Increasing Use Of Biofuel Is A Win-Win For India: Biofuels Junction Founder

Biofuel is the most emerging segment in the world as industries try to reduce emissions for meeting the Net Zero commitment of various nations. Increasingly, governments across the world are mandating industries to use a portion of biofuel in their boilers. They are also imposing norms for reducing the use of coal across several user groups. In India, the government is actively promoting the use of biofuel across the value chain. Especially, production of biofuel from agricultural waste has emerged as a priority area for reducing pollution, Biofuels Junction is one of the tech-powered companies that are driving this movement in India.

In a conversation with the Bizz Buzz, Ashvin Patil, Founder & Director, Biofuels Junction said that through its android-based digital platform, the company is connected with more than 2,500 manufacturers producing biofuels. It is also connected with big industrial groups like HUL, ITC, Reliance, NTPC and many others, which use the biofuel supplied through its platform. Patil said that the company’s revenue has grown more than 10 times in the last six years and will grow at a faster rate in the next three years

How did you get the idea to start Biofuels Junction?

This is about like 6-7 years back. Me and my co-founder Chaitanya (Korgaonkar) were scouting for business ideas and during one of those explorations, especially on the countryside, I was visiting the countryside in Central India, where I hail from. I came across this product at a local manufacturer where the agriculture residue was being compressed into briquettes and pellets. This is something so useful, where biofuels can be converted from agriculture residue, which is abundantly available in the countryside. That's how, we got into this. We realized that there was no pan India organized player in this particular field and there was a gap in quality, consistency and compliance. So, we decided to enter into the biofuels space.

So, when did you start?

The first financial year was 2019, when we started the operation. So, you can say it has been almost 6-7 years now.

Can you provide a brief overview about the operations of Biofuels Junction? How is the overall biofuel market in India shaping up?

Just to share about this industry, and the main demand drivers for biofuel industry in India, we should first know that the market is constituted typically into three segments. One is decarbonization or net zero transition, where all the industrial boilers, like manufacturing plants of, say, (large companies) are replacing coal and furnace oil- which are fossil fuel- with biofuel. This is primarily for two reasons. Coal replacement is happening to reduce pollution. There is no greenhouse gas emission like SOx (Sulphur Oxides) and Nox (Nitrogen Oxides). Also, those who are using furnace oil or imported gas, they are shifting to biofuel for cost reduction because biofuels are 30 per cent cheaper than these fossil fuel, liquid and gaseous biofuel. So, that is one segment and that is where, we have actually grown our business. Currently, we are present largely in that part of the segment, which is decarbonization in the industrial boilers.

Second one is co-firing. All the power players like NTPC or the private power players, are mandated by the government to replace 5 per cent of the coal consumption with agri-residue pellets, which is a biofuel. We have recently started working with NTPC in this segment. And the third one, which actually is propelling demand for the raw biomass, is the CBG (compressed biogas). Government of India has put up a bio alliance with many countries. India is leading the efforts where agriculture residue will be treated, processed through anaerobic digestion and compressed biogas or biomethane will be made from that. And that biomethane will be used to produce CBG, compressed biogas. That compressed biogas can replace CNG, which is used in automobile or LPG, which is used in cooking gas. CBG has far better property compared to CNG and CPG. The idea is that on one hand, you are using the waste which is agriculture residue that is otherwise getting burnt and creating pollution. On other hand, you are reducing the import bill by replacing imported LPG or CNG. So, it is a win-win for the country.

Biofuels Junction is an asset light supply chain player, which is actually working across all these three segments. We have about 2,500 manufacturers and suppliers, who are registered with us as our supply partners. They interact with us through our IT application- an Android-based app. The entire procurement is digitized. And on the other hand, we are a vendor to around 100 odd companies. Like, we are one of the largest vendors to HUL.

Can you give some views about your android-based tech platform? How do you leverage emerging technologies for its operations?

Basically, from procurement to price discovery to closure of the delivery, everything happens on this platform. It is an Android-based app which simplifies the entire process. This is installed by all our suppliers, and manufacturers. It is developed after four and a half years of research and customised through our deep understanding of the market.

For instance, if we see a demand at X location. Our app basically tells us in the admin console that which are the manufacturers that are in the vicinity of 50 kms or 100 kms or whatever distance we choose. Then, we can send a query to them asking to code for a particular location, and particular quality. The price discovery happens on the platform as we receive say out of 10, maybe 8 people have bidded and this is the best price and this is the quantity. So, there is a price discovery which happens on the platform.

Secondly, once we choose that these are the two suppliers who can be used for that location, then issuing of delivery challan schedule, uploading the invoice, getting the acknowledgement, and other related things happen in the platform. So, it eases the process of coordination through automation. Moreover, we have all the data of last four years in a digitized form. What was the quality of a particular delivery, how much time it took, what was the driver number, truck number, every parameter which went on the delivery chalan is captured electronically and it is available in the digital form. So, the decision making slowly gets automated through software assistance. So, there is less of human subjectivity. Also, the logistics timeline can be predicted.

Where do you see the company in the next three years as biofuel is a growing segment across India?

Yes, we would definitely be growing at a much higher rate than we are currently growing. We had a revenue of Rs 7 crore in FY19, which had grown to almost Rs 84 crore in FY24. We are aiming for a higher revenue number in next 2 to 3 years. On entity wise, we are profitable. In case of considering going public, I think that is one of the choices for value unlocking in few years down the line as there are stakeholders and the investors who would want to exist. So, we will definitely explore that at appropriate stage.