Establishment of

Castor Derivatives Base

Perfumery Raw
Materials Unit
Agro and Food
Processing
Government of Gujarat
Contents

Project Concept 3
Market Potential 5
Growth Drivers 6
Gujarat – Competitive Advantage 7
Project Information 8
- Location/ Size
- Infrastructure Availability/ Connectivity
- Raw Material/ Manpower
- Key Players/ Machinery Suppliers
- Key collaborations
- Key considerations
Project Financials 13
Approvals & Incentives 14
Key Department Contacts 18

Page 2
Project Concept

The concept
The project envisages setting up of a Castor oil derivatives unit to manufacture perfumery
raw materials. Castor is abundantly produced in Gujarat thereby making it an attractive proposition.

Castor oil and its derivatives

Castor oil is extracted from castor seeds and is used either in its crude form or in the refined
hydrogenated form. Generally, 65% of it is processed (about 28% is refined, 12% is hydrogenated,
20% is dehydrated and the balance 5% is processed to manufacture other derivatives).
The major derivatives of castor oil used in the industry are hydrogenated castor oil (HCO),
Dehydrated castor oil (DCO) and Sebacic acid etc.

Key derivatives of castor oil

Hydrogenated Castor Oil Castor Oil Pale Pressed Grade 2-Octanol(Capryl alcohol)
First pressed degummed grade
Castor meal Sebacic Acid
castor oil
12-Hydroxy Stearic Acid (12-HSA) First Special Grade (FSG) Castor Oil Ricinoleic Acid
Blown castor oil Castor Oil USP Castor Oil C-18 derivatives
Sulfated castor oil Dehydrated Castor Oil (DCO) Castor Oil C-11 Derivatives
Commercial Grade Castor Oil Ethoxylated Castor Oil Castor Oil C-7 Derivatives
BP grade Castor Oil Extra Pale Grade Castor Oil Castor Oil C-3 Derivatives
Castor Oil European Pharmacopoeia

Global castor oil and derivatives market

► The global castor oil and derivatives market is Global castor oil and derivatives
expected to reach US$1.81 billion by 2020, with demand (in kilogram tons)
the global demand growing at a CAGR of 4.2%
CAGR
between 2013 and 2020.
4.2%
► Cosmetics & pharmaceuticals accounted for over
25% of total market volume in 2013 and was the
largest application segment. Growing demand
for bio ingredient based cosmetics would
continue to remain a key driver for this segment.
898
► Asia Pacific emerged as the largest regional 674
market and accounted for 57.2% of total market
volume in 2013. Growth of personal care
industry coupled with increasing healthcare
expenditure particularly in China and India is 2013 2020
expected to drive the regional demand. Source: Global Castor Oil And Derivatives Market Size,
Share And Trends Report To 2020 : Radiant Insights

Page 3
Project Concept

Heptaldehyde and Undecylenic acid – the basic derivatives of castor oil,

used to manufacture various perfumery compounds, which in turn are used to
manufacture perfumes and synthetic flavors.

Perfumery Compounds End – use of Perfumery

prepared compound
Alpha-amyl Cinnamic In soap perfumery
Aldehydes
Nonylenic acid esters to Coconut aldehyde for flavor
make 8-n-amylbutyrolactone of coconut milk
Heptaldehyde Heptanoic acid Verts de Violette

Methyl-n-heptyl ketone and Oil of Rue used in violet

ester of 3-noninic acid Perfume
Heptaldehyde Jasmine Flavor

Gamma Undecalactone also Peach odor

known as Aldehyde- C-14
Nonylic acid , Nonylic alcohol Rose and Orange oil
and nonylic aldehydes constituents
Undecylenic Undecylenic alcohol Floral odor with fatty note
acid
n-decylaldehyde Spicy Orange like odor

Allyl esters of Undecylenic Odor of quinches and as

Acid modifier

Specifications for proposed perfumery chemicals

Specification details Heptaldehyde Undecylenic Acid

Appearance description Pungent smelling oily liquid Oily liquid
Color Colorless to pale yellow Water white to pale yellow
Acid content 5 % maximum 90-95% minimum
Aldehyde content 90-95% minimum 3-5% maximum
Refractive index at 25° C 1.415 1.488
Freezing point (in ° C) NA 21-24
Acid value NA 295-304
Specific gravity 0.815 0.92
Boiling point (in ° C) 152-154 NA

Page 4
Market Potential

Global flavor and fragrance industry (F&F industry)

Global Flavors and Fragrances Market 2014- Top players in Global F&F Industry:
2018 (US$ billion) Market share 2014
35.0 6.1% 6.2%
30.0 5.9% 6.0%
25.0 5.7% 5.8% Givaudan
20.0 20%
5.6% 38% Firmenich
15.0 5.4%
5.4% IFF
10.0 14%
5.0 5.2% Symrise
25.5 26.9 28.4 30.1 31.9
0.0 5.0% 12% Takasago
2014 2015 2016 2017 2018 5% 11%
Others
US$ billion % growth

Source: Technavio Analysis Source:Leffingwell & Associates

► The global F&F industry comprises the traditional market for F&F as well as the one for
ingredients such as essential oils and aroma chemicals. The market is estimated to be US$25.5
billion in 2014 and is expected to grow at a CAGR of 5.8% to reach US$31.9 billion by 2018.
► The market is driven by increasing demand from emerging markets, rising preference of
packaged foods and beverages, growing cosmetics industry and emerging middle class
population.
► The industry is characterized by its dynamic structure and intense competition. It is estimated
that in 2014 top five players accounted for 61.7% of the market. Givaundan (famous for
developing perfumes for Ralph Lauren) leads the market with 19% share, followed by Firmenich,
IFF, Symrise, and Takasago.

Indian flavor and fragrance industry (F&F industry)

► The fragrance market is consolidated, with large players such as Unilever, Dabur, Reckitt
Benckiser and Henkel generating the bulk of sales. India differentiates itself in the global market
with its sandal, jasmine and herbal-related fragrances, and spice-based flavors.
► India, being a world leader in Castor seeds/oil production and processing has edge over other
countries such as Japan, France and Germany which are importing castor oil and manufacturing
these perfumery chemicals for further processing into perfumes and synthetic flavors.
► Bulgari Parfums remains the leading player in fragrances in 2014, with a 6% value share as it
has massive presence in the market, reinforced by the company’s in-store promotional
campaigns and strong brand image amongst urban consumers.
► The Indian fragrance industry is witnessing advances in water soluble and water-insoluble
fragrance encapsulation technology.

Page 5
Growth Drivers

► Castor seed production in India is estimated to rise by 10%

to reach 1.39 million tonnes for the year 2015-16.
► Production in Gujarat will increase by 8% to 1.15 million
High availability
tonnes as against 1.06 million tonnes in 2015. Area under
of castor seeds castor crop registered an increase of 6% to 781,000 hectares
during the same period

► Castor oil and its derivatives are used in a number of

industries for production of a wide variety of products.

Wide industry ► It is used as a raw material in the manufacture of a number

of chemicals, which are further used in the manufacture of
application
surfactants, specialty soaps, surface coatings, cosmetics &
personal care products, pharmaceuticals, perfumes,
plasticisers, greases & lubricants and specialty rubber.

► India’s per capita income increased by 11.5% from US$ 969

in 2010-11 to US$ 1499 in 2013-14, promising economic
growth indicate corresponding trends for income growth
Rising per
► Holistic development will encourage higher spending on
capita income luxury items such as perfumes, which would further drive the
demand for castor derivatives.

► With the market in developed nations almost stagnant,

Increased manufacturers are targeting developing countries where the
growth rate in the flavor and fragrances market is higher
demand from than the global average.
developing
► Further, global players are sourcing essential oils from India
markets and to cut down cost of manufacturing quality aroma and
flavor chemicals.

Page 6
Gujarat - Competitive
Advantage
High availability of raw material

Castor seed production in India (in million

tonnes)

1.39
~1978kg/ha Highest
1.27 productivity in the world

0.17
0.26 ~84% of castor seeds produced in
India comes from Gujarat.

4.91 lakh ha. & ~9.71 lakh

MT Production
1.1 1.13

2015 2016E 58% rainfall deficit in Gujarat in 2016

till date. Low water requirement for
Gujarat Other states cultivation of castor seeds makes
Source:Solvent Extractors' Association of India (SEA) Gujarat a favorable destination.

Availability of skilled manpower

► Gujarat has a well developed chemical industry base, which can offer ready availability of
technical and commercial manpower.

Other advantages

Ease of doing business

► Only state which comply 100% with the environmental procedures. Gujarat fares
highly when it comes to setting up a business, allotment of land and obtaining a
construction permit.

Flourishing economy
► Gujarat contributes 7.2% of the Nation’s GDP and shows leadership in many areas
of manufacturing and infrastructure sectors. Gujarat’s SDP (State Domestic Product)
at current price registered a growth of 11% during the year 2014-15.

Strategic location and excellent infrastructure

► Located on the west coast of India, Gujarat is well connected to the major cities of
the world by air and sea routes. The state has 45 ports, 12 domestic airports and 1
international airport in addition to an extensive rail and road network.

Page 7
Project Information

Project location
Major castor producing areas in Gujarat ► Castor seed is cultivated mostly in arid
and semi-arid regions across the world
with a crop duration of 7 to 8 months.
► India is the world’s largest producer of
castor contributing to around 85% of
world’s total production.
► Gujarat, Rajasthan and Andhra Pradesh
contribute 96% of the total castor seed
production in India.
► The production in India has been
witnessing an increasing trend in the
2001-2014 decade due to rising usage of
castor oil in different industries.

Source: Religare castor seed crop survery report

District-wise castor production in Gujarat (2014-15)

District Estimated area Estimated yield Estimated
('000 ha) (Kg/ha) production ('000
tons)
Banaskantha 135 1813 245
Patan 117 1614 189
Mehsana 78 1381 108
Ahmedabad 48 1789 86
Sabarkantha 38 1849 70
Surendra Nagar 68 788 54
Gandhinagar 26 1760 46
Kutch 93 474 44
Vadodara 27 1568 42
Kheda 13 1710 22
Morbi 28 800 22
Rajkot 10 855 9
Jamnagar 8 760 6
Panchmahal 2 1890 4
Others 42 1050 44
Total 733 1351 990

Page 8
Project Information

Project at a Glance

Location Mehsana, Gujarat

Area 4500 sq. km.

Project site – Mehsana (Gujarat)

Mehsana

9 sub-districts
10 towns
606 villages
9 CD blocks

► Mehsana is one of the 33 districts of Gujarat and is located in the northern part of the state with
a geographical spread of 4500 km2.

► The district shares border with Banaskantha district in the north; Ahmedabad and Gandhinagar
districts in the south; Patan and Surendranagar in west; and Sabarkantha district in east.
► The district is strategically located and is at a distance of around 75 km from Ahmedabad. Over
the last few years, the district has seen significant industrial development.

► Mehsana is divided into nine sub-districts. Among these, industrial development is mainly
concentrated in Kadi and Mehsana Taluka, while other regions like Kheralu, Vadnagar and
Satlasana still remain backward.

Page 9
Project Information

Infrastructure availability
Logistics & connectivity
Mehsana is well-connected with different parts of Gujarat as well as with
other states in India

Rail Road

► Mehsana is connected with other ► Mehsana has a 51 km four-lane toll road

districts of the state like Patan, connecting it with Ahmedabad, Gujarat.
Porbandar and Ahmedabad by rail.
► The district is well-connected with
► It is further connected to Kandla port via Gandhinagar (68km), Vapi (458 km),
rail network through Ahmedabad and
Palanpur (72km), Rajkot (299km) and
Gandhidham.
Surendranagar (143km).

Air Port

► The nearest airport to the district is the ► The nearest port is at Dholera, 110 kms
domestic and international airport at from Ahmedabad. The port has potential to
Ahmedabad located at a distance of cater to ship building and ship repairing
77km. industries; offers opportunity for developing
berths for salt export.

► Dholera is being promoted as the Special

Investment Region for Gujarat.

Utilities

Water
Power

► Water for industrial purposes can be

obtained from four sources viz. Gujarat ► The main source for the power supply is
Gujarat Energy Transmission
Water Supply and Sewerage Board
Corporation Limited.
(GWSSB), an irrigation canal, dams, and
surface reservoirs.

Page 10
Project Information

Sourcing of raw material

► Gujarat is the largest castor seed producing state in India. Raw material can be easily sourced
from the main castor producing districts - Banaskantha, Patan, Mehsana, Ahmedabad and
Sabarkantha.
► Farmers in Gujarat sowed a higher number of castor seeds in 2014, primarily driven by high
prices in the market. The state also received decent rainfall which further helped in enhancing the
yield.

Key castor oil manufacturers in India

Jayant Agro Adani Wilmar Gokul Refoils &

Solvent Ltd.

Shivam Agro Sebacic India Limited

Key collaborations
Following are a collaborations in the castor derivatives market in recent years:

Collaboration Year Description

Arkema acquired 25% stake in Jayant Agro’s

Jayant Agro – Arkema 2013 subsidiary Ihsedu Agrochem which specializes in
the production of castor oil.

Jayant Agro, Mitsui Chemicals and Itoh Oil

Jayant Agro – Mitsui
Chemicals entered into a joint venture for
Chemicals – Itoh Oil 2013
investing in Vithal Castor Polyols Pvt. Limited for
Chemicals
manufacturing Castor Oil based Polyols

Page 11
Project Information

Equipment and machinery requirement

List of plant and machinery
Particulars Units required
Cracking unit – with column (MS), condenser (MS), receiver (MS) with 2
electrical heating
Castor oil (raw material) tanks 4
Acidification tank (SS) 2
Saponification tank (SS) 2
Caustic tank (MS) 1
H2SO4 tank (SS) 1
Dryer (PVC) 1
Storage tanks of crude fatty acid (PVC) 1

List of suppliers for plant and machinery

Company Location
Troika Process Pvt Ltd. Mumbai
Muez-Hest India Pvt. Ltd. Mumbai
Chempro Ahmedabad
Sterling Equipments Pvt. Ltd. Pune
Sundex Process Engineers Pvt. Ltd. Mumbai
Servotech India Limited Mumbai
Kumar Metal Industries Pvt. Ltd. Mumbai

Key considerations
► The Flavour and Fragrance industry is characterized by unprecedented volatility in the price of
castor seeds.

► The essential oil segment faces fierce competition from manufacturers and sellers of synthetic
flavouring, which is comparatively less expensive than their products.

► Stringent safety-related norms issued by the Flavor and Extracts Manufacturers Association
(FEMA) and the International Fragrance Association (IFRA) restrict the use of several chemicals
in production and creation of F&Fs.

Page 12
Project Financials

Cost of setting-up a castor oil derivatives unit

Project cost and means of finance

Project components & specifications Cost (INR million)

Land and Land development (Area: 5,000 square meters) 4.25

(Average land cost ~INR850 per square meters)

Buildings and civil works 6.47

Plant and machinery (30 tons/day) 10.78

Miscellaneous and other fixed assets 2.16

Preliminary and pre-operative 1.62

Provision for contingencies 1.62

Total Fixed Assets 26.90

Margin for working capital 11.32

Estimated block capital cost of project 38.22

Means of finance Cost (INR million)

Promoter’s contribution (Equity) 12.62

Term loan (Debt) 25.61

Total 38.22

Key operational indicators

Particulars Units

Project capacity (in tons per annum) 6,000

Working days in a year (8 hours single shift) 200

Manpower requirement 50

Page 13
Approvals & Incentives

Approvals
The Gujarat Government defines Agro industries in its Agro industrial policy as units
which add value to agriculture products/residues, both food and non-food, by
processing into products which are marketable or usable or edible or by improving
storability or by providing the link from farm to the market or part thereof. Agro
industry also includes Hi-Tech and Bio-technology based agriculture.

The proposed unit will have to register itself with Secretariat of Industrial Approvals (SIA),

1 Ministry of Industries and Government of India, by filing Industrial Entrepreneur’s

Memorandum (IEM), if it has plant and machinery investment of more than INR10 million.

The proposed unit being an Export Oriented Unit (EOU) and catering the major market of

2 advance countries like Japan, Egypt, USA, South Korea & Netherlands, are required to get
their products approved with Food and Drugs Administration (FDA) in these countries,
apart from registration with Indian and state food administration departments.

The most critical aspect of this product will be its quality for export consumers and Codex

3 standards of respective countries will be followed by the unit. It is obligatory to meet

provisions under the PFA act for all ingredients and quality aspects for marketing product
in Indian market.

Export Oriented Unit (EOU) registration from RBI, Directorate General of Foreign Trade

4 (DGFT) and with CHEMEXCIL (Basic Chemicals, Cosmetics & Dyes Export Promotion
Council) as registered manufacturer exporter to avail export incentives.

Page 14
Approvals & Incentives

Approvals Required to set up an agro industry*

Government permissions Concerned Department

Industries Commisionerate, (offices in each
Permission for starting the agro industrial project
district)
Town Planning Department \ Village
Approval of Factory Lay out
Panchayat
NOC on Pollution Control State Pollution Control Board
ISI Certification Bureau of Indian Standards
Department of Sales Tax, (Government of
Sales tax number from the State
Gujarat)
Department of Sales Tax, (Government of
CST no from the Central Government
Gujarat)
Department of Sales Tax, (Government of
Professional tax no
Gujarat)
License under Shop and Establishment Act Municipal Corporation
Registration under PFA Act Food and Drug Controllers Office
Steam Boiler and Smoke Nuisance
Boiler Inspection and verification of smoke Nuisance
Department
Income tax no Income Tax Department
Electricity Connection & sanction load GEB
Chief Electrical Inspector, Commissioner of
Inspection & approval of electrical installations
Electricity Duty
Inspection and passing of heavy vehicles \ reefer
RTO Office
vans, mobile pre-cooling units
Inspection of Weights, measures and packaging Controller of Legal Metrology Department
Number, inspection and collection of excise duty Department of Central Excise
Inspection of labs using sprits and alcohol in an
Prohibition and Excise Department
industrial unit
Registration under Provident fund Employees Provident fund Organization

* All the permissions are not required from the day one but as the unit becomes operational, most of the
above mentioned major permissions have to be obtained.

Page 15
Approvals & Incentives

Incentives from Government of Gujarat to Agro Industries -

Comprehensive Agro Business Policy – 2016 - 2021

Assistance of Capital Investment Subsidy:

Capital Investment Subsidy of 25% of eligible project cost subject to maximum of INR 0.5 million
for setting up/ expansion and diversification/modernization of agro and food processing units.

Assistance for back ended interest subsidy on term loan:

• Back ended interest subsidy at 7.5% on the term loan with maximum amount of INR 1.5
million for a period of 5 years for setting up/ expansion and diversification/modernization of
agro and food processing units.
Additional back ended interest subsidy on term loan:
• 1% additional interest subsidy to SC/ST, physically challenged or women entrepreneurs.
• 1% additional interest subsidy to entrepreneurs below 35 years age.

Quality certification mark:

MSME agro units are required to obtain quality certification mark for export purposes. For this
50% (maximum of INR 0.5 million) assistance of expenditure incurred will be granted for obtaining
certification mark from institute approved by Quality Council of India.

Skill enhancement:
Provides assistance at the rate of 50% of fee paid, subject to maximum of INR 10 thousand per
employee on obtaining industry recognized skill certifications from recognized institutions.

Incentive on power tariff and electric duty:

Provides power tariff subsidy at the rate of INR one per unit in the billed amount of the utility as
promotional incentive on reimbursement basis for a period of five years with effect from the
commencement of commercial production/ rendering services.

Page 16
Approvals & Incentives

Gujarat Industrial Policy 2015

Government of Gujarat has announced an ambitious Industrial Policy, in January 2015, with the
objective of creating a healthy and conducive climate for conducting business and augmenting the
industrial development of the state, including agro and food processing.
Approvals
• Registration of the industrial undertaking
• Industrial Entrepreneur Memorandum or Udyog Aadhar
• Non-agriculture land permission and purchase deed registration
• Consent to Establish from Gujarat Pollution Control Board
Quantum of incentives
% of eligible fixed
Category of % of Net VAT % of Net VAT to be
capital investment Incentive period
Project Location reimbursement to paid to
entitled for (no. of years)
(Taluka) the unit Government
Incentive
1 100 90 10 10
2 80 80 20 10
3 70 70 30 10
Net VAT incentives
Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not
exceed one-tenth of the total amount of eligible incentive.
Classification of the Project Amount (in INR crore)
Ultra Mega Industrial Unit 500
Mega lndustrial Unit 400
Large Industrial Unit 150
Micro, Small or Medium Industrial Unit 50

Page 17
 Agricultural & Processed Food Products Export Development Authority
http://apeda.gov.in/apedawebsite/

National Bank for Agriculture and Rural Development (NABARD)

www.nabard.org/

Food Safety and Standards Authority of India

http://www.fssai.gov.in/

Agriculture and Co-operation Department

www.agri.gujarat.gov.in/index.htm

Gujarat Industrial Development Corporation

www.gidc.gov.in/

Industries Commissionerate
www.ic.gujarat.gov.in

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Gujarat Agro Industries Corporation Limited

Gujarat State Civil Supplies Corporation Ltd Building
2nd Floor , "B” Wing , Sector 10A,
Gandhinagar – 382010, Gujarat, India
Phone / Fax : 079-23240208
Email: [email protected]
https://gaic.gujarat.gov.in/