Bio-fuel Market - India

June 2009
Executive Summary

Bio-fuels industry in India is at nascent stage and comprises of

Industry – Ethanol (made from Sugarcane - molasses)
Overview – Bio-diesel (made from Jatropha seeds)

Ethanol production was XX bn lites in 20-- while bio-diesel production was merely YY tonnes

Production cost of ethanol from molasses is INR A per litre and bio-diesel from jatropha is INR B-C

E
per litre

Drivers &
Drivers:

PL

Increasing energy demand and rise in oil
Challenges:

Raw material supply constraints

M
prices
Food vs. fuel
Challenges

A

National Bio Fuel Policy
Cost competitiveness

Policies &
Initiatives
S

Support from automobile manufacturers

Government is taking various initiatives to promote bio-fuel sector and reduce India’s
dependence on oil imports

National policy on ethanol and bio-diesel, 100% FDI and exemption of excise tax will boost the
bio-fuel sector

Company W is the major player in India with about a% market share

Other major players include Company X,Y and Z
Competition
Indian oil majors, and big corporate houses are foraying into the bio-fuel industry to cash on the
untapped potential

New entrants include Company A, B,C and D

BIO-FUEL MARKET – INDIA.PPT 2

•Industry Overview
•Drivers & Challenges
•Government Policies & Initiatives
•Competition
•Investments
•Key Developments

BIO-FUEL MARKET – INDIA.PPT 3

 Indian bio-fuel market is at nascent stage but expected to grow
significantly in coming years
Industry Overview Production distribution of bio-fuels
• Development of bio-fuels is yet at a nascent stage in
India but is being actively pursued to reduce India’s
dependence on oil imports

With x% of crude oil requirement being met through
imports, the government is promoting use of bio-fuels
• Bio-fuels primarily comprise of:

P

Ethanol (made from sugarcane - molasses)

Bio-diesel (made from Jatropha seeds) LE Punjab Chandigarh
Haryana
Uttar

M
Rajasthan
Pradesh

A
• Bio-fuels has significant growth potential in India due

S
to government initiatives, mechanisms to expand Madhya
production capacity and minimize price fluctuations Gujarat Pradesh
Chattisgarh
of key raw materials
Maharashtra Orrisa
Daman
Category Market Period CAGR & Diu
Andhra Ethanol Mixed Petrol
Ethanol production U 20-- - -- a%
Goa Pradesh
Jatropha Bio-Diesel
Ethanol production V 20-- - -- >b%
Karnataka
Puduchery Ethanol & Jatropha
Ethanol consumption W 20-- - -- c%
Tamil Nadu
Bio-diesel production X 20-- - -- >d%

Source:

BIO-FUEL MARKET – INDIA.PPT 4

Drivers & Challenges

Challenges
Raw material supply constraints
Drivers
Food vs. Fuel
Increasing energy demand and rising
oil prices Lack of Cost Competitiveness

National Bio-fuel policy

Support from automobile

manufacturers

BIO-FUEL MARKET – INDIA.PPT 5

 Ethanol and bio-diesel policies, 100% FDI and exemption of
excise tax will boost bio-fuel sector

Ethanol Policy Bio-diesel Policy

• Government approved National Policy on Bio-fuel • By the year 20--, the Planning Commission aims to
aiming a% blending of bio-fuels with petrol and diesel plant jatropha in X mn hectares of land. This will meet
by 20-- in all states except Jammu and Kashmir, the the requirement of b% blend of bio-diesel with petro-
north-east and the island territories diesel

Policies favouring
Bio-fuel growth

100% FDI Exemption of central excise tax

• 100% Foreign Direct Investment (FDI) in new and • The central government has exempted bio-diesel from
renewable energy is allowed in India, provided bio- central excise tax and is contemplating on bringing bio-
fuels are based solely on non-food feed-stocks to be diesel and ethanol under the ambit of 'declared goods’
raised on degraded or wastelands

Source:

BIO-FUEL MARKET – INDIA.PPT 6

 Company W is the major player; many small and big firms, are
showing interest in setting up bio-fuel production plants
Domestic Bio-fuel Producers Market Share
• The bio-fuel industry is at a nascent stage and hence
it offers huge untapped potential for existing and
upcoming players Others
a%
• Government initiatives and policies to promote the
industry have encouraged new players to enter the
market

PLE

More than a companies (including state owned oil
companies and b) have shown interest in the production
of bio-diesel
b%

than v% of the market share

• Other Major Players:

Company W S M
• Praj Industries is the major player in India with more

A
Company W

Revenues of major players (2007-08)

Company X Company W A

Company Y

Company Z Company X B
• New entrants:

Company U Company Y C

Company V INR mn
Company Z D

Going
Going forward
forward the
the bio-fuel
bio-fuel industry
industry is
is expected
expected to
to have
have more
more competition
competition and
and big
big players
players
Source:

BIO-FUEL MARKET – INDIA.PPT 7