Mauritius Renewable Energy

Market Entry Strategy
3 Options
Managing operations in Mauritius Joint Venture with a Wholly-owned Mauritian

from HQ in Singapore Mauritian company company
Macro Outlook Biomass Opportunities Business Strategy Implementation Plan Revenue & Costing Conclusion
1
Option 1
Managing operations in
Mauritius from HQ in Singapore
Pros Cons
Greater knowledge and familiarity Less control over business operations in

with Singapore laws and business Mauritius
operations Inability to resolve issues promptly
Lower awareness of our brand
Unable to build relationship with

Mauritian government and sugar
producers
2
Option 2
Joint Venture with a Mauritian

company
Pros Cons
Gain new expertise (share Lower awareness of our brand

competencies) Partnerships with sugar producers in
Established network (access to Mauritius may break if joint venture
multiple sugar producers) fails
Share risks and expenses (less risky Profit sharing with partner
in the short run)
3
Option 3
Wholly-owned Mauritian
company
Pros Cons
Greater control over operations Need to understand the corporate,
Build stronger ties with Mauritian employment, and tax laws of Mauritius
sugar producers and government Lack of understanding of operating in
Able to resolve issues more promptly Mauritius (culture, business norms)
Stronger brand awareness Higher costs and risks
Display commitment to market
Utilise tax-savings
4
Marketing Plan
Brand and Logo
Comm Energy
5
Marketing Plan
Target Audience
Small-Scale Sugar Producers Electricity Users
6
Marketing Plan
Target Audience
Mauritius Sugar Syndicate
Sugar trade fairs and conferences
Small-Scale Sugar Producers
7
Management
Plan
Stakeholder Strategy
9
Timeline of Implementation
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Incubation Start-Up Operations & Growth Monitor & Control Expansion
START
Year 1 Year 2 Year 3 Year 10
Continuous Growth Process
10
Internal and External Market Research Obtain Necessary Licenses

Analysis of domestic sugar producers in Mauritius Register business through the Companies Division
Volume of sugar produced, geographic location of Mauritius
of sugar plantations and proximity of sugar Obtain the Independent Power Producer Permit
plantations with other producers from the Central Electricity Board of Mauritius
Analysis of potential suppliers for biomass Apply for necessary business VISAs from Passport
conversion facilities and Immigration Office of Mauritius
Price, efficiency of power generation and
technical support offered
Forecast demand and supply requirements for
bioenergy in Mauritius
Consult experts feasibility studies

START
11
Government Grants and Subsidies Raise Capital

Apply for subsidies and grants for start-ups: Appeal for financing through negotiations with
International Fairs SME Refund Scheme investors and the government
Mauritius Business Growth Scheme Capital will be raised through bank loans, equity
Leasing Equipment Modernisation Scheme capital and venture capital
AFD Green Lending Scheme
SME Partnership Fund
Apply for subsidies and grants for businesses in the
renewable energy industry:
Feed-in tariffs for IPP
MSI Fund
Development Bank of Mauritius Schemes

START
12
Contract Negotiation (Sugar Producers) Contract Negotiation (Technology Provider)

Identify suitable sugar producers based on market Identify suitable biomass conversion facilities
research findings suppliers based on market research findings
Start negotiations with sugar producers by
explaining the benefits of our partnership
Economies of scale
Administrative and marketing services
Distribution services through export
Negotiate appropriate contract terms with sugar
producers such as commission and supply
frequency

START
13
Infrastructure Establish Brand (Marketing)

Set up biomass conversion facilities and office Build a relationship with the Mauritius Sugar
Begin construction of biomass conversion Syndicate to connect with more sugar producers
facilities Establish website and social media sites
Considerations: proximity to electricity
grid and space constraints
Lease industrial land and set up biomass
conversion facilities
Lease office space
Set up distribution networks
Connect central storage facilities and biomass
conversion facilities to national electricity grid

START
14
Begin Operations Establish Brand (Marketing)

Educate sugar producers on how to operate the Attend international renewable energy fairs such as
biomass conversion facilities the Biofuels International Conference and Expo to
Promote electricity generation services within expose our brand to potential export countries in
communities sugar producers and electricity future
users
Monitoring and expansion of mini-grids to
generate revenue (rental and commission)
Continuous liaising with Mauritian government to
keep abreast of progress in bioenergy policies

START
15
Evaluate Financial Performance Operational Audit and Improvement

Compare key financial indicators of company, such Consult audit firm to provide operational audit
as sales revenue, profit and market share with services
forecasts and targets Review effectiveness, efficiency and economy of
Identify causes for any divergence and operations
recommendations to narrow gap Collect feedback from staff from all business units,
Readjust forecasts and targets based on results sugar producers and customers focus group
discussions, surveys etc.
Based on feedback, implement changes to improve
system to promote growth

START
16
Diversification New export markets

Introduce value-added services by providing more Target other export markets both within Africa
tailored services for our partners, small sugar Criteria like the preference for renewable energy,
producers in Mauritius demand for energy and price offered will be used to
Consultancy arm - provide forecasting services for identify potential export countries
sugar producers to more accurately predict the Increase market share and increase both revenue
demand for sugar and profit consequently
Other services - business operations services such
as just-in-time management to increase efficiency
of sugar producers

START
17
Revenue
Generation &
Costing
Resources Requirement
Bulk of the expense outlay goes into maintain a workforce and equipment investments
Technical Resources
Wood Pellet Processing Technology
Wood Pellet Processing Equipment
Human Resources
Experts in the field to ensure optimal operational efficiency in the factories
Relatively cheap local labor to save cost
Experienced local Indonesian managers to ensure labor productivity
Legal advisors
Financial Resources
Cash
Loans from local and foreign banks to supplement working capital
19
Costing Analysis
We identified two core group of expenses: Infrastructure needs and Workforce/Inputs needs
Initial Start-Up Costs
Business Registration Cost

Cost of Incorporation $554
Trade Fee (Power Plant) $3077
Occupation Permit $2450
Independent Power Producer Permit $100
Property
Biomass Conversion Facility (100m2 x5) $350,000
Property Registration Duty $17,500
Machinery
Power Generator (200kW capacity x5) [within Biomass Conversion Facility] $400,000
Grid Connection (3km x5) $500,000
Initial Start-Up Costs $1,273,681
20
Costing Analysis
We identified two core group of expenses: Infrastructure needs and Workforce/Inputs needs
Variable Costs
Operating, Selling and Administrative Costs

Office Rental (100m2) $1,465x12=$17,580
Wages (4 technicians, 3 engineers, 2 administrative and communications staff, 2 $16,568x12=$318,816
managers and 1 higher management)
Water $1,500
Electricity $1,500
Telecommunications $614
Variable Costs $340,010
21
Revenue Generation & Costing
Our client should seek to break even by the 11th year of operation
Breakeven Analysis
12,000,000.00
Assumptions:
Sugar producers and customers grow by 5% per 10,000,000.00
annum
8,000,000.00
A rental fee of $1,000 is charged per producer
6,000,000.00
A commission of 10% of revenue from electricity sold is
charged
4,000,000.00
Electricity is sold at $0.16/kWh Break-Even by 11th Year

2,000,000.00
Cost of property and machinery, as well as operating,

selling and administrative costs grow at same pace as 0.00
growth in customers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Revenue
Rental of Biomass Conversion Facilities 0.00 0.00 300,000.00 315,000.00 330,750.00 347,287.50 364,651.88 382,884.47 402,028.69 422,130.13 443,236.63 465,398.46 488,668.39 513,101.81 538,756.90
Comission 0.00 0.00 276,480.00 290,304.00 304,819.20 320,060.16 336,063.17 352,866.33 370,509.64 389,035.12 408,486.88 428,911.23 450,356.79 472,874.63 496,518.36
Total Revenue 0.00 0.00 576,480.00 605,304.00 635,569.20 667,347.66 700,715.04 735,750.80 772,538.33 811,165.25 851,723.51 894,309.69 939,025.17 985,976.43 1,035,275.25
Expenses
Business Registration -6,181.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Property & Machinery 0.00 0.00 -1,267,500.00 -63,375.00 -66,543.75 -69,870.94 -73,364.48 -77,032.71 -80,884.34 -84,928.56 -89,174.99 -93,633.74 -98,315.43 -103,231.20 -108,392.76
Operating, Selling and Administrative Costs -340,010.00 -340,010.00 -340,010.00 -357,010.50 -374,861.03 -393,604.08 -413,284.28 -433,948.49 -455,645.92 -478,428.21 -502,349.63 -527,467.11 -553,840.46 -581,532.49 -610,609.11
Total Expenses -346,191.00 -340,010.00 -1,607,510.00 -420,385.50 -441,404.78 -463,475.01 -486,648.76 -510,981.20 -536,530.26 -563,356.78 -591,524.61 -621,100.85 -652,155.89 -684,763.68 -719,001.87
Cash Flow for Year -346,191.00 -340,010.00 -1,031,030.00 184,918.50 194,164.43 203,872.65 214,066.28 224,769.59 236,008.07 247,808.48 260,198.90 273,208.84 286,869.29 301,212.75 316,273.39
Net Cashflow -346,191.00 -686,201.00 -1,717,231.00 -1,532,312.50 -1,338,148.08 -1,134,275.43 -920,209.15 -695,439.56 -459,431.49 -211,623.01 48,575.89 321,784.73 608,654.02 909,866.77 1,226,140.16
22
Conclusion
c
Risks and Mitigation
These are the major risks that may challenge our clients entry into the industry
Non-approval
Setup a processing plant in Malaysia or
from
Vietnam, who are the first and second largest
High
Indonesian
exporter of woody pellets in Asia
Government
2
Unable to
Medium
Probability
Unable to secure
export agreements secure export Work closely with JETRO and attend
with Japanese firms agreements conferences and events to source for
with Japanese potential partners
firms
3
Non-approval from
Low
Currency Risk Indonesian

Government
Seek to transact in home currency/USD/JPY
Currency Risk
to eliminate IDR currency fluctuation
Low Medium High

Impact
24
Risks and Mitigation
These are the major risks that may challenge our clients entry into the industry
Source inputs of production from multiple

Supply Risk
High
Political Corruption suppliers

Risk
5
Medium
Probability
Transportation Work with our suppliers to ensure

Risk Transportation
engagement of quality logistics and
Risk
transportation counterparts
6
Low
Currency Risk
Political Indonesia has been showing a steady and
Corruption marked improvement over the years under
Risk the Yudhoyono & Widodo administration
Low Medium High
Impact
25
Conclusion
Our clients venture into Biomass is justified by strong demand for premium woody feed and macroenvironmental factors
1 Strong growth of biomass power generation in Japan
2 Premium woody feed is a key input material
3 Canadian woody feed imports are too pricey
4 Indonesia presents itself as a fertile ground for our clients entry
5 Our client will be able to enjoy a healthy 8.25% IRR on a 20mm investment
26
Conclusion
Our clients venture into Biomass is justified by strong demand for premium woody feed and macroenvironmental factors
1 Strong growth of biomass power generation in Japan
2 Premium woody feed is a key input material
3 You dont have to Canadian

be great to start,
woody but are
feed imports you
toohave
pricey to start to be great
4 Indonesia presents itself as a fertile ground for our clients entry
5 Our client will be able to enjoy a healthy 8.25% IRR on a 20mm investment
27
Question & Answers
28
End
29
References
Annex Business Media. (2015). Developing solid standards for biomass. Retrieved from https://www.pellet.org/wpac-news/developing-solid-standards-for-biomass
Argus Media. (2016). Biomass outlook Asia. Retrieved from http://biomassconference.mida.gov.my/biomass/SLIDE/Claire_biomass_presentation.pdf
Argus Media. (2016). Japan's Wood Pellet Imports Up 140%. Retrieved from http://www.koalaenergy.com.br/noticia/22/japan-s-wood-pellet-imports-up-140-
ASEAN Briefing. (2015). Indonesia Extends Tax Holiday in Bid to Attract More Foreign Investment. Retrieved from http://www.aseanbriefing.com/news/2015/05/20/indonesia-extends-
tax-holiday-in-bid-to-attract-more-foreign-investment.html
Austin, A. (2011). Biomass Power: Pillar of a New Japan?. Retrieved from http://biomassmagazine.com/articles/5550/biomass-power-pillar-of-a-new-japan
BBI International. (2017). Mitsubishi enters pellet market. Retrieved from http://biomassmagazine.com/articles/2200/mitsubishi-enters-pellet-market
Chen, I. (2016). Market Potential for Indonesian Wood Pellet. Retrieved from https://www.linkedin.com/pulse/market-potential-indonesian-wood-pellet-ivy-chen
Ekstrom, H. (2016). Softwood and hardwood pulpwood prices reach lowest levels in 10 years. Retrieved from http://www.woodworkingnetwork.com/wood/pricing-supply/softwood-
and-hardwood-pulpwood-prices-reach-lowest-levels-10-years
Global Business Guide Indonesia. (2012). Setting up a Business in Indonesia. Retrieved from
http://www.gbgindonesia.com/en/main/business_guide/setting_up_a_business_in_indonesia.php
Indonesia Investments. (2017). How to Establish a Foreign Company (PT PMA) in Indonesia?. Retrieved from http://www.indonesia-investments.com/business/foreign-
investment/establish-foreign-company-pt-pma/item5739?
Indonesia Woodpellets. (2017). Indonesia Woodpellets. Retrieved from http://www.pelletsfromwood.com/indonesia-woodpellets/
International Renewable Energy Agency. (2012). Renewable Energy Technologies: Cost Analysis Series. Retrieved from
https://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis-BIOMASS.pdf
30
3 Possible Options
OPTION 1: OPTION 2:
OPTION 3:
Managing operations in Mauritius Joint Venture with a Mauritian
Wholly-owned Mauritian Company
from HQ in Singapore Company
31

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Market Entry Strategy

Managing operations in Mauritius Joint Venture with a Wholly-owned Mauritian

Greater knowledge and familiarity Less control over business operations in

Lower awareness of our brand

Unable to build relationship with

Joint Venture with a Mauritian

Gain new expertise (share Lower awareness of our brand

Greater control over operations Need to understand the corporate,

sugar producers and government Lack of understanding of operating in

Able to resolve issues more promptly Mauritius (culture, business norms)

Stronger brand awareness Higher costs and risks

Display commitment to market

Small-Scale Sugar Producers Electricity Users

Mauritius Sugar Syndicate

Sugar trade fairs and conferences

Small-Scale Sugar Producers

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Internal and External Market Research Obtain Necessary Licenses

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Government Grants and Subsidies Raise Capital

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Contract Negotiation (Sugar Producers) Contract Negotiation (Technology Provider)

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Infrastructure Establish Brand (Marketing)

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Begin Operations Establish Brand (Marketing)

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Evaluate Financial Performance Operational Audit and Improvement

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Diversification New export markets

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Continuous Growth Process

Initial Start-Up Costs

Business Registration Cost

Operating, Selling and Administrative Costs

Sugar producers and customers grow by 5% per 10,000,000.00

Electricity is sold at $0.16/kWh Break-Even by 11th Year

Cost of property and machinery, as well as operating,

Currency Risk Indonesian

Low Medium High

Source inputs of production from multiple

Political Corruption suppliers

Transportation Work with our suppliers to ensure

1 Strong growth of biomass power generation in Japan

2 Premium woody feed is a key input material

3 Canadian woody feed imports are too pricey

4 Indonesia presents itself as a fertile ground for our clients entry

1 Strong growth of biomass power generation in Japan

2 Premium woody feed is a key input material

3 You dont have to Canadian

4 Indonesia presents itself as a fertile ground for our clients entry

Argus Media. (2016). Biomass outlook Asia. Retrieved from http://biomassconference.mida.gov.my/biomass/SLIDE/Claire_biomass_presentation.pdf

Indonesia Woodpellets. (2017). Indonesia Woodpellets. Retrieved from http://www.pelletsfromwood.com/indonesia-woodpellets/

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