fed to the pulper
through screw conveyor. Here we noticed 2 stages, in the first stage; the peel was
removed from slices and in the second stage fibrous material was removed from
pulp. After passing through pulper, the fine pulp was fed into the tank.
3.1.1.6 Sterilization
From the tank fine pulp was passed into the kettles, where the pulp was
heated upto 90°C. Immediately after reaching 90°C, pulp was removed from the
kettles. In case of aseptic packing, filtron machine was used for sterilization upto
74°C. As soon as temperature was recorded at 74°C, the pulp was removed. After
sterilization pulp was tested for brix and acidity. Here, the brix means total soluble
solids (TSS).
3.1.1.7 Filling
Finally, the pulp was filled in the cans with a capacity of 3.1 kg can-1 through
the pipeline. In case of aseptic packing the sterilized pulp was filled in storage tank
which then, passed into the asept and star asept systems and packed in the barrels
with a capacity of 215 kg barrel-1.
3.1.1.8 Packing
After filling, the cans were then packed in strong card board cartons, in
standard packings, each carton contained six cans.
3.1.1.9 Transportation
The product was transported through the containers, in which thousand
cartons were packed. Each container weighed about 18.6 tonnes.
3.1.2 Investment particulars of mango processing units
Table 3.1 provides information on investment particulars of mango
processing units with canning and then prices prevailed for these items were
recorded and presented in the Table 3.1. The average investment of processing units
which processed nearly 17037 tonnes of pulp in a season amounted to
Rs.1381.25lakhs
Table 3.1: Investment particulars of Sri Varsha food products India Ltd., mango processing unit: Sl. No. Particulars Value
(in Rs lakh) Percentage to
the total 1. Land value 500.00 36.2
2. Buildings 200.00 14.48
3. Machinery
a. Fruit washing m/c(SS304) 14.00 1.014
b. Inspection belt 4x60 two fire 30.0 2.17
c. Decanters 22 1.59
d. Canning equipment 75 5.43
e. Destoners-400 Rpm (SS304) 7.0 0.5
f. Sterilizer& Asceptic filler 250.00 18.1
g. Boiler-1 20.0 1.45
h. 2 Stage pulper&finisher (ss304) 5.0 0.36
i. Spiro flow pre heater with hot water (40 c-80c) 17 1.23
j. 3kl holding tanks 3.0 0.22
k. Water cooled chiller 17 1.23
l. Cooling towers 5.0 0.36
m. Air compresser 1.5 0.11
n. Boiler-2 45 3.26
o. Fork lift 6.75 0.49
p. Fruit storage crates 1.5 10.86
q. Weighing bridge 5.0 0.36
r. borewells 5.0 0.36
s. water treatment plant 3.0 0.22
TOTAL 1381.25 100
Of this the investment on machinery amounted to Rs.4.88 crores accounting for
nearly 49 per cent. The investment on building amounted to Rs.2 crore and
constituted 14.48 per cent of total investment. Canning equipment (5.43%),
sterilizer& asceptic filler (18.1%), boiler-2(3.26%), fruit storage crates (10.86%)
these are the major investments of the company. The investment on rest of the
machinery such as belt conveyor, screw conveyor, rotopumps, filling tank, DS-24
and retards collectively constituted less than 14 per cent. Investment on land value
constituted 36.2 per cent.
3.1.3 Cost of processing of Totapuri mango
Table 3.2 provides information on total processing costs of Sri Varsha food
products India Ltd., processing unit. These costs are split into variable costs and
fixed costs. The total variable cost amounted to Rs.43453.84, which constituted
nearly 96.5 per cent of the total costs (Rs.45013.9 lakh). Fixed costs constituted only
3.5 per cent of total costs.
Table 3.2: Costs of processing of Totapuri mango tonnes: Sl. No. Particulars Value in Rs.
lakh
Value per tonne of
pulp (in Rs.)
Percentage to the total
I. Variables costs
Raw fruits 2729.99 32047.78 71.19528
Causal labour charges 84.07 986.91 2.192457
Oil and fuel 20.65 242.41 0.53853
Cost of fuel wood 91.07 1069.09 2.37501
Electricity charges 7.2 84.52 0.187768
Diesel and lubricants 8.36 98.14 0.21802
Cost of packing 554.67 6511.36 14.46521
Chemicals 14.74 173.04 0.384404
Stationary and printing 0.59 6.93 0.015387
Telephone, telegram and postage 2.17 25.47 0.056591
Machinery and buildings repairs 1.56 18.31 0.040683
Fruit ripening sheds maintenance 1.36 15.97 0.035467
Vehicle maintenance 2.55 29.93 0.066501
Electrical maintenance 0.43 5.05 0.011214
Other expenses 175.975 2065.8 4.589243
Interest on working capital 6.23 73.13 0.162472
Total variable costs 3701.615 43453.84 96.53424
II. Fixed Costs
Salaries to permanent staff 42.6 500.09 1.110963
Depreciation on buildings 8.0 93.91 0.208632
Depreciation on machinery 48.45 568.76 1.263525
Opportunity cost of land 12.58 147.68 0.328073
Taxes and license charges 0.425 4.99 0.011084
Insurance fees 0.35 4.11 0.009128
Medical expenses to workers 0.22 2.58 0.005737
Interest on fixed capital 20.27 237.95 0.52862
Total fixed costs 132.895 1560.08 3.465762
III. Total costs 3834.51 45013.91 100.00
Major components of variable costs were raw fruits Rs. 2729.9lakhs, cost of
packing Rs.554.67lakhs. Other items of variable costs such as stationary and
printing, telephone, telegram and postage, machinery and buildings repairs,
maintenance charges of fruit ripening sheds, vehicles and electricity and other
expenses were of minor importance and constituted only 10.6 per cent of total costs.
For Sri varsha mango processing total fixed costs constituted only 3.4 per
cent. For example these were: salaries to permanent staff (1.1%), interest on fixed
capital (0.50%), and then depreciation on machinery (1.3%), building (0.2%).
Among the fixed costs the major items were salaries to permanent staff,
interest on fixed capital and depreciation on machinery, buildings which collectively
amounted to Rs.132.89
3.1.4 Costs and returns in Totapuri mango pulp processing
Table 3.3 shows information on costs and returns per one tonne of mango
pulp of processing units. In this table variable costs, fixed costs, total costs, gross
returns and net returns were worked out per one tonne of mango pulp of processing
units. Total costs were higher and almost equal in these units (Rs.45013.91). The net
returns were (Rs.4951.6) similarly; the same trend was maintained in case of gross
returns (Rs.49965.4).
Table 3.3: Cost and returns per tonne of mango pulp:
(Value in Rs.)
Sl. No. Particulars Sri Varsha food products India ltd
1. Costs
i. Variable costs 43453.84
ii. Fixed costs 1560.08
iii. Total costs 45013.91
2 Returns
i. Gross returns 49965.45
ii. Net returns 4951.6
Table 3.3 shows information on costs and returns per one tonne of mango
pulp of processing units. In these table variable costs, fixed costs, total costs, gross
returns and net returns were worked out per one tonne of mango pulp of processing
units. Total costs were higher and almost equal in these units (Rs.45013.91). The net
returns were (Rs.4951.6) similarly; the same trend was maintained in case of gross
returns (Rs.49965.4).
3.1.5 Break even analysis
Table 3.4 furnishes information on Break-even analysis of processing units
under existing situation. The Break-even output (BEO) was worked out using the
procedure and formula discussed in methodology (Chapter-II). It is revealed from
the table the BEO (mango pulp in tonnes) was at (2040.9tonnes) processing unit,
Margin of safety was worked out and showed in 9th row of the table by taking the
difference between the rows of 8 and 5. It was 6477.6 tonnes pulp. It indicates the
efficiency of the processing units. A high margin of safety indicates that these
processing units would make more profits relatively.
The.Break.even.Analysis.of.mango.processing.includes.fixed.costs(Rs.132.89
5lakh),.variable.costs.(Rs.3701.61lakh), total costs (Rs.3834.51 lakh).The sale price
of mango pulp per tonne was (Rs.49965.4), total output of mango pulp was
(8518.5tons), variable costs per tonne (Rs.43453.84).
3.1.6 Financial efficiency measures applied to processing units
Table 3.5 displays information on 4 categories of ratio measures pertaining to
4 types of processing units. As per the methodology discussed in Chapter II, these
ratios were worked out and presented in the Table 3.5.
Cost ratios
Cost ratios include operating ratio, fixed ratio and gross ratio. Operating ratio
is 0.94and gross ratio is 0.96andfixed ratio is0.04.
Table 3.4: Break-even analysis (BEA) for mango processing by Sri varsha food products India Ltd.,:
Sl. No. Particulars Sri Varsha food products
India ltd.
1. Fixed costs (in Rs.lakh) 132.89
2. Variables costs (in Rs. lakh) 3701.61
3. Total costs (in Rs. lakh) 3834.51
4. SalePrice per tonne of pulp (in Rs.) 49925.4
5. Output (in tonnes) 8518.5
6. Total revenue (in Rs. lakh) 4256.31
7. Variable costs per tonne (in Rs.) 43453.8
8. Break even output (Mango pulp in tonnes) 2040.9
9. Margin of safety (Mango pulp in tonnes) 6477.6
Table3.5: Financial efficiency measures:
Sl.No Particulars Processing unit
Unit-1
I. Cost ratios
i. Operating ratio 0.94
ii. Fixed ratio 0.04
iii. Gross ratio 0.96
II. Liquidity ratios
i. Current ratio 2.04
ii. Working ratio 2.46
iii. Current liability ratio 0.43
III. Solvency ratios
i. Net capital ratio 2.63
ii. Debt – equity ratio 0.61
iii. Equity value ratio 0.60
IV. Capital ratios
i. Capital per unit of gross income 0.44
ii. Rate of capital turnover (in percentage) 124.7
iii. Input- Output ratio 1:1.07
Unit-I: Sri Varsha food products India ltd processing unit.
Liquidity ratios
Liquidity means the capacity of the processing unit to clear the short term
loans. Liquidity ratios consist of current ratio, working ratio and current liability
ratio. Current ratio is 2.04and current liability ratio is 0.43. Whereas working ratio is
2.46. These liquidity ratios show the liquidity position of processing units. Higher
the ratios greater would be the liquidity position of processing unit.
Solvency ratios
Solvency means the capacity of the processing unit to solve the long-term
loans or debts. Higher the ratio value, greater would be the solvency of the
processing unit. Solvency ratios include net capital ratio, debt equity ratio and equity
value ratio. Net capital ratio is 2.63and equity value ratio is 0.60 whereas debt equity
ratio is0.61. Here smaller the ratio value, greater the solvency position of the firm.
Capital ratios
Three types of capital ratios were considered here viz., capital per unit of
gross income, rate of capital turnover and input – output ratio. The higher ratio value
would indicate the better financial position and economic viability of processing
unit. Capital per unit of gross income is 0.44. Whereas rate of capital turnover in
terms of percentage was 124.7.Input – output ratio was 1.1.07.
3.2 SWOT ANALYSIS OF MANGO PROCESSING IN SRI VARSHA FOOD
PRODUCTS INDIA LTD IN CHITTOOR DISTRICT:
The following points were elicited from the study with regards to SWOT analysis:
Strengths
1. There is abundant availability of fruits and vegetables
2. The location is well suited to the factory for the availability of water for
processing.
3. Proximity to major Indian cities like Chennai, Tirupati and Bangalore
4. Good rail and road link helped the factory from the losses of transportation.
5. There is also the the availability of other agri products.
6. Sri Varsha food processing is also provided with good infrastructure facilities.
7. The factory maintains good marketing channels which reduces the problems
during procurement.
8. The management of the factory has experience in export markets.
9. The procurement officials of the factory maintain good relationships with the
farmers of different villages.
10. The management of the factory provides loan assistance to the farmers; as a
result the farmers will be loyal to the factory in supplying mangoes regularly.
Weaknesses:
1. Inadequate product quality and standards.
2. The factory is not provided with good testing and research facilities.
3. Poor effort on value addition and better value life.
4. Poor availability of research by the factory.
5. Inadequate technical knowledge of local manpower.
6. Lack of proper coordination by the management.
7. Poor linkages with developmental institutions.
8. Factory is provided with limited geographical area.
9. Weak linkages between farmers and processing units.
10. High handling losses which nearly constitutes to 15 percent.
11. High post harvest losses which nearly constitutes to 20 percent.
Opportunities:
1. Availability of abundant Mango,Banana,and Guava in neighboring states of
Tamilnadu and Karnataka.
2. Growing export and domestic demand for processed foods.
3. Encouraging state and central Government policies on food related industries.
Threats:
1. Growing competition from related clusters like Pune and Bangalore.
2. Increasing incidence of bacterial and viral deceases in mango, papaya and banana
and difficulty in control.
3. Global economic recession affecting export market.
4. Stringent food safety norms of developed countries like USA, Japan and other
European countries.
3.1.10 Problems encountered by processing units and remedial measures:
3.1.10.1 Problems encountered by processing units:
During the survey several problems were disclosed by the proprietors of the
processing units. These were:
1. In general the raw fruits were brought through trucks, later they were
heaped manually in the sheds resulting on an average 10 per cent fruit
spoilage.
2. The raw fruits were stored and ripened in thatched sheds which regularly
required replacement every year and these sheds were generally prone to
fire incidents and also insect attacks.
3. Washed water was not recycled resulting in excess consumption of water
and hypochlorite.
4. Conveying of fruit slices to pulper were predominantly done manually
instead of machines. This was causing infestation and hygienic problems.
5. Recovery of pulp from the slices was not upto the mark, some produce
losses were also encountered.
6. Heating of pulp in open jacketed kettles resulted in a heavy surface heat
losses, steam condensate losses and losses in aroma. It also affected the
product hygiene adversely.
7. Cans sterilization was manual and not up to the mark.
8. They depended on merchant exporters to export mango pulp on pre-contract
basis. This situation reduced their export earnings.
9. The proprietors of processing units did not have adequate experience,
knowledge and skill to top the full potential of export of mango and other
fruits and vegetables.
10. Another important point was the prices of raw fruits and processed products
were highly fluctuating in domestic as well as international markets,
thereby causing higher risk particularly to small scale processing units.
Requisite remedial measures for strengthening the processing units:
1. Usage of perforated plastic crates would facilitate efficient storage of raw
fruits and minimizes fruit spoilage.
2. Proper storage structures such as intermediate storage sheds should be
strengthened to avoid storage losses of fresh fruits.
3. Adequate investment is required to construct durable storage structures in
place of thatched sheds.
4. Appropriate measures should be taken up for recycling of washed water and
divert the same for production of crops or other purposes.
5. In slicing and conveying operations suitable machines such as elevator to
transfer mango slices to pulper should be used in place of human labour.
6. At present export business with regard to mango pulp was being rested on
merchant exporters. In this regard AEZ should help the processing units to
provide direct link with the import countries and increasing export earnings
to processing units.
7. For overcoming the problem of under capacity utilization of the processing
units they should take up processing of other fruits and vegetables available
in other seasons.
8. There is need to improve the export intelligence, knowledge and skill of the
proprietors of processing units with regard to mango and other vegetables
with the help of AEZ.
9. There is a need to take up price stabilization measures in export business by
AEZ in Chittoor District.
CHAPTER – VI
SUMMARY AND CONCLUSIONS
India is the second largest producer of fruits in the world next to Brazil.
Among the fresh fruits grown in India, mango continued to dominate the other fruits
in fruit basket with 37 per cent share in the total export earnings of fresh fruits from
India.
The demand for mango fresh fruits and its pulp in the country and abroad is
increasing day-by-day. Mango fruit utilization begins from its raw stage when
chutney, pickles and drinks are prepared from it. It is an outstanding source of
vitamin-A and good source of vitamin-C, besides it has many minerals and other
vitamins.
The present study entitled “An economic study of processing of mango fruits
in Chittoor district of Andhra Pradesh.-A case study of Sri Varsha food products
Ltd.,” was intended to examine the costs and returns in processing of mango pulp
and SWOT analysis aspects of mango processing.
The objectives of the study:
1. To study and analyze the cost and returns of processing of mango fruits per
tonne of product.
2. To evaluate the performance of Sri Varsha food products through SWOT
analysis.
3. To identify the problems and suggest suitable remedies for efficient
functioning of factory.
The study pertains to the evaluation performance of Sri Varsha food products
India Ltd., was carried out in S.N. Puram village of Chittoor District of Andhra
Pradesh. Hence all the required data were collected from the records maintained by
the factory. Details regarding the processing of mango fruits per tonne of processed
product were obtained from the records the factory. Total costs include fixed costs
and variable costs per tonne of mango processed products
Fixed costs constitute:
1. Annual depreciation charges on buildings, machinery and implements.
2. Repairs and maintenance charges of factory per annum.
3. Interest as charged by nationalized banks on fixed capital as buildings, machinery
and factory site also.
4. Salaries of permanent staff and taxes paid by factory during the year.
Variable costs include:
Costs incurred on labor (human labor), raw material costs incurred in processing of
mango, costs of packing, advertising costs, marketing costs etc. All the necessary
data will be obtained from the records of the factory.
SWOT analysis which measures strengths, weaknesses, opportunities and
threats faced by the factory was collected fro the factory records and analyzed.
Problems were identified and finally solutions to the problems were suggested.
Financial ratio measures such as solvency ratios, liquidity ratios and leverage ratio
were employed to assess business performance of the factory.
Major findings of the study:
The total investment of mango processing units was Rs.27.34crores on
canning units and aseptic packing units. The major items of investment in mango
processing units were investment on machinery and buildings on which the amount
spent was Rs.5.2S8 crores and Rs.2 crores.
Total cost of mango processing amounted to Rs.45013.91 lakh for processing
units. (Of which variable cost contributed to 96.5percent respectively
The net returns were found to be Rs.4951.6 lakhs. These are higher than the
small and medium scale processing units.
Cost of processing per tonne of mango pulp amounted to Rs.49965.5 for this
unit.
Break even analysis at the existing level indicated that processing unit
registered BEO at 2040.9tonnes of pulp.
Operating ratio and gross ratio were higher for medium scale mango
processing unit with 0.94 and 0.96.
Current ratio and current liability ratio were higher for this processing unit
2.04 and 0.43, whereas working ratio was 2.46. If the ratio is greater than one, it
could be presumed that the factory had sufficient current assets to meet current
obligations. A current ratio of roughly one was considered to be a satisfactory
figure.
Net capital ratio and equity value ratio were (2.63 and 0.60) for this unit,
whereas debt equity ratio was 0.61.
Capital per unit of gross income was 0.44, whereas rate of capital turnover
was 124.7 and Input-output ratio was 1:1.07.
Conclusions:
The following conclusions have been emerged from the study:
1. In Chittoor District Totapuri was a prominent variety among other varieties
of mango and this was mainly used for making pulp to meet the demand in
domestic as well as in export markets.
2. Transportation and storage losses constituted nearly 10 per cent in this
district.
3. Investment was higher in aseptic packing processing units compared to
canning processing units.
4. Cost of processing per tonne of mango pulp was higher in Sri Varsha food
product processing unit.
5. The net returns per tonne of mango pulp was higher in these processing unit
6. BEO was lower for this processing unit. Whereas margin of safety was higher
for this unit.
7. Sri Varsha food processing was also provided with good infrastructure
facilities.
8. The location is well suited to the factory for the availability of water for
processing and accessibility.
Suggestions:
At present Sri Varsha food products India ltd Chittoor District was only
Totapuri mango is being processed to make pulp and other beverages for meeting
the demand in domestic and export markets. Hence, in this context the other popular
varieties of export viz., Alphanso from Maharashtra and Banganapalli from Krishna
district should be made popular with all the technical support to encourage state and
central government policies on food related industries.
At present only one fruit juice making factory i.e. M/s Parle International
Limited was functioning at Chittoor to produce Ready-to-serve (RTS) beverages
from mango, Guava and Papaya under the brand name of ‘Maaza’. Hence, the other
down stream units of mango pulp should be established in the District to prepare
mango jelly and other fruit bars such as ‘Am paper’, ‘Thandra’ or ‘Mango Leather’.
……. In processing units only mango is being processed and the processing was not
extended to other fruits viz., guava and papaya. Therefore, there is urgent need to
establish and promote multiproduct fruit manufacturing units in the District.
There is need to increase the area under mango export varieties with drip
irrigation facilities by providing subsidies and technical guidance. At present in
mango production pests (stone weevil and fruit fly) and diseases (anthracnose) are
increasing and posing lot of problems both in production and marketing. Hence,
IPM technology should be geared up adequately to stop these problems with
adequate staff and services of AEZ.
There is need to reduce post harvest losses by using grading and
standardization techniques and use of plastic crates in transportation and storage.
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Srivastava R.P 2007 Fruit and vegetable preservation, principles and practices pp 307-309,348-360.
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