Agritech & Energy Startup Raising Seed Funds In Bangalore

Product / Service

They plan to setup a bio-ethanol and organic fertilizers' manufacturing plant.

Clientele type

Petroleum industries and agricultural industries pan India.

Premises

The plant will require 5 acre of land

Asking Price Includes

The terms of transaction will be discussed with potential investors.

Asking Price

INR 6.50 Cr

Minimum ticket size

INR 6.50 Cr

Reason

These funds will be used to setup the plant.

Other Details

The problem we are aiming to solve:
1. 350 million tonnes of agricultural waste is produced almost every year. Due to lack of alternative economical options the farmers of our country are forced to burn stubble and their failed crops, this is one of the leading factors contributing to the very poor air quality in our major cities and towns.
2. The over cultivation of crops like sugarcane causes the wastage of the bagasse produced According to several reports in the year 2020, a 117.6 million metric tonnes of bagasse was wasted.
3. Currently in the market majority of the ethanol plants in our country produce ethanol by using corn starch as raw materials which makes the ethanol produced energy negative, that is the energy used in the form of water, electricity and man power is higher that the energy generated.
4. The need for a renewable source of power that is cheap and easy to integrate.

Solution:-
1. We aim to set up an ethanol plant that produces the best quality ethanol by using agricultural waste like broken rice, wheat, bagasse, stubble and other waste materials. By using agricultural wastes as raw materials we aim to produce energy positive ethanol and reduce the pollution of land, water and air.
2. We aim to create an attractive option to the farmers to not burn agricultural waste  by providing bio-fertilisers that is generated as a waste product from the ethanol plant for extremely cheap prices which can help the farmers save money and improve their profits.
3. It is actively developing a technology that converts a traditional coal power plant into a power plant that uses ethanol as a raw material to generate electricity. Our technology is unique as it easy and significantly cheaper to integrate when compared to other renewable sources.

Salient Features :-
1. The type of raw material used in the production of ethanol is very important in the unit economics of an ethanol plant. Our ethanol plant will be using agricultural wastes such as rice stalk,wheat stalk, spoiled fruits and vegetables. Using these raw materials separates us from our major competitors as they use cash crops as raw materials like sugar cane and corn. Using agricultural wastes is more economical as it is 33% more cheaper. Using cash crops as a raw materials are risky in the long run as it risks government intervention and threatens our countries food security.
2. Our technology helps in converting decommissioned or about to be decommissioned coal power plants into new power plants that use ethanol as a raw material to generate electricity. Our technology is attractive as it converts the coal power plants into ethanol power plants by making a few modifications to the combustion chamber of a conventional coal power plant.

Market potential :-
1. In the year 2022 India imported as much as 635 million litres of ethanol.
2. The demand for ethanol is projected to increase by a very large percentage due to the government’s energy targets for 2030, where almost every automobile sold in the country will run on a 20% ethanol blend to decrease the energy dependence for petroleum on countries like Saudi Arabia and Russia.
3. The demand for 20% blending is set to increase India’s ethanol demand to nearly 11 Billion litres by 2030.
4. In the present day the major ethanol producers in the country are sugar manufacturers and there is very less innovation and development in ethanol technology.
5. India aims to cut power output from at least 81 coal power plants over a 4 year time period . This could help in pushing our technology much more quickly and propel our company to expand rapidly.
6. According to many experts the country aims to increase the ethanol blend concentrations to as high as 35% in the upcoming years.

Revenue model:-
We aim to gain revenue from 4 sources that is:
1. Selling bio-ethanol as a fuel to petroleum companies for blending.
2. Selling bio-ethanol to power plants to generate electricity.
3. By partnering with power plants we would gain revenue by selling electricity.
4. Selling organic fertilisers to farmers.

Competitive landscape and possible future risks:-

1. Tough and intense competition from large sugar producers like Renuka sugars,Triveni and Bajaj . Large business like Adani are planning to invest heavily in ethanol production which gives the sugar manufacturers the flexibility to undercut the competition.
2. Future over saturation of ethanol producers. There is going to be hundreds of new ethanol producers coming up in the market in next few years which could cause major fluctuations in the prices.
3. Possible threat to our countries food security which might force the government to intervene and put heavy restrictions on ethanol producers . Bio-ethanol is largely produced by using cash crops as raw materials, due to the rampant increase in demand for bio-ethanol the farmers of our country might focus on growing cash crops like sugarcane and corn instead of rice and wheat. This could potentially pose a threat to our countries food security.
4. According to historical data, during the oil crisis in Brazil the government pushed for increasing the production of bio-ethanol but towards the end of the oil crisis majority of the ethanol plants shut down due to the government intervention and decline in demand.
5. While in the initial phases of the company we can focus on increasing our market share by expanding rapidly and increase the valuation of the company. But due to the above mentioned points this growth would however be temporary or very unsustainable in the long run.

How do we plan on solving the above potential problems?
1)We can easily solve the above problems by building small (10klpd) but many ethanol plants in strategic locations that have:-
1. very less number of ethanol producers.
2. good number of oil refineries.
3. easy access to cheap raw materials.
We have strategically narrowed down and have chosen to start our first ethanol plant in Bongaigaon, Assam.

Why Bongaigaon, Assam?
1. An entry point to the whole of the north east provides us with good and cheap transportation.
2. Assam has a good framework of regulations which helps us with an easy access for raw materials throughout the year.
3. Cheap raw material that is ₹6-₹8 per kg, which is 50% cheaper than other states in the mainland of our country.
4. The city is located very close to an oil refinery, this is very important as it could cut down costs for transport and make us an important and preferred supplier of bio-ethanol in the state.
5. Development of a semiconductor manufacturing plant in Assam by Tata. This would benefit us as semiconductor manufacturing requires the use of ethanol.

2)We would be protected from any government intervention by using rice and wheat straw as raw materials. This also promotes the cultivation of food crops in the country.

3)We could gain a competitive advantage by using our ethanol power generation technology. Using this technology we would be able to leapfrog our company and potentially be able to increase our market share by a large extent much more quickly.

4)Since we are focused on increasing our market share by expanding in terms of numbers, we would be projected to build at least 8 more ethanol plants at the end of 5 years.
We have decided to build only 10klpd ethanol plants as it would help us in producing ethanol throughout the year. This would make us an efficient and reliable producer of bio-ethanol.

Why only a 10klpd plant?
1. Easy and more efficient to operate.
2. Can be run throughout the year.
3. Enables us to expand rapidly.
4. Flexibility to set-up in almost in any part of the country due to lower land, water and electricity requirements.
5. Makes our company more profitable in the long run.
6. Provides a faster ROI.

Why do we see potential in ethanol power plants?
1. Ethanol is readily available and cheap to produce.
2. It is Cheaper to set up an ethanol power plant compared to other green power plants like solar power and wind power.
3. Ethanol Can be easily produced domestically.
4. Very low carbon emissions and an overall small carbon footprint.
5. Helps in strengthening our agricultural sector.
6. Easy to install as we are developing an ethanol power plant by just making a few modifications to a conventional coal power plant.

Growth and traction achieved till date:-
We are an early stage start-up looking to get into production of bio-ethanol.
We are currently only an R&D company and have successfully completed our research in the development of ethanol power plants. We will be applying for a patent once the technology has been fully tested.
Please read our projected revenue and our expansion plans.

Projected avg.monthly revenue:- ₹1,77,84,000
Total bootstrapped amount:-₹11,00,000(R&D and consultation charges with vendors)

Team profile:-
Founder : Sohan
Education: business engineer
College: THW-s. Schweinfurt, Germany
Co-founder: Swapnil
Education: microbiology and biochemistry
College: Bangalore university

Unit economics of one 10klpd plant:-

1. Litres produced per day:- 10,000. Price/litre:- ₹65 (dec 19 2023)
2. Manufacturing cost: ₹24/litre. Total:₹2,40,000
3. Raw material(rice & wheat stalk). Price/kg (avg):- ₹7. Total :₹7*25,000=₹1,75,000
4. Miscellaneous (transport & packaging). ₹1,00,000
5. Total manufacturing cost:- ₹5,15,000
6. Output:- bio ethanol(10,000Lt) & organic fertilisers (14,000kg)
7. Revenue:-
8. Bio-ethanol selling price/litre. ₹65/Lt Total:₹65*10,000=₹6,50,000
9. Organic fertiliser price/kg. ₹23/kg. Total:₹23*14,000=₹3,36,000
10. Total revenue. ₹9,36,000
11. Profit(per day):-
12. Total revenue - Total manufacturing cost. ₹9,86,000-₹5,15,000=₹4,71,000
13. monthly profit:- ₹98,91,000
14. yearly profit:- ₹11,86,92,000
15. Loan(7cr,5year) payment:- ₹1,50,00,000(approx)
16. Net. Profit. ₹9,36,92,000

Government support(central):-
1. Fixed price on bio-ethanol.
2. Gives moratorium on bank loans.
3. Reduced gst from 18% to 5%.
4. Inclusion in industrial act.1951 to allow free movement of bio-ethanol.
State government support(Assam):-
1. 20% capital subsidy on plant and machinery.

Expansion plans:-
We aim to set up 8 more bio-ethanol plants and convert 4 coal power plants all over our country in the span of 5 years.
We are committed to become the country’s first bio-ethanol based unicorn by the year 2034.

Why you should invest in us?
1. Our unique technology that could potentially replace coal power plants quickly and more economically.
2. Our target to grow rapidly in the next 5 years.
3. Helps in improving our farmers livelihood by providing them with cheap organic fertilisers that are rich in nitrates and phosphate. Providing our farmers with a supplementary income.
4. Solves the growing problem of stubble burning.

Investment required:-

We are a seed level company and We are looking for an investment of 800k usd~6.6crore inr.

We require this money as starting capital to begin the setting up of the plant and to finish the testing of our technology.

Breakdown:-
5.75cr will be used to acquire a business loan of 15cr inr to start the construction of our ethanol plant.
85 lakh inr will be used to fund testing and for the marketing our technology.

We are looking for an investment for 6.6 crore rupees for 15% of our company.
Since we are still a seed level company we offer to share 2% of our yearly profits among our initial investors.