business plan | Biodiesel | Diesel Fuel

A BUSINESS PLAN ON BIO DIESEL

UNDER THE GUIDANCE OF: PROF.SWAPAN DASGUPTA SUBMITTED BY:
AMAN SINGHANIA DEEPAK DHIMAN KARAN ARORA JIGAYSA GAUTAM SIDDARTH SINGHAL SANDEEP KUMAR PIYUSH AGARWAL SAHIL AGARWAL NISHANT JHA RAJA VASISHTA

THE INTERNATIONAL INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI

Acknowledgement
We are thankful to Prof. Swapan Dasgupta for giving us this opportunity to make a Business Plan. It is our great pleasure to express our profound sense of gratitude to our respected Guide professor for his constant help and precious suggestions to enhance the quality of the report. We are grateful to all the faculty members, for their valuable suggestions for the successful completion of our report. At last, but not the least, we thank all my friends those who have guided us, supported us and helped us in completing our work on time.

Table of Contents:
Background and Purpose
Company Summary Company Ownership Company History

Objective
Short term Long term Mission Statement

Market Analysis

SWOT Analysis
Strengths Weakness Opportunity Threat

Marketing Plan
Product Price

Promotion Place Technology

Marketing
Marketing Strategy Competitive Edge Sales Strategy Sales forecast

Financial Plan and Projection
Resources Financial statement and projection Business Ratios

Organization and Management
Form of Business Equity Position Key personnel HR strategy

Critical Risks and Contingency Plan

Bibliography

Executive Summary:

1 General: Company has proposed to set up a new plant for BioDiesel. The manufacturing unit is at Industrial area. The capacity of the new plant will be 1,000 liters of biodiesel per day. 2 Factory site: It is proposed unit will be set up at industrial area. 3 Raw material: The basic of raw material for manufacture of bio diesel is Vegetable oils, Methanol and Caustic potash. The arrangement for the assured supply of local raw material like

vegetable oil seeds like jatropa, Mahuwa and karanj are being done. The other raw material required for manufacture of bio diesel or methanol and caustic potash, which will made available from the market. 4 Schedule of project implementation : The estimated implementation period for the complete plant is around 20 week. Presently the land is fully develop for industrial purpose. Basic engineering design, detail engineering design equipment layout drawing are ready. Civil/Architectural design, is to be done. 5 Management and Technical Expertise: The company is promoted by a dynamic enthusiastic and enterprising person who is a qualified and experienced having good experience in this line. 6. We expects to raise Rs.7700000 of its own capital. This provides the bulk of the current financing required. Indian group anticipates sales of about Rs.3924000 in the first year, Rs.4768000 in the second year, and Rs.5971000 in the third year of the plan. Indian group should break even by the fourth month of its operation as it steadily increases its sales.

PURPOSE AND SCOPE

The business never comes into existence without any purpose. There is the common purpose for every business, that is; profit. Adding this to our purpose, the company put more emphasis on satisfying its customers by providing the high-quality products and good services to its customers so that the company should be known more for its services. It would be unsatisfying, to be in business with the only reason that of making money. A company needs profits to continue, but profits are not what the business is for.

No business sticks to the same strategy that what it adapted initially. With the change in the business environment, it needs to change its policies or strategies. An Biodiesel for business benefits in many ways as it is the most powerful an incredible source of cost-efficiency, an environmentally friendly ,eco-friendly renewable source of energy and pretty much a requirement today. Today, people expects (especially the clients/customers) to change according to the world and also now has become more responsible towards environment.

The purpose for setting up an Biodiesel business is by analyzing its future demand and more dependency towards the eco friendly fuel and energy. The first and the main purpose is to maximize share holders wealth. Biodiesel can help reduce our dependence on foreign oil and help us leverage our fossil fuel supply. It can also help reduce green house gas emission , as well as public health risk associated with air pollution. Secondly, it widens up the market and enhances the availability of the product, i.e., 24/7. It basically enhances the scope of the business, by increasing the market range and extending the customer base, lower cost of development, outperforming the competitors, convenient for the customers.

HISTORY
Indian Group is incorporated in Delhi. It is equally owned and managed by its four partners. Mr. Aman Singhania and Mr.Nishant Jha have extensive experience in sales, marketing and management, and Mr.Karan Arora Singh brings experience in the area of finance and administration. Mr.Siddarth Singhal is experienced in the area of Human Resource. Indian group started as a manufacturer of toiletry and cosmetics in the year 1994. Today, Indian Group is a Rs 500 crore group of companies. The plants and production activities of the group are currently spread across West Bengal, Pondicherry, Assam, Gujarat, Orissa, Uttaranchal and Himachal Pradesh.

Recently, Indian group has signed a MoU for a Cement and Power Plant in Chhattisgarh. Indian group has grown from West Bengal and will continue to be a part of the accelerated industrial growth of the State. Its Bio-diesel Project is another step in the direction

Objective:
Short term:The facility’s production will contribute to fulfilling the objectives set by the Indian Administration to encourage the penetration of biofuels in the market. Last January 1st legislation on the obligatory nature of the use of biofuels in transport came into effect. It establishes that 3.4% of the overall energy content of gasoline and diesel fuel sold in India for transport in 2009 should come from biofuels, and 5.83% in 2010 (in the first semester of 2008 the percentage was 1.47%).

The legislation sets a minimum objective of 2.5% for 2009. This applies to both biodiesel in relation to conventional diesel, and bioethanol in relation to gasoline, and the difference can be made up to a total of 3.4% with any of the two biofuels. For 2010 the minimum objective for each biofuel increases to 3.9% and the overall figure to 5.83%. In the specific case of biodiesel, and in the light of overall fuel consumption figures for transport in India, this means that a minimum of 740,000 metric tons of biodiesel should be incorporated into the system in 2009 and 1,070,000 mt in 2010. The production from this facility will, therefore, represent 27% and 17% of these targets respectively.

Long term:Profit Maximization: The main objective is to achieve the break even point as soon as possible and we expect that we will be able to achieve profit within one and half years. Because the main motive of every business is profit earning. In the long term, our company will aim at maximizing its profits margins and simultaneously providing best quality efficiently to its clients. Market Leadership: Our Company will aim at achieving market leadership in manufacturing of world class Biodiesel.

VISION, MISSION AND VALUES Vision of IOG

“A major diversified , trans-national , integrated energy company, with national leadership and a strong environment conscience ,playing a national role in oil security and public distribution”.

Mission of IOG
● To achieve international standard of excellence in all aspects of energy and diversified business with focus on customer delight through values of product and services, and cost reduction. ● To maximize creation of wealth ,value and satisfaction for the stakeholders. ● To attain leadership in developing, adopting and assimilating state of art technology for competitive advantage . ● To provide technology and services through sustained Research and Development. ● To foster a culture of Participation and Innovation for employee growth and contribution. ● To cultivate high standard of business ethics and Total Quality Management for a strong Corporate Identity and brand equity. ● To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

Values followed at IOG
● Care ● Innovation ● Passion ● Trust

Market Analysis:
OVERALL MARKET The U.S and global The U.S. and global markets for biodiesel growth, details major feedstock trends, and provides 5 to 10 year forecasts for biodiesel demand, consumption and production. Europe, China, India and Brazil are also covered as case studies. Proprietary forecasts developed for this study are also used to produce 2020 "scenarios" for the U.S., Europe, China, India and Brazil. We finds the biodiesel industry is entering a new era of transition to alternative feedstock’s, emerging technologies, and revised government policies favoring sustainable feedstock’s and fuels. Each of these transitions offers considerable challenges and growth opportunities for biodiesel developers, producers, feedstock producers, and entrepreneurs.

The global markets for biodiesel are entering a period of rapid, transitional growth, creating both uncertainty and opportunity. The first generation biodiesel markets in Europe and the US have reached impressive biodiesel production capacity levels, but remain constrained by feedstock availability. In the BRIC nations of Brazil, India and China, key government initiatives are spawning hundreds of new opportunities for feedstock development, biodiesel production, and export" said Biodiesel 2020 author Will Thurmond

SPECFIC MARKET India is a lucrative market of biodiesel. “Jatropha is an alternative, but palm oil seems better to us. Firstly, the jatropha yields are likely to be low and secondly, these will be time-taking.” As for palm oil, he said, “Palm stearin is a good option. At Rs 22,000 per tonne, palm stearin is much cheaper than diesel.” It is also expressed serious concerns over the shortage in oilseeds production in India, which makes the country increasingly dependent on imports to meet its demand. “It is needed to understand that high minimum support price for cereals and grains is not required anymore; it’s a thing of the past. Instead, which is need to focus on oilseeds,” Tag of a developing country with a huge energy demand (it was standing at the fifth position in terms of energy consumption in the world in 2007) has forced India to depend on other

countries for fuel (oil), increasing the risk exposure of the country to the volatility of crude oil prices in the international market. Feeling the heat of shooting oil prices, India commenced its biofuel journey in 2003. Currently, ethanol dominates the Indian biofuel sector, however, biodiesel is also expected to join the commercial stream soon as the phase one of pilot projects has already been completed. So being at the initial stage, but with huge potential in terms of production, the Indian biofuel industry will prove to be a good option for biofuel producers, says "Emerging Biofuel Market in India”, a recent research report on the Indian biofuel industry Ethanol dominates the world biofuel market and its production is expected to grow at a CAGR of around 6% during 2008-2017. - Worldwide biodiesel production is expected to grow at a CAGR of over 5% from 2008 to 2017. - Ethanol production of India is likely to attain a CAGR of slightly over 2% during the period 2008-2017. - Increased ethanol use is expected to supersede the production during the forecasted period. Domestic ethanol consumption in India is projected to expand at a CAGR of around 6.5% during 2008–2017. - India’s total biodiesel requirement is projected to grow to 3.6 Million Metric Tons in 2011-12, with the positive performance of the domestic automobile industry. - Similar to Brazil and the US, the Indian automobile industry has huge potential for the flexfuel vehicles

COMPETITVE FACTORS AND MICRO ENVIRONMENTAL INFLUENCE
Biodiesel growth from non-food feedstocks is gaining traction around the world," China recently set aside an area the size of England to produce jatropha and other non-food plants for biodiesel. India has up to 60 million hectares of non-arable land available to produce jatropha, and intends to replace 20% of diesel fuels with jatropha-based biodiesel. In Brazil and Africa, there are significant programs underway dedicated to producing non-food crops jatropha and castor for biodiesel." Second Generation Opportunities

As the Europe and US markets transition to larger plants, alternative feedstocks and 2nd generation technologies, the Biodiesel 2020 study predicts a consolidation among smaller, first generation producers from 2008-2010, accompanied by a series of mergers and acquisitions in the field. "From 2008 through 2020, a series of transitions in the biodiesel industry will create winners and losers," said Thurmond. "Biodiesel producers that are best able to evolve and adapt to transitions in technology, markets, feedstocks and government policies are most likely to succeed over the long term." Opportunities and Outlook The initial results from the study Biodiesel 2020: A Global Market Survey find that new developers, farmers, feedstock providers, producers, and investors who can meet growing demands for supply are expected to benefit from this emerging market. In addition, this study finds key advantages in the future will be available to producers and investors to supply future needs with new and improved technologies; alternative feed stocks with higher yields such as jatropha and algae biodiesel; production scalability and flexibility options; supply chain, distribution and co-location strategies; innovative risk management strategies; and industry-friendly government targets and tax incentives committed to promoting the awareness and growth of the industry. With an eye on the future, Biodiesel 2020: A Global Market Survey provides forecasts and scenarios to the year 2020 for the U.S. and European markets as well as the "big emerging markets" of China, Brazil and India. For Brazil, China and India, the study includes long-term forecasts and year 2020 scenarios, each measuring growth in the diesel and biodiesel markets, as well as focusing on the potential for biodiesel growth.

SWOT ANALYSIS

Strengths: -

- There are favourable climate and environmental conditions (esp.high quality of soil) to rape cultivation in the Podkarpacie region - Large , unexploited production potential of agriculture and rural areas (resource of land and workers) -Possibility of assign large areas of appropriate soil for rape cultivation - Possibility of gradual filling the gap after resigning from sugar beet or other, unprofitable, cultivation - The prospects of reducing the area of waste land - Low charges and surplus of manpower ( competitive price of rape and rape oil), - The custom of rape cultivation in he part of the province - The demand for the product (rape) from the local processing industry - Producers organizations connected to the issues of rape processing chain(production processing, purchase-distribution) - The rational rotation and improvement of soil productive quality has been understood - Existing production plants for rape processing into oil(processing capacity of the order of 30 thousand of tons per year) machines installed have the following features: small space for work; - Low electric energy usage, - High efficiency of work - No air pollution, - Low costs of operating and keeping in - Technical readiness state - long overhaul life between medium repair, that is 1000 tons - Low price - Good users opinions - Uniformed fleet– all rape producers work with the same installations - Normalized product is being received : - Oilseed cake

- Cold press method -preferences of delivery –Hot pressing gives worse physical chemical product parameters - Constant recipients– provides steady sale - Efficient advisement in rape cultivation and sale area, - Functioning producer group - Well developed system of rape purchase - Existing rape processing plants - Flourishing non-governmental organizations of RRE promotion and development - Well developed system of agricultural advisement - The ability of obtaining funds for projects

Weakness:
- Distraction (scattering of a sector) of rape oil production - Intercepting part of farmers’ income by agents working on the market ( purchase is made by external subjects) - Threat of unverified varieties of rape appearance on the market

- Predominance of the reluctant attitude among the farmers( small farms owners) and rural Inhabitants - Low level of education among the agricultural producers - The current technology used gives lower oil yield (30% in comparison to competitive 35%) what lowers the competitiveness of the product - High purchase price of rape - Banks are not engaged in supporting the rape processing and purchase in the Podkarpacie region - Slow processes of adjusting to changing developmental conditions( low rate of restructuring in the region) - Low capital resources of farmers - Distant relation of farms with the market ( the unmarketable farms mostly), - Lack of entrustment and common reluctance towards joint venture( undeveloped social capital) -Large young educated people migration, (the human capital deciding of the competitiveness of the region) - The partnership between public and private sectors is not developed in the region - Self-government and inhabitants are not satisfactory educated in abilities and needs of development and using the renewable resources energy

Opportunity:
In India agricultural and dairy sectors have achieved remarkable successes over the last three and a half decades. Besides being one of the world's largest producers of biodiesel, and providing much needed diesel security to the nation.

The accomplishments of the green and white revolutions have, however, not been matched by concurrent developments in supply chain management, and in new technologies for better processing, preservation, and storage of food. Pockets of shortages and near starvation, substantial wastages due to spoilage, quality deficiencies, and inadequate returns to the farmer are still very much in evidence. The initial results from the study Biodiesel 2020: A Global Market Survey find that new developers, farmers, feedstock providers, producers, and investors who can meet growing demands for supply are expected to benefit from this emerging market. In addition, this study finds key advantages in the future will be available to producers and investors to supply future needs with new and improved technologies; alternative feed stocks with higher yields such as jatropha and algae biodiesel; production scalability and flexibility options; supply chain, distribution and co-location strategies; innovative risk management strategies; and industry-friendly government targets and tax incentives committed to promoting the awareness and growth of the industry

Threat:
Numerous transport biofuel substitutes, including traditional fuel and alternative and New generation fuel( heading towards hydrogen generation)

• • • • • • • • • • • • • • • •

Relatively high price of transport biofuel production in EU in comparison e.g. spirit in Brazil or to costs of output of the barrel of crude oil (8-12 USD/barrel) problems with EN14214 norm in case of biofuel produced for own use (limited advantageous ecological effect) Insufficient profitability or lack of it(production profitability appears in case of larger production scale) Improving the image of 1st generation biofuel demands incurring high costs necessarily Uncertainty of sale Constance, seasonal sale in case of esters Uncompleted legal environment (revision of the excise directive causes anxiety). Unsatisfactory RRE promotion, Energy and fuel companies monopoly (controlled access to distribution channels) Development of large companies (out of the region) basing on bio-material (reducing the province to material producer only) Dynamically evaluating market of biocomponents able to eliminate ‘small material producers’ Import of biocomponents to biofuel production Higher competitiveness of producers from other regions Limited access to fund for biofuel market development Not efficiently developed business supporting structure Unsatisfactory cooperation between economy practice and theoretical works Low fund on the R&D area in Poland in contrast to other EU countries

PRODUCT AND ITS DEVELOPMENT
Product description and specification The proposed to be made in a new plant is BioDiesel is a domestically produced, Renewable fule that can be manufacture from vegetable oils, animal fats, or recycled restaurant oils. Bio diesel is safe, Biodegradable, reduces serious air pollutants such as particulate, carbon monoxide, hidro carbon and air toxic. Blends of 20% Biodiesel with 80% petroleum diesel can generally be used in unmodified diesel engines. Bio diesel can also be used in its pure from (be 100), But it too may require certain engine modification to avoid maintenance and performance problem. Biodiesel is a cleaner – burning diesel replacement fuel made from natural, renewable sources such as new and used vegetable oils and animal fats. Just like petroleum diesel, Biodiesel operates in compressionignition engines. Blends of 20% Biodiesel (mixed with petroleum diesel fuels) can be used in nearly all diesel equipment and are compatible with most stronger and distribution equipment. These low lavel blend (20% and less) generally do not require any engine modification. Biodiesel can provide the same pay load capacity and as diesel. Using Bio Diesel in a conventional diesel engine substantially reduced emissions of unburned hidro carbons, carbon monoxide, sulfates, and particulate matter. These reduction increased as the amount of biodiesel blended in diesel fuel increased. The best emissions reduction are seen with be 100. The use of biodiesel increased the solid carbon fraction of particulate matter (since the oxygen in biodiesel enable more complete combustion to c 02) and reduce the sulfate fraction ( Biodiesel contains less 24 ppm sulfur), while the soluble or hydrocarbon, fraction stayes the same or increase. Therefor, biodiesel work will with new technologies such as diesel oxidation catalysts (which reduce the soluble fraction of diesel particulat but not the solid carbon fraction). Emissions of nitrogen oxide increased with the concentration of biodiesel in the fuels. Some biodiesel produce more nitrogen oxide than others, and some additive have shown promise in modifying the increases. More R&D is needed to resolve this issue.

Bio Diesel has Physical properties very similar to conventional diesel. Bio diesel’s Physical characteristic: Specific gravity Kinematic viscosity 40*c Catane Number Higher heating value Sulfur, wt % Cloud point *C Pour point *C Iodine Number Lower heating value 0.87 to 0.89 3.7 to 5.8 46 to 70 16928 to 17996 0 to 0.0024 -11 to 16 -15 to 13 60 to 135 15,700 to 16,735

Biodiesel is packed in 35 Kg. carboys, 225 kg. MS Barrels and Bulk in Tankers.

Production Prcoess of making Bio Diesel
Biodiesel fuel can be made from new or used vegetable oils and animal fats, which are nontoxic, biodegradable, renewable resources. Fat and oil are chemically reacted with an alcohol (methanol is the usual choice) to produce chemical compound non as fatty acid methyel esters. Bio Diesel is the name given to these esters when they are intended for use as fuel. Glycerol (Used in pharmaceuticals and cosmetics among other market) is produced as a coproduct. Bio Diesel can be produced by a verity of esterification technologies. The oil and Fat are filtered and preprocessed to remove water and contaminants. If free fatty acid are present, they can be removed or transferred in to biodiesel using sepecial pretreatment technology. The pretreated oils and Fats are than mixed with an alcohol (usually methanol) and a catalyst (usually sodium or potassium hydroxide). The Oil molecules are broken apart and reformed into esters and glycerol, which are than shaprated from each other and purified. Approximately 55% of the Biodiesel industry can be use any Fat or oil feed stock, including recycle cooking oil. The other half of the industry is limited to vegetable oils, the latest expensive of which is gatropa oil. The Gatropa oil industry has been the driven force behind biodiesel commercialization because of large production capacity, product surplus , and declining price. Similar issue apply to the recycled oils and animal fats industry, even though these feed stock are less expensive than Gatropa oil based on combined resource of both industry, there is enough of the feed stock to supply 1.9 Billion gallons of biodiesel (under policies designed to encourage biodieses use).

Biodiesel Production Process

Resource Requirement
Raw Material (Jatropha seed and oil): Selection of improved germ-plasm material for quality and quantity of oil ; Selection of the bio-crop for production of Biodiesel i.e Jatropha curcas & others; Developing agro-technologies for different agro-climatic regions; Total chemical analysis of all potential non-edible oils with special reference to Jatropha Curcas Oil. • Production Technology : Research efforts for perfecting an efficient chemical/ catalyst conversion process ; Development of Bio-catalyst i.e. Lipase catalyzed esterification ; Development of Heterogeneous Catalyst i.e. use of smart polymers ; Alternate uses of by-products i.e. glycerol and meal cake. • Utilization as Fuel : Data generation & Production of bio-diesel from all possible feed stocks ; Response of different available additives and their dosages on the bio-diesel ; Effect of bio-diesel on elastomers, corrosion etc ; Stability of Bio diesel - Oxidation stability, Thermal Stability and Storage Stability; Engine Performance and emissions based on different feedstock based Bio-diesels ; Toxicological Studies and Tests to check Adulteration • Plants in operation/ under construction Different technologies are currently available and used in the industrial production of bio-diesel, which is sold under different trademarks. For example, there are the Italian processes Novamont, and the French IFP. A number of units are manufacturing bio-diesel worldwide. These units are using sunflower oil, soybean oil, rapeseed oil, used-frying oil, Jatropha oil, etc. as a source of triglycerides . Out of 85 plants identified, 44 plants were in Western Europe with Italy as the leading country with 11 plants, 29 plants in Eastern Europe, 8 plants in North America and 4 plants in the rest of the world. Overall capacity grew from 111,000 tons in 1991 to 1,286,000 in 1997. USA is the fastest growing newcomer and a number of companies are emerging there. Additional capacities are expected in Japan and the palm oil producing countries, Indonesia and Malaysia. Actual production grew from 10,000 tons in 1991 to 661,000 tons in 1997. France is the leading producer with 227,000 tons (in 1996). • Blending of Esters & Diesel Blending conventional Diesel Fuel (DF) with esters (usually methyl esters) of vegetable oils is presently the most common form of bio-diesel. The most common ratio is 80% conventional diesel fuel and 20% vegetable oil ester, also termed “B20,” indicating the 20% level of bio-diesel; There have been numerous reports that significant emission reductions are achieved with these blends and no engine problems were

reported in larger-scale tests with B20. Another advantage of bio-diesel blends is the simplicity of fuel preparation, which only requires mixing of the components. Ester blends have been reported to be stable. One limitation to the use of bio-diesel is its tendency to crystallize at low temperatures below 0°C. causing problems in fuel pumping and engine operation. One solution to this problem may be the use of branched-chain esters, such as isopropyl esters. Another method to improve the cold flow properties of vegetable oil esters is to remove high-melting saturated esters by inducing crystallization with cooling, a process known as winterization. • Storage & handling of Bio-Diesel: As a general rule blends of bio-diesel and petroleum diesel should be treated like petroleum diesel. Though the flash point of bio-diesel is high, still storage precautions somewhat like that in storing the diesel fuel need to be taken. Based on experience so far, it is recommended that bio-diesel can be stored up to a maximum period of 6 months. Bio-diesel vegetable methyl esters contain no volatile organic compounds that can give rise to poisonous or noxious fumes. There is no aromatic hydrocarbon (benzene, toluene, xylene) or chlorinated hydrocarbons. There is no lead or sulphur to react and release any harmful or corrosive gases. However, in case of bio-diesel blends significant fumes released by benzene and other aromatics present in the base diesel fuel can continue. • Engine Development & Modifications The use of unrefined vegetable oil leads to poor fuel atomization due to high viscosity resulting in poor combustion and also more gum formation in fuel injector, liner etc. The results of emissions of using unrefined vegetable oils were unfavorable and were also accompanied by deposit formation . Therefore, it is necessary to esterify the vegetable oil for use in engines. However, these problems can be addressed by use of a suitable additives package. Engine oil dilution is a potential problem with biodiesel since it is more prone to oxidation and polymerization than diesel fuel. The presence of biodiesel in engine could cause thick sludge to occur with the consequence that the oil becomes too thick to pump. Engine oil formulations need to be studied to minimize the effect of dilution with biodiesel. It must be noted that the light duty diesel engines are sufficiently different from heavy duty diesel engines in many aspects and one should not expect that the emission behavior of the two types of engines would be same. This fact should be kept in mind while transferring conclusions of studies done on one type of engine to other type of engines.

Quality Assurance
Specifications and Quality Standards for Bio-fuels ASTM has issued bio-diesel standard D 6751 in December 2001, which covers the use of pure bio-diesel (B100) into conventional diesel fuel up to 20 % by volume (B20). This replaces the provisional specification PS 121 issued in1999. Austria (ON C 1191), France (JO), Italy (UNI 10635) and Germany (DIN E 51606) had issued bio-diesel standards in 1997, Sweden in 1996 and a common draft standard EN 14214 for the European Union has also been announced. The new Italian bio-diesel standard, which will replace UNI 10 635, has been finalized and will be released this year for public. The

standards for Bio-Diesel in India are under formulation and are proposed to be based on standards adopted by European Union. It is necessary that the approval of Vehicle, Engine and Fuel Injection manufactures is taken before finalizing standards and implementing fuel change.

Marketing
One of our unique selling points will be quality control. We have appointed one of the worlds’ leading testing companies to oversee all of our quality control procedures. They will also act as consultants for the quality control procedures and specification testing. They will design, build and commission the QC laboratory and when the production is started, oversee it on our behalf. They will also look after quality control and EN 14214 testing schemes. Biodiesel Production India will oversee the implementation of the Laboratory to ensure compliance with best practice and the EN 14214 standard. We will invest in excess of Rs175,00000 in our laboratory to ensure that our Biodiesel is of the highest quality, and at all times satisfies the EN 14214 specification. Our Biodiesel will be sold as pure Biodiesel (B100), but there will be no visible product differentiation communicated to the customer. In this case Biodiesel is usually sold only as a cheaper fuel and environmental advantages are ignored. Another strategy is to blend Biodiesel in refineries into fossil Diesel up to 5% and sell it anonymised at fuel pumps (Our third strategy is, our Biodiesel is sold as a 100% pure fuel (B100) and is differentiated as a quality product, which is highlighted by a quality seal at the pump, where informative product information flyers are distributed to the customer This strategy will be targeted at transport fleets and buses. This is also a defense strategy against poor Biodiesel quality produced by home brewers not meeting the European EN14214 standard

Sales and marketing strategy.
The Company will target operators of fleet and transportation companies. Geographically, the company will initially concentrate car manufacturers. To insure rapid growth, the company plans to sell Biodiesel distributors at a small discount compared to regular diesel. In the first 3 years, the Company's output is expected to grow in accordance with the growth of the export market (around 30% yearly). The Company plans to start producing about 400 metric tons per month in the first 8 months of operation. This output will be increased by 5% in subsequent years

Financial Plan and Projection:
Resources
Indian group expects to raise Rs.7700000 of its own capital. This provides the bulk of the current financing required.

• Financial statement and projection

Pro forma Profit and loss:
As the Profit and Loss table shows, Indian group expects to continue its steady growth in profitability over the next three years of operations.

2008

2009 Rs.4768000

2010 Rs.5971000

Sales
Direct cost of sales

Rs.3924000

Rs.2260800

Rs.2758400

Rs.3438000

Other

0 -----------------

0 -----------------Rs.2758400

0 ------------------Rs.3438000

Cost of Goods sold

Rs.2260800

Gross Margin
Gross Margin%

Rs.1663200 42.38%

Rs.2009600 42.14%

Rs.2533000 42.42%

Expenses
Payroll Sales and Marketing expenses Depreciation Utilities Other Rs.756000 Rs.40000 Rs.200000 Rs.150000 0 ------------------Total Operating Expenses Rs.1146000 Rs.800000 Rs.50000 Rs.210000 Rs.160000 0 ----------------Rs.1220000 Rs.850000 Rs.60000 Rs.230000 Rs.170000 0 ----------------Rs.1265000

EBIT Interest Taxes incurred

Rs.517200 0 Rs.206880

Rs.789600 0 Rs.315840

Rs.1268000 0 Rs.507200

Net profit Net Profit/Sales

Rs.310400 7.91%

Rs.473760 9.93%

Rs.760800 12.74%

Pro forma Cash Flow
2008 Cash received Cash from Operations Cash Sales Subtotal cash from operations Additional cash received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment 2009 2010

Rs.3924000 Rs.3924000 0 0 0 0 0 0 0 0 Rs.3924000 2008 Rs.756000 Rs.1146000 0 Rs.206880 0 0 0

Rs.4768000 Rs.4768000 0 0 0 0 0 0 0 0 Rs.4768000 2009 Rs.800000 Rs.1220000 0 Rs.315840 0 0 0

Rs.5971000 Rs.5971000 0 0 0 0 0 0 0 0 Rs.5971000 2010 Rs.850000 Rs.1265000 0 Rs.507200 0 0 0

Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

0 0 0 Rs.2108880 Rs.1815120 Rs.500000

0 0 0 Rs.2335840 Rs.2432160 Rs.500000

0 0 0 Rs.2622200 Rs.3348800 Rs.500000

Balance Sheet:
The following is a projected Balance Sheet for MFFC.
Pro Forma Balance Sheet 2008 2009 2010

Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings

Rs.500000 Rs.1500000 Rs.2000000 Rs.6000000 Rs.300000 Rs.5700000 Rs.7700000

Rs.800000 Rs.150000 Rs.2300000 Rs.6000000 Rs.400000 Rs.5600000 Rs.7900000

Rs.1000000 Rs.150000 Rs.2500000 Rs.6000000 Rs.500000 Rs.5500000 Rs.8000000

Rs.206880 0 0 0 Rs.206880 0 Rs.206880 0 Rs.310400

Rs.315840 0 0 0 Rs.315840 0 Rs.315840 0 Rs.473760

Rs.507200 0 0 0 Rs.507200 0 Rs.507200 0 Rs.760800

Total Capital Total Liabilities and Capital

Rs.7182720 Rs.7700000

Rs.7110400 Rs.7900000

Rs.6732200 Rs.800000

Business Ratios: Ratio Analysis Sales Growth Gross Margin Current Quick 2008 0.00% 55% 11.57 11.57 2009 15.50% 58% 15.86 15.86 2010 15.50% 59% 17.06 17.06

ORGANISATION AND MANAGEMENT
Indian group managed by four partners. Since each state has specific laws on the formation and dissolution of partnerships, as well as laws regarding the legal responsibilities of each partner, business owners are well advised to consult an attorney and a tax accountant before establishing a partnership. A partnership is relatively simple to establish and does not require the same amount of record keeping as a corporation. Another advantage of a partnership is that income is taxed only once. By contrast, most corporations are taxed twice -- they pay taxes on their income, and if there are shareholders, they in turn pay taxes on the share of the corporation's income that they receive as dividends. Partnerships need only file an information return (a form indicating the partnership's income, expenses, and profits or losses) with the Internal Revenue Service, but the partnership itself does not pay taxes. Each partner pays federal, state, and local taxes on their income from the partnership as if it were personal income. The chief disadvantage of being a general partner is that you can be held personally responsible for another partner's negligence or carelessness. This means that if your partnership is unable to meet its financial obligations, you may have to use your personal assets to pay off debtors, even though you personally may not be at fault. If the partnership defaults on a loan, for example, the bank has the right to sue any general partner to collect this debt. If you own a car or a home, the court may order you to sell that property and turn the proceeds over to the bank. (If you and your spouse own the property jointly, the bank is entitled to only one-half the proceeds.)

Equity Position

Equity funds come from personal moneys of the partners (such as savings, inheritance or personal borrowings from financial institutions, friends, relatives and business associates). These funds are normally unsecured and have no registered claim on any of the assets of the business, freeing those up to be used as collateral for the loans (debt financing).

Key personnel
To accomplish missions, our company employs a matrixed organizational structure. Indian group is organized into the following major organizational units: MD/CEO, CFO, HR Manager and Marketing Manager.

• HR strategy
Faced with rapid change organizations need to develop a more focused and coherent approach to managing people. In just the same way, we require a marketing or information technology strategy it also requires a human resource or people strategy. The ultimate purpose of developing a human resource strategy is to ensure that the objectives set are mutually supportive so that the reward and payment systems are integrated with employee training and career development plans. • Culture: the beliefs, values, norms and management style of the organization

We believe that a norm is an implied agreement among the group's membership regarding how members in the group should behave. From the perspective of the formal group, norms generally fall into three categories-positive, negative, and neutral. In other words, norms support, obstruct, or have no effect on the aims of the larger organization. • • • Organization: the structure, job roles and reporting lines of the organization People: the skill levels, staff potential and management capability Human resources systems:

People work better when the environment, working methods, and the equipment have been designed to help them. If we add to this the natural motivation to do a good job-of-work for an appropriate reward, we can confidently anticipate improved productivity. Constantly improving productivity is something we all have a vested interest in, as it is the key factor that drives up living standards. High living standards are good for us, as those who enjoy a

relative high standard of living tend to be healthier and tend to live longer. We should also remember, the inverse holds true. Effective communications are vital in our management; in fact, they are the essence of our management.

RISK AND CONTIGENCIES
Economic, environmental and energy security concerns arising from reliance on petroleum are forcing countries the world over to shift to alternatives ethanol and biodiesel. Since biofuels can be produced from a diverse set of crops each country is adopting a strategy that exploits the comparative advantages it holds in certain crops.India has launched a National Mission on Biofuels, the main strategy of which has been to promote Jatropha Curcas; a perennial shrub that bears nonedible oil seeds that can be used to produce biodiesel. The cultivation of Jatropha Curcas is to be undertaken mostly on wastelands. India’s biofuel policy has certain drawbacks. These include the dependence of the rural poor on such wastelands for diverse purposes and which are unlikely to be met by Jatropha plantations, the potential for conflicts from the appropriation of common pool resources like wastelands without involvement of local communities in decision making, the lack of prior experience with cultivation of Jatropha especially on marginal lands, government subsidies to growers who would mostly be large landholders, the absence of minimum support prices for biofuel crops etc. An alternative approach would be one which focuses on multipurpose, shortduration annual crops that can either simultaneously yield fuel along with food and/or fodder or can be cultivated in rotation with food crops, so that even small private farmers can benefit from the opportunities that the market for biofuels present. Some crops that are already commercially well known and can be scaled up to produce for bioenergy are also discussed. The importance of policies like renewable fuel standards and minimum support prices for biofuels is also emphasized. Although Jatropha Curcas may have the potential to grow in diverse agroclimatic conditions, withstand drought and pest attacks, there is bound be accompanying variation in important parameters like seed yield, oil content, nutrient requirements etc. which are critical to economic viability of plantations. The survey carried out by the National OilSeeds and Vegetable Oil Development Board is said to have reported variation in oil content ranging from 21% to 48%. There is also no scientific evidence on the absence of pests and diseases in Jatropha plantations.

In fact cultivation practices reported by Tamil Nadu Agricultural University, Coimbatore (TNAU) mention of pests like defoliators, bark eaters, stem borers etc., which call for pest management techniques 2 . Further high plantation densities like 2500 plants per hectare are possible only under good soil and water conditions while on rainfed plantations on marginal soils optimum density is said to be about 1600 plants per hectare. The resulting effect is that production per hectare is likely to be lower on such lands. Such wide variation in key economic parameters and the lack of standardized seed material, cultivation practices call for intensive research and development prior to a largescale planting based on incomplete information. While the national mission on biofuels was launched as far back as 2003, there does not as on date exist a formal policy that has been passed into law relating to biofuels. First, blending of biodiesel is yet to be mandated by law and the various missions are merely indicative of government preference. Such mandates, which are commonly called Renewable Portfolio Standards (RPS) in the electricity industry and Renewable Fuel Standard (RFS) in the transportation industry , have become the preferred mechanism through which national and state governments in several OECD countries guarantee a market for investments in alternative energy technologies. However since there exist no such mandates in India oil companies have little incentive to undertake the necessary investments to achieve blending of biofuels with conventional fuels. On the other hand if the existence of a guaranteed export market is adequate incentive then the premise of subsidizing the biodiesel industry for national energy security becomes untenable. Second, complementing the absence of guaranteed national market for biodiesel, is the absence of MSP for biodiesel crops. MSP for agricultural commodities perform the vital role of motivating farmers to undertake cultivation in risky environments such as those encountered by poor farmer’s in arid, rain fed regions. The absence of MSP is bound to deter investments especially in long duration crops with little history of cultivation . Billion of rupees aree been poured into the biodiesel production , the uncertainity arises will it deliver? Amid all the uncertainicities ,in commodities industries the winner are the latest entrants At the bottom of the cost curve wielding the newest, most efficient technologies .But waiting may be costly strategies in biodiesel industry because land and other requirement are at the premium. Biodiesel player should loot at the different way to mitigate the risk, but every strategy will require a trade-off. Betting on number of geographical and technologies will make more difficult , but help balance risk. Vertical integration both complex and costly may be essential be helping in surviving this industry. Little increase in the raw material, increases the cost of production hefty, so this is one of the major threat since major raw material needed is agricultural based, therefore unexpected rain ,natural calamities which can effect the supply of raw material can drastically affect the biodiesel prices. Whether through subsidies ,import tariff, research grant, government regulation have helped derive both demand and profitability in the industry. Because energy policies of most nation Is still evolving regulation perhaps is the greatest uncertainty of all. Lower subsidies could diminish profit , therefore political stability and strong market regulator for energy could prove a win – win situation for the companies as well as for overall industry. Companies that enters now can mitigate the riskby hedging their bets and forming relationship this may help them to reduce volatility and influence regulation. Many countries are currently looking at growing high-yielding crops for the production

of biofuels as alternatives to traditional fuels (petrol and diesel) to address imminent energy shortages and reduce impacts of climate change. This usually involves the importation of foreign (i.e., alien) species of plants that are known for their fast and productive growth. If these initiatives are not carefully assessed, however, promoting the cultivation of some popular species for biofuel production will increase two of the major causes of biodiversity loss on the planet: clearing and conversion of yet more natural areas for monocultures, and invasion by nonnative species. Habitat conversion is already the leading cause of biodiversity loss worldwide, and limiting the enthusiastic cultivation of new crops to areas already converted is not an easy task. The issue addressed here, though, is that some of the most commonly recommended species for biofuel production, particularly for Biodiesel, are also major invasive alien species in many parts of the world. Thus, their likelihood of becoming invasive needs to be assessed before being cultivated on a large-scale for biofuel production in new areas. Some of these species are spread by birds, small mammals and other animals, making their control difficult or impossible, with impacts increasing over time and long-term production prone to greater financial losses than gains. This note provides basic information and recommendations for proposals on biofuel developments using species that may have a history of invasion and so require careful management if they are to be used on a large scale and not contribute to natural habitat and biodiversity loss. The Global Invasive Species Programme has identified actions to avoid impacts on biodiversity from the use of inappropriate species for biofuels and is ready to provide further support to countries on this issue. Specifically, the development of biodiesel production projects should consider: Information gathering: Risk assessment: Benefit/cost analysis:); Selection of native or low risk species: create incentives for the development and use of native and/or non-native species that pose the lowestrisks to biodiversity; Transportation & storage of biodiesel require special management. Some properties of biodiesel make it undesirable for use at high concentrations. For example, pure biodiesel doesn't flow well at low temperatures, which can cause problems for customers with outdoor storage tanks in colder climates. A related disadvantage is that biodiesel, because of its nature, can’t be transported in pipelines. It has to be transported by truck or rail, which increases the cost. Biodiesel is less suitable for use in low temperatures, than petrodiesel. The “cloud point” is the temperature at which a sample of the fuel starts to appear cloudy, indicating that wax crystals have begun to form. At even lower temperatures, the fuel becomes a gel that cannot be pumped. The “pour point” is the temperature below which the fuel will not flow. As the cloud and pour points for biodiesel are higher than those for petroleum diesel, the performance of biodiesel in cold conditions is markedly worse than that of petroleum diesel. At low temperatures, diesel fuel forms wax crystals, which can clog fuel lines and filters in a vehicle’s fuel system. Vehicles running on biodiesel blends may therefore exhibit more drivability problems at less severe winter temperatures than do vehicles running on petroleum diesel. Therefore a proper blend must to be standardized to meet the problem at a macro level then only it will be compatible and compliance.

Summary
BioDiesel in India is virtually a non-starter.. So by taking the advantage of the this we can successfully can lauch our dream project which can take our industry as well as india to sour a new height in the field of renwable source energy sector. The various attributes will lend a competitive edge over the other source of energy. Bio diesel is a substitute or extender for traditional problem diesel and you do not need special pump or high pressure equipment for fueling. The addition , it can be used in conventional diesel engines, you need not need to buy special vehicle and engines to run bio diesel. Biodiesel also produce fewer particulate, carbon-di-oxide and sulfur di oxide emission all targeted as public health risk by the environmental protection engency. Since Biodiesel can be used in convertible diesel engines, the renewable fuel can directly replaced petroleum product, reducing the countries on imported oil. Biodiesel can help reduce our dependence on foreign oil and help us leverage our fossil fuel supply. It can also help reduce green house gas emission , as well as public health risk associated with air pollution. It is non toxic and biodegradable. Bio diesel contain only trace amount of sulfur, typically less than the new epa standard that will go into effect diesel fuel. It is safe to handle, transport, and store and has a higher flash point than petroleum dielsel. It can also be stored in diesel tank and pumped with regular equipment except in colder weather.

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