PATEL MENTHOL OIL TRADING CO.

Project on Application of Statistics in Business

Submitted to Prof. S V Malik
Sujeet Kumar Patel 11/09/20111

Introduction

General Characteristics

Menthol flake is a transparent, white liquid with strong minty herbal odour derived from Mentha oil, which is obtained from a perennial herb called Mint (Mentha arvensis) belonging to the Labiatae family. This family is well known for aromatic plants, which yield volatile oils from the foliage. Mentha oil derived by steam distillation of mint (pudina) leaves is frozen to (-) 60o Celsius in an aluminum vessel for about a week. The liquid is then centrifuged to obtain De-Mentholised Oil (DMO) and Menthol flakes to the extent of 30% and 70% respectively. Menthol flakes are melted and packed in 180 kg galvanized iron barrel and Menthol flakes are further processed to obtain Menthol crystals. Menthol flakes and its constituents and derivatives are used in food, pharmaceutical, perfumery and flavoring industry. Its main constituent, menthol, is used in the manufacture of lozenges, toothpastes, pain balms, cold balms, Dabur Pudin Hara, etc.

It is estimated that tobacco industry accounts for about 40% of the total Mentha oil consumption followed by pharmacy and confectionary industry.

Global Scenario

Globally, India is the largest producer and exporter of Menthol Flakes. The other major producers in the world are China, Brazil, US and Japan. Out of total global production of Menthol flakes India contributes around 73%, China 18% and others 9%. India meets the global demand by exporting nearly 10000 to 12000 tonnes per annum valued at more than Rs. 1000 crores. The major exports are directed to countries like China, France, Germany, Japan etc. About 50% of total Menthol flakes production is exported to China, whereas menthol crystals are exported to US and European countries.

Indian Scenario

India's annual production of Menthol flakes has been rising in the recent years to meet the rising demand, with 2007 and 2008 production estimated to be around 22,000 tonnes. However, production in 2009 is reported to have fallen to around 18,000 - 20,000 tonnes. Uttar Pradesh is India's largest producing state, contributing almost 8090%, to the country's total production, followed by Bihar, Punjab, Haryana and Himachal Pradesh. Cultivation of mint in India starts from February - March every year and the crop takes around 90 days to mature and produces first flowers, which is the best stage to harvest. First harvesting is done during May - June. Farmers undertake atleast two harvestings from the crop. Menthol flakes production in India begins from mid-June and steady arrivals are seen till November. The major production/trading centers of Menthol flakes cover the districts of Moradabad, Rampur, Barabanki, Sitapur and Lucknow in the Central Uttar Pradesh; Chandigarh & Jalandhar in Punjab.

Market Influencing Factors

The acreage under the crop, weather conditions during cultivation and India's output are very important factors influencing supply and prices as major share of global production and exports emanate from India.

As India exports a significant portion of its annual production, any factor which affects global demand including macro-economic factors like economic scenario, currency fluctuations have a profound influence on domestic prices. The stock present with traders and the cost at which it has been acquired is a major price influencing factor. Domestic demand usually peaks during the winter season. Despite, supply not being a constraint in recent years due to successive bumper outputs, prices do display a tendency to firm during the winter months. The physical market of this commodity is very fragmented, does not have a regulatory body and is large consisting of around 500 participants including small processors, traders exporters and industrial users. The information flow is not uniform and accurate between different participants in many cases, which too is a factor to be kept considered, while pricing this commodity. Meanwhile, as Menthol flakes is not considered an essential commodity Government intervention in this commodity is very minimal.

Uses of Menthol Crystal are as follows: Pharmaceuticals Chewing Tobacco Pan Masala Perfumery Compounds Toothpaste Mouth Washes Oral Preparations Confectionery Cigarettes

Processing Chart : -

Figure 1: Processing of Menthol oil

Production of Menthol oil in India: Sr. No 1 2 % of Total crop in India U.P(BARABANKI,SITAPUR,FAIZABAD) 60% U.P(SAMBAL,CHANDOSI,RAMPUR) 30% State/ Area

PUNJAB,HARYANA,RAJASTHAN

10%

Table 1: % of Mentha production on the basis Area/State

70%

60%

50%

40%

30%

20%

10%

0% Barbanki,Sitapur,Faizabad U.P(Shambal,Chandosi ,Rampur) Punjab,Haryana,Rajasthan

Figure 2: Histogram of % of Mentha production on the basis Area/State Table below shows the year wise cultivation & production of Mentha Oil Year 1965 1970 1975 1980 1981 1985 1988 Area Hectare 65-70 600-650 4000-4500 8000 10000 18000 25000 Production of Mentha oil(In MT) 2 46 260 500 800 1400 2200

1990 1992 1995 1996 1997 1999 2001 2003

35000 38000 45000 35000 55000 62000 65000 72000

5000 5400 7000 5500 11000 12000 13000 15000

70000 14000 2004 Table 2: year wise cultivation & production of Mentha Oil
80000 70000 60000 50000 40000 30000 20000 10000 0 1965 1970 1975 1980 1981 1985 1988 1990 1992 1995 1996 1997 1999 2001 2003 2004 Area Hectare Production of Mentha(MT)

Figure: - Line graph representation of production

Menthol oil Price Trend in past 10 year: Serial no. 1 Year 2001 Price 400-600

2 3 4 5 6 7 8 9 10
1400 1200 1000 800 600 400 200 0

2002 2003 2004 2005 2006 2007 2008 2009 2010

400-700 400-750 500-850 550-900 600-1000 600-1100 600-1200 700-1300 750-1400

Avg price of the year

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Conclusion: My trading firm would Purchase Mentha oil from farmers and then I will sell to those people who have their crystallization plant. This sector is not organized in India so profit calculation is very tough. Bibliography:I have all the information from Google.