ENTERPRISE PLAN FOR VALUE ADDITION TO POTATOES

USING DEHYDRATION TECHNOLOGY

A Project report submitted on Village Immersion Program

Done by
ASHWIN B (36005)
CHRISTEE J F (36013)
MOHAMED NIAZ IBRAHEM S (35028)
NAVEEN V (36031)
RAGAVENDRAN H (36036)
MUJEBU RAHMAN MS (36093)

Under the guidance of

Dr. S. JAYA KRISHNA

Associate Professor, Bharathidasan Institute of Management, Trichy

BHARATHIDASAN INSTITUTE OF MANAGEMENT

(School of excellence affiliated to Bharathidasan university)
TRICHY – 620 014

AUGEST 2019

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 TABLE OF CONTENTS
―
Contents Page No
Table of contents 2

Acknowledgements 3

1. Introduction 4

1.1 Overview Nilgiris District

1.2 Socio-Economic Profile of Thoraihatty

2. Business Case 6

3. Project Charter 7

4. SWOT Analysis 11

5. Root Cause Analysis 11

6. Developing alternate solutions 12

7. Availability of resources including logistics 13

8. Production Process and Technology 15

8.1 Quality standards and control mechanisms

8.2 Continuous Improvement system

9. Market Analysis 20

10. Supply chain of Potatoes 28

11. Financial Analysis 30

ANNEXURE 34

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 ACKNOWLEDGEMENT

We wish to express our deepest sense of gratitude to our Dr. Karuthiah

Pandiyan, Director, Bharathidasan Institute of Management and Prof. M.
Sankaran, Chairman, PGP for providing the opportunity and support to
accomplish this project.

We would to thank Dr. S. Jaya Krishna for his valuable guidance, comments
and suggestions throughout the course of this project.

We would also like to express our sincere gratitude to the villagers of

Thoraihatty, Nanjanadu for their co-operation towards the completion of
this project.

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 1. INTRODUCTION

1.1 Overview Nilgiris District:

The Nilgiris district occupies a unique position in the sense that this hill ranges, though
situated in the tropical belt, enjoys temperate climate because of its altitude. The district has
different climatic conditions such as Tropical, Sub-tropical and Temperate. The district
experiences an average minimum and maximum height of 800 meters and 2595 meters above
the MSL respectively.
Natural forest wealth is the one of the main factors adding to the Natural beauty and
Economic importance of this district. The highest elevation is the Doddabetta peak which lies
at a highest of 2595 meters above the mean sea level. The Towns of Kotagiri, Coonoor and
Gudalur lies at a height of 1983, 1858 and 1117 meters above mean sea level respectively.
Rain fall in the district varies considerably and ranges from 1063 to 1696 mm per
annum, depending upon the altitude and Topography of the place. The district comes under
the influence of the south – west monsoon and North – East monsoon.
The Geographical area of the district is 2,545 sq.km, consisting of six Taluks namely
Udhagamandalam, Kundha, Coonoor, Kotagiri, Gudalur and Padalur. About 56% of the total
area of the district is under forest.
The Nilgiris district is located between 11⁰10 and 11⁰45 N latitude and 76⁰14 and 77⁰2
E longitudes. The district consists of 4 Municipalities, 1 Cantonment and 4 Panchayats Unions,
11 Town Panchayats, 35 village Panchayats and 54 Revenue Village covering 1534 Hamlets.
The Nilgiris district is endowed with varied Agro-climatic conditions because of its
unique location at the junction of Western and Eastern Ghats. This has made the district a
home for almost all cultivated crops such as vegetables, fruits, flowers, spices and plantation
crops. The cultivation is done mainly on terraced lands and sometimes even on narrow slopes
in small valleys. The temperate crops such a Tea, Potato, Cabbage, Carrot, Beans, Plum, Pear,
Peach, etc., are grown in the higher plateau of this hill district while sub-tropical crops like
Coffee are grown in the mid region of the hills and various humid tropical crops like Clove,
Pepper, Ginger and fruits like Banana and Jack fruit are grown in the lower elevation of this
district.

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1.2 Socio-Economic Profile of Thoraihatty:
Thoraihatty village lies 12 km away from Udhagamandalam town. One can reach
Thoraihatty through the narrow roads passing by Anikorai village and it comes under the
jurisdiction of Udhagamandalam Taluk and Thuneri Panchayat. The word “hatty” means valley
thus the name. There are around 600 houses in the village with population of about 2500
people. All the villagers in Thoraihatty speak a local language called Baduka and it is almost
similar to Kannada. These people have migrated from Mysore during the early 20th century.
The entire village is like a close-nit family where each one of them helps others out during the
harvest of each crops. As far as the education is concerned most of the youths of the village
has an UG degree and most of the income goes to providing professional education, marriage
and medical expenses only.
Agriculture is the main source of income where potato, carrot, garlic, cabbage, beetroot,
beans are the major produce. Since it is a hilly region, they follow terrace type cultivation to
suit the need. Cattle rearing also provides sufficient income to the villagers with two societies
for collecting and transporting milk to Ooty town. The fertile land along with abundant water
makes Thoraihatty a conducive location for agriculture.

THORAIHATTY

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 2. BUSINESS CASE

Fruits and vegetables are highly perishable commodities and about 30% of the fruits and
vegetables grown in India get wasted annually due to poor post-harvest management
practices. The case of potato farmers is much worse since potatoes does not provide sufficient
income to cover the production costs itself. Five years ago, potatoes were sold for more than
2000 Rs. per bag but the drop-in prices to 700 Rs. per bag hit the farmers hard and now most
farmers plant potatoes only as part of crop rotation cycle.
The farmers usually pay around 80 Rs. /bag for transporting the produce to the
wholesale market present at Mettupalayam. The produce is sold there by auction method
and price is determined by the demand in the market. The problem arises when there are low
prices provided for the produce so the farmers are force to sell the produce at very less price
which causes heavy loss. They also cannot exercise the option of bringing it back since the
fruits and vegetables have very less shelf life.
Thus, by going for a value addition process to the potatoes by forming a micro-
enterprise, the value of the product increases irrespective of demand for raw potatoes. The
shelf life is extended to about 10 – 12 months so during the season where the prices are low,
they can stock the product without worry and the lower grade potatoes which fetch very low
prices can be used for value addition thus reducing wastage. They can also utilize the
government schemes and subsidy so they can mitigate their financial shortcomings.
Using the substantial additional income from the value-added process, they can cover
for the expenses like education, marriage and medical expenses thereby increasing the
standard of living for the potato farmers.

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 3. PROJECT CHARTER

1. General Project Information

Project Name: Village Immersion Programe-2019
Executive Sponsors: Director, Bharathidasan Insttitute of Management, Tiruchirapalli
Department Sponsor: PGP, Chairman
Program Manager K.Saminaathan, Visiting Professor
assigned
2.Business Case Marginal farmers cultivating potato and other vegetables in “Thoraihatty”
village, “Udhagamandalam” taluk, “Nilgiris” district feel that the price
discovery mechanism for their potatoes does not generate desired income
on a sustainable basis. As a result of greater uncertainty in their income
generation, many of them aren’t able to meet their major household
expenditures like professional education and marriage of their children. In
this context, they require an appropriate solution in the form of setting up
of a micro- enterprise based on their resources and skills available which
would improve their income levels on a sustainable basis irrespective of the
demand for raw potatoes.
3. Resources Assigned:
Project Name Department Telephone E-mail
Manager
Team 17 Dr. S. JAYA Associate +91- [email protected]
KRISHNA Professor 9025482929
Team ASHWIN B PGP 1 +91- [email protected]
Members 8754216555
CHRISTEE J F PGP 1 +91- [email protected]
8883074766
MOHAMED NIAZ PGP 1 +91- [email protected]
IBRAHEM S 7373515001
NAVEEN V PGP 1 +91- [email protected]
7010031825
RAGAVENDRAN PGP 1 +91- [email protected]
H 9940634664
MUJEBU PGP 1 +91- mujeburahmanms@bim
RAHMAN MS 8675149997 .edu
Teams of 6 members covering Thoraihatty Village, Nilgiris districts

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 3. Stakeholders (e.g., those with a significant interest in or who will be significantly affected
by this project)
Internal stakeholders are 1) Department Sponsor, 2) The Program Manager, 3) Faculty members
designated as project managers of the respective teams, 4) 6 members of team 17 of first year
students of 36th batch of BIM,Trichy 5) Admin staff, and 6) Computer Lab Staff
External stakeholders- District Collectors, GM,DIC, Ooty, Bank Managers, Machinery suppliers,
logistics operators and stakeholders of the respective villages identified.
4. Project Scope Statement
i) Objectives (in business terms) To raise the economic standard of the potato
farmers by enlightening them about the existing technology available and
implementing it, which in turn provides value addition to potatoes and concieve an
enterprise plan for future beneficiaries.
ii) Deliverables :
Specific: i)Identification of at least one beneficiary out of the mushroom
small/marginal farmers, ii)getting his concurrence in the form of getting the
NEEDS/PMEGP application form duly signed by him and iii) and coming out with an
Enterprise plan for starting the Dehydrated mushroom unit in “Nilgiris” district
Measurable: Raise the annual income level of beneficiaries by 15% from 2020-21
onwards.
Attainable: Implement dehydration technique in most feasible and cost-effective
way for the beneficiaries. The enterprise plan should be developed in such a
way that it does not have any window dressing and that the deliverables specified in it are
attainable
Relevant: Make small farms sustainable and profitable

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 iii) Scope The scope of the project is to provide value addition options to the potato farmers of
Thoraihatty village, Nilgiris district. The value addition of the potato is done by enlightening
them about the technology available and come up with an innovative product which could
increase the income of the beneficiaries considerably. Also understand the feasibility of the
product through market research and identify potential buyers and subsidies available for
them to sustain.

iv) Project Milestones Propose start and end dates for Project Phases (e.g., Initiation,
Planning, Execution, Monitoring & Control and Closure) and other major milestones
Process group Start and end date
Identification of the problems and its root cause 22.8.19 to 23.8.19
Development of alternative solutions & choosing the best, 24.8.19
identification of the beneficiaries
Analysis of the technical aspects & Marketing issues(identification of 25.8.19 to 27.8.19
possible right supplier of the machneries & buyer of finished products
Preparation of the Project Report 28.8.19 to
30.8.2019
Presentation by the team to the beneficiary and the General Manager 30.08.2019 to
or his authorised representative of the respective District Industries 31.09.2019
Centre of the district and forwarding the Enterprise Plans the Director,
BIM, Trichy

v) Major Known Risks (including significant Assumptions) (identify the obstacles that you
may have to face during the execution of the project)
Risk-(The list given below is not an exhuastive one but an Risk Rating (Hi, Med, Lo)
indicative list and you add any type of risk that you think,
deem fit to include)
Food may not be as liked by the students depending upon the Low
location of the project
Accommodation may not be very good Low
Co-operation of the stakeholders may not be as expected Medium

vi) Constraints List any conditions that may limit the project team’s options with respect to
resources, personnel, and or schedule.
Time is a major constraint as the project involes multi-dimensional research and analysis.
Limited working hours due to climatic conditions.

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 vii) External Dependencies Need to identify the relevant local contacts and influencers in the
region and gain support from them at the start of the project and the project success depend
on coordination of efforts between the project team, cooperation of the potential
beneficiaries, support from district collector and implementation by the General Manager,
District Industries Centre of the district.
5. Communication Strategy:
i. The respective teams shall update their daily report to the Department Sponsor and
the Program Manager through the stipulated browser based Excel sheet and the same
will be monitored and controlled by the Department Sponsor and the Program
Manager so that the program objectives are met within the estimated budget and
without affecting the schedule.
ii. However, all the mails will be documented team wise and project wise in the form of
hard copy.
iii. All the hardcopies should be handed over to Prof. J.M.Sankaran, PGP chairman of BIM
after getting due acknowledgement for the same and one copy of the all the documents
will have to be kept under the safe custody of the team leader
iv. All payments will be made through ECS and the respective faculties should give
immediate ackowledgement for having received the payment. Any amount over and
above the fund allotted

6. Sign-off
Name Signature Date
(MM/DD/YYY
Y)
Executive Sponsor S. Karuthiah Pandian -
Director, Bharathidasan
Insttitute of Management.
Department Sponsor Prof. J.M.Sankaran, PGP
Chairman
Program Manager K.Saminaathan, Visiting
Professor
Project Manager Dr. S. Jaya Krishna
7. Notes: All the teams should prepare the project charter for their respective teams and
get the approval of the Executive Sponsor on or before 16.8.2019

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4. SWOT ANALYSIS:
The SWOT analysis is done to understand the current landscape of the potato farmers
by figuring out the strengths, weaknesses, opportunities and threats. This will help us
providing the scope on which the enterprise plan should focus on. The Input for the SWOT
analysis is taken from the perspective of potato farmers.
The strengths were primarily focused on the geographical characteristics of these
farmers. While the opportunities where based on lees exposure to technology and other
beneficial options. The weakness in potato farming are factors mostly similar to every type of
farming such as low financial standards and logistics.

SWOT ANALYSIS OF POTATO FARMING IN NILGIRIS

5. ROOT CAUSE ANALYSIS:

The Root cause analysis was done by gathering the necessary information from the
farmers during the field visits to identify the major causes that contribute to the effect of
incurring losses by farming potatoes and earning low marginal income. After brainstorming
with the team, all the causes where identified and the causes where categorized into 6
different major segments as given below.
Using the 5 Whys interrogative technique the cause and effect relationship where
identified and represented in the form of Ishikawa diagram.

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 ISHIKAWA DIAGRAM FOR ROOT CAUSE ANALYSIS

6. ALTERNATE SOLUTIONS:
From the SWOT and Root cause analysis, the major problems concerning the farmers
has been identified. This gives us the direction in which efficiency and effectiveness to be
brought forth to solve the existing problem.
Using the small potatoes again for harvest: This might seem like an easy solution to increase
the production but when the same potatoes are used again the yield is just half of what it
used to be. In Kolar, the farmers cut these potatoes in four and dip them in chemical solution
and plant again to gain more yield but in Ooty, if it’s done the potatoes will like to be affected
by fungus.
Organic farming: The farmers have also tried organic farming to increase their profit but failed
miserably because they did not have prior knowledge about organic farming so the produce
was half of what they normally produce and also, they do not have any testing centers to
certify the produce so it was sold at usual price only.
Considering the above available options, it is clear that value added products will solve not
only the problem of increase the income substantially but also converts the wastage into
value. Thus, going for a micro-enterprise formed by the farmer as a single entrepreneur or
co-operative to make the value-added product will solve the problem at hand effectively.
The Value-added dehydrated products from potato can be potato powder, potato
starch and potato chips. Considering market growth, sales potential and cost potato powder
and chips were chosen. Since potato starch requires multi-step which is not feasible in terms
of production cost.

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7. AVAILABILITY OF RESOURCES INCLUDING LOGISTICS:
Land
Most of the farmers have their own land. In this village there are around 600 farmers each
having around half acre of lands each. Overall the village has 300 acres of cultivable land.
From 1 acre of land 12000 kgs of potatoes are produced in 90 days of harvesting cycle. So, for
300 acres of land 36,00,000 kgs of potatoes are produced throughout the village for that 90
days span only. So yearly 154 lakh kgs were produced from Thoraihatty village alone. From
this during the month of January to June, 10 percent wastage were accounted and during July,
30 percent wastage were estimated.
We collected data regarding the area of cultivable land each farmer holds. These lands are
not exclusively for potato cultivation. Carrot, beetroot and other vegetable crops are also
cultivated during the other seasons. The sample of farmers was randomly selected from Ooty.
Sample Size: 80
Minimum land owned by a farmer: 0.5 acres
Maximum land owned by a farmer: 12.0 acres

Land Ownership

13% 10%
Less Than 1
14% 1 to 2
30% 2 to 3
3 to 4
Above 4
35%

Soil Types
Potatoes do well on a range of soil types, but sandy loam soils are preferred. The soils of
Nilgiris district can be broadly classified into 5 major soils types viz., Lateritic soil, Red sandy
soil, Red loam, black soil, and Alluvial soil. Ooty has Sandy loam soil which is suitable for potato
cultivation.
Water
Irrigation sprinkler systems are installed in almost all the fields at the villages. One of the main
advantages of the sprinkler irrigation technology is more efficient use of water for irrigation

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in agriculture. It is affordable and easy to setup. It costs only Rs. 5000 for 10 cents of land over
there. Apart from this Ooty has the optimum level of rainfall for the cultivation. They have
also got wells in the fields. Most of the farmers got bores where they get water within 100 ft.
The village and the fields have electricity connection. The fields have three phase power units
for running of the motors.
Labour
Ploughing and other harvesting processes are done by the villagers only. They help each other
in the fields. The beauty of the village is everyone knows each one of them in the village. So,
they work in their neighbour’s field during the time of need and vice versa. They have a very
good synergy maintained in the village. So, the labour expenses incurred by them is very less.
Most of the villagers have sprinkler irrigation system. They have motors and some of the
farmers even have hand tractors used by them. Since the farming is done in slopes, it’s hard
to use tractors and other machineries for ploughing, seeding and harvesting. But they do have
vegetables washing machine located in some of the places.
Machineries
Most of the villagers have sprinkler irrigation system. They have motors and some of the
farmers even have hand tractors used by them. Since the farming is done in slopes, it’s hard
to use tractors and other machineries for ploughing, seeding and harvesting. But they do have
vegetables washing machine located in some of the places.
Transportation Facilities
Transportation and its cost are one of the problems faced by these villagers. Since the village
is located 12 km away from Ooty, they have to visit Ooty for every process. They have busses
for every 30 minutes. They send their produced vegetables to the Mettupalayam. So, the
transportation cost incurred by them is high.
Raw materials and consumables
Farmers here are getting good quality seeds from Bangalore. For 10 cents of land, seed cost
around Rs. 1,000. They are getting pesticides and fertilizers from the local market. They are
using cow dung as the fertilizers. For 10 cents of land, Rs. 2,000 is the cost of pesticides used.
Power
The village and the fields have electricity connection. The fields have three phase power units
for running of the motors.

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8. PRODUCTION PROCESS AND TECHNOLOGY
Convenience foods and ready to cook products have gained considerable importance in
recent times. In this context, this potato-based product will find a good place and will become
popular as a mass consumption product. Potatoes processed into powder, can find use in a
variety of dishes where potatoes are normally used and also find new uses as convenience
food. Tikki, chops, Pakodas, Stuffed Parothas, Sewain, Kofta etc, can be easily prepared. It can
be used for making soup, Khir and thickening agent in gravy. The product is easy to pack in
any size of supply unit and less susceptible to variations in climate and has got good shelf-life.
This product has considerable scope and potential in the emerging food scenario. To produce
a kilo of dehydrated potato around 10kgs of fresh potato are required. After getting sliced
potato dried, it needs to be stored in air-tight bottles or moisture-proof material to have long
shelf-life, as oxygen concentration, moisture content, temperature and exposure to light
could cause deterioration of dried potato. The dried potato flakes and powder can be stored
for more than ten months.

Process flow Diagram:

GRADING PEELING TRIMMING SLICING DEHYDRATING PULVERIZING

Dehydration:

Process Definition:
During the grading process, the potatoes are segregated base on their size and color. The
lower and marginal grade potatoes are chosen for dehydration. After peeling and slicing, the
vegetable slices are dried using the dehydrator. Dehydration is the process of removing water
from food by a continuous circulation of thermostatically-controlled warm air. Using
dehydrator compared to traditional canning of freezing methods will prove to be well worth
your initial low-cost investment.
Process Constraints:

Timing
The individual food listed on pages below is the approximate amount of time needed to
dehydrate each food. Drying times, however, are enormously dependent upon multiple
factors. These factors include the amount of humidity in the air, the moisture content of the
food being dried and the method of preparation.

Humidity
Air must be kept in motion. Stagnant air will soon take on as much moisture as it can hold,
and then drying will no longer take place. Drying must be a continuous process so the growth

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of micro-organism is prevented. Check with your local weather service to determine the day’s
humidity level. The closer the humidity is to 100%, the longer it will take for your food to dry.
Moisture content
The actual amount of water in the food you are drying is also a major consideration.
Remember, water content of a fruit or vegetable can vary due to growing season, rainfall and
environment factors.
Pre-Treatment (Optional)
These are basically two types of pre- treatment, dipping and blanching. The fast-drying times
and controlled conditions under which your unit operates dries food before it has a chance
to spoil. However, pre-treating will help maintain color, nutrients and texture.
Food Drying Vegetables Guide:

FOODS PREPARATION TIME

Asparagus Wash & Cut into 1” 5-6 hours

Pieces.

Beans and Greens Wash; remove ends, cut 1” 8-12 hours

Pieces or French style

Beetroot Remove all but 1/2” of the top 8-12 hours

scrub thoroughly, stem until
tender. Cool, peel & cut 1/4”
slice or 1/8 cubes
Broccoli and cabbage Wash, trim & cut into 1/8” 7-11 hours
Pieces. Dry florets whole.

Carrots Wash, trim tops, peel if 6-10 hours

desired. Cut into 1/8” cubes or
circles
Potatoes Use new potatoes, wash and 6-14 hours
steam for 4-6 minutes. Cut
French style, in ¼ inch slices,
1/8-inch circles or grate.

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 Food Temperature vs. Air Temperature

During the dehydration process the food temperature is generally 20 to 30 degrees cooler
than the air temperature, due to effects of evaporation. As the warm air blows across the
food, moisture is evaporated from the food surface, creating a cooling effect that keeps the
food temperature cooler than the air temperature. Keep in mind that the dial settings
represent air temperature, so the air temperature may be as much as 25 degrees higher.

Pulverizing :

Process Definition:

It is the process of crushing solid material into a fine particles of less than 5
mm. Pulverization method includes crushing, impacting and grinding. A pulverizer or
grinder is a mechanical device for the grinding of many different types of materials. The
dehydrated beetroot flakes can be given as input to the pulverizer to obtain the required
beetroot powder. It is a simple process and the wastage is negligible.

Machinery specifications and Quotation of Price:

Dehydrator:

Cost
S. Company Power
Model type Tray size capacity Watt (including
No name (in v)
GST)
1. Packaging PS-TRY 16”*32”*1 3 to 5 7000 Rs.2,63,400.
Solutions dryer(Mild .25” kg/tray 220V W 00
steel and (350 to
aluminium, 500kgs)
96 trays)
2. Creature CRWY 100( 15”*30*1. 4 to 5 7500 Rs.4,24,800.
way Stainless 25” kg/tray( 250V W 00
Manufacturi steel,100 400 to
ng. trays) 500kgs)
3. Powersol PWSD48( 15”*30*1. Up to 4500 Rs.2,36,000.
Stainless 25” 5kgs/tray 150V W 00
steel, 48 ( up to
trays) 250kgs)
4. Infinity Electric 13”*30”*1 3 to 150V 7000 Rs.2,36,000.
Engineering Tray .25” 6kgs/tray W 00

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 dehydrator ( 150 to
( standard 220kgs)
body
model, 35
trays

Pulverizer:

S.no Company Model Capacity Power Watts Cost(

name name ( in V) including
GST )
1. Infinity SS body 30kg/hr. 220V 2200W Rs.24,000.00
Engineering model
2. Maharani Deluxe 20kg/hr. 250V 1500W Rs.14,500.00
3. Packaging standard 250kg/hr. 250V 3000W Rs.85,000.00
solutions

Peeling, Trimming and Slicing:

Process Definition:

In Peeling the potatoes are forced against a abrasive rolls where the dirt along with
outer skin is removed and in trimming the defective parts are removed and bigger potatoes
are cut in half to be processed. In our case the peeler is not required since the potatoes are
cleaned prior and only smaller potatoes are used the trimming is not required.

For slicing the potatoes are centrifugally pushed against a slicer to cut the potatoes and the
width of the potato slices can be varied.

Potato Slicer – IndiaMart- 250 Kg/hr – Rs. 270000

** The Highlighted machine specifications are optimal and cost efficient and hence
preferred to be procured.

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8.1 Quality standards & control mechanisms:

The Potato from the Thoraihatty village has three variants from large, medium and small.
Among the three categories 5% has been wasted completely because of pests and rats. The
rest 35% can be used for potato power manufacturing. The potatoes that are being unsold
and going less cost can be used. The safety and storage stability of dehydrated foods like
crystallized potato foods, depend on the moisture content of the product being reduced to a
value at which potential spoilage organisms cannot grow.

If the product is going to be packaged then it must have the clearance from FSSAI (Food Safety
and Standards Authority of India) and certification from AGMARK.
The Quality of the product can be maintained by following the below suggestion:
1. Controlling the quality of raw materials.
- By segregating the produce in terms of grades and utilizing Grade B & C for making
potato powder and chips.
2. Establishment of various standards and specifications.
- By maintaining standards for humidity content in the output, quality of the
product can be maintained.
3. Controlling the processes and operations of production.
- By maintaining temperature and processing time the quality of the product can be
maintained.
4. Inspection of machinery and equipment.
5. Development of quality consciousness among the workers.

8.2 Continuous Improvement System:

Continuous improvement or Kaizen can be introduced in any system by following the below
steps:
1. Identify an opportunity
2. Analyze the process
3. Develop an optimal solution
4. Implement the solution
5. Study the results
6. Standardize the solution
7. Plan for the future
By following kaizen, the problems in the work place can be solved one by one thereby reaping
a bigger benefit at the end. The following methodologies can be used to achieve kaizen:

5S Methodology: The 5S stands for – sort, set in order, shine, standardize and sustain. It can
be used by the farmers to bring efficiency in their work culture.

DMAIC Process: This is an improvement cycle process which is used for achieving six-sigma
quality. The acronym stands for Define, Measure, Analyze, Improve and Control. In the case

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of the farmers it can be used as a framework to solve any quality related large problem they
might have but it needs huge amount of data.
Deming Cycle: Also called as Plan-Do-Check-Act is used solve short-term problems there by
reaping bigger benefits at the end. It is formulated from the Kaizen methodology.

9. MARKETING ANALYSIS:
Marketing analysis of Dehydrated potato has been done by
segmentation, consumer survey, market and sales potential, selecting the target markets and
developing the market plan. Also, it includes the process of

• Identifying market opportunities at local, regional and exports

• Understanding the market segments based on dehydrated potato powder application
• Identifying current producers acros the segments at each level (local, regional,
export)
• Identifying quality standards and market expectations of each segment
• Understanding market constraints & consumer behaviour in each segment
• Estimating the market and sales in each segment potential at each level
• Selecting the segment(s) for targeting
• Deciding the marketing mix, communication mix, etc

Potato Cultivation Market Challenges:

Potato is one of the major crop cultivations in India. India is holding the
rd
position of 3 major potato exporting country in the world. Uttar Pradesh, West Bengal, Bihar,
Gujarat are the major potato cultivating states of India which contributes to remain in the
position of 3rd major potato exporters in the world. Because of its high production/cultivation
in India the competition has become more active and powerful between potato farmers.
Despite the demand for potato has always been unchanged, increasing competition made the
potato farmers to incur loss.

Farmers in Thoraihatty, Nilgiris sell potatoes in Mettupalayam and Coimbatore

market on the basis of auction. Traders in these places use their network and distribution
channels to sell potatoes to other regions and states. This has created a situation where
middle men constantly eat away a large sum of money. The commission agent is well aware
that the farmer will sell the crop at any cost and not be willing to take it back paying for
transportation a second time. Even though the retail price of potato is Rs 40 per kg, farmers
sell it at the mandi for Rs 15-30 per kg based on the quality standard of the potatoes. On the
other hand, farmers cannot be directly selling to commercial institutions like hotels,
restaurants and food-processing companies, since supply in Thoraihatty is confined to the
harvesting season.

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 Before exploring business opportunities based on potato bi-products for
farmers, the team verified if any untapped or new market potential is available to sell excess
production to the retail/institutional/industrial markets. The team tried to identify specific
market opportunities in the neighbouring states like Andhra, Karnataka, Kerala etc. During
the exploration, it was identified that further investigations are required to understand the
periods during which there are shortages of supply in the new markets, which will help the
team to ascertain whether there is new market potential at all for potatoes produced by small
and marginal farmers in Thoraihatty either to sell with or without storage.

DEHYDRATED POTATO MARKET DRIVERS:

The major drivers for the growth of dehydrated potato market are the increasing
popularity among consumers for their taste, all seasonal availability and longer shelf life.
Potatoes are rich source of potassium, carbohydrates and vitamins. Dehydrated potatoes are
actually instant potatoes which take less time to cook and are easy to digest. Potatoes are
bulky, heavy, and sensitive to moisture. Storing them requires a considerable amount of space
as well as the ability to maintain stable temperature and moisture conditions. Potatoes
preservation by dehydration solves the storage problems. Dehydrated potatoes act as
convenient staples or domestic emergency food supplies for 2/3rd of the global population.
Benefits of Dehydrated Potato:

• Dehydrated Potato is good for curing stomach ulcers.

• It also helps to cure inflamed conditions of the colon.
• It is also low on the glycaemic index scale, and some research suggests that it can also
help to reduce low blood sugar and insulin resistance in people suffering from
diabetes.
• Maintains a low sodium intake and help to lower blood pressure.
• It contains beta-carotene which may play a protective role against prostate cancer
• The high fibre content in potato powder help to prevent constipation
• Antioxidants like vitamins C and E in sweet potatoes helps to improve eye health and
prevent degenerative damage.
• It can also be used as thickening agent.
• Potato powder also helps to maintain the structure of cellular membranes.

SEGMENTATION:
Dehydrated Potato is segmented on the basis of packaging, distribution
channel, type and region.

• Packaging:
The market is segmented into retail packaging and bulk packaging. Bulk packaging is
much preferred by the restaurants or hotels and exports, whereas retail packaging is
preferred by the consumers for their household.

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 • Distribution channel:
The market is segmented into supermarkets/ hypermarkets, convenience stores and
online stores. It is expected that supermarket/hypermarkets will hold a relatively
high share in the potato flour & powder and potato flakes market compared to other
distribution channel.
• Region:
The dehydrated potato flour & powder and dehydrated potato flakes are segmented
into local (Ooty & Coimbatore), within the state (Tamilnadu), other states
(Karnataka, Andhra pradesh, Kerala, etc.) and other countries via exports.
• Customer persona:
The market is segmented based on income profile, lifestyle and behaviour.

MARKET POTENTIAL:
When enquired about opportunities for selling potatoes to food processing,
personal care, retail markets/supermarkets, we understood such firms aren’t interested to
take the produce until supply is consistent throughout the year with acceptable quality
standards. The team understood that there is very little or no scope for potato market
expansion and therefore started exploring at value added potato-based products as solution
for the excess production and loss on wastages. After analysing the market and availability of
resources, we, as a team, introduced a new value-added application of potato to the potato
farmers in Thoraihatty which is,

• Dehydrated potato flour & powder

• Dehydrated potato flakes
which in turn help the farmers in terms of increase in income level and
reducing the loss on wastages. The team explored the possibilities of having a potato
dehydration unit in Thoraihatty as solution to the farmers’ problem. The secondary sources
like online published report(s) and views expressed by the potato producers’ association were
used selectively by the VIP Team for better understanding of the following and their
implications on dehydrated potato to make informed analysis:
(i) Qualitative aspects like prevailing and emerging supply market situations, competitive
scenario, domestic market characteristics, household consumption levels and potential,
market acceptance, customer types and product expectations, consumer awareness, need-
gaps, channel preferences, prices, parity & fluctuations, market growth rate, tendency to shift
to dehydrated potatoes, competitiveness level required in domestic markets, potato raw
material types & their comparative potentials, etc.
(ii) Quantitative aspects like the technology, production process, input quality standards,
number of shifts possible per day, the ratio of input to output in potato powder production,
project costs for various output capacities, availability of Minimum Export Price (MEP) for
dehydrated potatoes, export duty, transport assistance in exports, competitiveness in global
markets, etc.

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 With a view to develop a risk-free, successful, performance-oriented
and sustenance-assured enterprise solution for the dehydrated potato in Thoraihatty, the VIP
team adopted a holistic approach so that all risks & success factors are contemplated into the
process. In this connection, the analysis of recent experiences (of those related to dehydrated
potato) particularly the price risks, market risks, inventory risks, financial risks, etc., were also
understood from reputed media sources and report(s).

SALES POTENTIAL:
Retail sales
Supermarkets/ Hypermarkets will be the right place for selling to the households. Hence our
team has done the sales analysis by contacting the high-end supermarkets & hypermarkets
such as spencers, Nilgiris, etc., and local retail shops inside the town, Coimbatore and asked
them about their interest in buying it from the farmers. Our team has also done the product
pitching process to the super & hypermarkets and convinced them to buy it. A good profit
margin for the supermarket will make them to promote the product themselves.
Direct selling through dealers

The team has contacted the already available dealers of dehydrated potato powder who
have a good contact with the restaurants & hotels (ITC Hotel, etc.,). Our team has also got
the acceptance from the dealers (Shree Foods-Indore, Aayush Food Products-Coimbatore,
Prithvi Enterprise-Coimbatore, Tharudhyey Enterprise-Ahmedabad, etc.,) who have already
selling it through online marts (indiamart.com and amazon.in.).

CONSUMER SURVEY:

We have done consumer survey by floating google forms across all

categories irrespective of age and gender but predominantly to the household women to
identify various knowledge regarding dehydrated potato powder such as,

• Product Awareness
• Mode of purchase
• Reason for purchase

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Product Awareness:

The Consumer response indicates that the awareness about the product is moderate and also
has latent market demand which can be pursued.

Mode of purchase:

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Reason for purchase:
i) Dehydrated potato powder:

(ii) Dehydrated potato flakes:

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MARKETING PLAN:
a) Value Proposition
Order Winners;

• Taste
• Freshness
• Uniform distribution of size and colour
Order Qualifiers;

• Shelf-life
• Price
• Aroma
b) Target Market Segments:
Target Audience

i) Modern themed multi-cuisine restaurants

ii) Ready to cook industry
iii) working class households in metro cities where they look for easy to cook
ingredients.

1. Working class households:

These people look for products that will speed up their cooking process i.e., they look for
ease of cooking. In such places dehydrated potato powder can find good market because it
saves them from peeling, cutting and also from boiling.

• Taste
• Not Price-Conscious
• Consumption rate is Average

2. Ready to cook industry:

The packaged ready-mix companies use potato powder as one of their main ingredients.
Such markets offer huge potential for selling our dehydrated potato powder. These
customers look for the following in the product:

• Cost-effectiveness
• Taste and quality
• Consistent supply

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3. Themed flavoured Restaurants, Multi-cuisine hotels:
As potato powder will reduce a lot of inventory space these restaurants especially the ones
in cities prefer potato powder to fresh potato. By establishing the right contact of people, we
can sell our potato powder to these restaurants.

• Price-conscious
• Taste and quality
• Regular and frequent supply.
Variants in Product quantity according to the customers:
Target Customers Packages and Jars (in Kg’s)
Frequent buyers (Restaurants) 1Kg, 5Kg

Non- frequent Buyers (household, flavour lover 100-500 gm)

The 4 P's mix for dehydrated potato powder

Product:

• The product which we have to market is the Dehydrated potato powder

• Excess small and medium potatoes can be used
• Production of the powder and flakes can be done using machinery
• Product value includes freshness, aroma, texture and uniformity.
• Packaging can be done in packages and barrels.
Place:

• The dehydrated potato powder can be sold in cosmopolitan cities like Chennai,
Bangalore, Mysore, Coimbatore, Madurai, Salem, Trichy, Erode, etc., where there are
a lot of super markets and restaurants.
• Existing dealers who sell dry potato powders can also be used for this purpose.
Price:

• Generally, the potato powder from unorganized players are sold at Rs120-150 per Kg
• The pricing for dehydrated potato powder can be done at a lower rate around Rs. 140
per kg than the existing competitors who sell it at approximately Rs 200 per Kg.
• Market penetration strategy can be done to capture the market share along with
latent market potential.

Promotion:

• Freshness and aroma can be promised to the customers by making them aware that
the Potato powder is made from fresh potatoes directly from the farmland located in
Ooty which is called as “Queen of hills” known for its well-built resources.
• Fresh potatoes can increase the aroma of the powder. This can be used to attract the
niche market.
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 • Since the latest technology is used, we can treat finesse and crispiness as our product
value.
• Lower price can be promised to restaurants and hostel kitchens have great potential
market.

10. Supply Chain of Potatoes:

Current Scenario:

After the Potatoes are harvested, the potatoes are graded based on their size. Grading of
potatoes is done based on their size. Grade A potatoes are usually 2.5 inches in diameter.
Grade B potatoes are usually 1.5 to 2.25 inches in diameter. Grade C potatoes are less than
1.5 inches in diameter. The price of the Grade A potatoes is high compared to Grade B and C.
So, the Commission agent and local traders get the Grade B and Grade C potatoes to the lower
price. Low prices of Potatoes (grade B and C) after harvest are a serious concern for farmers
as they generate minimal profit. Here, the middleman or the dealers involved in distributing
the harvested potatoes from the farmers to the end consumers, take more than needed
cut/profit, compared to the farmers. This can be minimized if farmers are involved in handling
their own produce and add value to the potato to get the appropriate profit.

Potatoes are
harvested

Grading of
Potatoes.
gaGrad

Commission Local Traders

Agents

Wholesalers

Retailers

Consumers

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Business Plan after Value addition to Potatoes:
Since the price of Grade B and Grade C potatoes are comparatively less, instead of minimum
profit/loss incurred to the farmers selling those potatoes to the middleman or the dealers,
farmers them self can make a value-added product from potatoes such as Potato powder /
Potato Flakes using the Dehydration technique. So that those grades of potatoes can be used
for making Potato powder or Potato Flakes and sell it in the market at a better price than the
market offering price for those potatoes.

Farmers Harvesting
Potatoes

Grading of potatoes
(Grade A, Grade B, Grade
C)

Commission Agents Local Traders (Grade A Production of Dehydrated

(Grade A and some and some Quantity of Potatoes (Remaining
Quantity of Grade B) Grade B) quantity of Grade B and
Grade C)

Dehydrated Potato flakes Dehydrated Potato

Wholesalers
Powder

Retailers

Retailers / Online channel

Consumers

Consumers

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11. FINANCIAL ANALYSIS
Project Report for dehydrated Potato flakes and powder
I Cost of the Project (in lakhs)
Land & building 0.00
Machineries 7.29
Tech transfer, setup &
1.00
fixtures
Preliminary & pre-
0.50
operative expenses
Rent Advance & other
0.00
statutory advances
Margin money for
0.50
Working Capital
Contingencies 1.00
Total Project Cost 10.29
II Sources of Finance
Own funds 0.51
Subsidy from Govt. 3.60
Long term loan 6.17
Total Project Cost 10.29
III Projected Revenue from Operations
IV V VI
Description of item I Year II Year III Year
Year Year year
Installed Capacity in 120.0 120.0
120.00 120.00 120.00 120.00
MT 0 0
Capacity utilisation 0.054 0.057 0.060 0.063 0.068 0.070
Production in MT 6.45 6.527 6.606 6.685 6.765 6.846
Total sales Qty in MT 6.45 6.53 6.61 6.68 6.77 6.85
Selling price per kg 140 142.1 143.52 144.95 146.4 147.8
Total sales Value
9.03 9.28 9.48 9.69 9.90 10.12
(Rs.lacs)
IV Projected cost of Production
IV V VI
Cost of Production I Year II Year III Year
Year Year year
Raw material Cost 3.707 3.82 3.93 4.05 4.17 4.30
Rent 0.050 0.052 0.053 0.055 0.056 0.058
Power cost 0.35 0.35 0.35 0.35 0.35 0.35
Repairs &
0.6 0.62 0.64 0.66 0.68 0.70
Maintenance
Depreciation 0.73 0.66 0.59 0.53 0.48 0.43
Other production
0 0 0 0 0 0
related expenses
COGS 5.44 5.50 5.56 5.64 5.73 5.83

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 Preliminary expenses
0.2 0.2 0.2 0.2 0.2 0
written off
Selling Expenses 0.75 0.77 0.80 0.82 0.84 0.87
General Expenses 0.5 0.5 0.5 0.5 0.5 0.5
Administrative
0 0 0 0 0 0
Expenses
Total COP 6.89 6.97 7.06 7.16 7.28 7.20
COP excluding
6.16 6.31 6.47 6.63 6.80 6.77
Depreciation
Assumptions: 1) Inflation is taken at 3% p.a

V Projected Profitability
IV V VI
I Year II Year III Year
Year Year year
Net Sales Value (PRO) 9.03 9.28 9.48 9.69 9.90 10.12
COP excluding
6.16 6.31 6.47 6.63 6.80 6.77
Depreciation
EBIT & Depreciation 2.87 2.97 3.01 3.06 3.11 3.35
Interest on term loan 0.74 0.74 0.59 0.44 0.00 0.00
Cash profit(+)/loss(-) 2.13 2.22 2.42 2.62 3.11 3.35
Depreciation 0.73 0.66 0.59 0.53 0.48 0.43
Earnings before Tax 1.40 1.56 1.83 2.08 2.63 2.92
Income Tax 0 0 0 0 0 0
Earnings after Tax 1.40 1.56 1.83 2.08 2.63 2.92
Cumulative Earnings
1.40 2.97 4.80 6.88 9.51 12.43
after tax
Assumptions:
1) Interest is taken at 12% p.a
2) Depreciation is calculated at 10% for the machinary which costs Rs 7,29,712

VI Projected Cash accruals from Operations

IV V VI
CASH ACRUALS I Year II Year III Year
Year Year year
EAT 1.40 1.56 1.83 2.08 2.63 2.92
Depreciation 0.73 0.66 0.59 0.53 0.48 0.43
Preliminary expenses
0.2 0.2 0.2 0.2 0.2 0
written off
Total gross cash
2.33 2.42 2.62 2.82 3.31 3.35
accruals
Repayment of term
0 1.234 1.234 1.234 1.234 1.234
loan
Net cash accruals 2.33 1.19 1.39 1.58 2.07 2.12
Cumulative cash
2.33 3.52 4.91 6.49 8.56 10.68
accruals

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 VII Projected balance sheet
IV V VI
Equities & Liabilities I Year II Year III Year
Year Year year
Own Capital 0.51 0.00 0.00 0.00 0.00 0.00
Subsidy 3.60 0.00 0.00 0.00 0.00 0.00
Reserves & Surplus 1.40 2.97 4.80 6.88 9.51 12.43
Term Loan 6.17 4.94 3.70 2.47 1.23 0.00
Total 11.69 25.57 26.90 27.96 29.45 31.55
Assets
Non Current Assets 6.57 5.91 5.32 4.79 4.31 9.87
Loans &
Advances(Rent 1 1 1 1 1 1
advance )
Cash 2.33 3.52 4.91 6.49 8.56 10.68
Preliminary expenses 0.79 0.6 0.4 0.2 0 0
Other current Assets 1 1 1 1 1 1
Total 11.69 25.57 26.90 27.96 29.45 31.55
Assumptions:

1. There is no asset as the Goernment lends it's own land and property required for
manufacturing the product. The SHG does not hold any land and buildings for its own.

VII
Calculation of Term Loan Interest
I
Loan at
the
Intere Repaymen Balanc
Year beginni
st t e
ng of
the year
1 6.17 0.74 0.00 6.17
2 6.17 0.74 1.234 4.94
3 4.94 0.59 1.234 3.70
4 3.70 0.44 1.234 2.47
5 2.47 0.30 1.234 1.23
6 1.23 0.15 1.234 0.00
Interest 0.74 0.74 0.59 0.44 0.30 0.15
Term loan 6.17 4.94 3.70 2.47 1.23 0.00
Repayment 0 1.23 1.23 1.23 1.23 1.23

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 VII
Calculation of Depriciation
I
Year Value of machineries = Rs.7.297 lakhs
Value Depreciati cum
WDV
of M/c on depre
1 7.30 0.73 6.57 0.73
2 6.57 0.66 5.91 1.39
3 5.91 0.59 5.32 1.98
4 5.32 0.53 4.79 2.51
5 4.79 0.48 4.31 2.99
6 4.31 0.43 9.87 3.42
0.73 0.66 0.59 0.53 0.48 0.43
cum. Depreciation 0.73 1.39 1.98 2.51 2.99 3.42
WDV 6.57 5.91 5.32 4.79 4.31 9.87
IX Calculation of Debt Service Coverage Ratio
YEAR I II III IV V VI
EAIT 1.40 1.56 1.83 2.08 2.63 2.92
Add: Depriciation 0.73 0.66 0.59 0.53 0.48 0.43
Term Loan
0.74 0.74 0.59 0.44 0.30 0.15
Interest
Total cash inflow 2.87 2.97 3.01 3.06 3.40 3.50 18.81
Term Loan
0.74 0.74 0.59 0.44 0.30 0.15
Interest
Repayment of
0 1.234 1.234 1.234 1.234 1.234
Term Loan
Total cash outflow 0.74 1.97 1.83 1.68 1.53 1.38 9.13
Debt Service Coverage
3.88 1.50 1.65 1.82 2.22 2.53 2.06
Ratio
X Calculation of Pay back period
Year I II III IV V VI
cum Cash inflows 2.33 3.52 4.91 6.49 8.56 10.68
NPV 2.03 3.06 4.27 5.64 7.45 9.29
Investment 6.69
Pay back period in
4.02
years
Discounted payback
4.14
period in yrs
XI Calculation of Internal Rate of return
Year 0 I II III IV V VI
Cash Inflows -6.69 2.33 1.19 1.39 1.58 2.07 2.12
15.02
IRR
%

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ANNEXURE:
Consumer Survey –
https://bim.sharepoint.com/:f:/s/BIMVILLAGEIMMERSIONPROGRAM/ElTL-
ETA0wVNhmTVJSRVvSMB0QZVdGWFppj1M3MQJqP3Sg?e=hnPLpG

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