The Landmark Bangkok Hotel

29-30 May 2008

Om Narayan, DirectorAnant Pande, COO

Indo Greenfuel Consultants Pvt. Ltd., India

The beauty of economic theoryPrice

Quantity

Demand

Supply

Sweet SpotEquilibrium price

Equilibrium volume

Sweet spot : an Ideal situation where demand & supply are in perfect equilibrium

Price

Quantity

Demand

Supply

Surplus = Exports

The beauty of economic theory

Price

Quantity

Demand

Supply

Deficits = Imports

The beauty of economic theory

How does one get to the Sweet Spot ?Price

Quantity

Demand

Supply

Identify economically attractive options for the surplus/ deficit

The track-record in IndiaMillion tons of sugar

-2.2

2.0

3.4

-0.8

-2.1

0.5

2.9 2.6

0.7

2.2

-3.6

-5.8

1.4

9.1 8.8

Surplus

Deficits

Time

A large imbalance between production & consumption of sugar

2.7

5.3

7.8

5.55.9

7.4

10.7

12.0 11.712.4

9.1

5.24.2

11.5

17.3

93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08e

The track-record in IndiaMillion tons of sugar

Sugar surplus : a problem or an opportunity -> ” a new paradigm ”

Higher oil prices - a short-term event or a structural trend ?12-months moving average

0

20

40

60

'87 '97 '07

US$ / Barrel

90

Huge demand-supply gap leading to a secular uptrend in oil prices search for alternative fuels

Objectives from a more intensive usage of biofuels

E - 5E - 10

E - 20 E - 85

Conv

enti

onal

pet

rol

etha

nol

100 % = 1 liter of gasoline

• oil to last longer

• reduce OPEC dependency

• reduce global warming

effect

• . . . .

Flex-fuel engine

Before

Objectives and benefits

Normal engine

Ethanol : the sustainable fuel for the future . . . . . .

Rapid growth in Ethanol production in the USAProduction in Million of gallons

870

1,470

4,855

1980 19

8219

8419

8619

8819

90 1992

1994

1996

1998

2000 20

0220

0420

06

1,000

2,000

3,000

4,000

Key players of the automobile industry already endorsing E-85 technology

US auto majors also taking up the cause . . . . . .

Large and rapidly growing number of E-85 pump stations across the US

E-85 : No longer a myth . . . .

Key players of the automobile industry already endorsing E-85 technology

Apart from US, the other global auto majors also pushing for E-85

By 2007, most new cars in Brazil running on flex-fuel E-85 engines

Gasoline, Alcohol,

Diesel

Flex Fuel 10

84

16

Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07

100% = 114,140 units 130,118

90

Monthly sales on new cars

successfully eliminated the oil bill deficit with high growth rates in flexi fuel cars ~ 800 folds increase in last 4 years

Ethanol composes an important share of vehicle fuels in BrazilIn %, of total gasoline and ethanol consumption

39 38 42 39 41 43 40

61 62 58 61 59 57 60

2000 2001 2002 2003 2004 2005 2006

Average mandatory blend ratio = 23%

ethanol

Gasoline

100% = 28.3 bn ltrs

27.2 27.7 28.1 30.0 31.0 31.1

Brazil : > 40% blend ratio of ethanol against mandatory requirement of 23%

Billion liters

Ethanol

Conventional gasoline 514

2005 2015

530

609

16

518

122

191716 Production of US, Brazil, and rest in

2006

E - 85

E - 20

Consumption of gasoline - USA Demand of Ethanol in 2015

Additional need for 450+ billion lts.

52

Demand for ethanol bound to increase by a factor of > 10 in the US alone

Huge upsurge expected in the demand for ethanol with most companies producing E-85 compatible cars

World demand for oil likely to increase dramatically

MotorizationPopulation

100% = 780 cars per 000 inhabitants100% = 2,409 Million

China + India US

Additional demand for

fuel

China + India US

Driven by the staggering growth in the emerging markets . . . .

60

10

Ethanol 2007

Sugar cane

Corn and other grains

Other

30

Sugarcane by far the largest fedstock for production of ethanol in the world

100% = ~ 16 billion gallons

> 60% of world ethanol being produced from sugarcane

In US$ cts. per liter – in late 2006

Ethanol from sugarcane is the cheapest to produce

18 - 24

28 - 32

34 - 38

68 - 72

Brazil - sugarcane

India - molasses

US - corn

EU - beet/wheat

+ 200 %

Financially, the most viable option . . . .

In %

Cost of production of ethanol/industrial alcohol in India Non-binding, indicative only

100% = ~ US$ 28 - 32 cts. per lt.

Total cost

71

Feedstocki.e., C-Molasses

Direct labor

5

Depreciation Maintenance & repairing

9

Manufacturing overheads

2

7

Energy

6

With feedstock constituting > 70% cost, raw material securitization would be the key . . . .

India is the second largest producer of sugarcane in the world

430

260

88

47

45

Brazil

India

China

Pakistan

Mexico

Million tons of sugarcane, based on crops 06-07

India has significant potential to becoming the ethanol hub of the world

Sugarcane can be grown practically everywhere in the country

Vast land & water resources available throughout the country . . .

Sugar Production '06, in Million tons

Ethanol Production'05, in Billion lts.

Ethanol Export'04, in %

Ethanol has been a neglected activity in India so far

32

26

Brazil India

15.4

1.7

Brazil India

11

Brazil India

0.1

Large untapped ethanol production potential . . .

The majority of the sugar mills in India are of very small capacityDistribution of 583 sugar mills, 2006, by daily crushing capacity

> 10,000

7,500 – 9,999

5,000 – 7,499

3,000 – 4,999

1,000 – 2,999

< 1,000

Capacity, in tcd

11

12

58

70

384

48

Fragmented industry, small size mills . . . .

Large majority of the distilleries in India of very small capacity

Distribution in % of a total of 297 distilleries, 2006

As per annual production capacity, in Milion lts per year

> 40

30 - 40

20 - 30

10 - 20

5 - 10

< 5 34

31

24

5

5

1

Still almost 200 sugar mills with no distilleries in Maharashtra and UPNumber of sugar mills and distilleries in the top 5 regions in India, 2006

186

132

5142 38

67

44

29 25 21

Maharashtra Uttar Pradesh Karnataka Andhra Pradesh Tamil Nadu

Sugar millsDistilleries

Huge un-cashed opportunity for ethanol production . . . .

18,376

16,998

3,849

1,900

950

647

386

280

USA

Brazil

China

India

France

Russia

South Africa

U.K.

Ethanol production in India can easily be 6-7x larger than it is todayEthanol production 2006, in Milion lts.

Significant value creation potential for PE funds . . . .

India has a great future as a world-

class producer of biofuels

Targeted investments for the US$ 150 Million to be raised in the IGF-I cell

IGF-I

US$ 150 Million

Build greenfield ethanol plant

side-by-side to existing sugar

mills

15 - 25 > 25 %

Co-investments

Type of

investment

Size

in US$

Million

Likely IRR

Build greenfield ethanol

plants on a stand-alone

situation

20 - 35 > 35 %

Acquire stakes in existing ethanol

plants and/or sugar-mills10 - 25 > 20 %

Loans

Total investments in 10 - 12 plants and mills: 250 - 350

Intended timing of activities of IGFnon-binding, indicative only

Value of the portfolio

Build-up phase

2009 2010 2011 2012 2013 2014

Managing & optimizing phase

2015

Disposal time-window

Preparatory phase

2008

Time

Valuation of ethanol plants in terms of US$ per ltr. of installed capacity, Summer 2007

~ 1.5 - 2

~ 0.42

~ 5 - 7

US

~ 3.5 - 4

Brazil

~ 3.5 - 4

China India IGF capex

Value of sugar/ethanol assets in India have a large up-side potential

There is a significant

potential for capital

gains

High capital appreciation potential – timing is the key

Ethanol = new reality for India as sugar playerMillion tons of sugar

-3.6

-5.8

1.4

9.1 8.8

Surplus

Deficits

Time

India + ethanol

means

more sugarcane, but

NO surpluses of sugar any longer

A new paradigm for sugar business in India . . . .

Question : will it happen in India ?

2010 2011 2012 2013 2014 2015 20162009Time

Substantially reduce large dependency on foreign oil

Improve balance of trade

Secure a leading role, and at a world-scale level, in the promising sector of renewable fuels

Once-in-a-lifetime opportunity to enable 45 million farmers to escape from poverty and misery

Production of Sugarcane

Thank You