Licence, label and price for a new masala-powder partnership
A three-person partnership in Jaipur wants to sell a ready-to-cook dal makhani masala powder in 200 g laminated pouches to kirana stores and on an e-commerce platform. Projected first-year turnover is ₹26 lakh. They hold a Basic Registration certificate obtained when they were only doing job work, and their pouch currently carries only the brand name, net weight, MRP and a mobile number. Their cost sheet per kg of powder is: raw spices ₹320, milling and blending ₹40, pouch and printing ₹35, labour ₹25, power and overheads ₹30; they plan a 25% margin on cost with 5% process wastage allowed. A retailer has complained that a pouch bought in March had live weevils in June. The partnership stores 300 kg of finished pouches next to 500 kg of whole spices in a room also used to park a scooter. They ask whether they can keep selling while a licence upgrade is processed, and what must change on the pack.
1. Which FSSAI licence category applies at ₹26 lakh turnover, and what does that mean for their current Basic Registration and their ability to keep selling?
Read the worked answer
Category: State licence. The slabs are Basic Registration up to ₹12 lakh annual turnover, State licence above ₹12 lakh and up to ₹20 crore, and Central licence above ₹20 crore. At a projected ₹26 lakh, they are in the State licence band.
What that means for the Basic Registration: it was granted on the basis of a job-work operation at a much smaller scale and does not cover manufacturing and selling this product at this turnover. Continuing to trade on it is a compliance exposure, and e-commerce platforms increasingly ask for the licence number and verify the category.
Can they sell while the upgrade is processed?
- Apply for conversion/upgrade on FoSCoS before further production and dispatch, and keep the application reference on file.
- The practical position most units take is that the existing registration remains valid until the upgrade is decided, so they may sell stock already manufactured - but they must not represent themselves as holding a licence category they do not hold, and they should get written confirmation from the district Designated Officer.
- Do not use the pending application as a reason to delay the label overhaul: unlabelled packs are a separate violation and cannot be sold on any platform.
Also check before quoting turnover: the product category, the kind of premises (a room shared with scooter parking may not be accepted as a food handling area), water and pest-control arrangements, and the named technical person/FOOD safety supervisor requirement.
2. Calculate the ex-factory price of a 200 g pouch from their cost sheet, and explain why the MRP printed on the pack cannot simply be that number.
Read the worked answer
Step 1 - cost per kg before wastage 320 + 40 + 35 + 25 + 30 = ₹450 per kg.
Step 2 - allow 5% wastage Only 95% of the input becomes saleable powder, so the true cost per saleable kg = 450 ÷ 0.95 = ₹473.68 per kg.
Step 3 - add 25% margin on cost 473.68 × 1.25 = ₹592.11 per kg ex-factory.
Step 4 - convert to a 200 g pouch 592.11 × 0.20 = ₹118.42 per pouch ex-factory (roughly ₹118).
Why MRP is not ₹118
- Taxes: MRP is inclusive of GST. At 5% on branded spice powder, ₹118.42 becomes about ₹124.34 before any trade margin.
- Channel margin: a distributor and retailer typically need 20–30% of MRP between them. If the retailer buys at about ₹118 and needs a 20% margin on a selling price, MRP must land around ₹148–155.
- Costs not in the sheet: e-commerce commission and shipping, spoilage returns, promotion, and the 5% wastage is an assumption, not a guarantee.
- Legal point: the printed MRP is the maximum retail price inclusive of all taxes; it must be a deliberate commercial decision, and it must cover the channel. Printing ₹118 means the unit absorbs the retailer's margin and makes a loss on every pouch.
Recommendation: test the market at an MRP of about ₹150, and rework the cost sheet if the retailer will not accept it.
3. Which label declarations are legally missing, and which of the storage problems actually caused the weevil complaint? Separate the two.
Read the worked answer
Missing label declarations (legal, mandatory)
- FSSAI logo and licence number.
- Name and full address of the manufacturer/packer, and of the marketer if different.
- Ingredient list in descending order of weight, with the correct names.
- Nutritional information per 100 g (energy, protein, carbohydrate, sugar, fat, saturated fat, trans fat, sodium).
- Green vegetarian logo (a dot in a green square).
- Batch/lot number, date of manufacture, and best-before or use-by date.
- Net quantity, storage instructions, and instructions for use.
- Allergen declaration where applicable (for example mustard, if used).
- Customer care details - name, address, phone/email - which they partly have but must complete.
- Nothing on the pack may claim a health benefit or 'fortified' status without substantiation.
What actually caused the weevils (operational)
- Whole spices arrive already carrying eggs and larvae; a spice powder is not sterile. Storing 300 kg of finished powder beside 500 kg of raw whole spice in the same room guarantees cross-infestation.
- The room is warm (scooter parking, engine heat, poor ventilation) and spices are hygroscopic; warm, humid powder above about 10% moisture is ideal for Tribolium, Lasioderma and Stegobium.
- March to June is a long dwell time with no FIFO and no pest monitoring.
Fixes: physically separate raw and finished stores; sealed, food-grade containers on pallets; cool, dry, dark store below 25 °C and 60% RH; strict FIFO with 3-month maximum age; monthly pest logs; sieve/metal-detect before packing; a hot-air or approved fumigation treatment for incoming spices, or buy pre-cleaned, treated spice from a reputable supplier. A new label does not fix a weevil; a segregation and pest-control programme does.