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BUSINESS PLAN

RICE HUSK ELECTRICITY


ENSURING LIGHTEN LIVELIHOOD

PRESENTED BY
SIDRA BASHIR ROLL NO: 903
SHUMAILA SAMAD ROLL NO: 937
AMNA RASHID ROLL NO: 985
FASIHA ALWAZ ROLL NO: 1003

SUPERVISED BY:
SIR. AMMAR HAIDAR

Business Name
Rice Husk Electricity (RHE)
Logo
Tag Line
Ensure lighten the livelihood
Business Profile
The purpose of the project essentially is to utilize available rice mill generated rice husk as a
sustainably grown and un-utilized waste biomass resource effectively for generation of steam
and therefrom electricity. It is important to realize the importance of waste recycling, especially
for power generation because it will pave way for preservation of the fast depleting natural
resources. Rice husk is generally used as solid fuel in combustion process by rice mills but
around 50% still go waste. Many countries including Thailand, India, Bangladesh, Philippines
use rice husk to produce electricity. In Pakistan there are about 560 listed rice mills producing a
large amount of waste in the form of rice husk.
The project will help to reduce the ever-increasing demand and supply gap of electricity besides
contributing towards economic growth and development of the area.
Mission Statement
Want to light up people' lives by providing affordable energy solution and to explore alternative
energy resources that are indigenous, cost effective, environmental friendly and quick to
implement.
Vision Statement
To provide cheap and environmental friendly energy solutions to the homes and industries of
Pakistan

Description of Venture
We are proposing the establishment of a firm that will provide electricity at affordable price to
industries and nearby residential areas. We are providing cheap electricity from rice husk at low
rate. Rice husk is wasted in Pakistan but we can utilize it in producing electricity. Further waste
(rice husk ash) can also be used in
In rubber industry as reinforcing agent
In cement industries
Cosmetics
In tooth pastes as anti-caking agents
In water purifier as purifier
The nature of our business will be partnership. Three principals would be involved each with
their own share and contribution. The principals of this venture are fresh graduates of
Management Sciences Department of University of Education, Multan.
Opportunity Rationale
Pakistan has been facing an unprecedented energy crisis since the last several years. The problem
becomes severe during the summers. Large numbers of users have to be disconnected from the
energy supply system to prevent overloading the generating stations (load shedding). On
occasions the urban dwellers had to suffer load shedding of 8-10 hours every day. During the
same time rural consumers suffered it for up to 20 hours at a stretch. Such projects not only solve
electricity problems, creates employment opportunities but also pave the way towards
development. Throughout the world of energy. It is a basic requirement for economic
development and for an adequate standard of living. As a country's population grows and its
economy expands its demand for electrical energy multiplies. If this demand is not met
adequately a shortage in supply occurs. For that reason the demand for such market is ever
increasing which plays a vital role for the overall development of Pakistan economy.

Introduction

Every person is in the state of failure. Whether it is child who fails to get good marks in test or
employee who has failed to achieve his target and get abominated by his boss whose business is
suffering from losses. All this is happening in Pakistan because of one reason only, that is the
electricity outages. Each day dozens of people are protesting on roads, outside the parliament,
governor house, WAPDA, PEPCO to demand electricity round the clock.

Pakistan have been facing acute deficiency in electricity. Currently Pakistan is going through the
crises of power outages causing destruction to our economy. At present, there is a dire need to
explore alternative energy resources that are indigenous, cost effective, environmental friendly
and quick to implement rather than just relying on dams that require long term construction
process and heavy investments.

Biomass is one such energy source that offers solutions matching the above requirements.
Biomass is organic material, which has stored solar energy from sunlight in the form of chemical
in the plants through the process called photosynthesis. Biomass fuels include agricultural
wastes; crop Residues, Wood, Woody Waste & Organic wastes etc. Unlike fossil fuels Biomass
does not add carbon dioxide to the atmosphere as it absorbs the same amount of carbon while
growing. It is the cheapest, eco-friendly, renewable source of energy.
Here we have a business plan to use indigenous alternate energy sources to generate electricity
which is cost effective and quick to implement. Pakistan is a country of diverse ecology.
Northern areas have rich reserves of pine trees littering their needles and foliage the years around
and covering vast land with thick biomass. The cultivable plans of Punjab and Sindh are
producing crops with biomass like rice husk, cotton waste, corn empty combs, shells of peanuts,
almonds, apricot and dates, even household garbage which is thrown away.

Plant Equipment and Personnel


Our equipment divided into three parts
Biomass gasifier
Biomass purification system
Generator
Production Process
Biomass gasification plant is being employed in order to generate electricity. The production
process starts with the continuous conveying of rice husks in a sequential order as follows: from
the storage yard to the indoor storage, to the grinder, to the service silo and finally to the furnace
chamber of a boiler. The process of gasification involves controlled burning of the biomass to
produce a particular cocktail of gases, called the producer gas. This gas is a mixture of carbon
monoxide, nitrogen, hydrogen, carbon dioxide and a little bit of methane. Producer gas is a
combustible gas. It is fed into a gas engine, which drives an alternator to produce electricity.
Next to the gasifier are four filters for cleaning tar and dust from the gas, and a generator in
which the producer gas is used to drive a turbine and create electricity. "The design of the plant
involved a lot of research and development, especially regarding the fuel feeding, combustion
regulation and ash removal. Raw and hot producer gas could be used for meeting thermal needs
or could be cooled and cleaned, and used in reciprocating engines or gas turbines for power
generation. Biomass gasification power generation system adopt the draft-down fixed bed
gasification furnace which saves electricity and convenient. The engines and generator, electrical
equipment should be arranged indoor, but other equipment can be arranged outdoor. The area of
building for each 200KW generator unit is approximately 40-50m2. Through the above process,
biomass gasification & power generation converts various kinds of wastes into electricity,
reducing pollution due to waste disposal and making better use of energy.
SWOT ANALYSIS

Strengths
The resources used for rice husk energy technology are mainly by-products that result
minimal cost for the raw materials in electricity production.
Rice husk technology is more reliable than the alternative energy sources.
Unlike wind turbines and dams, it is not dependent on geographic areas
Rice husk is also more strategic than other forms of biofuel because it does not take away
materials that are still edible, unlike in corn or wheat fuel.
A source of revenue is the sale of ash, a waste- product that emerges by using rice husk
technology.
Having this secure source of raw materials supports Pakistan to become more energy-
independent

Weaknesses:
Shortage of raw material
Low production of rice due to floods
Latest technology not being used in Pakistan
No government support.
Opportunity

In Pakistan, WAPDA enjoys the monopoly in producing electricity at such a big scale. The main
problem with WAPDA is that it has a high demand for electricity but its supply to its users is
low. Because of its failure in providing electricity around the clock and continual increase in per
unit electricity prices at frequent intervals many industries has built up their own power set-ups
like Bahria town. But they aren't our direct competitors. The primary reason is that our target
market is different. We are targeting those areas that are getting electricity from WAPDA at high
rates. We will provide them electricity at not only at cheaper rates but also the availability of
electricity will be ensured around the clock.

Threats

Main risk will be continuous supply of biomass and Climatic conditions. This can be mitigated
by carrying out an in depth survey of the biomass availability in the area and ensuring that the
plant can use a variety of biomass.

Marketing Mix

Product
The company aim to produce electricity by using rice husk biomass gasifier plant. The
conversion of plant material into energy takes place inside a biomass gasifier. So through this
process more electricity will be produced.

Pricing
Cost pricing strategy will be used that is after determining the cost, profit will be added to decide
at which price per unit electricity will be sold. We will charge different prices to residential and
commercial areas. Rs. 9.90 per unit will be charged to residents and Rs. 13.90 per unit to
industries.

Place
The power plant will be besides the rice mill so that transportation cost will be minimal. The
areas where are initially targeting is Gujranwala. The rationale of choosing this region is that
Gujranwala possesses many rice mills like Adil company, Agroman Crystal rice mill, Ahsan rice
mill, Al Fajar rice mill, Al haidi rice mill, Al hameed rice mill, Al Riaz rice mill, Al Shauq Rice
and processing mill etc. that make availability of rice husk around the clock. Moreover, if in any
year rice production decreases we can easily take rice husk from Narowal and Kasur where there
are availability of rice mills. So, availability of rice husk will not be a problem in this region.

Promotion
The basic marketing challenge is to come up with a cohesive campaign to attract rice millers to
take electricity from our company. This can be achieved by a giving them a solid value
proposition, that they can get reliable energy for substantially lower rates. We will make them
see the comparison of prices between rice husk electricity and the alternatives that they have.
PEST Analysis

Economic Factors
Throughout the world electricity is the most widely used and desirable form of energy. It is a
basic requirement for economic development and for an adequate standard of living. As a
country's population grows and its economy expands its demand for electrical energy multiplies.
If this demand is not met adequately a shortage in supply occurs.
Pakistan has been facing an unprecedented energy crisis since the last several years. The problem
becomes severe during the summers. Large numbers of users have to be disconnected from the
energy supply system to prevent overloading the generating stations (load shedding). On
occasions the urban dwellers had to suffer load shedding of 8-10 hours every day. During the
same time rural consumers suffered it for up to 20 hours at a stretch.
Rice Husk electricity production is a positive step in this situation because Pakistan needs such
projects. It will:
Decrease power supply shortfall
Reduce Unemployment
Provide electricity at cheap rates which in turn decreases industries cost of production that
ultimately benefit the consumers
Saves Fuel that saves country's foreign exchange reserves

Social Factors

Social factor of a country also play vital role in our business. Organia is a business that addresses
these factors. We not only are serving our economy by providing employments specially in this
non industrial area of Sahiwal, but also our target market includes all the people belonging to all
social classes. As in this stressful routines where diseases have become a threat close to occur,
Organia secures a lot of these reservations, and takes care of the life of people, as gifts of nature.
This unique thing is basically comparative advantage of our business which priory have never
been addressed by anyone .People are becoming more health conscious so Organia provides the
most secure pillows which they use in more than one third period of their life time.

Technological Factors

If you have unique technology then it became your comparative advantage but if you dont have
then it becomes a threat for you especially in nowadays quickly succeeding economy where
technology is updated within every millisecond. We hence, have ordered the best plants operated
with modern operating methods and techniques. As an entrepreneur we want of establish
relationships with our customers and we have to find out who are our loyal customers and how to
create value for them. This thing requires information and for that we are using different IS
software(s) in our business that enable us to handle our accounts as well as proper analysis about
customers. It also helps us in changing our marketing and pricing strategies if required.

Political factors

Looking at the great wide gaps between the industrial sector and government; Organia shall
focus on building long term profitable alliances amongst. Due to the political instability no
business is able to flourish properly, so a collective approach of joining hands with the
government and assisting in raising the standards of the people of Pakistan will be the major
focus.

Porter's Five Forces


Entry barriers
Economies of scale
Government policy
Product differentiation
Access of distribution channels
Powerful suppliers
Suppliers products have few substitute
Buyer is not important to supplier
Powerful buyers
Buyers are concentrated
Buyers has full information
Substitute products
These are alternative products/ brand satisfying the similar need of the customer.
Substitute products affect when the switching cost is high.
Entry
Barriers

Powerful
suppliers

Substitute Powerful
Products Buyers

Target market
Nowadays in Pakistan the electricity consumption has been surpassed and supply of electricity is
insufficient to meet the demand. Many industries have been shut down causing unemployment
due to this critical situation. These industries use more amount of electricity due to which
provision of electricity to households also affects badly. Industries should have their own
separate setup for electricity generation instead of depending on government to provide them
electricity. So the major targeted areas where we can provide electricity through rice husk are:
Industries
Households
Commercial areas
Market Segmentation
The market segmentation for biomass gasifier electricity plant will provide electricity to
the:
Commercial areas
Industrial zones
The areas where are initially targeting is Gujranwala. The rationale of choosing this
region is that Gujranwala possesses many rice mills that make availability of rice husk
around the clock. Moreover, if in any year rice production decreases we can easily import
rice husk from Narowal and Kasur where there are availability of rice mills.

Analysis of competitors

In Pakistan, WAPDA enjoys the monopoly in producing electricity at such a big scale. The main
problem with WAPDA is that it has a high demand for electricity but its supply to its users is
low. Because of its failure in providing electricity around the clock and continual increase in per
unit electricity prices at frequent intervals many industries has built up their own power set-ups
like Bahria town. But they aren't our direct competitors. The primary reason is that our target
market is different. We are targeting those areas that are getting electricity from WAPDA at high
rates. We will provide them electricity at not only at cheaper rates but also the availability of
electricity will be ensured around the clock.

Financial analysis

Statement of financing needed


The amount of Rs. 20 million is used as a startup finance. This amount will cover the initial
financial requirement for setting up a small production plant. The costs relating to
Purchase of machinery and the setup
Physical place for operation
Contract with the firms for the regular supply of rice husk
Fuel to burn the rice husk will be the major cost
Hiring of human resource for operating the machinery is the cost that would be borne at
the end of the month.

Composition of Capital

Plant and Machinery


Purchase of machinery is the major decision as it requires heavy financing. Because of capital
shortage manual feeding of rice husk is done instead of purchasing belt conveyor that can convey
the material to the gasifier furnace.
Our equipment is majorly divided into three parts, biomass gasifier, biomass purification
system and generator.
Major machinery may include feeding machine, gas tank, gasifier furnace, purifier,
filters, pipeline network etc.

Electricity production (Estimation)


200 KWH
140 KWH
160 KWH

Rice Husk (Estimation)


1680 tons
1176 tons
1344 tons

Land
A plot of around 3 kanal will be sufficient as the built-up area requirement is not more than 16
marals. Building would be taken on rent at Rs. 50,000 per month that will be around 600,000
lacs per annum or 0.6 million.
Accessories
Necessary furniture like tables, chairs, desks, storage cupboards; a small amount of stationary;
water coolers, split a/cs in the office are required that will take approximately Rs. 5 lakhs for its
arrangements.

Vehicles
Carriage Vans will be needed to bring rice husk to the desired location. Second hand vehicles
will be purchased that will approximately cost Rs. 6 lakhs.
Manpower Requirement
In order to execute the work, employees, labors are required.

Quantity Rs
Particulars

Operation manager 1 50,000

Machine operator 2 40,000

Skilled worker 2 30,000

Unskilled worker 2 26,000

Guard 5 50,000

Clerks 2 20,000
Projected Income Statement

year1 year2 year3 year4 year5


Sales 85,00,000 90,00,000 19,992,000 21,992,000 24,992,000
C.G.S 30,00,000 32,00,000 14,517,400 15,520,000 17,000,000
Gross profit 55,00,000 3,716,500 5,474,600 6,472,000 7,992,000
Salaries 1,79,000 1,79,000 1,79,000 1,79,000 1,79,000
Vehicles 600,000 5321000 600,000 600,000 600,000 600,000
Plant&
machinery 800,000 4721000 800,000 800,000 800,000 800,000
sEBIT 39,21,000 1,644,100 3,310,300 4307000 5732000
Interest 15% 15% 15% 15% 15%
EBT 33,32,850 1446808 2913064 516840 687840
Taxes 100,000 120,000 140,000 160,000 180,000
Net income 32,32,850 1434808 2899064 500840 669840

Revenue Projection
Rs. In Million
Description Start Up Year 1 Year 2 Year 3 Year 4 Year 5

Initial Investment 25

Net income After Tax 11.7 14.3 28.9 50.0 66.0

Depreciation 0.54 0.54 0.54 0.54 0.54

After Tax Net Cash Flows 12.24 14.84 29.44 50.54 66.54

Discount Factor @ 5.75 % 1 1.005 1.011 1.017 1.022 1.028

Present Value 20 12.17 14.67 28.94 49.45 64.727


Net Present Value 169.95

5.75% Discount Rate has been used


Accounting Depreciation is assumed to be equal to Tax Depreciation
time horizon for the project has been assumed to be 5 years
Depreciation is a non-cash expense

Interpretation:

The financial data and other supporting data; income statement and revenue assumptions tables,
supports the viability of the project. Its evident from the financial values that the project is not
only projectable in real course but also will give back good returns in some time.

Recommendation
We can broaden our customer base in the same market by launching personal care organic and
herbal products with promised quality standards along with the diversification of business by
introducing it in new markets.