Wood pellets production project summary and business plan
- profit-making : - 1st year - EUR 140 000;
- developing wood pellets production in a long-term perspective: - 1st - 3rd year - 6000 MT;
- 2nd year - EUR 157 000;
- 3rd year - EUR 170 000;
- 4th year - EUR 300 000;
- 5th year - EUR 380 000.
- 4th -5th year - 12000 MT.
- Constant growth of the market (wood pellets), excess of demand over supply;
- Team of professionals, which is able to develop the project;
- Constant growth of prices on the utilities will make consumers turn to alternative cheaper and ecologically clean fuels;
- High profitability of the product (low costs of the raw material and labor force).
The search of the investor (partner) for establishing a joint venture
The degree of project preparation for establishing a joint venture (wood pellets production)
1. A detailed business plan has been worked out, including supplement:
- The source of raw materials has been studied and covered profoundly. The necessary raw material calculations are done and agreements on the raw material (saw dust) supply are reached;
- the availability of rented production site directly in the forestry (raw material supplier);
- calculations of approximate (the prices on construction materials grow constantly) estimation of repairs and production building preparations for the equipment installations;
3. The base of potential buyers of wood pellets (European countries: Poland, Germany) and Ukraine) is compiled and it is being constantly widened. We had a preliminary talk with potential buyers of ready product on the subject: supply terms, quality and the set product (wood pellets) price, samples of contracts are considered.
4. We did a detailed study of wood pellets production process, quality standards and possibilities of wood pellets production of din +.
5. We have preliminary agreements on fast realization of the project and obtaining licences on wood pellets production installation, production and product standardization.
6. We have found a contractor on the repairs and preparation of the facilities and jointly conformed the preliminary estimate.
7. There have been worked out logistic schemes of the raw material deliveries to the plant and the product deliveries to buyers.
8. There are several variants of pelleting equipment selected and carried on the talks with the basic production equipment suppliers from Russia and Germany.
9. We have guaranteed support from the local authorities!
10. There is a mature team of professionals:
- professional head - higher education;
- experienced financier and economist - higher education (economy), working experience;
We did preliminary discussion of recruiting an accountant, drivers, production staff. Production staff coaching is supposed to be on-site when installing production equipment during 2 weeks by the representatives of the plant which supplies production equipment and this is in the list of the required services by the procurement of equipment.
11. Everything is ready and thought over for a quick start of wood pellets production and profitable work of the enterprise. There is an opportunity of the production expansion. We need a reliable partner and money to start production of wood pellets.
We would like to take into account the mistakes of Ukrainian producers, needs and requirements of European consumers and use maximum of geographical, technological and administrative advantages for creating a maximum profitable production eneterprise!
The characteristics of wood processing market and the place of company applicant of the investment in it
Wood processing market: The company applicant is located in Volinska Region, Ukraine where wood pellets production is planned to be organized.
The total area of forest resources of the region - 702,5 thousand hectare. The total area of state forest resources - 502,5 thousand hectare, including 472 thousand hectare covered with forest. The total reserves - 85 million cubic meters. The forestries working in the region receive 200-250 cubic meters of sawdust monthly. In general the forestries will give 80% of the raw material. The rest will be provided by timber industry enterprises and commercial firms.
It is planned to use a temporary polygon for storing sawdust in order to secure the manufacturing in respect of troubleproof working of the plant and having raw materials inventory of 5000 - 6000 cubic meters.
The region borders with Poland that is why it is interesting for selling the product (wood pellets) in the framework of selling it to foreign customers and namely to Poland.
Product market (wood pellets)
Today the major product markets of domestic wood pellets are Poland, Czech Republic and Germany. While the domestic market of solid biofuel is still on the emerging stage of development.
As of today the average price on wood pellets on the Ukrainian market EUR 80 - 100 while the prices on this product in the countries of European Union vary from EUR 180 to 220 for a ton. Taking into account these factors our company is going to take the following policy of pricing. The export price is EUR 100 for a ton. The price on the domestic market is EUR 100.
Planned sales by the channels: 80% - export, 20% - inner market.
Export: Poland, Latvia, Czech Republic, germany
Inner market: dealer-exporters (wholesale)
According to the prognosis the year sales will comprise:
- 2010 - 5 268 000 UAH (6 000 MT of wood pellets)
- 2011 - 5 715 000 UAH (6 000 of wood pellets)
- 2012 - 5 715 000 UAH (6 000 of wood pellets)
- Financial resources
The tasks of the partner
Providing financial means of EUR 193600 for covering capital investment and starting wood pellets production by 12% yearly rate for the period of 3,6 years.
Special (obligatory) requirements to the partner
Share proportion by the participation of a foreign investor in the wood pellets production with establishing a new company
The share of the partners is 70% under condition of establishing a joint enterprise. Investing according to the investment schedule during 5 months. The 1st month - 80%, the 4th - 20%
The project implies wood pellets production on the basis of soft wood sawdust.
The offer for the investor: investment
- Investment sum - EUR 193 600
- The regulation of investment transaction
- Currency of investment: euro
- Investment property: financial means of the investor
- The category of the investment: direct
- The period of return on investment (ROI): 3,6 years
- Yearly interest rate for using investment - 12%
- Payment of interest for using investment: by the quarter
- The return of the investment sum: monthly of equal shares for the period of investment. The schedule of return: 50% - 2011, the rest 50% - 2012.
Breed of wood (percentage):
90% - soft wood, 10% - other breeds of wood.
Sawdust humidity: Middle 8-12%
The distance between raw material base and production site (km.): 5-25 km.
The guaranteed yearly supply of raw material (m3): 10 200
Feedstock supply plan (see .xls supplement) calculations available
Description and characteristics of transportation means of the raw material to the production site. It is planned to buy special engineering for transportation an autoloader and truck.
Wood pellets production characteristics Equipment:
- Production capacity of the equipment - 23 MT/h;
- The cost of the main machinery - UAH 1 284 000;
- The delivery of equipment, installation, setup - UAH 55 000
- Workshop preparation - UAH 147 000
- Purchase of automotive tractor engineering - UAH 450 000
- Quarterly equipment service - UAH 8 000 per month
- Selling price 80-120 EUR/ton (by the exchange rate 10,0 - 700/1000 UAH/ton)
- Packaging of finished product - polyethylene bags by 20 - 25 kg., packaging of big-bag type is possible (650 kg.)
- Woodworking waste is used as raw material: tail cuttings, slabs, edge cuts
- Raw material consumption for a ton of product - 1,9 m3
- The cost price of the main material - 20 UAH/cubic meter
Wood pellets production is continuous that is why it is necessary to have 3 shits work by 8 hours.
- Operating staff in a shift: 1 workshop manager, 1 machineman, 1 worker.
- Truck driver, loader driver
Production Plan calculations available
Company structure calculations available
Personnel arrangements calculations available
Remuneration of labour calculations available
Capital costs calculations available
Marketing Plan calculations available
Investment schedule (UAH) calculations available
Investment schedule (EUR) calculations available
Ivestment return schedule (UAH) calculations available
Ivestment return schedule (EUR) calculations available
Operational costs calculations available
Profitabality Calculations calculations available
Flow of funds calculations available
Financial Plan calculations available
Costs for producing 1 ton of the finished product
Transportation by 20 ton trucks
Incomes and costs calculations available
Advantages of the project