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MODIFIED STARCH

CONTENTS

SECTION I PRODUCT CHARACTERISTICS AND SPECIFICATION SECTION II PRODUCT APPLICATIONS SECTION III INDIAN MANUFACTURERS SECTION IV IMPORT/EXPORT LEVEL SECTION V PRICE DETAILS SECTION VI INDIAN DEMAND SECTION VII BROAD OUTLINE OF MANUFACTURING PROCESS SECTION VIII RAW MATERIAL REQUIREMENTS, UTILITY

AND AVAILABILITY SECTION IX GLOBAL SCENARIO SECTION X DISCUSSIONS ON ECONOMIC CAPACITY, PROJECT COST AND PROFITABILITY PROJECTIONS SECTION XI SWOT ANALYSIS SECTION XII FACTORS INFLUENCING THE POSITION FOR

A NEW INDUSTRY AND RECOMMENDATIONS

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SECTION I

PRODUCT CHARACTERISTICS AND SPECIFICATION

1.1. General Details Ordinary Starch when cooked to increase its thickness power is termed as Modified Starch. Modifications of Starch are carried out to change one or more of following characteristics Pasting Temperature, Solids viscosity relationship, Gelatinisation and Cooking characteristics, Resistance of pastes to breakdown in viscosity by acids, Heat and\or mechanical shear, Retrogradation tendencies, Ionic character, Hydrophilic character.

Different Modified Starches

Sector of applications

Thin boiling starch, White dextrine starch Yellow dextrine starch

Textile

Oxidised starch and Cationic starch

Paper industry

Starch ester Food processing industry as a thickener, filler, binder or stabiliser

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SECTION – II

PRODUCT APPLICATION

The main uses of starches in general and modified starches in particular are indicated in the following table. To meet the needs of a particular application, a suitable starch product can be developed by selecting the right type of starch (potato, maize, wheat, tapioca, etc.) as well as the type of modification(cross linking, esterification, pregelatinisation). Some important performance factors are gelatinisation characteristics, thickening power, viscosity stability, binding and adhesive characteristics, film forming ability and viscosity stabilising activity. It is important to remember that there are difference in the properties of starches derived from different biological sources. Economic considerations also play a significant part in the selection of a particular starch, as price of a particular type of starch varies with local availability of raw material as well as the value of the co-products produced. Applications

Different modified Starches

Sector of applications

Thin Boiling Starch White Dextrine Starch Yellow Dextrine Starch

Textile

Oxidised Starch And Cationic Starch Paper industry Starch Ester Food processing industry as a thickener, filler, binder or

stabiliser

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Applications of thin boiling Starch (Acid Modified Starch)

Sector

Function Remarks

Textile To warp sizes and to increase yarn strength and abrasion resistance during weaving.

These uses have somewhat declined due to increased use of poly(vinyl alcohol). Starches with different fluidities are used for specific types of yarns. Thus, low fluidity Starch is used for heavy yarns and high fluidity Starch is used for light yarns. Starch concentrations of 10 to 12% are usual for such sizing applications.

Gypsum board To bond plaster and paper together. Dry wall construction

Starch gum confectionery To produce proper texture, the acid modified Starch is boiled together with sugar, corn syrup and water to form highly concentrated pastes which form very firm gels on cooling. Not surprisingly, the granule structure is almost completely disintegrated in the cooking process.

Candy orange slices.

Paper To increase the strength of kraft linerboard, to improve bleached board printability and to increase the production rate of corrugated board.

It is typically applied at 66 to 71 deg C and PH 7.5 to 8.0.

Applications of Oxidised Starch

Sector Function Remarks Paper To determine the properties of

the Starch derivative which is used mostly in the paper industry. It acts as a coating binder for high solid pigment coating colours. As a wet end additive in paper manufacture, to seal pores, improve surface strength, and provide ink holdout

80 to 85% of oxidised Starch is used in paper production Oxidised Starch is also used as a surface size in paper and paperboard manufacture. As a pigment dispersant to reduce pigment retention

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Laundry finishing and in making construction materials

To provide sizing and adhesive characteristics.

Used in wallboard and ceiling tiles.

Food To give good adhesion of the breading to the food.

Lightly oxidised Starches have application in breading batters for deep fried foods

Gelatin immobilisation of yeast cells

As hardening agents Periodate oxidised Starch is a good substitute for Formaldehyde or Glutaraldehyde

Textile To provide abrasive resistance for yarn

Now being replaced by synthetic polymers.

Applications of Cationic Starch Sector

Function Remarks

Paper As wet end additives and sizings, and as coating binders. To increase the retention of fines and improve paper strength.

Cationic Starch is used in flocculation agents for clay, titanium dioxide, coal, iron ore, silt, anionic Starch and cellulose and for many other uses. Cationic Starches may also be used as paper sizing agents.

Textiles It is used as warp sizing agent and provides good lubrication and yarn abrasion resistance.

The ability of cationic Starch to flocculate fines is seen in its use in treating raw primary sludge.

Applications of Starch esters

Sector

Function Remarks

Paper Starch phosphates are used as wet end additives to improve paper strength and filler retention, and as thickeners in textile printing inks to improve ink penetration into cotton

In textiles, these esters act as sizes for polyester cotton, polyester rayon and pure cotton yarns.

Adhesives To improve storage stability and promote rapid bond strength

Use of 10 mg/l of Starch phosphates prevents or inhibits scale forming deposits

Food As effective oil-in-water emulsifiers as well as good thickeners and stabilisers

Coal washery tailings can be flocculated by Starch phosphates in food.

Medicinal To promote rapid healing and reduces incidence of infection.

Starch phosphates have also been used in medicinal films for the treatment of skin wounds and burns.

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SECTION III

INDIAN MANUFACTURERS

Indian manufacturers of Modified starch include the following. * Anil Starch Products Ltd., 1st Floor, Ramji Kamani Marg Ballard Estate, Mumbai-400 026 Head office Anil Road, P.B. No. 10009,

Ahmedabad 380 025 Factory : Nava Bunder Road, Bhavnagar, Gujarat Madras Office : 29/4, Desilva Road Mylapore Chennai-600 004 * Bharat Starch Industries Ltd. (Bio Polymer Division) Kalitheerthalkuppam, Pallineliyanur (Via) Madagadipet Commune,Pondicherry-605 107 Mumbai Office : 234, Udyog Bhavan, Sonawala Road, Goregaon (E), Mumbai-400 063 Regd. Office : Patriot Complex (2nd Floor) Opp. Amrakunj Society, Race Course Circle, Baroda-390 007 Corporate Office : N-75, Connaught Circus, New Delhi-110 001 * Cellulose Products Of India Limited P.O, Kathwada Maize Products Dist. Ahmedabad 382 430 * Corn Products Co. India Ltd., Sreeniwas House,H.Somani Marg,Fort,Mumbai. Factory : MIDC Indl. Area,

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Belapur Road, Kalwa, Thane * Dakshin Synthetic Bonds and Chemicals Ltd., 32,33, Gopal Nagar, Peelamedu, Coimbatore-641 004. * E.P. Industrial & Agro Chemicals Pvt. Ltd., Admn. Office : 1-7-264, 6th Floor, Emerald House, S.D. Road,Secunderabad - 500 003, (A.P.) * Gujarat Ambuja Proteins Ltd., Gujarat Ambuja Exports Ltd., "Ambuja Tower", Opp Mem Nagar Fire Station, Navrangpura, Post. Navjivan, Ahmedabad-380 014 * Riddhi-Siddhi Starch & Chemicals Ltd. GCR030 57, Hirabhal Market, Diwan Ballubai Road,Ahmedabad-380 022. 701, Sakar-1, Opp. Gandhigram Railway Station, Ashram Road Ahmedabad-380 009 * Sahyadri Starch & Chemicals (P) Ltd. 60-61, 3rd Phase, 4th Main, Peenya Industrial Area, Bangalore-560 058 * Sabari Starch A-31, Industrial Estate Thattanchavady-605 009 * Tirupati Starch & Chemicals Ltd. Madan Mahal, 12-A, Agrawal Nagar, Indore-452 001, Madhya Pradesh. * Sukhjit Starch & Chemicals Limited Regd. Office Sarai Road, N.A. District, Phagwara, Punjab-144401 * Universal Starch & Chemicals Ltd.,Dhulia Indian installed capacity for Modified Starch: 35,000 tonnes per annum

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New projects under planning Name and address of the Indian company

Name of the foreign collaborator

Items of manufacture

Nature of collaboration

Amount (Rs.in million)

Foreign equity %

Cerestar Holding B.V. C/o Chambers of Zia Mody 16, Ali Chambers, N.Master Road, Mumbai 400 001

Cerestar Holding B.V., Netherlands

Manufacture and marketingof Starch and its derivatives including glucose syrups, dextrose, modified Starches and by products such as corn gluten meal and crude corn oil

Financial 1900.00 100.00

Bharat Starch Industries Ltd., B6/9, Commercial Centre, Safdarjung Enclave, New Delhi

Ae Stalye Invstment Inc. Mauritius

Starch and derivatives

Financial 80.10 35.47

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SECTION IV

IMPORT/EXPORTS LEVEL 4.1. Present import level Around 2300 tonnes per annum Countrywise Imports of Dextrins & Other Modified Starches Period April 2001 to March 2002

Country Qunatity in Kgs

Australia 1000 Austria 4548 Belgium 1600 Chinese Taipei 13700 China P RP 2508 France 17835 German F REP 1087278 Hong Kong 100 Indonesia 42536 Ireland 200 Italy 38000 Japan 40898 Malaysia 1225 Netherland 413577 Nigeria 800 Singapore 5276 Spain 10134 Switzerland 2000 Thailand 128581 Turkey 190950 U Arab Emts 40 UK 45546 USA 254205

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Sample of individual imports Year: 2002 Name of the Importers

Quantity in tonnes

Value in CIF Rs.

Country Date Port

Godrej Pillsbury Ltd.,

0.300 35667 US 09.01.2002 to 16.01.2002

Mumbai

Godrej Pillsbury Ltd.,

0.408 80223 US 09.01.2002 to 16.01.2002

Mumbai

ICI India Ltd., 4.535 393151 US 09.01.2002 to 16.01.2002

Mumbai

ICI India Ltd., 1.021 82562 US 09.01.2002 to 16.01.2002

Mumbai

ICI India Ltd., 0.572 102409 US 09.01.2002 to 16.01.2002

Mumbai

Firmenich Aromatics India

8.000 970310 US 24.01.2002 to 31.01.2002

Mumbai

Matsushita Lakhanpal Battery

1.800 208472 Japan 24.01.2002 to 31.01.2002

Mumbai

Matsushita Lakhanpal Battery

0.750 86863 Japan 24.01.2002 to 31.01.2002

Mumbai

ICI India Ltd., 0.454 34094 US 11.02.2002 to 19.02.2002

Mumbai

ICI India Ltd., 1.016 73770 Thailand 11.02.2002 to 19.02.2002

Mumbai

Jalen Dyeing & Bleaching Mills

5.000 259720 Holland 01.03.2002 to 08.03.2002

Mumbai

Pepsi Foods Ltd., 3.021 515727 US 01.03.2002 to 08.03.2002

Mumbai

ICI India Ltd., 2.613 272035 US 22.04.2002 to 30.04.2002

Mumbai

Nestle India Ltd. 19.000 791472 Italy 01.05.2002 to 07.05.2002

Mumbai

ICI India Ltd. 0.023 1219 U.S. 03.06.2002 to 10.06.2002

Mumbai

Jalan Dyeing & Bleaching

6.000 308349 Holland 01.07.2002 to 05.07.2002

Mumbai

Hindustan Lever Ltd. 1.000 44904 Australia

23.08.2002 to 29.08.2002

Mumbai

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ICI India Ltd. 6.532 734158 U.S. 17.09.2002 to 24.09.2002

Mumbai

4.2. Present export level Around 1250 tonnes per annum Countrywise Exports of Dextrins & Other Modified Starches Period April 2001 to March 2002

Country

Qunatity in Kgs

Australia 3000 Bangladesh 82000 Egypt A RP 19000 Greece 19000 Indonesia 2000 Kenya 20000 Korea RP 6000 Kuwait 10000 Lao PD RP 1000 Malaysia 19916 Mauritious 549662 Mexico 3000 Oman 1100 Tanzania REP 258501 Thailand 28500 U Arab Emts 215200 USA 7911

Sample of individual exports - Year: 2002 Name of the exporters Quantity in

tonnes Value in CIF Rs.

Country Date Port

Spectrum Polymers 3.500 90871 Dubai 01.02.2002 to 15.02.2002

Mumbai

Spectrum Polymers 1.500 36895 Dubai 01.02.2002 to 15.02.2002

Mumbai

Spectrum Polymers 4.000 108428 Dubai 01.04.2002 to 30.04.2002

Mumbai

Spectrum Polymers 1.000 26082 Dubai 01.04.2002 to 30.04.2002

Mumbai

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Spectrum Polymers 1.000 25958 Dubai 01.04.2002 to 30.04.2002

Mumbai

Spectrum Polymers 4.000 98837 Dubai 01.04.2002 to 30.04.2002

Mumbai

Spectrum Polymers P.Ltd.,

4.000 104962 Dubai 01.05.2002 to 31.05.2002

Mumbai

Spectrum Polymers P.Ltd.,

20.000 323300 Dhaka 09.06.2002 to 31.06.2002

Chennai

Spectrum Polymers P.Ltd.,

3.000 78837 Dubai 01.07.2002 to 15.07.2002

Mumbai

SECTION V

PRICE TRENDS The price of Modified Starch varies depending upon the type of the Modified Starch The average price of Modified Starch is around Rs.25 to 30 per kg.

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SECTION VI

INDIAN DEMAND

Modified starch is predominently used in the following sectors * Paper * Textiles * Adhesives * Food * Other sector Sectorwise demand for Modified Starch - Period 2002

Sector Demand level per annum In tonnes

Paper 21500 Other sector such as textile, adhesive, food,

6000

Total 27500 Categorywise demand

Demand in tonnes per annum

Cationic 5000 Oxidised.acetylated 16000 Thin boiling/dextrins and others 6500 27500 Growth rate in demand The growth rate in demand for Starch/Modified starch is likely to be in tune with the performance and growth rate of downstream sector in the coming years.

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Sector Estimated growth rate in % Paper* 9 to 10% Other sector such as textile, adhesives, food 8 to 9% * The growth rate of 9 to 10% annually, slightly would be higher than that of the overall paper market’s growth in India during the next few years, due to the likely increased demand for papers that use starch, including uncoated free sheet, other high quality printing and writing papers, and even some package grades.

SECTION VII

BROAD OUTLINE OF MANUFACTURING PROCESS

Although native starch does have its industrial uses, most often industry requires the functionality of modified starch. The modification is achieved in one of two ways-either by the starch producer, who modifies the starch without disrupting the granules, or by the end-user who cooks and modifies the starch in a single step operation. The first method results in a granular product good for storage and the other in a ready-to-use paste. The two methods do not always act as substitute for the other. Starch may be modified in numerous ways, both physically and chemically. A manufacturing unit normally produces variety of modified starches, hence production is batch-wise. Only in cases where a plant produces a few modified starches in very large volumes are continuous processes employed. A generalised process for the manufacture of modified starches is as follows: Starch slurry is introduced into a well agitated tank. After the necessary adjustments of pH and temperature, the reagents are added, sometimes over a period of several hours and the reaction is allowed to proceed. A sample is analysed to ensure that the correct properties have been attained,after which the reaction is terminated, if necessary, by pH change or other means. The reacted starch is washed and concentrated in hydrocyclones or other systems,after which it is dewatered and dried in the normal way and pregelatinised. Some reactions require pH control using alkali. To avoid local gelatinisation in the tank, dilute caustic should be used and it should be well distributed. Sometimes, the use of salts, such as sodium sulphate, which prevent gelatanisation is necessary. The method of addition of reagent would depend on how fast the reaction takes place.. It should be noted that when starch is treated with a reagent that inserts substituent groups into the molecule, the extent of such treatment is measured by the degree of substitution.

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This is defined as the number of hydroxy group that have been substituted per anhydroglucose unit. For this commercially modified starches, the degree of substitution is less than 0.1. However, even at this low degree of substitution, the effect on the properties and the starch molecule can be substantial. Source of technology * Central Tuber Crops Research Institute, Kerala, * Regional Research Laboratory, Kerala, Major plant & machinery equipment and suppliers Reactor Chemitherm Plants & Systems P. Ltd.,

30, Anandha Street Alwarpet, Chennai-600 018 Texel Fabricators Pvt. Ltd., 335, Sidco Industrial Estate, Ambattur, Chennai-600 098, Tamil Nadu

Centrifuge The Anup Engineering Ltd., P.B. No.1158, Ahmedabad-380 002 B.M.T. Industries 15, Neelkanth Shopping Arcade 1st Floor, Chemburkar Marg, Chembur, Mumbai-400 071

Tray dryer Richard Engineering (Bombay) Pvt. Ltd. 42, IIF, Veerabadran Street Near Valluvar Kottam Nungambakkam, Chennai-600 034 Ganson Ltd. 645, Anna Salai, Chennai-600 006

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Steam boiler Cethar Vessels Ltd., No.4, Dindigul High Road, Trichy Firetech Boilers Pvt. Ltd. No.211, 2nd Cross, 38th Main, B.T.M. Layout 2nd Stage, Bangalore-68

SECTION VIII

RAW MATERIAL REQUIREMENTS, UTILITY AND AVAILABILITY

Raw material requirements Basis: One tonne of Modified starch Starch 1.2 tonne Utility Installed power 150 HP Fuel 160 litres Raw material availability In India, starch and its derivatives are largely produced from Tapioca (cassava) and Maize. The details of Indian availability and production of Tapioca and Maize are given below. * Tapioca-Indian scenario General details Tapioca, also known as cassava, is one of the major tuber crops grown in more than 80 countries of the world situated in the tropical wet belt. Botanically, it is called Mahihot Esculenta Crantz. The main cassava-growing countries in the world are Brazil, Zaire, Nigeria and Indonesia, with

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India ranking fifth. In India, tapioca grows mainly in Tamil Nadu, Kerala, Pondicherry and Andhra Pradesh. The yield is the highest in Tamil Nadu (28.7 tonnes per hectare), while it is 17.64 tonnes/hectare in Kerala and only 7.52 tonnes per hectare in Andhra Pradesh. Taking the country as a whole, the productivity is very high; 19.73 tonnes per hectare compared to Brazil where it is only 12.2, Nigeria 10.8 and Thailand 14.4. Agricultural scientists say that it is possible to raise the production upto 35 tonnes per hectare in India,if high-yielding varieties are cultivated with proper agronomic practices. The average Indian production is around seven million tonnes a year. Tapioca is one of the most efficient photosynthesising plants. It accumulates starch in large thickened storage roots which contain 25 to 35 per cent of starch. On a dry basis, the starch content reaches upto 90 percent. Tapioca starch is a potentialcandidate for the manufacture of alcohol to meet the energy needs of India. Tapioca is a multipurpose crop that takes nine to 11 months to and is drought resistant. The tubers have a light brown skin and white flesh. The most important use of tapioca as human food. At present about 70 per cent of the world's tapioca products is utilised as food, 20 per cent as animal feed and 10 per cent as starch and for other industrial uses. In African and Latin American countries, where tapioca forms a prominent food item, numerous delicacies have been evolved. However, the use of tapioca as food is declining in the wake of increased availability of cereals like wheat, rice and changing consumption patterns of the weaker sections of the society. Sago pellets made from tapioca by many cottage industries continue to be an important staple diet for sick and invalids in ŠNorth India. As a food item on days of fasting, it is verypopular in Maharashtra and Gujarat. However, people from Kerala and Tamil Nadu consume it as a staple food. Tapioca is also exported. Area of cultivation 3.9 million hectares Though Kerala ranks first in cultivation and production, Tamil Nadu is in the top slot in respect of processing Tapioca into sago and starch. Indian Production level Around 7 million tonnes per annum * Tamil Nadu scenario:- Salem district accounts for 85% total of the Tapioca and Starch production. 60% of Tapioca is converted into Starch and 40% goes for sago production. In Salem Dist., there are 750 small scale sago starch units producing 0.25 million tonnes of finished products.

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SECTION IX

GLOBAL SCENARIO Global demand 0.5 million tonnes per annum Global growth in demand 2 to 3% per annum Global producers Global producers of Modified Starch include the following Important Global manufacturers/trading houses of Starch * Cerestar International Sales Ave Louise 149, Bte 13 B-1050, Bruxelles Belgium.

* Alko Limited SF-05200 Rajamaki

* Raisio Chemicals Ltd. PO Box 101, Finland-21201, Raisio

* Raisio Chemicals Ltd. PO Box 101, Finland-21201, Raisio

* Roquette Freres a) 4, rue Patou 59022 Lille Cedex

* Miwon Co. Ltd., 52-1, Kayang-dong Kangoso-gu, Seoul.

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* Simonis BV P O Box 33, 3000 AA Rotterdam

* Henkel SA (Pty) Ltd. P O Box 3933, Johannesburg, 2000

* Allgain Limited 62/3, Soi Tanommitre, Ramindra 65 Road, Talaeng, Bangkhen, Bangkok-10220,Thailand

* National Starch & Chemical Pacific Operations Bangna Towers, 11/f, 2/3 Moo 14 Bangna, Trad Hi-Way Km 6, Bangaew, Bangplee, Samutprakarn 10540,Thailand

* Thai Prasit Starch Company Limited 1240, Srinakarin Road, Suan Luang, Bangkok 10250 Thailand.

* AVEBE America Inc., 4, Independence Way, CN-5307, Princeton, NJ 08543-5307, USA

* Aabbit Adhesives Inc. 2403 N Oakley Ave, Chicago, IL 60647

* National Starch and Chemical Company, 10, Finderne Avenue, P.O.Box 6500, Bridgewater, NJ 08807, USA.

Joint venture Raisio Chemicals (Raisio, Finland) and Emsland-Starke (Emlichheim, Germany) will form a joint venture to sell and market chemicals and Starch products to the paper industry in Germany, Austria and the Netherlands. The joint venture, Emsland Raisio Chemie (Hamburg), will operate as a part of Raissio Chemie (Hamburg), global operations. The joint venture is expected to have sales of about DM60 million ($35 million) its first year of operations.

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SECTION X

DISCUSSIONS ON ECONOMIC CAPACITY, PROJECT COST AND PROFITABILITY PROJECTIONS

Economic capacity : 1500 tonnes per annum Project cost : Rs.146 lakhs Assessment of project cost 1. Land S.No. Description Cost

Rs.in lakhs

1.1 Cost of land of one acre at Rs.5.5 lakh per acre 5.5 1.2 Cost of levelling, laying internal roads/fencing and

compound wall 0.55

Subtotal 6.05 2. Building S.No. Description Cost

Rs.in lakhs

2.1 Factory building of area 300 sq.m. at Rs.3200/sq.m. 9.60 2.2 Non-factory building of area 100 sq.m.at Rs.4500/sq.m. 4.50

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Subtotal 14.10 3. Cost of Plant & Machinery S.No. Description Cost

Rs.in lakhs

3.1 Cost of basic plant and machinery 42.00 3.2 Instrumentation and control 3.15 3.3 Pipelines and valves 4.20 3.4 Structurals for erection 2.10 Subtotal 51.45 3.5 Octroi, excise duty, sales tax, etc.at 12%� 6.17 3.6 Packaging and insurance charges (2%) 1.03 3.7 Transportation charges (2%) 1.03 3.8 Machinery stores and spares (2%) 1.03 3.9 Foundation charges (2%) 1.03 3.10 Installation charges (2%) 1.03 Total cost of plant and Machinery 62.77 4. Technical know-how fees Rs.2.5 lakhs 5. Miscellaneous fixed assets S.No. Description Cost

Rs.in lakhs

5.1. Electrification 2.00 5.2. Steam boiler and auxillaries 3.50 5.3. Water storage tank, borewell etc. 1.00 5.4. Fuel storage tank 1.00 5.5. Laboratory equipment 1.20 5.6. Office machinery & equipment 1.20 5.7. Material handling equipment, packaging machinery,

weigh balance, etc. 1.00

5.8. Diesel generator 4.00 5.9. Effluent treatment 1.60 Total 16.50 6. Preliminary & Pre-operative expenses: S.No. Description Cost

Rs.in lakhs

6.1. Preliminary expenses 1.00 6.2. Pre-operative expenses:-

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6.2.1 Establishment 1.00 6.2.2 Rent rates and taxes 1.20 6.2.3 Travelling expenses 1.40 6.2.4 Interest and commitment charges on borrowings 2.80 6.2.5 Insurance during construction period 1.70 6.2.6 Other preoperative expenses and deposits - 6.2.7 Interest on deferred payment - Total 9.10 7. Provision for contingency Rs. 6.82 8. Working capital margin Rs. 28.24 9. Total project cost Rs. 146 lakhs 10. Means of finance Promoter's contribution Rs 58 lakhs Term loan from financing institutions Rs 88 lakhs Total project cost Rs 146 lakhs 11. Financial statements Cost of production A Variable cost

Rs. in lakhs

Raw material and utilities 230.63 Spares and maintenance 3.77 Selling expenses 18.75 Total variable cost (A)

253.14

B Fixed cost

Salaries and wages 12.00 Interest on term loan and working capital loan 31.03 Depreciation 8.42 Administrative expenses 11.25 Total fixed cost (B)

62.70

C. Total cost of production (A+B)

315.84

D. Selling price per kg. (in Rupees)

25

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E. Annual sales turnover

375

F. Net profit before tax (E-C)

59.16

G. Breakeven point in %

51

SECTION XI

SWOT ANALYSIS

Strength Large production of starch in the country

Weakness Need for production of more product grades

Opportunity Growing demand for the product

Threat Import

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SECTION -XII

FACTORS INFLUENCING THE POSITION FOR A NEW INDUSTYR AND RECOMMENDATIONS

Importance of the product Modified starches extend the range of functionalities of native starches and make it possible to use them in many more applications than would otherwise have been possible. Modified starches are value added products and are priced at a considerable premium over native starches and starch hydrolysis products. Once the consumer is made aware of the cost advantages that the Modified starches give him, rather than considering the price of the product, he will readily adopt their use. The growth of the modified starch industry in India will be consumer driven. Unless the Indian starch industry responds to this need, the need will be met through imports. Consumption level It is pertinent to record that the per capita starch consumption (which excludes starch consumed as a constituent of food products such as grains and flours derived from them) in India is one of the lowest in the world (0.59) as compared to a world average of 6.5.

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The percapita consumption in Pakistan is 2.3, and the USA 64.3. Demand growth The changing demographic scenario in India has resulted in both a quantitative shift as well as qualitative shift in the types of products demanded by customers. This shift has resulted in an increased demand for products which require starches and more specifically, modified starches in their manufacture. Liberalisation and the need to compete with imported products has resulted in the need for upgradation of product quality, sometimes only possible by adding such additives. It is reasonable to expect an increased demand for modified starches in India in the near future as the consumer industries would realise the cost benefits that will accrue to them by their use. The paper industry, is likely to increase its consumption of modified starch due to the increased demand for quality paper as well as the use of inferior grades of cellulosic fibres. There will be an over all increase in the demand for starches, both modified and native, particularly in the paper industry. Raw material The starch industry should take advantage of availability of tapioca in India and produce value added products for export. Tapioca starch and products prepared from it command a premium internationally, if the quality would conform to standards. The recent setting up of mechanised plants has made good quality tapioca starch available.