Scaling a Roasted Chana Snack Business
A graduate in Guwahati plans a small unit to roast and pack chana (Bengal gram) under a brand name. Projected sales are 2,500 kg/month at ₹220/kg; variable cost is ₹130/kg; monthly fixed cost (rent, salaries, utilities, licence compliance) is ₹1,20,000. The unit will sell through local grocers and a social-media page, with 10% of sales on consignment. The entrepreneur has a ₹8 lakh bank loan, no food technology staff, and plans to print 'high protein, good for diabetics' on the pack. Annual turnover is projected at ₹66 lakh. A retailer asks for 60-day credit, and a distributor offers to buy 1,000 kg/month at ₹180/kg. The entrepreneur wants to know whether to accept the distributor, what FSSAI licence is needed, and what minimum label and testing controls apply before the first sale.
1. Calculate break-even and assess the distributor offer. Show contribution margin and the volume needed.
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Retail contribution = ₹220 − ₹130 = ₹90/kg. Break-even = fixed cost ₹1,20,000 ÷ ₹90/kg = 1,333 kg/month (rounded up). At 2,500 kg, total contribution = ₹2,25,000; profit = ₹2,25,000 − ₹1,20,000 = ₹1,05,000/month before loan and taxes. Distributor contribution = ₹180 − ₹130 = ₹50/kg. If the 1,000 kg is truly incremental and capacity/fixed costs do not change, it adds ₹50,000/month, so it is better than nothing. But each kg switched from retail to distributor loses ₹40 of contribution; if the 1,000 kg displaces 1,000 kg of retail sales, contribution falls by ₹40,000 and the deal destroys value. The 60-day credit also ties up ₹1,80,000 (1,000 × ₹180) in receivables, so check cash flow. Decide on incremental demand, not just the offer price.
2. Determine the appropriate FSSAI licence category and outline the label requirements and claim risk.
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Projected turnover is ₹66 lakh/year, above the ₹12 lakh basic-registration threshold and below the ₹20 crore central-licence threshold, so a State FSSAI manufacturing licence is the appropriate category, subject to the current FSSAI classification for the product. The label must carry the FSSAI logo and licence number, brand/name, ingredient list, net weight, batch number, date of manufacture and best-before/expiry, storage instructions, manufacturer/packer address, nutrition information and the veg/non-veg mark. 'High protein' needs a validated nutrition analysis and must meet the conditions for that claim; 'good for diabetics' is a disease-related health claim and should not be used without substantiation/approval-remove it before printing. Also test moisture, peroxide value/rancidity, and microbiological parameters for roasted chana, and keep batch records. Claims are a regulatory risk, not marketing decoration.
3. Advise on working capital and quality controls before launch, given the 60-day credit request.
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The 60-day credit on 1,000 kg at ₹180 creates ₹1,80,000 of receivables; with monthly fixed costs of ₹1,20,000 and variable costs, the business needs a cash buffer or a shorter credit period. Counter with 30 days, a bank guarantee, or a 2–3% early-payment discount; price the credit into the distributor rate. Before launch, set up GMP/hygiene, a pest-control and cleaning schedule, calibrated moisture/weight/thermometer checks, batch coding, retain samples, and supplier approval for chana and oil. Test each batch for moisture low enough to prevent mould, peroxide value/rancidity, and microbial load; do a shelf-life trial in the actual pack. Keep a simple costing sheet so the distributor decision is based on contribution after credit cost, not on sales volume alone.