Idea of the project 

Solid biofuel for sale is offered by our enterprise to heat utility spaces and production premises

List of services:

Product name Measure unit Estimated capacity 
Briquette  Tons  250 kg * 10 h / day * 356 days /year = 890 000 tons / year
Pellets  Tons  400 kg * 10 h / day * 356 days year = 1 424 000 tons / year

Market analysis

Economic situation in this sphere remains unclear for today. There are several leaders. Moreover, Poltava has favorable geographical location. Our enterprise is located close to raw materials supplier which allows saving transportation costs

Nowadays, the sphere of eco-fuel production is becoming attractive due to the fact that ecological situation in the world is getting worse while traditional types of fuel are becoming more expensive. Some countries are already opting to shift to bio-fuel

The demand for bio-fuel in Ukraine is constantly growing. Ukrainian market consumes only 15-20% of all produced pellets. Thus, it is hard to comment anything about market players the number of which is more than a thousand

Competition advantages

There are few enterprises in Poltava specialized in solid bio-fuel. Due to favourable geographical location – that is close to raw materials - the expenses cost is not high. Moreover, there is a railway transport in Poltava

Advertising means will be aimed to draw attention of targeted audience. The main criteria of advertising channels selection are maximum reach of core audience, correlation of advertisement price and the budget available as well as correspondence of advertising message to channel’s peculiarities. Apart from that, geography of consumers will be considered, frequency and form of information presentation.  Selecting the advertising means, it is important to remember that one-time contact with the potential client is not of any commercial value. Only regular advertising campaign may bring the results when the springing contacts should come within short intervals of time. High efficiency of advertisement can be reached by reasonable combination of communication channels

Bio-fuel market is quite specific. First, it is not developed enough in Ukraine, second – targeted audience are entrepreneurs while they are main bio-fuel consumers. The major advertising source is internet as well as stands, brochures, etc

Business model

Consumers

Bio-fuel is ideal for heating a house, a building or huge production premises

Value offer

Timber complex enterprises have wastewood in all the production phases. Wastewood occupy huge area and pollute the environment. Its transportation to waste deposits is quite expensive. According to up-to-date ecological requirements for production enterprises the new laws are being developed which regulate location of such enterprises as well as waste storage and recycling. Thus, the urgent task is to find effective ways of waste utilization, namely obtaining additional product from the waste

Production of pressed fuel in the form of pellets and briquettes without use of any other substances is a perspective sphere

Technology of pressed wood fuel production allows to solve number of issues

  • Utilize different woodwaste
  • Obtain eco-friendly high quality bio-fuel
  • Provide low waste and eco-friendly production status
  • Decrease expenses for fuel storage and transportation in comparison to lump woodwaste or firewood
  • Increase production culture
  • Obtain additional income from fuel sale 

Sale channels

To increase sale channels, advertising on specialized web-sites is needed as well as banners in the streets and active participation in domestic tenders

Relations with clients

The main aim is to convince major consumers to use bio-fuel instead of firewood which has always been one of the oldest and proved ways of heating. The advantages of bio-fuel are its low humidity, high density of material, minimum smoke. It is not necessary to destroy the whole tree to produce such fuel: it is enough just to use crushed crown branches

Income sources

Own investments and financial support of investor

Key resources

Main production resource is timber complex enterprises

Types of activity

Biofuel production out of woodwaste, further on – out of agricultural waste

Main partners

Sawmills within 40 km radius, with enough amount of raw material

Expenses structure

  • Raw materials purchase
  • Public services
  • Wages fund 

Figures

Amount of investments 250 000 ₴

Min investment 50 000 ₴

Income for the year 1 878 600 ₴

Payback up to 1 year

Profitability

Profitability of pellets production -33%

Profitability of briquette production -34%

Implementation of investments

Works  Implementation period, days Investments, UAH
Equipment purchasing 10 171 800
Equipment delivery 6 5 000
Equipment setting  5 5 000
Raw materials purchasing, pellets, packing   63 880
Lease    4 320
Total  21 250 000

Period of investment return

To produce fuel briquettes with the investments available the approximate production volume will make up 75 tons per month = 75 * 3 500 = 262 500 UAH profit per month
 

  Income Expenses       Nett profit Investmnets payment 
Per month  262 500 165 560 66 940 250 000 / 66 940 = 3,7 months

For briquettes production only – with negative income – investment is paid off in 4 months. For selection of maximum comfortable investment period the following is proposed:

1. Investments return during the year, with 5% payback for surplus:
 

Investments payoff, UAH Interest payoff, UAH Surplus from the sumUAH
1     250 000,00
2 20 833,33 12 500,00 229 166,67
3 20 833,33 11 458,33 208 333,34
4 20 833,33 10 416,77 187 500,01
5 20 833,33 9 375,00 166 666,68
6 20 833,33 8 333,33 145 833,35
7 20 833,33 7 291,67 125 000,02
8 20 833,33 6 250,00 104 166,69
9 20 833,33 5 208,33 83 333,36
10 20 833,33 4 166,67 62 500,03
11 20 833,33 3 125,00 41 666,70
12 20 833,33 2 083,34 20 833,37
13 20 833,33 1 041,67 0,04
Total 249 999 96 81 250,00  

2. Investments return during 2 year period, with quarter payoffs, the first payoff makes up 20%, with further 5% for surplus:

Payoff period Investments payoff, UAH Intersts payoff, UAH Surplus from the sum, UAH
1 quarter 2020      250 000,00
2 quarter 2020  31 250,00 50 000,00 218 750,00
3 quarter 2020  31 250,00 10 937,50 187 500,00
4 quarter 2020  31 250,00 9 375,00 156 250,00
1 quarter 2021  31 250,00 7 812,50 125 000,00
2 quarter 2021  31 250,00 6 250,00 93 750,00
3 quarter 2021  31 250,00 4 687,50 62 500,00
4 quarter 2021  31 250,00 3 125,00 31 250,00
1 quarter 2022  31 250,00 1 562,50 0,00
Total 250 000,00 93 750,00  

For pellets production with investments available the approximate production volume makes up 120 tons / month = 120 * 3 000 = 360 000 UAH of monthly income

  Incomes Expenses Nett profit  Investments payoff
Per month 360 000 270 390 89 610 250 000 / 89 610 = 2,8 months

For pellets production only – with negative income – investment is paid off in 3 months. For selection of maximum comfortable investment period the same payoff scheme as the briquettes one, is proposed

Team 

Our team will include minimum staff: director, chief mechanic, 2-3 workers 

In case of two shifts – the personnel number will be doubled. This system has an advantage: the first shift might produce briquettes while the second one – pellets.  

Investment offer 

We propose participation in our active project of bio-fuel production. We  have fuel briquettes production Pini & kay, the investments are required to extend and increase production volumes