Praj Industries Ltd. (Praj) is a leading Biofuels Technology company with a number of processes and systems for ethanol and biodiesel production to its credit. Praj provides end-to end solutions, backed by years of research and development, in 40 countries across 5 continents. It offers one of the largest resources to support the biofuels industry.
Praj offers innovative solutions to significantly add value in ethanol, bio-diesel and brewery technology and related wastewater treatment systems for customers, worldwide. It provides customized engineering and manufacturing solutions, systems and services with a strong infrastructure in design and engineering, which enables response to specific needs of output in accordance with process needs.
Praj is a knowledge-based company with expertise and experience in bioprocesses and engineering. The company has designed and supplied plant and equipment for a number of industries including Chemicals, Agrochemical, Power, Distilleries, Breweries, Fruit/Food Processing, Pharmaceutical and Dairies. Praj is amongst the world's single largest supplier of molasses-based distillery technology, plant and equipment.
The company’s principal activity is to manufacture turnkey plants and equipment for fermentation and distillation systems, worldwide. Distillery (Ethanol) plants and equipment and related wastewater treatment systems continue to form more than 85% of the revenues. Whereas, brewery and other process equipment account for the balance 15%. The R&D wing of Praj, dedicated to ethanol technology, offers a competitive advantage over other players. Its foray into biofuels technology will also offer a sizeable potential growth, given that most countries are major diesel consumers and nearly 60% of the incremental growth in world transport fuel is diesel-based.
Currently, revenue contribution from the export market is likely to scale up, owing to the increasing business opportunities in Europe and the UK, the US and Brazil.
Opportunities in biofuels:
World ethanol production, as per industry estimates, is expected to surpass 90 billion liters by 2010. Globally, over 300 to 400 ethanol plants are likely to be installed over the next three to four years. Countries, which are not very high gasoline consumers, like Peru and Colombia in South America, Philippines and Indonesia in Asia or even OPEC countries like Nigeria have also announced ethanol programs, while large users of gasoline like USA, China, Japan and EU nations, continue to promote ethanol. Thus, in order to keep pace with the growing demand, companies, including Praj, are investing into identifying newer energy crops like sweet sorghum and the next frontier of ethanol, cellulosic raw materials, new micro-organisms, new plant models which will be more energy efficient.
World ethanol production, as per industry estimates, is expected to surpass 90 billion liters by 2010. Globally, over 300 to 400 ethanol plants are likely to be installed over the next three to four years. Countries, which are not very high gasoline consumers, like Peru and Colombia in South America, Philippines and Indonesia in Asia or even OPEC countries like Nigeria have also announced ethanol programs, while large users of gasoline like USA, China, Japan and EU nations, continue to promote ethanol. Thus, in order to keep pace with the growing demand, companies, including Praj, are investing into identifying newer energy crops like sweet sorghum and the next frontier of ethanol, cellulosic raw materials, new micro-organisms, new plant models which will be more energy efficient.
Praj has set up a manufacturing unit at the Kandla Special Economic Zone (SEZ). The commissioned area is about 75,000 sq. ft., which has a capacity to manufacture 3500 tonnes of equipment. The facility is equipped with state-of-the-art machinery and a very high level of automation in welding and other processes. The SEZ facility was an outcome of the company’s pursuit of global business of biofuels projects, which involve supply of larger dimensioned equipment. A major benefit of this unit is its proximity to the Port, which will in itself cut down on transportation/logistics cost. Further, the tax benefits availed by the company will also boost the profit margins of PRAJ. Praj’s acquisition of an US-based company, CJ Schneider, an equipment provider, is also likely to expand the PRAJ’s client base in America.
Praj has also formed a joint venture with Brazil’s Jaragua Equipamentos Industriais, a leading Brazilian engineering major, wherein Praj will hold 54% stake. This venture will help Praj tap the huge ethanol production market in Brazil.
The Government's decision to blend ethanol with petrol is a welcome move. With sugar prices on a downturn, sugar companies could rely to a greater extent on byproducts such as ethanol for revenues and profits. Hence, capex in this segment is likely to continue and will also attract additional investment in further improving technology and infrastructure as well as in setting up appropriate processes. This would augur well for Praj.
Nearly 60% of the world’s transport fuel growth will come from diesel, which can easily be replaced by biodiesel. This opens up vistas of opportunity in the biodiesel industry, especially in US and Europe regions, which are now pursuing biodiesel earnestly. Praj is planning to capitalize on its presence on these regions.
Sales and NP for year ended 06 – 07 were 586.0Cr & 86.3Cr. Sales and NP for latest Quarter 180.2Cr & 39.4Cr. On YOY basis NP has increased by 255% & based on quarter latest its increased by 17%. Dividend during year ended 06 – 07 was 135%
Tata sons have bought 7.3 % stake in Praj in sept 07 just 5 months back @251 per share, and now one is getting it @118 only ... Its down just because of technicals and not due to fundamentals, so just grab this stock for medium to long term point of view for good gains.
Jitendra Gala
