My notes
Q4 highlights
- Work done over last few years has started to bear fruit.
- Biologics market in India is developing
- Efforts made in USA, emerging markets saw traction develop.
- Zero discharge with IOCL
- CBG using Rice straw
Change in Domestic ecosystem changed with gov announcement for 20% blending by 2025.
Sugar+Starchy feedstock usage brought in increased sales due to leadership position.
Capability to delivery high volumes in one Quarter. This sets high benchmark for future executions.
Develop new technology
- Biobitumen
- Develop co-products
Over next 5 years
- String of pearls kind of business which will drive the ship ahead instead of having only one or two core businesses.
- 1st gen technology is here and now and is the core business.
- Going forward focus would move from liquid to gas
- Commissioning of 3 plants.
Even within biologics, focus would be on diff technology and also the Co-products.
Zero liquid discharge is getting importance
- zero liquid discharge out of premises (metal, power, Oil & gas, Food and Beverage)
- Combines knowledge of - microbiology+Thermal power+water treatment is required for ZLD.
No other company has the above 3 knowledge.
Investments made in customer business would unfold.
- Move away from China helps Praj.
- Provide engineering cum manufacturing solution.
- Green tech Companies are looking for green tech solutions to be implemented on the ground and that is where Praj comes in.
Most of our business is on the Capital side, but on the revenue side where we have performance enhancers enzymes to increase the yield for customer. This has been tested and has been successful and focus is now to develop this further.
Order from HPCL for rice straw to gas.
Bioenergy is 65% revenue and 35 % is Engineering &
Focus is to grow all the pearls to their natural size.
For Pharma we provide high purity solutions and this is gaining traction. Additional focus is coming in injectables and will act as a sub vertical.
Ecosystem of different verticals are are diff stages and hence growth rates are different, but the focus would be to grow all of them.
12-14K business opportunity on ethanol machinery over next 4-6 years…… said 1000k capital investment.
Common Question: What happens after 20% ethanol blending in petrol is reached….
- Brazil has plans to reach complete 100% ethanol fuel
- Currently working on 6-7% ethanol blending for Diesel without impacting performance. Need to identify the right blending element.
6% diesel business = 20% petrol. Wow…
- Ethanol is like a brick and can open up new vistas
Because of above opportunities runway for ethanol is long and solid.
Competitors would also be seeing the same and act upon
- Starchy feed stock – we have competed with every market and have gained a dominant share by beating international markets. Below are the two reasons which helped us:
- Our domestic laws are strict on effluent treatment and has helped us in developing effluent treatment technology.
- Have already developed capability to build cost efficient plants.
Competition is welcome but because of our long term investment required, they will take time to catch up.
Competition helps us to be innovative and also helps customer to solve their problems. We will not yield the ground to competition as we have invested, performed internationally and have relationships with customers. We are thus planning to improve the market share.
13-14K will be the overall market share and Praj expects two thirds out of it.
Biogas opportunity is 1,75,000 crores and is a huge number.
Gov of India – share of gas in our energy has to be increased.
Import is not feasible. So Atmanirbhar, National Security, foreign exchange….
So GoI has planned to set up 5000 distributed plants and the specifications of CBG are stricter than CNG.
Rather than burning the grass/straw/stumps, use it to generate Biogas.
Many organic products/feedstock are now thrown away which can be used a high value resource to generate CBG.
5000 local plants at city outskirts can also inject gas to City grids. Thus these plants can become feeders to city gas.
Ecosystem would gradually develop.
175000 crores is computed from 5000 plants as a base figure.
Right now our yields are atleast 30% higher than competition as microbiology is not available with competition as they are only engineering companies. We are an integrated solution provider.
Even internationally the competitions are focusing only on farm based solutions, whereas Praj is already focusing on Industrial solutions.
By 2023, this differentiation will start showing.
Right now diesel is at 80 rupees diesel and so some villages have converted to CBG which is cleaner and cheaper.
Plants are set up by Sugar mills, entrepreneurs who know agrarian economy, biomass distributions, ESG focused funds, as per tonne CO2 footprint is the lowest. Gov of India does not have to spend any money. Gov of India only formulates the policy and act as enabler.
Policy is an important dimension for building the ecosystem.
- State gov like Punjab has already brought in contracts for plants per 50Km
- Long term contracts already signed between companies.
- ESG are investing due to clear policies.
37 minute
1950 Crore order FY21 – This order can double/treble in very quick time annually.
Seeing definitive structure of Industry change with opening up of feedstock. Every state can now put up to start starchy feedstock.
Size of plants will go up and good demand visibility.
Solar plant companies want to setup these plants as wind is uncertain through the year.
New set up of customers are coming in as run way is long and clear.
No focus to yield any market share and focus is on providing new solutions.
40 minute
Bioenergy business is growing at a very high pace.
Mix between Bioenergy and Engineering would not change much as focus would also be to grow engineering division as our market share is not that high.
Capex – 42 minute
- To catch up the run rate, no new major capex is required until
- Q4 showed as what we are capable of and our infrastructure can deliver. Q4 times 4 can be handled by us with the current capex.
- Technology investment/capability investment than capacity investment is more important.
- More focus would be on R&D(Industry 4.0 to 5.0) will require transformation on the energy side for sustainable bioenergy.
- Large Capex not in near future.
Praj is more of a technological company than a capital goods company.
- Country has plenty of talent.
- Develop the talent within as there is no external talent available.
- Work with international collaborations to learn and extend the technology further.
Other business than ethanol, biogas:
- Annual maintenance business
- Performance enhancer business – we provide consumable additives.
- Project management + Operational management for new generation ethanol is the solution provided by Praj.
- Digital has to be integrated for the best solution.
Praj matrix
- Praj Matrix is the moat
- Was set up in 2008-2009 when world was wilting. During the diff times, we stayed and built our competency. So anyone who wants to compete with Praj has to be put in 13 years and do all the learning which Praj has.
- Technology(2G, Biogas, Water treatment) and Fermentation is our solution, instead of only Technology as provided by others.
- Fermentation in drug making, biopharma ….has huge scope.
- Market feedback, customer integration, providing new opportunity to employees is part of matrix.
- We find problems customer wants to solve and then develop solutions using our expertise.
Numbers – 55 minute
1300 Crore to 3000 crore revenue, profit from 80 Crore to 240 crores in 2 years is feasible.
In FY21 we worked only for 9 months.
Current order book is 70% higher than what we had at start of last year.
Order book is ahead of our execution.
