How to Start A Potato Chips Making Business

Are you looking for Potato chips making business project plan? Find here a detailed guide on how to start including machine, equipment, set up, process, etc

Potato chips are one of the most popular ready to eat snacks item in India. And any individual can start a small-scale manufacturing project with small capital investment. Additionally, from the same unit, you can produce french fries and banana wafers also. It will increase the overall profitability of your unit.

Currently, the potato chips are available in different tastes and flavors. The list includes salty, sour, sweet, hot sauce, ketchup, light salted, red hot, etc.,

The object of crafting this article is to provide a detailed guide on how to start the potato chips manufacturing business. Additionally, the article consists of the project cost, registration & licensing requirements, machinery, manufacturing process, raw materials, etc.

Potato Chips Factory Business Plan Guide

Potato Chips Market Potential & Opportunity

Potato chips are the most popular salted snacks item globally. Additionally, the demand is increasing day by day. The global potato chips market is expected to grow at a CAGR of 4.3%, during the period 2017-2022, to reach a market value of USD 40.3 billion by 2022.

Several aspects are directly and indirectly responsible for the rapid growth of the potato chips market. The reasons include easy affordability and availability, increasing young population, growing disposable incomes and changing lifestyles.

Additionally, the introduction of healthier alternatives, like the low-fat and low-sodium chips, in the emerging markets also supports the growth of this industry.

Potato chips in the pouch packets are the most popular in the market. Additionally, hotels, restaurants, and caterers are the major institutional buyers of this item. Also, the product has great export potential. Some of the most popular potato chips brands are Lay’s, Pringles, Uncle Chipps, Haldiram’s, Ruffles, Bingo, Tastilo, etc.

Create a Business Plan

In starting the business, you must have a business plan or project report in your hand. And according to your investment capacity, you will need to craft the project report. Additionally, the project report is a mandatory tool for applying for a bank loan.

Generally, a project report has two parts. One is mechanical and another is financial. It is advisable to ask an expert for preparing the business plan document for your proposed unit.

Potato Chips Manufacturing Plant Cost

Generally, the cost of the project depends on several aspects. These are production quantity, business size, etc. However, the fixed capital consists of plant, building, machinery, and other preliminary expenses. And the working capital cost consists of raw materials, labor, utilities, etc.

Licensing & Registration of Potato Chips Making Business

In starting this business, you will need to obtain several registrations and licenses from the Govt. authority. First of all, you have to register the business with ROC. However, you can also start a mini plant as a proprietorship company. Apply for Trade License and MSME Udyog Aadhaar registration. Also, you have to get permission from FSSAI.

This type of production unit doesn’t demand pollution clearance. However, it is better to have a NOC from the Pollution Control Board of your location.

You will establish a brand in the market. Hence, you can protect the brand name through trademark registration. Consult with a tax consultant about the upcoming compliance liabilities. You will need to get the GST registration too.

Potato Chips Unit Setup

You will need to have a space for the unit operation. Generally, an 800 Sq Ft space is good enough for starting a small scale unit. However, it depends on the business size. Additionally, you will need to have electricity and water supply.

Carefully, select the factory location. There are some important aspects that you must consider before selecting a location for the unit.

Potato Chips Making Machine

You can start the unit in two ways. Either as semi-automatic or as a fully-automatic basis. However, procuring the machinery carefully from reliable suppliers. Some of the basic machinery requirements are

  • Potato washing and peeling machine
  • Slicing machine
  • Dewatering machine
  • Batch fryer
  • Spice coating machine
  • Sealing machine with inert gas flushing unit
  • Stainless steel working tools
  • Weighing scales, dispensers, and fillers
  • Plastic trays

Raw Materials for Potato Chips Making Unit

The major required raw material is the potato.  However, you have to procure potatoes carefully. You will need to collect large oval shapes free from disease and fully mature potatoes. Additionally, it must have the minimum number of eyes to cut down the losses by trimming.

Additional required raw materials are oil, salt, and spices, preservatives, etc. Also, you will need to procure the packaging consumables. For primary packaging, you will need to have poly pouches. In addition to that, for outer packing, you have to arrange corrugated boxes.

Potato Chips Manufacturing Process with Flow Chart

First of all, wash the potatoes thoroughly and peel them. You can peel the potatoes manually with a stainless steel knife or using an abrasive potato peeling machine.

Then wash the peeled potatoes with sprays of water. Then trim them and place in water to prevent browning. After that, cut them into slices from 0.4 to 0.5 cm thick on a slicing machine. Again place the slices in cold water.

Whenever there is considerable delay in the subsequent operations of blanching, you can keep the slices in water containing 0.05% Potassium metabisulphite to avoid oxidation.

Then blanch the slices for 3 to 5 minutes in boiling water and spread on trays at the rate of 4.88 kg. to 7.30 kg. per square meter of the tray surface. The blanched chips are then subjected to a hydro-extracting machine (centrifugal) to remove the excess of water and fried at 1900°c for 3-4 minutes. fried potato wafers are then

Finally, keep the fried potato wafers on the sieve to remove the excess oil. After cooling, mix the other ingredients like salts, the spicy mixture as per the required taste. And finally, pack the potato chips in polythene bags and seal.

Quality Specification for Potato Chips

During the production, you will need to maintain some of the quality specifications for the potato chips. First of all, you have to maintain the moisture in chips 2% maximum. Additionally, you must use F.F.A of oil as oleic acid up to 0.1% maximum.

The oil must contain nil Peroxide value. Finally, the potato chips must free from coliforms, salmonella and streptococci bacteria.

Potato Chips Making Project  Cost Synopsis

Plant Capacity: 2000 kgs per day Plant & machinery: Rupees 137 Lakhs
Working Capital: Rupees 91 Lakhs Total capital investment: Rupees 271 Lakhs
Return: 39.21% Breakeven: 40.17%

The actual cost of the project may deviate from the change of any of the assumptions. You can modify the project capacity and project cost as per your requirement.

Potato Chips Making Business Profit

Commercial potato chips manufacturing is a profitable business. The business ensures a good margin. However, how much profit you will earn that depends on several internal and external aspects.

Gross Profit = Sales Revenue – Production Cost

So, if you want to increase the profit margin, you can think about reducing the cost price. Also, this type of item ensures a better margin if you can increase the sales volume too. Increasing the sales volume ensures reducing transport costs, infrastructure costs, and manpower costs too.

We hope the above article about starting potato chips making business will help you in making an informed decision.