Ladies and gentlemen good day and welcome to the Praj Industries Limited Q4 and FY 2024 earnings conference call. As a reminder all participants lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you, sir.
Thank you. Good morning, everyone and a very warm welcome to you all. Sorry, it's 12:00 o'clock, so good afternoon, everyone. My name is Anuj Sonpal from Valorem Advisors. We represent the investor relations of Praj Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the Q4 and financial year ended 2024.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions.
The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now, let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We firstly have with us Mr. Shishir Joshipura, CEO and Managing Director, and Mr. Sachin Raole, CFO and Director of Resources. Without any further delay, I request Mr. Shishir Joshipura to start with his opening remarks. Thank you and over to you sir.
Thank you, Anuj. Good day, everyone. I welcome you to Praj Industries' earnings call for Q4 and FY 2024. First, all of you have the opportunity to go through our results for the quarter ended 31 March 2024. I would like to start today with two exciting developments in the quarter. First, Praj is ranked global number one in the 50 Hottest Companies in the Advanced Bioeconomy by the US-based Biofuels Digest. This makes Praj the first Asian Indian company to bag this honor. From a global rank of 34 in 2018 to a global rank number 8 in 2019, and finally, a global rank number 1 in 2024, it's been a very eventful and exciting journey.
Secondly, we are very, very proud to announce successful commissioning of commercial-scale CBG plants based on pressmud and rice straw, as also achieving benchmark results for wheat. These plants deploy Praj's state-of-the-art proprietary PM-Stab and Bio-Trol biosolutions to achieve reliable performance. With this, Praj now has proven commercial-scale CBG projects operating on three key feedstock, namely, spentwash, pressmud, and rice straw. This establishes Praj's range of technology as a definitive solution for complex agricultural feedstocks. Now, coming to the business performance. Our performance for the quarter and whole year reflects the business development across different dimensions of our portfolio and our ability to create, deliver, and capture value to an increasing base of diverse customers.
We are on a path to transform our business with increasing focus on emerging segments of CBG, SAF, and ETCA in near to midterm future, while expanding the share of international business in the overall pie. Our domestic bioenergy business saw the quarter continuing to see development of starch-based ethanol plants in the country, with over 90% of our domestic order book coming from starch-based plants. The mandated realignment of sugarcane-based feedstocks and product mix slowed down order execution and finalization for ethanol projects based on sugar feedstocks. We are in discussion with several customers on converting this, their existing single feedstock plants to multi-feedstock. With favorable revised estimates on sugar production in the country, we are confident that the delayed projects will soon get back on the track.
On the international front, as you all know, Brazil is the sugar and the ethanol capital of the world, and so far, the ethanol production in the country has been from sugar feedstocks, and of late, it has started to produce ethanol from starchy feedstocks. Brazil is now moving rapidly on ethanol production based on starchy feedstock. I'm happy to share that we have successfully handed over our first grain-based ethanol project in Brazil. We have already signed up for one more contract for grain-to-ethanol plant with Be8, a global renewable energy company, in Brazil. The engineering activity for this plant will commence in this quarter, followed by construction activities in next quarter. I'm happy to share that a French group has awarded us a contract to set up a 60 KLPD greenfield ENA plant in Ivory Coast, Africa.
This is the second project from the same group. We are in the process of completing the first project that is being set up in Congo. The low carbon ethanol opportunity in United States is expected to get momentum, post notification of 45Z under the IRA Act. We have initiated dialogue with several countries who have become part of global biofuel alliance. On the services business that saw only 2% growth in FY 2024, we are eyeing significant growth in both domestic as well as international markets in FY 2025. Biogenic CO2 capture is increasingly gaining traction at the back of sequestration activities picking up, and we have started to provide solutions for capture of biogenic CO2. Our solution for enhancing sugar yield and quality is gaining traction in the Brazil market. On fuel front, IOCL plant recommissioning is underway.
I'm happy to share the plant has produced over 1 million liters of ethanol to date. Being a first-of-its-kind plant, there are unique situations that need resolutions across the ecosystem and the project... We are working very closely with IOCL team to resolve these and render production in a gradual manner. As for CBG, I have already shared the most important development. We are further working on establishing turnkey solutions for other feedstocks. The inquiry pattern for CBG plant is developing in a healthy way, and we expect to be partnering with the farm business as we progress in the year. Our modularized solutions offering is finding strong traction in international markets and has witnessed nearly 2x growth in order book over the previous year. Praj chosen to build state-of-the-art modules for one of the largest blue hydrogen projects in Europe.
We have also booked and executed engineering projects for modularization of ATJ projects. ATJ is the alcohol-to-jet pathway for SAF in United States. We have commenced commercial production for our new greenfield facility in Bengaluru in February. All customer audits held for 2 of these facilities are successfully completed. Our PHS business has posted strong growth over last year with healthy order book and has seen increasing traction for our high-capacity fermenter offerings. We completed 3 state-of-the-art blood plasma projects in this fiscal year, and with one major customer achieving 100% capacity for the blood plasma product . Zero Liquid Discharge, our modularized solutions are finding increasing acceptance from our new customers. We are leveraging our core competence in industrial biotechnology and microbiology to develop specialized microbes for processing difficult to treat industrial effluents.
The brewery and beverages business inquiry is now building up on the back of normalcy in the market demand. We are expecting CapEx investments in the coming financial year. Overall, the business outlook continues to be positive for our business. With this, I will now hand over to Sachin for his comments on the financial performance.
Thank you, Shishir. The consolidated income from operations stood at INR 10,185 million in quarter four of 2024, as compared to INR 10,039 million in quarter four of the last year. PBT for the quarter stood at INR 1,230 million, as compared to INR 1,128 million in the corresponding period last year. Profit after tax at INR 91.96 crores, as compared to INR 88 crores of last year's quarter four.
For the full year ended March 31, 2024, income from operations stood at INR 34,662 million as against INR 35,280 million. PBT stood at INR 3,774 million in FY 2024, as against INR 3,187 million. PAT for FY 2024 came in at INR 2,833 million as against INR 2,398 million in FY 2023. Export revenues accounted for 20% for FY 2024. Of the total revenue, 74% is from bioenergy, 18% is from engineering, and 8% is from PHS business. The order intake during the quarter was INR 9,240 million, with 61% from domestic market. Of the total order intake, 65% came from bioenergy, 30% from engineering, and balance 5% from PHS business.
The order backlog as of March 2024 is at INR 38,550 million, comprising 71% of domestic order, with 76% from bioenergy, 19% from engineering, and balance 5% from PHS business. Cash in hand as of March 31, 2024 is INR 7,700 million. The board of directors proposed a final dividend of INR 3 per equity share at the rate of 300% of the face value of INR 2 per equity share. Final dividend, sorry, 300% at the rate of INR 6 per share, of the face value of INR 2 per equity share for the financial year ended March 31, 2024. It is subject to the approval of shareholders at the forthcoming annual general meeting. With this, I will conclude my remarks. Thank you all for joining.
We'd now be happy to discuss any questions, comments, or suggestions you may have.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from ICICI Securities Limited. Please go ahead.
My first question is on the order inflow. So you've done very well on the revenue and margin front, but the order inflow has been subdued, especially if you look at last couple of Q2. We haven't seen the bump up from ethanol or any other, you know, project. How do you think about the ordering flow for FY 25?
Thank you, Mohit. As you have pointed out and correctly surmised the government's notification around alternate use of feedstocks which as you are aware that there was a realignment required for the feedstocks from on the sugar side specially where the notification came which said that syrup and molasses feed cannot be used for production of ethanol and that made, that meant that there was a clear halt of sorts inside as well as outside from this particular sector. And this is a very important part of our overall customer segmentation. So from that perspective that was one. Two, as you have seen, that we have also built different business lines over a period of time, because EBP 20 is a definite positive wind in our sails.
But that is a definitive benchmark, and we need to then see how do we move forward from there. So therefore, a lot of effort has gone into creating alternative business avenues. And as you also saw, the starchy-based feedstock has started to pick up in a big way, with nearly 90% of order book coming from starchy feedstock. We have also seen CBG build very positively in the last half of the year. We are seeing ETCA opportunity building in a very positive and constructive way, as I mentioned in my opening remarks as well.
So these are the vectors which are now also started to contribute in a very, very positive way, and that is why, although the sugar, sugary part of the business, came to a virtual halt, it still did not impact the overall order book, and we were still able to meet nearly the same numbers in last two halves, last two quarters of the year.
If I understood you correctly, sir, you think FY25 will be far better compared to FY24. Is it right to say so?
Sorry, Mohit, we can't hear you.
Sorry, FY, how do you think about FY 25? I understood, sir, your issue with the order inflow for FY 24. How do you think about FY 25 order inflow?
Exactly. So, as I said, there is strong traction on CBG, there is strong traction on modularization. We also expect that, at the back of a strong sugar season that the country has witnessed, we will see restoration of pit stock permission for using sugary feedstock for ethanol production. So we see that, the canvas will start to change. We've already been seeing couple of businesses in the sugary feedstock as well as we move forward through the year, so that will order positively for our business as we go, as we move through the year.
My second question is on the sales execution in the current CBG order book. How is the traction? And also the related question is that we are getting a number of CBG tenders out from larger industrial players. Do you expect the number of-
So right now, if you really look at it, there are two or three vectors I was mentioning to you. CBG in India, ETCA, on the international business especially, I mentioned about the blue hydrogen project, and that's just an indicator. We have talked about Brazil as a very important market for us, where we clearly begin to see build up of a very good traction. So, the LCE opportunity in the United States. So we are beginning to see what we have been talking about as an opportunity to be developed, coming now, potentially getting translated to order book. And we believe that this will continue to be so as we go through the year.
Thank you, sir. Thank you for answering my question, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Shailesh Lakhani from Centrum Broking. Please go ahead.
Good afternoon, everyone. Congratulations, sir, for a good performance during the challenging environment, and thanks for the opportunity. So I had a few questions. First, on the engineering side, so when I see the order inflow for FY 2024, we have doubled. But on the revenue booking front, it has been separate. So, can you give some color on what is happening over there?
So, all I can say is that there is a cycle that we need to go through, order execution cycle. So what you see now getting, displayed as order book, will obviously start translating itself to revenue as we, as we, go through the year, right?
Okay. So, just to put it other way around, in my modeling, I'm getting a huge bump up in FY 2024 for engineering division, say more than 50-60%, given the tenure of your order book. So is it a fair assumption, sir?
Sorry, Shailesh, can you please repeat your question? There was a disturbance.
Yeah, yeah. So I am saying, so just to put it the other way around, given the order book traction, what we have seen in FY 2024, engineering division is expected to do a very good performance in FY 2025, say more than 50%-60% in terms of revenue booking. Is it a fair assumption, sir?
Yes, fair assumption.
Okay.
... ETCA, that's right. You'll see a major change happening on the order booking, because our new facility, as Shishir was mentioning, is already approved by the customers. We'll first see build-up of OB happening in that engineering segment in the next 2 quarters, and then the revenue will start flowing in, because the facility is now up and running. Yeah. One only thing is that given the way the order books will move, so as Sachin mentioned, it will be an order book that will get built up over the next 6 months, and then the execution cycle will take care.
Okay. Fair enough. Sir, another point is on gross margins. We have done exceedingly well in FY 2024 on gross margins term. So, and coupled with that, this is, I think after nearly five years, we are having an order backlog where nearly 30% is going to come from international market. So how do you see the gross margin shaping in FY 2025 and 2026?
... Two or three things. One, the domestic and international ratio, what we always said that is going to change over a period of time. It has already started showing first to some extent in revenue going forward in the order book. That is that is definitely going to help us on building up our margin. The other element which actually created some kind of issue, mainly on the commodity prices in the last couple of years, has also smoothened. So we believe that that is also going to help us on the gross gross margin going forward. Our first target was to achieve the two-digit kind of a margin on the EBITDA side, on the buildup of the higher gross margin, which has already started showing the results in last two quarters. We think that this momentum is going to continue.
With what that number is going to be, unfortunately, I will not be able to give that kind of a number as a guidance. But yes, our efforts on building upon the improvements on gross margin on the EBITDA is anyway going to continue.
That's very helpful. Sir, if I can squeeze one more question. So wanted to understand on the order inflow mix going ahead. There has been a drop in the bioenergy space, right? For obvious reasons, beyond our control. So how do we see shaping, say, in FY 25, 26, on order inflow mix?
So, bioenergy, when you say bioenergy, then we will have to see it from a different perspective, because there is the molecule is changing, number one. Number two, the segments may change in terms of geographically, whether it's India or outside India. I mentioned Brazil, I mentioned United States. We also mentioned 2, 3 quarters from African region, what's going to happen in the in the in the ... So maybe, the construction of the bioenergy order book will change because of changing molecules, because changing geography, changing application, but overall, we expect this to grow. We are not expecting it to stay, say, status quo or shrink. Not at all. We are actually expecting to grow. Also, we expect the engineering order business to grow, as we already answered to you.
So we expect both our business, major business segments to actually continue to grow from where they are. Maybe with a different, element, at the element level, different construction, but overall, the book will continue to grow. And Shailesh, just to add, we had mentioned that our 2030 target is three times of revenue, and in that buildup of revenue, all the businesses are going to equally contribute. So even in the bioenergy space, if you look at, maybe within bioenergy, we will see some kind of, shift happening between let's say, CBG and HEFA and bio, biofuel. But all these things are going to contribute in the overall picture of our three times of revenue going forward.
That, that's really helpful. Thanks a lot, sir, and best of luck, sir.
Thank you. Thank you.
Thank you. The next question is from the line of Manish Goyal from Thinkwise Wealth Managers LLP. Please go ahead.
Yeah. Thank you so much, sir. Please bear with me. I have a few questions. First, on the services business, if you can probably provide more insights on different kind of services we offer, and what are the revenue potentials? Probably one is performance enhancers, which is probably like a consumable. And then you had earlier spoke about opportunities in U.S. for low carbon intensity refurbishments of plants. So that is first question on services. And how much does it currently contributes in terms of overall revenue? That was one. And second, sir, if you can also give us a perspective, like you just mentioned on gross margins. So one is definitely you mentioned international revenue share improving, but any other change in revenue mix with say, engineering share improving or high purity improving?
Does that also support your gross margins improvement? That was second question. Third question is on any update on the U.S. front in terms of Inflation Reduction Act incentives under the IRA, if you can provide that. Maybe if you allow, I'll probably have a couple more later on. Thank you.
Yeah. These are... I think all the questions you are asking one by one. So let's first try to answer those questions and then we will see.
Thank you.
Yeah. So, okay, so on the IRA front, the 45-day notification is still awaited, so we do not have that. But as I mentioned to you, we are already, some of the customers are already beginning to move, actually, because the fact remains that if SAF has to come through an ATJ pathway, and that is, most considered to be the most viable pathway right now outside HEFA. The low carbon ethanol has to become a reality, and we expect that that will happen. So the first project is already under construction now, by us. So we'll see how that develops, and we are expecting 45-day to be clarified soon.
In terms of margin that you said, that you know what's going to be the order mix, or mix of businesses, let me tell you that we, we are very clear in our strategy, in what we see in front of us, also future unfolding. Each and every one of our businesses will grow from here onwards, so we're not expecting any business to shrink. There may be slightly different construction at the elementary level, but other than that, we do not expect any other change. All of these are favorable, if I can use that word, on the margin side of the story. That's what we expect will happen as we go forward. Each and every business of ours will grow.
Some of the new stuff we already talked about, CBG, ETCA, and in time to come, that will also start to grow, very, very constructively, as we move forward, through the years.
... Sure, sir. And sir, like, we have seen a very strong traction in international order inflows, in the current year, and that is across the segments. So, like, how is the pipeline, and do we see this momentum continuing, going forward? And sir, I probably missed my first question on the services discussion. Thank you.
Yeah. So you are asking the question, and we don't.
Okay. So sorry. So maybe you can answer on services. I'll come back on that.
The services, so the low carbon ethanol opportunity in United States that you mentioned, it's not a service offering, it's a full-fledged technology offering from our end. So that's not part of the services. But the performance analysis I mentioned about, a new traction we are finding among the product that we introduced on the sugar side of the industry, not ethanol. It actually helps into sugar quality and color, et cetera, so they're finding very good traction. So, and services, then other, other stuff, you know, remote through the inflation, what we offer to our customers for managing their plants remotely, for parts services, O&M services. So these are all different package of services that we offer to our customers.
They obviously need set of enzymes and performance enhancers and yeast, et cetera, so that gets sort of bundled together and moves forward. So services is a different construction of business that moves forward. Okay? Anything, anything else that I left out on-
No. So how much, sir, like, like, what could be the current contribution of services roughly, and how do you see it growing, sir?
So, the contribution from services business currently is in the range of 4%-5%, and we expect that share to go up going forward because we, on a continuous basis, we are increasing our offering under services umbrella. Just to give an example, today, when the CBG plants are coming up now, for the maintenance or the, for the, maintaining the quality of the feedstock, there is a biological solution which we are providing under our services umbrella. So that is supposedly to also contribute in a big way. We have introduced providing our solutions in the Brazilian market in a big way now. This has also started picking up now. So the services share supposedly to go up going forward. There's another important element to the service business, and that I mentioned, is about capture of biogenic CO2.
That's really finding a big traction because CO2 capture is becoming a significant activity for several of our customers and organizations across the world. And that's where we are beginning to offer our services and solutions for capturing of the CO2 as it is integrated. So that will become, that's also part of our services portfolio.
The best part is our captive customer base is also increasing.
Sure.
It is also going to contribute in a big way for our services.
All fermentation processes will create Biogenic CO2, so that becomes almost a captive customer for us.
Right, sir. I'll just squeeze in one more question on high purity, sir. Again, this segment has seen a very strong order inflow as well as execution front. So are we also started getting inquiries for from semiconductor and electronic plants which are being set up in India, and can it be a large opportunity for us?
So, if the semiconductor chip manufacturing needs water, which is of the same level of quality and purity that is required for pharma application. And so from that perspective, from a capability perspective, we already have a capability. As and when the projects are announced and, you know, these are large outlet projects, obviously this will take some time to get off the ground, but as and when they come up, we'll surely be hearing about it, and we'll speak to you. As of today, we do not see, you know, any projects actually going to a stage of ordering out equipments and discussing and all that. So I think we are still a little away from that.
Okay. I'll come back in touch with you. Thank you so much for all that.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address the questions from all the participants, please limit your questions to two per participants. I repeat, please limit your questions to two per participants. Thank you. The next question is from the line of Sagar Kapadia from Prabhudas Lilladher. Please go ahead.
First of all, congratulations to the Praj team that even in such a tough time, you have come out with an excellent set of numbers as well as the excellent order intakes.
Thank you, Sagar.
Thank you.
Go ahead, your voice is cracking in between now.
Okay, okay, I'll speak a little bit louder. Sir, I just wanted to split-
Yeah.
In the bioenergy, you have said there's an order intake in the Q4 worth around INR 600 crore. So what is the split between the CBG and the ethanol orders?
So, Sagar, we have not yet started splitting our segments into, what I can say, mini segments right now. But yes, there is a order book built up happening on the CBG side and on the ethanol starchy feedstock which, Shishir had mentioned earlier. But we have not started giving this further split of-
Last quarter you had given that information. You had received certain, you know, 4 orders from CBG worth INR 400 crore or INR 300 crore. You had given that information in the conference call.
We had mentioned because that was the beginning of CBG order picking up.
Yeah.
But we have not yet started giving the split of all the verticals.
Okay, so you are still not giving that split between the inaudible?
That's right. That's right.
But can you give me a split broadly, like, out of the INR 600 crore, how much is for the exports?
That's possible. Just give me a minute. If you are having a second question, you can put that second question, and I will give you a split of 600.
... No, I don't have any other question. This is the one only. Okay, how much is contributed by that?
Okay. So out of that, almost INR 210 crore, almost INR 150 crore will be export, and INR 450 crore will be domestic.
Okay, sir. Thank you.
Thank you.
Yeah.
Thank you. The next question is from the line of Nihal Shah from Prudent Broking. Please go ahead.
Hello, am I audible?
Hello.
Am I audible?
Hello? Hello.
Hello, hello.
You lost him?
Hello.
Yes, we hear you. Please go ahead.
Yes, yes. Thank you. Thank you for the opportunity. So my question was on the engineering front, as we are seeing a lot of traction there in terms of order book, and in this quarter, our revenues also, 20% of them came from the engineering segment. So, how do we see our margins going ahead?
We have lost the management line connection. Please stay connected.
Okay.
While we reconnect them. Thank you.
Okay, okay.
Ladies and gentlemen, thank you for patiently holding. We have the management line back on call. Nihal, please continue with your question.
Yeah. Congratulations for the great set of numbers. My question was on the line of engineering segment, as we are seeing good traction coming from there. About 20% of our revenues also came from that segment, and order book also looks strong. Going ahead, how do we see our margins improving from around 11% to 13%-15% in the next two to three years?
Sorry, I will not be able to exactly tell you how the percentages are going to move. As I mentioned in my earlier comment, that we, our endeavor is to... First endeavor was to get into s- double-digit margin and then build on that margin. You have to keep in mind a couple of things because, we, we are talking about expanding the, business offering in the form of, let's say, CBG supposedly to catch up now. Services business is supposed to go up as the businesses start kicking in. But at the same time, there is a lot which is happening on the developmental side also, for preparing ourselves for the next, wave of growth. So we are investing, in, in R&D in a big way. Our PLA plant is supposedly to start, its operation from this year.
The Q2, we will start the operation of our PLA. We will get into more R&D-related activity. For CBG, we are working on multiple feedstock testing in our demo plant. So there is a lot which is happening on the developmental side also. And whatever happens in our research side, it gets actually debited to P&L, so we don't, we don't capitalize our research expenses. So depending on how these activities are going to get built up, the margins are supposedly to move, but as I said, our efforts are to build upon what already has been achieved in the margin side.
Okay. And, another question was on the front of, the sustainable aviation fuel. So are we seeing orders starting to come up from that segment? Because I guess there was a 1% target that the government had said till 2025. So, how is that segment moving?
So, Nihal, SAF is a... What we did was we demonstrated last year that it's possible to-
make SAF in India on global feedstock. Yeah, that was the proof. There is, there is no legislation in place as yet. The only agreement that is in place globally is, comes into being, it makes it mandatory for airlines to blend 1% starting January 1, 2027. So these are still early days for SAF, but as we go through the year, maybe towards the end of the year, we'll start to see some announcements around SAF capacities being set up as well. So we'll see how that develops in terms of what mandates come, what, what's the new policy that comes in for the domestic SAF. The international part of the business, as I said, is already in January 1, 2027.
Okay. Okay, and sorry, just a follow-up on the previous question. Like, is the execution cycle on the engineering front slower than that in the bioenergy front, or it's around, it takes around the same time?
No, actually, in some cases, it is even longer than the bioenergy side, depending on the complexity of the project.
Okay. Okay, thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Vikram Suryavanshi from PhillipCapital India Private Limited. Please go ahead.
Yeah. Good afternoon, sir, and good numbers given the challenging environment. Initially, I just missed few comments, so pardon me in case I'm repeating this question. In case of a bio-plastic or demo plant will be ready, so how will be... How is there any inquiry pipeline or how we plan to monetize it? That is my first question. And second, on Brazil opportunity, you highlighted to some extent already, but would it be possible to give what would be the scope of our services there and any business development strategy on Brazil? And I think, I guess it will be mostly on maize side. So if you can answer this two question, that's it.
So, let me take the second question first, Vikram. Thank you. So in Brazil, as we have known, Brazil is obviously known for its sugar-based ethanol production, but as the country is going to enhance the use of ethanol, they're also finding very similar challenges to what we did, that sugarcane is not present in all the parts of the country, so they need to transport ethanol long distance, which is not a good thing, not a positive thing from an environmental perspective. So they have also started to look for alternative feedstock, and starchy feedstock is a natural candidate in line for that. That's number one. So they are beginning to look at alternative feedstocks in terms of what kind of starchy feedstock in different parts of Brazil that can be put to use.
We commissioned our first project based on corn. The second project that I mentioned to you about is based on wheat. So, different feedstock in different parts of the country that will be put to use. And we from our inquiry pipeline, from the dialogues that we are having with customers, we clearly see this to be the new growth area for as far as Brazil is concerned, in terms of capacity that will come up, as we travel through the year. There are already significant amount of activity increase in that space as far as Brazil is concerned. On the PLA, we obviously need to first... It is a demonstration plant that we are now building, and it will start commissioning in this quarter.
Once that is commissioned and the process is established, obviously, we have to invite the interested customers to the plant for them to witness the process and its efficacy, and then only we'll be able to build it. So we are not building any PLA-based revenue or book in this year's estimate apart, but as we probably travel through the future, we will be able to see that build.
Got it. Just a related extension of what you have said about if you look at the Brazil is very competitive on sugar side, so is there any government support for this grain-based or starch-based feedback, which is picking up now? Because we have seen very strong growth in grain side of story in terms of production for Brazil also. So just in case of competitiveness or if you can just give, share your experience from that point.
So what we are seeing is two or three things, Vikram. One, that our technology is absolutely able to deliver a benchmark performance on different dimensions that are important to an owner of an ethanol facility based on starchy feedstock. That's number one. Two, we have a very, very extensive experience globally on. So for example, I mentioned about the wheat project. We built a wheat-based project as the largest project in U.K., almost a decade ago. So that, when they came and saw that we have that kind of experience available on our side, they obviously were impressed that we've been running that kind, that size and that kind in a very advanced nation for a very long period of time. So that comes in handy as well.
There are incentives that the government is making available in Brazil at local level. I'm sure that, but that's not work, that's more to the producers or the promoters of the project. So, you know, in terms of what incentives are required. State governments are getting very active because they clearly see some of the states in Brazil see this as a clear activity to drive employment and, you know, create more opportunities for the local population. So obviously, that's another one that's going up. We will see, we are seeing positive traction develop all across.
Got it, sir. Thank you very much.
Thank you.
Thank you. The next question is from the line of Arnab Dave, an individual investor. Please go ahead.
Hello, good afternoon, sir. Can you hear me?
Yes, Arnab, good afternoon.
Sir, I had 2 questions. One is that, I heard that by, like, FY 30, we want to make the contributions from all the 3 segments equal. However, sir, if you look at the data of last few years, order books in bioenergy dominate, and the growth of all the order book segments has been brought in line with the overall growth. So like, if we want to, let's say, increase the share of the other two segments, like engineering and high purity, we have to make substantial year-on-year increase in the order book number. So, sir, any thought on the, like, going ahead with any kind of areas which are not currently in our domain or like, let's say, substantial increase, how it will come, if you can just throw some light?
So Arnab, first of all, we have said that we want every segment of our business to grow. It's not that we are saying that everything will be equally, equally split, at the end of six years. No. What we have said is, A, between the domestic and international, if you were to take a cut, our, our aim is to go 50/50. So that is half of our bookings, half our business in 2030 should come from domestic business, and another half will come from international business. So from that perspective, we have treated evenly. But as far as business segments are concerned, we are saying every business must grow to its potential, and we are not limiting any, anybody to say, "Oh, you need to be 1/3." There is no such lock on any business, and that's the second one.
Third, you mentioned that the engineering services business is obviously starting out on a smaller base compared to our bioenergy business. So in that sense, there is a different base on which we are operating. But we, as I mentioned to you, the opportunities opening up on CBG side, on the ETCA business, on the modularization opportunity for ours. We are clearly seeing a pipeline of our inquiry building very, very healthy, and therefore, we are saying that our business. So some businesses in rate, percentage terms may grow faster because they start from a smaller base. But in overall terms, we see bioenergy growing, we see engineering business growing. At the back of modularization, we also see PHS growing, each at their own potential rate that's possible in the market.
Okay, sir. Sir, another question is that, sir, in terms of bioplastics for PLA, sir, when do you think, like, revenues will kick in?
No, so as I mentioned to you, we are right now in the process of commissioning our demonstration plant. And then, obviously, we have to invite industry customer. That interest of customer is already building up on the PLA side of the equation. And then, so we don't expect any revenue or order book to happen literally this year, but maybe in the following years, we'll be able to talk about it.
Sir, any sort of-
Likely to start creating different molecules out of that plant, so.
Sir, any sort of numbers that we are targeting from that segment?
No, as I mentioned to you, we will not be able to give a specific number for that yet. In due course of time, surely we will talk about it.
Okay.
Thank you. The next question is from the line of Dhaval Shah from InCred Capital. Please go ahead.
Good afternoon, sir. Congratulations on wonderful performance. While though the environment was challenging, there were equal opportunities. And Reliance, Adani, everyone is, you know, announcing big plans in CBG. So how are we positioned to capture that segment? And do we see CBG overtaking biofuel, bioethanol in terms of revenue mix in our bioenergy segment?
So, Dhaval, yes, what good news is that large private corporate houses, energy companies, are saying that they want to develop this in segment. So that, I think, that actually goes to say that there's a definitive potential that is likely to unfold as we travel through this. Obviously, these corporates have very ambitious plans. We are also working with them. We have commissioned projects for them. So we know that we are. I also mentioned the beginning of the call, that we are very, very proud that we now have three feedstock on which we have got absolute benchmark yields established at commercial scale. I made this specific mention because that's been a pain point for the industry so far, that, you know, there was always ifs and buts around what works and what does not work.
But now we have established this beyond any doubt that on three important feedstocks, namely spent wash, pressmud, and rice straw, we are able to deliver absolutely benchmark performance as far as yields are concerned, and on a reliable and consistent basis. So second one, because people were finding that plants were not running on a continuous basis, so a lot of people have said there are challenges. So that's something that we have solved. So technology-wise, we are there. Sachin also mentioned that we are developing further on newer feedstocks, because these are not the only feedstock that will work. Maybe in the first slot, this is the most important feedstock, but we already know people are talking cotton stalk, napier grass, many other second crop residues. So, slurries from equal waste.
There are many, many dimensions which are now emerging in terms of pulp regulator. So we are now in the process of establishing the correct performance parameters on these alternative feedstock as well, so that we are able to offer to our customers a wide array of feedstock from which they can run their plant. We are working very closely with the companies that you mentioned and also some others in the field, and we are very confident that we'll start to see a big, significant change in the complexion of this business. Whether it will go bigger than bioethanol or bioethanol, I think we are not having that race. We are very clear in our head, each business must grow to its potential, whatever is its potential.
And if it has to create potential, it has to create new opening, that's what we will drive. So I, I mentioned that ethanol SAF becomes a big application in the ethanol-based chemicals become a big application. We will talk about the diesel blending, as I call. There are many things that will go as we move forward, will start to change. And all of the, the feedstock itself will undergo change, in our opinion, once we fully stabilize IOCL plant. And maybe a year down the line, we'll be talking very some very different dimensions of the business emerging, both in India and abroad, in terms of what can happen to cellulosic feedstocks. So we are not going to limit ourselves to say one should grow bigger than another. For us, each business should go to its potential.
Right. But since CBG seems to have more potential, and even there is more competition as well, Thermax is also doing, taking big orders. So I was just worried, can we, you know, position ourselves better and, you know, capture the larger pie of the market?
No, we are very focused on CBG. CBG for us is a very, very important business. I'm reiterating that it's a very important business for us, not only in India, but even outside India. And we will start with, as we go through the year, you'll hear more about it. The important question to be resolved there was the fact that markets, competition, customers, everybody was worried about reliable yield coming out of the plants, and that's something that we have proven. Right now, at the commercial scale, we are the only proven technology in the country. So, absolutely focused on ensuring that we completely go around unleashing this potential.
Right. And so, just a quick update on the IOC JV. Are we right now-
Thank you, sir. I request you to come back for a follow-up question.
... since you asked half the question, maybe we'll go to the full question.
Yeah. Thank you. At this time, what is the update on the IOC JV? Is there any movement on that? Where are we heading there?
Right now, no, in the sense that, we are still awaiting the final approval. As soon as we hear that, and it is in the pipeline, so we will hear it soon.
All right. Okay.
Just to add-
Along with many other news during the month of June.
Yeah. So we are waiting for formal approval for the formation of JV, but we have already started groundwork, what should happen under the JV, what businesses should start shaping up in that, what is required from our side, how the structure should look like. So the groundwork is already happening on that front. Only the formal approval is awaited. After that, we will be in a position to talk about the business plan for the JV in greater detail.
Great. Good luck for that, and good luck for the future business.
Thank you, Dhaval
Thank you. The next question is from the line of Shailesh Lakhani from Centrum Broking. Please go ahead.
Yeah. So just one question, with respect to our engineering division and bioenergy and PHS. If you can just talk about the tenure of average order bookings. By what time we can expect the order book to get converted into revenues with for all three segments?
So average, Shailesh, is you can safely, safely consider as 9-12 months for both the businesses. But in engineering business, what Shishir earlier was mentioning, there is a possibility that if some, some orders are such that the execution time is a little on a longish cycle, so it can go from 12 months to even, for that matter, 18 months. Because the entire modularized, if we are supposed to do the equipments and the modularization both together, then the timeline can be going beyond 12 months also. But on an average, you can consider between 9-12 months.
Even for the bioenergy segment? Because I was under the impression that the bioenergy is a little bit longer, to 12-15 months.
No, it is not. It is not. Beyond 12 months, project will not go. If it is of a very large capacity, and if our scope is absolutely like an LSTK, then there is a possibility, but otherwise it will run in a period of 12 months. Even for that matter, CBG also, between 10-12 months is a, is a, what I can say, a period for execution.
Just a follow-up on CBG. We are doing the whole EPC turnkey projects in the CBG projects, right?
Not necessarily. So it's a customer's own demand.
Okay. Otherwise, what will be the addressable market in a CBG project if EPC is not completely done?
So, every customer has a different model, right? So they say, some will say: "Okay, you know what? You just do your technical piece, and we'll do the rest.
Some will say: "No, I will give you a piece of land, and please build everything." Some will say, "No, CBG, we manage, you manage others." So every, every customer is their own. There are no fixed models for this, unfortunately. What remains common is that the technology piece, the critical part, that is done by us.
So that would be what, what percentage, if I say, what percentage that would be of INR 100?
So let's assume if the LSTK project is going to cost us INR 100, our scope can go from INR 30 to INR 100, on a scale of 30 to 100. And additionally, you also need to keep it in mind, if it is the whether it is pressmud-based or agri-waste-based plant, the solutions which we provide on top for maintaining the performance of that plant is like a recurring business for us, under our services umbrella.
Yeah. That's, that's quite helpful. Thanks a lot, sir. Thanks a lot.
Thank you, Shailesh.
Thank you. The next question is from the line of Rohan Mehta from Ficom Family Office. Please go ahead.
Thanks.
Hi, sir. Thank you so much for the opportunity. Is my voice audible?
Yes.
Okay, great. So I just wanted to get your thoughts on CBG. So how do you compare CBG plants right now versus ethanol when it comes to payback period and the unit economics? How viable are the CBG plants right now?
Sorry, your last question we were not able to hear, because your voice is little low.
What I was saying is, where do you see the viability in the CBG plants right now? How viable do you think are CBG projects at the moment?
If you are looking from the viability of CBG projects, it is still, what I can say, to some extent it is work in progress. But projects are viable. They are having IRR ranging from 14%-18%, depending on what is the mixture, what is the size, and how they are selling apart from CBG, the solid manure or taking care of liquid manure. So it's a range.
Okay. Okay, okay. Got it. Got it. That, that's all from my side. Thank you so much.
Okay. Thank you, Rohan.
Thank you. The next question is from the line of Godwin, an individual investor. Please go ahead.
Hello. Thanks for taking my question. Am I audible?
Yes, yes, you are audible, but please be a little loud.
Yeah. Yeah. So I was referring to the latest news you all stated that by 2030, around 30 cities in India will, will go waterless or thing. So we are having an active participation in a water treatment plant. So can you shed some light on our business prospects into the second wastewater treatment and other things? Thank you.
So our water treatment is in two parts. One is our PHS business, which is serving ultrahigh purity water to pharmaceutical segment, and then we have zero liquid discharge system for some targeted industries, which are, you know, which have, which are mandated not to discharge any liquid out of their premises, like metals and mining, pharmaceuticals, fertilizers, chemicals. So we offer zero liquid discharge solution to those organizations. And sorry, we didn't get your name. Can you please let us know your name, please?
Godwin.
Okay. Thank you.
And can I ask one more question?
Yeah, please go ahead.
Yeah, and congrats on securing your first order for this blue hydrogen participation. So can you kindly let me know the prospects of this industry and how can we go forward with this particular segment?
So hydrogen, as you know, is going through a transition and transformation both, where traditionally only the gray hydrogen was being produced and then it goes to blue and green, and then of course there's pink hydrogen as well, depending on what the process of the customer land is. So right now the whole belief is that hydrogen is something that will become fuel of the future, but that's on a long-term horizon. And obviously a lot of effort is going on by the leading corporates, oil refineries, oil energy majors, to start cutting down their own CO2 emissions from their operations, and this is a very clear step in that direction. So we will see them connecting more as well.
Okay. Thank you, sir. That's for my end.
Thank you. Ladies and gentlemen, we'll take this as the last question, and I'll hand the conference over to the management from Praj Industries Limited for closing comments.
Thanks, everyone, for your time today. If you have any more questions, please feel free to write us at info@praj.net. I once again thank you for your time, and have a nice day.
Thank you. On behalf of Praj Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.