KATTHA & CATECHU
INTRODUCTION:
Kattha is obtained by crystallization in cold from the water extractives of the heartwood of Acacia
Catechu, commonly known as Khair tree. Acacia Catechu is widely distributed in India , from the
northwest plains to eastwards in Assam and throughout the country, particularly in drier and deciduous
regions. The process of kattha making is a long and arduous process, which takes upto 45 days. Each
step in the production process is closely monitored and proper climatic conditions are maintained for
optimum colour and quality.
Kattha & cutch are extracted from wood of Khair tree. Acacia is the botanical name of this tree and it has
different varieties like Acacia Sundra, Acacia Catechuoides & Acacia Catechu. These species of tree are
mainly concentrated in Uttar Pradesh, Bihar, Rajasthan, Gujarat and Himachal Pradesh. The preferred
locations are either UP or Bihar. Manufacture of Kattha is an important forest-based traditional industry in
India. The Central Forest Research Institute has developed an improved process to manufacture kattha
and cutch. Manufacture of these products is simple and does not require sophisticated technology or
equipments. There are many applications of these products.
Kattha (Catechu) is one of the principal ingredients used in the preparation of PAAN from betel leaves,
for chewing purposes when, in combination with lime, it gives the characteristic red colouration.
With the advent of ready made paan (i.e., paan-masala) and gutkha (paan-masala with tobacco) and its
ever-growing popularity among masses, the usages of kattha have increased many folds.
OBJECTIVE:
The primary objective of the model report is to facilitate the entrepreneurs in understanding the
importance of setting up unit of Kattha & Catechu plant. This model report will serve as guidance to the
entrepreneurs on starting up such a new project and basic technical knowledge for setting up such a
facility.
RAW MATERIAL AVAILABILITY:
The only Raw Material is Khair Wood and available in some parts of India.
SUITABLE LOCATION:
Kattha & Catechu can be manufactured at that location where Khair Wood is easily available.
MARKET OPPORTUNITIES:
Kattha is being produced in the country since long and it is a mass consumption item as it is
used in preparation of paan all over the country. It has got medicinal values as well and is used in
ayurvedic preparations as it cures itching, indigestion and bronchitis and is very effective in leprosy,
ulcer, boils, piles, throat diseases etc. On the other hand, cutch has various industrial applications. It is
one of the important sources of vegetable tanning materials, used extensively as an additive to the
drilling mud used for oil drilling and for preservation of sailing rods, fishing nets, mail bags etc. Thus,
both products are versatile with varied application.
Kattha is a white substance found in Khair wood. It is obtained by boiling small chips of the
heartwood in specially designed earthen pitchers and allowing the concentrate to cool and crystallize.
Kattha is not only used as a remedy for body pain but also in medicines for other human ailments.
Kattha is also used extensively in pan. It forms an important ingredient of adhesives for plywood and is
also extensively used in drying canvas and sizing of fishing nets and ropes.
PROJECT DESCRIPTION:
CAPACITY OF THE PROJECT:
• The capacity of the project is 21,600 Kg. of Kattha & Catechu per year.
PRODUCTION TARGET:
• Qty.: 15,120 Kg. per annum or 1,260 Kg. per month.
• The scheme is worked out per shift (8 Hour) basis and 300 working days per annum.
MANUFACTURING PROCESS:
Heart wood of khair or acacia is cut into fine chips and around 8-9 kgs. of chips are kept in wire
net cage to avoid direct contact with heated surface of extractor. These cages with about 25-27 ltrs. of
water (3 times the weight of chips) are placed in extractors. Extraction is done by boiling chips with
water for about 3 hours. Extracts from each extractor are mixed after filtering with the help of muslin
cloth and concentrated in an open pan on fire and then kept in shade to facilitate crystalisation of
Kattha for about 2 days. After complete crystalisation, the curd like mass is passed through frame and
plate-type filter press, operated manually and then it is washed with cold water which improves the
quality of kattha. It is then placed on wooden frames provided with canvas cloth to separate traces of
cutch. Finally, kattha is cut into uniform tablets with the help of wire cutter or knife and dried in sheds.
The mother liquor after removal of kattha is further concentrated in an open pan till it becomes viscous
and then poured in wooden frames for drying. The dried material is cutch. About 100 kgs of acacia
chips give 5 kgs. of kattha and 14 kgs of cutch. Yield largely depends upon the quality of chips. The
process flow chart is as under:
Cutting of wood into fine chips
Extraction
Crystalisation
Filtration
Washing
Tablet Making
Concentrating and Drying
Packing
PROJECT COMPONENT AND COST:
FINANCIAL ASPECTS:-
APPLICATION OF FUNDS SOURCE OF FUND
Particular Amount Particular Amount
200 sq. meter
Own Capital
Land & Building covered area on 518,140.11
Rent Loan from Banks 359,250.00
Loan for Working
Plant & Machinery 429,000.00 293,370.34
Capital
Office Equipment & Furniture 50,000.00
Working Capital 666,760.45
Pre-Operative Expenses 25,000.00
Total 1,170,760.45 Total 1,170,760.45
FIXED ASSETS
(1) Land And Building: Value (Rs.)
Rs. 96,000 per
Land & Building 200 sq. meter covered area on rent
annum
(2) Machinery And Equipment:
S. N. Description (Name of machine with specification) Qty. Rate Value (Rs.)
Production Unit
i Kattha Extractor 1 100,000.00 100,000.00
ii Wire Mess 2 50,000.00 100,000.00
iii Tray 2 20,000.00 40,000.00
iv Vessel 2 40,000.00 80,000.00
v Wooden Frame 2 10,000.00 20,000.00
vi Furance 2 10,000.00 20,000.00
vii Weighing Machine 1 10,000.00 10,000.00
viii Miscellaneous Equipments / Items (Cloth, Filter, Cutter
- - 20,000.00
etc.)
Total Cost of Machinery & Equipments 390,000.00
Electrification & Installation Charges @ 10% 39,000.00
Total Cost of Production Unit 429,000.00
Furniture & Fixtures - 50,000.00
3
Pre-Operative Expenses: - 25,000.00
Total Fixed Capital ( 2+3) - 454,000.00
SALES TURNOVER PER MONTH
Qty. Rate Value
Description
(Kg.) (Rs./Kg.) (Rs.)
Kattha 420 500.00 210,000.00
Catechu 840 200.00 168,000.00
Total 378,000.00
RAW MATERIAL REQUIREMENT & STOCK
Raw Material (per month):
Qty. Rate
Description with specification Value (Rs.)
(Kg.) (Rs./Kg.)
Khair Wood Tree 8,400.00 25.00 210,000.00
210,000.00
ANNUAL CONSUMPTION
Khair Wood Tree Rs 2,520,000.00
Total 2,520,000.00
Stock of Raw Material 30 days 207,123.29
Stock of WIP 02 days 13,808.22
Purchase Cost of Raw Material Rs 2,740,931.51
WORKING CAPITAL REQUIREMENT
Particulars Days Year' 1
Raw Material 30 207,123.29
Work in Process 2 13,808.22
Finished Goods 10 96,239.90
Receivables 30 378,000.00
Advance/Security 200,000.00
Total 895,171.41
Less: Creditors 30 228,410.96
Net Current Assets 666,760.45
Paid Stock 88,760.45
75% of Paid Stock 66,570.34
60% of Book Debts 226,800.00
Bank Limits 293,370.34
Margin for Working Capital 373,390.11
SELLING & ADMINISTRATION
STAFF AND LABOUR EXPENSES
EXPENSES
Total
S. S. Salary
Particular Year I Description No. Salaries-
N. N. PM
Year I
i Postage 18,000.00 (a) Administrative & Supervisory
ii Commission on sales 60,000.00
Production
iii Office Expenses 29,000.00 i Incharge cum 1
15,000.00 180,000.00
accountant
iv Tour & Travel 18,000.00
v Printing & Stationary 20,000.00 Total Salaries 180,000.00
vi Advertisement 60,000.00
vii Telephone 20,000.00 (b) Skilled & Unskilled-Wages
viii Repair & Maintenance 22,000.00
ix Conveyance 27,000.00 i Skilled Worker 1 10,000.00 120,000.00
Semi Skilled
x Sales expenses 36,000.00 ii 1 8,000.00 96,000.00
Worker
xi Insurance 20,000.00 iii Helper 2 5,000.00 120,000.00
xii Misc. Expenses 30,000.00 Total 336,000.00
Total 360000.00 Grand Total 516,000.00
MANUFACTURING AND PROFIT BALANCE SHEET
& LOSS ACCOUNT
Particulars Year' 1 Particulars Year' 1
Sales Value of Kattha & Catechu 4,536,000 Liabilities:
Cost of Production:
Raw Material Consumed: Capital 947,140.11
Opening Stock 0
Add: Purchases 2740931.50 Reserve & Surplus 189,497.40
2740931.50
Less: Closing Stock 207123.28 Secured Loan:
Raw Material Consumption 2533808.21 Term Loan 287,400.00
Add: Op Stock of WIP 0
2533808.21 Unsecured loan:
Less: Cl Stock of WIP 13808.21
2520000 Current Liabilities:
Power & Fuel 300000 Bank Borrowings 293,370.34
Manufacturing Wages 336000 Sundry Creditors 228,410.96
Bonus & Incentives 16800 1,945,818.81
Packaging Materials 100000
Rent 96000 Assets:
Raw material storage & ins.
4800 Fixed Assets:
Cost
Carriage inward 19186.52 Gross Block: 479,000.00
Depreciation 71850 Less: Depreciation 71,850.00
407,150.00
Total Cost of Production 3464636.52
Add: Op. Stock of Finish. Goods 0 Current Assets:
3464636.52 Inventories 317,171.41
Less: Cls. Stock of [Link] 96239.90 Recievables 378,000.00
Cost of Sales 3368396.61 Advance/Security 200,000.00
Cash & Bank Balance 280,297.40
Gross Profit 1167603.38
0.25 Preliminary Expenses 363,200.00
Selling & Admin Cost:
Expenses 360000 1,945,818.81
Salary 180000
Difference 0.00
Financial Expenses
Interest on Term Loan 48947.81
Interest on [Link] 36671.29
Pre. Expenses 90800
Profit Before Taxation 451,184.27
Taxation 135355.28
Net Profit After Taxation 315,828.99
Cash withdrawal 126331.59
Transfer to Reserves 189497.39
Cumulative Reserves 189497.39
% of PBT on Sales 9.94
RATIO ANALYSIS BREAK EVEN ANALYSIS
Particulars Year' 1 Fixed Cost
NET PROFIT RATIO Rent 96,000.00
NP*100/Total sales 6.96 Interest on Borrowing 48,947.81
40% of Salaries 72,000.00
RATE OF RETURN 40% of Utilities 120,000.00
NP*100/Total Investment 19.74 25% of Admin Exp 90,000.00
Depreciation 71,850.00
Total 498,797.81
BREAK EVEN POINT Fixed Cost * 100
Fixed Cost + Profit
61.23
ADDRFESS OF MACHINERY & EQUIPMENT SUPPLIERS:
• M/s Bajaj Processpack Maschinen Pvt. Ltd., 7/27, Jai Lakshmi Industrial Estate, Sahibabad Industrial
Area, Sahibabad, Dist. Ghaziabad (U.P.) - 201301.
• M/s Jayems Engineering Works, Strand Road, Kolkata – 700 001
• Sarkar machinery, 49, P. K. Guha Road, Near Kumarpara Party Office, Kolkata, West Bengal, 700028
• M/s Krishna Food Products, No. 426 To 429, New G. I. D. C., Kabilpore, Bardoli Road, Navsari -
396424, Gujarat, India
• M/s Unique Wood Products, 52/1B, Katra Pedan, Tilak Bazar, Khari Baoli, Delhi - 110006, India
• M/s FMC Asia-Pacific Inc., Complete Fruits and Vegetable Plant, Compre- Krision House, Saki Vihar
Road, Saki- hensive Line of Equipments for Tomato Process-Naka, Mumbai-400 072.