full & final report

Entrepreneurship & Business Project DevelopmentCourse Code: F--306

Bangladesh in one of the least developed countries in the world. In such a country like

ours where people strive to maintain a minimum living standard, the price of fuel is

mounting. Present government of the Bangladesh is now in a great challenging

position for the regular increase in the power and fuel price. It is fully dependent on

the imported power and fuel to meet the ever increasing demand of its citizen. As a

result, Bangladesh government is spending millions everyday as subsidy in the

petroleum sector. In search of a way to help the government in these situations

whether through a giant or a small initiative, we the business students of University of

Dhaka came up with a new idea to start a medium sized (in capital) fuel business in

the petroleum industry. We have named our business “Green Energy” because we will

be both generating the fuel and making it available to people in an easy way. We are

dealing with the sole product of our business named “bio-fuel” generated from

renewable sources like sea algae. Fuel generated from any nature friendly source

means that it will emit lower amount of hazardous particles in the environment, will

be low-priced, good for the engines and will definitely provide a better mileage than

conventional fuel which is endangering our lives and also the next generation. In that

sense, we call our fuel as a green fuel also. Our product bio-fuel can bring

revolutionary change in the power and fuel industry of Bangladesh, as a new product.

At the same time it will be less costly and environment friendly energy. Our product

analysis discloses that it will be a perfect product in the context of our country. Our

business is Bangladesh based and we are targeting only consumers such as

manufacturing organizations, private car owners, public transports, necessary goods

carrier and also the agricultural sector in our country. The marketing plan specifies

that it can be possible to target potential customers and to distribute our product to

them. So, in near future, we want to see ourselves as one of the promising businesses

of bio-fuel in the petroleum sector of Bangladesh. We are planning for being a private

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EXECUTIVE SUMMARY


limited company and the possible time to start the business is 1st May, 2014. Initially,

we will need 11 office employees and 30 factory workers later as our production

capacity will increase, the number of workers will increase. Initially we will invest

10,000,000 taka in our business. 60% of this investment will be collected as financial

leverage (debt) and remaining 40% will equity capital. We will invest 6,500,000 taka

in fixed asset; 2,800,000 taka in the initial current asset and the remaining 700,000

taka as startup cost. From the financial plan, we are suggested that it will be a

profitable company in the future. At the end, we want to conclude that our bio-fuel is

able to save subsidy of Bangladesh government in petroleum sector and increase the

purchasing power of general mass indirectly by reducing the transportation cost of

daily necessary goods.

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Brief Description of the Business


Brief Description of the Business

Name of the Business: Green Energy Pvt. Ltd.

Nature of Business: Green Energy Pvt. Ltd. is an Algae Bio-fuel manufacturing company.

Sector/ Industry: Power and Fuel Industry.

Objectives: The objectives of our business are as follows:

I. Habituating people to use an alternative source of Bio-fuel from Algae.

II. Serving the country with a low priced fuel.

III. Rescuing the world and our country from the severe fuel crisis.

IV. Improving the economy of our country by creating a new dimension for employment

opportunity and reducing the inflation rate.

V. Developing the new fuel industry in our country to keep pace with the modern developed

country and properly utilizing our ample algae resources.

Type of Company: Private limited Company.

Core concept of the Business:

The energy crisis that hit the world in the recent decades has triggered off the race for

invention of effective as well as cheap bio-fuels. As we know, Bangladesh is a developing

country and it is also not out of this severe energy crisis. Present government of the

Bangladesh is now in a great challenging position for the regular increase in the power and

fuel price. It is fully dependent on the imported power and fuel to meet the ever increasing

demand of its citizen. Lack of technology and sufficient fund to use our natural resource

properly, unawareness and less eagerness to use alternative energy sources, higher cost of

using the solar energy encourage us to participate in the race for the invention and

utilization of the cheap and effective Bio-fuels from the Algae with the developed county

over the world. Algae petroleum is one of the 3rd generation bio-fuel that has been derived

from algae. The concept of algae culture or algae farming has been derived as a result, and

many forms of algae fuels like cooking oil, biodiesel, bio-ethanol, bio-gasoline, etc. are in the

process of development. Algae are one of the best examples of putting eco-friendly

resources to use, as none of the products derived from algae are considered to be

pollutants. In many industries, algae bioreactors are used to curb the emission of carbon and

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carbon compounds. Nowadays many countries are giving emphasis to produce bio-fuel from

algae at a commercial level. A recent research in the New York city shows that the innovative

process of producing Algae Bio-fuel is at least 40 percent cheaper than that of others now

being used. Supply will not be a problem: There is a limitless amount of algae growing in

oceans, lakes, and rivers, throughout the world. That’s why we decide to make our business

plan on the production and commercialization of the Algae bio-fuel.

Total Investment

Investment Fixed Assets Current

Assets

Start-up

cost

Total

10,000,000 6,500,000 2,800,000 700,000 10,000,000

Loan and Equity

loan Equity Total

6,000,000 4,000,000 10,000,000

Potential Market

Local Market International Market

During the first 3 years of our business of

Algae Bio-fuel, we will target only

Dhaka metropolitan city to serve. Then

we will target entire Bangladesh from

district to district, as our production

capacity, skill and competency will be

increased by that time. We will sale our

product through local dealers and factory

sales will also be encouraged.

Our product has the potential for export

in almost every country of the world

because fuel crisis is a burning problem

all over the world. Although there is huge

demand of our product but due to our

small capacity at the beginning years of

our company we can’t go for international

market. But we have plan for global

expansion in the upcoming future.

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Description of the Product

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Description of the Product


The world energy demand is expected to rise 60% by 2030; oil consumption has increased by

20% since 1994, while the European Union import dependency has reached almost 54% of

its energy requirements in 2006. Land filling of bio waste is one of the major sources of

methane emissions. Additionally attention is being focused on the treatment of bio waste to

address difficulties in their direct utilization, cost-efficiency and its output product pollution.

Moreover, the need to focus on ‘non-food’ energy crops for the production of 2nd

generation bio-fuels and develop cost-efficient solutions has been revealed and underlined

in the recent report of the Food and Agriculture Organization. In fact, currently, the

production of biogas is principally carried out through anaerobic fermentation of (mixed)

cereal crops. So, one promising source of bio-fuels has been identified as marine algae

grown in large open ponds. The algae would be harvested and turned into a carbon neutral

fuel source.

Product

An alternative low-priced, environment friendly fuel named “algae-Fuel”. It will be produced

from sea algae. The existing large-scale natural sources are of algae are: bogs, marshes and

swamps - salt marshes and salt lakes. Micro-algae contain lipids and fatty acids as membrane

components, storage products, metabolites and sources of energy. Algae contain anything

between 2% and 40% of lipids/oils by weight.

Features of the product

It is a scientifically proven and renewable natural resource of bio-fuel. Normally, maximum

diesel engines do not require any modification to use bio fuel. So it will not face any problem

in that case. It can cover a huge market demand efficiently and economically. It will also

provide an acceptable margin for sellers and can still be cheaper for buyers of conventional

fuel. It will provide high safety and better mileage for car engines especially. Lastly, it will

stand in line with the need of a country like ours through reducing the transportation cost of

daily necessities ultimately lowering price of those goods.

Comparative Advantages

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It will be less expensive than “Normal Fuel”. Its production process is less costly and less

complicated. Moreover, it is very unique fuel for all types of engines. It is more environment

friendly product. Algae and aquatic biomass has the potential to provide a new range of

third generation bio-fuels, even including jet fuels. Their high oil and biomass yields,

widespread availability, absent (or very reduced) competition with agricultural land, high

quality and versatility of the by-products, their efficient use as a mean to capture CO2 and

their suitability for wastewater treatments and other industrial plants make algae and

aquatic biomass one of the most promising and attractive renewable sources for a fully

sustainable and low-carbon economy portfolio.

Producing biodiesel from algae has been touted as the most efficient way to make biodiesel

fuel. The main advantages of deriving biodiesel from algae oil include:

Rapid growth rates,

A high per-acre yield (7 to 31 times greater than the next best crop – palm oil),

Certain species of algae can be harvested daily,

Algae bio-fuel contains no sulphur,

Algae bio-fuel is non-toxic,

Algae bio-fuel is highly bio-degradable, and

Algae consume carbon dioxide as they grow, so they could be used to capture

CO2 from power stations and other industrial plant that would otherwise go into

the atmosphere.

Comparative disadvantages

Normal Fuel is more familiar to the consumers than algae-Fuel. Acceptance of this fuel may

take time. Its Viscosity may vary which needs more inspection during the production time. It

will be more costly than CNG in some extent which can bring a massive competition for our

product. Marketing or advertising of this new product is the most problematic than other

factors. It totally depends on the consumers’ view of acceptance. Another disadvantage is in

case of expanding the idea; it cost a lot in the research and development sector.

Research and Development

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Currently most research into efficient algal oil production is being done in the private sector

in some countries over the world but if predictions from small scale production experiments

bear out then using algae to produce biodiesel may be the only viable method by which to

produce enough automotive fuel to replace current world gasoline usage, according to U.S.

Department of Energy.

Research into algae for the mass-production of oil is mainly focused on micro-algae. The

preference towards micro-algae is due largely to its less complex structure, fast growth rate,

and high oil content. Some species of algae are ideally suited to biodiesel production due to

their high oil content – sometimes topping out near 50%. Some commercial interests into

large scale algal-cultivation systems are looking to tie in to existing infrastructures, such as

coal-fired power plants or sewage treatment facilities. This approach not only provides the

raw materials for the system, such as CO2 and nutrients; but it changes those wastes into

resources.

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Marketing Plan

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Marketing Plan


Analysis of Competitors

In the power and fuel industry of Bangladesh, all types of fuel are imported by Bangladesh

Petroleum Corporation. They are the sole distributor in Bangladesh in case of petroleum.

Bangladesh government gave all types of authority to handle petroleum product through

Bangladesh Petroleum Corporation ordinance 1976. Padma, Meghna and Jamuna ltd are

three subsidiary companies of BPC who distribute fuel all over the country on behalf of

Petroleum Corporation. Other multinational companies like Shell, Chevron are mainly

working to produce Gas in our country. So, in that sense, we don’t have any direct

competitor in the market. We can consider the international company from which BPC is

importing fuel is our soul competitor. Beside that use of will also bring competition for our

product.

SL Competitor Position

1 Companies from which BPC is importing

petroleum currently

First

2 CNG Second

Comparison of product with customer

Strength Weakness Opportunity Threat

Renewable

source of fuel.

Simple

production

process.

More costly than

CNG

Less familiarity.

Huge market

Demand

Introduction

Of a new source fuel.

Future govt. support.

Foreign

companies

can enter

into the

market. like

Chevron,

Shell

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Green Energy Less costly

product.

Engine

modification is

not necessary.

Immense

scope of

competition

International

Competitor

Ability to meet

huge demand

Most familiar

fuel product

High price

Differ product

for different

engine

No specific

promotional

activities for the

product

They can also supply

their bio-fuel product

After

introducing

eco-fuel

govt. may

not be

interested to

import these

product

Local Competitor

Ability to

supply at a low

price.

Engine

modification is

necessary to use

it.

Gas used to

produce it is not

unlimited

Market acceptance.

Can be used as an

alternative of oil in

different purposes.

Price of gas

is gradually

increasing.

Pricing Strategy

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The pricing strategy for our product will be based on the cost. That means we shall use the

‘cost plus pricing method‟ to price our product Algae-Fuel. It must be lower than the

existing fuel market price.

year Product category price(TK)

2013-14 Algae Bio-Fuel 43





Distribution Strategy Distribution Strategy:

We will sell our product to Bangladesh Petroleum Corporation, a sole distributor of petroleum in Bangladesh. They will sell our product all over the country through different filling stations. Besides this, we will sell some of our product through dealers and in our factory as factory sales. For the first 3 years of our business we will distribute our algae fuel only in the Dhaka Metropolitan area and we will try to expand our business in the whole country with the pace of time advances. We are thinking to distribute our product in free of cost to the different tourist organizations for the special promotional activities.

Promotional Strategy

Print Media: We will contact with the different newspaper and

magazines to make an Advertising Contract with them.

Television Media: We will make a contract with ad agencies to make

an advertisement showing different aspects of our product.

Banners and Billboards: We will use our banners and billboards in

different busy highway for the publicity for our product beside that in

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different filling stations, we also use our banners to provide knowledge

to the consumers about our product.

TAC (Tourist Awareness campaign): We will distribute our product free of

cost to different travel agency of our country. In return, they will use our banners

and stickers in their car. Through this way, we can do branding of our product to the

foreign people who will visit our country. In this way, our company will get

recognition all over the world.

Green Energy Forecasted Sales

(1% of yearly BPC Sales)

(BPC Yearly Sales are shown in the Appendix)

Year Quantity Unit Price Total taka

2014

3,000,000 43 129,000,000

2015

3,000,000 43 129,000,000

2016

3,000,000 43 129,000,000

2017

4,500,000 45 202,500,000

2018 4,500,000 45 202,500,000

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1 2 3 4 50

50000000

100000000

150000000

200000000

250000000

Projected Sales

year

Year

Year

ly p

roje

cted

sale

s

Figure 1: Yearly projected sales

Market Segmentation

As per the rule regarding petroleum in Bangladesh, Bangladesh Petroleum Corporation (BPC)

is the sole distributor of petroleum in Bangladesh. Companies exporting petroleum in our

country trade under BPC. We shall do the same. After extracting our fuel, we will go for

distribution through BPC. So the customers served by BPC are our customers also.

Farmers

Bangladesh being an agro based country needs a high level of irrigation

when cultivating the lands. To irrigate our lands, farmers use machines

which are operated by using diesel. This diesel is very costly to the

farmers and on the other hand pollutes our environment. For this

reason, we have decided to provide our bio-fuel to the farmers also to

operate their machines. The result we acquired from them is:

Characteristics:

The farmers of our country live below the poverty line. So, it is very obvious that

almost all of them are price conscious rather than considering quality. To know more

about the characteristics of the farmers, they were asked about whether they prefer

saving the environment over financial consideration. It led us to conclude that they

are also in a neutral state regarding such matter.

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Factors considered when buying:

According to the farmers, the fuel should be available to them through selling agents

because it is easier for the farmers to interact with the agents rather than going to

the filling stations. Another fact about the farmers that we came across through the

survey was that they want our fuel not just because of the low price, also because our

fuel comes from a renewable source.

Manufacturing organizations

Manufacturing organizations were surveyed because most of the organizations have

their own transport to distribute their products to the consumers. If they were

provided the low priced Green Energy fuel, it is obvious that the price of such

products will be lowered. The results are:

Characteristics:

Most of the organizations prefer the quality of the fuel, rather than considering the

price. They said that they are quality conscious to a great extent because they want

their car engines to be working smoother. Coming to the dilemma of choosing

between saving the environment and financial expenditure, most of them were

agreed to save the environment from dangerous particles emitting fuel.


When they were asked about how they want to avail our product, they expressed

their desire to get it from the filling stations which is another factor to them

whenever buying the fuel. They also concluded that other than the cost, the reason

to switch to bio-fuel was that it was saving our environment.

Public Transport

The last group of consumers who were surveyed by us for their valued opinion was

the public sector. Whatever they think of our algae-fuel was very important to us to

project the future of our business.

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Characteristics:

Most of them preferred a quality fuel for their engines, rather than focusing on the

price only. When they were asked to make judgment on the matter that saving our

environment is much more important than the financial expenditure, they were

totally agreed with us.


100% of the owners said that they want to take the fuel for their engines from

the filling stations nearby. The owners were considering a high mileage with

the fuel as a reason to switch to bio-fuel other than cost.

Marketing Budget

Items 2013-14 2014-15 2015-16 2016-17 2017-18

Promotion cost 900,000 900,000 750,000 750,000 720,000

Distribution cost 200,000 150,000 100,000 100,000 100,000

Total 1,100,000 1,050,000 850,000 850,000 820,000

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Implementation Plan

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Implementation Plan


To implement the plan, at first it is needed to register the business as a private limited

company under the company act. That will require at least 1 month. Then it will be

needed to apply for the loan to meet up capital expenditure. And at least 1 month and

15 days require fulfilling this activity. In the mean time, the required resources are

needed to be acquired for the proper start up of the business. And at least 1 month

and 15 days require rent a space for office. Besides these, 3 months are needed to

connect the utilities. For the recruitment of personnel it is required 2 months. For the

completion of other activities, at least 1 month is needed. This start up activities can

be described as following table:

Business Start-up Activities Time Cost

Business Plan Preparation 1 month 60,000

Registration 5 months 100,000

Application for loan 1 months and 15 days 40,000

Leased Land/Office rent 1 month and 15days 300,000

Connection Of Utilities 3 months 70,000

Recruitment 2 months 50,000

Others 1 month 80,000

Total 16months 700,000

Table: Business Start-up Activities and Cost

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Operational plan

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Operational Plan


Basic Production Process of Algae fuel

Step-1: Choosing the Right Algae

Our bio-fuel production will start with the choice of right algae from which we can produce

high quality bio-fuel. It is the first step in bio-fuel production.

General Aspects to Consider:

There are many aspects to consider when choosing the right algae for biodiesel production.

In order to achieve the highest possible production rate of oil, oil content has to be balanced

against growth kinetics. Furthermore there are many advantages in having a healthy species

of alga since the system will be less sensitive to variations in parameters like temperature,

pH and salinity. Size and oil composition are also important in order to achieve a simple

separation and post processing. Last but not least, it is important that the alga strain is well

known and that sufficient research and information exists.

Step-2: Choosing an Algae Strain

Algae with high oil content from the list in Micro- and Macro- Algae: Utility for industrial

applications by Anders S Carlsson et al 2007 (14) were investigated. When considering

important parameters it resulted in further evaluation of the following three algae:

Phaeodactylumtricornutum, Chlorella Protothecoidesand Botryococcusbraunii. After a

conversation with the commercial company Algae Link the algae Nannochloropsissalinawas

also investigated.

B.brauniiis is one of the most known hydrocarbon producing algae. This fact that it’s well

known and thoroughly researched is one of its strengths. If an unknown alga strain is

chosen, expert knowledge and extensive research are required to produce necessary data

concerning oil composition and to properly dimension the equipment.

So, after this stage we select B. brauniialgae to produce bio-fuel.

Step-3: Algae grown for production

We have to grow algae for our bio-fuel production. We will follow closed system to grow

algae.

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Closed system

A method for growing algae is a vertical growth or closed loop production system. This

process actually came about as bio-fuel companies sought to produce algae quicker and

more efficiently than what was possible utilizing open pond growth. The closed photo

bioreactor system consists of a number of transparent reactors. The reactors are designed to

maximize the absorption of the incoming light and to minimize negative effects such as

oxygen oversaturation. And unlike the open pond method where algae are exposed to

contamination, the vertical growth method isolates algae from this concern.

Type of reactor

The preferred reactor will be the closed photo bioreactor, since the open ponds suffer from

contamination risks together with high evaporative losses of water and diffusion losses of

CO2. This means that the investment cost will be significantly higher, but also that the

separation step will be easier, due to dense cell cultures. Land area unsuitable for

agricultural activities are generally sparse on fresh water, why the loss of water should be

minimized, this supports the closed reactor. Of the different kinds of closed reactors,

tubular, flat and in polyethylene bags, the tubular reactor is chosen. The research on

polyethylene bags is not sufficient for the bags to be an alternative. The tubular reactor has

a better photo efficiency than the flat reactors, and will be the preferred choice.

Step-4: Extracting oil from algae

Once the algae are harvested, the lipids, or oils, are extracted from the walls of the algae

cells. There are a few different ways to extract the oil from algae. But we will use the mostly

use method Oil Press to extract oil from algae.

Oil press

This is the simplest and most popular method.

It can extract up to 75 percent of the oil from the algae being pressed.

Oil press process

First the algae are ground into an algae paste using large milestones.

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http://en.wikipedia.org/wiki/Millstone


The algae paste generally stays under the stones for 30-40 minutes

After grinding, the algae paste is spread on fiber disks, which are stacked on top of

each other, then placed into the press. Traditionally the disks were made of hemp or

coconut fiber, but in modern times they are made of synthetic fibers which are

easier to clean and maintain.

These disks are then put on a hydraulic piston, forming a pile. Pressure is applied on

the disks, thus compacting the solid phase of the algae paste and percolating the

liquid phases (oil and vegetation water). The applied hydraulic pressure can go to

400 atm.

To facilitate separation of the liquid phases, water is run down the sides of the disks

to increase the speed of percolation. The liquids are then separated either by a

standard process of decantation or by means of a faster vertical centrifuge.

Step-5: Transesterification

Once the oil's extracted, it's refined using fatty acid chains in a process called

transesterification. Here, a catalyst such as sodium hydroxide is mixed in with an alcohol

such as methanol. This creates a biodiesel fuel combined with a glycerol. The mixture is

refined to remove the glycerol. The final product is algae biodiesel fuel.

Production capacity

For the 1st three years 3000,000 liters of bio-fuel will be produced at unit price of tk.43

making a total of tk. 129, 000,000. In the fourth and fifth year 4,500,000 liters of bio-fuel is

planning to be produced at unit price of tk.45 making a total of tk. 202,500,000. We will try

our level best to fulfill our production capacity planning. This planning is based on the

resources what we will need for our production. It is fully analyzed in Appendix 1.

Resource requirements

For initiating our business operations we will definitely need some resources including fixed

assets, current assets, and start-up costs.

Fixed assets

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Fixed assets are those assets which are tangible and must needed for our business which

cannot be converted to cash easily.

We need a patent for our bio-fuel which will cost tk.350,000

We need a machine for our production of bio-fuel which will cost tk. 2,050,000

Warehouse is must for a better inventory management which costs

tk.1,000,000

Our main business factory with storage facilities will cost tk.1,500,000

Vehicle is needed for better sales and marketing system will cost tk.800,000

Furniture needed for our administrative office will cost tk.200,000

Air cooler and computer needed for proper business management will cost

tk.200,000 respectively.

Furniture needed for factory arrangements will cost tk. 200,000.

For proper management we will use computers that cost tk. 200,000.

So, Total cost of fixed assets will be approximately tk. 6,500,000.

Current assets

Current assets are all assets that a person can readily convert to cash to pay

outstanding debts and cover liabilities without having to sell fixed assets.

Raw material needed for bio-fuel production will cost tk.600000

Wages of the workers will show a total of tk.400000

Manufacturing overhead will cost tk.400000

Administrative expenses will cost tk.400000

The most significant part of our business, marketing segment will incur

expense of tk.10,00,000

Start-up costs

Every business incurs start-up costs at the beginning of their business which is not

avoidable. We make a list of the start-up activities of our business and their costs.

At first the business plan preparation will cost tk. 60,000

Legal registration of our business will cost tk.100,000

Application for a business loan costs tk.40,000

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Land leased and Office rent will cost tk.300,000

Connection fee of utilities will cost tk.70,000

Beginning recruitment costs tk.50,000

Others will cost tk.80,000

Workforce Engaged in Production

Yearly direct and indirect wage for the first 3 years are:

Designation Number Salary/person Time Total

Factory

Manager

1 15,000 12 months 180,000

Chemist 2 15,000 12 months 360,000

Assistant.

Chemist

2 10,000 12 months 240,000

Direct labor

(permanent )

10 2,900 12 months 348,000

Indirect labor

(permanent )

3 975 12 months 34,750

Supervisor 1 3,500 12 months 42,000

Guard 2 2,500 12 months 60,000

Total 21 1,263,750

Inventory Management

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In our inventory, there will be two types of inventory. One is raw material and another one is

finished product that is Bio-Fuel. It will be our policy to complete our production fully within

a year that will help us to have zero wok-in-process inventories. In case raw material, we will

determine the order size by using Economic Order Quantity which will minimize the total

raw material cost (ordering cost, carrying cost) for our company. Timing of placing an order

will be determined by calculating the reorder point after considering the safety stock.

In case of finished goods, we will determine how much we should produce in each

production

Run on the basis of Economic Production Size that will help us to minimize the cost for

finished product.

For the purpose of inventory control, we will use ABC analysis. It means, we will divide our

inventory in three sections depending on their value. A category includes highest valued

inventories and it will be under tightest control. B category includes second highest valued

inventories and it will be under moderate control. C category includes inventory having

minimum value which will be under simple control.

The storage section or warehouse will be owned by the company. Our product is one kind of

fuel so we have high risk of fire. For security purposes, we will build our warehouse and

storage in such a way that will help to adjust the temperature for our product time to time.

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Organizational and Management Plan

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Organizational & Management

Plan


Organizational Structure

The organizational structure of Green Energy Pvt. Ltd is divided into 3 levels. Top level

management, mid-level and operational level are the three levels of management.

Top level management

Top level is responsible for strategic decision making. Mainly the board of directors and CEO

will be included in this stage. Their main purpose is to create the mission, vision for the

organization and long term goals for organization.

Mid-level management

Mid-level management is mainly responsible to implement the plan created by the top level.

All the departmental heads are included in this level like CFO, Head of the Human Resource

department etc. They are responsible for plan.

Operational Level

Operational level managers are the lowest level of the management hierarchy. They work

with the operational level employees and labors to implement the plan of mid-level which

will ultimately fulfill the goals of top management.

Goals set by the top management are in the strategic level. It is very important to interpret

those goals to all levels of employees. After understanding that they can realize what they

need to accomplish from their position to achieve the overall goal of the organization.

Management Team

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S

I

Name Designation Experience Qualification

1 Not Recruited

yet

Director, Finance

&Accounts

5 years

minimum

Chartered Accountant

2 Not Recruited

yet

Director, HR 5 Years

minimum

MBA, Major in HRM

3 Not Recruited

yet

Director, Production 5 years

minimum

MBA, CMA

4 Not Recruited

yet

Director, Marketing 5 years

minimum

MBA, Major in

Marketing

Page | 29Organogram


Figure 2: The organogram of the organization

Succession Plan

Page | 30

Top Management(CEO)

Manager (Marketing)

Manager (HRM)

Manager (Production)

Manager (Finance & Accounts)

ControllerTreasurer

Factory Manager

Sales OfficerOfficerWorke

rOfficer

Officer


Green Energy is a private limited company. All of its shares are equally distributed among

the entrepreneurs. In the absence of these entrepreneurs, their selected persons will

continue the business on behalf of them. If shares are sold, new shareholders will run the

business. If any emergency arrives the company will be dismantled according to the

Company Act 1994.

Office Equipment

Fixed Assets Quantity Per Unit Cost Total Cost Depreciation

Furniture 150,000 5,250

Computer 5 40,000 200,000 5,000

Air cooler 4 50,000 200,000 5,000

Total 550,000 15,250

Salary of the Employee

For the first 3 year the salary will be same after that it will change.

SI Designation Number Salary per person Total Salary Yearly Salary

1 CEO 1 30,000 30,000 360,000

2 Manager 6 15,000 90,000 1,080,000

3 Officers 4 10,000 40,000 480,000

4 Clerk 2 5,000 10,000 120,000

5 Cleaner 2 2,500 5,000 60,000

Total 2,100,000

Administrative Expenses

Page | 31


Items Amount

Salaries & Wages 3,363,750

Utilities expense 120,000

Office rent 110,000

Audit fee 75,000

Depreciation 417,750

Printing and stationary 50,000

Insurance 120,000

Recruitment and training 120,000

Research and development 300,000

Amortization of preliminary expenses 17,500

Convenience 80,000

Legal and other professional expenses 112,000

Total 47,66,000

Monitoring and Evaluation

Organization’s strategic goals will be determined by the top executives .Those goals will be

interpreted to each level of management and guidelines will be sat for every level like what

their responsibility is to fulfill the goals, how they can contribute from their own position to

add value. Every employee must be clear about their authority and responsibility in the

company. So, periodically their performance will be evaluated with the standard sat by the

top management for example whether they are contributing properly to attain the goals of

the organization or not. If there is any deviation, corrective action will be taken to increase

efficiency. Reward system will be implemented to appreciate employee for their good

performance.

For performance evaluation, we will divide our all segment as different centers. Like cost

center, profit center and investment center. Cost and profit center will be evaluated

depending on the periodical segment report and investment center will be evaluated

depending on the return on investment ratio and residual income.

Page | 32


Corporate Social Responsibility

First and most important social activity of our business is to serve our society by providing

our high quality product with a minimum price.

By habituating people to use eco fuel, we will help to build a pollution free green

environment in our country. It will be a subconscious process of developing pollution free

environment.

Research and Development

Since, it is bio fuel manufacturing company, we need to do a lot of research and

development activities to improve the quality of our product and at the same time we need

to find out new renewable source of fuel. Our research and development works will focus on

the following areas:

Improving quality of the fuel.

More cost efficient way of production.

Finding new source from which more oil can be extracted.

Making more environment friendly product.

Training and Development

For continuous performance development, we will implement some training program in our

organization for the employees. Training program will focus on the skill development of the

employees, adaptability in difficult situation, innovative thinking development, ethical

learning

Page | 33


Risk Assessment

Page | 34

Risk Assessment


Risks Inherent to the Business

Businesses are not free of risk. A business without risk is impossible to conduct. Some risks

can be controlled and some cannot be. Our business of bio-fuel production from algae also

faces some risks. We have classified the risks mainly in two types. These are:

Unavoidable Risk

Avoidable Risk

Unavoidable Risk

Unavoidable risks are mainly natural calamities and change in weather. Some risks are

inherent in the type of the business, so these are unavoidable too. Some of these

unavoidable risks are discussed below:

Fire:

in our fuel production process many highly flammable materials are used.

Sometimes produced oil is stored in the factory for some time before distribution. If

the flammable materials are not kept in safe place or the produced oil is not stored

with adequate caution it may cause explosion or any other accident the result of

which will be very acute.

Temperature and sunlight:

We will mainly use Botryococcusbraunii algae in our oil production. A research on one

strain of this algae has found that it grows best at a temperature of 23°C, a light

intensity of 60 W/M², with a light period of 12 hours per day, and a salinity of 0.15

Molar NaCl. In different seasons the temperature and sunlight may vary. It can

create problems in algae production and growth.

Ways to reduce the risks

Page | 35


The risks to which our business is exposed are unavoidable due to their nature. Still some

steps can be taken to mitigate those risks. They are as follows:

Fire and property insurance policy will be taken.

There will be availability of fire extinguisher in the factory premises.

Employees will be properly trained to handle any hazardous uncertain event.

Fire safety regulations will be strictly maintained.

Highly flammable materials will be kept in a safe place.

There will be safe arrangement for oil storage.

There will be facility of artificial temperature and light in case of unsuitable weather.

Avoidable risk

There are many risk factors inherent in the business, which are avoidable. The risk factors,

related risks and ways to minimize risks are shown in a table format below:

Risk factors Risk Ways to

minimize risk

Competitors

The process of producing algae fuel

is quite easy and the cost of the fuel

will be cheaper than much other

existing oil, so we may face the risk

of new entrance.

1. Customer oriented marketing.

2. Making unique contract with BPC

so that new entrance in this sector

will be difficult and expensive.

Demand Risk

If the production cost of other

different biodiesels gets lower their

cost will be lower for the consumers

too. It can shiver the demand of

algae fuel.

1. Creating an eco-friendly

appearance of algae fuel to people.

2. Giving emphasis on less emission

of CO₂ by algae fuel.

Operational Risk The equipment may go out of

service

The machineries are locally made

and easy to repair.

Page | 36


This may affect production.

Socio-

psychological

risks

Algae fuel is a new product in

people’s lifestyle so it may cause

setback.

Focusing on lower cost, safe

environment and high mileage

during promotion.

Contingency plans

Considering future risk of more competitors entering in this business sector we have made

some plans which can increase our production capacity in a good figure. In our current

production process we use oil press method as it is easy and traditional. Low cost of

production process is also one main reason. But after 2 or 3 years when our company will be

in a good financial position we can go for more efficient methods. These methods will surely

be costlier than the oil press method but their production will be larger also. Using oil press

method we can extract maximum 75% oil. The alternative methods can extract up to 90% oil

even 100% also. Besides the financial problem the labor problem is one of the main reasons

of our not using these efficient methods at the beginning of our business. It is not possible

for us to get a large manpower at the very first beginning. But after few years the success of

the company will lead to the necessary man power very easily.

Here we have two alternative methods of oil pressing. These are discussed briefly below:

Hexane solvent method

This process extracts up to 95 percent of oil from algae.

First, the press squeezes out the oil.

Then, leftover algae is mixed with hexane, filtered and cleaned so there's no

chemical left in the oil.

Page | 37


Supercritical fluids methods

It extracts up to 100 percent of the oil from algae.

Carbon dioxide acts as the supercritical fluid -- when a substance is pressurized

and heated to change its composition into a liquid as well as a gas.

At this point, carbon dioxide is mixed with the algae. When they're combined,

the carbon dioxide turns the algae completely into oil. The additional equipment

and work make this method a less popular option.

So these methods should always be in our consideration for long term risk assessment. We

cannot stop new entrance fully. If new companies come we can maintain our share in the

fuel market by using any of these methods, because it will be difficult for the new companies

to use these methods at the beginning of their business.

Page | 38


SWOT Analysis

Page | 39

SWOT Analysis


Strengths:

1. Algae produce cellular oils that can be refined into different bio-fuels, including jet

and diesel fuels that can be used without engine modifications.

2. Bio-fuels are organic sources of energy that replenish naturally and quickly.

3. Algae consume large amounts of carbon dioxide, a major greenhouse gas and

contributor to Global warming.

4. Algae based bio-fuel being an oxygenated fuel (enriched with oxygen), biodiesel

from algae makes fuel combustion more complete and results in carbon emission

much lower than conventional diesel.

5. Algae as bio-fuel can be used on all aircraft and engines don't need to be modified

for this usages.

6. Lower cost & Easy production process than other fuels.

7. Import dependency minimization.

8. Sound marketing & Distribution plan.

9. Lower cost of labor.

10. Raw materials are local & available in our country.

11. Non toxic & highly bio degradable fuel.

12. Eco friendly fuel production.

Weaknesses:

1. The algae bio-fuel production is highly dependent on availability of suitable climatic

condition, substantial quantity of water, flat land, and carbon dioxide feed --all in

one location

2. Whether people will use this fuel is a question.

3. Continuance of Supply of high growth algae.

4. Behavioral changes needed to adapt using new form of Fuel.

5. Lack of Government support, needed to succeed the venture.

Opportunities:

1. Some strains are capable of producing at least 10 times as much fuel per acre than

corn or soybeans.

Page | 40


2. The greatest advantage of algae for producing biodiesel over other plants is that this

plant is not used for any food products. This gives benefit of lower price volatility to

algae .

3. Demand of fuel is increasing day by day.

4. Expansion is easy and effective in this venture.

5. Using this fuel also serves social responsibility.

6. International Fuel crisis will have less effect in our country.

7. After meeting local demand we can export the excess Fuel in international market.

8. Ample opportunity of research and development.

9. We can also cultivate our raw materials in future.

10. High price of other fuels will aggravate the need of algae fuel.

Threats:

1. Competitors are heavyweights in our country.

2. The environmental effects of extracting oil from algae are also quite controversial

topic because some environmentalists do not think they are environmentally

friendly source of energy

3. Proper funding is necessary.

4. Level of acceptance by People is not certain.

5. Huge amounts of water needed to produce enough algae in future.

6. If improperly managed it can contaminate water.

7. Threat from CNG as a substitute.

8. Several pressure groups can create problems in implementing this venture.

Page | 41


Page | 42

Financial Plan


Financial Plan

1. Fixed Assets

Items Amount

Patent 350,000

Machine 2,050,000

Warehouse 1,000,000

Factory Building with storage facilities 1,500,000

Vehicle 800,000

Furniture(Office) 150,000

Air cooler 200,000

Furniture(Factory) 250,000

Computer 200,000

Total invest in fixed assets 6,500,000

2. Current Assets

Items Amount

Raw material 600,000

Wages 400,000

Manufacturing overhead 400,000

Administrative expenses 400,000

Marketing expenses 1,000,000

Total 2,800,000

3. Start-up costs Total start-up costs is 700,000

Page | 43


.4. Total investment Fixed assets +Current assets+ Start-up cost

= 6,500,000+2,800,000+ 700,000

=10,000,000

5. Sources of Fund

Description Loan Equity Total

Machine 1,150,000 900,000 2,050,000

Warehouse 600,000 400,000 1,000,000

Factory Building with storage facilities 1,000,000 500,000 1,500,000

Vehicle 550,000 250,000 800,000

Furniture(Office) 150,000 0 150,000

Air cooler 200,000 0 200,000

Furniture(Factory) 250,000 0 250,000

Computer 0 200,000 200,000

Business start-up costs 0 700,000 700,000

Current Assets 2,100,000 700,000 2,800,000

Other Office assets 350,000 350,000

Total 6,000,000 4,000,000 10,000,000

Page | 44


6. Loan repayment Schedule

Loan will be taken from United Commercial Bank Ltd. From Kawranbazar Branch with 20%

interest

Year Installment Principal

Payment

Interest Total

Remaining

0 - - - 6,000,000

1 2,006,278 806,278 1,200,000 5,193,722

2 2,006,278 967,533 1,038,744 4,226,188

3 2,006,278 1,161,040 845,238 3,065,147

4 2,006,278 1,393,248 613,029 1,671,898

5 2,006,278 1,671,898 334,379 0

7. Pro forma Income Statement

Items 2013-14 2014-15 2015-16 2016-17 2017-18

Sales 129,000,000 131,150,000 131,150,000 202,500,000 202,500,000

(-)COGS 123,360,000 123,360,000 123,360,000 188,500,000 188,500,000

G.P 5,640,000 7,790,000 7,790,000 14,000,000 14,000,000

(-)

Administrative

expenses

Salaries &

wages

3,363,750 3,363,750 3,363,750 4,567,750 4,567,750

Utility

expenses

120,000 120,000 120,000 160,000 160,000

Office rent 110,000 110,000 110,000 140,000 140,000

Audit Fee 75,000 75,000 75,000 90,000 90,000

Depreciation 417,750 417,750 417,750 626,625 626,625

Page | 45


Printing and

stationary

50,000 50,000 50,000 60,000 60,000

Insurance 120,000 120,000 120,000 160,000 160,000

Entertainment 80,000 80,000 80,000 100,000 100,000

Recruitment

and training

120,000 120,000 120,000 160,000 160,000

R& D 300,000 300,000 300,000 400,000 400,000

Amortization

of preliminary

expenses

17,500 17,500 17,500 17,500 17,500

Convenience 80,000 80,000 80,000 95,000 95,000

Legal and

other

professional

expenses

112,000 112,000 112,000 140,000 140,000

Total

Administrative

expenses

4,766,000 4,766,000 4,766,000 6,716,875 6,716,875

Marketing

expenses:

Promotion cost 900,000 900,000 750,000 750,000 720,000

Distribution

cost

200,000 150,000 100,000 100,000 100,000

Total

Marketing cost

1,100,000 1,050,000 850,000 850,000 820,000

Net Operating

income

(226,000) 1,974,000 2,174,000 6,433,125 6,463,125

Interest

expenses

1,200,000 1,038,744 845,238 613,029 334,379

Net income

before tax

(1,426,000) 935,256 1,328,762 5,820,096 6,128,746

Page | 46


Income Tax 0 0 0 0 0

Net income

after tax

(1,426,000) 935,256 1,328,762 5,820,096 6,128,746

Page | 47


1 2 3 4 5

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

Net Profit projection

N.P

Year

Net

Pro

fit

Figure 2: Gross profit Projection and Net Profit Projection

Page | 48

1 2 3 4 50

50000000

100000000

150000000

200000000

250000000

Gross Profit Projection

salesCOGSG.P

Year

Sale

s, CO

GS &

Gro

ss p

rofit


8. Owner’s equity statement

Items 2013-14 2014-15 2015-16 2016-17 2017-18

Initial

capital

4,000,000 4,000,000 4,000,000 4,000,000 4,000,000

Retained

Earnings

0 (1,426,000) (490,744) 838,018 6,658,114

Net income

after tax

(1,426,000) 935,256 1,328,762 5,820,096 6,128,746

Dividend 0 0 0 1,000,000 1,200,000

Ending

retained

Earnings

(1,426,000) (490,000) 838,018 5,658,114

Owner’s

equity

2,574,000 3,510,000 4,838,018 9,658,114 11,586,860

9. Breakeven Point

For Year 2013-2014

Description Fixed cost Variable cost

Variable cost

Material cost

Factory wages

Factory utilities

Indirect labor

Page | 49


Total variable cost 123,360,000

Per unit variable cost 41.12

Fixed cost

Factory wages 1,000,000

Insurance 120,000

Depreciation 417,750

Amortization of patent 17,500

Repair and maintenance 400,000

All administration

expenses

4,766,000

All marketing expense 1,100,000

Total fixed cost 7,821,250

10. Pro Forma Balance Sheet

Items 2013-14 2014-15 2015-16 2016-17 2017-18

Current assets

Cash 2,909,250 3,312,966 3,915,193 7,777,290 8,469,388

Intangible assets

Page | 50


Patent 350,000 350,000 350,000 350,000 350,000

Property ,equipment

Machine 2,050,000 2,050,000 2,050,000 2,050,000 2,050,000

Warehouse 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Factory building 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000

Vehicle 800,000 800,000 800,000 800,000 800,000

Furniture(office) 150,000 150,000 150,000 150,000 150,000

Air cooler 200,000 200,000 200,000 200,000 200,000

Furniture (factory) 250,000 250,000 250,000 250,000 250,000

Computer 200,000 200,000 200,000 200,000 200,000

Start up cost 800,000 800,000 800,000 800,000 800,000

Total assets 10,209,250 10,612,966 11,215,193 15,077,290 15,769,388

Liabilities and equities

Current liabilities

Accounts payable 1,200,000 1,038,745 845,238 613,030 343,380

Accumulated

amortization(preliminary

expense)

17,500 35,000 52,500 70,000 87,500

Accumulated

depreciation(plant)

417,750 835,500 1,253,250 1,671,000 2,088,750

Bank loan(current

portion)

806,278 967,533 1,161,040 1,393,248 1,671,898

Long term liabilities

Bank loan 5,193,722 4,226,188 3,065,147 1,671,898 0

Owners equity

Owners equity 2,574,000 3,510,000 4,838,018 9,658,114 11,586,860

Total liabilities and

equities

10,209,250 10,612,966 11,215,193 15,077,290 15,769,388

11. Pro Forma Cash Flow Statement

Page | 51


Items 2013-14 2014-15 2015-16 2016-17 2017-18

Sales 129,000,000 131,150,000 131,150,000 202,500,000 202,500,000

(-)COGS in

cash

(121,503,800) (123,239,173) (123,160,745) (189,708,876) (192,908,875)

Gross profit 7,496,200 7,910,827 7,989,255 12,791,124 9,591,125

(-)Salaries&

wages

(3,363,750) (3,363,750) (3,363,750) (4,567,750) (4,567,750)

(-)utility

expense

(120,000) (120,000) (120,000) (160,000) (160,000)

(-)Office rent (110,000) (110,000) (110,000) (140,000) (140,000)

(-)Printing and

stationary

(50,000) (50,000) (50,000) (60,000) (60,000)

(-)Audit Fee (75,000) (75,000) (75,000) (90,000) (90,000)

(-)Insurance (120,000) (120,000) (120,000) (160,000) (160,000)

(-)Entertainme

nt

(80,000) (80,000) (80,000) (100,000) (100,000)

(-)Recruitment (120,000) (120,000) (120,000) (160,000) (160,000)

(-)R&D (300,000) (300,000) (300,000) (400,000) (400,000)

(-)Connivance (80,000) (80,000) (80,000) (95,000) (95,000)

Legal expenses (112,000) (112,000) (112,000) (140,000) (140,000)

(-)Promotion

cost

(900,000) (900,000) (750,000) (750,000) (720,000)

Distribution

cost

(200,000) (1,50,000) (100,000) (100,000) (100,000)

Interest

expenses

(1,200,000) (10,38,744) (845,238) (613,029) (334,379)

Net cash flow

from operating

activities

665,450 1,371,249 1,763,267 5,255,345 2,363,996

Cash flow from

Page | 52


investing

activities

(-)Patent (350,000)

(-)Machine (2,050,000)

(-)Warehouse (1,000,000)

(-)Factory

building

(1,500,000)

(-)Vehicle (800,000)

(-)furniture (250,000)

(-)computer (200,000)

Start up cost (800,000)

Net cash flow

from investing

activities

(6,950,000)

Cash flow from

financing

activities

Capital 4,000,000

Loan 6,000,000

(-)Loan

repayment

(806,200) (967,533) (1,161,040) (1,393,248) (1,671,898)

Net cash flow

from financing

activities

9,193,800 (967,533) (1,161,040) (1,393,248) (1,671,898)

Cash change

during the year

2,909,250 403,716 602,227 3,862,097 692,098

Beginning

balance

2,909,250 3,312,966 3,915,193 7,777,290

Ending balance 2,909,250 3,312,966 3,915,193 7,777,290 8,469,388

Ratio Analysis

Page | 53


Ratio Ref. 2013-14

SQuick Ratio Quick AssetCurrent Liabilities

1.45

Current ratio Current AssetCurrent Liabilities

1.45

Net working capital Total current Asset-Current Liabilities

9,02,972

Debt equity ratio Total debtTotal equity

2.8:1

Liverage ratio Total LiabilitiesNet worth

1.08

Return on Asset Net profit after taxTotal assets

-.14

Gross Profitratio

Gross ProfitNet sales

.043

Operating profit ratio EBITSales

-.0018

Net profit ratio EAT Sales

-.011

Interest coverage ratio EBITInterest

-.188

Page | 54


Other Courses of Actions

Environmental Issues

Our product is totally an environment friendly product that will reduce CO₂ by consuming it

at their growing period. It does not contain sulphur or any other toxic elements.

Ethical Issues

We will ensure the supply of the best quality product to our customers. We will employ certain quality control procedures in our company to maintain certain standard of our product.

We will maintain complete books of accounts and reasonable accounting policies and estimates that will ensure fair presentation of financial statements and free of material misstatement in all material respect.

There will be independent audit every year.

Page | 55

Other Courses of Actions


Certain code of ethics will be developed for the employees of the organization that will help them to understand what is right and what is wrong in different circumstances.

Legal Issues

Each and every rules and regulations related to our business must be taken into

consideration at the time of taking any operational or financial decision.

Internal regulation like Article of Association and entity’s constitution that is

Memorandum of Association will be designed by considering the existing legal issues

related to the entity.

Intellectual Property issues

In each and every new business, protection of the business is a vital issue. New ideas can be

duplicated. Our business of bio-fuel generated from algae is the first and a complete new

business in Bangladesh. So, all the legal rights of the business and bio-fuel production lie

with us. So we will strictly focus on our protection issues from other businesses in the energy

area. In this regard, we shall apply for the patent for our business from the government.

Patents which are a kind of intellectual property are a government's way of giving an

inventor, in this case us, ownership of our creation for a specified period of time. For that

certain period of time, we, the patent holders shall be allowed to control how our inventions

are used, what process to be selected etc.

Another protection for the name of our business will be our ‘Green Energy’ trademark. After

getting the right of trademark, no business will be allowed to duplicate the name of our

business. If anyone breached the rule we shall enjoy the right to file a legal suit against them

as the trademark holders.

Working environment

To be an effective organization and to keep pace with the outer world, right working

environment at the right time is a great factor for the employees. We know that upper

management only plan the functions in an organization but employees execute those plans.

So a working environment with peace and harmony must be ensured. Promoting peace and

Page | 56


harmony in the business is not an easy task. Several initiatives must be taken which are as

follows:

(1) A semi-democratic environment: In our business we will maintain a semi-democratic

environment not an autocratic one. People here will be free to provide any advice they think

to be useful for the business. It will not be always the situation that managers are doing

whatever they say. This may lead to the situation for employees to rule over upper

management.

(2) Consultancy: There will be continuous consultation with the employees in the business,

both with the factory workers and with the administrative employees regarding ways to

develop the business more. It helps the employees to feel that they are an important part of

the organization.

(3) Discussion: There will be discussion held twice a month with the representatives of the

employees and the management. In this session, the representatives discuss all of their

problems regarding their jobs, their working environment, their pay, job security.

(4) Solution of conflicts: Sometimes it may happen that one employee is not comfortable to

work with other employee. There may be differences in opinion which may lead to conflict.

Any such disputes among the employees will be resolved as early as possible by upper

management.

If above steps are taken and maintained on a regular basis, peace and harmony in the

working environment can be ensured.

Safety and security issues

Employees hold a large portion of an organization. A manufacturing organization’s smooth

work, efficient and effective production depends largely on how the employees of that

organization are motivated, directed, what they feel towards their organization. Employees

get enthusiasm to work efficiently only when they feel that their inputs and efforts won’t go

priceless. They want security of their job, security of their families, and safety in the work

environment. In our organization, we will try our utmost to ensure all of the safety and

security issues of the employees. The following measures will be implemented:

Page | 57


Factory workers:-

(1) Safe working environment: We will ensure that the factory environment of our

business remains safe all the time. The supervisors will inspect the processes, machines on a

continuing basis. Records will be kept regarding the inspections to be reviewed further by

middle management.

(2) Proper maintenance: Any kind of defect detected in the machines will be repaired

immediately so that they will cause no harm for our employees.

(3) Training of the employees: Before the workers start formal production works, they

will be properly trained by the supervisors and others who are specialized in this area so that

workers can handle the machines smoothly.

(4) Providing precautionary tools for workers: Workers in the factory will be given

some tools like metal gloves, masks etc.

For administrative employees:

(1) Insurance: Employees will be under the protection of group insurance which will help

the employees feel protected.

(2) Medical allowance: Medical allowance of a particular percentage of the basic salary

will be provided to the employees each month for themselves and for their families too.

(3) Overtime premium: Employees working overtime will be provided an overtime

premium. It helps them feel that they are getting adequate return of their efforts towards

the organization.

Use of ICT

ICT has become the most cost effective medium that helps managing business activities in

today’s world. I.C.T. is very useful as it provides a faster way of doing many tasks and

ultimately saving the business time and money. It is more efficient when works are done

through a computer with an internet connection. Having an internet connection helps doing

researches and competitor analysis as computers can quickly handle data and convert it to a

better form like a graph and a pie chart. Documents can be typed and reports can be

Page | 58


compiled with the added advantages that back - ups can be made and they can be edited

and are easier to read. Interaction with the customers becomes very easy. There are

thousands of other advantages of having ICT in a business other than the above. Each of our

employees with a computer will be given an internet connection. Moreover, for making our

accounts easier to record, analyze, summarize and interpret, we will have specialized

accounting software embedded in each of the computers in the office. The software is

named Tally which is renowned for accounting in the world. Using this software will enable

us to produce our financial statements in a shorter time period putting in less effort by the

employees. This will be just a matter of a click to the employees.

Page | 59


Conclusion

A business is a part of a society and serving the society by making reasonable profit is the

main purpose of business. From this point of view, we want to introduce our new business

Green Energy Pvt. Ltd which will be an exclusive solution of the fuel problem of Bangladesh.

Our product bio-fuel can bring revolutionary change in the power and fuel industry of

Bangladesh. As a new product, at the same time it will be less costly and environment

friendly energy. Our product analysis discloses that it will be a perfect product in the context

of our country; our financial plan indicates that it will be a profitable company in the future

and the marketing plan specifies that it can be possible to target potential customers and to

distribute our product to them.

It can be summarized that this business has an immense opportunity to serve the people of

Bangladesh. It will save government from the hand of subsidy loss; it will help to reduce the

inflation rate indirectly by reducing the transportation cost of daily necessary goods and it

will provide us a green society by reducing the CO2.

Page | 60

Conclusion


So at the end, to save ourselves as well as the planet, it is needed to use bio-fuel.

Page | 61

Appendix


Appendix

Appendix 1:

Marketing Research:

To understand the target market, condition of the target market, behavior of the target

market, we have done a marketing research. It also helped us a lot to do the sales

projection. For feasibility study, we developed a questioner and made a survey of around 65

people who live in Comilla and some of its nearer places. We used random sampling to

determine the sample. We also considered the population characteristics and the survey

purposes to determine the sample size. Our target markets are Public transport, daily goods

carriers and farmers. We took a sample of at least 21 from each group to understand their

current fuel consumption habit, their satisfaction dissatisfaction, their views about our

product, what they are demanding, what they prefer most etc. To analyze this researched

data, we used some modern statistical techniques also.

Analysis and Findings:

Page | 62


In this section, we analyze and describe the result of our research relating to each target

group as well as a whole. Reasons for switching from normal fuel to Algae Bio-fuel other

than cost are:

Reasons farmers Public

Transports

Goods

Carriers

High Mileage 8% 29.4% 48.5%

Environment

friendly

10% 18.2% 17%

Good for

Engines

24% 32.1% 20%

Renewable

alternative

sources

58% 20.3% 14.5%

Total 100% 100% 100%

We find that 58% farmers prefer algae bio-fuel to normal oil as they want to use renewable

alternative sources. But 32.1% public transports owners want to switch to algae bio-fuel for

ensuring more security and safety of the engines of their transport vehicles. Good carriers

such as truck owners are giving more emphasis on high mileage. They will switch to our

product because of high mileage (48.5%) other than cost.

Distribution Strategy:

Particulars Farmers Public Transports

Manufacturing Organizations

Filling stations 23% 78% 80.5%

Dealers 52% 13.8% 9.3%

Factory sales 25% 8.2% 10.2%

Total 100% 100% 100%

Page | 63


Here we can see that most of the public transporters and manufacturing organization prefer the distribution process through filling stations. On the other hand, 52% farmers think that to collect our product from the dealers will be more convenient for them.

Price:

Price range farmers Public

transporters

Goods

carriers

42-48 76% 81% 71%

49-54 19.5% 17% 23%

55-61 4.5% 2% 6%

total 100% 100% 100%

Here we can see that most of the sample from our target market wants to get our product

within the range of the 42 to 48 taka. Very few are eager to buy our product at the price

range of the 55to 61 taka. We must need to keep our price below 55

Most important characteristics price or quality:

Particulars Farmers Manufacturing organizations

Public transports

Price 83% 58% 38%Quality 15% 32% 53%Neutral 2% 10% 9%Total 100% 100% 100%

Most farmers (83%) give more emphasis on price before making their purchase decision. Whereas manufacturing organizations and public transporters have mixed reaction in choosing between price and quality.

Sales Projection:

For the future estimated demand, we consider the past 10 year consumption of fuel in

Bangladesh. Data was collected from Bangladesh Petroleum Corporation’s website. Here y is

Page | 64


the per year consumption of fuel in Metric ton. We analyze the data by using time series

analysis using Microsoft Office Excel.

year (X) X bar X-X bar consumption of

fuel in M.T. (Y)

2002 2006.5 -4.5 24,245,023

2003 2006.5 -3.5 24,860,266

2004 2006.5 -2.5 26,744,928

2005 2006.5 -1.5 27,553,409

2006 2006.5 -0.5 27,656,172

2007 2006.5 0.5 26,136,159

2008 2006.5 1.5 26,518,942

2009 2006.5 2.5 24,327,828

2010 2006.5 3.5 27,477,062

2011 2006.5 4.5 35,599,860

total 20065 271,119,648

average 2006.5 27,111,965

Due to the linear trend in data, we use the formula Y hat= a+bx

a = 2, 71, 11,964.80

b = 3, 14,552.08

Y hat = 2, 71, 11,964.80 + 3, 14,552.08x

Appendix 2

Production capacity Analysis:

Page | 65


Oil Press biodiesel processor is able to process different fresh algae oils, as well as pre-

treated used vegetable oils and yellow grease. Phaeodactylumtricornutum, Chlorella

Protothecoidesand Botryococcusbraunii etc. others can be processed through it. It has a

capacity of producing 150 gallons /600 liters per day or approximately 48,000 gallons per

year. The Oil Press is constructed of stainless steel tanks and piping. It features a remotely

located touch screen microprocessor control panel. It uses ultrasonic mixing, glycerol

separation technology, and “dry wash” biodiesel purification technology. The entire system

is CE and ATEX certified. It‟s others features are given below-

General characteristics:

1. Store/heat : 300 liters

2. Purification buffer : 150-300 liters

3. Mixing process : Ultrasonic processing

4. Pump rate : 400 liters per minute

5. Purification method : Ion-exchange

Power Requirement:

Page | 66


6. Air : 150 Cubic Feet per Minute

7. Electrical : 128 amp (3 ph + neutral 400V 50hz)

8. Operating temperature : 60 - 75°C

Space demand for the Oil Press:

9. Width : approx. 7.50 feet

10. Length : approx. 44.25 feet

11. Height : approx. 8.33 feet

Figure: oil press process machine

Production capacity for the first 3 years

Total

Machin

e

Production per

Day(liters)

Total Days Total crude

Litter

Sale litter

10 6000 350 2,100,000 3,000,000

10 6000 350 2,100,000 3,000,000

10 6000 350 2,100,000 3,000,000

Page | 67


Production capacity from year 4

15 9,000 350 3,150,000 4,500,000

15 9,000 350 3,150,000 4,500,000

Notes: We will mix 30% diesel with the crude oil according to standard E-50.For this reason the total litter is doubled in the last column.

Now, we can say that we can sale the whole amount produced because the demand in our country in a year will be thousands of Metric ton but we are giving a small portion of that. From our survey, it is found that all types of customers are ready to take our product at our price.

Appendix3

Capital Budgeting Decision:

WACC Calculation Amount

Debt 6,000,000

Equity 4,000,000

Total 10,000,000

Cost of debt 20%

Cost of Retained earnings 25%

WACC 22%

WACC= 20%(60,00,000/1,00,00,000)+ 25%(40,00,000/1,00,00,000)

=22%

Change in Net Working Capital:

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Total

Current

Asset

2,800,000 2,909,250 3,312,966 3,915,193 7,777,290 8,469,388

Total 2,000,000 2,441,528 2,876,778 3,312,028 3,747,278 4,191,528

Page | 68


Current

Liability

Net

Working

Capital

800,000 467,722 436,188 603,165 4,030,012 4,277,860

Net

Change in

Net

working

Capital

(332,278) (31,534) 166,977 3,426,847 247,848

Project Valuation:

Items Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Initial

interment

in Fixed

assets and

Start up

(7,200,000)

Initial

Investment

In Current

Assets

(2,800,000)

Sales 129,000,000 13,11,50,000 13,11,50,00

0

20,25,00,00

0

20,25,00,00

0

COGS (12,33,60,00

0)

(12,33,60,00

0)

(12,33,60,00

0)

(18,85,00,00

0)

(18,85,00,00

0)

Total

Operating

expense

(47,66,000) (47,66,000) (47,66,000) (67,16,875) (67,16,875)

Page | 69


Depreciatio

n of Office

Assets(+)

417,750 417,750 417,750 626,625 626,625

Amortizatio

n of

preliminary

expenses(+)

17,500 17,500 17,500 17,500 17,500

Amortizatio

n of

patent(+)

17,500 17,500 17,500 17,500 17,500

Net Change

In Net

Working

Capital (-)

(3,32,278) (31,534) 1,66,977 34,26,847 2,47,848

Capital

Expenditur

e(-)

(10,00,000) (10,00,000) (5,00,000)

Cash Flows (1,00,00,00

0)

9,94,472 24,45,216 26,26,227 1,08,61,597 81,92,598

Weighted

Average

Cost of

capital

22%

Present

Values of

Cash

Inflows

1,18,38,44

1

NPV(Cash

Inflow-Cash

18,38,441

Page | 70


Outflow)

IRR 108%

Pay Back

Periods

3.39 Years

Appendix 4

Cost of Sales Statement:

Cost of Sales Statement

Material cost 11,55,00,00

0

11,55,00,00

0

11,55,00,00

0

16,45,00,00

0

16,45,00,00

0

Total wages 28,00,000 28,00,000 28,00,000 40,00,000 40,00,000

Manufacturi

ng overhead

50,60,000 50,60,000 50,60,000 2,00,00,000 2,00,00,000

Total Cost of

goods sold

12,33,60,00

0

12,33,60,00

0

12,33,60,00

0

18,85,00,00

0

18,85,00,00

0

Total

administratio

n cost

47,66,000 47,66,000 47,66,000 67,16,875 67,16,875

Total

marketing

overhead

11,00,000 10,50,000 8,50,000 8,50,000 8,20,000

Total cost 12,92,26,00 12,91,76,00 12,89,76,00 19,60,66,87 19,60,36,87

Page | 71


0 0 0 5 5

Per unit cost 43.07 42.35 42.28 43.58 43.56

Profit per unit (.07) .65 .72 1.42 1.44

Price per litter 43 43 43 45 45

Notes:

1. Assuming no beginning and ending work in process and finished goods inventory

2. Wages include only the direct wages

3. Other wages are included in manufacturing overhead

4. From the fourth year, we allocate a portion of our firm unit to the production in every year as material, when we start our production from ALGAE. Before that we include all of our expenses on firm unit as an asset.

Appendix 5

Breakeven Point Analysis:

Particulars 2013-14 2014-15 2015-16 2016-17 2017-18

Total fixed

cost

7,821,250 7,625,500 7,422,500 7,250,500 7,046,700

Page | 72


Selling price

per unit

43 43 43 45 45

Variable cost

per unit

41.16 40.04 40.04 41.18 41.18

Contribution

margin per

unit (S.P-V.C)

1.84 2.96 2.96 3.82 3.82

Break even

unit(litters)

{FC/(S.P-V.C)

4,250,679 2,576,182 2,507,601 1,898,037 1,844,686

FC= Total Fixed cost

VC=Variable cost per unit

SP= Selling price per unit

Depreciation Determination:

Fixed Assets:

Fixed asset Quantity Price (Taka) Total price

(Taka)

Depreciation

(Taka)

Page | 73


Patent 350,000 350,000

Machine 10 205,000 2,050,000 152,500

Factory

Building with

storage

facilities

1 1,500,000 1,500,000 150,000

Warehouse 1 1,000,000 1,000,000 50,000

Vehicle 2 400,000 800,000 40,000

Furniture

(factory &

office)

4000,000 400,000 15,250

Computer 5 40,000 200,000 5,000

Air cooler 4 50,000 200,000 5,000

Total 6,500,000 417,750

Depreciation of Assets:

Fixed asset Quantity Price (Taka) Total price

(Taka)

Depreciation

(Taka)

Patent 350,000 350,000

Machine 10 305,000 3,050,000 152,500

Factory

Building with

storage

1 3,000,000 3,000,000 150,000

Page | 74


facilities

Warehouse 1 1,000,000 1,000,000 50,000

Vehicle 2 500,000 1,000,000 50,000

Furniture 350,000 350,000 15,250

Total 8,750,000 417,750

Bibliography

Page | 75


1. Leonard Wagner, July 2007, “ BIODIESEL FROM ALGAE OIL”.

2. Md.Imran Kais, Farsad Imtiaz Chowdhury, Kazy Fayeen Shahriar, 2011,“BIODIESEL

FROM MICROALGAE AS A SOLUTION OF THIRD WORLD ENERGY CRISIS”.

3. Shahriar Rahman, Razin Ahmed, Salman Quaiyum , 2010, ” ALGAE BASED BIOFUEL

PRODUCTION FROM CO2 OBTAINED FROM FIXED CHIMNEY BRICKFIELDS IN

BANGLADESH ”.

4. Michael Bernstein, 2008, “FIRST ECONOMICAL PROCESS FOR MAKING

BIODIESEL FUEL FROM ALGAE”.

5. KEVIN BULLIS, 2012, “SAPPHIRE ENERGY RAISES $144 MILLION FOR AN

ALGAE FARM BUT IS THE COMPANY SCALING UP ITS TECHNOLOGY TOO

FAST?”

6. William A. Wurts, “FARMING ALGAL FUEL: ECONOMICS CHALLENGE

PROCESS POTENTIAL”.

7. Stephenson, Patrick G., Moore, C. Mark, Terry, Matthew J., Zubkov, Mikhail

V. and Bibby, Thomas S. (2012) , “IMPROVING PHOTOSYNTHESIS FOR ALGAL

BIOFUELS - TOWARD A GREEN REVOLUTION”.

Citations

Page | 76


[email protected]

[email protected]

http://www.ca.uky.edu/wkrec/Wurtspage.htm

[email protected]

http://www.eia.doe.gov/emeu/international/reserves.html

http://www.eia.doe.gov/energyexplained/index.cfm?page=oil_home#tab2

http://tonto.eia.doe.gov/dnav/pet/pet_cons_psup_dc_nus_mbbl_a.htm

[email protected]

Page | 77

mailto:[email protected]