Auto LPG-CNG Conversion System For Four Wheeler          

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Expression of interest setting up of ALDS on franchisee model Proposal - A

M/s ACE EnerTech Limited is promoted by ACE Group of companies, who are pioneers in the Auto LPG & CNG Conversion market. ACE Group is well known in the industry for its reliability to its stake holders, such as Dealers, Distributors and Customers. With its vast experience ACE Group has been promoting
Auto LPG & CNG Conversion kits.

M/s ACE EnerTech Limited (hereinafter referred to as AEL) is interested in inviting Applications/expression of interest from enthusiastic business entrepreneurs for setting up of Auto LPG Dispensing Stations (ALDS) in India.

BACKGROUND

Auto LPG in India is fast growing fuel due to its economical and environmental benefits.

As per the World LPG statistics, Auto LPG as a fuel is growing at a substantial rate against the other conventional fuels like petrol & diesel. Even in India the growth of Auto LPG is phenomenal.

The business of Auto LPG has proved beyond any doubt that all the stake holders involved in this business are extremely satisfied due to its phenomenal economic advantage.

Indian customer is sensitive to price. The spiraling crude prices have resulted in very high costs of conventional liquid fuels, such as Petrol & Diesel. This has resulted in a quest for alternate fuel like Auto LPG. While the motorists are happy with its price advantage over Petrol & Diesel, the other stake holders are also equally satisfied with attractive margins from the business of Auto LPG Dispensing Station far exceeding margins on sale of Petrol or Diesel. Government of India has initiated a blue print & has encouraged us to offer Auto LPG as an alternate fuel. This economic perspective throws a wide range of opportunities to all the partners to grow together in the business of Auto LPG dispensing.

ELIGIBILITY CRITERION

AEL intends to invite applications from interested parties owning or taken on lease suitable land having minimum plot area of 1000 sq. mtrs. (10000 sq. ft) within town / municipal limits and 1600 sq. mtrs. (16000 sq. ft.) on National Highways with a minimum frontage of 36 mtrs. (110 ft.) in both cases. The depth for city-based sites should be 30 meters minimum and that for Highway sites should be 50 meters minimum. Interested land owners may offer the land to AEL who will then construct the Auto LPG Station for them on the proposed plot of land as per terms and conditions stated hereunder.

Boundaries of the plot of land should be as per Check List for land suitability for ALDS stated hereunder.

The ALDS will be operated by the successful applicant appointed by AEL. AEL proposes to give very attractive commission on the basis of per liter sale of Auto LPG.

BUSINESS MODEL

The interested land owners can enter in to a business tie up with ACE EnerTech Limited, in setting up ACE brand of Auto LPG dispensing stations. The approx. cost of setting up ALDS can be as below :

    1) Land – 1000 / 1600 sq. mtrs.
    2) Rs. 53 Lacs – Design, Engineering, Supply, Installation & Commissioning of ALDS. All taxes will be extra at Actual.
    3) Rs. 5 Lacs to 10 Lacs – Construction of Sales office, drive way & beautification of site.
    4) Layout approval from CCOE – ACE EnerTech to facilitate.

MODALITIES

The interested parties can apply to ACE EnerTech Limited and submit this application form by remitting Rs. 2,00,000/- by DD (or) crossed at-par cheques, payable to ACE EnerTech Limited at Thane. This amount will be utilised for the site inspection, approval of layout & system from CCOE, obtaining LPG storage license etc. The modalities, commercial terms and conditions are explained in detail in this Application.

On successful allotment of ALDS the selected applicant, as a franchisee of ACE EnerTech Limited, has to enter into a commercial agreement with ACE EnerTech Limited for a minimum period of 7 years further renewable every 3 years.

ACE EnerTech Limited will supply Auto LPG by Road tanker trucks to the outlet, which will be invoiced after deducting the margins from the Retail Sale Price.

The successful applicant will be imparted operating knowledge by AEL and will be certified by AEL on successful completion of the training. However sufficient manpower and working capital has to be arranged by the successful applicant to successfully operate the ALDS.

PAYMENT TERMS & CONDITIONS

Payment terms and other general terms and conditions are covered in and are a part of the dealership.

PROJECT ECONOMICS

Note: Land cost not included.
         Density = Mass / Volume
         Density of Auto LPG for calculation purpose = 0.57 gm/cc
         Volume per Kg. of Auto LPG = 1/0.57 = 1.75 Liters
         Means ONE Kg. of Auto LPG = 1.75 Liters.

The successful applicant shall enter into an exclusive agreement with ACE EnerTech Limited for the dealership as well as for the purchase of Auto LPG from AEL.

While developing the above model, additional revenue towards ATM / Service center and operation of retro-fitment center of LPG Kits are not considered in arriving at the expected payback period (point no. 6 above). These are listed in Annexure I. One of the ACE group companies will also provide LPG kits for retro-fitment through a different contract to boost the sale of Auto LPG.

The selection of City as well as exact location of the ALDS has to be carried out by the successful applicant depending on market potential. AEL will provide necessary information of related data to guide the applicant.

Needless to mention that any increase in Capital cost will impact the returns and hence the Capital Cost has to be restricted.

CHECK LIST FOR LAND SUITABILITY OF ALDS

GENRAL TERMS AND CONDITIONS

1. Separate application form is to be filled and submitted for separate locations.
2. Incomplete forms are liable to be rejected.
3. Applicant having business experience in Oil & Gas industry will be given preference.
4. AEL will set up the entire ALDS installation at the cost of the successful applicant including the cost of transportation of the equipment. The ALDS     installation will be conforming to SMPV Rules and other statutory rules as and when applicable. The successful applicant agrees to pay an advance of 30%     of the project cost. This advance will be adjusted against the last payment due to AEL
5. The land development is to be carried out by the successful applicant as per Indian Road Congress and the NHAI. The final level of the driveway has to be     100 mm below the road level.
6. It may be amply clear that purchase of the application form does not entitle dealership rights. Final decision on the award of the dealership will be given only     after proper market study and judging the business acumen of the applicant. Decision of AEL regarding award of dealership shall be final and shall be     binding both the parties.
7. Successful applicant irrevocably agrees to sign a separate dealership agreement with AEL.
8. Necessary insurance will be arranged by the successful applicant for the product stored at site, equipment and 3rd party insurance cover for the     surroundings.
9. The successful applicant agrees to comply with the provisions of various Acts, Rules, Regulations, By-laws enacted and / or amended and / or imposed in     future from time to time with regard to the ALDS, Labour, Environment, Petroleum Rules, Municipal acts etc.
10.The successful applicant will make all the payments to concerned authorities directly and proof of such payments made shall be submitted to AEL as and      when advised.
11.The successful applicant shall at all times keep AEL indemnified against all actions, proceedings, claims and demands against it by the Central and / or      State Governments, Municipal, local and / or any other authorities, any customer and / or third party as a result of or in consequence of any act of      omission or commission of whatsoever nature by the successful applicant or his personnel.
12. The successful applicant agrees to abide by the existing and future acts, rules, regulations, laws, by-laws of the local, state and central government or      laws / rules enacted and amended from time to time.

Applicant is requested to keep a photocopy of this application for their record.

In consideration of successful applicant agreeing to be the dealer following broad terms and conditions are agreed between the two parties:

i.  AEL agrees to supply required Auto LPG to the above mentioned stand alone ALDS.
ii. The supply of Auto LPG to ALDS will be in line with the terms and conditions finalised between the two parties.
iii.The successful applicant will receive Auto LPG at the stand alone ALDS and dispense the same to the consumer using motorized vehicle fitted with Auto     LPG storage tanks fitted permanently inside that vehicle along with the approved conversion kit and is duly tested from time to time as notified in Central     Motor Vehicle Rules, 2001.
iv. The successful applicant agrees to abide by the provisions mentioned in the LPG Control Order, 2001 issued by the Ministry of Petroleum and Natural Gas     and its subsequent amendments issued from time to time.
v. All day-to-day operating expenses of the awarded ALDS will be met with by the successful applicant. He will also maintain accounts of expenses under    various heads per the format provided by AEL.
vi.AEL will stand warranty for 12 months from the date of commissioning or 16 months from the date of installation, which ever is earlier for equipment    installed for the subject ALDS. On expiry of warranty the successful applicant will enter in to an annual maintenance contract with AEL. Annual maintenance    charges will be borne by the dealer. It is also agreed that the successful applicant will maintain all the facilities and equipment in a good working condition.    He will also upkeep the decorum of the outlet to make it pleasant to the delight of the customers.
vii.It is agreed that the successful applicant will solely be responsible to obtain No Objection Certificate from District Magistrate of the jurisdiction, Fire    Brigade, Police Station, Municipality / Gram Panchayat as well as National Highway Authority within six months of signing of dealership agreement. All    incidental expenses for the same are to be borne by the successful applicant.
viii. The successful applicant will provide to AEL a security deposit in the form of an interest free deposit of Rs. 4.0 Lacs (rupees four lacs only). This deposit    will be retained by AEL during the entire currency of the agreement. AEL shall have the right to recover its losses from the security deposit amount if it is    established that the loss is attributable to the successful applicant.
ix. Working capital to operate the awarded ALDS will be arranged by the successful applicant.
x. The successful applicant shall provide a computer at site with internet facility and maintain the same operational for 24 hours, all days of the week.
xi. Please attach the following documents as a part of this application:
    a. Attested copy of the latest 7/12 extract for the premises (patta)
    b. Attested copy of the land use certificate for commercial purpose
    c. Attested copy of the title deed for the site plot of land
    d. Layout survey plan showing dimensions of the plot and surrounding facilities and structures / buildings within radius of 100 meters, attested by an         approved surveyor.
    e. Photographs of the plot and its surrounding area
    f. PAN details
    g. Declaration as mentioned in “H” of this application form
    h. PF and ESI registration (if available)
    i. Copy of other LOI/LPG dealership (if applicable)
    j. Attested copy of partnership deed (if applicant is a partnership firm)
   k. Balance sheet with Profit & Loss statement (if applicant is a partnership firm)

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