A north Indian entrepreneur had a piece of land and wanted to start some food processing unit. He had started captive mushroom growing on his land. Keeping this in mind, he thought of starting manufacturing unit for frozen mushrooms, and other locally available vegetables like peas, cauliflower, carrots, radish, etc. Accordingly, he made an investment of about 11 - 12 crores in frozen vegetable plant and started the unit.

In a couple of years, he discovered that the availability of quantity of vegetables required for commercial scale production was not available. Secondly, there was no demand for frozen mushrooms, as it was expected. As a result the plant started making losses and the interest Burdon on the loan kept on rising.

At this stage he had discussed the issue with the banks and consultants and after the detailed discussions, it was concluded that there were more prospects for canned mushrooms, whole and slices, in the international market. The consultant studied the whole situation. The entrepreneur along with the consultant did informal survey on markets and came to conclusion that there was demand for canned mushrooms, whole and slices, as pizza toppings and in the salads in the US. The investment in canning line was in the region of 50 - 60 lakhs, which the entrepreneur found it difficult to shell out. Considering the dead end situation with the major investment in the frozen unit of around 12 crores, finally, the investment in canning of Rs. 50 - 60 lakhs was made and the canning unit started. The canned mushrooms established the quality parameters and product started moving into the US market.

Over a period of time canned mushroom business got well established in the US markets with repeat orders and the canning line with the smaller investment became the backbone of the project. Once the project started making money, the organization focused on frozen products and utilizes that line as well, as most of the factory overheads got absorbed in the canning line. Today they are running a successful canning and frozen unit.

The case tells us about - Importance of sight selection vis-à-vis raw material availability, and market survey and precise demand analysis before making capital commitment.