FERLAND

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Team Members: XiaoJing Wan LuHua Ma Jun Li Qi Zou YiJie Zhang Team Sponsor: Antai School of Management

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SOLUTION OF SEWAGE TREATMENT & FERTIGATION Background Environmental pollution in China's vast rural area Improper disposal of domestic sewage Excessive use of chemical fertilizers

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SOLUTION OF SEWAGE TREATMENT & FERTIGATION The Need Ineffective Traditional sewage treatment plants Farmers are relocated to less fertile higher places

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SOLUTION OF SEWAGE TREATMENT & FERTIGATION FERLAND Solution A practical solution for changing domestic sewage into nutrient-rich liquid for plants What do we provide

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SOLUTION OF SEWAGE TREATMENT & FERTIGATION Competitive Analysis Expense of Operation per year(300 M3/day) About RMB 5,000/year Energy Used Gravitational energy of hills Water Discharged Nutrient removal Unit Initial Investment (RMB/M3） RMB 2,000 (including drip irrigation facilities) About RMB 65,000/year Above RMB 2,000 Electricity Nutrient liquid for plants SOLUTION OF SEWAGE TREATMENT & FERTIGATION

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SOLUTION OF SEWAGE TREATMENT & FERTIGATION 105 towns 18 towns 87 towns Traditional sewage treatment plants Our potential market Market Analysis Y2005 Y2010 SOLUTION OF SEWAGE TREATMENT & FERTIGATION Y2007 Phase 1 Phase 2 Phase 3

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Marketing Enhance Interest Effective Low operation cost Easy to build & maintain Adapt to the hilly terrain Durable & reliable Voice of Customer

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Financial Overview NPV: RMB 1,706,000 (Discount Rate = 10.6%) (=US$ 213,250)

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SROI

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Social Impact Overview Change in Farmers’ Life Environmental Benefits Social Cost Savings Increase in incomes Decrease in cost on fertilizer Scientific & effective skill in fertigation Less untreated sewage discharge Re-use of sewage as nutrient liquid Sustainable use of soil Lower cost in operation of sewage treatment Strengthened people’s awareness in environmental protection

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Thank you ! Team Sponsor:

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Q&A

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Technology 1. Sewage Pipe 2. Bio-Carrier 3. Nylon Thread 4. Nylon Tread Fixture 5. Hydrolysis Tank 6. Solid-liquid Separation Tank 7. Light-weight filtration media 8. Main Pipe 9. Dripper 10. Crops Hydrolysis & Acidification Solid-liquid Separation

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Fertilizer tank Fields Pipe Nutrient Rich Liquid (N,P) Fertilizer (N,P,K, Micro-nutrients)

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Nutrients Supply & Need Phosphorus (kg) Nutrients in Sewage / Orange Tree / year Nutrients Need / Orange Tree / year Nitrogen (kg) 0.415 – 0.518 0.031- 0.052 0.625 – 0.940 Notes: Every orange tree receives 28.4L processed domestic sewage per day averagely Nitrogen contained in domestic sewage is 40-50ppm according to test results Phosphorus contained in domestic sewage is 3-5ppm according to test results Calculated from Fertilization Test for Orange Trees in Hilly Lands, www.china-citrus.cn 0.375 – 0.564 1 2 3 4 1 2 3 4

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Water Supply for Orange Trees Town (15,000 Residents) Orange Trees (1,200 MU ) Notes: Sewage discharged per person per day – 142L Water need per orange tree per year – 900~1200mm Chinese unit of area, 1/15 of a hectare 1 2 1 2 3 3

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Orange Industry Development Plan in Three Gorges Area 1 1 Released by Chongqing Municipal Government in May 2003 Unit - MU 2 Chinese unit of area, 1/15 of a hectare 3000 3000 3000 2000 2000 2000 2000 2000 2000 2000 Unit - MU 2 Notes:

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Main Parameters of Sewage Unit-PPM 1 ≤300 ≤200 ≤30 ≤10 1 Issued by Chinese State Environment Protection Administration in 1992 <10 200-250 25-30 3-5 Notes: Effluent Influent Parameters 300-350 100-120 3-5 20-25 2 1 2 Lab test results

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Projects Built in Five Years 2006 2007 2008 2009 Year Month 1 6 18 20 Collection & Payment Sep ~ Oct Nov ~ Dec Construction period for project ①,we will get 50% of the total payment for the project and pay 20% for the irrigation system Acceptance check period for project ①, at the end of this period, we will get 40% of the total payment and pay 70% for the irrigation system 2010 11~ 12 9 ~ 10 No. of projects 16 Sep ~ Oct Get the remaining 10% of the total payment for project and pay the remaining 10% for the irrigation system 1

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Cost Breakdown RMB 444 K

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Sewage Treatment Status in Small Towns in Three Gorges Area

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Urban Sewage Treatment Processes Low Initial Investment Sequencing Batch Reactor and its variety FERLAND Low Operation Cost Oxidation Ditch, SBR, FERLAND Reuse as irrigation water Oxidation Ditch, SBR, FERLAND Making full use of local terrain Constructed Wetland (for swale) FERLAND (for hilly land) New processes Cyclic Activated Sludge System (CASS) UNITANK, FERLAND Key Requirement Preferred Processes

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Economic Parameters of the Main Sewage Treatment Processes 1 Among those wastewater treatment processes, Anaerobic/Anoxic/Oxic, BIOLAK , CASS and Oxidation Ditch are the most widely used wastewater treatment solutions in Chinese urban sewage treatment plants. 1 Data source: Ding Yan, Research Report on Urban Sewage Disposal Craft , Environmental Protection. 2005(7)

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Why are small traditional sewage treatment plants ineffective? Residential Area Town

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Why are small traditional sewage treatment plants ineffective? 20% reduction in treatment capacity Only 12% reduction In total initial investment 10% increase in unit cost of processing sewage 1 1 1 Data source: Characteristics and Problems of Sewage Treatment Project in Small Cities and Towns, report issued by Chongqing Water Authority.

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Why are small traditional sewage treatment plants ineffective?

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The Constitution of the Maintenance Cost % of the total cost

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Comparison of the Operation Cost FERLAND Operation Cost ① Volume of the sludge accumulated per year=146m3 ② Dredging workload per person per day= 5m3 ③ Wage of one dredging worker according to the national regulation RMB 27.4

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Government Concerns & Our Solution Increase farmers’ income Encourage farmers to use new technology to promote productivity Improve rural infrastructure and public services Save resources and energy in production Government concerns towards farmers are included in the “New Countryside” Scheme, which is part of China’s Five-Year Program for 2006-2010 period proposed by the Central Committee of the Communist Party of China in Oct. 2005. Our Solution Improve the quality and productivity of crops which provide the main income for the local farmers Save water resources and electricity Prompt farmers’ adoption of drip irrigation system Government Concerns Wastewater Treatment Effectiveness Operation cost Fit for wastewater treatment in scattered towns Very low operation cost 1 1 Farmers’ Problem

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Requirements for Sewage Treatment Solutions in Three Gorges Area

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Domestic Sewage Composition in Targeted Small Towns

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SOLUTION OF SEWAGE TREATMENT & FERTIGATION Implementation Schedule

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Financial Risk Analysis

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Management Team Jennifer WAN, President: postgraduate in Shanghai Jiao Tong University (SJTU), majoring in International Management. She holds a B.S degree in Economics from SJTU. Has a strong interest in entrepreneurship. Lei LU, Marketing Director: got his Ph.D. in Dept. of Mathematical Science and Technology, Agriculture University of Norway (NLH), majoring in Environmental Engineering. Being an expert in wastewater treatment, he has helped the implementation of several wastewater treatment projects both in China and in Norway. Born in the Chongqing, he can speak fluent local language and is very familiar with the area. Janice ZOU, Director of Finance: postgraduate in SJTU, majoring in Management Engineering and Science, got her bachelor’s degree in Economics from SJTU. She has solid knowledge of accounting and auditing and is determined to take corporate finance management as her career development direction after graduation next year. ShengBing HE, Director of R&D: associate professor in Shanghai Jiao Tong University, specializing in water pollution control, bioprocess of sewage and ecological engineering. He is the owner of FERLAND sewage treatment solution technology. He has successfully launched some sewage treatment projects in China.

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Revenue in Five Years

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Basic Data & Statistics

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Process Domestic Sewage

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Productivity & Farmers’ Incomes Increase On average, the yield of orange on 1sqm land is about 0.8kg now (assume it’s at Year0), and we assume the increasing percentage of quantity remains at 15% (compared with Year0) and the trade price remains at RMB2.00/kg through next 5 years period.

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Decrease in Cost on Fertilizer

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Purchasing Procedure

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SWOT Analysis

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Three Gorges Area Market Size Estimation (5 years totally) [1] Data source: Characteristics and Problems of Sewage Treatment Project in Small Cities and Towns, report issued by Chongqing Water Resources Holdings Ltd. [2] Data source: Characteristics and Problems of Sewage Treatment Project in Small Cities and Towns, report issued by Chongqing Water Resources Holdings Ltd. [3] The average scale of our projects is 300M3.

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Income Statement RMB Thousands

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Cash Flow Statement RMB Thousands

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RMB Thousands Balance Sheet