Business Formation

To Start FMCG products Manufacturing Business in India

To Start FMCG products manufacturing business in India will invite certain scrutiny that comes under policies in fast moving consumer good (FMCG) segment and is having huge scope in the market as an essential product used daily by billions of people. Taking the example of Soap as a product, the soap industry is divided into various segments – personal use, veterinary use and laundry use. Personal care soap segment is dominated by large consumer goods companies, whereas the veterinary use and laundry use segment is fragmented or dominated by a few large players. In this blog we will be looking as an overview on the necessary compliance. The major two:

License & Registration

If you want to start the manufacturing, you need to obtain different registrations and licenses. However, it depends on the location where you are establishing the plant. It is advisable to check the local state laws. Here we put some of the basic considerations.

  • First of all, determine the form of your business. And accordingly, register the business. Like Private Limited company or LLP.
  • Apply for the Trade License from the Municipal Authority.
  • Additionally, apply for MSME Udyog Aadhaar online registration.
  • Apply for the ‘Consent to Establish’ from the Pollution Control Board
  • Obtain the GST registration.
  • Apply for BIS certification.
  • Choose a catchy brand name of the product and secure the name with Trademark

 

Investment Required

The investment required for starting a small soap manufacturing business is minimal. A soap manufacturing unit setup with an investment of about Rs.15 lakhs can generate revenues of up to Rs.50 lakhs and a profit of Rs.8 lakhs, if operated successfully. The breakup of the investment required and the assumptions for revenue are as under:

Land & Building Requirement

A small soap manufacturing unit requires a space of about 750 square feet of which around 500 square feet must be constructed. For the financial model, we have assumed that such a place can be obtained with an investment of about INR 5L with the necessary power and water supply.

Machinery Required

A small detergent soap making business minimal investment in machinery. Typical list of soap making machinery required for soap manufacturing are plodder machine, miller machine, sap stamping machine and soap cutting machine. Based on the type of product to be manufactured and the scale, the type and investment required in machinery would vary. Investment in a small soap manufacturing unit can vary between INR 2L and INR 10L. The typical time for setting up of a unit is about 3 to 6 months for obtaining the necessary licenses, equipment, raw material, act.,

Working Capital

The main working capital expenditure for a soap manufacturing unit is raw material, salaries and wages, power cost and receivables. Raw material to the tune of INR 3L- 4L must be on-stock for operating a soap manufacturing unit smoothly, with additional working capital requirement of INR 1L – 2L required for other expenditures like salaries, power and receivable. Hence, taking into a three month working capital cycle, the promoters must have about Rs.8 to INR 12L of working capital funds to operate smoothly.

Bank Loan for Soap Manufacturing

Bank loan can be obtained for soap manufacturing from various banks in India. Since, the amount of investment required would be less than INR 1C, loan can be obtained under the CGTMSE scheme without any collateral.

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