This paper proposes an automated method for segregating and counting the different colored pencils by non-contact method. The proposed work is carried out in LabVIEW platform based on the image processing techniques. This work consists of two parts, firstly classification of pencils and secondly counting the number of pencils. The proposed work is implemented on a conveyor running continuously, at a defined speed done without halting the conveyor. The images acquired using camera are processed using support vector machine to classify pencils based on color, and a counting algorithm is incorporated to find the specific number of each colored pencils. Results on testing showed the successful achievement of set objectives.