PROJECT REPORT

OF

BIODIESEL MANUFACTURING UNIT

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Biodiesel Manufacturing Unit.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in

project identification for investment and in order to serve his objective; the document covers
various aspects of the project concept development, start-up, marketing, finance and
management.

[We can modify the project capacity and project cost as per your requirement. We can also
prepare project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak

Building , 27/1/B, Gokhlley Marg, Lucknow-226001
Delhi Office: Multi-Disciplinary Training
Centre, Gandhi Darshan Rajghat, New Delhi 110002
Email: info@[Link]
Contact: +91 7526000333, 444, 555
 PROJECT AT GLANCE

1 Name of Proprietor/Director XXXXXXXX

2 Firm Name XXXXXXXX
3 Registered Address XXXXXXXX
4 Nature of Activity XXXXXXXX
5 Category of Applicant XXXXXXXX
6 Location of Unit XXXXXXXX
7 Cost of Project 24.72 Rs. In Lakhs
8 Means of Finance
i) Own Contribution 2.47 Rs. In Lakhs
ii) Term Loan 15.75 Rs. In Lakhs
iii) Working Capital 6.50 Rs. In Lakhs
9 Debt Service Coverage Ratio 3.08
10 Break Even Point 0.39
11 Power Requiremnet 18 KW
12 Employment 9 to 10 Persons
Non-edible vegetabe oils,
animal fats & Short chain
13 Major Raw Materials alcohols, Catalyst such as
NaOH, KOH, And
packing materials etc.
14 Details of Cost of Project & Means of Finance

Cost of Project
Particulars Amount in Lacs
Land Owned/Leased
Building & Civil Work Owned/Leased
Plant & Machinery 16.50
Furniture & Fixture -
Other Misc Assets 1.00
Working Capital Requirement 7.22
Total 24.72
Means of Finance
Particulars Amount in Lacs
Own Contribution 2.47
Term Loan 15.75
Working capital Loan 6.50
Total 24.72
 1. INTRODUCTION

Biofuels are renewable alternatives to petroleum-based motor fuels, such as gasoline and diesel.
These are derived from plants, animal waste, or algae material. The major biofuel variants
available in the market include bio-gasoline from sugar-based bioethanol and biodiesel from
vegetable oils or fatty acid methyl esters (FAME). These fuels offer several advantages over
conventional fossil fuels, such as better lubricating properties, cost-effectiveness, ease of source,
and reduced greenhouse gases emissions. Since biofuels are created from organic matter
(biomass), they can be quickly replenished. At the same time, the low emissions associated with
their combustion means they are an attractive prospect for usage in various industries. Biodiesel
production is the process of producing biofuel, biodiesel, through the chemical reactions of
transesterification and esterification. This involves vegetable or animal fats and oils being
reacted with short-chain alcohols (typically methanol or ethanol). The alcohols used should be of
low molecular weight. Biodiesel has become more attractive recently because of its
environmental benefits and the fact that it is made from renewable resources. The cost of
biodiesel, however, is the bottleneck to its commercialization. To make Bio-diesel, hydrocarbons
(i.e., oil or fats) are filtered and get mixed with alcohol, which are usually methanol and a
catalyst. Ester and glycerol bio-diesel fuel, are the major products of this reaction that have been
used for commercial purposes.
 2. PRODUCT DESCRIPTION

2.1 PRODUCT USES

Biodiesel is a domestically produced, clean-burning, renewable substitute for petroleum diesel.

Using biodiesel as a vehicle fuel increases energy security, improves air quality and the
environment, and provides safety benefits.

2.2 PRODUCT RAW MATERIAL

 The raw materials for biodiesel production are vegetable oils, animal fats, and short-chain
alcohols. Since cost is the primary concern in biodiesel production and trading
(fundamentally due to oil prices), the utilization of non-edible vegetable oils is
recommended. Other than its lower cost, one more evident benefit of non-edible oils for
biodiesel production lies in the fact that no foodstuffs are spent to produce fuel. Animal
fats are also an interesting option, especially in countries with plenty of livestock
resources, although it is necessary to carry out preliminary treatment since they are solid;
furthermore, highly acidic grease from cattle, pork, poultry, and fish can be used.
Methanol is the most frequently used alcohol although ethanol can also be used.
  Other: Catalyst, Packing materials, etc. Strong alkali catalysts such as NaOH, KOH,
CH3ONa, and CH3OK (potassium methoxide) are used for biodiesel production.

2.3 MANUFACTURING PROCESS

This process can be broken down into the following steps-

 Raw material procurement
 Production Process
 Testing

Raw Material Procurement

To ensure complete quality control, all raw materials are checked strictly as per established
quality standards and requirements. Individual supplier assessment and supplier rating are done
depending upon the rejection levels at the incoming quality control stage. After quality control,
sorting of raw material will be done. In the sorting procedure, the different types of materials will
be sorted out. Then treatment of raw materials will be done. In the case of highly acidic raw
materials (animal fats from cattle, poultry, pork; vegetable oils from cotton, coconut, most used
oils, etc.) an acid transesterification is necessary as a preliminary stage, to reduce the level of
FFAs and they will be stored in a neat storage area for further processing.
Production process
1. Storage: Before or after treatment, raw material will be collected and stored in a storage
tank for further processing. In this initial stage filtration of raw material can also be done.
The storage tank is connected with the esterification tank. The raw material will be sent
to the esterification tank.
2. Esterification: Esterification increases the yield of biodiesel. When oil contains an
excess of free fatty acids they have to go through the process of esterification. The key to
effectively preparing for the esterification process is to make sure the raw material has
been sufficiently filtered by removing all contaminants and water. Upon filtration, the
raw materials are fed to the acid or resin esterification process. The catalyst, sulfuric acid,
is dissolved in methanol and then mixed with the pretreated oil. Once the mixture is
heated and stirred, the free fatty acids are converted to biodiesel. The final step of
esterification is to dewater and feed the product to the transesterification process.
3. Transesterification: The transesterification reactions are the most common method of
converting triglycerides (TAG) from oils into methyl esters (biodiesel). The conversion
of vegetable oil into biodiesel through the transesterification process reduces the
molecular weight to one-third, reduces the viscosity by about one-seventh, reduces the
flashpoint slightly, increases the volatility marginally, and reduces the pour point
considerably. Then, the fuel produced has approximately the same property as petrodiesel
and can be used in conventional diesel engines without any change in this last. After
transesterification, the ester can be separated from glycerol by simple gravitational
sedimentation and the ester has to be washed to remove traces of alkali.
4. Decantation: Due to its low solubility in esters, separation is usually performed by
either decantation or centrifugation. In the separation by decantation, the biodiesel and
glycerol mixture are rested in tanks. The separation cost is low, but it is a slow process.
5. Purification: Biodiesel is conventionally purified using water and dry
washing technologies. Water could eliminate the remaining sodium salts and soaps
formation; this is due to their water solubility.
6. Storage and filling: Storage conditions are important for biodiesel storage. Biodiesel
should not be stored or transported in copper, bronze, brass, lead, tin, or zinc metal tanks
because these metals will hasten degradation. Instead, containers made from aluminum,
 steel, fluorinated polyethylene, fluorinated polypropylene, or fiberglass tanks can be
used. Tanks that are designed to store and transport petro-diesel can also be used to store
biodiesel. Heat, sunlight, and oxygen will also cause biodiesel to degrade more rapidly,
so storage should minimize exposure to these conditions. If biodiesel will be stored for
longer than about four to five months, a stability additive should be used. Biodiesel will
be filled by using an oil filling machine. The biodiesel shall be packed in suitable airtight
sealed containers as agreed between the purchaser and the supplier. The use of airtight
sealed containers, such as drums or totes, can enhance the storage life of biodiesel.
7. Shipping: When biodiesel is transported, ensure the transportation container has been
cleaned (except if it recently carried petro-diesel or biodiesel) and that there is no water
in the tank. The tank might require insulation or heating if the biodiesel is being
transported in cold weather. On the other hand, the biodiesel can be allowed to freeze in
the tank and afterward be heated at the destination. Pure biodiesel is not considered
flammable, has a flash point greater than 200°F, and can be transported without any
warning signs. Biodiesel blends require cautioning signs if the flashpoint of the blended
fuel is lower than 200°F.
Testing
 Quality Control

FLOW CHART OF THE PROCESS

Raw Material Procurement

Production Process

Testing

3 PROJECT COMPONENTS

3.1 Land & Building

The land required for this manufacturing unit will be approx. around 2000 to 2500 square feet.
Land Purchase and Building Civil Work Cost have not been considered as part of the cost of
project. It is expected that the premises will be on rental and approximate rentals assumed of the
same will be Rs.20000 to Rs.25000 per month.

Land and building requirement may vary depending on the size of project .
3.2 Plant & Machinery

 Biodiesel production plant: The biodiesel production plant consists of a storage tank,
and an esterification tank. Transesterification tank, distillation tank, condenses, columns,
reactors, cooling towers, receiver, finisher tanks, etc.

1. Storage tanks: These tanks are used for raw material processing and storage.

2. Esterification tank: This tank is used for the esterification process.

3. Transesterification tank: This tank is used for the transesterification process.

4. Glycerol reactor: This reactor is used to process or separate glycerol.

5. Distillation unit: The distillation unit is a pressure vessel that heats the crude oil in a
pressurized environment to separate it into different components because they
vaporize at different boiling points. To achieve this, oil refineries use two main types
of distillation columns.

6. Columns: Columns are used for countercurrent contacting of vapor and liquid to
effect separations by distillation or absorption.
 7. Condensers: Condensers are used in chemical processes such as distillation.

8. Cooling tower: Cooling towers are primarily used for heating, ventilation, and air
conditioning (HVAC) and industrial purposes. Cooling towers provide a cost-
effective and energy-efficient operation of systems in need of cooling.

9. Receiver tanks: The receiver tank acts as a reservoir of compressed air for peak
demands. The receiver tank will help remove water from the system by allowing the
air a chance to cool. The receiver tank minimizes pulsation in the system caused by a
reciprocating compressor or a cyclic process downstream.

10. Finish tank: Finish tank is used to store the final product. These containers are made
from aluminum, steel, fluorinated polyethylene, fluorinated polypropylene, Teflon®,
or fiberglass. To prevent free water accumulation, make sure storage tanks are
cleaned and dried before biodiesel is put into the tank. As much as possible, keep
only a small air space above the fuel – 2% air space is recommended to allow for
thermal expansion. More air space may allow the biodiesel to accumulate more water
from the air. If possible, drain free water off the bottom of storage tanks regularly.

11. Oil filling machine: This machine is used to fill oils in a drum or container.

 Other: Vacuum pump, Piping system, etc.

 4 LICENSE & APPROVALS

Basic registration required in this project:

 MSME Udyam registration

 GST registration

 NOC for fire safety board and from Pollution Control Board

 Trade License

 Factory License (Optional)

 BIS certification

 Choice of a Brand Name of the product and secure the name with Trademark if required .
PROJECTED BALANCE SHEET (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
Liabilities
Capital
Opening balance 4.70 7.33 10.17 14.38
Add:- Own Capital 2.47
Add:- Retained Profit 4.73 7.13 9.34 12.21 15.20
Less:- Drawings 2.50 4.50 6.50 8.00 10.50

Closing Balance 4.70 7.33 10.17 14.38 19.08

Term Loan 14.00 10.50 7.00 3.50 -
Working Capital Limit 6.50 6.50 6.50 6.50 6.50
Sundry Creditors 1.85 2.11 2.39 2.69 3.00
Provisions & Other Liability 0.40 0.48 0.58 0.80 0.96
TOTAL : 27.45 26.92 26.64 27.87 29.54
Assets
Fixed Assets ( Gross) 17.50 17.50 17.50 17.50 17.50
Gross Dep. 2.63 4.86 6.75 8.36 9.74
Net Fixed Assets 14.88 12.64 10.75 9.14 7.76

Current Assets
Sundry Debtors 4.08 4.88 5.52 6.28 7.09
Stock in Hand 5.34 6.05 6.78 7.62 8.45
Cash and Bank 1.16 1.11 1.09 1.34 2.24
Loans & Advances 2.00 2.25 2.50 3.50 4.00
TOTAL : 27.45 26.92 26.64 27.87 29.54
PROJECTED PROFITABILITY STATEMENT (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
Capacity Utilisation % 55% 60% 65% 70% 75%
SALES
Gross Sale
Biodiesel 81.51 97.51 110.33 125.55 141.73

Total 81.51 97.51 110.33 125.55 141.73

COST OF SALES
Raw Material Consumed 55.44 63.36 71.76 80.64 90.00
Electricity Expenses 1.90 2.38 2.58 2.78 2.98
Depreciation 2.63 2.23 1.90 1.61 1.37
Wages & labour 7.44 7.81 8.20 8.61 9.04
Repair & maintenance 1.63 1.95 2.21 3.77 4.25
Packaging 0.82 0.98 1.10 1.26 1.42
Cost of Production 69.85 78.71 87.75 98.67 109.06
Add: Opening Stock - 3.49 3.94 4.39 4.93
Less: Closing Stock 3.49 3.94 4.39 4.93 5.45
Cost of Sales 66.36 78.27 87.30 98.12 108.54
GROSS PROFIT 15.15 19.24 23.03 27.43 33.18
18.59% 19.73% 20.88% 21.85% 23.41%
Salary to Staff 3.24 3.73 4.28 4.93 5.67
Interest on Term Loan 1.55 1.36 0.98 0.59 0.21
Interest on working Capital 0.72 0.72 0.72 0.72 0.72
Rent 2.88 3.31 3.81 4.38 5.04
Selling & Administrative Exp. 2.04 2.44 2.76 3.14 3.54
TOTAL 10.42 11.55 12.55 13.76 15.17
NET PROFIT 4.73 7.69 10.49 13.67 18.01
Taxation - 0.56 1.15 1.46 2.81
PROFIT (After Tax) 4.73 7.13 9.34 12.21 15.20
NET PROFIT RATIO 5.80% 7.31% 8.46% 9.73% 10.72%
PROJECTED CASH FLOW STATEMENT (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
SOURCES OF FUND
Own Margin 2.47
Net Profit 4.73 7.69 10.49 13.67 18.01
Depreciation & Exp. W/off 2.63 2.23 1.90 1.61 1.37
Increase in Cash Credit 6.50 - - - -
Increase In Term Loan 15.75 - - - -
Increase in Creditors 1.85 0.26 0.28 0.30 0.31
Increase in Provisions & Oth labilities 0.40 0.08 0.10 0.22 0.16
-
TOTAL : 34.33 10.26 12.76 15.80 19.85
APPLICATION OF FUND
Increase in Fixed Assets 17.50
Increase in Stock 5.34 0.71 0.73 0.84 0.83
Increase in Debtors 4.08 0.80 0.64 0.76 0.81
Repayment of Term Loan 1.75 3.50 3.50 3.50 3.50
Increase in Loans & Advances 2.00 0.25 0.25 1.00 0.50
Drawings 2.50 4.50 6.50 8.00 10.50
Taxation - 0.56 1.15 1.46 2.81
TOTAL : 33.17 10.32 12.78 15.56 18.95

Opening Cash & Bank Balance - 1.16 1.11 1.09 1.34

Add : Surplus 1.16 -0.05 -0.01 0.24 0.90
Closing Cash & Bank Balance 1.16 1.11 1.09 1.34 2.24
CALCULATION OF D.S.C.R

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

CASH ACCRUALS 7.36 9.36 11.23 13.83 16.57

Interest on Term Loan 1.55 1.36 0.98 0.59 0.21
Total 8.90 10.72 12.21 14.42 16.78

REPAYMENT
Instalment of Term Loan 1.75 3.50 3.50 3.50 3.50
Interest on Term Loan 1.55 1.36 0.98 0.59 0.21

Total 3.30 4.86 4.48 4.09 3.71

DEBT SERVICE COVERAGE RATIO 2.70 2.20 2.73 3.52 4.52

AVERAGE D.S.C.R. 3.08
 REPAYMENT SCHEDULE OF TERM LOAN
Interest 11.00%
Closing
Year Particulars Amount Addition Total Interest Repayment Balance
1st Opening Balance
1st month - 15.75 15.75 - - 15.75
2nd month 15.75 - 15.75 0.14 - 15.75
3rd month 15.75 - 15.75 0.14 - 15.75
4th month 15.75 - 15.75 0.14 15.75
5th month 15.75 - 15.75 0.14 15.75
6th month 15.75 - 15.75 0.14 15.75
7th month 15.75 - 15.75 0.14 0.29 15.46
8th month 15.46 - 15.46 0.14 0.29 15.17
9th month 15.17 - 15.17 0.14 0.29 14.88
10th month 14.88 - 14.88 0.14 0.29 14.58
11th month 14.58 - 14.58 0.13 0.29 14.29
12th month 14.29 - 14.29 0.13 0.29 14.00
1.55 1.75
2nd Opening Balance
1st month 14.00 - 14.00 0.13 0.29 13.71
2nd month 13.71 - 13.71 0.13 0.29 13.42
3rd month 13.42 - 13.42 0.12 0.29 13.13
4th month 13.13 - 13.13 0.12 0.29 12.83
5th month 12.83 - 12.83 0.12 0.29 12.54
6th month 12.54 - 12.54 0.11 0.29 12.25
7th month 12.25 - 12.25 0.11 0.29 11.96
8th month 11.96 - 11.96 0.11 0.29 11.67
9th month 11.67 - 11.67 0.11 0.29 11.38
10th month 11.38 - 11.38 0.10 0.29 11.08
11th month 11.08 - 11.08 0.10 0.29 10.79
12th month 10.79 - 10.79 0.10 0.29 10.50
1.36 3.50
3rd Opening Balance
1st month 10.50 - 10.50 0.10 0.29 10.21
2nd month 10.21 - 10.21 0.09 0.29 9.92
3rd month 9.92 - 9.92 0.09 0.29 9.63
4th month 9.63 - 9.63 0.09 0.29 9.33
5th month 9.33 - 9.33 0.09 0.29 9.04
6th month 9.04 - 9.04 0.08 0.29 8.75
7th month 8.75 - 8.75 0.08 0.29 8.46
8th month 8.46 - 8.46 0.08 0.29 8.17
9th month 8.17 - 8.17 0.07 0.29 7.88
10th month 7.88 - 7.88 0.07 0.29 7.58
11th month 7.58 - 7.58 0.07 0.29 7.29
12th month 7.29 - 7.29 0.07 0.29 7.00
0.98 3.50
4th Opening Balance
1st month 7.00 - 7.00 0.06 0.29 6.71
2nd month 6.71 - 6.71 0.06 0.29 6.42
3rd month 6.42 - 6.42 0.06 0.29 6.13
4th month 6.13 - 6.13 0.06 0.29 5.83
5th month 5.83 - 5.83 0.05 0.29 5.54
6th month 5.54 - 5.54 0.05 0.29 5.25
7th month 5.25 - 5.25 0.05 0.29 4.96
8th month 4.96 - 4.96 0.05 0.29 4.67
9th month 4.67 - 4.67 0.04 0.29 4.38
10th month 4.38 - 4.38 0.04 0.29 4.08
11th month 4.08 - 4.08 0.04 0.29 3.79
12th month 3.79 - 3.79 0.03 0.29 3.50
0.59 3.50
5th Opening Balance
1st month 3.50 - 3.50 0.03 0.29 3.21
2nd month 3.21 - 3.21 0.03 0.29 2.92
3rd month 2.92 - 2.92 0.03 0.29 2.63
4th month 2.63 - 2.63 0.02 0.29 2.33
5th month 2.33 - 2.33 0.02 0.29 2.04
6th month 2.04 - 2.04 0.02 0.29 1.75
7th month 1.75 - 1.75 0.02 0.29 1.46
8th month 1.46 - 1.46 0.01 0.29 1.17
9th month 1.17 - 1.17 0.01 0.29 0.88
10th month 0.88 - 0.88 0.01 0.29 0.58
11th month 0.58 - 0.58 0.01 0.29 0.29
12th month 0.29 - 0.29 0.00 0.29 -
0.21 3.50
DOOR TO DOOR 60 MONTHS
MORATORIUM PERIOD 6 MONTHS
REPAYMENT PERIOD 54 MONTHS
 DISCLAIMER

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