The company is an oleo-chem manufacturing entity which produces bio-diesel and processed vegetable oils used as renewable fuel and industrial raw materials respectively.
The company is a small-scale manufacturing company, which produces bio-diesel, fatty acid methyl esters (FAME) and Processed Vegetable Oils. It is located in Pithampur, M.P. on land covering 10,000 sq. m. priced at INR 3.5 crores.
Bio-diesel is a renewable fuel, which serves as a green replacement for petroleum diesel. Bio-diesel is derived from vegetable sources and causes lesser pollution as compared to diesel when it burns.
FAME has various applications in industries where they are used as replacements to harmful petroleum based chemicals. FAME serves as environment friendly alternatives to petroleum based solvents and chemicals.
Processed vegetable oils are chemically and/or physically modified vegetable oils used as raw materials in various industries such as paints, varnishes, coatings, leather, adhesives etc.
All products manufactured at the company are sold to various industries across various sectors. These products serve as raw materials for the customer industries.
Biodiesel/FAME is a relatively new product for the Indian market. Only recently, with the change in Government and its modern, environment friendly outlook, demand for biodiesel has been created. The Indian Railways and Oil Marketing Companies (BPCL, HPCL, IOCL) have issued tenders for procuring biodiesel.
Thus, with the changing market situation wherein the OMCs are inviting tenders for procurement of Bio-Diesel, we see this as an opportune moment for the buyer to gain an early foothold on the biodiesel industry and be seen as a pioneer.
The buyer should understand that this being a new market, the past performance of the company is not an indicator of the opportunities that the future will provide. With the aim of achieving 5% blending with diesel, the OMCs will need 3.5 million tons (350 Crore kg) of biodiesel annually. They have already released a tender for 85 Crore litres to be supplied by March '16, And as of now the quantity bid by all bio-diesel manufacturers in India is far less than the requirement.
Rationale for the deal
The Company has an installed capacity of 40 tons per day for the production of biodiesel. The machinery includes all necessary equipments for the production of biodiesel. These are – thermic fluid heaters, boilers, reaction vessels, filters, storage tanks, heat exchangers, condensers, evaporator, cooling towers, vacuum system and various auxiliaries.
The production area is a double height shed covering an approximate area of 5000 sq ft. The shed houses the production machinery and provides adequate space for drum handling. Storage tanks are located outside of the shed. Total land area is approximately 1 hectare. Land is on a 99 year lease beginning December 1995. The value of the land alone is upwards of Rs. 3.5 Crores and is located very well in the industrial town of Pithampur, 30 km from Indore - the commercial capital of M.P.
The Company has developed and evolved the manufacturing process to produce biodiesel at minimum cost. Yield losses and generation of waste streams has been minimised.
The biodiesel produced by the Company meets the Indian and international standards.
American – ASTM D6751
European – EN 14214
Indian – IS 15607
The plant operates on a semi-continuous production approach, which is the most suited and efficient method for biodiesel manufacturing. It allows for optimum use of machinery such that all equipment is used throughout the day. This manner of production eliminates the need for over sizing the equipment. Smaller capacity equipment are thus operated continuously to produce double the quantity as compared to batch / non-continuous systems.
All such minute but thoughtful improvements give the Company an edge over turnkey plant suppliers who have limited first hand knowledge about biodiesel production.
In essence the buyer here stands to gain much more than turnkey suppliers can offer, at a fraction of their offered price. More so, the buyer can start production immediately after completion of the deal and as such save valuable interest money, which is otherwise lost during the setting up of a new facility. He will also be able to avoid much of bureaucracy as factory license; pollution approval, tax registrations etc. are in place.
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