Set up an Edible Oil Refining Business in India

For as long as there are people alive, edible oil will continue to be in demand. Edible oils, commonly known as vegetable or cooking oils, are a rich source of dietary fats. Oils contain fatty acids essential to the smooth functioning of our bodies. They help our brain and nerves to function properly, improve digestion and help our bodies absorb vitamins and nutrients. Most of all, they amplify the taste, texture and flavour of our food.

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If you found this post, you're very likely an aspiring entrepreneur seeking to set up an edible oil refining business. You have probably already researched the market, competitors, trends, and the demand for different kinds of oils in your geographical region or export market.

While research and competitor analysis help understand the opportunity, several operational factors must be considered before making a decision. We've put together a list of the 5 most critical considerations.

Is the edible oil business profitable?
The edible oil refining business is highly profitable and offers high returns with low risk. Profit margins depend on the easy availability and cost of raw materials and operating costs. Typically the edible oil business offers an initial return of 5 to 10%, with premium oils providing a higher return of around 25% of the revenue.

It also helps to invest in training your workforce to use the machines efficiently, so there is minimum waste. Take advantage of annual maintenance contracts offered by the equipment manufacturer, particularly in the early years when you are learning the business. Proper equipment maintenance will ensure fewer breakdowns and improve your bottom line.

What is the capital investment needed to start an edible oil business?
Your investment depends entirely on the plant's capacity, raw materials you plan to process, the process you opt for and the equipment you utilise for your process.

Production is calculated in tonnes per day or TPD. Edible oil refineries have capacities that start from as little as 3 TPD and go up to TPD.

If you are a startup, you might want to start with a batch-type refinery, also known as a mini or small-scale edible oil refining plant. It is perfect for small tonnage processing, is simple to operate and delivers a quick return on your investment. As you gain experience, you can reinvest your profits to gradually increase your scale of operations.

You can take advantage of subsidies your local government provides to small-scale entrepreneurs. For example, in India, the government offers various schemes for MSMEs (Medium and Small Scale Industries), making it easier for them to avail of financing.

Where should I set up my plant?
Your plant should be set up as close as possible to your crude oil source. Ideally, in an industrial zone that already has all the necessary infrastructure and utilities. Having access to a steady and continuous supply of electricity and water is critical to the continuous and smooth functioning of your plant. Secondly, permissions are simpler to obtain in designated industrial or economic zones. Another essential aspect to consider is proximity to transport hubs. Coastal areas are a popular location for oil refineries as they offer better cost advantages for crude oil imports and refined oil exports.

While you could set up your plant at any location close to the source of your crude oil, it will involve a number of additional steps, especially if you are converting agricultural land into non-agricultural land.

What licenses or permissions are required to set up an edible oil refining plant?
Licenses and permissions vary from country to country and region to region. Some are mandatory, and others optional. In addition, regulations change, so it's always best to check with national and local regulators in your country for current information on the licenses and permissions you will need.

In India, any food-related business, including edible oil refining, must have valid licenses issued by central government bodies - FSSAI and BIS to operate.

State government licences mandatory also apply for everything from pollution control to labour.

What are the raw materials used?
Raw materials tend to vary by geography, consumption patterns and market demand. Therefore, it is best to choose oil seeds that can be sourced easily and are least likely constrained by logistical bottlenecks. The most consumed oils globally include soybean, sunflower, mustard, palm, corn, coconut, rice bran, castor, sesame, and shea. In India, soybean, groundnut, rapeseed/mustard, castor seed, coconut and sunflower oils are the most produced oils.

India for example imports a significant quantity of edible oil to meet domestic consumption needs. Crude oil refining even at small capacities is therefore a good bet for any new investor.

How much land do I need to set up the refinery?
Plant capacities range from 3 tonnes to tonnes per day. Plants are of two types - batch and continuous. Batch refining is ideal for capacities up to 30 tonnes, while continuous refining is recommended for anything higher.

Batch refineries utilise less space than continuous refineries, but utility consumption tends to be significantly higher.

A plant with a capacity of 30 tonnes per day needs about 2 acres of land to accommodate the processing plant and utilities. Higher capacities will require more extensive areas of land.

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You&#;re looking for an equipment partner for your edible oil refinery. You&#;ve done your initial research &#; listed all the edible oil refinery plant manufacturers in India you could find, scoped their websites, maybe even asked for quotations from some of them. But you can&#;t just make a decision based on edible oil refinery plant cost, can you? Surely, there is more to the process of choosing a partner who will support you before, during, and after you install a refining plant?

You&#;re right. Selecting from the vast array of edible oil refinery plant manufacturers in the market is a difficult decision but a crucial one &#; and we&#;re here to help you through it. But first, why is it so important to get things right? 

Edible oil refining: The what, why, and how
Edible oil refining is an essential process in the production of safe, nutritious, and palatable edible oils. Through several steps like degumming, alkali neutralisation, bleaching, deodourisation, and more, refining is employed to enhance the quality of crude oil extracted from seeds, nuts, fruit, bran, and other plant-based oil-bearing materials. This is achieved by different physical and chemical processes to eliminate impurities like phospholipids, free fatty acids (FFAs), gums, waxes, intense flavours, unwanted pigments, odouriferous compounds, and other undesirable components. When the right steps are applied to crude oil &#; each oil is refined using a specialised set of steps most appropriate to it &#; what is achieved is a final product with enhanced flavour, smell, nutritional value, and stability against rancidity. Importantly, for oil refined for commercial sale, high-quality refining helps you meet not only consumer expectations but also regulatory requirements.

Essentially, you should rely on only the very best edible oil refinery plant manufacturers out there if you want the processes at your facility to be optimised for quality, food safety, and maximum yield.

Identifying the pros: How to select the best edible oil refinery plant manufacturers to partner with
Selecting the best edible oil refinery plant manufacturers in India is easier said than done. The process requires deep consideration of your requirements and their offerings, keeping in mind the changing dynamics of the oils and fats industry and the need for resilience and agility in the face of these changes.

In general, trustworthy edible oil refinery plant manufacturers have...

&#; a legacy and a reputation that precedes them. This is not to say that new, upcoming players in the market aren&#;t good at their work. But when edible oil refinery plant manufacturers have a decades-long legacy and an untainted reputation, you can be assured that they have the competence to weather difficult challenges and stand the test of time. You can be assured that they have delivered quality results time and time again.

&#; a global footprint. Again, local players also have a lot to offer, but when edible oil refinery plant manufacturers in India have successfully executed projects in different countries, you know that they have what it takes to weather different geographical and climatic landscapes, regulatory frameworks, and varied consumer preferences.

&#; adaptability and the ability to deliver tailored solutions. Never underestimate the power of a customer-focused business that prioritises a service culture. An equipment partner who can customise refinery plants easily to align with client requirements showcases a commitment to them. If they demonstrate flexibility in design and customisation to your specific needs &#; be it to handle different types of oils or varied production capacities &#; you know that they understand the nuances of edible oil manufacturing.

&#; the latest tech and a focus on innovation and R&D. Edible oil refinery plant manufacturers who incorporate state-of-the-art solutions in their projects are a force to be reckoned with. They consider more than just edible oil refinery plant cost to keep up with the latest advancements in the industry, which can enhance efficiency for their customers. You will be able to identify such manufacturers through their in-house R&D centres and projects using cutting-edge tech.

&#; expertise enhanced by experience. While deep process knowledge regarding degumming, neutralisation, dewaxing, bleaching, deodorising, and GE and 3-MCPD mitigation is a non-negotiable, vast experience in edible oil processing system design, installation, commission, service, and support is also incredibly useful. A track record of success across the edible oil processing life cycle helps you ensure that the refinery manufacturer you choose can be your one-stop shop for things design, manufacturing, installation, and troubleshooting. 

&#; systems that provide high earnings and low life cycle costs. While edible oil refinery plant cost is not the deciding factor when picking equipment, you most definitely need to have a plan to reach profitability in order to be a sustainable business in the long run. The best edible oil refinery plant manufacturers help you lower production costs and increase your earnings. This may sometimes require higher upfront costs, but it&#;s a good deal if, in the long term, it results in savings from lower maintenance and operational costs. Think low product loss, low consumption of utilities like electricity and water, eco-friendly practices which minimise the cost of waste management, and ease of equipment operation &#; when these practices are implemented while maintaining product quality, you have your path towards profitability.

Of course, there are certain parameters you can use to gauge input costs. For instance, for a soyabean oil refinery machine, you should list out and do the math for not only daily production capacity but also consumption of water, electricity, steam, diesel, clay, and your degumming agent to ensure that your operational costs do not exceed your earnings from a batch of refined oil.

 &#; intelligently designed equipment. Reliable, versatile, and easy-to-use systems are characterised by high-quality materials (stainless steel or other durable, hygienic, and corrosion-resistant materials), precision engineering, and compliance with industry and regulatory standards (such as ISO, CE and safety and environmental norms). While the specific product features you should look out for vary across machinery type and design, some design elements that make refinery equipment stand out are 

• Safety features for each component of the plant
• Large valves for speedy product circulation
• Multiple pumps for precise functionality
• Independent steam agitators at each phase
• Completely sealed joints
• Leak-proof vacuum systems
• Strategic design for ease of access for maintenance and repair.

 &#; a promise for refined oil quality. Good quality refined edible oil has optimal aroma, taste, appearance, shelf stability, and nutritional value. While evaluating edible oil refinery plant manufacturers, you should test oil samples refined in their plants for these qualitative properties as well as for technical specifications like smoke point, density, refractive index, saponification value, unsaponifiable matter, and iodine value.

&#; reliable after-sales support. This includes not only after-sales technical support, but also maintenance services and spare parts availability. This assures you that your refinery plant will run smoothly, and if it doesn&#;t, you&#;ll have troubleshooting services ready to kick into action.

&#; a dedicated fan club! Ultimately, customer reviews are the most important part of this puzzle. Glowing reviews from businesses that have already worked with certain edible oil refinery plant manufacturers are good indicators of their competence and credibility. Before you finalise a manufacturing partner, evaluate their portfolio, go through their testimonials, read online reviews, and request references from them to inquire directly from their customers about the experience of working with them.

Evaluating these aspects thoroughly can help you to select edible oil refinery plant manufacturers in India who not only meet your expectations but exceed them.

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