NEW HORIZON PVT. LTD.

BIO DIESEL- THE FORTIFICATION OF ENERGY SECTOR

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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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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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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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

Nitrogen Percentage

Phosphorous Percentage Potassium

Pongamia Pinnata oilseed filter cake

3.95 0.52 0.42

Jatropha Curcas oilseed filter cake

4.44 2.09 1.68

Neem oilseed filter cake

5.0 1.0 1.5

Castor oilseed filter cake

4.37 1.85 1.39

Di-Ammonium Phosphate

18 20 0

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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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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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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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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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 equipments2. Purchased equipment installation3. Instrumentation and control4. Piping5. Electrical equipment and material6. Building (including services)7. Yard improvement8. Land

INDIRECT COST:

1. Engineering supervision2. Construction expenses3. Contractor’s fee

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4. ContingencyCOST 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 ¿2 (1.5∗0.15∗0.0254 )+2 (1∗0.212∗0.0254 ) ¿0.02219m3

Weight¿Volume∗Density

¿0.02219∗800 0

¿177.52 Kg

Price of one stage with fabrication ¿250 Kg

¿ (177.52∗250 ) ¿44,380 Rs

Cost of 10 stage=44,380∗10

¿4,43,800 Rs

Cost of Belt=13,000 Rs

Cost of Roller, Bearing and Motor ¿20000 Rs

So, Total Cost for Extraction Unit ¿4,76,800 Rs

(c) Condenser :- Double Pipe Heat Exchanger

Inner Pipe Di ¿12

=3.80 c and L¿3.54m

Outer Pipe Do¿5.4cm and L¿3.54m

Cost Approximately ¿45,000 Rs

(d) Storage Tank:-Miscella¿10.33m ³=12KL(SS 304)

Oil ¿1.334m ³=2KL(SS304)

Hexane¿12KL(SS304)

Water ¿3 KL(SS 304)

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Total Cost Approximately ¿29 Lac

(e) Piping, pump miscellaneous (approximately)¿12,00,000 Rs

Total Fixed Capital Investment Cost¿41,56,800 Rs

(1) DIRECT COST (D.C)

1) Total Purchased Equipment Cost (25 % of FCI )= 41,56,800∗2525

¿41,56,800 Rs

2) Installation Cost (25% of FCI ) ¿41,56,800∗10

25

¿16, 62,720 Rs

3) Instrument & Control Installed(8% of FCI )=41,56,800∗825

¿13,30,176 Rs

4) Piping Installation Cost (18 % of FCI )=41,56,800∗1825

¿29,92,896 Rs

5) Electrical Installation Cost (6% of FCI )=41,56,800∗625

¿9,97,632 Rs

6) Building Process & Auxiliary (5% of FCI )=41,56,800∗525

¿8,31,360 Rs

7) Service Facilities (1%of FCI )=41,56,800∗125

¿1,66,272Rs

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8) Yard Improvement(1.5 % of FCI )=41,56,800∗1.525

¿2,49,408 Rs

9) Land(1.5 % of FCI )=41,56,800∗1.525

¿2,49,408 Rs

TOTAL DIRECT COST (76 % of FCI )=41 ,56 ,800∗7625

¿1 ,26 ,36 ,672 Rs

(2) INDIRECT COST (I.C)1) Engineering & Supervision Cost (7% of D .C )=1,26,36,672∗0.07

¿8,84,357.04 Rs

2) Construction Expenses Cost (8% of D .C )=1,26,36,672∗0.08

¿10,10,933.76 Rs

3) Contractor Fees (2%of D .C )=1,26,36,672∗0.02

¿2,52,733.44 Rs

4) Contingency:(7% of D .C )=1,26,36,672∗0.07

¿8,84,357.04 Rs

TOTAL INDIRECT COST (24 %of D .C )=1 ,26 ,36 ,672∗0 .24

¿30 ,32 ,801 .28Rs

3) FIXED CAPITAL INVESTMENT (F.C.I):

FCI=DC+ IC

¿1 ,26 ,36 ,672+30 ,32 ,801.28

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¿1 ,56 ,69 ,473 .28 Rs

4) WORKING CAPITALA INVESTMENT (WCI):(15 % of FCI )=1,56,69,473.28∗.15

¿23,50,420.992Rs

5) TOTAL CAPITAL INVESTMENT (TCI): TCI=FCI+WCI

¿1,56,69,473.28+23,50,420.992

¿1,80,19,894.27 Rs

ESTIMATION OF TOTAL PRODUCT COST (TPC):

FIXED CHARGES:

A) Depreciation :( 10 % of TCI for machinery )¿1,80,19,894.27∗0.10

¿18,01,989.427 Rs

B) Local taxes :( 3 % of TCI )¿1,80,19,894.27∗0.03

¿5,40,596.83 Rs

C) Insurance:( 1 % of TCI )¿1,80,19,894.27∗0.01

¿1,80,198.9 Rs

D) Rent:( 9 % of TCI)¿1,80,19,894.27∗0.09

¿16,21,790.5 Rs

TOTAL FIXED CHARGES:(23 % of TCI )=1,80,19,894.27∗0.23

¿41,44,575.682 Rs

But, Fixed Charges ¿10 % of TFC

¿41,44,575.682∗0.1

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¿4,14,457.5682 Rs

TOTAL PRODUCTION COST¿4 ,14 ,457 .5682 Rs

DIRECT PRODUCTION:

a) Raw material:(30 % of TPC )=4,14,457.5682∗0.30

¿12,43,337.27 Rs

b) Operating labour cost:(15 % of TPC )=4,14,457.5682∗0.15

¿6,21,668.64 Rs

c) Direct Supervision and Electric labour:(15 % of TPC )=6,21,668.64∗0 .15

¿93,250.3 Rs

d) Utilities:(15 % of TPC )=4,14,457.5682∗0.15

¿6,21,668.64 Rs

e) Maintenance : (6% of TPC )=4,14,457.5682∗0.06

¿24,867.45 Rs

f) Operating supplies (OS): (15 % of maintenance )=24,867.45∗0.15

¿3,730.19 Rs

g) Laboratory charges: (15 % of OL )=6,21,668.64∗0.15

¿93,250.3 Rs

h) Patent and royalties:(4 %of TPC )=4,14,457.5682∗0.04

¿16578.3 Rs

PLANT OVERHEAD COST:(5% of TPC )

¿414457.5682∗0.05

¿20 ,722.88 Rs

MANUFACTURING COST (MC): ¿(TPC+Fixes charges+PlantOverheadCost )

¿4,14,457.5682+41,44,575.682+20,722.88

¿45 ,79 ,756 .13 Rs

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GENERAL EXPENSES:

a) Administration Cost: (40−60 % of OL)

Assume 55%

¿93,250.3∗0.55

¿51287.67 Rs

b) Distribution & selling Cost :(2−30 % of TPC )

Assume ¿4,14,457.5682∗0.15

¿62,168.64 Rs

c) Research & Development Cost :(3%of TPC ) ¿4,14,457.5682∗0.03

¿12,433.73 Rs

GENERAL EXPENSES¿51,287.67+62,168.64+12,433.73

¿1 ,25 ,890 .04 Rs

TOTAL PRODUCTION COST:¿MANUFACTURINGCOST (MC )+GENERALEXPENSES

¿45,79,756.13+1,25,890.04 ¿47 ,05 ,646 .17 Rs

GROSS EARNING & RATE OF RETURN:

The plant is working for say 300days a year.

Selling Price: ¿36 Rs/Kg

Total Income ¿(5000KgDays )∗(300

DaysYear )∗(36

RsKg

)

¿5,40,00,000 Rs

GROSS INCOME¿TOTAL INCOME+TOTALPRODUCTIONCOST

¿5,40,00,000+47,05,646.17

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¿4,92,94,353.83 Rs

TAX=50 %

NET PROFIT=4,92,94,353.83∗0.50

¿2 ,46 ,47 ,177RsYear

RATE OF RETURN¿ NET PROFITTOTALCAPITALCOST

¿2,46,47,1771,80,19,894

¿1 .37 %

BREAK EVEN POINT CALCULATION (BEP)

Production cost per Kg¿ Total Diret ProductionCostAnnual Rate

Annual Rate¿(5000KgDays )∗(300 Days )

¿15 ,00 ,000Kg

Product cost¿51,287.67

1500

¿35RsKg

Total Fixed Charges:

¿(GENERALEXPENSES+¿Charges+PLANT OVERHEADCOST )

¿1,25,890.04+41,44,575.682+20,722.88

¿42 ,91 ,188 .602 Rs

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Now, cost of Jatropha oil per Kg= 36 Rs/Kg

So, Kg of oil at breakeven point 42,91,188.602+¿35n =36n

n=42 ,91 ,188 .602KgYear

Thus, Break-even point is 42 ,91 ,188 .602KgYear

Break even analysis

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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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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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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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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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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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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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