Biodiesel Company Investment Opportunity in Surat, India

Partial stake sale of a newly-established bio-diesel and glycerin manufacturer with a monthly production capacity of 3,000 kl.

Established 1-5 year(s)
Employees 10 - 50
Legal Entity Private Limited Company
Reported Sales USD 1.8 million
Run Rate Sales USD 5 million
EBITDA Margin 5 %
Industries Biodiesel
Locations  Surat
Local Time 4:02 AM Asia / Kolkata
Listed By Business Owner / Director
Status Active
Overall Rating
Seeking Investment
USD 170 thousand for 25.0% stake (Native Currency: INR 12,500,000)
Reason: Promoter is transferring his stake within the business (25%) due to personal and family reasons.
Includes physical assets worth USD 540 thousand
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Business Overview

- Manufacturer of bio-diesel and glycerin. 80 percent of the revenue is derived from bio-diesel with the remaining coming from glycerin.

- Glycerin is a by product of the reaction and demand for it fluctuates rapidly. Price of 1 litre of bio-diesel is approximately INR 50 and 1 kg of glycerin is INR 20.

- Factory has a daily production capacity of 100 kl (1 lakh litres) of bio-diesel hence the monthly production capacity is 3,000 kl. In the beginning, the business expected demand of at least 1,000 kl of bio-diesel. Due to stricter government regulations regarding imports of palm oil from Malaysia in the third quarter of the previous year, production decreased significantly. The business had to switch over to tallow as a raw material. However, the onset of COVID-19 pandemic in China during the last quarter of the previous year led to a reduction in the meat imported into India from China leading to another production crisis. However, the situation is expected to improve this year. The company has identified an alternate supplier for its raw materials. Last month, they sold between 400 - 500 kl of bio-diesel due to a surge in demand of bio-diesel from the cement industry. However, this month sales are expected to be low. But monthly sales are expected to rise significantly once the lock-down is lifted and regular transportation resumes considering how lucrative this sector is. Most of the orders came from cement companies such as Ambuja Cements and Shree Cements. Have served over 30 - 35 clients so far.

- Have 7 storage tanks - 100 kl each, 1 boiler - 2 metric ton, 3 reactors – 14 kl each, 2 big round tanks for methanol storage – 30 kl and 40 kl, 6 Intermediate Settling Tank - 18 to 20 kl each, and 5-6 small machinery for further refining.

- Have taken a term loan of INR 1.5 cr with an annual interest rate of 10%. However, the company has applied for a concession on the interest rate with the Gujarat Industrial Development Corporation (GIDC). Once approved, the newly subsidized interest rate will be set at 3%. The loan was sanctioned last year and it needs to repaid within 7 years. Business has repaid over INR 7 - 8 lakh so far.

- Have an authorized dealer in Rajasthan. Otherwise, business directly sells its products across the country depending on the orders.

- Have applied for a tender with PSUs such as Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) for monthly production of 500 kl.

- Business has 19 employees including 4 promoters.

- Each promoter has experience of between 15 - 30 years in different industries such as textile and fabrication. One of the promoters is a chartered accountant.

Products & Services Overview

Manufacturer of bio-diesel and glycerin as by-products.

Facilities Overview

2,000 square meter premises on rent. Has two floors. Premises is owned by one of the promoters. According to the rental agreement, business is supposed to pay INR 12,000 to the promoter on a monthly basis. But the promoters have reached a mutual understanding to pay INR 60,000 to the promoter. Duration of the agreement is 32 years.

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Disclaimer: SMERGERS is a regulated marketplace for connecting business sell sides with investors, buyers, lenders and advisors. Neither SMERGERS represents nor guarantees that the information mentioned above is complete or correct.
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