Set up an Edible Oil Refining Business in India

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

You might find these interesting:

A simple guide to edible oil refining
Learn everything about batch refining of oils
Why it is imperative to innovate in the edible oils processing industry

It is worth investing in a sunflower oil processing plant. One is that sunflower oil has a broad consumer market, and the other is that investing in sunflower oil processing plants is a sustainable business model. Sunflower oil processing equipment can be recycled, and sunflower seeds are a renewable resource that can be grown year after year. This helps to ensure a stable supply of raw materials and a stable source of income for businesses.

Sunflower oil processing plant

The first is the consumer market, because only by having sufficient consumer markets can we obtain more profits. When we can earn more profits from this project, our investment is worth it. For edible oil, it is closely related to our daily diet. The sunflower seed itself has a high oil content, and is rich in unsaturated fat acids, vitamins and trace elements. It can help regulate metabolism and promote blood circulation in the human body, and is one of the three mainstream edible oils in the world. And based on our experience, in recent years, the world's demand for sunflower seed oil consumption has been rapidly increasing. Therefore, sunflower oil has a very promising market prospect.

Another factor is cost investment, which determines how large a sunflower oil processing plant we ultimately need to build. The general cost investment mainly includes three aspects, namely factory rent, raw material cost, and equipment price.

At the factory level, before assuming a sunflower oil processing plant, we need to prepare sufficient open space for the factory construction. The larger the production scale, the larger the factory area, and the greater the rental investment. At the same time, the rent for factory buildings varies in different regions and geographical locations.

Another is the cost of raw materials. If you have a large area of planting sunflower seeds, you can save a lot of cost investment on the raw material level. Of course, it is also possible to find suitable suppliers and establish long-term cooperative relationships. You can obtain sufficient raw materials at a relatively low price.

Sufficient sunflower seeds

Finally, there is the investment in equipment. The price of the equipment is closely related to its processing capacity and configuration. If you are just starting to enter this industry, the processing capacity is not large, and the equipment cost investment is relatively lower. If you want to build an automated edible oil processing plant that processes dozens or even hundreds of tons of raw materials every day. The equipment cost investment will be relatively higher.

The cost input of a sunflower oil processing plant is one-time, but then the profit is continuous, with the right market research, cost investment and equipment, then investing in a sunflower oil processing plant can be a profitable and sustainable business adventure.

Sunflower oil processing machine

Henan Glory Company has been engaged in equipment manufacturing and installation for over a decade. We have a team of experienced engineers responsible for project development and design. There are also professional sales teams who can provide you with the most suitable advice based on your specific needs. Due to our own production factory, we can help customers save equipment investment costs to the greatest extent and provide guarantee for equipment quality.

The success of our clients is our success. If you are interested in investing in sunflower oil processing plant, please feel free to contact us at any time.

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