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How to Start Neem Oil Extraction Business

Do you want to start a small-scale neem oil extraction business? Find here a detailed neem oil extraction business plan sample checklist for your ready reference.

Neem is one of the most significant contributors to Ayurveda. The scientific name of neem is Azadirachta Indica. Basically, neem is a native plant of India with incredible benefits for curing our skin and hair problems.

Neem leaves, fruits, flowers, and twigs have great pharmaceutical value. Generally, neem oil is one of the most premium products. It has several uses in the cosmetics and consumer goods industry. The neem oil extraction process is simple. And any individual can start a neem-based small-scale industry with small capital investment.

Scope of Neem Oil Extraction Business

Neem provides a cure for innumerable health problems. The basic list includes

  • Dryness of skin
  • Skin problems like eczema
  • Hair problems like dandruff & hair fall control.
  • Skin blemishes and uneven complexion

Neem is also a natural mosquito repellant and prevents diseases like Dengue. Unlike synthetic mosquito repellants, it has no side effects.

Though many people have a Neem tree in their garden, very few believe that they can actually realize its socio-environmental and commercial value.

Steps  to Start Neem Oil Extraction Business

Steps in establishing neem oil extraction business

  • Manufacturing
  • Packaging
  • Promotion
  • Distribution
  • Quality control

Neem Oil Extraction process

Broadly, you can extract neem oil from neem kernels or neem leaves. However, the manufacturing operation requires some basic machinery.

  • Mixer grinder/ food processor
  • Boiling Pot
  • Filter
  • Measuring cylinder

Neem Oil Extracting Process from Leaves

First of all, you will need to dry and desiccate the neem leaves. Then shred these to form smaller leaf segments. Add the water and heat the neem water solution till boiling. During the boiling process, the liquid gradually becomes green in color. It also becomes more viscous as the oily constituents get leached from the shredded leaves into liquor.

Neem Oil Extraction Process from Kernels

You can also extract the neem oil from small neem fruits. Basically, neem fruits are spherical in shape. Actually, you can derive a greater viscosity of oil by squeezing these small fruits, using a crusher.

First of all, separate the neem kernels from the neem seed shells. Then, gently pound and dehusk the kernels to remove their peels. Then pour these processed kernels into a basket to aid separation. Ensure that the seeds are not rotten.

Put neem seeds into a chopper and crush them. Here, you can use stone crushers for this purpose. In order to grind the seed kernel, one can also use a small food processor. During the crushing process, the seeds are gradually converted to semi-powdered form so that oil could be filtered out.

Pour the powdered seeds into a metallic bowl. Pour the water into the bowl and mix. For every 10 parts of powdered seeds, add one part of water.

Generally, a 1-gram neem kernel will give a yield of 100 ml. During the process, one can see 100% organic oil coming out. Filter the oil and keep it in an air-free bottle. Ensure that the ambient temperature does not exceed 23ºC. Prior to usage, you must heat the oil for 5 minutes so that its temperature goes past 55ºC.

For large-scale neem oil extraction, you will need to use advanced techniques and equipment. The screened dry seeds are directly poured into the machine bucket.

Commercial Use of Neem Oil

Neem oil is one of the most effective and important ingredients for producing several products. The major application area is cosmetics. Neem oil is used in soaps, moisturizers, face packs, and facial cleansers.

Neem oil is an effective moisturizer for the skin. Besides removing dryness it helps to maintain an even complexion. It has antiseptic properties as well.

Derived products from Neem Oil

Neem soap

If you add neem oil during the saponification process, the finished product is neem soap. Neem soap has great commercial value and medicinal benefits. Consumers are encouraged to take regular neem bath

Hair oil

Generally, manufacturers mix a portion of Neem oil with coconut oil and olive oil to make it useful as hair oil. The desirable attributes of coconut and olive are hence added to the therapeutic qualities of Neem. Even you can add mustard oil to it.

Mosquito repellant

You can use neem water solution or neem oil of reduced viscosity in spray form to keep your home safe from insects or mosquitoes.

Facial cleanser/face pack

Also, one can mix the neem oil with glycerine to form a facial cleanser or scrub which helps to remove skin problems such as excessive oiliness or acne. It also renders an even complexion on the skin and a glow on the face.

Neem-based herbal therapies

One can use neem oil in beauty treatments. In addition to neem, you will need to add Gulab Jal and turmeric to make your skin radiant and beautiful.

Winter cream

Being a natural moisturizer, neem protects skin from getting dry during the winter season. Hence, neem is an effective ingredient in making lotion for skincare during the winter.

Packaging & Marketing 0f Neem Oil Extraction Business 

Basically, you can pack neem oil into bottles of various sizes or volumes. However, you must apply the labels on the bottles with the name of the manufacturing company and other details such as ingredients or directions for usage.


Bottled neem oil can be refrigerated to preserve its herbal value.

Marketing strategies

It is important that the herbal products formed from the various parts of the neem are marketed effectively to make this eco-friendly venture successful. Many reputed companies already exist in this sector. So for a new firm to get the name is a challenging matter.

So, you must promote the neem oil extraction business through customer awareness camps, product demonstrations, etc. Manufacturers must use an attractive tagline such as ‘Go green’ or ‘Living in the lap of nature. Such green marketing campaigns will create a desirable brand image for the manufacturing firm in the market.

Advertising requires sufficient capital investment. Manufacturers can get financial aid like bank loans at minimum interest, to meet the expenditures.

Some of the most effective ways of promotion:

  1. Newspaper advertisements
  2. TV commercials
  3. Online portals
  4. Participation in trade fairs


Manufacturers must keep track of present and prospective customers. They must expand their distribution channels to build their customer base. The logistics department must ensure that there are no losses in terms of product quality or quantity during distribution to the customers.

Quality control

You must hire qualified staff to ensure the finished products ranks high in terms of quality. There should be no discrepancy between desirable and actual product quality. Finally, you must procure quality raw materials to get quality products from neem oil extraction.