Team 3

“Corn Banaayega Crorepati”

Agenda
Motivation

Opportunity
Proposal

Technology

Location

SCM & Logistics

Financials

Future expansion

Social Impact
Motivation
Rising fuel prices Greenhouse emission Pollution

Search for alternate fuel

Ethanol-blended gasoline

E A High-octane liquid fuel

T
H Blending ethanol with gasoline leads to lower emission levels
A
N Gives 30 percent fewer miles per gallon than gasoline
O
L Manufactured from Sugarcane, Corn, Wood, Vegetable wastes
History
United States Canada
Mandate: In some states Mandate: At provincial level
“All cars built after 1980 will “All cars built after 1980 will
operate on E10” operate on E10”

Brazil
Mandate: 20-25%
“All cars to use ethanol blends”

Ethanol blended Gasoline also used

in countries like Sweden, Thailand,
Canada, China and United Kingdom
India
E5 being pilot tested in seven
states since 2003
A 5% Ethanol blending to be made mandatory from end
of 2006
Blending levels to be increased to 10% by
end of 2007
Opportunity
Petrol Consumption (Million Tonnes) Growth: 5.35%

9000 8648 Consumption of Petrol: 10,000

8251
7897 Million Liters
8000 7570
7011
7000

6000
5% Ethanol, 5000
5000 Lac Liters
2001-02 2002-03 2003-04 2004-05 2005-06

Unsatisfied demand
3160 Lac Liters

Revenue Opportunity (@ Rs. 24/Liter)

Rs. 7580 Million
Proposal

Where? Begusarai District

For? Barauni Refinery

How? From Corn Stover using Cellulostic Technology

Raw Material
What? Part of plant (Stalk & Leaves) left behind after Corn is harvested

Why?

1 Low procurement cost compared to Corn and Sugarcane

2 Not a consumption crop like Corn and Sugarcane

3 Can be grown in semi-arid regions with short harvest cycle

 Technology
Procurement Enzyme Cost Ethanol Yield Total Cost
(Rs./ Ton) (Rs./Ton) (Liter/Ton) (Rs./Liter)

640 Negligible 72 9
Sugar Cane Sucrose

5000 Negligible 450 11

Corn Starch Ethanol

1500 550 300 7

Corn Stover Cellulose

Process Description
Corn Stover Steam & Acid

Collection Pre-Treatment S/L Separation

Distillation Saccharification
& & Conditioning
Purification Fermentation

Ethanol

Technology will be procured from National Renewable Energy Laboratory (NREL) USA
Location
Selection Criteria
4000
Corn Production 3000
-The higher the better 2000
-Year round production 1000
0
AP Bihar Karnataka Maharashtra Rajasthan UP

60

Sugar Production 40
-The lower the better 20

0
AP Bihar Karnataka Maharashtra Rajasthan UP

60000

Refinery Capacity 40000

-The greater the better 20000

0
AP Bihar Karnataka Maharashtra Rajasthan UP

Plant at Begusarai would serve the Barauni and Haldia plants with
installed capacity: 10.6 MMT
Supply Chain & Logistics
Mandi Rs. 4.95/Liter

Warehouse Rs. 0.60/Liter

Total Cost
Rs. 12/Liter
Factory Rs. 5.67/Liter

+ Transport Rs. 0.15/Liter

Selling Price Markup

Refinery Rs. 17/Liter Rs. 5/Liter
 Financials
Revenue Profit Revenues & Profits (Rs. Million) Growth: 16%
300
250
200 Growth: 41%
150
100
50
0
2007 2008 2009 2010 2011

Capex Rs. 350 Million for a capacity of 60,000 Liters per day
Key Parameters

Payback Period 4.5 Years

NPV Rs. 26 Million over a 7 year horizon

ROE Increases from 9% in the first year to 30% in the fifth year
Risks

Feedstock
Price impact on input cost

Supply Side Risk

Technology
Emerging technology might make existing
facilities inefficient

Government Policy
Policy reversal on ethanol use

Demand Side Risk

Competition
Excess local capacity build-up near refineries
 Future Expansion
Geographical Expansion

Plant Location Target Market

1 Begusarai Barauni

2 Begusarai Haldia
1
3 Karimnagar Vizag, Tatipaka Barauni
2
4 Chitradurga Mangalore Haldia

Local Expansion 3Vizag

4
Tatipaka
Capture 20% of Refinery Demand
Mangalore
Scale Up: Economies of Scale & Entry Barriers

Target 50% of Refinery Demand

Social Impact

Create a market for Corn Stover,

which is otherwise a waste product

Results in 30% increase in farmer income

Eco-friendly method of fuel production

Produced in semi arid regions with little agricultural support
Thank You
Back-up Slides
Raw Material Cost

Raw Materials Rs / Liter

Corn Stover 4.95

Corn Steep Liquor 0.50

Enzymes 1.85

Denaturant 0.25

Total RM Cost 7.54

Distribution Cost

Warehousing 0.60

Transportation 0.15

Total Variable Cost 8.29

Back
Warehousing and Transportation Costs
Warehousing Cost

Cost of storage 15 paise / bag / day

Quantity of bag 50 kg

Average Storage Period 60 days

Total Warehouse Cost Rs./Liter 0.6

Transportation Cost

Distance between Barauni and Begusarai (Km) 100

Capacity of oil tankers (Tonnes) 10

Mileage ( Km / Liter) 4

Diesel Cost (Rs. / Liter) 35

Overheads ( driver, other overheads) (Rs. / Liter) 25

Transportation Cost Rs./Liter 0.15

Back
Labor & Admin Costs
Daily Wage Rate Monthly wage
Direct Labor ( Plan ) No. of workers (Rs.) Bill (Rs.)
Feed Handling 15 200 90000
Solid Separation 15 200 90000
Pre-treatment Conditioning 5 400 60000
Cellulose Treatment by enzymes 5 400 60000
Fermentation 5 400 60000
Distillation/Dehydration 5 400 60000

Total Labor bill for 1 shift ( 3 shifts daily) 420000

Total Monthly Labor bill 1260000

Monthly wage Bill

Office Administration No of workers Monthly Salaries (Rs.)
Supervisors 10 20,000 200000
Admin Support staff 5 12,000 60000
Plant Manager 1 40,000 40000
Total Admin Cost 300000
Back
Overhead Costs

Total Wage Bills for the month ( 2 shifts daily) 1560000

Planned monthly production for ethanol 1800000

Labor and Admin Cost Rs. / Liter 0.9

Overhead Costs (Rs./Liter)

Labor and Admin Cost 0.9

Energy Cost 0.18

Waste Disposal 0.09

Total Overhead Cost 1.17

Back
Pricing

Total Costs (Rs/Liter)

Variable Cost 8.29

Overhead Cost 1.17

Depreciation 0.6

Interest Cost 1.30

Total Cost in producing 1 Liter of Ethanol 12.00

Mark up 5.00

Final Price 17.00

Back
Capital Costs
Capital Costs ( Rs. Million)

Land 6

Building and Civil Structure 35

Plant Machinery & Equipments

Pre-treatment/Detoxification 80

Simultaneous Saccharification/Co-fermentation 40

Cellulose Production 50

Distillation 14

Solid/Syrup Separation 25

Boiler/Turbo generator 100

Total Capital Investment ( Rs. Million) 350

Back
Revenue Projections

Years 2007 2008 2009 2010 2011

Installed Capacity (T/Year) 18,000 18,000 18,000 18,000 18,000

Capacity Utilization 50% 60% 70% 80% 80%

Ethanol Produced (T/Year) 9000 10800 12600 14400 14400

Price ( Rs/Liter) 17 17 18 18 19

Revenue (Rs. Million) 153 184 227 259 274

Back
Profit and Loss Statement
Years 2007 2008 2009 2010 2011
Revenue 153 184 227 259 274

Cost of Goods
Raw Material 68 81 95 109 109
Warehousing 5 6 8 9 9
Transportation 1 2 2 2 2
Gross Margin 78 94 122 140 154
Expenses
Direct Labor 15 15 17 17 18
Admin Costs 4 4 5 5 6
Energy Costs 2 2 2 3 3
Waste Disposal 1 1 1 1 1
EBIDT 57 72 97 114 126
Depreciation 10 10 10 10 10
Interest Expense 23 23 23 20 16

PBT 24 39 64 84 100
Tax @ 30% 7 12 19 25 30

PAT (Rs. Million) 17 27 45 58 70

ROE 9% 14% 23% 30% 36%
Back
Free Cash Flow Projections
Year 2007 2008 2009 2010 2011

PAT 17 27 45 58 70

Add Depreciation 10 10 10 10 10

Capital Expenditure -350 0 0 0 0

Working Capital 7.65 9.18 11.34 12.96 13.68

Change in working capital 0 1.53 2.16 1.62 0.72

Repayment of Principal 0 0 0 20 30

Free Cash Flow (Rs. Mn) -323 36 53 47 50

Back
NPV Calculation
Year 2007 2008 2009 2010 2011 2012 2013

EBIDT(1-t) 40 50 68 80 88 97 107

Add Depreciation 10 10 10 10 10 10 10

Capital Expenditure -350 0 0 0 0 0 0

Working Capital 7.65 9.18 11.34 12.96 13.68 16.2 16.2

Change in working capital 0 1.53 2.16 1.62 0.72 2.52 0

Free Cash Flow to the share

holders -300 59 76 88 98 105 117

Net Present Value (Rs. Mn) 25

Discount Rate = 15%

Back
Cost Comparison

Raw Material Sugar Cane Corn Kernel Corn Stover

(Sucrose) (Starch) (Cellulose)

Procurement Cost (Rs./T) 640 5000 1500

Enzyme Cost (Rs./T) Negligible Negligible 550

Input Cost (Rs. /T) 640 5000 2050

Yield Ethanol (Ltrs/T) 72 450 300

Input Cost Rs. / Ltr of Ethanol 9 11 7

Back
Social Impact

Additional Income from 1 Hectare (Ha) Land Holding

Size of Land Holding (Ha) 1

Yield of Maize (T/Ha) 3

Maize Produced (T) 3

Income from Maize at Rs. 5/kg (Rs.) 15000

Maize : Corn Stover Ratio by Weight 1:1

Corn Stover Produced (T) 3

Income from Stover at Rs. 1.5 /kg (Rs.) 4500

Percentage increase in income 30%

Back
Process Description
Steam & Acid Lime Gypsum

Corn Stover Hydrolyzate Liquor

Collection Pre-Treatment S/L Separation Conditioning

Lignin Residue Broth Solids

Burner/Boiler Distillation
& Purification Sachharification & Fermentation
TurboGenerator

Steam & Enzyme

Electricity Ethanol Steam

Back