A business plan for Bio fuels

1. NEW HORIZON PVT. LTD.
BIO DIESEL- THE FORTIFICATION OF ENERGY
SECTOR
CHANDAN CHOWDHURY

2. CONTENT
Serial No. Title Page no.
1 Problem overview/ why Bio diesel 3
2 Industry overview 4
3 Jatropha In India 6
4 Company Overview 9
5 Financial Statement 10
6 Manufacturing Process 19
7 Inventory Management 20
8 Marketing plan 21
9 Competitive Edge 23
10 Action plan 25
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3. WHY BIODIESEL:
Bio-diesel is found everywhere in India, and the rising population of India,
combined with its developing industries, have created even more need of diesel
engines. The emissions from all of these diesel engines contribute to the decreasing
level of air quality in India, and rest of world. The use of an alternative fuel in these
diesel engines could play a major role in slowing the harmful environmental affects
of combustion engines. Biodiesel is an alternative fuel that can be run in any existing
diesel engine with negligible or no modifications, and can be mixed in any ratio with
petroleum diesel. It significantly reduces emissions with respect to petroleum diesel
combustion. The problem is that biodiesel is not Widely available in India, or in the
majority of the world for that matter. Though there have been many endeavors in
the field of biodiesel extraction, but our project deals in making the same process
user-friendly and cost-effective. Carbon dioxide (CO2), the principal greenhouse gas
is reported to have risen more than ten-fold since the start of the industrial
revolution. More than 30 percent concentration of CO2 is raised and if the present
emission rates are continued its concentration could reach twice than the pre-
industrial level by the mid of this century. On this concentration developed
countries accounts for over half of the global Green House Gas (GHG) emissions. In
order to reduce the level of GHG emissions, historically the Kyoto Protocol has been
conceptualized in the Conference of Parties-3 (COP-3) in 1997, which was further
entered. into force in 2003. The protocol establishes targets for developed countries
only and aims to reduce their collective emissions by 5.2 percent from the 1990
levels. However, the actual reduction is likely be substantially less because of
compromise negotiated by the parties and the withdrawal of the United States of
America.
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4. INDUSTRY OVERVIEW :
Biofuels are going to play an extremely important role in meeting India’s energy
needs. The country's energy demand is expected to grow at an annual rate of 4.8 per
cent over the next couple of decades. Most of the energy requirements are currently
satisfied by fossil fuels – coal, petroleum-based products and natural gas. Domestic
production of crude oil can only fulfill 25-30 per cent of national consumption. In
fact, the crude oil imports are expected to total 147 million tons (Mt) in 2006-2007.
With the ever-escalating crude oil prices, if one assumes a price of $57/barrel
($420/ton), the estimated crude oil import bill for 2006-2007 would be $61.74
billion, about 10 per cent of the country's Gross Domestic Product.
The Government of India has developed an ambitious National Biodiesel Mission to
meet 20 per cent of the country’s diesel requirements by 2011-2012. Since the
demand for edible vegetable oil exceeds supply, the Government decided to use
non-edible oil from Jatropha Curcas oilseeds as biodiesel feedstock. Extensive
research has shown that Jatropha Curcas offers the following advantages: it requires
low water and fertilizer for cultivation, not browsed by cattle or sheep, pest
resistant, easy propagation, high seed yield and ability to produce high protein
manure. The National Biodiesel Mission will be implemented in two stages:
1) A demonstration project carried out between 2003-2007, which will cultivate
400,000 hectares of land and yield about 3.75 tons oilseed per hectare annually. The
expected annual biodiesel production from the project is 1.2 t/ha/year for a total of
480,000 tons per annum. The Government will build a transesterification plant with
a biodiesel production capacity of 80,000 t/year as part of the demonstration
project; and
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5. 2) A commercialization period from 2007-2012 will continue Jatropha cultivation
and install more transesterification plants which will position India to meet 20 per
cent of its diesel needs through biodiesel.
An economic analysis indicates that ethanol from sugarcane and biodiesel from
Jatropha Curcas can be manufactured at under Rs. 21/litre ($0.47/litre at an
exchange rate of Rs 45/$). Current production cost of petrol and diesel from crude is
$0.46/litre, and with crude oil prices on an upward swing, the production costs of
ethanol and biodiese l compare favorably with those of petrol and diesel.
Comparison of oil seed filter cake nutrients with DAP and Urea
Source of fertilizer Percentage Percentage Percentage
Nitrogen Phosphorous Potassium
Pongamia Pinnata 3.95 0.52 0.42
oilseed filter cake
Jatropha Curcas 4.44 2.09 1.68
oilseed filter cake
Neem oilseed filter 5.0 1.0 1.5
cake
Castor oilseed filter 4.37 1.85 1.39
cake
Di-Ammonium 18 20 0
Phosphate
Urea 46 0 0
Source: CETESB (2009).
Diesel engines require, starting from Vegetable oil, Diesel, and now Bio diesel, as
fuel. There are numerous benefits of using
biodiesel as compared to petroleum diesel.
As of now biodiesel is the only alternative
fuel, which requires no alterations to,and
can be run in, an existing diesel engine.
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6. SCOPE OF JATROPHA IN INDIA
There are more than 100 tree species which bear seeds rich in oil having excellent
properties as a fuel and which can be processed into a diesel substitute. Of these
some promising tree species have been evaluated and
it has been found that Pongamia Pinnata
and Jatropha curcas are most
suitable. However, the advantage is
clearly in favour of Jatropha curcas
due to the following reasons.
shows the different areas under
Jatropha cultivation in India.
• It can be grown in areas of low
rainfall (500 mm per year) and in problem soils. In high rainfall and irrigated areas
too it can be grown with much higher yields. Therefore, it can be grown in most
parts of the country. It can be grown in desert areas, with the help of drip
irrigation.
• Oil yielding per hectare is among the highest of tree borne oil Seeds
• Animals do not graze Jatropha.
• Being rich in nitrogen, the seed cake is an excellent source of plant nutrients.
• Various parts of plant are of medicinal value, its bark contains tannin, the flowers
attract bees and hence plant has honey production potential.
• The plant is undemanding in soil type and does not require tillage.
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7. WHAT IS JATROPHA?
 Scientifically known as Jatropha curcas L.
 Locally known as “tuba-tuba”, “tubing”, “bakod”.
 A non-edible plant that grows mostly in tropical
countries like the Philippines.
 Drought resistant.
 Easily be planted and propagated.
 One of the higher yielding oil crop.
WHY JATROPHA?
Jatropha Curcas is resistant to drought and can be planted even in the desert
climates, and it thrives on any type of soil, grows almost anywhere; in sandy,
gravelly and saline soils.
 Jatropha has no inspect pests it is not browsed by cattle or sheep.
 Jatropha Curcas can survive long periods of drought.
 Jatropha Propagation is easy.
 Jatropha Curcas growth is rapid; forms a thick live hedge after only a month's
planting.
 Jatropha Curcas starts yielding from the second year onwards and continues
for 40 years.
 Approximately 31 to 37 % of oil extracted from the Jatropha Curcas seed. It
can be used for any diesel engine without modification.
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9. COMPANY OVERVIEW:
New Horizon Pvt. Ltd. is the flagship subsidy of Jai Balaji Group. Jai Balaji Group is
one of the largest manufacturers of steel in the private sector in Eastern India. We
have integrated facilities for producing steel in our eight manufacturing units spread
across the states of West Bengal, Chhattisgarh, Orissa and Jharkhand in India.
The new horizon ltd. is situated at Lonavla, Maharashtra. This company is basically
deals with Biodiesel production from Jatropa plants. It is going to be operated in
January, 2013.
VISION STATEMENT:
“To Become the World Leader in the Creation, Development, and Deployment of Technologies
that Converge the Advancement of Human Civilizations with that of the Environmental Condition”
THREE-YEAR MISSION STATEMENT:
“To Profitably and Sustainably Introduce Renewable Energy Into the World’s Underdeveloped
Communities”
PROPRIETARY RIGHTS:
This company is wholly owned by Jai Balaji Group. The land has been taken on 20
years lease from Maharashtra Govt. on tender basis & it is followed the section 23 of
company act, 1956.
KEY PEOPLE:
Ms.Trina Mukherjee
Mr. Ashim Kumar Mukherjee
Mr. Krishnava S. Dutta
Mr. Chandan Chowdhury
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10. FINANCIAL SHEET
Acceptable plant design must present a process that is capable of operating under
conditions, which will yield profit. Since net profit equals total value minus all
expenses, it is essential that the chemical engineer be aware of the many different
types of cost involved in the manufacturing processes. Capital must allocate for the
direct, plant expenses, such as those for raw material, labor and equipment. Besides
direct expenses many others indirect expenses are incurred, and these must be
included if a complete analysis of the total cost is to be obtained. Some examples of
these indirect expenses are administrative salary, product distribution cost and cost
for interplant communication.
The sum of the fixed capital investment and the working is known as the total
capital investment. Generally, the working capital amounts 10-20% of the total
capital investment.
Following is the breakdown of the fixed capital investment for a chemical process.
DIRECT COST:
1. Purchased equipments
2. Purchased equipment installation
3. Instrumentation and control
4. Piping
5. Electrical equipment and material
6. Building (including services)
7. Yard improvement
8. Land
INDIRECT COST:
1. Engineering supervision
2. Construction expenses
3. Contractor’s fee
4. Contingency
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11. COST ESTIMATION
Basic: - 5,000 Kg/day
(a) Dehuling, Grinder ,palletizer cost Approximately =35000 Rs
(b) Extraction unit 10 stage:
Cost of single stage:
Total volume for single stage
Weight
Price of one stage with fabrication
Cost of Roller, Bearing and Motor
So, Total Cost for Extraction Unit
(c) Condenser :- Double Pipe Heat Exchanger
Inner Pipe Di and L
Outer Pipe Do and L
Cost Approximately
(d) Storage Tank:-
Miscella
Oil
Hexane
Water (SS 304)
Total Cost Approximately
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12. (e) Piping, pump miscellaneous (approximately)
Total Fixed Capital Investment Cost
(1) DIRECT COST (D.C)
1) Total Purchased Equipment Cost
2) Installation Cost
16, 62,720 Rs
3) Instrument & Control Installed
4) Piping Installation Cost
5) Electrical Installation Cost
6) Building Process & Auxiliary
7) Service Facilities
8) Yard Improvement
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13. 9) Land
TOTAL DIRECT COST
(2) INDIRECT COST (I.C)
1) Engineering & Supervision Cost
2) Construction Expenses Cost
3) Contractor Fees
4) Contingency:
TOTAL INDIRECT COST
3) FIXED CAPITAL INVESTMENT (F.C.I):
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14. 4) WORKING CAPITALA INVESTMENT (WCI):
5) TOTAL CAPITAL INVESTMENT (TCI):
ESTIMATION OF TOTAL PRODUCT COST (TPC):
FIXED CHARGES:
A) Depreciation :( 10 % of TCI for machinery )
B) Local taxes :( 3 % of TCI )
C) Insurance:( 1 % of TCI )
D) Rent:( 9 % of TCI)
TOTAL FIXED CHARGES:
But, Fixed Charges
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15. TOTAL PRODUCTION COST Rs
DIRECT PRODUCTION:
a) Raw material:
b) Operating labour cost:
c) Direct Supervision and Electric labour:
d) Utilities:
e) Maintenance :
f) Operating supplies (OS)
g) Laboratory charges:
h) Patent and royalties:
PLANT OVERHEAD COST:
MANUFACTURING COST (MC):
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16. GENERAL EXPENSES:
a) Administration Cost:
Assume 55%
b) Distribution & selling Cost
Assume
c) Research & Development Cost
GENERAL EXPENSES
TOTAL PRODUCTION COST:
GROSS EARNING & RATE OF RETURN:
The plant is working for say 300days a year.
Selling Price:
Total Income
GROSS INCOME
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17. RATE OF RETURN
BREAK EVEN POINT CALCULATION (BEP)
Production cost per Kg
Annual Rate
Product cost
Total Fixed Charges:
Now, cost of Jatropha oil per Kg= 36 Rs/Kg
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18. So, Kg of oil at breakeven point 35n =36n
Thus, Break-even point is
Break even analysis
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19. MANUFACTURING PROCESS FOR BIODIESEL:
The most economical process for biodiesel manufacture is transesterification of
vegetable oil by an alcohol, usually methanol. The chemical reaction is shown below
and is commonly catalysed by an alkali such as potassium hydroxide. Methanol is
preferred over ethanol because the costlier anhydrous ethanol is required instead of
the readily available 95 per cent ethanol. The presence of water in 95 per cent
ethanol drastically brings down the conversion of vegetable oil. Also the ethyl esters
(biodiesel) are more soluble in the by-product glycerol, making purification of the
biodiesel product more difficult. An alkaline catalyst like potassium hydroxide is
preferred to an acid catalyst because the latter necessitates a higher reaction
temperature, a greater reaction time, and is more corrosive. Acid catalysts are used
when there is free-fatty acid in the oil, as in animal fats. Jatropha oil contains very
little free fatty acids.
Production of biodiesel using Jatropha feedstock
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20. INVENTORY MANAGEMENT SYSTEM
a) Just-In-Time (JIT) is an inventory strategy implemented to improve the return on
investment of a business by reducing in-process inventory and its associated
carrying costs. Quick communication of the consumption of old stock which triggers
new stock to be ordered is key to JIT and inventory reduction. This saves warehouse
space and costs. In order to meet our requirements we will be having tie ups with
Vendor and retail store.
b) Economic Order Quantity (EOQ) is the level of inventory that minimizes the
total inventory holding costs and ordering costs. The framework used to determine
this order quantity is also known as Wilson EOQ Model. We will order on Daily basis
with one order per day and as per our requirements say for example in the morning
we order we will see to it that with that order our requirement is fulfilled of the day,
this will reduce the transportation cost for 1 more order or unnecessary order .
c) Supply Chain Management (SCM) is the management of a network of
interconnected businesses involved in the ultimate provision of product and service
packages required by end customers. we will be having tie ups with sum of the
vendors of Oil retailers like IOCL, so that our needed requirements doesn’t get
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21. hampered as we will be following JIT and EOQ methods to avoid unnecessary
wastage of resources and money.
MARKETING PLAN
A comprehensive business plan includes a sound marketing plan. Owner, investors
and bankers want to know you have a proactive plan to grow your business. You
can’t rely on instant popularity and simple word-of-mouth marketing just because
some restaurants, but not many, open their doors to instant success.
Objectives:
· Shall deliver what is promised, promptly
· Shall adapt to the changing trends and deliver the best accordingly
· Shall strive to maintain harmonious relationship with customers & suppliers
Goals:
· Create Awareness through intensive marketing
· Attract people and impart the experience
· Break even by the third year of establishment
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22. 4 P’S OF MARKETING:
Price:
Price is a critical element of business. It is directly proportional to the sales volume.
Price can be determined either by demand or by volume of supply.
We have chosen the formula of economic order scale. We put lower profit margin
but high volume of sales proportion. The price of 1 litter oil would be 36/- where in
the market it is 40/-
Product:
It is the only oil that we are going to sell to the Indian market with the collaboration
of 85% of the total volume to INDIAL OIL CORPORATION LIMITED.
But we are providing the oil in 5 dimensions;
1. 100 litter
2. 500 litter
3. 1000 litter
4. 5,000 litter &
5. 10,000 litter (Only for IOCL)
Promotion:
Promotion is another name of communication. As the IOCL holding the majority
sales proportion of sales volume, it will be directly promoted by IOCL(SERVO)
brand.
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23. Place:
The manufacturing plant is situated at Lonavla area, Maharashtra.
COMPETITIVE EDGE
Location:
Location is critical to success. Our factory is on a place from which all kind of
transportation is readily available. It is also come under the SEZ.
Convenience:
We will be first company in India who will be able to provide the customize amount
of volume for export purpose. It will help the Govt. to increase the balance of
payment.
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24. High quality:
It will be our commitment that we will provide the standard quality oil. We also
have applied for ISO 9000:2001 Certification and the six sigma operation control.
COMPETITIVE STRATEGY
There are three major ways in which we will create an advantage over our
competitors:
1. Product identity, quality, and novelty
2. High employee motivation and good sales attitude
3. Innovative and aggressive service options
WHAT NEXT?
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