Masala Business Profit Margin | Guide for Startups

Indian spices are one of the most used household items in India and also around the world. In fact, the Indian Spice Market is growing with more than Rs.40 Thousand Crores per year. So, if you are thinking about how to start spices business in India and the masala business profit margin, here are the details.

 

Overview of Masala Business in India

 

• Investment: Rs. 1,00,000 - Rs. 5,00,000 (assumed)
• Area Required: 700 Sq Ft. (minimum)
• Human Resource: 10 - 12 employees
• Masala Business Profit Margin: Approx 30% - 40%
• Expected Sales Per Day: 100 kg
• Earning: Rs. 60,000 - Rs. 1,40,000 per month

 

Types of Masala Business

 

The spice industry is divided into three following kinds that have different profit margins:

 

• Manufacturing - 60% - 70% Profit Margin
• Wholesaling - 40% - 50% Profit Margin
• Retailing- 20% - 30% Profit Margin

 

Therefore, one thing is obvious the masala business is one of the most profitable businesses that require low investment and ensures high returns in less time.

 

Masala Business Profit Margin

 

The profit margin in the masala business is 40%-50%. 

 

Suppose your expected sales per day are 100 kg with a profit margin of 40%, and the cost of goods purchased is Rs.100/kg.

 

i.e. 100 kg x Rs. 100 + 40% profit margin

 

= Rs. 10,000 + Rs. 4,000 (Profit) per day

 

The cost of goods sold will be Rs.140/kg after adding the profit margin.

 

Accordingly, your monthly masala business profit will be Rs. 4000 x 30 Rs. = Rs. 1,20,000.

 

Investment 

 

Firstly, to start the basic business process, you need to secure funds. Either you already have personal savings or, you can look for external fundings.

 

With this in mind, you can get the investments from the following sources:

 

• Angel Investors
• Venture Capitalists
• Business Bank Loans
• Bootstrapping
• Business Incubation Funds
• NBFC's
• Startup Capital from Government Schemes

 

The minimum working capital required for a masala business is Rs. 1 lac - Rs. 5 lacs, and the minimum fixed capital required is Rs. 6 lacs to Rs. 10 lacs. 

 

If you plan to manufacture the masala yourself, read in detail about Masala Factory Project Cost to determine the gross funds you need.

 

However, the funding requirement will mostly depend on the scale of your business.* 

 

The most important thing you should invest in when starting a business is protecting your brand identity and registering your business. 

 

With this in mind, go for company registration and trademark registration online.

 

Trademark Class for Spices: Class 30

 

Area 

 

Considering the above as the initial investment, the minimum area required for the masala business is 700 sq ft. 

 

If you rent the land, it would cost a minimum of Rs. 15,000 per month, depending on the area. 

 

But, if you plan to buy the space, the prices will differ from city to city.

 

Therefore, it is advisable to consult a property dealer for this decision.

 

• Retail Business - 700 - 1000 sq ft 
• Wholesale Business - 200-300 sq ft (Office) and 1000 sq ft (Godown)
• Masala Manufacturing Plant - 2000 sq ft. (minimum)

 

Get a layout map made by a professional for your masala business accordingly.

 

Also, you will need some mandatory permits. Therefore, find out the license required for spice business.

 

Human Resource 

 

Accordingly, you will need 10- 12 employees initially to start the business operations. You can find out the current salaries for each position on Glassdoor.

 

You will need around Rs. 1,70,000 as an initial average investment in human resources.

 

Frequently Asked Questions

 

• How can you sell 100 kg of spices per day?

You can sell even more than 100 kg per day. All you have to do is find and get dealerships from the market.

 

For example, you are trading in Delhi, there are more than a thousand shops and grocery stores selling spices. If you get a dealership from even 30 shops of 10 kg masala per day, you can easily make a sale of 300 kg per day.

 

Also, target the nearby villages, societies and supermarkets. Moreover, you can increase your sales by sponsoring events to create brand awareness.

 

• What led to the rise in the demand for spices over the years?

The speedy urbanization, improving incomes and growing financial stability have raised the demand for processed foods. Moreover, the increasing popularity of Indian culture and cuisines has led to a rise in demand for spices for the special preparation of Indian food.

 

• How much does the global spice industry make?

The global spice industry was valued at USD 15.44 billion in FY20. According to the forecast, it is estimated to reach around 22.46 billion in FY27. In other words, it is about to experience a rise of 6.3% CAGR from 2021-2027.

 

5 Ways to Increase Masala Business Profit 

 

1. You can sell these masalas to industrial units for making pickles, chutneys and snacks.
2. Not only the domestic market but also the foreign market are open for good quality products. Therefore, you can export the spices too. However, for that, you have to get an IEC (Import-Export Code).
3. The target customers for the masala business are not only women handling the kitchens, but hotels, railways, and army canteens are also huge customers of spices.
4. In the initial stage, you can start the masala business as a cottage industry from home and make a customer base, targetting the neighbourhood. As a result, you do not need to rent a space, and you will already have regular clients when you go big.
5. Also, you can partner with caterers to buy and use your masalas in events like weddings, birthdays etc.