D1 Oils plc ("D1 Oils"), the UK based low cost producer of biodiesel, today announces the acceleration of its targets for the planting of Jatropha in India by its joint venture company, D1 Mohan Bio Oils Limited ("D1 Mohan").
D1 Oils plc ("D1 Oils"), the UK based low cost producer of biodiesel, today announces the acceleration of its targets for the planting of Jatropha in India by its joint venture company, D1 Mohan Bio Oils Limited ("D1 Mohan"). D1 Oils also announces new third party off take agreements in India for the supply of crude Jatropha oil through to 2015.
The main points are as follows:
a twenty fold increase in the targeted planting of Jatropha in India during the course of 2005;
reconfirmation of the medium term target to plant a total of 5 million hectares;
farmers to purchase seedlings and planting materials from D1 Mohan through local bank financing, providing D1 Mohan with additional revenue and enabling a more rapid expansion due to lower working capital requirements;
D1 Oils option to export up to 25 percent of the oil produced by D1 Mohan;
Additional Jatropha oil supply contracts for export, independent of D1 Mohan, totaling 10,000 tonnes per annum in 2006, rising to 50,000 tonnes per annum by 2009.
The new targets agreed by D1 Mohan are for the planting of 100,000 hectares of Jatropha in India in 2005. This is a significant increase over the 5,000 hectares estimate used at the time of D1 Oils' admission to AIM last year. Given this increase, D1 and its joint venture partner will monitor closely the progress made
throughout the year paying particular attention to the availability of quality planting seed. Once mature, this initial planting should yield approximately 250,000 to 300,000 tonnes of crude Jatropha oil per annum. D1 Mohan has also reaffirmed its medium term objective of planting 5 million hectares of Jatropha.
In addition, the operational model has changed such that contract farmers will now purchase seedlings and planting materials from D1 Mohan financed by local banks. At the time of D1 Oils' admission to AIM, it was assumed these supplies would be provided free of charge. This alteration provides D1 Mohan with additional revenue and enables the business to expand more rapidly as the working capital requirements for each hectare are reduced.
D1 Oils now has the option to export 25 per cent of the crude Jatropha oil produced by D1 Mohan for sale to international customers. Previously, all crude Jatropha oil produced by D1 Mohan was to be retained for domestic biodiesel production.
D1 Oils has also entered into a number of ten-year crude Jatropha oil supply agreements with independent suppliers. These supply agreements are in addition to those detailed in its AIM admission document and separate from the targets agreed by D1 Mohan. D1 Oils anticipates that these new contracts will provide an additional 10,000 tonnes per annum of crude Jatropha oil for export in 2006, rising to 50,000 tonnes per annum in 2009 which will more than double its supply of crude oil from such supply arrangements.
It is premature to forecast accurately revenues arising from these additional volumes as the markets for biodiesel in India and crude Jatropha oil internationally are in the early stages of development. The revenues will also depend on the extent to which D1 Oils exercises its option to acquire oil from D1 Mohan. Nevertheless, order of magnitude figures can be assessed. The initial 100,000 hectares planted by D1 Mohan could in due course produce revenues for the joint venture in the order of $100m per annum. Revenues for D1 Oils arising from the new third party supply agreements could rise to the order of $25m per annum. These potential revenues are dependent on a number of factors and should not be interpreted as a profit forecast.
Philip Wood, Chief Executive Officer of D1 Oils commented that:
"The new arrangements transform our ability to expand at a much faster rate as a result of lower constraints on working capital required for developing large-scale plantations. We are extremely pleased with the progress we are making in India and the commitment of our joint venture partner, Mohan Breweries in helping D1 Oils establish itself as the market leading brand in the biodiesel industry in India."
M. Nandagopal, Chairman of Mohan Breweries & Distilleries Limited, commented that:
"We are delighted to be working with D1 Oils as our partner in India. We have strong support from the Indian Government at all levels and are confident our business has the potential to contribute to the security and independence of the domestic energy supply in India. Our joint venture provides a major contribution to the rural economy whilst having the potential to become a highly profitable and expanding business."
Notes to editors:
D1 Oils plc is the owner of technical, marketing, logistical and other intellectual property related to the establishment, development and harvesting of Jatropha plantations, the extraction of oil from the harvested seed and the production of biodiesel and other valuable by-products from the vegetable oil.