Om Narayan, Director
      Anant Pande, COO

Indo Greenfuel Consultants Pvt.
          Ltd., India
     The Landmark Bangk...
The beauty of economic theory
     Price

                                                                Supply




Equil...
The beauty of economic theory
  Price

                                 Supply

                     Surplus =
           ...
The beauty of economic theory
  Price

                                Supply




                    Deficits =
          ...
How does one get to the Sweet Spot ?
   Price

                                                           Supply




     ...
The track-record in India
  Million tons of sugar
                                                                        ...
The track-record in India
Million tons of sugar

                                                                         ...
Higher oil prices - a short-term event or a structural trend ?
12-months moving average
              US$ / Barrel
       ...
Objectives from a more intensive usage of biofuels

                           100 % = 1 liter of gasoline


             ...
Rapid growth in Ethanol production in the USA
Production in Million of gallons
                                           ...
Key players of the automobile industry already endorsing E-85 technology




US auto majors also taking up the cause . . ....
Large and rapidly growing number of E-85 pump stations across the US




E-85 : No longer a myth . . . .
Key players of the automobile industry already endorsing E-85 technology




Apart from US, the other global auto majors a...
By 2007, most new cars in Brazil running on flex-fuel E-85 engines
Monthly sales on new cars


             100% = 114,140 ...
Ethanol composes an important share of vehicle fuels in Brazil
In %, of total gasoline and ethanol consumption

      100%...
Demand for ethanol bound to increase by a factor of > 10 in the US alone
  Billion liters

               Consumption of g...
World demand for oil likely to increase dramatically

        Population                 Motorization


     100% = 2,409 ...
Sugarcane by far the largest fedstock for production of ethanol in the world



       100% = ~ 16 billion gallons




   ...
Ethanol from sugarcane is the cheapest to produce
                     In US$ cts. per liter – in late 2006

             ...
Cost of production of ethanol/industrial alcohol in India                      Non-binding, indicative only


In %

 100% ...
India is the second largest producer of sugarcane in the world
Million tons of sugarcane, based on crops 06-07



      Br...
Sugarcane can be grown practically everywhere in the country




Vast land & water resources available throughout the coun...
thanol has been a neglected activity in India so far

    Sugar Production        Ethanol Production         Ethanol Expor...
The majority of the sugar mills in India are of very small capacity
Distribution of 583 sugar mills, 2006, by daily crushi...
Large majority of the distilleries in India of very small capacity
                              Distribution in % of a to...
Still almost 200 sugar mills with no distilleries in Maharashtra and UP
Number of sugar mills and distilleries in the top ...
Ethanol production in India can easily be 6-7x larger than it is today
Ethanol production 2006, in Milion lts.




       ...
Targeted investments for the US$ 150 Million to be raised in the IGF-I cell


                                            ...
Intended timing of activities of IGF
non-binding, indicative only
          Value of the
           portfolio


          ...
Value of sugar/ethanol assets in India have a large up-side potential

      Valuation of ethanol plants in terms of US$ p...
Ethanol = new reality for India as sugar player
 Million tons of sugar
                               9.1
                ...
Question : will it happen in India ?
  Production of
   Sugarcane

                     Substantially reduce large depende...
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Biofuels Presentation at TBLI CONFERENCE ASIA 2008

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by Om Narayan, Director and Anant Pande, COO of Indo Greenfuel Consultants Pvt. Ltd., India

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Biofuels Presentation at TBLI CONFERENCE ASIA 2008

  1. 1. Om Narayan, Director Anant Pande, COO Indo Greenfuel Consultants Pvt. Ltd., India The Landmark Bangkok Hotel 29-30 May 2008
  2. 2. The beauty of economic theory Price Supply Equilibrium price Sweet Spot Demand Equilibrium Quantity volume Sweet spot : an Ideal situation where demand & supply are in perfect equilibrium
  3. 3. The beauty of economic theory Price Supply Surplus = Exports Demand Quantity
  4. 4. The beauty of economic theory Price Supply Deficits = Imports Demand Quantit y
  5. 5. How does one get to the Sweet Spot ? Price Supply Demand Quantity Identify economically attractive options for the surplus/ deficit
  6. 6. The track-record in India Million tons of sugar 9.1 8.8 3.4 Surplus 2.9 2.6 2.0 2.2 1.4 0.5 0.7 Time -0.8 -2.2 -2.1 Deficits -3.6 -5.8 A large imbalance between production & consumption of sugar
  7. 7. The track-record in India Million tons of sugar 17.3 12.4 12.0 11.7 11.5 10.7 9.1 7.8 7.4 5.9 5.3 5.5 5.2 4.2 2.7 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08e Sugar surplus : a problem or an opportunity -> ” a new paradigm ”
  8. 8. Higher oil prices - a short-term event or a structural trend ? 12-months moving average US$ / Barrel 90 60 40 20 0 '87 '97 '07 Huge demand-supply gap leading to a secular uptrend in oil prices search for alternative fuels
  9. 9. Objectives from a more intensive usage of biofuels 100 % = 1 liter of gasoline Objectives and benefits Flex-fuel engine • oil to last longer • reduce OPEC dependency • reduce global warming ethanol effect Conventional petrol • .... Normal engine Before E-5 E - 20 E - 85 E - 10 Ethanol : the sustainable fuel for the future . . . . . .
  10. 10. Rapid growth in Ethanol production in the USA Production in Million of gallons 4,855 4,000 3,000 2,000 1,470 1,000 870 82 84 86 88 92 94 96 98 02 04 80 90 00 06 19 19 19 19 19 19 19 19 20 20 19 19 20 20
  11. 11. Key players of the automobile industry already endorsing E-85 technology US auto majors also taking up the cause . . . . . .
  12. 12. Large and rapidly growing number of E-85 pump stations across the US E-85 : No longer a myth . . . .
  13. 13. Key players of the automobile industry already endorsing E-85 technology Apart from US, the other global auto majors also pushing for E- 85
  14. 14. By 2007, most new cars in Brazil running on flex-fuel E-85 engines Monthly sales on new cars 100% = 114,140 units 130,118 16 Gasoline, 90 Alcohol, Diesel 84 Flex Fuel 10 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 successfully eliminated the oil bill deficit with high growth rates in flexi fuel cars ~ 800 folds increase in last 4 years
  15. 15. Ethanol composes an important share of vehicle fuels in Brazil In %, of total gasoline and ethanol consumption 100% = 28.3 bn 27.2 27.7 28.1 30.0 31.0 31.1 ltrs 58 59 57 60 61 62 61 Gasoline Average 42 41 43 40 mandatory ethanol 39 38 39 blend ratio = 23% 2000 2001 2002 2003 2004 2005 2006 Brazil : > 40% blend ratio of ethanol against mandatory requirement of 23%
  16. 16. Demand for ethanol bound to increase by a factor of > 10 in the US alone Billion liters Consumption of gasoline - USA Demand of Ethanol in 2015 609 Additional need for 450+ billion lts. 530 E - 85 518 Conventional gasoline 514 E - 20 122 191716 52 Production of US, Ethanol 16 Brazil, and rest in 2005 2006 2015 Huge upsurge expected in the demand for ethanol with most companies producing E-85 compatible cars
  17. 17. World demand for oil likely to increase dramatically Population Motorization 100% = 2,409 Million 100% = 780 cars per 000 inhabitants Additional demand for fuel China + India US China + India US Driven by the staggering growth in the emerging markets . . . .
  18. 18. Sugarcane by far the largest fedstock for production of ethanol in the world 100% = ~ 16 billion gallons 60 Sugar cane 30 Corn and other grains 10 Other Ethanol 2007 > 60% of world ethanol being produced from sugarcane
  19. 19. Ethanol from sugarcane is the cheapest to produce In US$ cts. per liter – in late 2006 + 200 % EU - beet/wheat 68 - 72 US - corn 34 - 38 India - molasses 28 - 32 Brazil - sugarcane 18 - 24 Financially, the most viable option . . . .
  20. 20. Cost of production of ethanol/industrial alcohol in India Non-binding, indicative only In % 100% = ~ US$ 28 - 32 cts. per lt. 71 Feedstock 9 i.e., C-Molasses 7 6 5 2 Total cost Manufacturing Energy Depreciation Direct labor Maintenance & overheads repairing With feedstock constituting > 70% cost, raw material securitization would be the key . . . .
  21. 21. India is the second largest producer of sugarcane in the world Million tons of sugarcane, based on crops 06-07 Brazil 430 India 260 China 88 Pakistan 47 Mexico 45 India has significant potential to becoming the ethanol hub of the world
  22. 22. Sugarcane can be grown practically everywhere in the country Vast land & water resources available throughout the country . . .
  23. 23. thanol has been a neglected activity in India so far Sugar Production Ethanol Production Ethanol Export '06, in Million tons '05, in Billion lts. '04, in % 32 15.4 11 26 1.7 0.1 Brazil India Brazil India Brazil India Large untapped ethanol production potential . . .
  24. 24. The majority of the sugar mills in India are of very small capacity Distribution of 583 sugar mills, 2006, by daily crushing capacity Capacity, in tcd > 10,000 11 7,500 – 9,999 12 5,000 – 7,499 58 3,000 – 4,999 70 1,000 – 2,999 384 < 1,000 48 Fragmented industry, small size mills . . . .
  25. 25. Large majority of the distilleries in India of very small capacity Distribution in % of a total of 297 distilleries, 2006 As per annual production capacity, in Milion lts per year > 40 1 30 - 40 5 20 - 30 5 10 - 20 24 5 - 10 31 <5 34
  26. 26. Still almost 200 sugar mills with no distilleries in Maharashtra and UP Number of sugar mills and distilleries in the top 5 regions in India, 2006 186 132 67 51 44 42 38 29 25 21 Sugar millsDistilleries Maharashtra Uttar Pradesh Karnataka Andhra Pradesh Tamil Nadu Huge un-cashed opportunity for ethanol production . . . .
  27. 27. Ethanol production in India can easily be 6-7x larger than it is today Ethanol production 2006, in Milion lts. USA 18,376 Brazil 16,998 China 3,849 India 1,900 France 950 Russia 647 India has a great future as a world- class producer of biofuels South Africa 386 U.K. 280 Significant value creation potential for PE funds . . . .
  28. 28. Targeted investments for the US$ 150 Million to be raised in the IGF-I cell Type of Size Likely IRR in US$ investment Million Build greenfield ethanol 20 - 35 > 35 % plants on a stand-alone IGF-I situation US$ 150 Million Build greenfield ethanol plant 15 - 25 > 25 % side-by-side to existing sugar mills Co-investments Acquire stakes in existing ethanol 10 - 25 > 20 % plants and/or sugar-mills Loans Total investments in 10 - 12 plants and mills: 250 - 350
  29. 29. Intended timing of activities of IGF non-binding, indicative only Value of the portfolio Disposal time-window Managing & optimizing phase Build-up phase 2008 2009 2010 2011 2012 2013 2014 2015 Time Preparatory phase
  30. 30. Value of sugar/ethanol assets in India have a large up-side potential Valuation of ethanol plants in terms of US$ per ltr. of installed capacity,Summer 2007 ~5-7 ~ 3.5 - 4 ~ 3.5 - 4 There is a significant potential for capital gains ~ 1.5 - 2 ~ 0.42 US Brazil China India IGF capex High capital appreciation potential – timing is the key
  31. 31. Ethanol = new reality for India as sugar player Million tons of sugar 9.1 8.8 India + ethanol means more sugarcane, but NO Surplus surpluses of sugar any longer 1.4 Time Deficits -3.6 -5.8 A new paradigm for sugar business in India . . . .
  32. 32. Question : will it happen in India ? Production of Sugarcane Substantially reduce large dependency on foreign oil Improve balance of trade Secure a leading role, and at a world-scale level, in the promising sector of renewable fuels Once-in-a-lifetime opportunity to enable 45 million farmers to escape from poverty and misery Time 2009 2010 2011 2012 2013 2014 2015 2016
  33. 33. Thank You
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