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Sub: Attractive Biomass Pelleting Business Looking for Equity Investors

Introduction to India’s Largest Biomass Pelleting Plant

Recently, I had the opportunity to meet an interesting biomass sector professional in Delhi – Bharat Sharma.

And he took the trouble of taking me all the way to Roorkee so that I could see his pretty awesome biomass pelleting plant, perhaps the largest in India – can do over 400 tons of pellets a day…

While there are quite a few biomass pellet making facilities in India, I doubt anything is of this capacity.

Biomass Pellets – Aren’t they an expensive option?

Honestly, I had not done much work in biomass pellets as I had always felt that these were too expensive for India – for those new to biomass as a fuel, biomass briquettes (fairly large, mini brick sized solids) sell for about Rs 6/Kg while pellets, which are as thin as pencils almost, sell for about Rs 9-10 /Kg.

At such an expensive price, I thought there was little chance that the end users who use biomass in their boilers for heating and/or for power generation will use pellets.

During the trip from Delhi to Roorkee, Bharat explained to me how pellets are in fact more economical than briquettes if one considered the entire operational chain for the use in biomass boilers.

Cutting a long story short, he has proof for this – he has been able to convince the likes of Coca Cola and Pepsi to shift from briquettes to pellets.

Well, I would say the jury is still out on whether pellets can win over briquettes in India for large scale use in boilers, but Bharat certainly has a convincing story to narrate.

The Real Market for Biomass Pellets is Not in Boilers!

But Bharat has more ambitions than just make briquette users shift to biomass pellet users.

He has put together an interesting concept whereby he can enable thousands (or tens of thousands) of commercial and industrial sectors to start using biomass instead of costlier alternatives such as diesel or LPG. This is where his rather innovative pellet based appliances enter.

You see, Bharat realized that a large market is available for biomass pellets in the commercial and industrial sector where much smaller appliances (much smaller than boilers) are used to generate heat. These could be medium and large restaurants and hotels, for instance. A number of other sectors such as textiles and related domains could also benefit from the use of pellet based heaters.

This market is fairly unorganized right now, uses costly and polluting fuel and does not have any branded players in the heating fuel or fuel appliance supply sector.

Bharat’s idea is to target these commercial establishments with the following business model:

He will supply the appliance and also will be the regular supplier of biomass pellets.

You see, this segment is far more attractive because, even at a price of Rs 10/Kg, pellets are economically more attractive than the use of diesel or LPG. And there is no competition from briquettes because briquettes cannot be used in these smaller appliances.

Pellet Energy Systems’ Business Case

So, Bharat’s business case is as follows:

He will be the country’s largest manufacturer of biomass pellets, and will supply to a select group of companies for large scale use in boilers, and will be an integrated supplier of appliances and pellets for smaller scale establishments.

To begin with, he will focus on northern India (especially, Punjab, Haryana, NCR, Uttaranchal, UP…) and will gradually expand his business to all over the country.

As I mentioned earlier, he has already put together an awesome 400 tons/day pellet plant at an investment of about Rs 50 crores…

Looking for an Equity Investor

Pellet Energy Systems is looking for an equity investor to support his expansion plans. The additional equity will be invested in setting up the appliance making unit, for which he has the complete design available.

I found Bharat to be a transparent and positive entrepreneur, with a fairly strong business case.

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Bharat is keen to meet equity investors in this regard and explain his business and his business case.

I request those of you interested in interacting with Bharat to send an email to consult@eai.in

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I look forward to hearing from interested equity investors – whether from private equity sector, or from strategic corporate investors.

Thanks

Narasimhan Santhanam

Co-founder & Director

EAI

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Some pictures from the pellet plant visit I made

The factory main building

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The large storage area for the raw biomass (mainly saw dust)
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The biomass feedstock sent through the drying process

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The massive rotary drum dryer

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Inside the pellet mill

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The bagging /packing section

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Also check out: EAI Consulting for Bio-energy & Biofuels, Bioplastics & Other Biomass-based Value Added Products

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