My Eco Energy introduces BS-VI bio-diesel
It was in August 2014 that the Punebased My Eco Energy Ltd (MEE), a bio-diesel manufacturing company, launched a bio-diesel fuel under the brand name ‘Indizel’. The company launched the first bio-diesel station at Lonikand near Pune. Made from vegetable oils and feed-stock like palm stearin and palm fatty acid distillate, the bio-diesel was claimed to be capable of replacing fossil diesel completely.
In 2017 June, the promoters of the company have resurfaced. Briefing the media on Indizel recently in Mumbai, the company laid out an attractive business proposition. Coinciding with India’s recent upgrade to Bharat Stage IV (BS-IV) emission standards, the tactical move comes 3 years ahead of India’s transition to BS-VI standards in April 2020.
Expecting to ride the wave of this major leap by the entire automotive ecosystem, MEE is pitching Indizel to retail investors as the only fuel in the country meeting the BSVI (Euro-6) emission norm. The company has installed 1 demo pump each in Maharashtra, Rajasthan, Andhra Pradesh and Telangana for interested retail investors to experience the difference of the bio-diesel over conventional diesel. It has invested Rs. 250 crore for the venture.
MEE is targeting conversion of already functional traders, across industry segments, in a bid to build a pool of Indizel retailers. With claims of 600 retailers having signed-up, MEE aims to launch 50 pumps over the next 3 months. In line with the trend of asset-light business models, it brings to the table, fuel-station models that are multi-functional. They can be set up in the investors existing business premises or on a stand-alone site on a companyowned dealer-operated model. The premises will be owned by the retail investor to begin with, while the onus of add-ons like training, equipment and guidance will be with MEE.
It is claimed that MEE is one of the only 7 companies in the country, to hold an operating license to retail fuel, known to have a relatively high entry barrier. MEE aims to achieve about 10% share of the overall diesel market in 6 or 7 years for which it plans to open 4,000 fuel stations across the country in 4 to 5 years.
Indizel: The DNA
Indizel, like most bio-fuels, is made from vegetable waste. MEE uses a blend of 3 such bio-fuels available in Singapore. Manufactured out of Singapore, according to Sachin Labde, Co-founder, MEE, it is what makes Indizel unique. Refusing to divulge the precise composition, Labde drew attention instead to the formula not being patented to avoid disclosing the composition. Filing a patent requires the working details to be made public which the company fears. The working details could include details like the quantity and value of a product that is sold, manufacturing base, quantity of production or imports etc., making it vulnerable to plagiarism.
Indziel, which reduces emissions better than fossil-based petroleum products, surpasses the BS-VI emission standards with ease Labde said. “Indizel burns cleaner than petroleum-based fuels and results in
lower emissions of carbon monoxide, particulate matter and unburnt hydrocarbons. Compared to fossilbased fuels containing sulphur at 500 parts per million (ppm), Indizel contains less than 10 ppm,” he said.
According to Santosh Verma, Co-founder, MEE, the initiative will not only append value to the industry and communities, it will help them contain the most pressing environmental concerns of today. “It is not only a better alternative to ordinary diesel but also is economical and suitable for the vehicle owing to higher fuel efficiency. Indizel ensures a smoother ride as higher lubricity provides a longer engine life,” he added. Indizel meets European (EN 590 Euro-6) and BIS (IS 1460) Bharat Stage quality requirements. It can be used with existing infrastructure, distribution systems and engines without modification, he said. Collating with the World Wide Fuel Charter (WWFC) category 4 requirements, MEE aims to meet category 5 going forward. The Business case
Indizel will be made available through MEE’s different retail models such as ‘Urban’, ‘SemiUrban’, ‘Highway’ and ‘Satellite’. The business models are further classified into stand-alone, and a shop-in-shop. For the Urban Fuel stations, it is designed with simple structures like quick-fill and checkout from the fuel station. A SemiUrban model is suitable for spacious plots. A Highway outlet, will have all desired amenities for travelers like ample parking space for big vehicles, a convenience store, rest area and mechanic. A Satellite model is more suited to retailers in rural areas.
Indizel would be always priced lower than deisel’s market rate. Retail investors can reap good returns with one-time investment of about Rs 40 lakh. MEE will provide infrastructure that includes a storage tank (above ground and below ground), a fuel dispenser, stock (as per usage), a canopy set-up and required automation. Fuel-stations have a modular set-up, and are claimed to be construction-free and quick to install. These light, portable units can be transported easily requiring less space than for conventional diesel stations. Every MEE fuel outlet will be installed with an electronic point of sale system to maximise efficiency.
GST impact
Indizel is claimed to outperform other conventional diesels in terms of key metrics like performance, mileage, price and value. For instance, a litre of Indizel is said to deliver 10% higher mileage. As against diesel priced at Rs 61.67 per litre, for instance, Indizel at Rs 59.67 per litre is cost effective.
But this advantage could soon be lost with the Goods and Sales Tax (GST) rate of 18%. Bio-diesels like Indizel could soon become costlier than conventional diesel. GST of 18%% on Rs 59.67 works out to be Rs 10.74 which revises the price of Indizel to Rs 70.41 over the regular diesel at Rs 61.67 per litre. According to a statement from the Bio-diesel Association of India, the higher GST rates could impact the bio-diesel industry reeling under the pressure of complex and varied taxation policies of the States. The higher rate of tax is expected to make the industry uncompetitive and this could pose a huge challenge for MEE and its brand Indizel. It could well restrain the mass consumption by even the existing users like OMCs, railways and road transporters.
Sources suggest that such a price hike could make farmers switch back to use of polluting fuels and other products. It could foil MEE’s bid to increase localisation in manufacturing up to 30% by next year as the company has already narrowed down 3 manufacturing units, in Kolhapur, Noida and Vishakapatnam. Beyond the price metric, Indizel’s high flash point means that it is out of the purview of the Petroleum Act as it is not explosive.
The Outlook
Opportunities for MEE lie in diverse sectors like Railways and State Transport Undertakings (STUs) among others willing to harness the benefits of bio-diesel. Sources claim that a new mandate by 2018 would also require conventional fuels to be blended with 5 to 10% of bio-fuels like Indizel. Mandates like these could further boost the potential to increase the overall market size of bio-fuels, and thus a possibility to attain a significant market share owing to the early mover advantage it has. With the petroleum industry turnover last year (2016) at Rs 12.5 lakh crore, it assures MEE and its channel partners assured volumes. Perhaps the biggest rider for MEE would be to overcome its limited production capacity apart from its performance over time compared to conventional fuels.