24th Jan 2005 13:22
D1 Oils Plc24 January 2005 24 January 2005 D1 OILS PLC ACCELERATES EXPANSION IN INDIA London D1 Oils plc ("D1 Oils"), the UK based low cost producer of bio diesel, todayannounces the acceleration of its targets for the planting of Jatropha in Indiaby its joint venture company, D1 Mohan Bio Oils Limited ("D1 Mohan"). D1 Oilsalso announces new third party off take agreements in India for the supply ofcrude 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 ofJatropha in India in 2005. This is a significant increase over the 5,000hectares estimate used at the time of D1 Oils' admission to AIM last year. Giventhis increase, D1 and its joint venture partner will monitor closely theprogress made throughout the year paying particular attention to theavailability of quality planting seed. Once mature, this initial planting shouldyield 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 millionhectares of Jatropha. In addition, the operational model has changed such that contract farmers willnow purchase seedlings and planting materials from D1 Mohan financed by localbanks. At the time of D1 Oils' admission to AIM, it was assumed these supplieswould be provided free of charge. This alteration provides D1 Mohan withadditional revenue and enables the business to expand more rapidly as theworking capital requirements for each hectare are reduced. D1 Oils now has the option to export 25 per cent of the crude Jatropha oilproduced by D1 Mohan for sale to international customers. Previously, all crudeJatropha oil produced by D1 Mohan was to be retained for domestic bio dieselproduction. D1 Oils has also entered into a number of ten-year crude Jatropha oil supplyagreements with independent suppliers. These supply agreements are in additionto those detailed in its AIM admission document and separate from the targetsagreed by D1 Mohan. D1 Oils anticipates that these new contracts will provide anadditional 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 supplyof crude oil from such supply arrangements. It is premature to forecast accurately revenues arising from these additionalvolumes as the markets for bio diesel in India and crude Jatropha oilinternationally are in the early stages of development. The revenues will alsodepend on the extent to which D1 Oils exercises its option to acquire oil fromD1 Mohan. Nevertheless, order of magnitude figures can be assessed. The initial100,000 hectares planted by D1 Mohan could in due course produce revenues forthe joint venture in the order of $100m per annum. Revenues for D1 Oils arisingfrom the new third party supply agreements could rise to the order of $25m perannum. These potential revenues are dependent on a number of factors and shouldnot 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 aresult of lower constraints on working capital required for developinglarge-scale plantations. We are extremely pleased with the progress we aremaking in India and the commitment of our joint venture partner, Mohan Breweriesin helping D1 Oils establish itself as the market leading brand in the biodieselindustry in India." M. Nandagopal, Chairman of Mohan Breweries & Distilleries Limited, commentedthat: "We are delighted to be working with D1 Oils as our partner in India. We havestrong support from the Indian Government at all levels and are confident ourbusiness has the potential to contribute to the security and independence of thedomestic energy supply in India. Our joint venture provides a major contributionto the rural economy whilst having the potential to become a highly profitableand expanding business." Enquiries Philip Wood D1 Oils plc 020 7321 3885 David Cunningham Bell Lawrie 0141 314 8105 Kevin Byram/Gill Ackers Brunswick 020 7404 5959 Notes to editors: D1 Oils plc is the owner of technical, marketing, logistical and otherintellectual property related to the establishment, development and harvestingof Jatropha plantations, the extraction of oil from the harvested seed and theproduction of bio diesel and other valuable by-products from the vegetable oil. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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