session 3 - investment pitch_sukha ae_06022013
DESCRIPTION
Presentations from the Energy for All Investor Forum, Nepal February 2013TRANSCRIPT
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SUKHA Alternative Energy Suman Shakya MD, One Planet Solution Consultant / Service Provider, SAE Pvt. Ltd.
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Just thinking does not make a positive difference.
Doing it does !
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SUKHA Alternative Energy Pvt. Ltd.
• New company
• Combined experience of over 60 years
• Produce Electricity from Poultry waste – 1.25 mw
• Produce Organic Fertilizer – 1000 mt annually
• Three promoters combined turnover in excess of NPR 25 Crores / USD 2.9 mil
• Subis, Khanal and Annapurna Poultry farms located around 2 km at East Chitwan
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Promoters’ Background
• Father of poultry in Nepal
• Established companies
• Well explored eco system
• Expanding bird capacity
• Setting up environmental control system
• Farms has bio gas plants
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Promoters’ Experience
• Experimented a lot
• Tried to implement many solutions
• Even produced electricity
• Subject to various researches
• Multiple promises
• No result
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Problems
• Waste management
• 20 tons of average poultry waste per day.
• High demand during season, low other times
• Problems in functioning consistency
• Community issues
• Cost to dispose
• Health risk due to air pollution and flies
• High cost of fuel during load shedding
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Solution
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Solution
• Rather than wait, Jump
• Size does matter
• Combined strength - 200,000 birds
• Spreading risks – 3 promoters
• Faster access to technology
• Seen it work in other countries
• Ready to make initial equity investment
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Farm
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Farm
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Bird Cage
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Transporting waste
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Proposed system
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The Math
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Business Model
• Revenue - Electricity and Organic Compost Fertilizer
• The 3 promoters themselves - buyers of electricity
• Current demand = production
• Price – half of what is currently incurred using diesel
• Excess will be connected to the national grid whose substation is only 1.5 km away
• Organic compost fertilizer in high demand
• Selling price conservative, buyers available
• Excess gas – to be sold
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Business Model
• Company – led by Atul Khanal, MBA – BE
• Team composition – mix of engineering and operational skill set
• Replicable – Immense possibility >15,000 farms
• Tested solution in other countries
• All three farms gearing for growth
• Double capacity in three years
• Expansion inevitable
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Impact –Environmental / Social
• Elimination of waste – extremely environment and health hazard
• Reduction of methane – one cause of global warming
• Reduction in diesel pollution – 80 liter a day
• Disposal of the waste – health hazard, improved sanitation. Smell is a big nuisance
• Increase in awareness of bio gas plants
• Community benefit from excess gas/electricity
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Impact – Finance
• Creates economic value while solving multiple environmental problems
• Integrated solution to multiple problems
• Supplier is supported by GIZ, IDCOL, IFC, SNB and KFW.
• Replication is easy
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Financial Highlights
NPR USD
Investment 61,530,000.00 723,882.35
Capital Structure
Equity 30% 18,459,000.00 217,164.71
Loan 70% 43,071,000.00 506,717.65
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Cash Flow
-
2,000,000.00
4,000,000.00
6,000,000.00
8,000,000.00
10,000,000.00
12,000,000.00
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Projected Cash Flow
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Financial Highlights
Interest Rate 11% Payback period 9yrs BEP (year 1 at 100% capacity) 84% NPV (net cash inflow basis) @ 9% NPR 5,137,458 IRR ( Net cash inflow basis) 9.98% Liquidity 2.57:1 in year 7
Loan repayment 7 years
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Required Investment
• 70% of the project - USD 506,717.65
• As debt – long term loan to be taken up by the company
• At preferential interest rates
• Without exchange risks
• Support to understand technology transfer and project feasibility better
• 30% of the project - USD 217,164.71
• Injected as equity by three partners in equal amount
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Points to Ponder
• Issues with locals
• Bird Flu
• Dollar Rate fluctuation
• Transmission lines
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We are ready. Are you? SUKHA Alternative Energy Pvt. Ltd.