80 klpd ethanol plant from cane molasses

DETAILED PROJECT REPORT (DPR)

ON

80 KLPD ETHANOL PLANT

FROM CANE MOLASSES

AT

Village Selu, PO - Jategaon, Tehsil Gevarai,

District Beed, Maharashtra

Prepared for

M/s. Pingale Sugar & Agro Products Private Ltd. Registered Office:

C/o. Shambhu Mahadev Sugar & Allied Industries Ltd.,

Havargaon, Tal-Kallam, Dist-Osmanabad

Prepared by

MITCON Consultancy & Engineering Services Ltd. Kubera Chambers, 1st Floor, Dr. Rajendra Prasad Path

Shivajinagar, Pune – 411 005

September, 2015

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed i


ON

80 KLPD ETHANOL PLANT FROM CANE MOLASSES

TABLE OF CONTENTS

Chapter

No.

Title Page No.

DISCLAIMER

EXECUTIVE SUMMARY I – VII

1. INTRODUCTION

1.1 Project Background 1

1.2 Promoter’s Background & Experience 2

1.3 Cane Availability Projections 2

1.4 Ethanol Industry 4

1.5 Objectives & Scope of Work 7

1.6 Methodology 7

1.7 Acknowledgements 7

2. PRODUCTS & PROCESS

2.1 Products 8

2.2 Process 8

2.3 Requirement of Molasses 10

2.3.1 Use of B-heavy molasses 10

2.3.2 Molasses balance 12

3. SITE DETAILS AND INFRASTRUCTURE

3.1 Project Site, Key Features 13

3.2 Raw Materials 14

3.3 Utilities & Consumables 15

3.4 Manpower 15

4. DESIGN BASIS

4.1 Introduction 16

4.2 Design Basis, Fuel ethanol from molasses 16

5. PLANT LAYOUT

5.1 Layout Considerations 20

5.2 Ash, Effluent and Sewage Disposal 21

5.3 Plant Layout 21

5.4 Approach and Internal Roads 21

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed ii


ON


TABLE OF CONTENTS (CONTD…)

Chapter

No.

Title Page No.

6 PROJECT PREPAREDNESS AND IPLEMENTATION

SCHEDULE

6.1 NoC’s / Approvals / Permissions 22

6.2 Management & Administration 22

6.3 Technical & Financial Tie Ups 23

6.4 Project Management 23

6.5 Implementation Schedule 23

7. ESTIMATED CAPITAL EXPENDITURE

7.1 Land & Site Development 25

7.2 Civil Works 25

7.3 Equipment 26

7.4 Miscellaneous Fixed Assets 26

7.5 Preliminary & Pre-operative Expenses 27

7.6 Contingencies 27

7.7 Margin Money for Working Capital 27

8. FINANCIAL VIABILITY

8.1 Basis & Assumptions 28

8.2 Cost Summary 31

8.3 Means of Finance 31

8.4 Financial Viability Indicators 32

9. SOCIO-ECONOMIC AND ENVIRONMENTAL

BENEFITS

33

10. CONCLUSIONS & RECOMMENDATIONS

10.1 Project SWOT Analysis 34

10.2 Risk & Mitigates 35

10.3 Key Management Features 37

10.4 Conclusions & Recommendations 37

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed iii


ON


LIST OF SCHEDULES

Schedule

No.

Title

A Cost of Project & Means of Finance

B Estimated Cost of Production & Profitability Statement

C Debt Service Coverage Ratio

D Cash Flow Statement

E Balance Sheets Forecast

F Analytical & Comparative Ratios

G Breakeven Analysis

H Sensitivity Analysis

I Payback Period

J Internal Rate of Return

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed iv


ON


LIST OF ANNEXURES

Annexure

No.

Title

1 Particulars of Land and Site Development Costs

2 Particulars of Buildings and Civil Works

3 Details of Indigenous Machinery

4. Miscellaneous Fixed Assets

5 Preliminary and Preoperative Expenses

6 Estimates of Contingency Escalation Provision

7 Working Capital Requirements

8 Estimated Annual Production & Sales Value

9 Particulars of Indigenous Raw Materials

10 Particulars of Consumables

11 Particulars of Utilities

12 Requirement of Direct Labour & Calculation of Wages

13 Particulars of Repair and Maintenance

14 Particulars of Other Manufacturing Expenses

15 Requirement of Administrative Overheads

16 Repayment of Term loans & Calculation of Interest

17 Provisions for Taxation & Dividend (Income tax working)

18 Calculation of Depreciation

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed v


ON


LIST OF APPENDICES

Appendix

No.

Title

I Company Incorporation Certificate & Memorandum of Association &

Articles of Association

II Promoter Details of PSAPPL

III IEM License for ethanol Plant

IV Annual Reports of PSAPPL

V Land Documents

VI Detailed Process Description and Flow Charts

VII Processes available for Effluent Treatment – Merits and Demerits

VIII Undertaking of PSAPPL for diversion of required quantity of B-heavy

molasses

IX Technical and commercial offers

X Implementation Schedule

XI Preliminary Plant layout

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed vi

DISCLAIMER

1. This Detailed Project Report (hereinafter referred to as Report), the business plan/financial

projections, if any and its contents are confidential. Accordingly, Report and its contents are on basis

that will be held in complete confidential.

2. By accepting a copy of this report, the recipient agrees to keep its contents and any other information,

which is disclosed to such recipient, confidential and shall not divulge, distribute disseminate any

information contained herein, in part of in full, without the prior approval of MITCON Consultancy &

Engineering Services Ltd (MITCON).

3. This report is prepared exclusively for the benefit and for the internal use of the recipient and /or its

affiliates and does not carry any right of publication or disclosure to any other party.

4. The client has engaged MITCON for preparation of Detailed Project Report on 80 KLPD ethanol

plant, we have relied upon and assumed, without independent verification, the accuracy and

completeness of all information given by the client which has frequently been referenced in this

report.

5. The Report developed by MITCON has used inputs and conclusions drawn out of discussion with the

client and reference to project specific studies, and other information/documents obtained by

MITCON from various sources/available publicly, which MITCON believes to be reliable. MITCON

has not carries out any independent verification for the truthfulness of the same and its accuracy and

reliability cannot be guaranteed.

6. MITCON and their respective directors, officers, agents, employees and shareholders (collectively

referred to as “Relevant Persons”) expressly disclaim any responsibility or liability for any loss,

damage or inconvenience caused to anybody whether directly or indirectly due to this Report and the

information contained herein. MITCON may be exempted from all errors and omissions in this

Report.

7. This presentation may include future expectation, projections, or forward looking statements. These

forward looking statements involve known and unknown risks, uncertainties and other factors that

may cause actual events to be materially different from future events expressed or implied by such

forward looking statements.

8. This report is not directed or intended for distribution to, or use by, any person or entity who is a

citizen or resident of or located in any locality, state, country or other jurisdiction, where such

distribution, publication, availability or use would be contrary to law, regulation or which would

subject MITCON and its affiliates to any registration or licensing requirement within such

jurisdiction. Persons in whose possession this document may come are required to inform them of and

to observe such restriction.

Prepared by Checked By

Amit Chaudhari S.C. Natu

Chief Consultant Sr. Vice President Power Division Power Division

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed I

Executive Summary

Project at a Glance

Pingale Sugar & Agro Products Private Ltd. (PSAPPL) is a Company registered in the

State of Maharashtra under the Companies Act, 1956.

PSAPPL has been taken over by Mr. Dilip Shankarrao Apet & Mrs. Shalini Dilip Apet by

purchasing shares & ETC on August 8, 2014. The promoters sensed the great availability

of sugarcane in the region of Gevarai tehsil and increasing demand of power & ethanol

and keeping in view, the needs of the local farmers, those cultivate sugarcane in the

command area.

PSAPPL proposes to set up an integrated new sugar mill of 5000 TCD, eco-friendly 35

MW capacity cogen power project for decentralized generation of exportable surplus

power, mainly from renewable sources of fuel, located near village Selu, 25 km from

Gevarai, which is Taluka headquarter.

PSAPPL, also proposes to set up a 80 KLPD capacity ethanol plant to produce ethanol,

adjacent to the propose sugar plant located at Village Selu, PO Jategaon,Taluka Gevarai,

District Beed, Maharashtra

The proposed ethanol plant project will produce fuel ethanol mainly on own molasses,

molasses available from the other sugar factories. The steam and power requirement for

the proposed plant will be made available from the new slop fired incineration boiler &

back pressure turbine.

Project Rationale

The promoters have extensively and carefully analyzed the present and future scenario of

alcohol and sugar industry. They have also studied carefully the present irrigation

facilities and surplus cane availability, as well as future potential of irrigation and

additional cane availability. The command cane area has excellent irrigation facilities due

to the perennial water source. With this background, the promoters have finalized the said

project. Promoters having experience in sugar industry and sugarcane cultivation, have

been able to foresee the cane potential in the command area.

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed II

PSAPPL will generate about 36000 MT of molasses from expected / sustained cane

crushing of 8.00 lakh MT / year, with 4.50% molasses recovery.

The requirement of in –house molasses to run the ethanol plant for at least 160 days as

per SDF norm is 54,468 MT. PSAPPL will utilize 36,000 MT of own molasses and

22.14% or 12,400 MT of B-heavy molasses required to be diverted, for meeting the

shortfall quantity of 18,468 MT of final molasses.

The total requirement of molasses for the 270 days operation of the proposed ethanol

plant at optimum level of operation will be around 91,915 MT. PSAPPL will utilize

54,468 MT of own/B-heavy molasses & the balance 37,447 MT of molasses will be

procured from nearby sugar mills.

The current policies in India are conducive and backed by favorable regulatory

framework for manufacture of fuel ethanol, as well as regarding support for private

investment in such project.

The promoters also have acknowledged in depth, the socio-economic and environmental

value addition of the captioned project to the local people, region, State and the Country,

as well as its win-win situation to all the stakeholders involved.

The Promoters & Project Preparedness

PSAPPL is promoted by:-

Mr. Dilip Shankarrao Apet, Chairman & MD

Mrs. Shalini Diliprao Apet, Director

The CMD of PSAPPL is highly educated and has 35 years of experience in the sugar

industry. His huge practical experience in sugar industry will be immensely helpful in

executing and operating the proposed ethanol project. The management is successfully

operating a sugar unit, M/s. Shambhu Mahadev Sugar & Allied Industries Ltd. at Village

Havargaon, Tal - Kallam, Dist - Osmanabad.

PSAPPL already has appointed a technical / managerial team of highly qualified

engineers, contract & arbitration experts, agricultural officers and managerial personnel

for implementation and operation of the captioned integrated project.

PSAPPL has already obtained IEM from the Ministry of Commerce & Industry, Govt. of

India for setting up 30 KLPD ethanol plant and has already applied for amendment of

IEM for 80 KLPD ethanol plant.

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed III

Project in Brief

The proposed ethanol plant of 80 KLPD capacity will employ fermentation, multi

pressure distillation system, evaporation & slop fired incineration boiler. Sugar mill will

supply molasses, while the incineration boiler & turbine will supply steam & power to

the proposed ethanol plant.

Financial Highlights

Project Cost:

(Rs. Lakh)

Particulars Ethanol

Plant

Land and Site Development 150

Buildings 2346

Indigenous Plant and Machinery 9000

Miscellaneous Fixed Assets 80

Prelim. & Preoperative Expenses 590

Contingencies 244

Working capital margin 290

Total 12700

Means of Finance:

(Rs. lakh)

Particulars Ethanol

Plant

PSAPPL Equity / Internal accruals (27%) 3429

SDF Quasi Equity (35%) 4445

Bank / F. I. Loan (38%) 4826

Total 12700

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed IV

First year Fifth year

Estimated W/C Requirements Rs. Lakh 1157 1833

Estimated Annual Turnover Rs. Lakh 4925 8772

Profit Before Tax Rs. Lakh 827 2837

Accumulated Cash Surplus Rs. Lakh 1521 5245

Employment potential Nos. 81 81

Debt Service Coverage Ratio (DSCR) Average 2.38

Maximum 3.82

Minimum 1.35

FACR 1.34

Payback period Years 5 to 6

Rate of Return on total project cost % 19.32 %

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed V

Strengths

The main strengths of this integrated project include:

Background and experience of the promoters

Proposed Sugar Factory & Infrastructure

Commitment & vision of promoters, with forward integration planned right

from beginning

Excellent irrigation facilities with ensured cane cultivation & availability on a

long term basis

Project location in potential sugarcane area

Experienced, willing and committed farmers

Ensured cane availability

Demand supply gap in fuel ethanol in India

Conducive policy / regulatory frame work

High order of socio-economic and environmental value to the local populace

Latest technology equipment with highest efficiency and

Sound techno commercial viability

Risks Factors

Risk Factors Remarks

Industry Risk

The Industry is cyclical and highly regulated. The price of

free sale sugar is directly/indirectly controlled by the govt.

Therefore, the company has been making its operations

integrated, comprising of sugar, cogeneration and ethanol

plant to protect its margins and profitability and avert

cyclicality.

Implementation

Risk

PSAPPL has experienced people in its management team.

Keeping in view overall good track record, it is felt that

PSAPPL has the competence for timely implementation of

project as per the schedule. The ethanol project shall be

implemented on turnkey basis. The ethanol project being

implemented on turnkey basis, will reasonably assure

completion of the project within the envisaged cost.

However, any increase in cost of plant & machinery shall

be met by the internal accruals.

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed VI

Operating Risk Though the company is new to the production and

marketing of ethanol, it is in the business of manufacturing

and marketing of sugar with proposed capacity of 5000

TCD & cogen 35 MW. Moreover, the ethanol project is

being implemented on a turnkey basis and will be backed

by suitable clauses in terms of warranty and guarantee. As

such it is felt that the operating risks would be mitigated to

a considerable extent.

Though the availability of adequate quantity of molasses is

also dependent on the supplies from neighboring units to

meet the shortfall, the company has identified nearby sugar

mills from where molasses can be sourced.

Credit Risk Average DSCR of the ethanol project is estimated to be

2.38, which is satisfactory. PSAPPL has been regular in

meeting its commitments to FIs/Banks and SDF.

Financial Risk The company is comfortably placed to infuse its equity

contribution in the project and is awaiting sanction of term

loan from banks. As such, no problem is envisaged

Raw Material Risk PSAPPL has announced a reasonable remunerative price in

line with the market trend and neighboring sugar mills.

Also, it is providing services to educate farmers about the

best practices in sugarcane cultivation for improvements in

the yield. Company is proposes operating a 5000 TCD

Sugar plant & 35 MW cogen power plant in the same

premises as proposed for the ethanol plant. The molasses

required for the ethanol plant shall be readily available

from the sugar plant. The Neighboring sugar mills has

already shown willingness to supply the molasses for

meeting the shortfall.

Market Risk/ off

take risk/ payment

risk

The Govt. of India has allowed mixing 5% ethanol in

petrol and has increased of ethanol percentage to 10%,

recently. Since there is need for huge investment to set up

additional required capacity of 96 million litres of ethanol

by 2017, PSAPPL is not expected to face any problem in

selling the ethanol from proposed project.

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed VII

Implementation Schedule

The entire project will be commissioned by October 2016 after the financial

closure expected by October 2015. Meticulous planning and strong project

management proposed will ensure this schedule.

Conclusions

Over all, the project is well conceived and conceptualized, with sound

commercial viability. The expected financial returns are quite satisfactory. The

project is being implemented by promoters having requisite background and

experience and with employment of experienced professionals, experts and

consultants. All perceived risks have adequate safe guards. The project is

recommended for lending by financial institutions, as well as SDF.

Detailed Project Report on 80 KLPD Ethanol Plant of PSAPPL at Dist. Beed 1

CHAPTER – 1

INTRODUCTION

1.1 Project Background

1.1.1 This Detailed Project Report (DPR) has been prepared for M/s Pingale

Sugar & Agro Products Private Ltd. (PSAPPL) by MITCON Consultancy

& Engineering Services Limited (MITCON), Pune, for setting up 80

KLPD ethanol plant from molasses as raw material at Village Village

Selu, PO Jategaon,Taluka Gevarai, District Beed, Maharashtra.

1.1.2 M/s. Pingale Sugar & Agro Products Private Ltd., is a Private Limited

Company registered in the State of Maharashtra under the Companies Act,

1956. PSAPPL has been taken over by Mr. Dilip Shankarrao Apet & Mrs.

Shalini Dilip Apet by purchasing shares & ETC on August 8, 2014.

Appendix I gives certificate of incorporation & commencement of

business and Memorandum of Association & Articles of Association of

PSAPPL.

PSAPPL proposes to set up an integrated new sugar mill of 5000 TCD,

eco-friendly 35 MW capacity cogen power project for decentralized

generation of exportable surplus power, mainly from renewable sources of

fuel, located near Village Selu, PO Jategaon,Taluka Gevarai, District

Beed, Maharashtra.

1.1.3 PSAPPL has already obtained IEM from the Ministry of Commerce &

Industry, Govt. of India for setting up 30 KLPD ethanol plant and has

already applied for amendment of IEM for 80 KLPD ethanol plant.

Appendix III gives IEM license for ethanol plant

1.1.5 Water required for the proposed fuel ethanol plant will be made available

through existing water supply scheme / existing wells.


1.2 Promoter’s Background & Experience

PSAPPL is promoted by:-

Mr. Dilip Shankarrao Apet, Chairman & MD

Mrs. Shalini Diliprao Apet, Director

The CMD of PSAPPL is highly educated and has 35 years of experience in the

sugar industry. His huge practical experience in sugar industry will be immensely

helpful in executing and operating the proposed cogen project. The management

is successfully operating a sugar unit, M/s. Shambhu Mahadev Sugar & Allied

Industries Ltd. at Village Havargaon, Tal - Kallam, Dist - Osmanabad.

Appendix-II gives the Promoter Details of PSAPPL.

After scrutinizing the bio-data and experience of key Directors, it is identified that

the management of PSAPPL is capable of undertaking the captioned integrated

project.

Under the guidance of Shri Dilip Shankarrao Apet, CMD with his management

team have already carried out several activities in the command area, including

land acquisition, site development etc. PSAPPL is also planning for cane

development in command area.

A dedicated Project Team of PSAPPL has been functioning since March, 2015,

along with appointed experts and consultants, for speedy and successful

commissioning of this project.

PSAPPL already has appointed a technical / managerial team of highly qualified

engineers, contractors & arbitration experts, agricultural officers and managerial

personnel for implementation and operation of the ethanol project.

1.3 Sugarcane Potential in Command Area of PSAPPL:

In the light of the new sugar policy, with almost total decontrol, the cane

command area of the proposed sugar factory is expected to fall in Command area

of Gevarai and nearby tehsils like Beed, Majalgaon, Wadwani in the Beed district

and Ghansawani & Ambad from Jalna District.

There are 9 sugar factories in this district. Out of which 4 were operating for the

year of 2013-14 with installed crushing capacity of 16200 MT/day. Annual

crushing for season 2013-14 was 15.72 lakh MT at the average recovery of

9.76%.


The command area comprises of six tehsils. Gevarai, Beed, Majalgaon,

Wadawani from Beed District along with Ghanasawangi & Ambad from Jalna

district. The total area under sugarcane cultivation of these six tehsils is 33594 ha,

with total sugarcane production of 2687520 MT.

Table No. Details of the Generation of Sugar Cane

Sr.

No.

Name of the Tehsil in

the command area

Area under sugar

cane cultivation, Ha

Cane Production

MT

1 Gevarai 1922 153760

2 Beed 2238 179040

3 Majalgaon 7641 611280

4 Wadwani 3780 302400

5 Ghansawangi 4828 386240

6 Ambad 13185 1054800

Total 33594 2687520

The sugarcane consumption of 8 sugar factories in the command area is around

14.78 lakh MT considering their area shared in the command area of PSAPPL.

Considering the cane requirement for 5000 TCD average capacity, for maximum

160 days of crushing, require about 8 lakh MT of sugarcane. Hence, the surplus

cane of 12.10 lakh MT available for the proposed sugar mills will be sufficient.

Molasses % on cane in the command area:

There are 8 sugar factories in the command area of PSAPPL. Out of which 3

factories are closed & 5 factories are operating. The average generation of

molasses of nearby 5 sugar factories is given below:

Sr.

No.

Name of the Sugar Factory Avg. generation of

molasses, % cane

1 Majalgaon SSKL, Shivajinagar, Taluka: Gevrai, Dist.

Beed

4.25%

2 NSL Sugar Ltd., (Jai Mahesh), Unit 3, Pawarwadi,

Taluka: Majalgaon, Dist: Beed

4.90%

3 Samrudhhi Sugars Ltd., Renukanagar,

Devidahegaon, Taluka: Ghansawangi, Dist: Jalna

4.83%

4 Samarth SSKL., Ankushnagar, Taluka: Ambad, Dist:

Jalna

4.25%

5 Chhatrapati SSKL., Sawargaon, Taluka: Majalgaon,

Dist: Beed

4.44%

Average % of Molasses on Cane 4.53%

Command area has average molasses generation of about 4.53%. The molasses

generation on estimated crushing of PSAPPL has been considered at 4.5%

accordingly.


1.4 Ethanol Industry

1.4.1 Industry Overview

Ethanol is used as an automotive fuel by itself and can be mixed with

gasoline to form what has been called "gasohol" FUEL ETHANOL- the

most common blends contain 10% ethanol and 85% ethanol mixed with

gasoline. Over 1 billion gallons of ethanol are blended with gasoline every

year in the United States. Because the ethanol molecule contains oxygen,

it allows the engine to more completely combust the fuel, resulting in

fewer emissions. Since ethanol is produced from plants that harness the

power of the sun, ethanol is also considered a renewable fuel. Therefore,

ethanol has many advantages as an automotive fuel.

Molasses is one of byproducts of sugar industry which is used to produce

rectified spirit/alcohol for making liquor and fuel. Traditionally, molasses

has been used in India to produce rectified spirit and alcohol of higher

than 95% purity for producing liquor for human consumption and for

producing various chemicals. However, with technological developments

in the recent past, molasses has been effectively used to produce bio-

ethanol for blending with petrol as a fuel.

1.4.2 Global Scenario

Brazil is the second largest producer of ethanol globally after U.S. While

U.S. produces ethanol from corn, Brazil manufactures ethanol from

sugarcane. Brazil has mandatory blending ratio of ethanol in gasoline

ranging from 18% to 25%. The blend rate was as high as 25% before

September 2011 and was reduced to 20% due to drop in cane output hence

affecting the ethanol production. Currently, flex-fuel cars, which can use

either ethanol or blended gasoline, in Brazil account for about 53% of the

total car fleet and around 90% of the new vehicles’ sales. The proportion

of the flex-fuel cars are expected to cross 80% by 2020. Currently, the

Brazilian light vehicle fleet has been increasing by 6.7% y-o-y since 2003

with currently 90% of the new vehicles being flex-fuel cars. Thus, there

exists an increasing demand in Brazil for ethanol which is encouraging for

the sugarcane industry.

1.4.3 Indian Scenario

The Indian sugar industry today is at a very critical juncture and needs

investments for expansion, modernization, as well as implementation of

ethanol plants & cogeneration power plants, for their long term

integration. The recent Government policy has pegged 5% ethanol

blending with fuel (with possibility to extend to 10% shortly), at an

attractive price of Rs. 48.50/Liter. for ethanol. This provides an excellent

opportunity to the sugar factories to implement ethanol projects in the

immediate future.


There are 429 distilleries in India, 216 connected to sugar factories & 213

standalone, with about 100 distilleries having installed ethanol

manufacturing facilities, which can produce over 5 billion litres of

rectified spirit (alcohol) per year in addition to 2 billion litres of fuel

ethanol. Despite of conducive policy environment today, the ethanol

industry still faces several issues regarding timely evacuation of ethanol

by the petroleum companies, payments, etc., as well as strict pollution

control norms imposed by the Central & State Governments and financing

by banks / financial institutions / SDF.

The Central Pollution Control Board (CPCB) has prescribed and

implemented zero discharge norms from effluent for the distillery industry

with effect from January 01, 2006. CPCB had provided about three year

time to the distillery industry to achieve zero discharge through any

process of distillery effluent treatment suitable to each distillery. The

current stringent pollution control policies & norms for effluent through

distilleries have made many distilleries to shut down their operations,

thereby making heavy losses with the investments becoming dead.

Deployment of Incineration Type (Slop Fired) boiler has proved to be an

effective solution in resolving this issue.

Today, Indian distillery industry broadly consists of two parts:

Production of alcohol from molasses for industrial alcohol.

Production of alcohol from molasses for liquor purposes.

Ethanol demand for fuel blending is a recent phenomenon. For this

purpose, alcohol from molasses is used.

The potable distillery producing Indian Made Foreign Liquor (IMFL) has

a steady but limited demand. The alcohol produced is now being utilized

in the ratio of approximately 52 per cent for potable purpose and the

balance 48 percent for industrial purpose.

1.4.4 Demand of Ethanol:

Since 1977, several technical committees and study groups have examined

the issue of blend of Ethanol with petrol. Announcements were made on

this issue in Parliament in December 2001 and March 2002. Auto fuel

policy was declared in August 2002.

The Ministry of Petroleum, recently issued a gazette notification, dated

11th of January, 2013 making 5% ethanol blending with petrol mandatory

across the country. The 5% ethanol blending programme was so far made

applicable in only 13 states of the country with blending level of about 2%

against a mandatory target of 5%, but with this gazette notification it

becomes mandatory for OMCs to achieve 5% ethanol blending

programme for the entire country.


The Report of the Committee on Development of Biofuels was published

by the Planning Commission of India. It gave projections of demand and

supply of ethanol for India for the end of each five-year plan. This table

shows the break-up of production and consumption of ethanol in terms of

molasses and cane.

Projections of demand and supply of ethanol (Million Liters)

Year Ethanol Production Ethanol Utilization Ethanol

Blending

Petrol

Demand Molasses Cane Total Industry Potable Balance

2001-02 1775 0 1775 600 648 527

5% 448

8960 10% 896

20% 1792

2006-07 2300 1485 3785 711 765 2309

5% 638

12672 10% 1276

20% 2552

2011-12 2300 1485 3785 844 887 2054

5% 814

16286 10% 1628

20% 3257

2016-17 2300 1485 3785 1003 1028 1754

5% 1039

20785 10% 2078

20% 4157

(Source:-Planning Commission)

From the above table it can be concluded that actual production of ethanol

in India has not kept pace with the demand. Also with robust growth for

chemical and potable industries it will mean greater shortage of ethanol in

the coming years ahead.

1.4.5 Government Policy

In 2006, GOI mandated 5% ethanol blending with petrol (EBP)

programme to directly benefit the sugarcane farmers by assuring the sugar

industry a stable and reasonable return for the molasses and then passing a

significant part of the same to the farmers. But since then the programme

has been struggling to take off despite the fact that the Cabinet Committee

on Economic Affairs (CCEA) in November 2009 directed that a financial

penalty be imposed on OMCs for their failure to reach targets.

In August 2010, the CCEA set up the Saumitra Chaudhuri committee for

determining the ethanol pricing after a Committee of Secretaries (CoS)

failed to reach at a consensus. So far, the OMCs have been contracting

ethanol at the provisional procurement price of Rs 27 per litre, fixed by the

CCEA that time. The Ministry of Petroleum and Oil Marketing

Companies (OMCs) put a specific condition in September 2010, that

ethanol should be produced from domestic molasses only i.e., molasses or

alcohol cannot be imported by the ethanol producers and has to be

produced only from molasses and not sugarcane juice or food grains.


In November 2012, the CCEA has made it mandatory for Oil marketing

companies (OMCs) - Bharat Petroleum, Hindustan Petroleum and Indian

Oil Corporation - to blend 5% ethanol with petrol. This is likely to reduce

the fuel import bill and lower India's dependence on fossil fuel as the

ethanol prices are lower than petrol. OMCs have been blending ethanol

with petrol for the past two years but the policy was partially implemented

in absence of any clear directive. The Committee, headed by the Prime

Minister, has also approved market-based pricing of the biofuel, opening

the market for ethanol producers - mostly sugar companies. This shall

result in an increased demand for ethanol by OMCs.

The national bio-fuel policy, approved by the Government of India, has

plans for a 20% ethanol blending programme by 2017 from the current

mandated 5% blending & recently increased to 10%, to reduce India’s

dependence on fossil fuel imports.

1.5 Objectives & Scope of Work

The objective of the assignment was to prepare Detailed Project Report (DPR) on

the captioned ethanol plant being set up at Village Selu, PO Jategaon,Taluka

Gevarai, District Beed, Maharashtra, in line with the requirements of the financial

institutions.

PSAPPL appointed MITCON Consultancy & Engineering Services Ltd.

(MITCON), Pune for preparation of this Detailed Project Report.

The scope of work mainly included review of the promoter background, project

concept, design and key parameters, technical specifications, plant layout,

environmental & social considerations, project preparedness, estimated capital

expenditure, financial viability, conclusions and recommendations.

1.6 Methodology

For preparing this Detailed Project Report, MITCON deputed a task team of in-

house coordinators and expert associates. MITCON submitted list of data /

information / documents required for preparation of DPR. MITCON’s task team

undertook visit to factory site. The budgetary estimates for this DPR, for major

plant and equipment, were procured from competent suppliers.

1.7 Acknowledgements

We wish to record deep sense of gratitude to PSAPPL management, for entrusting

this challenging assignment. In particular, we are thankful to Dilip Apet, Founder

Chairman, Mr. J.D. Mamadge, Chief Executive Officer, Mr. Aniket Salunke and

all other concerned staff of PSAPPL, for providing required guidance and data

support.


CHAPTER – 2

PRODUCTS & PROCESS

2.1 Products

The proposed ethanol plant will undertake manufacture of following product:

Fuel Ethanol of 80 KLPD capacity

Appendix IX - gives the details of the technical and commercial offer.

2.2 Process

The brief manufacturing processes for project component are given below:

The process envisages use of own & B-heavy as well as procured molasses from

nearby sugar factories for manufacture of ethanol during sugar mill season and

during off-season days.

Cane crushing system

Fermentation system

Distillation & Fuel Ethanol

Effluent treatment system

Following is a brief description of the process:

2.2.1 Cane crushing system

The crushing capacity of sugar mill is 5000 TCD. All the molasses

generated in the boiling house will be stored / utilized for the ethanol

plant. The molasses recovered during manufacture of sugar will be 4.5%

of cane. The net generation of the molasses at optimum level of operation

will be 36000 MT. To balance the requirement of molasses, the other

nearby sugar mills will be utilized by PSAPPL.

2.2.2 Fermentation system

The molasses stored in the storage tanks will be supplied to the fermentor,

where it will be diluted partly by water and partly by the effluent produced

by the ethanol plant and then fermented in a continuous fermentation

reaction.


2.2.3 Distillation

The fermented wash will be then fed to the distillation column. Here the

wash will be distilled to generate the rectified spirit, which will be sent to

the molecular sieve section where rectified spirit will be converted to

ethanol.

The ethanol plant will produce 80000 liters of total spirit per day & 76,000

litres per day ethanol that will be sold to the oil companies for blending

with petroleum products.

Appendix – VI gives detailed process description and flow charts.

2.2.4 Effluent treatment system

The spent wash of a distillery process is a serious problem by way of

threat to the environment. Its volume from continuous fermentation plant

is as large as 7.56 TPH for a distillery of 80 KL/day capacity based on

multi pressure distillation with integrated evaporator system.

The spent wash evaporation technology is a multiple effect evaporator

system in which heat recovered from one effect is used to concentrate

spent wash in second effect evaporator with continuous recirculation of

concentrated spent wash with in the system until desired concentration is

obtained. This entire concentration process is carried out under vacuum

leading to less consumption of steam and maximum concentration of spent

wash with in less period of time.

The concentrated spent wash generated after entire process of evaporation

is then sprayed in a furnace with support fuel bagasse and is then burnt in

a boiler.

Choice of Spent wash Treatment System

In order to fulfill the Pollution Norms and to achieve zero Discharge and

at the same time to operate ethanol plant for the period more than 270 days

per annum, PSAPPL proposes to go for spent wash Concentration and

Incineration Technology simultaneously generating Steam and Power for

the process and Ethanol plant.

With effective utilization of such a technology big hurdle of spent wash

disposal will be solved and distilleries will become zero effluent

discharging unit.

Refer Appendix – VII for processes available and their merits and

demerits for effluent treatment.


2.2.5 Condensate Polishing Unit

The condensate polishing unit is also envisaged to take care of spentlees,

cooling tower blow down, washing and process condensate from

evaporation plant. After treatment all the stream at CPU, water can be

recycled to process and as cooling tower make up.

2.3 Requirement of Molasses:

The requirement of in –house molasses to run the ethanol plant for at least 160

days as per SDF norm is 54,468 MT. PSAPPL will utilize 36,000 MT of own

molasses and 22.14% or 12,400 MT of B-heavy molasses required to be diverted,

for meeting the shortfall quantity of 18,468 MT of final molasses.

2.3.1 Use of B-heavy molasses:

The entire process & advantages of Ethanol production by B-heavy

molasses route for meeting the shortfall in the molasses quantity, is

explained as below.

There is practically no change in the manufacturing process for

Ethanol production, only the source of molasses is both from low

purity molasses available from C curing of the sugar process and

from diversion of required quantity of B-heavy molasses after B

curing.

No need of any additional investment and machinery for this

diversion and meeting the molasses shortfall, except minor piping

and accessories

Flexibility for starting & stopping within no time gap, as per the

market position for Sugar or Ethanol

Improvement in sugar quality thereby increasing revenue

Increase in the boiling house capacity to the extent of diversion of

B-heavy molasses, due to increase in consequent pan capacity and

reduction in massecuite % cane

Reduction in steam consumption, resulting in additional bagasse

saving

Possibility of storage of B-heavy molasses, in the same final

molasses storage tanks


The calculation of requirement of B-heavy molasses diversion, to

meet the molasses shortfall is given below:

Requirement of Molasses & B Heavy molasses for 160 days

1 Final Molasses required for proposed 80 KLPD Ethanol plant for

160 days ( 80000/235 x 160), MT

54468

2 Present availability of molasses @ 4.5 % on cane for 5000 TCD

sugar plant for 160 days ( 5000 x 160 x 4.5 %), MT

36000

3 Shortage of own molasses for proposed 80 KLPD Ethanol plant (

1-2), MT

18468

4 B-heavy molasses production from 5000 TCD sugar plant @ 7%

on cane for 160 days. i.e. (5000 x 160 x 7 %), MT

56000

5 Recovery of ethanol from Final molasses, Lits/MT as per SDF

norms

235

6 Recovery of ethanol from B-heavy molasses, Lits/MT

Ethanol Recovery =

(Fermentable Sugar x Ethanol Conversion Factor x Fermentation

efficiency x Distillation efficiency x Dehydration efficiency ) /

Alcohol Strength

Fermentable Sugar = 61 % ,

(based on latest RT 8 ( c ) records giving B heavy molasses purity

and reasonable assumptions thereof, as special analysis for B

heavy molasses is unavailable with the sugar factory, as no

diversion is made till date )

Ethanol Conversion Factor

= Sucrose to Alcohol Factor x 1000 / Alcohol Specific Gravity

= (0.5111 x 1000 /0.794) = 644

Fermentation efficiency = 90%

Distillation efficiency = 98.5%

Dehydration efficiency = 99.6%

Alcohol Strength = 99.8%

350

7 The quantity of B-heavy molasses (of 65 to 70 TRS) required to

be diverted for meeting balance molasses requirement ( 18468 x

235 / 350), MT

12400

8 The percentage of diversion of B-heavy molasses, % (12400 MT/

56000 MT)

22.14%

Refer Appendix – VIII for undertaking of PSAPPL for diversion

of required quantity of B-heavy molasses, to meet the short fall in

molasses quantity.


2.3.2 Molasses balance:

The total requirement of molasses for the 270 days operation of the

proposed ethanol plant at optimum level of operation will be around

91,915 MT. PSAPPL will utilize 54,468 MT of own/B-heavy molasses &

the balance 37,447 MT of molasses will be procured from nearby sugar

mills.

The installed capacity and capacity utilization levels for ethanol plant and

respective annual requirement of molasses have been shown in the

following table:

Sr.

No.

Particulars Projected

2016-17 2017-18 2018-19 2019-20 100%

capacity

Utilization

1 Estimated annual crushing in LMT 8.00 8.00 8.00 8.00 8.00

2 Molasses recovery, % cane 4.50 4.50 4.50 4.50 4.50

3 Production of own molasses, MT 36000 36000 36000 36000 36000

4

Installed Capacity of Ethanol Plant,

KLPD 80 80 80 80 80

5

Ethanol yield from cane molasses as

per SDF Norm, lit/MT 235 235 235 235 235

6

Requirement of Molasses for 80

KLPD Ethanol Plant for 160 days, MT 54468 54468 54468 54468 54468

7 Capacity Utilization, % 80% 85% 90% 95% 100%

8



9 Deficit of molasses for 160 days, MT -7574 -10298 -13021 -15745 -18468

10

Recovery of ethanol from B-heavy

molasses, Lits/MT 350 350 350 350 350

11

Requirement of B-heavy molasses,

MT 5086 6914 8743 10571 12400

12



13

Molasses procured from nearby sugar

mills for 270 days, MT 29957 31830 33702 35574 37447


CHAPTER – 3

SITE DETAILS AND INFRASTRUCTURE

3.1 Project Site, Key Features

3.1.1 Site Location

Village Selu

Taluka Gevarai

District Beed

Nearest Taluka Gevarai, 25 Km

Nearest Water Source Godavari River, 10 Km

Nearest Electrical Substation 132 kV, located at Gevarai at 20 Km

The proposed site is ideal for the proposed ethanol project, due to

following reasons:

- Required land is available at the project site and is owned by PSAPPL

- The site is easily accessible by road

- The site is located at Village Village Selu, PO Jategaon, Taluka

Gevarai, Dist. Beed, Maharashtra, which has very good ground water

availability and is near to the perennial source of water

- The cane availability and potential in the command area is excellent

and will ensure sustained cane availability.

- The plant will operate on own & procured molasses

3.1.2 Infrastructure

The site has easy access to latest communication and other social

infrastructure facilities, including telecommunication, medical & health

facilities, commercial infrastructure, etc.

The process steam & power required at 3.5 kg/cm2 for the proposed

ethanol plant which will be met through 32 TPH, 45 kg/cm2 slop fired

boiler and matching 4 MW turbine.


3.1.3 Manpower

The skilled manpower required for operation of ethanol plant are being

appointed. PSAPPL is in a process of appointing required manpower for

fuel ethanol plant and has already appointed key top management

positions for the purpose.

3.1.4 Effluent Disposal

Due care will be taken in design, implementation and operation of the

captioned project for satisfactory disposal and effective utilization of plant

effluents, waste water and colony waste water. Scientific treatment will be

given to ensure that waste water from all sources needs the norms

stipulated by the Maharashtra State Pollution Control Board. The effluent

/ spent wash will be concentrated in evaporators. The concentrated spent

wash generated after entire process of evaporation is then sprayed in a

furnace with auxiliary support fuel bagasse and is then burnt in a boiler.

In order to fulfill the Pollution Norms and to achieve zero Discharge and

at the same time to operate ethanol plant for the period more than 270 days

per annum, PSAPPL proposes to go for spentwash Concentration and

Incineration Technology simultaneously generating Steam and Power for

the process and Ethanol plant.

With effective utilization of such a technology big hurdle of spent wash

disposal will be solved and distilleries will become zero effluent discharge

unit.

3.2 Raw Materials

3.2.1 Raw Materials for Fuel Ethanol Plant

The total requirement of molasses for the 270 days operation of the

proposed ethanol plant at optimum level of operation will be around

91,915 MT. PSAPPL will utilize 54,468 MT of own/B-heavy molasses

& the balance 37,447 MT of molasses will be procured from nearby

sugar mills.

It is concluded that PSAPPL can easily generate the required quantity

of molasses and procured molasses from nearby sugar mills to operate

plant for 270 days.


3.3 Utilities & Consumables

3.3.1 Water and power are the main utilities required for operating the project.

Water will be drawn from the existing water scheme of sugar mill or

through own wells / borewells.

Additionally, DG set of required capacity will be installed.

3.3.2 The consumables required for operation of ethanol plant include,

laboratory and chemicals, oils / lubricants and other, etc.

The consumables indicated above will be available in substantial

quantities from nearby Gevarai town, and no difficulty will be envisaged.

3.4 Manpower

The total direct manpower required for the project has been estimated at 81. It is

most essential for PSAPPL to define the organization structure for the ethanol

plant.

It is most essential that the experienced and well qualified manpower is employed

right from the project development / implementation period, through

advertisement or through head hunting exercise, particularly for the top and key

positions. Manpower training and skill up-gradation must become an integral part

of the HRD policy.


CHAPTER – 4

DESIGN BASIS

4.1 Introduction

The design basis & configuration for the fuel ethanol from molasses project has

been elaborated in the following paragraphs.

4.2 Design Basis, Fuel Ethanol from molasses

4.2.1 The working parameters of the sugar factory are as under

Bagasse % cane – 30

Molasses % cane – 4.5

4.2.2 Synopsis of ethanol plant operation

Total crushing, lakh MT : 8.00

Molasses % cane : 4.5

Installed capacity of

Ethanol Plant, KLPD

85,000 LPD of Total Spirit (TS) with

minimum strength of 95% v/v.

80,750 LPD of Rectified Spirit with

minimum strength of 95 % v/v.

OR

80,000 LPD of Extra Neutral Alcohol

with minimum strength of 96 % v/v.

AND

80,000 LPD of Absolute Alcohol with

minimum strength of 99.8% v/v (RS to

AA mode)

Fuel Ethanol plant working

days, Nos.

: 270

Fuel Ethanol yield from

molasses

: 235 lit / MT

Fuel Ethanol yield from B

B-heavy molasses

: 350 lit / MT

Molasses required for

optimum level of operation

: 91,915 MT P.A.

Own molasses production : 36,000 MT P.A.


The quantity of B-heavy

molasses (of 65 to 70 TRS)

required to be diverted for

meeting balance molasses

requirement ( 18468 x 235 /

350), MT

: 12,400 MT P.A.

Procured molasses from

nearby sugar mill

: 37,447 MT P.A.

4.2.3 Input requirement & Specification for Ethanol plant:

1 Raw Material: Molasses with 42%

w/w Fermentable Sugars

About 340 - 345 MT/Day

2 RS Requirement for MSDH Plant 80.75 KLPD @ 95 w/w% Alcohol

strength.

3 Steam Requirement:

Distillation Process

Dehyadration Section

Evaporation

2.2 kg per liter of TS (RS)

3.2 kg per liter of TS (ENA)

0.55 kg per liter of TS

0.6 kg per liter of TS

4 Process Water for Dilution in

Fermentation

About 680 m3/day

5 Soft Water for FO decanter,

alcohol scrubber, Pump sealing,

etc

About 490 m3 / day

6 Cooling Water Circulation Fermentation at ΔT – 3OC – 600 m3/hr

Distillation & Int. Evaporator at ΔT –

8OC – 940 m3/hr

Dehydration at ΔT – 8OC – 120 m3/hr

Independent Evap at ΔT – 3OC – 120

m3/hr

7 Make up DM Water

Requirement

95 - 100 m3/day

8 Chemical Requirement Sulphuric acid

Antifoam agent

Nutrients

Biocides

Descalling agent

9 Power Requirement- 415 V/4

Wire/3 Phase Frequency:

50Hz – Consumed Load

without Standby motors

1100 KW

10 Spent wash after evaporation 7.56 Ton/hr


4.2.4 Utility requirements

Steam – The ethanol plant employs multi pressure system for

achieving steam economy. The working steam pressure is 3.5

kg/cm2g. The steam from back pressure turbine will be supplied to

fuel ethanol plant using 32 TPH slop fired spent wash Incineration

boiler.

The Technical Specifications for slop fired spent wash Incineration

boiler for the proposed fuel ethanol plant will be as under:

Type Single drum, Double pass furnace,

top membrane wall, pulsating grate

boiler

MCR 32 Tones per Hour

Pressure at superheated outlet 45 kg/cm2 (g)

Temperature of steam at

superheated outlet

400 ± 5º C

Temperature of flue gases at

furnace outlet

700ºC (approx.)

Feed water temp. at inlet of feed

water tank

85 deg C

Temp. of flue gases at outlet 180±5 deg C

Fuel Slop + Bagasse / Indian / Imported

Coal

Efficiency 67% on 60% spent wash + 40%

coal

Or

61% on 60% spent wash + 40%

bagasse

Ultimate Fuel

Analysis (In %)

Slop Bagasse Indian

Coal

Imported

Coal

Carbon 28.25 23.50 39.90 55.45

Hydrogen 3.40 3.25 2.48 5.49

Oxygen 13.24 21.75 6.76 10.76

Moisture 40.54 50 10.00 20.00

Ash 14.28 1.50 39.81 7.00

Sulphur 0.00 0 0.38 00.30

Nitrogen 1.01 0 0.67 1.00

GCV(Kcal/kg) 1700 2272 3800 5200


Power –The total power requirement will be met through 4 MW back

pressure turbine with no suplus power for export to grid.

The Technical Specifications for Back Pressure TG Set for the

proposed fuel ethanol plant will be as under:

Type Back Pressure type

Rating of Turbine 4 MW

Boiler Steam Parameter

Pressure

Temperature

40 kg/cm2 (g)

400 ± 5º C

Turbine Back Pressure 3.5 kg/cm2 (g)

Steam flow at turbine 100 (max.)

Power Factor 0.8

Generation voltage 440 V

Ambient Temperature for

Electrical Equipment Design

50 deg C

Parallel operation with grid Future facility to synchronize

with grid

Cooling Tower For Fermentation

Cooling Tower for Distillation, Ethanol

Cooling Tower for standalone evaporation

Condensate Policing Unit


CHAPTER – 5

PLANT LAYOUT

5.1 Layout Considerations

5.1.1 Layout design issues

Major layout design issues, which have been considered while developing

the proposed plant layout, are as follows:

Vastu Shastra

Available land for the project at site location

Topography of the land and contour limitations

Area requirements for various plant buildings, storage areas, admin

building, miscellaneous areas, etc.

Direction / velocities of wind.

Optimum men and material movement

Minimum length of high pressure piping

Minimum lengths of interface systems between the fuel ethanol plant

and sugar mill

Disposal of ash / spent wash

5.1.2 Area requirement & Layout

PSAPPL has earmarked 10 acres of land for the proposed fuel ethanol

project which is sufficient.

Refer Appendix – XI for proposed preliminary plant layout.


5.2 Ash, Effluent & Sewage Disposal

5.2.1 Ash

Annual ash generation from use of slop (effluent) & bagasse for boiler for

fuel ethanol manufacture will be mixed with the press mud or will be sold

to brick manufacturers.

5.2.2 Effluent

The proposed scheme for treatment of spent wash will be evaporated at 60

brix and will be burnt in slop fired boiler along with bagasse. Therefore,

there will be zero discharge of effluent.

5.2.3 Sewage

All sewage will be collected in a common septic tank and discharged as

per accepted norms.

5.3 Plant Layout

5.3.1 General

The proposed fuel ethanol plant will be located adjacent to the existing

sugar mill.

5.4 Approach & Internal Roads

The site is easily accessible with approach road already existing and thereby not

requiring any additional approach road. Required internal roads for movement of

men and material will have to be constructed within the plant area.


CHAPTER – 6

PROJECT PREPAREDNESS AND IMPLEMENTATION

SCHEDULE

6.1 NoC’s / Approvals / Permissions

List of NoC’s / Approvals / Permissions required & their status as of June, 2015 is

indicated in the following table:

Project Component / Item Status

of NoC / Approval Completed Under Process Yet to start

General

Registration of PSAPPL

Excise, sales tax, professional

tax & income tax registrations

PF / ESI registrations licenses

Consent to Establish from

MPCB

Consent to Operate from MPCB

Environment Clearance from

MoEF, GoI

NoC from local gram panchayat

IEM license for ethanol

(amendment)

Letter of Intent from State

Excise

Electrical Inspector approval

Factory Inspector approval

Boiler Inspector approval

6.2 Management & Administration

PSAPPL has already deployed a competent Project Team for developing and

implementing this project at Selu. The PSAPPL Board will take a review of

progress of work on a monthly basis, to ensure speedy and successful

implementation of this project.


6.3 Technical & Financial Tie Ups

PSAPPL has the experience and know how for adopting the latest technologies.

Consultants and experts will be appointed, as and when required, during the

development and implementation of this project. PSAPPL already has appointed

MITCON Consultancy & Engineering Services Ltd., for preparation of DPR.

PSAPPL will bring in the required equity through internal accruals, as well as

provide the negotiated securities to the bankers and financial institutions.

PSAPPL proposes to approach nationalized banks / Financial Institutions for

availing term loan / working capital facilities. PSAPPL is looking forward to avail

loan from SDF for the proposed fuel ethanol plant.

PSAPPL will not face any difficulty for arranging technical and financial tie-ups

required for the captioned project.

6.4 Project Management

The project management for the proposed project will be under able leadership of

CMD / Directors. The appointed experts, consultants and PSAPPL’s existing

sugar mill staff will together work in tandem and develop / implement this

project.

Required top-level manpower will be appointed. Project monitoring /

management will be almost on daily basis and as per the final bar chart /

implementation schedule, developed after ordering of main plant and equipment.

6.5 Implementation Schedule

6.5.1 Project Implementation

For implementing this project within the desired time and cost schedules,

it is essential to undertake meticulous planning, right from the conceptual

stages. Following aspects of the project implementation will be crucial:

Effecting timely project development activities, including securing

various approvals / NoC’s / permissions for each component of the

project.


Appointment of pre-investment consultants and experts for preparation

of DPRs, approaching select FIs / bankers, rendering required follow

up and achieving financial closure, through raising of required equity

and providing necessary securities.

Finalization of mode of project implementation, package route and

O&M contracts for individual project components, along with strong

owner engineering / consultancy team for effective monitoring of the

implementation / commissioning of each component as per the

schedule, is recommended. PSAPPL has experienced in-house project

team for the purpose.

Manpower and resource mobilization at required time and effectively

6.5.2 Project Schedule

The zero date of the project starts from the date of achieving financial

closure, expected to complete within 2 to 3 month. The total

implementation period is estimated at 12 to 15 months.

The detailed PERT / CPM networks for individual components and overall

project will have to be prepared by the time of achieving the financial

closure. Normally the major activities after the financial closure for each

component includes,

Appointment of owner engineer / consultant, in-house project team

and project architect

Basic engineering & finalizing outline specifications

Detailed design engineering and specifications

Preparation of package bids, bidding, bid evaluation, recommendations

and contracting for civil, mechanical, electrical and instrumentation

components, as well as BoPs

Kick off meetings with individual vendors / contractors

Vendor drawing review and approvals, inspection and expediting and

delivery at site

Site supervision for erection, testing & commissioning

Bidding, contracting and signing of O&M contracts

Plant stabilization and development of MIS

Appendix X gives implementation schedule.


CHAPTER – 7

ESTIMATED CAPITAL EXPENDITURE

7.1 Land & Site Development (Refer Annexure – 1)

PSAPPL has already earmarked 10 acres of land for the proposed fuel ethanol

plant.

The site development expenses is estimated at Rs.150 lakh which include

leveling, fencing, gates, internal roads, green belt development, etc.

7.2 Civil Works (Refer Annexure – 2)

The main civil works for the fuel ethanol plant and their estimated costs are

indicated in the following table.

Item Cost, Rs.

Lakh

Main plant building, admin building, lab, Excise Office, stores

Weigh bridge, storage, ethanol plant machinery foundations,

Structural for evaporation, distillation & fermentation, Pipe Racks,

Cooling tower civil works (Basin Only), Raw water tank, Treated

Water storage tanks, Fire water storage tank, Raw & Concentrated

Spent wash holding tank, Condensate Polishing Unit civil work,

Boiler foundations & Axillaries (0.00 Lvl), Turbine foundations

(0.00 Lvl), DG set foundation, structural work for Boiler &

Turbine (0.00 Lvl), Ash & Fuel handling system foundations etc.,

staging structure and foundations

2300.00

Architect fees (2%) 46.00

Total 2346.00

Based on the actual civil costs incurred for similar capacity fuel ethanol plant and

preliminary estimates from the project architect, the civil estimates have been

worked out at Rs.2346 lakh, including Architect’s fees. The appointed architect

for the project will work out detailed estimates and civil drawings (based on the

inputs received by the equipment suppliers and labour / material rates at the site

location).


7.3 Equipment (Refer Annexure 3 )

The main items of equipment for the fuel ethanol plant and their estimated erected

costs are given in the following table:

Item and brief specifications Estimated

Erected Cost,

Rs. lakh

1) 80 KLPD Capacity ethanol plant plant, including incl. molasses

handling section, fermentation section, Multi-Pressure

Distillation & Ethanol, Independent Evaporation System for

spent wash concentration, Utility Equipment - Cooling Towers,

Compressor, Condensate Polishing Unit, Blower & Chilling

Plant, Alcohol Storage & auxiliaries, interface piping, electrical

& instrumentation, Air compressor, structural work, Erection &

Commissioning etc.

4250.00

2) 32 TPH Capacity, 45 kg/cm2 pressure slop fired Boiler &

auxiliaries

2000.00

3) 4 MW Capacity matching back pressure TG set & auxiliaries 450.00

4) Balance of Plant equipment incl. Bulk Molasses storage section

along molasses handling & Transfer, Fire Fighting, Weigh

Bridge, Lab Equipment, PRDS, Steam HP & LP Piping, Yard

Piping, CPU, Water Treatment Plant and internal piping up to

battery limit DCS, Air conditioning and ventilation. etc. 800.00

Sub-total including erection & commissioning, packing forwarding,

insurance, etc. 7500.00

Avg. Taxes & Duties (20%) 1500.00

Total 9000.00

Based on the budgetary offers received from reputed machinery suppliers &

possible negotiation margins, the estimated erected cost of plant and equipment

for the proposed fuel ethanol plant including Boiler & Turbine has been worked

out at Rs.9000 lakh.

7.4 Miscellaneous Fixed Assets (Refer Annexure – 4)

The major miscellaneous fixed assets for the fuel ethanol plant, include Office

Furniture and Fixtures, Items out of battery limits such as steam line, water line,

molasses line, yard piping, etc, Lab Equipment, etc. The Misc. fixed assets for

fuel ethanol plant accumulate to Rs. 80.00 lakh.


7.5 Preliminary & Pre-operative Expenses (Refer Annexure – 5)

The preliminary expenses include expenses for preparation of DPRs / Tender

documents, and legal / administrative expenses.

The pre-operative expenses include establishment charges, Government

Clearances, Establishment, Rent, rates and taxes, Travelling Expenses, Start up

expenses including wages & salaries, Interest on Loans, Mortgage expenses &

stamp duty, bankers charges, insurance, etc., Pre-investment, Pre-contract & Post

contract fee, etc.

The total preliminary and pre-operative expenses for the proposed project have

been estimated at Rs. 590 lakh.

7.6 Contingencies

The contingencies have been worked out at 2% of the non-firm items of site

development, buildings, plant & machinery and miscellaneous fixed assets,

preoperative expenses. They, accumulate to Rs. 244 lakh.

7.7 Margin Money for Working Capital

The margin money on working capital is calculated @ 25% of the working capital

requirement which works out to Rs.290 lakh.


CHAPTER – 8

FINANCIAL VIABILITY

8.1 Basis & Assumptions

8.1.1 The entire financial analysis of the project has been worked out on a

computer, using specific project feasibility software developed for the

purpose.

Annexures-1 to 18 gives the basis and details of various items of project,

along with item wise costs. Schedules-A to I represent results of the

analysis in terms of cost of project and means of finance (Schedule-A),

project profitability and cost of production (Schedule-B), Debt Service

Coverage Ratio (DSCR) (Schedule-C), Cash Flow Statements (Schedule

- D), Balance Sheet Forecasts (Schedule -E), etc.

8.1.2 Each item of capital cost is based on the estimated erected costs for

various equipment contractors. Annexures-1 to 6 respectively give land

and site development costs, civil works, erected costs of indigenous

equipment, erected costs of miscellaneous fixed assets and preliminary

and pre-operative expenses. While calculating the cost of site development

and civil works, the prevailing rates for labour, material, etc have been

assumed.

8.1.3 The contingency provision has been made on all non-firm items of the

project cost and has been considered at 2% for each component of the

project including preoperative expenses (Refer annexure 6).

8.1.4 The installed capacities and capacity utilisation levels for fuel ethanol

plant and respective annual productions have been shown in the following

table:


Item Year

1 2 3 4 5

Installed Capacity-KLPD 80 80 80 80 80

Number of shift/day 3 3 3 3 3

No. of days 180 270 270 270 270

No. of hrs. 24 24 24 24 24 Annual Installed Capacity 14400 21600 21600 21600 21600

Capacity utilization, % 80 85 90 95 95

Total Spirit, KL 11520 18360 19440 20520 20520

Net Production Fuel Ethanol,

KL

10944 17442 18468 19494 19494

8.1.5 Project income is based on the quantities of fuel ethanol sold.

In view of the rate agreed by petroleum companies for sale of fuel ethanol

has been assumed at Rs. 45000 / KL for the all the years. Refer Annexure

– 8 for estimated annual production and sales value for ethanol.

8.1.6 Refer Annexure 9 for particulars of indigenous raw materials explained

above. The requirement of molasses has been worked out based on the

recovery of ethanol @ 235 Ltr/MT of molasses. The own/B-heavy

molasses price has been considered at Rs.4000/MT and the outside

molasses purchase price considered at Rs.4200/MT.

8.1.7 The consumables and chemicals for fuel ethanol have been considered as

per the norms of industry & calculated in Annexure-10.

8.1.8 Annexures 11 gives the details of requirement of utilities & their costs.

8.1.9 The requirement of direct manpower has been estimated based on the

equipment / facilities to be operated in each section of the project. Total

manpower requirement has been estimated at 81 for fuel ethanol plant.

Every year 10% increment and 10% benefits have been provided for

(Refer Annexure-12).

8.1.10 Repairs and maintenance costs have been estimated at 1.5% on civil works

& miscellaneous fixed assets and plant equipment (Refer Annexure-13).


8.1.11 Other manufacturing expenses include rent, rates and taxes, electricity

charges, insurance charges for fixed assets and stocks, miscellaneous

expenses and contingencies (Refer Annexure-14).

8.1.12 Administrative overheads include administrative staff salary and expenses

like printing and stationery, postage and telephone, traveling and

conveyance, Excise fees and other expenses (Annexure 15).

8.1.13 The repayments of interests and term loans for each component of the

project have been considered based on the means of finance and the terms

for debts for each. The term loans for fuel ethanol plant will be at 13.5 %

rate, payable within 28 quarterly instalment with one & half year as

moratorium and SDF loan will be at 7% rate payable in 8 equal half yearly

installments with one year as moratorium (Refer Annexure 16).

8.1.14 Annexure-17 gives income tax calculation as per relevant tax laws

applicable.

8.1.15 Depreciation has been calculated by following methods and rates (Refer

Annexure-18 for details).

Item of capital cost WDV SLM

Site development and civil structure 10.00 3.34

Plant & Machinery 15.00 5.28

Miscellaneous assets 15.00 5.28

8.1.16 Preliminary expenses have been written off equally in 5 years.

8.1.17Based on above assumptions, the detailed project financial analysis for a

period of 10 years have been worked out and are presented in Schedules-A

to J.


8.1.18 following items of costs have been classified into variable and fixed

components for arriving at the break-even point.

Fixed Variable

Utilities 20 80

Direct labour 90 10

Other mfg expenses 80 20

Admin.overheads 80 20

8.2 Cost Summary

Based on the capital cost break up worked out in Chapter 7, the project cost

summary for the entire integrated project is given in the following table (Also

refer Schedule A):

Particulars Amount,

Rs. Lakh

Land and Site Development 150

Buildings 2346

Indigenous Plant and Machinery 9000

Miscellaneous Fixed Assets 80

Prelim. & Preoperative Expenses 590

Contingencies 244

Working capital margin 290

Total 12700

8.3 Means of Finance

The proposed means of finance is indicated below. (Refer Schedule – A).

Particulars

Amount,

Rs. Lakh

PSAPPL Equity / Internal accruals (27%) 3429

SDF Quasi Equity (35%) 4445

Bank / F. I. Loan (38%) 4826

Total 12700


8.4 Financial Viability Indicators

8.4.1 Schedules A to J establish results of the project financial analysis, in terms

of total project cost and means of finance, project profitability, debt

service coverage ratio, cash flow statement, balance sheet forecast,

analytical and comparative ratio, breakeven analysis, sensitivity analysis,

internal rate of return, payback period, etc. supported by Annexures 1-19.

8.4.2 The above ratios establish good financial viability of the project for this

funding pattern and project income from sale of fuel ethanol, as indicated.

8.4.3 The financial viability ratios have been tabulated as below:

(Rs.Lakh) Operating Years

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26

1. EBIT to Capital Employed 15.98 28.85 28.30 25.32 24.78 22.65 20.82 19.23 17.31 15.79

2. Return on Investment

i) PBT to Capital Employed 5.71 17.90 18.76 16.98 17.65 16.99 16.08 15.29 14.01 12.78

ii) PAT to Capital Employed 6.32 14.88 14.43 12.81 12.98 12.24 11.40 10.69 9.69 8.75

iii) PBT to Net Worth 9.40 27.11 26.35 22.43 21.95 19.75 17.73 16.14 14.71 13.36

iv) PAT to Net Worth 10.42 22.53 20.26 16.92 16.14 14.23 12.57 11.29 10.17 9.15

3. PBT to Sales 17.48 31.30 32.72 30.62 32.34 33.93 34.84 35.75 36.26 36.26

4. Raw Materials Cost to Sales 40.04 40.63 40.63 40.63 40.63 40.63 40.63 40.63 40.63 40.63

5. Operating Ratio 51.04 49.56 50.64 54.34 54.60 54.75 54.90 55.06 55.21 55.21

6. Interest Coverage Ratio 2.62 4.17 5.02 5.61 7.36 10.18 13.33 19.35 0.00 0.00

7. Fixed Assets Turnover Ratio 0.40 0.77 0.84 0.88 0.93 1.00 1.07 1.16 1.26 1.38

8. Debt Equity Ratio 0.55 0.42 0.31 0.23 0.16 0.09 0.04 0.00 0.00 0.00

9. Ratio of N/W + L/T

Liabilities to Fixed Assets 1.15 1.25 1.37 1.47 1.60 1.87 2.19 2.56 3.10 3.74


CHAPTER – 9

SOCIO-ECONOMIC

AND ENVIRONMENTAL BENEFITS

9.1 The proposed project of PSAPPL will be a landmark achievement in Beed District

of Maharashtra State. It will truly become a role model of zero pollution industry

by utilizing the waste effluent in slop fired boiler in the most efficient manner for

eco-friendly products like fuel ethanol. The sound techno-economic and

commercial viability of this project, coupled with highest efficiency in all aspects

of product manufacture, will pave the way for integration of sugar industry in the

State of Maharashtra.

Establishment of the latest and most efficient technologies adopted for fuel

ethanol manufacture, will also help the Indian sugar industry and equipment

manufacturers to grow leaps and bounds, at the national and the international

levels.

9.2 The socio-economic benefits arising out of this project for the local populace will

include creation of direct and indirect jobs and consequent rise in the income

levels, associated commercial and social infrastructure development in the

mofussil areas, better environment and higher returns for the cane crop due to

higher yield and cane price.

9.3 At the national and the State levels, the benefits include reduced emissions,

increased tax revenues and reduction in the transportation costs.

9.4 At the project and promoter levels, the captioned project offers excellent

opportunities for manufacture of fuel ethanol and improved returns from trade of

emission reductions from the up coming international emissions trade market,

under the Kyoto Protocol.

9.5 The project will have excellent multiplier effect and will become truly a win-win

situation for all the stakeholders. Thus, the proposed project has substantial socio-

economic and environmental benefits at the local, the State, the Regional and the

National levels.


CHAPTER – 10

CONCLUSIONS & RECOMMENDATIONS

10.1 SWOT Analysis

Strengths (S):

- Availability of land in existing sugar factory premises

- Excellent irrigation facilities with ensured cane cultivation and availability on

a long term basis

- Availability of basic infrastructure

- Favorable policy regime for Fuel ethanol at the Central Govt. and in

Maharashtra State, with defined policies regarding sale of fuel ethanol

- Commitment and vision of the promoters, with forward integration planned

right from beginning

- Professional and business like approach of the promoters, with meticulous

planning for speedy and successful implementation and operation

- Good financial viability and technical feasibility of the project at the estimated

project capital cost and prevailing selling prices of fuel ethanol, as well as

landed prices of various raw materials and inputs

- Deployment of latest technologies and equipment

- A very high order of socio-economic and environmental value to the local

populace, Maharashtra State and the country.

Weaknesses (W):

- Complexities and higher investment levels of the project. Employment of

experienced and professional teams and consultants, as well as project and

equity partners, directors on board will reduce this weakness.

- Changes in the Govt. policies related to ethanol

- Satisfying the statutory agencies in execution & operating the plant.


Opportunities (O):

- Decrease dependence on sugar margins

- GOI’s 5% mandatory ethanol blending since December 2012, approval to

market based pricing & increased blending ratio from 5% to 10% recently

and, thus, having a two to three fold increase in requirement.

- The unit has flexibility with minimum investment of entering into alternative

products like ENA, IMFL & CS

- Implementation of the recommendations of Rangarajan Committee by GOI &

freeing up the sugar and ethanol market

Threats (T):

- Cyclic or climatic changes leading to low cane crushing and hence resulting in

the under capacity utilization. Alternate cane varieties shall be incorporated at

later date depending upon market conditions.

- Over dependence of in house raw materials for revenue generation.

Alternative, third party vendors have been identified for molasses

requirement.

- Over dependence on marketing of the product to single agency (OMCs),

which is influenced by the policy matters, to be decided by the GOI.

However, GOI is committed to fuel ethanol projects and are to increase the

blend ratio.

10.2 Risk Factors

Risk Factors Remarks

Industry Risk

The Industry is cyclical and highly regulated. The price of

free sale sugar is directly/indirectly controlled by the govt.

Therefore, the company has been making its operations

integrated, comprising of sugar, cogeneration and ethanol

plant to protect its margins and profitability and avert

cyclicality.


Implementation

Risk

PSAPPL has experienced people in its management team.

Keeping in view overall good track record, it is felt that

PSAPPL has the competence for timely implementation of

project as per the schedule. The ethanol project shall be

implemented on turnkey basis. The ethanol project being

implemented on turnkey basis, will reasonably assure

completion of the project within the envisaged cost.

However, any increase in cost of plant & machinery shall

be met by the internal accruals.

Operating Risk Though the company is new to the production and

marketing of ethanol, it is in the business of manufacturing

and marketing of sugar with proposed capacity of 5000

TCD & cogen 35 MW. Moreover, the ethanol project is

being implemented on a turnkey basis and will be backed

by suitable clauses in terms of warranty and guarantee. As

such it is felt that the operating risks would be mitigated to

a considerable extent.

Though the availability of adequate quantity of molasses is

also dependent on the supplies from neighboring units to

meet the shortfall, the company has identified nearby sugar

mills from where molasses can be sourced.

Credit Risk Average DSCR of the ethanol plant project is estimated to

be 2.38, which is satisfactory. PSAPPL has been regular in

meeting its commitments to FIs/Banks and SDF.

Financial Risk The company is comfortably placed to infuse its equity

contribution in the project and is awaiting sanction of term

loan from banks. As such, no problem is envisaged

Raw Material Risk PSAPPL has announced a reasonable remunerative price

in line with the market trend and neighboring sugar mills.

Also, it is providing services to educate farmers about the

best practices in sugarcane cultivation for improvements in

the yield. Company is proposes operating a 5000 TCD

Sugar plant & 35 MW cogen power plant in the same

premises as proposed for the ethanol plant. The molasses

required for the ethanol plant shall be readily available

from the sugar plant. The Neighboring sugar mills has

already shown willingness to supply the molasses for

meeting the shortfall.


Market Risk/ off

take risk/ payment

risk

The Govt. of India has allowed mixing 5% ethanol in

petrol and has increased of ethanol percentage to 10%,

recently. Since there is need for huge investment to set up

additional required capacity of 96 million litres of ethanol

by 2017, PSAPPL is not expected to face any problem in

selling the ethanol from proposed project.

10.3 Key Management Features

Appointment of Project Team, required experts and consultants, as well as top

level staff - right from the beginning

Securing all required balance permissions / NoC’s / approvals quickly and

achieving the financial closure at the earliest.

Selection of right technology and equipment suppliers for fuel ethanol plant.

Effective project management for timely execution

Cane development in the command area

10.4 Conclusions & Recommendations

The captioned fuel ethanol project is technically feasible and commercially

viable. The project is recommended to financial institutions for financing term

and working capital loans.

The forward linkages of this project / as well as socio-economic and environment

benefits to the local population make this a win-win project to all the

stakeholders.