INDIAN INSTITUTE OF MANAGEMENT,UDAIPUR

BUSINESS PLAN REPORT ON

Dehydrated Onion Powder

SUBMITTED BY:
HIMANSHU SACHDEVA
AMIT KUMAR SINGH
PRANJAL GAUR
BIREN SON TIMUNG
MAHIMA KHANDELWAL

PGP-1 2014-2016(A8)

Contents:
1. Introduction
2. Market Analysis and Research
3. Product and Product Characteristics
4. Operational Plan
5. Financial Plan(Break Even Analysis)
6. Future Scope and Expansion Plans
7. Summary

Business Plan: Dehydrated Onion Powder

Sector: Food and Agricultural Sector

Introduction
Onion is one of the most basic and widely used ingredients in Indian kitchens and hence any
changes in its price have a large impact on the household budgets of a large section of the
society. The target consumer for onions is not only the high end class but also the street
dwellers. Hence the quantity and the price of onions need to be in check to ensure proper
fulfilment of the demands of the consumers. Also if the crop is sold below the cost that has
been incurred in its production than this causes loss to the producers. Hence we need to find
ways to regulate the prices of onions as well as the quantity in markets such that it better
serves the requirement of the consumers.
The volatility in the prices of such commodities has been one of the major causes of inflation
in the past few months. Since there are not many market players in this sector the prices as
well as availability of onions in market are decided by a small group of people and hence
there is monopoly. Also in some cases there are some transportation and storage issues
because of which the crop gets perished. This in turn leads to increase in prices because of the
decrease in the quantity available.
The crops like onion, garlic being high in water content are delicate commodities to store
since they get ruined if kept in excess moisture. Hence we can prevent a major supply of
onions from being wasted if we have sufficient methods to ensure safe storage for the same.
The crop instead of being transported in trucks wherein the crop at bottom gets ruined
because of the weight of the crops placed above. Hence we can adopt better storing
techniques where the onions can be stored in crates and then transported in trucks. The
proposed project envisions an alternative to store such crops wherein we need to dehydrate
the crops and store them away from moisture. Dehydration is the removal of moisture under
controlled temperature and humidity conditions without impairing the nutrient content of the
product. The process ensures that the product prevents microbial growth. Thus dehydration
offers a standard quality hygienic product in a concentrated form. The dried products offer
the following advantages:

The process of drying helps in the preservation of perishable commodities against

spoilage.
Drying reduces the volume and bulk of the material and thus saves packaging cost.
Transportation cost can also be reduced by a significantly large amount because of
condensed size of the products after dehydration.
Most vegetables are seasonal and dehydration makes them available throughout the
year at reasonable cost.

Maharashtra is the leading onion producing state in India followed by Madhya Pradesh,
Karnataka, Andhra Pradesh and Bihar. The following bar graph shows the top 10 onion
producing states in India and their production in thousand tonnes.

TOP 10 States in Onion Production(Exhibit 1)

Market Potential
To think of implementing this idea we need to work on the market structure that is prevailing
in the current situation. Also the following factors needs to be considered.

Various Market players in this segment need to be identified.

Nature of Market at various stages of the supply chain.
The regulatory framework that governs the market.
The number of market participants and the role of each participant.
The number of transaction points.
The number of State level mandis where the producers sell their products.

We will also need to analyse and assess the competition in the market based on the following
ways:

Taking quantitative analysis on price output and cost relationship in the selected
markets.
Comparative analysis of competition in local mandis.
Comparative analysis of the efficiency in the local mandis.
The cause of huge difference in prices in wholesale markets and the retail markets.
Cost incurred in transporting the products from producers to consumers.

Significant Observations

The Onion market is dominated by a small group of traders who control the prices as
well as the quantity to be made available in the market.
Lack of Education to farmers to sell their products at adequate prices in proper
markets.
Existence of established players that act as barrier to the entry of new entrants in
market.

MARKET SUMMARY
China dominates the world in onion production with an annual contribution of around 32%
to the world production. Indias contribution was around 10% to the world production and is
the second largest producer in the world. The other major producers are USA, Turkey,
Pakistan, Russia, Indonesia, Vietnam and Myanmar.
Indias onion production in the year 2013-2014 was estimated at 19.229 million MT, way
higher as compared to 16.654 million MT in 2012-2013 and 17.511 million MT
in 2011-2012.The following chart briefs the contribution of Indian states in onion Production.
India mainly exports onions to South East Asian countries, Middle East-Gulf countries and
CIS Countries. The major importers of Indian produced onion are Malaysia,UAE, Sri Lanka,
Bangladesh, Singapore and Saudi Arabia.

The following table briefly summarizes onion production for the last 4 available years.
Indian Production of Onions- Last 4 years(Exhibit 2)
Sr. No.

Year

Quantity (MT)

1.

2010 2011

15.117

2.

2011 2012

17.511

3.

2012 2013

16.654

4.

2013 2014

19.30

Source: DIRECTORATE of Economics & Statistics, New Delhi & Department of Commerce, Government of India

Author, Mott MacDonald India , Gujarat Agro Industries Corporation Ltd, Project profile on Onion
cold storage

MARKET POTENTIAL
Food habits of Indians are such that most of the households prepare vegetables every day.
Non-availability of onion during off-season creates major problem in the market and causes
price fluctuations, which directly affects the consumer. Hence, if they are processed and
stored during peak season and made available during this period, then they command
premium. With growing incomes, changing lifestyles and hectic daily schedule, market for
dehydrated onion is growing especially in urban areas. Proper placement of products in the
departmental stores, super markets, shopping malls etc. backed-up by publicity is the key to
success. It is also possible to have tie-up with exclusive restaurants, star hotels, renowned
caterers etc. for regular supplies. Dehydrated product can be used in dry soup mixes, canned
soups and sauces, frozen entrees, processed meats, baby foods, snack foods and seasoning
blends. Good packaging material will help to store the product up to 9 months safely.

Fee for Training and Licensing of Dried Onion Flakes and Onion Powder Technology is
Rs 11000/- (Eleven Thousand Only), so budget wont be an issue to obtain a licence.

Onion powder is made by dehydrating onions and grinding them down to a fine powder. It is
a common seasoning and a component of spice mix. Onion powder replaces the taste of
onions when used in recipes. The powder can be combined with other herbs and spices to
create rubs, spice mixes, drinks and dressings. Applications include pasta, pizza, and grilled
chicken. It is a common component of seasoned salt. Non-availability of onion during offseason creates major problem in the market and causes price fluctuations, which directly
affects the consumer. Hence, their processing and availability during this period commands
premium. With growing incomes, changing lifestyles and hectic daily schedule, market for
dehydrated onion is growing especially in urban areas. The dehydrated onion processors in
India are expanding their capacities significantly to meet the fast growing global demand.
Many units are increasing their production capacity to fulfill the increasing demand of coldweather countries like Germany, France, the US, the UK and South Africa. The entry of
multinational companies into snack food business has also pushed the demand for dehydrated
onions.

The onions are perishable commodity and can not be stored for a long time after harvest in a
ordinary conditions. Dehydration is simply, effective and economical for preserving the
onions during seasons of abundance and using them during off seasons. Onion powder is
used chiefly as a constituent in various food products i.e. this is sold to manufacturing
concerns as a industrial raw material, hotels, restaurants, caterers and domestic consumption.
Onion powder has also good export market. Therefore, has a very good scope for new
entrants.

Author, Dr. Dattatreya M. Kadam, Sr. Scientist & I/C ITMU, Central Institute of PostHarvest Engineering and Technology (CIPHET)

COMPETITOR ANALYSIS
GG Foods
Business Type: Manufacturer / Exporters / Wholesale Suppliers
Year of Estd. : 2006
Company Turnover: Rs. 0.5 to 2.5 Crore Approx.
Ownership: Individual (Sole proprietorship)
Business Markets: Worldwide
Website: http://www.ggfoods.net

GG Foods is a leading manufacturer and exporter of dehydrated garlic, onion, potato, and
other vegetables from the last 08 years. The company is exporting its products in Europe,
Japan, Australia, Canada, South Africa, Brazil and their quality and services are widely being
accepted. They are serving the domestic market also.
Their main products are:
1. Dehydrated garlic powder/flakes/granules
2. Potato powder /chips / cubes
3. Onion powder/flakes
4. Cabbage flakes
5. Carrot flakes
6. Peas
7. Mint leaves
8. Kasuri methi leaves/powder
9. Palak leaves/powder

Shree Ram Food Industries

An established manufacturer and exporter of dehydrated Onions & Garlic from Gujarat
(India). They also hold HACCP, 22000:2005 & ISO 9001:2000 Certificate which represents
the quality manufacturer and is Indias largest manufacturer & exporter of dehydrated
Onions, Garlic and other vegetables.

Business Type: Manufacturer / Exporters / Wholesale Suppliers

Year of Estd. : 1984
Company Turnover: Rs. 5 to 25 Crore Approx.
No. of Employee: 100 - 150
Ownership: Partnership
Website: http://www.shreeramfood.com

Krushi Food Industries

Manufacturer / Exporters / Wholesale Suppliers Of dehydrated onion, dried onion,
dehydrated garlic, dried garlic, dehydrated vegetables, garlic, garlic powder, garlic flakes,
onion powder, dehydrated onion flakes, dehydrated kibbled onion, dehydrated onion minced,
dehydrated garlic granules, dehydrated minced onion, dehydrated garlic powder, peanuts,
roasted peanuts, salted peanuts.

Business Type: Manufacturer / Exporters / Wholesale Suppliers

Year of Estd. : 2003
Company Turnover: Below Rs. 0.5 Crore Approx.
No. of Employee: 20 - 50
Website: http://www.krushifoods.in

PRODUCTS
Onion powder
Onion powder is ground, dehydrated onion.
It is used to improve or enhance the flavour of food. It is mostly applied in food item like
pasta, pizza, and grilled chicken. Onion salt is simply salt and onion powder. Onion powder
is also used in spice mix and also a common component of seasoned salt.

Onion rings
Onion rings generally consist of a cross-sectional ring of onion dipped in batter or bread
crumbs and then deep fried, a variant is made with onion paste. Whole onion rings make for
better presentation through a variety of sizes, while those made from a paste offer quantity
through consistent size. Onion rings are sometimes dipped into ketchup or spicy sauces.

Dry Onion
There are two categories of dry onions: storage onions and sweet onions. Storage onions are
low in water and high in sulphur, so they store well and are available year-round. Sweet
onions are usually available just from April to August. Storage onions are more pungent and
flavourful than sweet onions, and they're best if cooked before eating. Sweet onions are
usually served raw or lightly cooked.

White onion
White onion is a type of dry onion that has a pure white skin and a sweet, mild white flesh.
This onion is used in Mexican foods or complementing the flavours of other ingredients. The
onion can be sauted to a dark brown colour and served to provide a sweet and sour flavour
to other foods.

Garlic powder
Garlic powder is ground, dehydrated garlic.
It is a very common seasoning. Applications include pasta, pizza, and grilled chicken. Garlic
salt is simply salt plus garlic powder. Garlic powder is a common component of spice mix. It
is also a common component of seasoned salt.

OPERATIONAL PLAN
Objective
We are starting up a venture to produce dehydrated onion and garlic powder initially for the
domestic market. Initially we will be setting up a small production unit Lasalgaon near
Nashik in Maharashtra, India.

Production Setup
This setup will be done on a rented land of 3000 sq. feet area. This facility completion will
take around 12 weeks of time. In the meanwhile we will start our process for hiring some
locals and get them trained any of the government Onion processing facility near Nashik or
Lasalgaon. Building material required will be directly taken from local agencies and
construction workers from local contractors. Machines and other tools will be procured
second hand from variety of vendors. We are already engaged in conversation.

Raw Material
We are in process of conversation with small local farmers onion to directly sell their
agriculture product to us at the same market price benefitting them by picking up their
harvest directly from the fields. This will provide us a quality raw material.

Management
This will be a three layered structure with the production, management, security staff will be
at the level one . Production, finance, sales and marketing, operations teams will be at level
two. Board Members will form the top level which will have leads from production, finance,
sales, marketing and operations team.

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Management Layer Structure(Exhibit 3)

Quality Standards
The Quality control of food has a significant role in assuming a high quality, safe and
nutritious food supply for the public, for their good health and for the economic benefits
derived from trade of safe and high quality food. We will ensure high quality standards for
the processed product. Quality control is applicable throughout the entire food system. The
three basic characteristics of a food quality control infrastructure include

Food Law and accompanying regulations

A Food Inspectorate, Analytical Services, and Compliance Unit

Supporting services i.e. education, information, training and advisory support, industry,
consumers

Key aspects of a quality control program are:

Physical and Chemical evaluation of raw materials and processed products

In- process control of

Raw materials, ingredients and packaging supplies

Processing parameters

Finished products

Quality control in a typical food processing system begins right from the stage of production
of food and runs till the stage of its sale and distribution. Some of the common quality control
measures at each stage of a processed food are highlighted below:

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Production

Control on the use of pesticides, veterinary drugs, and fertilizers.

Quality control at the time of harvesting.

Post-harvest handling particularly during storage (temperature, humidity and time

control)

Processing

Use of Good Manufacturing Practices (GMPs)

Application of Hazard Analysis of Critical Control Points (HACCP) approach to

achieve optimum results with regard to the quality and safety of the product.

The application of ISO 9000 series of standards to establish Q.C regimes.

Monitoring Progress
Its an very important aspect so as to check our growth, quality and product development.
This will keep us on our toes us to keep on doing innovation so be there in market, fulfil
customer requirements and improve our relations.

Financial Plan
This venture will start with an investment amount of Rs.5,50,000/- . It will be an investment
from each member of sum Rs.1,10,000/- each. It will be spent on infrastructure, resource
acquisition, training and facilities.

Cost Analysis
S.No.
1.
2.
3.
4.
5.
6.
7.
8.

Description
Land:2000 square meters leased at Rs. 15/m2
Land development ( Building and Furniture)
Machinery
Raw Materials(Onion)
Laboratory Equipment
Office Equipment
Health And Safety Equipment
Labor Cost
Total Amount(In Rupees)
Remaining Amount(In Rupees)

Remaining amount will be kept for any further expansion plans.

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Amount(In Rupees)
30000/150000/100000/40000/68000/10000/20000/60000/4,28,000/72,000/-

Breakeven Analysis
For the period Of 1 Oct 2014 To 31
Mar 2015
Selling Price of Onion Rings
A. 250 Grams Pack
B. 500 Grams Pack
Selling Price of Ready To Eat Onion
Powder
A. 250 Grams Pack
B. 500 Grams Pack
Selling Price Of Ready To Eat Garlic
Powder
A. 250 Grams Pack
B. 500 Grams Pack
Total
Total Expenditure on Production(In
Rupees)
Gross Profit(In Rupees)
Net Profit(In Rupees)
Total Fixed Costs(In Rupees)
Total Variable Costs(In Rupees)

13

Units
Produced

Units
Sales

Sales(in
Rupees)

Rs. 10
Rs.12

500
500

450
450

4500
540

Rs. 15
Rs. 28

500
500

450
450

675
12600

Rs. 30
Rs. 45

500
500
3000

450
450
2700

13500
20250
52065

Price Per Unit

30000
22065
20000
Rs 3,58,000/Rs 1,00,000/-

5 Years in the future

The focus of the company in the next 5 years will be to expand in production and to come up
as a strong competitor in supplying dehydrated Onion and Garlic products. This will require
improvements in various segments of the business be it marketing, production or distribution.
Further the capital has to be raised either by through loans or through investors. Either way
the capital will be used for to increase the production to mass scale. This will help decrease
the cost per unit output, as fixed costs are spread out over more units of output. This will
further help in generating profits.
With increase in production, it has to be distributed into the market so as to meet the demand.
Hence, another goal is to expand the distribution channel and to include not only all the retail
stores in Maharashtra but to penetrate in other states like Madhya Pradesh and Rajasthan,
Karnataka, West Bengal etc. This will help increase in sales of the products and help in
penetrating the market.
Everyone knows the feeling of waking up early to avoid the morning rush and almost never
find time to plan ahead, least of all plan the meals of the day or week ahead. Taking into
consideration the effect of pollution and stress on the human body, at least one balanced meal
every day is now more important than ever. People easily revert to take-away meals and
dining out, or simply eat what is easily available, to cut out the time factor of preparing a
meal. Hence, the focus of the target group will be on Students and professionals who are
working out of home.
The next step is to go to a different product segment. Therefore, the production of other
dehydrated products like fruits and vegetables will be started. These products will be the
focus in the next coming years.

Future Scope
The major scope in the future would be providing powdered products for almost all kinds of
foods like vegetables and fruits. Exporting the powdered products to countries abroad is
another area of growth for the company. As the data provided by FPO IP Research and
Communities, dehydrated onions are the single largest import item in all four markets, both in
quantity and value terms, except in the United States. Germany and the United Kingdom are
by far the leading markets for this product. Major suppliers are the United States, Egypt,
India, Hungary, Mexico and China. Dehydrated tomatoes are the leading import in the United
States, by both quantity and value, and they are among the principal dehydrated products
imported into the other markets. Major suppliers to the United States include Spain, Morocco,
Switzerland and Portugal, whereas Europe purchases mainly from Italy, Spain and France.
Dried and dehydrated mushrooms and truffles are the second or third largest import item (by
value) in the markets covered. Leading suppliers among developing countries and areas
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include China, Taiwan Province (China), Chile and the Republic of Korea. Dehydrated garlic
is listed separately in import statistics only in the United States, although it is also a
significant import into the European markets reviewed. China, Egypt, India and Mexico are
major developing country suppliers. The United States is a large exporter to Europe.
Dehydrated carrots are in demand in all of the markets. Germany is by far the principal
importer. Suppliers are mainly European countries, with Poland being the largest. Dehydrated
olives (from Morocco and Spain mainly) and herbs (not in powder form) are listed separately
in the trade statistics of the United States only, which purchases primarily from Egypt, Israel,
France and India. Dehydrated potatoes and sweet corn are recorded in the import figures of
all of the countries studied, although quantities are insignificant. This data provided by
Kortbech-Olesen, Rudy in their publication International Trade Forum provides good hope
for the company.
Another area for the company to grow is to go into the digital world. The company can
provide online shopping for its products to penetrate the market even more. According to a
recent research done by CRISIL, Indias online retail industry has grown at a swift pace in
the last 5 years from around Rs 15 billion revenues in 2007-08 to Rs 139 billion in 2012-13,
translating into a compounded annual growth rate (CAGR) of over 56 per cent. Hence, an
online retail site for the company will add further to the sales of the product.

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SUMMARY
The scope of the plan is to produce dried onion ,onion rings as a substitute to fresh Onion.
The dehydration of Onions ensure that it is less prone to microbmaial attacks. The process of
drying helps us in preserving the perishable commodities against deterioration or s. Also the
reduction in bulk and volume makes it easy to store and transport the product in an efficient
and cost effective manner.
The process of dehydration of vegetables helps us store various items that are seasonal ,to be
kept for use in other seasons as well. And hence its available all round the year and at
reasonable cost. This process is very helpful for people in the catering industry wherein the
large scale caterers need to cater to the need of people. The compactness of the dried forms of
onions also makes it easy to carry for expeditions like deep sea fishing, mountaineering,
defence rations where at high altitudes it is difficult to carry heavy baggage because of the
difficulty in handling. It could also be one of the basic ingredients of Convenience foods
where it could be used in combination with other materials to produce various other dishes.
The product will also be beneficial to students and working professionals outside home who
would have huge time constraints.
The volatility in price of onion in the market has made the demand for onions quite unstable.
Since it is a very basic ingredient in almost all Indian recipes it is one of the prime
components in Indian kitchens. Hence efficient use of onion and its bi-products can help us
make huge profits.
Various Pharmaceutical companies use Onion and Garlic products because of its medicinal
importance. It has small quantity of some essential nutrients but they are not sufficient to rely
upon them. The concentrated form gives a strong flavour to the dishes. Cutting back on salt
intake by using onion powder helps reduce the risk of high blood pressure, heart diseases etc.
With these target segments in mind and proper and efficient production line there seems to be
good future prospects for the company.

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