Analysis Report On Bio-diesel from algae
| BIO-DIESEL FROM ALGAE |
| ENERGY………the NEXT |
Executive Summary
With the responsibility of global food crisis, bio-fuel is becoming notorious day by day. But it seems to be a breakthrough for mankind. Too much consumption of food grain and cultivable land to produce fuel took bio-fuel to this position. But a Bangladeshi scientist Dr Ataul Karim, head of the research department of Virginia Old Dominion University, came up with a ground breaking technology to produce bio-diesel from algae.
Bangladesh is totally dependent on imported fossil fuel, which increases the vulnerability of its energy security. This is where “GREEN FUEL” the organization comes in the scenario. With the vision to be largest renewable energy supplier, GREEN FUEL will produce bio-diesel from algae. Why algae? It is the most efficient source of bio-fuel than any others. To produce 250 metric tons of diesel, algae consumes 5 hectors of land but to produce the same amount with palm will take 40 hectors of land.
The preferred location for GREEN FUEL is Khulna because of its geographic advantages and high demand for diesel. After setting a fixed location GREEN FUEL will formulate an operational plan. The plan includes two units. They are algae cultivation and oil conversion unit. After drying algae, we can get lipid or crude oil by the means of press. And later the crude oil can be converted into diesel by transesterification process.
Only production is not the end of the journey. We need to set target market and ways to communicate the benefits and values we are offering. We will serve agriculture sector or the farmers engaged in cultivating. To communicate our values and benefits, we will first position GREEN FUEL as the most caring supplier to the farmers. We will support our positioning through distribution channel and promotional campaign. We will supply directly to farmers to improve their productivity.
Our entire plan will remain only plan, if we do not make a proper human resource strategy. We required 22 personnel in different levels of management and operation in the very first year. Although among the investor three people will hold the position of top executive of Finance, Operation and Marketing.
Now at this position, we are like an ASTON MARTIN car that cannot run. The car’s got everything except fuel. To run the ASTON MARTIN we need fuel. The fuel of our business is money that is equity. 2/3 of our investment will be invested by partners and 1/3 of the investment will come from the debt from the bank. The amount of total investment will be 75000000 in the first fiscal year. Every partner will provide equal amount of equity. We have our assumptions to conduct our entire financing plan. We have forecasted our finance plan for five years.
We assume a flat price of diesel over our forecasted five years. The cost of goods sold will be around 15%-20% of revenue. We have forecasted a NPV of BDT and IRR at .GREEN FUEL will be in the track of profit from the first year of operation.
GREEN FUEL wants maximum utilization of its Strength to grab the maximum Opportunities and work out its Weakness to reduce the possibility of Threats. There are several risks we have identified as well as alternative ways to reduce the identified risks.
Nothing is so easy in the world so is our business. But we got great opportunities and we will stick on to it unless we make the brake through.
Introduction
The reserve of fossil fuel is reducing day by day, but the alternative of fossil fuel, bio-fuel from various food grain (corn, sugarcane, palm tree, Jatropha) has led the world towards severe food crisis (Reported in UN report BIO-FUEL: CRIME AGAINST HUMANITY). “Green Fuel” the organization wants to meet up the increasing demand of diesel and reduce the risk of food crisis of the world generated by food-based bio-fuel technology. The main purpose of production of biodiesel from algae is to eliminate this problem. Algae can produce 10 times more fuel and use 10 times less land from other bio-fuel sources like Jatropha, palm etc. Low production rate and use of cultivable land is contributing highly in global food shortage. In perspective of Bangladesh, bio-diesel from algae is a unique and feasible way to meet the demand for diesel.Ultimately GREEN FUEL is working with a strategic sector of Bangladesh, which is closely related with energy security and will prevent the curse of food shortage which has been created because of existing bio-fuel technology.
The venture’s Impact
- Reducing air pollution by absorbing high amount of CO2 (1kg algae absorb 3kgs of CO2) discharged by various diesel and furnace oil based manufacturing plant.
- Saving a portion of foreign currency of Bangladesh, which is used for importing diesel
- Filling up the gap between the demand for and supply of diesel.
- Developing an energy backbone for Bangladesh.
Business Type: Cultivating and Manufacturing
We will cultivate algae and use those cultivated algae to produce bio-diesel. Through this process we will get a byproduct that is massed algae, which can be used as organic fish food. So we will…
- Produce bio-diesel from algae and sell them to the targeted customers
- Production capacity will be around 800000 liters in a year.
Vision
To be the largest supplier of renewable fuel to make Bangladesh self-reliant in energy.
Mission
· To provide environment friendly diesel that will meet internationally accepted straight quality standard at a competitive price.
· To earn fair amount of profit for organizational growth; and by so doing generate opportunities for both employees and shareholders to achieve rational personal objective.
· To establish an alternative source of bio-fuel that will not affect food production by using any cultivable land.
Organizational form and Management Team
· Green Fuel Will be a partnership firm.
· The organization will consist of 6 partners.
· Each will provide equal amount of equity.
· The organization structure will be flat in term of managerial Organ gram.
· There will be three Directors, who will be head of finance, operations and marketing departments.
Overview of industry
- As algae based diesel Production is the first of its kind in Bangladesh. We expect less competition in the field of bio-diesel. But in future we will face competition in this field.
- For our product and market segment, the only competitor in Bangladesh is Bangladesh Petroleum Corporation (BPC). BPC is the sole importer and supplier of petro-fuel in Bangladesh. BPC covers all the market segment of Bangladesh. But most of the time of the year BPC faces supply shortage due to different reasons. Though apparently BPC is our competitor, we are willing to work in collaboration with BPC not as a competitor but as a collaborator by fulfilling the gap of demand and supply of diesel.
The competition may intensify if other bio fuel base company develops gradually to produce bio-diesel from other sources like Jatropha, Corn, Wood, Sugarcane etc
Primarily the potential market of “GREEN FUEL” is the entire user of diesel in Bangladesh but as our plant is located in Khulna; our potential and targeted customers will be the users of Khulna region or the southern part of the country. Last year BPC imported 2.2 million tons of diesel and .76 million tons of diesel was being supplied to this area. And almost 152,000 tons of which was used in agriculture. But this huge supply of diesel could not eliminate the shortage. We will fill up a portion of that supply gap according to our production capacity. Our targeted segment will be the individuals, who are engaged in agriculture. Our main target customers are the large farmers, who have more than 8 acres of cultivating land. But we will also serve the other types of demands for diesel. In Khulna the numbers of these type large farmers are 4153 and they require huge amount of diesel to irrigate this huge amount of land.
Main Problem of Farmers with Diesel Supply
· Untimely, short and interrupted supply of diesel in irrigation season.
· As dealers are situated in upozillas, farmers in villages find it difficult to reach them.
· To get required amount of diesel, farmers have to lose some of their working hour and the cost of transportation of diesel increases their production cost.
· Extra price charged by the dealers in times of shortage.
Overview of Promoter
The promoters are fresh graduate. They are young entrepreneurs. They have no previous experience. So it is also a green field project.
- Promoter : Young Entrepreneurs
- Education : Fresh Graduate
- Total Employee: 22
- Department: 3
- 2 persons specialized in botany and chemical technology
Overview of Project
We will produce Bio-Diesel from the natural waste Algae. It is available in our pond, small rivers.
- Project: Production of Bio-Diesel from Algae.
- Project Life time: 20 years
- Goal of Project: Elimination of Fuel problem in Khulna
- Capital: 7.5 corer
- Leased land in Khulna for 20 years
- 22 employee
- Utility : Green Fuel at lower price
- Our Price: TK 42 per liter
- Market Price : 44 Per liter
Objective & Goal of Project
The main purpose of production of biodiesel from algae is to eliminate this problem. Algae can produce 10 times more fuel and use 10 times less land from other bio-fuel sources like Jatropha, palm etc. Low production rate and use of cultivable land is contributing highly in global food shortage. In perspective of Bangladesh, bio-diesel from algae is a unique and feasible way to meet the demand for diesel.Ultimately GREEN FUEL is working with a strategic sector of Bangladesh, which is closely related with energy security and will prevent the curse of food shortage which has been created because of existing bio-fuel technology.
Planning
- Required Capital: 7.5 crore. 67% will be equity financing and rest will be raised from 3 banks at 13% interest rate
- Only Experienced personnel will be hired in the production plant
- Duration of the project: 20 years
- Break-even point: 2 Years 279 Days.
- IRR: 14%
- Payback period: 5 years
Substitute projects
- Bio-Diesel from Nim tree
- Bio diesel from Jatropha
- Bio Diesel from Water Hyacinths
Market Analysis
Potential and Target market
Primarily the potential market of “GREEN FUEL” is the entire user of diesel in Bangladesh but as our plant is located in Khulna; our potential and targeted customers will be the users of Khulna region or the southern part of the country. Last year BPC imported 2.2 million tons of diesel and .76 million tons of diesel was being supplied to this area. And almost 152,000 tons of which was used in agriculture. But this huge supply of diesel could not eliminate the shortage. We will fill up a portion of that supply gap according to our production capacity. Our targeted segment will be the individuals, who are engaged in agriculture. Our main target customers are the large farmers, who have more than 8 acres of cultivating land. But we will also serve the other types of demands for diesel. In Khulna the numbers of these type large farmers are 4153 and they require huge amount of diesel to irrigate this huge amount of land.
Positioning
We will position “GREEN FUEL” as a cultivation partner of farmers. We will make farmer’s life easier and reduce their production cost by saving their working time and cost, consumed by fuel transportation. We will set our distribution channel and promotional campaign in a manner, which will establish our desired position in the mind of the farmers.
Marketing strategy
· Following channel differentiation strategy to establish our positioning.
· More emphasis will be given on promotional campaign rather than advertisement.
· Removing the informational barriers in creating the market for bio-diesel.
· Creating, maintaining and expanding the arena of long term relationship with the customers.
Pricing Strategy
Bangladesh Petroleum Corporation regulates the price of diesel. We will not break their regulation. In present market, the price of diesel is BDT 44/liter. We will adjust the price with BPC over the time. Excess price will not be charged in time of shortage.
Distribution Channel
| Green Fuel |
| Farmers in targeted areas |
Selling strategy:
Selling Strategy
· We will sell our product directly to the farmers by home delivery system and customer centre system in some important area.
- In every targeted area, we will employ a local agent to know the requirement of farmers and get orders.
- On the basis of the information and order provided by the agent, we will deliver 250-liter container to the addresses by rental supply vans.
- We will replace the empty containers with filled ones but orders must be placed before two days.
Promotional Campaign
The objective of our promotional campaign is to communicate the benefits of using our products and establishing our positioning concept. Ultimately we will be a brand for the villagers by creating win-win situation. Our promotional campaign will be…
- HAAT KRISHI SOMADHAN (Market agro solution): Through this program, we will provide farmers information and advice for cultivation by horticulture specialist on every “Haat day”. This program will build an image of caring supplier in the mind of the farmers and also help the farmers to improve their production capacity, which will lead to a win-win situation.
- Engaging local agro officers: We will collaborate with local agriculture office with different facilities and promote our product to the local farmers by their field officer.
- Sponsorship: We will provide scholarship to children of needy farmers. We will sponsor local cultural programs like Jattra and Baul gaan.
Competition
- As algae based diesel Production is the first of its kind in Bangladesh. We expect less competition in the field of bio-diesel. But in future we will face competition in this field.
- For our product and market segment, the only competitor in Bangladesh is Bangladesh Petroleum Corporation (BPC). BPC is the sole importer and supplier of petro-fuel in Bangladesh. BPC covers all the market segment of Bangladesh. But most of the time of the year BPC faces supply shortage due to different reasons. Though apparently BPC is our competitor, we are willing to work in collaboration with BPC not as a competitor but as a collaborator by fulfilling the gap of demand and supply of diesel.
· The competition may intensify if other bio fuel base company develops gradually to produce bio-diesel from other sources like Jatropha, Corn, Wood, Sugarcane etc.
Technical Analysis
Production
We will lease 2 acre of land beside Khalishpur Power Plant in Khulna. Then we will build 5 raceway ponds (a special type to cultivate algae). The area of each pond will be 1500 square meters. We will install steel skeleton around each pond and cover the pond with transparent fiber. These ponds will be solely used for algae production. For the maximum growth of algae we will connect each pond with the chimneys of nearby KHALISHPUR power plant. We will cultivate, P. Tricornutuum, a type of algae. In the remaining areas we will build our fuel conversion plant, 3 storage systems, guard rooms and other facilities. We will fence around the total areas.
The process is given below in graphical form.
| Algae Cultivation |
| Algae Dryer |
| Dried algae |
| Extracting lipid from algae by mean of press |
| Bio-diesel |
| Transesterification solvent |
| Lipid or Crude oil to conversion plant |
Ordering: Orders will be received from local agents in targeted areas.
Delivery: We will deliver diesel in 250-liter containers by our rental transportation system.
Billing: Users of bio-diesel are required to pay the bill within 15 days of delivery.
Quality control: To ensure best quality, specialist will be engaged, at least 4 times a year from valid institutes like University scientists.
R&D: Initially “GREEN FUEL” will jointly work with botany and biotechnology department of KHULNA UNIVERSITY by sponsoring bio-fuel research.
Capital requirement
The project will required BDT 75000000 for setup cost in FY2009/2010. We need a lot of working capital in this type of business.
· From these money algae cultivation plant and bio-diesel conversion plant will require BDT 56500000.
· Rest of the outflow will be required to build storage and other facilities and working capital.
Moreover, capital expenditures during the subsequent years of operation are also regarded as capital investment, which is projected to be BDT1000000 for pickup van in 2016. Again we will invest, to expand the production capacity, in 2016 to acquire land and equipment.
Personnel Requirement
Organizational Structure: Flat managerial organizational structure.
Staffing need: Head of the departments will be taken from partners.
We need a total number of 22 people under 3 departments in the first year. Among the 22 employees there will be 2 persons specialized in botany and chemical technology. As our initial task will be to make people familiar with this kind of biodiesel, we will employ more people in the marketing sector than others. We will employ 2 managers and 4 assistant managers in the marketing department and 1 manager and 1 assistant manager in the finance department. Apart from this we will employ sales representatives in the targeted areas as well as some cultivators and some guards.
Outsourcing: We will outsource specialist in the field of bio-diesel from universities and research institutes.
Sales Projection
We are expecting that we can start the production from the second half of the very first year. Production will start to grow from the second year as the economies of the scale will take place.
The sales projection schedule is furnished below:
| Particulars | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Bio diesel yield (liters) | 350000 | 750000 | 780000 | 800000 | 800000 |
| Sales price | 44 | 44 | 44 | 44 | 44 |
| Total revenue | 15400000 | 33000000 | 34320000 | 35200000 | 35200000 |
The projected income statement for the next 5 years is furnished below:
Income Statement (Summarized)
| Year | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Revenue | 15400000 | 33000000 | 34320000 | 35200000 | 35200000 |
| Cost of goods sold | 3080000 | 5940000 | 5834400 | 5632000 | 5280000 |
| SG&A | 3030000 | 3150000 | 3600000 | 2880000 | 2730000 |
| Depreciation | 3416667 | 3416667 | 3416667 | 3416667 | 3416667 |
| EBIT | 5873333 | 20493333 | 21468933 | 23271333 | 23773333 |
| Interest expenses | 3500000 | 3500000 | 3500000 | 3500000 | 3500000 |
| EBT | 2373333 | 16993333 | 17968933 | 19771333 | 20273333 |
| Tax | 0 | 0 | 0 | 0 | 0 |
| Net income | 2373333 | 16993333 | 17968933 | 19771333 | 20273333 |
The demand of the bio-diesel is never expected to fall. However the price of the diesel may fluctuate over time. The cost of goods sold may also fall dramatically. Especially the cost of ethanol and potassium hydroxide used to produce the bio-diesel may rise over time. So for this reason we have done the scenario analysis.
Scenario Analysis
| Scenario Summery | Current Value | Likely | Worst | Best |
| Diesel Price | 44 | 44 | 40 | 50 |
| Cost of goods sold | 15%-20% | 15%-20% | 30% | 12% |
Net income for the first 3 years for different scenarios is furnished below:
| Scenario based net income | 2009-10 | 2010-11 | 2011-12 |
| Best case | 5453333 | 22933333 | 26878333 |
| Worst case | (146667) | 10933333 | 11323333 |
The projected balance sheet for the next 5 years is furnished below:
Balance Sheet (Summarized)
| Year | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 | |
| Total Current Assets | 28603334 | 41016667 | 54417802 | 68220135 | 82273467 | |
| Net Fixed Assets | 53083333 | 49666667 | 46249999 | 42833332 | 39416665 | |
| Other Assets | 0 | 0 | 0 | 0 | 0 | |
| Total Assets | 81686667 | 90683334 | 100667801 | 111053467 | 121690132 | |
| Total Current Liabilities | 5500000 | 6000000 | 7000000 | 7500000 | 8000000 | |
| Total Long-term Debt(5 yrs) | 25000000 | 25000000 | 25000000 | 25000000 | 25000000 | |
| Total Equity | 51186667 | 59683334 | 68667801 | 78553467 | 88690132 | |
| Total liabilities and
Equity |
81686667 | 90683334 | 100667801 | 111053467 | 121690132 | |
Ratio Analysis
| Year | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Current ratio | 5.20 | 6.84 | 7.77 | 9.09 | 10.28 |
| Quick Ratio | 5.20 | 5.84 | 6.77 | 8.9 | 9.28 |
| Inventory Turn over | – | 5.5 | 4.90 | 4.69 | 4.4 |
| Fixed Asset Turnover | .290 | .664 | .742 | .822 | .893 |
| Total Asset Turnover | .189 | .364 | .341 | .317 | .289 |
| Basic earnings power | 7.19% | 22.5% | 21.3% | 20.9% | 19.53% |
| Profit Margin on sales | 15.41% | 51.49% | 52.35% | 56.16% | 57.59% |
The huge amount of cash will be used in the fiscal year 20014-15 to pay back the 5 year debt and also for the expansion of the business. The cash could be used earlier for the same purpose but has not been used as we are the first producer of the bio-diesel in the country through algae and will be dealing with a lot of uncertainty. So we will like to reserve this cash for the contingency plan purpose in time of liquidity crisis.
Projected Cash Flow
| Year | 0 Date | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| EBIT | 5873333 | 20493333 | 21468933 | 23271333 | 23773333 | |
| Income Tax | 0 | 0 | 0 | 0 | 0 | |
| Unlevered Net Income | 5873333 | 20493333 | 21468933 | 23271333 | 23773333 | |
| Add: Depreciation | 3416667 | 3416667 | 3416667 | 3416667 | 3416667 | |
| Less: Changes in WC | -18500000 | -4603334 | -11913333 | -12401135 | -13302333 | -13553332
+73673467 |
| Less: Capital Expenditure | -56500000 | |||||
| Free Cash Flow: FCF | -75000000 | 4686666 | 11996667 | 12484465 | 13385667 | 87310135 |
| PV of FCF @ 12% | -75000000 | 4184523 | 9563669 | 8886195 | 8506833 | 49542115 |
| Present Value of Cash inflow | 80683335 | |||||
| Less: Project cost | -75000000 | |||||
| NPV | 5683335 | |||||
| IRR | 14% |
Here we observe that the business has a positive NPV at 12% rate of return in only 5 years. So the business is highly feasible.
Selection of Projects
Implementation Plan
Gathering required resources
With a view to implementing the plan, the first and foremost responsibility is to gather the required resources effectively and efficiently. This firm has requirement of financial, human resources and technology of both in-sourced and out-sourced. The financial resources are met up by both internal and external sourcing. On the other hand, workforce is designed mostly by external sourcing. Technological requirements will be fulfilled by outsourcing equipments and experts at different levels.
Financial resources are vital for uplifting capital investments, working capital. Human resources are significant to facilitate the monitoring of the whole production and distribution process from top to bottom. Significance of technology lies in the production process.
Risk Assessment
Risk in production process: The process of producing bio-diesel involves high degree of chemical use. Diesel itself is a flammable thing. So without proper monitoring any disaster can happen any time.
Escape Plan: Fire alarm and protection equipments, special protective suit for workers and strict monitoring system will be introduced.
Natural Calamities: Natural calamities might hinder the production of algae
Escape plan: No protection will work against calamities like sidr but strong construction will give some strength to protect our cultivation and manufacturing plant. Our production area is relatively free from calamities like flood and earthquake than the other southern regions.
Implementation Risk: The implementation of the plan consists of integrating two production units. However, quality checking is a crucial factor for each of the units. If this job is not carried on perfectly the production units may not perform at its optimum level, Thus resulting loss of sales and goodwill.
Escape plan: To synchronize all the steps in production and quality control units, we will engage expert personnel.
Supply Risk: In the production process, we need huge amount of chemicals and other raw materials. Improper supply of any raw materials can hamper production.
Escape plan: For proper supply of chemicals, we will develop an inventory management committee jointly with our suppliers. We will use alternative transportation system in time of any disturbance or natural calamity.
Innovation of Other Sources: Research on renewable energy is being conducted around the world. In near future many other sources may develop, so innovation of new source of bio-diesel can make our process obsolete.
Escape Plan: Future innovation of new source can be a risk and an opportunity both. We will follow business flexibility strategy to adopt change and make our R&D stronger with the time.
S.W.O.C Analysis
Strength
· Using algae as a source of bio-diesel, which is 10 times more productive then other sources.
· Simple procedure of producing diesel.
· Availability of core production source, algae.
· High flexibility of switching market segments.
· Sole producer of bio-diesel in Bangladesh.
Weakness
· Lacking practical experience about bio-diesel production.
· High setup cost can hamper the cash position.
· Relatively sensitive distribution channel.
Opportunity
· Short supply of diesel.
· Rising awareness about environmental threat.
· Growing shortage of natural gas supply around the country.
· Most part of the country remains out of the range of gas supply.
· High incentives for renewable energy sector from the government.
Challenge
· Growing use of gas in different sectors.
· Unavailability of skilled labor.
· Rising cost of chemicals and machineries.
· Decreasing amount of lands.
· Decreasing price of fuel because of recent global financial downturn.
Conclusion
In Bangladesh there is a huge gap of diesel. Every year a lot of currency is used to import the required diesel. At the same time the fossil fuel production is emitting CO2 which is destroying our mother earth. Our project is a small step here. If many projects like us come to light then our country will be improved, our beautiful world will be saved.
We will try our best to gift a GREEN WORLD through our project. That is our ultimate MOTO.
Appendix
Assumptions
Algae Cultivation Plant
· Around 280 gram of algae can be produced in every square meter per day.
· Each of the race way ponds will be 1500 square meter.
· Algae cultivation plant will produce algae every day.
Transesterification Process
· After cultivation the algae will be dried.
· Crude oil will be extracted from dried algae by mean of press.
· 20% ethanol and 2% Potassium Hydroxide will be mixed with the crude oil to get diesel.
Fuel Conversion Plant
· Each gram of algae contains 80%-85% of lipid or crude oil.
· More than 80% of that lipid can be converted into diesel.
· This plant will be in operation for round the years.
Others
· Cost of cultivation plant + cost of fuel conversion plant = Cost of bio-diesel.
· 98% of the production is assumed to be sold every year.
Accounting Assumption
Depreciation Policy: Straight Line Method.
| Asset Type | Economic Year |
| Race way pond | 20Years |
| Oil conversion plant (Building) | 15 Years |
| Oil conversion plant (Equipment) | 15 Years |
| Other accessories | 10 Years |
Inventory Valuation: FIFO Method.
Tax Rate: Total tax is exempted for 5 years for renewable energy business.
Financial Assumption
· Initially the total capital expenditure will be provided by 6 partners.
· The capital requirement will be BDT75000000.
· There is an expansion plan in the 6th year.
· Selling price is assumed to be flat through 5 years.
· As there is huge growth opportunity we will reinvest 50% of the net income in the business at a required rate of return of 12%.
| Organogram |
Personnel Requirement
| Year | 2009-10 | 2010-2011 | 2011-2012 | 2012-2013 | 2013-2014 |
| Marketing | |||||
| Manager | 2 | 2 | 3 | 3 | 4 |
| Asst. manager | 4 | 6 | 9 | 9 | 12 |
| Finance | |||||
| Manager | 1 | 1 | 2 | 2 | 3 |
| Asst. Manager | 1 | 1 | 3 | 3 | 6 |
| Operation(Production & maintenance) | |||||
| Technician | 2 | 2 | 3 | 3 | 3 |
| Labor | 6 | 10 | 15 | 15 | 20 |
| Security Guard | 6 | 8 | 8 | 10 | 10 |
Cost of Goods Sold
| Particular | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Beginning Inventory | 0 | 20000 | 20000 | 20000 | 20000 |
| Add: Purchased Inventory | 3100000 | 5940000 | 5834400 | 5632000 | 5280000 |
| Less: Ending Inventory | 20000 | 20000 | 20000 | 20000 | 20000 |
| Cost of Goods Sold | 3080000 | 5940000 | 5834400 | 5632000 | 5280000 |
Break-even Point
Required Capital: 7.5 crore
Total Revenue 2009-10 & 2010-11: (15400000+33000000) =48400000
Total Revenue 2011-12: (34320000/12 months) = 2860000/30days= 95333.33 per day.
95333.33*279 days= 26597999.07
So Break-even Point: (48400000 + 26597999.07) = 74997999.07
(2 Years + 279 Days)= 2 Years 279 Days (app.)
We can easily say that, we will reach in our Project Break-even Point in 2 Years 279 Days.
Income Statement
| 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 | |
| REVENUES | |||||
| From Bio-diesel | 15400000 | 33000000 | 34320000 | 35200000 | 35200000 |
| Less: Cost of goods sold | 3080000 | 5940000 | 5834400 | 5632000 | 5280000 |
| GROSS PROFIT | 12320000 | 27060000 | 28485600 | 29568000 | 29920000 |
| Less: OPERATING EXPENSES | 6446667 | 6566667 | 7016667 | 6296667 | 6146667 |
| Salary | 480000 | 550000 | 650000 | 680000 | 730000 |
| Marketing and promotion | 1850000 | 1200000 | 1500000 | 700000 | 500000 |
| Transportation rent( including agent cost) | 700000 | 1400000 | 1450000 | 1500000 | 1500000 |
| Depreciation | 3416667 | 3416667 | 3416667 | 3416667 | 3416667 |
| EBIT | 58733333 | 20493333 | 21468933 | 23271333 | 23773333 |
| Less: Interest Expanse | 3500000 | 3500000 | 3500000 | 3500000 | 3500000 |
| EBT | 2373333 | 16993333 | 17968933 | 19771333 | 20273333 |
| Less: Tax (Holiday for 5 years) | 0 | 0 | 0 | 0 | 0 |
| Net Income | 2373333 | 16993333 | 17968933 | 19771333 | 20273333 |
Balance Sheet
| Year | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Current Assets: | 28603334 | 41016667 | 54417802 | 68220135 | 82273467 |
| Cash | 24103334 | 29516667 | 41417802 | 54220133 | 67473466 |
| Accounts Receivable | 4500000 | 5500000 | 6000000 | 6500000 | 6800000 |
| Inventory | 0 | 6000000 | 7000000 | 7500000 | 8000000 |
| Fixed Assets: | 56500000 | 56500000 | 56500000 | 56500000 | 56500000 |
| Cultivation Pond | 26000000 | 26000000 | 26000000 | 26000000 | 2600000 |
| Oil Conversion Plant | 28000000 | 28000000 | 28000000 | 28000000 | 2800000 |
| Other building and equipments | 2500000 | 2500000 | 2500000 | 2500000 | 250000 |
| Less: ACCU. DEP. | 3416667 | 6833333 | 10250000 | 13666668 | 17083335 |
| Net Fixed Assets | 53083333 | 49666667 | 46249999 | 42833332 | 39416665 |
| Total Assets | 81686667 | 90683334 | 100667801 | 111053467 | 121690132 |
| Liabilities and Owners Equity | |||||
| Current Liabilities | 5500000 | 6000000 | 7000000 | 7500000 | 8000000 |
| Accounts Payable | 5500000 | 6000000 | 7000000 | 7500000 | 8000000 |
| Tax payable | 0 | 0 | 0 | 0 | 0 |
| Long Term Debt and Owners Equity | |||||
| Long Term Debt | 25000000 | 25000000 | 25000000 | 25000000 | 25000000 |
| Equity | 50000000 | 50000000 | 50000000 | 50000000 | 50000000 |
| Retained Earnings | 1186667 | 9683334 | 18667801 | 28553467 | 38690131 |
| Total equity | 51186667 | 59683334 | 68667801 | 78553467 | 88690131 |
| Total Liabilities and Equity | 81686667 | 90683334 | 100667801 | 111053467 | 121690132 |
Cash flow Statement (Indirect Method)
| 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 | |
| Cash flow from the operating activities | |||||
| Net income | 2373333 | 16993333 | 17968933 | 19771333 | 20273333 |
| Adjustment to reconcile income to net cash provided by operating activities | |||||
| Depreciation expense | 3416667 | 3416667 | 3416667 | 3416667 | 3416667 |
| Increase in the account payable | 5500000 | 500000 | 1000000 | 500000 | 500000 |
| Increase in the account receivable | (4500000) | (1000000) | (500000) | (500000) | (300000) |
| Increase in the inventory | 0 | (6000000) |
Disclaimer: |