Company Registration

Setting Up an Oil Mill Business in India

calendar22 Apr, 2024
timeReading Time: 4 Minutes
Oil Mill Business

Oil is very fundamental and crucial for everyday life. A variety of oil crops are grown on Indian soil. It is an excellent opportunity to start an oil mill business unit, and Mills is a very profitable business in India because of the staple demand and high profitability of vegetable oil and oil seed products. If you want to start an oil mill Business in India, you are required to select the scale and size of your industry and the extent of your business operations, followed by procuring necessary compliances, licenses, and permits for machinery and raw material as well as adequate infrastructure for transporting, distributing and selling the finished product to the wholesalers or retail vendors. To ensure that the company registration for oil mill business is efficiently taken care of, following a step step-by-step approach is always preferred. Let us look at the procedure for starting an oil mill business.

Start an Oil Mill Business: Selecting the Business Size

For the purpose of company registration to start an oil mill business, it is most crucial first to decide the type of business entity. Based on the volume and size of production capacity, oil mill businesses in India are classified into the following categories –

  • Small Scale Industries

In small-scale oil mills and industries, the daily oil extraction and processing quantity ranges from 5 to 10 metric tonnes. This type of industry is suitable for small-scale enterprises and MSMEs that do not have a higher production capacity.

  • Medium Scale Industries

These industries are involved in higher volumes of oil extraction and processing, typically 10 to 50 metric tonnes per day. The medium-scale industries offer a viable choice to sectors that are not small but not big enough either to start an oil mill business.

  • Large Scale Industries

These are industries extracting or processing more than 50 metric tonnes of oil on a daily basis. The scale and size of the oil mill business are suitable for large and established businesses engaged in large-scale manufacture and export of oil and oilseed products. To function effectively, these industries require substantial investment, workforce, management, and operation strategies.

Essential Points to Start an Oil Mill Business

To start an oil mill business in India, you should identify key performance areas and potential risks and draw a viable roadmap to ensure the business is set up and runs smoothly.

The critical areas of due diligence before you start an oil mill business are –

  • Market Analysis

Before starting any business, it is crucial to perform market analysis and identify important Aspects, such as competitors, visible pitfalls, location and proximity to raw materials and ancillary markets, availability of water, and good transport connectivity, that are crucial for the success of the oil mill business.

  • Prepare a Detailed Project Report

Before embarking on setting up any business, it is crucial to conduct thorough and comprehensive due diligence about the industry and prepare the same in a Project report. The report should clearly mention the objectives of the business, the intended investment cost, and timelines of return on investment etc.

  • Financing

Planning and preparing a roadmap is just not enough, you also are required to conduct financial planning and deliberate the sources of funding for the business. Since oil mills are capital-intensive enterprises that require a steady flow of money to keep going.

  • Selecting a Suitable Location

To select a suitable location to start an oil mill business, the owner needs to factor -in several aspects, such as distance from local markets and wholesalers, availability of raw material, water, electricity, and transport connectivity, as well ease of procuring land and related licenses. Since oil mills do not require much space, they can be easily set up at any terrain and location.

  • Skilled Employees

Running Oil Mills requires skilled and trained professionals who are trained and knowledgeable about the various processes, machinery, and functions of the oil mill. Also, the non-technical staff should be sufficiently skilled and trained to ensure that they are able to complete the tasks efficiently and smoothly.

Compliance required starting an oil mill business 

The compliance of various rules and regulations is very vital when planning to start an oil mil business. The compliances needed to start an oil mill business are:

  • FSSAI License

FSSAI license is essential for setting up any business in the food and beverage industry. The Food Safety and Standards Authority of India is the nodal body that makes laws and regulates the quality of food products, as well as licensing the manufacturers of various types of food items. FSSAI license is a mandatory compliance for Oil Mill Businesses since it signifies that the raw materials, manufacturing process, packing and labelling methods of oil and oil seeds products such as vegetable oil, sesame oil, etc, are at par with the quality standards of FFSAI.

  • Bureau of Indian Standards

The Bureau of Indian Standards, or BIS, is the nodal agency and national body responsible for standardization and grading in India. The Bureau offers BIS certification as a guarantee of the quality of its products. The machinery and devices used in the oil mill for producing and processing oil and oil seeds shall be tested, examined, and verified by BIS officials and shall bear a BIS Mark, ensuring their industrial quality and safety.

Conclusion

Despite being a relatively simple and profitable business venture, The Oil Mill Business requires extensive financial planning and strategizing industrial compliances to ensure the oil mill business is set up and operates effectively. Fore mostly, it is necessary to select the proper business type and structure, based on the size, investment, and growth of the oil mill.

If you are looking for a trusted industrial incorporation and set-up partner to assist you in starting an oil mill business, you can rely on the enhanced services of Corpbiz to seamlessly help you in the incorporation of an oil mill business, refinery or processing units and facilitate the overall pre and post incorporation compliance framework.

Frequently Asked Questions (FAQs)

  1. What are the products that are processed in an Oil Mill?

    Various types of oil and oilseeds are processed in an oil mill, such as vegetable oil, sunflower oil, rapeseed oil, mustard oil, sesame oil and other oil by products.

  2. How many types of oil mill businesses are there?

    Oil mill businesses in India are categorized into small, medium, and large scale businesses based on size and scale of operation.

  3. Why is market analysis important for setting up an oil mill business?

    Market analysis is essential for setting up an oil mill business since it helps you assess various business aspects, such as competitors, visible pitfalls, location and proximity to raw materials and ancillary markets, availability of water, and good transport connectivity as crucial for the success of the oil mill business.

  4. What should a detailed project report contain to start an oil mill business?

    A detailed Project Report should clearly mention the business's objectives, the intended investment cost, timelines of return on investment, and all other crucial present and future projections of the business.

  5. How important is location while setting up an oil mill business?

    It is essential to consider important factors, such as distance from local markets and wholesalers, availability of raw material, water, electricity, and transport connectivity, as well ease of procuring land and related licenses.

  6. What are the compliances applicable to oil mill businesses?

    As per the statutory regulations, oil mill businesses in India are required to comply with FSSAI and BIS Standards.

  7. How can I procure skilled manpower for my Oil Mill Business?

    Running Oil Mills requires skilled and trained professionals who are trained and knowledgeable about the various processes, machinery, and functions of the oil mill. Setting up an oil mill near urban establishments, towns, hamlets, or in the vicinity of cities can solve the problem of procuring a skilled workforce for oil mills.

  8. What is the cost of setting up an oil mill business?

    To start an oil mill business in India the capital can differ from due to various factors. The cost of setting up the business depends on the scale on which the business is set up.

  9. What are the machines used in an oil mill?

    An oil mill business generally uses machines such as oil pressers, threshers, seed cleaners, storage tanks, boiling tank etc. It typically depends on the scale and type of products refined and produced in an oil mill.

  10. How can Corpbiz help me set up my oil mill business?

    Corpbiz is a leading company registration and compliance services provider with a team of dedicated compliance professionals, lawyers, and chartered accountants. Our services are uniquely placed and adequately equipped to assist you in navigating the complex compliance and licensing requirements needed to start an oil mill business in India.

Read Our Article: Why Is Company Registration Mandatory?

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