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1. Executive summary 3
1.1. Mission and objectives 3
Company description 3
3. Product Description 4
3.1 Key Advantages and Performance of Biodiesel 5
3.2. Sourcing 5
3.2.1. Used cooking oil 6
3.2.2 Jatropha 6
3.2.3. Rape oil. 9
3.2.4. Palm oil 9
3.2.5. Soybean oil 9
3.3. Biodiesel production costs 11
3.4. Future Products and Services 11
3.5. Technology 12
4. Market analysis 13
4.1. Market for biodiesel in 15
4.2. Market prices 15
4.3. Competitors 16
4.4. Sales and marketing strategy 16
5. Project competitive advantages 17
5.1. Process advantages 17
5.2. Product advantages 17
5.3. Company advantages
6. Management and personnel
6.1.Key members of management team
7. Sales forecast
8. Financial Planning
8.1. Project Financing
8.2 Break-even Analysis
8.3. Projected Profit and Loss Report
8.4. Projected cash flow
8.5. Sensitivity analysis.
9. Risk Management:
10. Future Plans.
11. Exit Strategy
1. Executive summary
2. Company description
3. Product Description
The company is planning the production of Biodiesel as a primary product with Glycerin as a by-product.
Glycerine will initially be sold to the soap and cosmetics industries. Subsequently, the company will consider an
approach with more added-value.
Biodiesel is the name for the methanol-ester-based biofuel made from vegetable oils or animal fats. In this
business plan biodiesel will be produced from ___________________.
Biodiesel is a clear liquid, without unpleasant odor or handling characteristics, of virtually the same viscosity as
mineral fossil diesel oil. For this reason, it may be used in a standard diesel engine without additional modifications.
It may also be blended with petrodiesel to improve quality of latter. There are even examples of usage crude
vegetable oil (not processed into biodiesel) in specially designed diesel engines, or blended (50/50) with petrodiesel
oil in ordinary diesel engines.
1. Biodiesel is the only alternative fuel that runs in any conventional, unmodified diesel engine. It can be stored
exactly like petroleum diesel. Biodiesel shows similar fuel consumption, horsepower, torque, and haulage rates as
conventional diesel fuel.
2. Biodiesel can be used alone or mixed in any ratio with petroleum diesel. The use of biodiesel can extend the life
of diesel engines because it is more lubricating than petroleum diesel fuel, while fuel consumption, auto ignition,
power output, and engine torque are relatively unaffected. Lubricity results of biodiesel and petroleum diesel using
industry test methods indicate that there is a marked improvement in lubricity when biodiesel is added to
conventional diesel fuel. Even biodiesel levels below 1 percent can provide up to a 30 percent increase in lubricity.
3. Biodiesel is safe to handle and transport because it is as biodegradable as sugar (pure biodiesel degrades 85 to
88% in water within 28 days), 10 times less toxic than table salt (lethal dose is greater than 17.4 g/Kg body weight,
while for salt (NaCL) it is 1.8 g/Kg), and has a high flashpoint of about 200°C compared to petroleum diesel fuel,
which has a flash point of 70°C.
4. Combustion of biodiesel provide over a 75- 90% reduction in environmental pollution and a 90% reduction in
cancer risks.
5. Biodiesel is the only alternative fuel to meet all environmental and human health requirements for energy
sources.
6. Biodiesel is the only biofuel, which received approval from most car manufacturers; it is a proven fuel with
over 20 years of use in Europe and 30 million successful US road miles.
7. Biodiesel has the highest energy yield in comparison to other fuels, including conventional one: ethanol,
distilled from cellulose.
8.Biodiesel is nontoxic and poses little or no health risk to humans. Vehicles that run on biodiesel emit less sulfur
dioxide (SO2), particulate matter (soot), carbon-dioxide (CO2), with fewer heavy Hydrocarbons (HC) and Polycyclic
Aromatic Hydrocarbons (PAH). Biodiesel does not contain sulfur so it will not contribute to sulfur dioxide emissions
that result in acid rain. Tests have shown that the cancer-causing potential of particulate matter from pure biodiesel is
about 94% less than that of regular diesel.
3.2. Sourcing
One of the most important problems for biodiesel manufacturers is high cost of feedstock. The major source of
raw materials for biodiesel production in Europe is rape (canola); for US and South American manufacturers it’s soy
bean; for many other countries it’s also palm oil. Due to constantly growing demand for biodiesel, vegetable oil
prices on the world market are following an upward trend. For this reason, the company will start operations with
The Company is also considering the import of .
3.2.2 Jatropha
Jatropha is believed to originate from Mexico and later been introduced to Africa and Asia. This highly drought-
resistant species is adapted to arid and semi-arid conditions. It has few conditions with respect to its environment: it
can grow in areas that are unsuitable for other plants, because of soil depletion. It’s a labor intensive plan, which,
however, requires minimum investments after maturity (in 2 years) with regular and stable harvests for min. 50 years
The reason is that Jatropha is not needed to be replanted every season like other oil crops which saves labor and other
[1]
cost. Jatropha yield per hectare per year is up to 8.0 tons of seed, which contain over 37% oil ; Jatropha seeds do
not require special conditions for storage; Jatropha shell after pressing makes a valuable fertilizer. Jatropha is a
natural pest and bug killer requiring no additional pesticides; it is possible to intercrop Jatropha with other plants to
increase productivity of land or to create a living fence around.
Many national governments are interested in effective use of wasted lands, creation of stable income in local
communities, and developing production of alternative fuels. For example, in India alone there are about 552,692.26
sq km of wastelands, out of which 62.87% amounting to 347,490.15 sq km are suitable for cultivation of Jatropha.
Summary: Benefits of Jatropha
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Rapeseed oil now makes up between 80%–85% of the EU biodiesel. Prices for Rape have been falling for the last 2
years, because of record harvests, see the graph below. But it is unlikely that these records would be repeated, and
increase of demand worldwide will keep prices higher. We expect average market price for Rape in 2006 – $250 per
tone, and average price for Rape oil – $670 per tone, depending on season (fall prices are usually lower than spring
ones.
The world largest suppliers of Palm oil are Malaysia, which produces 45% of the world’s supply and Indonesia
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(39%) These countries would supply up to 20% of the European Union’s biodiesel needs by 2010.
The strong growth in Palm oil consumption over the last six years has resulted in Palm oil being the dominant oil
in the global market. As Soybean oil prices began to rise in 2001-02, the spread between Palm oil and Soybean oil
began to widen, increasing the competitiveness of Palm oil in the world market. Since 2001-02, Palm oil
consumption has increased 13.2 million metric tone, compared to an 8.7 MMT increase in Soybean oil consumption.
This lower price, compared to other major oils, primarily Soybean oil, has given Palm oil a competitive advantage in
both these large oil consuming countries. The rising trend is attributed also to making Trans Fatty Acid (TFA) label
effective in the United States in January, 2006. The association of Palm oil companies (Gapki) predicted the prices of
crude Palm oil (CPO) will hover around US$600 per ton this year and will not dive lower than US$550 per ton[3].
Conclusion: we proved in the plan the following purchasing prices of raw materials:
- Used cooking oil –
- Jatropha oil-
Other important costs are costs of raw materials, chemicals and energy: 1 ton of oil plus 0.12 ton of methanol plus
0.01 ton of KOH. Please refer to Table 4 for summary. Energy requirements were estimated under assumption that
with technologically advanced plant we need approx. 20 liter of biodiesel as energy to produce 1 ton of biodiesel.
For other costs please see Profit and loss statement.
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Glycerol is a by-product of our technological process, but it needs further cleaning. The company is looking into
the installation of glycerol processing equipment. As the equipment requires an additional investment and the
Company wants to remain focused on the production of quality Biodiesel as a flagship product, this investment might
be forgone in the immediate future.
3.5. Technology
The process of converting vegetable oil into biodiesel fuel is called transesterification or neutralizing the free fatty
acids in oil, removing the glycerol, and creating an alcohol ester. This is accomplished by mixing methanol (wood
alcohol) with lye (sodium hydroxide) or potassium Hydroxide, to make sodium (or potassium) methoxide. This liquid
is then mixed into vegetable oil. The entire mixture then settles. Glycerol is left on the bottom and methyl esters, or
biodiesel, is left on top. Finally, the methyl esters is washed, filtered and refined.
4. Market analysis.
World consumption of biofuels nowadays is under 10 million tons annually, or approximately 2% of total fuel
consumption.
Details are available in full version.
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Current price difference between diesel and biodiesel is about 11 euro cents per liter: price of diesel on gas-station
is 1.11 Euro (1.44 USD) per liter incl. petroleum tax, compared with 1 Euro (1.3 USD) / liter for biodiesel. We do
not expect significant price changes (see graphs below) in the future and plan selling price in this project $852 / ton.
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 _________- metric tons per month in the
first _______ months of operation. This output will be increased by .
There is latest invention in biodiesel production. But you may mention your supplier as a leading one or smth like
that. There should be advantages, otherwise project is uncompetitive.
Our technology employs “ hydrodynamic cavitation” , an industrial phenomenon, produced by pressure variations
and obtained using the geometry of the system creating velocity variation. Cavitation itself perceived as “ a
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technology of future” ; use of cavitation in chemical processes reduces reaction time, increases reaction yield and
decreases consumption of energy.
The conventional techniques of biodiesel production typically utilize temperatures in the range of 70 to 200°C,
pressures in the range of 6 to 10 atm and reaction times of up to 70 hours for achieving conversions in the range of 90
to 95%based on the type of raw material used (usually mixtures of fatty acids obtained as waste). Use of
[10]
hydrodynamic cavitation decreases reaction time and temperature to 70 min. and 30C respectively . So, use of
cavitation reactor for production of biodiesel allows save up to 10 times on electricity.
In ecologically sensitive segments and at equal pricing, Biodiesel will have a competitive advantage against regular
Diesel. Advantages of our Biodiesel are based on it’s quality and costs. To illustrate product quality, we compare
major indicators of biodiesel manufactured with our technology (column Utilized technology) and industry
standards. Obviously, manufactured product meets the highest industry standards and can be supplied at the lowest
possible costs.
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The starting project headcount is ___________employees with future increase to _____________, see table
Personnel plan. Our team members and their resumes listed below; all team members have required experience and
qualification to start and manage the project.
resumes
7. Sales forecast
We expect to start sales at ____________. Direct cost of sales includes costs of purchased vegetable oils. All other
costs indicated in income statement. All assumptions behind sales forecast were explained in chapter Sales and
marketing strategy.
8. Financial Planning - does not make sence to present statements here, - please use this spreadsheet to make
relevant calculations
Financial projections are based on sales forecast. We do not expect changes in biodiesel production technology
which would make our product uncompetitive, because we are already on leading position of this technology and
plan developing it in future. Offered technology is also protected by patents.
Summary of start-up requirements presented in the table below. laboratory unit 132 gal/hour) to be financed by
loan.
Cash collection period is approx. 1 quarter so we do not plan outstanding bills at the end of year.
In this project we used assumptions proven by market analysis and research. However, we created also 2 scenarios
with different assumptions. Summary of all scenarios show on the table below.
9. Risk Management:
The major type of business risk identified by the company is related to the continuity and cost of raw materials.
Explain in your risks
As part of its expansion plan, the company will be involved in R& D related to the field
[1]
Five tons of jatropha oil seeds can produce two tons of biodiesel.
[2]
http://asia.news.yahoo.com/050505/3/20hjl.html
[3]
Asia in Focus: Crude palm oil price to hover around US$450 per ton
[4]
Financial Express: India, China to drive global palm oil demand higher. 15 June 2006
[5]
Dow Jones Commodities Service
[6]
http://www.greencarcongress.com
[7]
UFOP: http://www.ufop.de
Details are available in full version.
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