10
10
Production
Poltava, Ukraine
27.01.2020
1566
Finished project
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