How to register food processing company in Chennai

How to register food business in Chennai

Manufacturing or processing of food products is considered as profitable and sustainable business in FMCG – Fast moving consumer goods industry.

Set up and starting commercial production in food processing business requires high level of experience in processing or manufacture of food products. The output of varies from each company based on the unique formula, method of processing, quality of inputs and raw materials used, level of quality control, standardization of manufacturing process.

How to register food processing company in Chennai ?

Development and research of business idea : Development of business idea and conducting ground research is mandatory and primary activity to be finished before starting company registration in Chennai. We recommend preparing detailed project report regarding business prospects, running cost of business, production capacity required, sales projection, etc.

Deciding on no of stakeholders :  In the majority of business operating in food processing or manufacturing industry, the core team or owners include more than one person. The food products are subject to strict government regulations, therefore close monitoring of operational activity is crucial for successful business.

Application for company registration : Choose type of company registration for your business, based on following criteria

  • Based on No of owners :  In case of single person company register for proprietorship or one person company, in case of more than one owner it is advisable to include all owners legally in business by registration of private limited company, partnership company registration, or LLP company registration.
  • Based on amount of investment : If the investment in business is high, it is preferred to register private limited company as first priority and partnership firm as second priority.
  • Based on risk factor : In case there is heavy legal risks or liability risks, it is advised to register pvt Ltd company or limited liability partnership firm.
  • Business growth prospects : When there is opportunity for rapid expansion in a short period of time, it is always advised to choose registration of pvt limited company.

Once company registration process is over, there are mandatory registrations required for food processing business for commencement or business.

Other business registrations required for food processing

  • GST registration : GST registration is required in most of the cases other than cottage industries, microscale business, this is because the practical environment, is such that business cannot be continued without GST registration.
  • FSSAI registration : Food safety registration is required for any business operating in manufacturing, processing or handling of food products. The business owner is required to apply FSSAI licence in state licence or central licence based on the criteria laid out by the food safety department.
  • Fire licence : Fire safety licence is required for the majority of industries in all sectors, in food processing industry it is enforced strictly due to presence of activity involving cooking with the use of fire and other approved fuels.
  • Bar code registration : Bar code registration is required where the product is pre packed food, and sold in retail outlet. Barcode is unique number for easy billing and identification of products in retails stores.
  • Trade Mark registration : Registration of trademark is mandatory in case the product is sold or marketed in own brand name, food industry is commonly known for trademark infringements and brand name duplication, therefore it should be given first priority for trademark registration.
  • Import export code registration : I E code registration is required in case the entity exports goods to other country, or in case it imports raw materials from foreign country.
  • Registration with board for certain agricultural products : There are different boards operating in the country for the manufacturer or processor of agricultural and allied products, the business is required to register itself in the board as a member for doing certain activity and co ordination between its members and e.g:  Apeda registration for registration with Agricultural and processed food export development authority, spice board registration for import and export of spices etc.

What are the GST benefits for food business ?

Majority of processing and manufacturing activity of basic raw materials used in food products are either at zero GST rate or exempted goods.

Apart from exempted and nil rate for basic food products, most common GST rate is 5 % for food products, the important reason for lowest GST rates are inputs from farmers, classified as necessities etc.

Availability of composition scheme for dealers in manufacturing of food products at the rate of 1 % if the turnover does not exceed Rs.1.5 crores in the previous financial year.

The foods items which are not a basic necessity are charged to GST at 18 % and above.

Professional support

It is advised to get support of professional for GST registration service, company registration services and other business and tax compliance, complex nature for business operation and legal compliances requires close monitoring by experienced auditor. We are one of the best auditor in Chennai for company registration and  business legal compliance, reach us for long term and reliable consultation.

Important points every food processing entrepreneur should know

  • Sustainability : Sustainability is an important factor is any food processing or manufacturing business, because you are creating a new product irrespective of other existing brands. You should have proper road map to achieve sustainability at initial life cycle of the business, at least for 3–5 years.
  • Marketing : The unique nature of food processing industry is that the product will market itself or the product will degrade itself, so the key success factor is the quality of the product and how it is differentiated from competitors in taste, price etc. There will be heavy initial marketing costs in advertisements, brand promotion, providing free samples, creating new market etc. Market penetration is crucial at initial stages of the product life cycle.
  • Rapid growth : Products in FMCG sector will have sudden spike in growth and turnover in short period of time when it is placed in the market properly and delivers intended experience to its users.
  • Each product is unique : Each processed or manufactured product batch will be unique if there is no standardization in quality, quantity and processing methods. Therefore, standardization ensures same result at every time of manufacturing or processing.
  • Heavy machinery cost : In case of large scale production use of traditional process will not yield results due to shortage of labour, expertise etc. So there is always a heavy initial investment in plant and machinery cost in case of large scale processing.
  • Industrial supplies : Catering entities or other industries dealing with supply of food products in bulk quantity will source ready to use food products from different third party bulk manufacturers rather than own manufacturing due to seasonal or occasional business.